RJR Acquisition Corp – ‘DEFM14A’ on 9/26/00

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Definitive Proxy Solicitation Material — Merger or Acquisition   —   Schedule 14A
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Document/Exhibit                   Description                      Pages   Size 

 1: DEFM14A     Definitive Proxy Solicitation Material -- Merger     188    938K 
                          or Acquisition                                         

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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT 
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) 
of the Securities Exchange Act of 1934

Filed by the Registrant /X/                                                     

Filed by a Party other than the Registrant / /                                  

Check the appropriate box:                                                      

/ / Preliminary Proxy Statement                                                 

/ / Confidential, for Use of the Commission Only (as permitted by               
Rule 14a-6(e)(2))                                                               

/X/ Definitive Proxy Statement                                                  

/ / Definitive Additional Materials                                             

/ / Soliciting Material Under Rule 14a-12                                       

NABISCO GROUP HOLDINGS CORP.
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):                              

/ / No fee required.                                                            

/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.    

  (1) Title of each class of securities to which transaction applies: Common
Stock, par value $.01 per share, of Nabisco Holdings Corp.        

    (2) Aggregate number of securities to which transaction applies: 213,250,000
shares                                                            

(3) Per unit price or other underlying value of transaction computed    
pursuant to Exchange Act Rule 0-11: $55.00 per share              

(4) Proposed maximum aggregate value of transaction: $11,728,750,000*   

(5) Total fee paid: $2,345,750                                          

   (*) Represents the aggregate cash to be received by the Registrant from the
sale of the Common Stock.                                         

/X/ Fee paid previously with preliminary materials.                             

/ / Check box if any part of the fee is offset as provided by Exchange Act      
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement 
number, or the Form or Schedule and the date of its filing.             

(1) Amount Previously Paid:                                             

(2) Form, Schedule or Registration Statement No.:                       

(3) Filing Party:                                                       

(4) Date Filed:                                                         

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[NABISCO GROUP HOLDINGS LOGO] 

TRANSACTIONS PROPOSED--YOUR VOTE IS VERY IMPORTANT

Dear Stockholder:                                                               

The Board of Directors of Nabisco Group Holdings Corp. has approved two 
major transactions:                                                             

(1) the sale of Nabisco Group Holdings Corp.'s 80.5% interest in Nabisco
Holdings Corp. to Philip Morris Companies Inc., and               

(2) the subsequent acquisition of Nabisco Group Holdings Corp. by R.J.  
Reynolds Tobacco Holdings, Inc. for $30 per NGH share.            

  We are asking stockholders of Nabisco Group Holdings Corp. to approve each
of these transactions, which are more fully described in this booklet.          

   We have scheduled a special meeting for our stockholders to vote on each of
the transactions. The date, time and place of the meeting are:                  

FRIDAY, OCTOBER 27, 2000                                  
10:30 A.M., EASTERN TIME                                  
HOTEL DUPONT                                              
11TH AND MARKET STREETS                                   
WILMINGTON, DELAWARE 19801                                

    Your vote is very important. Please vote by proxy, telephone or internet FOR
each proposed transaction today. We appreciate your support.                    

Sincerely,                                                                      

                                                                [Download Table]
                                                              
/s/ Steven F. Goldstone  /s/ James M. Kilts                   
STEVEN F. GOLDSTONE      JAMES M. KILTS                       
CHAIRMAN                 PRESIDENT AND CHIEF EXECUTIVE OFFICER

IMPORTANT: YOUR PROXY CARD IS ENCLOSED IN THE ADDRESS WINDOW OF THE ENVELOPE  
CONTAINING THIS MATERIAL. IF YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON 
PLEASE FOLLOW THE PROCEDURES SET FORTH ON PAGE IV-3 TO OBTAIN AN ADMISSION    
TICKET. VOTING YOUR PROXY BY TELEPHONE OR THROUGH THE INTERNET IS AVAILABLE   
FOR THIS SPECIAL MEETING. SEE PAGE I-2 OR IV-2 FOR MORE INFORMATION.          

Proxy Statement dated September 26, 2000, and first mailed to stockholders on or
about September 27, 2000. 

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[NABISCO GROUP HOLDINGS LOGO] 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF                                    
NABISCO GROUP HOLDINGS CORP.

TIME:                                                                           

10:30 a.m., Eastern Time                                                

DATE:                                                                           

October 27, 2000                                                        

PLACE:                                                                          

Hotel DuPont                                                            
11th and Market Streets                                                 
Wilmington, Delaware 19801                                              

PURPOSE:                                                                        

- Vote on the sale of Nabisco Group Holdings Corp.'s 80.5% interest in  
Nabisco Holdings Corp. to Philip Morris Companies, Inc.             

    - Vote on the subsequent acquisition of Nabisco Group Holdings Corp. by R.J.
Reynolds Tobacco Holdings, Inc. for $30 per share                   

- Conduct other business if properly raised                             

    Only stockholders of record on August 29, 2000 may vote at the meeting. Only
stockholders or their proxy holders and guests of Nabisco Group Holdings Corp.  
may attend the meeting.                                                         

 Your vote is important. Please complete, sign, date and return your proxy
card in the enclosed envelope promptly, or authorize the individuals named on   
your proxy card to vote your shares by calling the toll-free telephone number or
using the internet as described in the instructions included with your proxy    
card.                                                                           

                        JAMES A. KIRKMAN III
                                          SENIOR VICE PRESIDENT, GENERAL COUNSEL
                 AND SECRETARY

Parsippany, New Jersey                                                          
September 26, 2000                                                              

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TABLE OF CONTENTS 

                                                                [Download Table]
                                              
CHAPTER ONE--SUMMARY AND TRANSACTIONS OVERVIEW

SUMMARY TERM SHEET..................       I-1

SUMMARY.............................       I-3
  The Transactions..................       I-3
  The Companies.....................       I-3
  Reasons for the Transactions......       I-4
  Recommendation to Stockholders....       I-4
  Interests of Officers and                   
    Directors in the Transactions...       I-4
  Sale of Nabisco Holdings Shares...       I-4
  Acquisition of NGH by RJR.........       I-7

TRANSACTIONS OVERVIEW...............      I-10
  General...........................      I-10
  Company Information and the 1999            
    Restructuring...................      I-11
  Background of the Transactions....      I-12
  NGH's Reasons for the                       
    Transactions;                             
    Recommendation of the NGH Board           
    of Directors....................      I-15

INTERESTS OF OFFICERS AND DIRECTORS           
  IN THE TRANSACTIONS...............      I-19
  Stock Options, Restricted Stock             
    and Restricted Stock Units......      I-19
  Agreements with Certain Executive           
    Officers........................      I-22
  Prior Employment Relationships....      I-24
  Indemnification; Directors' and             
    Officers' Insurance.............      I-24

CHAPTER TWO--SALE OF NABISCO HOLDINGS SHARES  

NABISCO HOLDINGS MERGER AGREEMENT...      II-1
  The Nabisco Holdings Merger.......      II-1
  Completion of the Nabisco Holdings          
    Merger..........................      II-1
  Merger Consideration..............      II-1
  Stock Options.....................      II-1
  Covenants.........................      II-2
  Representations and Warranties....      II-5
  Conditions to the Nabisco Holdings          
    Merger..........................      II-5
  Termination.......................      II-6
  Certain Fees and Expenses.........      II-7
  Amendments and Waivers............      II-8

OTHER MATTERS.......................      II-8
  Financing of the Merger...........      II-8
  Regulatory Matters................      II-9
  Appraisal Rights..................      II-9

NGH VOTING AND INDEMNITY                      
  AGREEMENT.........................     II-10
  Covenants.........................     II-10
  Termination.......................     II-11
  Certain Fees and Expenses.........     II-12
  Indemnification...................     II-12

OPINIONS OF FINANCIAL ADVISORS......     II-13
  Opinion of UBS Warburg LLC........     II-13
  Opinion of Morgan Stanley & Co.             
    Incorporated....................     II-18
  Fee Arrangements..................     II-23

CHAPTER THREE--ACQUISITION OF NGH BY RJR      

NGH MERGER AGREEMENT................     III-1
  The NGH Merger....................     III-1
  Completion of the NGH Merger......     III-1
  Merger Consideration..............     III-1
  Surrender of Certificates and               
    Payment Procedures..............     III-1
  Stock Options.....................     III-2
  Covenants.........................     III-2
  Representations and Warranties....     III-5
  Conditions to the NGH Merger......     III-5
  Termination.......................     III-6
  Certain Fees and Expenses.........     III-7
  Amendments and Waivers............     III-8

OTHER MATTERS.......................     III-8
  Regulatory Matters................     III-8
  Stockholder Rights Plan...........     III-9
  Material United States Federal              
    Income Tax Consequences to NGH            
    Stockholders of the NGH                   
    Merger..........................     III-9
  Litigation........................    III-10
  Appraisal Rights..................    III-10

CHAPTER FOUR--INFORMATION ABOUT THE MEETING   
  AND VOTING                                  

  Matters Relating to the Meeting...      IV-1
  Vote Necessary to Approve                   
    Proposals.......................      IV-2
  Proxies...........................      IV-2
  Other Business; Adjournments......      IV-3
  Security Ownership of                       
    Management......................      IV-4
  Security Ownership of Certain               
    Beneficial Owners...............      IV-6

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                                                                [Download Table]
                                              
CHAPTER FIVE--ADDITIONAL INFORMATION          
  FOR STOCKHOLDERS                            

FUTURE STOCKHOLDER PROPOSALS........       V-1
WHERE YOU CAN FIND MORE                       
  INFORMATION.......................       V-1

                                                                [Download Table]
                                                                    
ANNEXES                                                             

Annex A............  Nabisco Holdings Merger Agreement              
Annex B............  NGH Voting and Indemnity Agreement             
Annex C............  NGH Merger Agreement                           
Annex D............  Opinion of UBS Warburg LLC                     
Annex E............  Opinion of Morgan Stanley & Co. Incorporated   
Annex F............  Section 262 of the Delaware General Corporation
                     Law (Appraisal Rights)                         

ii

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CHAPTER ONE 
SUMMARY AND TRANSACTIONS OVERVIEW 

SUMMARY TERM SHEET

Q:  WHAT TRANSACTIONS ARE BEING PROPOSED?                                       

A:  Two transactions are being proposed:                                        

- the sale of Nabisco Group Holdings Corp.'s 80.5% interest in Nabisco  
Holdings Corp. to Philip Morris Companies Inc. and                  

- the subsequent acquisition of Nabisco Group Holdings Corp. by R.J.    
Reynolds Tobacco Holdings, Inc. for $30 per share.                  

Q:  WHAT ARE THE REASONS FOR THE TRANSACTIONS?                                  

A:  In order to maximize stockholder value, the Board conducted an auction for  
the sale of Nabisco Group Holdings and Nabisco Holdings. Your Board of  
   Directors believes that each of the proposed transactions is fair to and in
   the best interests of the company's stockholders; and that the transactions
 will provide value to stockholders substantially greater than the trading
prices of Nabisco Group Holdings stock prior to the announcement of the 
transactions. An important factor in the Board's determinations was the 
   broad scope of the auction conducted by management and outside advisors for
the sale of Nabisco Group Holdings and Nabisco Holdings.                

Q:  WHAT WILL I RECEIVE IN THE TRANSACTIONS?                                    

A:  After the acquisition of Nabisco Group Holdings is completed, you will      
  receive $30 in exchange for each of your shares of Nabisco Group Holdings.

Q:  WHEN IS THE STOCKHOLDER MEETING?                                            

A:  October 27, 2000.                                                           

Q:  WHAT VOTE OF STOCKHOLDERS IS REQUIRED TO APPROVE THE TRANSACTIONS?          

A:  Stockholders will vote separately on each transaction. Each transaction     
requires approval by holders of a majority of the outstanding shares of 
Nabisco Group Holdings common stock.                                    

Q:  ARE THE TRANSACTIONS CONDITIONED ON EACH OTHER?                             

A:  R.J. Reynolds and Nabisco Group Holdings are not obligated to, and will not,
   complete the Nabisco Group Holdings transaction unless the Nabisco Holdings
   transaction or a comparable acquisition transaction with respect to Nabisco
Holdings is completed. The Nabisco Holdings transaction may be completed
whether or not the Nabisco Group Holdings transaction is completed.     

Q:  WHAT WILL HAPPEN IF NABISCO GROUP HOLDINGS SELLS ITS NABISCO HOLDINGS       
SHARES, BUT IS NOT SUBSEQUENTLY ACQUIRED BY R.J. REYNOLDS?              

A:  The Nabisco Holdings shares constitute essentially all of the assets of     
Nabisco Group Holdings. After the sale of these shares, Nabisco Group   
   Holdings would have approximately $11.728 billion in cash proceeds from the
sale and estimated net liabilities of approximately $450 million, before
taking into account any potential tax benefits.                         

If the acquisition of Nabisco Group Holdings by R.J. Reynolds is not    
    completed, the Board of Directors of Nabisco Group Holdings will, consistent
  with its fiduciary duties and taking into account the legal environment in
which it operates, including the risks of potential tobacco litigation, 
explore alternative uses for or investment of the cash proceeds from the
sale of the Nabisco Holdings shares. We can give no assurance as to the 
nature, timing or value of these alternatives, and we believe that the  
   acquisition of Nabisco Group Holdings by R.J. Reynolds provides the highest
value to Nabisco Group Holdings stockholders that could reasonably be   
expected to be achieved compared to any other possible transaction.     

Q:  WHAT SHOULD STOCKHOLDERS DO NOW?                                            

A:  You should complete, sign, date and mail your proxy card in the enclosed    
   return envelope or vote by telephone or the internet as soon as possible so
that your shares may be represented at the meeting. In order to assure  

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that your vote is obtained, please give your proxy by following the     
instructions on your proxy card even if you currently plan to attend the
meeting in person. The Board of Directors of Nabisco Group Holdings     
recommends that you vote in favor of each of the transactions.          

Q:  HOW DO I VOTE BY TELEPHONE OR OVER THE INTERNET?                            

A:  Telephone and internet voting are available as follows:                     

    - by telephone, call 1-877-PRX-VOTE (1-877-779-8683) in the United States or
1-201-536-8073 outside the United States; or                        

- by internet, visit the website specified on your proxy card.          

When you vote by telephone or internet, simply follow the instructions  
   provided. You will need to provide your personal identification number from
   your proxy card in order to vote by either of these methods. If your shares
    are held in the name of a bank or broker, follow the voting instructions you
receive on your proxy card. Telephone and internet voting is offered to 
stockholders owning shares through most banks and brokers.              

Q:  WHAT DO I DO IF I WANT TO CHANGE MY VOTE?                                   

A:  Just send in a later-dated, signed proxy card to our Secretary or vote again
by telephone or the internet before the meeting. Or, you can attend the 
meeting in person and vote. You may also revoke your proxy by sending a 
notice of revocation to our Secretary at 7 Campus Drive, Parsippany, NJ 
07054-0311.                                                             

Q:  IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY 
SHARES FOR ME?                                                          

A:  If you do not provide your broker with instructions on how to vote your     
   "street name" shares, your broker will not be permitted to vote them on the
proposals. You should therefore be sure to provide your broker with     
instructions on how to vote your shares. If you do not give voting      
instructions to your broker, you will, in effect, be voting against the 
 proposals unless you appear in person at the meeting and vote in favor of
the proposals.                                                          

Q:  SHOULD I SEND IN MY STOCK CERTIFICATES NOW?                                 

A:  No. A letter of transmittal for use in surrendering your stock certificates 
   and obtaining payment for the shares will be sent to you promptly after the
acquisition of Nabisco Group Holdings is completed.                     

Q:  DO I HAVE APPRAISAL RIGHTS?                                                 

A:  If you so choose, you are entitled to exercise appraisal rights in          
   connection with the acquisition of Nabisco Group Holdings so long as you do
    not vote your outstanding shares of NGH common stock in favor of adoption of
    the NGH merger agreement and so long as you take all other steps required to
  perfect your rights. See "Chapter Three--Other Matters--Appraisal Rights".

Q:  WHEN WILL THE TRANSACTIONS BE COMPLETED?                                    

A:  We are working towards completing the transactions as quickly as possible.  
In addition to stockholder approval, we must also obtain regulatory     
   approvals. We expect to complete the transactions during the fourth quarter
of 2000.                                                                

Q:  WHOM DO I CALL IF I HAVE QUESTIONS ABOUT THE TRANSACTIONS?                  

A:  If you have any questions, require assistance, or need additional copies of 
this proxy statement or other related materials, please call MacKenzie  
Partners, Inc. at 1-800-322-2885.                                       

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                                Chapter One -- Summary and Transactions Overview

SUMMARY 

THE FOLLOWING IS A SUMMARY OF THE MATERIAL INFORMATION FROM THIS PROXY  
STATEMENT AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU.  
TO UNDERSTAND THE PROPOSED TRANSACTIONS FULLY AND FOR A MORE COMPLETE           
DESCRIPTION OF THE LEGAL TERMS OF THE TRANSACTIONS, YOU SHOULD CAREFULLY READ   
THIS DOCUMENT AND THE DOCUMENTS TO WHICH WE HAVE REFERRED YOU. ADDITIONAL       
INFORMATION ABOUT NABISCO GROUP HOLDINGS CORP. ("NGH") HAS BEEN FILED WITH THE  
SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE UPON REQUEST WITHOUT CHARGE;
SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE V-1.                          

THE TRANSACTIONS                                                                

This proxy statement relates to two transactions:                               

(1) the sale of NGH's 80.5% interest in Nabisco Holdings Corp. to Philip
        Morris Companies Inc. (the "Nabisco Sale") pursuant to a merger in which
        Philip Morris Companies Inc. will acquire all of the outstanding Nabisco
    Holdings Corp. common stock for $55 per share (the "Nabisco Holdings
merger"), and                                                   

(2) the subsequent acquisition of NGH pursuant to a merger in which     
        R.J. Reynolds Tobacco Holdings, Inc. will acquire all of the outstanding
NGH common stock for $30 per share (the "NGH merger").          

NGH stockholders will receive $30 per NGH share upon completion of these        
transactions.                                                                   

THE COMPANIES                                                                   

NABISCO GROUP HOLDINGS CORP.                                                    
NABISCO HOLDINGS CORP.                                                          
7 Campus Drive                                                                  
Parsippany, NJ 07054-0311                                                       
(973) 682-5000                                                                  

NGH is a holding company which owns 100% of the outstanding Class B common stock
of Nabisco Holdings Corp. ("Nabisco Holdings"), representing approximately 80.5%
of the economic interest and 97.6% of the total voting power of Nabisco         
Holdings' outstanding common stock. Nabisco Holdings, through its operating     
subsidiaries, is one of the largest food companies in the world, and the largest
manufacturer and marketer of cookies and crackers in the United States.         

PHILIP MORRIS COMPANIES INC.                                                    
120 Park Avenue                                                                 
New York, NY 10017-5592                                                         
(917) 663-5000                                                                  

The first proposed transaction relates to the sale of NGH's 80.5% interest in   
Nabisco Holdings to Philip Morris Companies Inc. ("Philip Morris"). This        
transaction will be effected through the merger of Nabisco Holdings with a      
subsidiary of Philip Morris pursuant to a merger agreement. Philip Morris is a  
holding company whose principal wholly-owned subsidiaries, Philip Morris        
Incorporated, Philip Morris International Inc., Kraft Foods, Inc. and Miller    
Brewing Company, are engaged in the manufacture and sale of various consumer    
products. Philip Morris is the largest consumer packaged goods company in the   
world.                                                                          

R.J. REYNOLDS TOBACCO HOLDINGS, INC.                                            
401 North Main Street                                                           
Winston-Salem, NC 27102-2866                                                    
(336) 741-5500                                                                  

The second proposed transaction relates to the acquisition of NGH by R.J.       
Reynolds Tobacco Holdings, Inc. ("RJR") after the sale of NGH's 80.5% interest  
in Nabisco Holdings. This transaction will be effected through the merger of NGH
with a subsidiary of RJR pursuant to a merger agreement. RJR, a holding company,
owns 100% of the stock of its operating subsidiary, R. J. Reynolds Tobacco      
Company ("Reynolds Tobacco"). Reynolds Tobacco is the second largest cigarette  
manufacturer in the United States. Reynolds Tobacco's largest selling cigarette 
brands, DORAL, CAMEL, WINSTON and SALEM, were four of the top ten best-selling  
brands of cigarettes in the United States in 1999.                              

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CHAPTER ONE -- SUMMARY AND TRANSACTIONS OVERVIEW                                

REASONS FOR THE TRANSACTIONS                                                    

In order to maximize stockholder value, the Board conducted an auction for the  
sale of Nabisco Group Holdings and Nabisco Holdings. The Board of Directors of  
NGH believes that each of the Nabisco Sale and the NGH merger is fair to and in 
the best interests of NGH's stockholders; and that the transactions will provide
value to stockholders substantially greater than the trading prices of Nabisco  
Group Holdings stock prior to the announcement of the transactions. An important
factor in the Board's determinations was the broad scope of the auction         
conducted by management and outside advisors for the sale of NGH and Nabisco    
Holdings.                                                                       

To review the reasons for the transactions in greater detail, see pages I-15    
through I-18.                                                                   

RECOMMENDATION TO STOCKHOLDERS                                                  

Members of the NGH Board of Directors present at the meeting unanimously voted  
to recommend and they are recommending that NGH stockholders vote FOR each of   
the transactions. All but one member of the NGH Board of Directors attended the 
meeting. The absent member was unavailable.                                     

INTERESTS OF OFFICERS AND DIRECTORS IN THE TRANSACTIONS                         

When you consider the Board of Directors' recommendation that NGH stockholders  
vote in favor of each of the proposals, you should be aware that a number of NGH
officers and directors may have interests in the transactions that are different
from, or in addition to, yours (see page I-19).                                 

SALE OF NABISCO HOLDINGS SHARES                                                 

THE NABISCO HOLDINGS MERGER AGREEMENT AND THE RELATED NGH VOTING AND INDEMNITY  
AGREEMENT ARE ATTACHED AS ANNEX A AND ANNEX B TO THIS PROXY STATEMENT. WE       
ENCOURAGE YOU TO READ THESE AGREEMENTS AS THEY ARE THE LEGAL DOCUMENTS THAT     
GOVERN THE SALE OF THE NABISCO HOLDINGS SHARES.                                 

CONSIDERATION                                                                   

In the Nabisco Holdings merger, each share of Nabisco Holdings common stock     
(including all the publicly traded Class A common stock and the 213,250,000     
shares of Class B common stock of Nabisco Holdings owned by NGH) will be        
exchanged for $55 in cash. The Nabisco Sale represents approximately $11.728    
billion in gross proceeds to NGH before giving effect to the liabilities of NGH.

NGH STOCKHOLDER VOTE REQUIRED TO APPROVE THE NABISCO SALE                       

The Nabisco Sale requires approval by holders of a majority of the outstanding  
shares of NGH common stock because the Nabisco Holdings shares constitute       
substantially all of the assets of NGH.                                         

NGH has entered into a voting and indemnity agreement with Philip Morris with   
respect to the Nabisco Sale. The agreement generally provides that, upon        
receiving approval of the Nabisco Sale from the NGH stockholders, NGH will      
promptly vote in favor of (or execute a written consent adopting) the Nabisco   
Holdings merger. The approval by NGH is the only approval from Nabisco Holdings 
stockholders required to complete the Nabisco Holdings merger. The voting and   
indemnity agreement is described in Chapter Two.                                

OPINIONS OF FINANCIAL ADVISORS (SEE PAGE II-13)                                 

In deciding to approve the Nabisco Sale, NGH's Board of Directors considered the
opinions of NGH's financial advisors. The Board received written opinions dated 
June 25, 2000 from each of UBS Warburg LLC and Morgan Stanley & Co. Incorporated
to the effect that the consideration to be received by Nabisco Holdings         
stockholders, including NGH, in the Nabisco Holdings merger is fair to such     
stockholders from a financial point of view. These opinions are attached as     
Annex D and Annex E.                                                            

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                                CHAPTER ONE -- SUMMARY AND TRANSACTIONS OVERVIEW

REGULATORY APPROVALS (SEE PAGE II-8)                                            

The Nabisco Holdings merger cannot be completed until                           

- the waiting period under the Hart-Scott-Rodino Act has expired or been
terminated; and                                                     

- the European Commission approves the merger.                          

INDEPENDENT TRANSACTION                                                         

The Nabisco Holdings merger is an independent transaction. It will be completed 
if the Nabisco Sale is approved by holders of a majority of NGH's outstanding   
shares and the other conditions to the Nabisco Holdings merger are satisfied.   
The completion of the Nabisco Holdings merger is not dependent on the completion
of the NGH merger. In the event the Nabisco Holdings merger is completed and the
NGH merger is not completed, NGH will hold the proceeds of the Nabisco Sale but 
NGH stockholders will not immediately receive any cash for their NGH shares.    

CONDITIONS TO THE NABISCO SALE (SEE PAGE II-5)                                  

The obligation of Nabisco Holdings and Philip Morris to complete the Nabisco    
Holdings merger depends upon meeting a number of conditions, including the      
following:                                                                      

  - approval by NGH (which, in turn, depends on approval by NGH stockholders
of the Nabisco Sale);                                               

- no law, court order or injunction shall prohibit the Nabisco Holdings 
merger;                                                             

- receipt of the regulatory approvals we refer to above;                

  - accuracy as of the closing of the representations and warranties made by
  the other party to the extent specified in the Nabisco Holdings merger
agreement; and                                                      

    - performance in all material respects by the other party of the obligations
required to be performed at or prior to closing.                    

In addition, Philip Morris's obligation to complete the Nabisco Holdings merger 
is subject to receipt of all required consents and approvals of governmental    
entities, except those that, if not received, would not have a material adverse 
effect on Nabisco Holdings.                                                     

TERMINATION OF THE NABISCO HOLDINGS MERGER AGREEMENT (SEE PAGE II-6)            

Nabisco Holdings and Philip Morris may mutually agree at any time prior to the  
completion of the Nabisco Holdings merger to terminate the Nabisco Holdings     
merger agreement. In addition, either Nabisco Holdings or Philip Morris may     
terminate the Nabisco Holdings merger agreement if:                             

 (1) the Nabisco Holdings merger has not been completed by April 30, 2001;

   (2) there is a permanent legal prohibition to the completion of the Nabisco
Holdings merger;                                                

(3) NGH stockholders do not approve the Nabisco Sale;                   

  (4) the NGH voting and indemnity agreement has been terminated because the
  NGH Board has withdrawn its recommendation of the Nabisco Holdings
        merger agreement or NGH has accepted a superior proposal or breached its
obligation to vote in favor of the Nabisco Holdings merger; or  

  (5) a change in tax law occurs that would reasonably be expected to result
in specified adverse tax consequences.                          

Philip Morris may terminate the Nabisco Holdings merger agreement if:           

(6) the Nabisco Holdings Board fails to recommend the Nabisco Holdings  
      merger, withdraws or modifies in a manner adverse to Philip Morris its

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        approval or recommendation of the Nabisco Holdings merger or approves or
    recommends a superior proposal relating to an acquisition of Nabisco
Holdings;                                                       

   (7) Nabisco Holdings enters into or announces its intention to enter into a
       definitive agreement with respect to a superior proposal relating to an
acquisition of Nabisco Holdings; or                             

  (8) Nabisco Holdings fails to perform in any material respect any material
     obligation under the Nabisco Holdings merger agreement, or materially
breaches its representations and warranties.                    

Nabisco Holdings may terminate the Nabisco Holdings merger agreement if:        

   (9) its Board authorizes Nabisco Holdings to enter into a written agreement
        concerning a superior proposal with respect to Nabisco Holdings, so long
 as Nabisco Holdings has complied with the non-solicitation, board
     recommendation, notice, negotiation and termination fee provisions of
      the Nabisco Holdings merger agreement and Philip Morris has not made a
      definitive, binding offer that is at least as favorable to the Nabisco
Holdings stockholders as the superior proposal; or              

(10) Philip Morris fails to perform in any material respect any material
    obligation under the Nabisco Holdings merger agreement or materially
breaches its representations and warranties.                    

TERMINATION FEES AND EXPENSE REIMBURSEMENT (SEE PAGE II-7)                      

Nabisco Holdings must pay Philip Morris a termination fee of $445 million if:   

- the Nabisco Holdings merger agreement terminates as described in items
(6), (7) or (9) above;                                              

- the Nabisco Holdings merger agreement terminates as described in item 
(8) above, if at the time of termination a third party has made an  
   acquisition proposal relating to an acquisition of Nabisco Holdings and
within nine months after termination of the Nabisco Holdings merger 
      agreement, Nabisco Holdings enters into a definitive agreement relating to
any acquisition proposal or such a transaction is completed; or     

- the Nabisco Holdings merger agreement terminates as described in items
    (3) or (4) above and prior to the NGH stockholder meeting, a third party
or Nabisco Holdings has publicly announced an acquisition proposal  
  relating to the acquisition of Nabisco Holdings and within nine months
after termination of the Nabisco Holdings merger agreement, Nabisco 
   Holdings enters into a definitive agreement relating to any acquisition
proposal or such a transaction is completed.                        

Nabisco Holdings must pay Philip Morris up to $30 million for Philip Morris's   
transaction-related expenses if:                                                

- the Nabisco Holdings merger agreement terminates as described in item 
(8) above, if at the time of termination, a third party has made an 
acquisition proposal for Nabisco Holdings; or                       

- the Nabisco Holdings merger agreement terminates as described in item 
(3) above.                                                          

The expense reimbursement payment would reduce the $445 million payment if it   
becomes payable.                                                                

Philip Morris must pay Nabisco Holdings up to $30 million for Nabisco Holdings' 
transaction-related expenses if the Nabisco Holdings merger                     

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agreement terminates as described in item (10) above.                           

APPRAISAL RIGHTS                                                                

NGH stockholders do not have any appraisal rights in connection with the Nabisco
Sale.                                                                           

ACQUISITION OF NGH BY RJR                                                       

THE NGH MERGER AGREEMENT IS ATTACHED AS ANNEX C TO THIS PROXY STATEMENT. WE     
ENCOURAGE YOU TO READ THE NGH MERGER AGREEMENT AS IT IS THE LEGAL DOCUMENT THAT 
GOVERNS THE ACQUISITION OF NGH.                                                 

CONSIDERATION                                                                   

In the NGH merger, NGH stockholders will receive $30 in exchange for each share 
of NGH common stock.                                                            

NGH STOCKHOLDER VOTE REQUIRED TO APPROVE THE NGH MERGER                         

The NGH merger requires approval by holders of a majority of the outstanding    
shares of NGH common stock.                                                     

REGULATORY APPROVALS                                                            

The NGH merger cannot be completed until the applicable waiting period under the
Hart-Scott-Rodino Act has expired or been terminated.                           

NGH MERGER CONDITIONED ON NABISCO SALE                                          

The NGH merger is conditioned on completion of the Nabisco Sale or a comparable 
acquisition transaction involving Nabisco Holdings. If no such transaction      
occurs, NGH and RJR will not be obligated to, and will not, proceed with the NGH
merger.                                                                         

OTHER CONDITIONS TO THE NGH MERGER (SEE PAGE III-5)                             

The obligation of NGH and RJR to complete the NGH merger depends upon meeting a 
number of conditions, including the following:                                  

- completion of the Nabisco Holdings merger, or a comparable acquisition
transaction, as discussed above;                                    

- approval by the stockholders of NGH;                                  

- no law, court order, verdict or injunction shall (1) prohibit the NGH 
      merger or (2) cause completion of the NGH merger to constitute a breach of
the fiduciary duties of the Board of Directors of either party;     

- expiration or termination of the Hart-Scott-Rodino Act waiting period;

  - accuracy as of the closing of the representations and warranties made by
    the other party to the extent specified in the NGH merger agreement; and

    - performance in all material respects by the other party of the obligations
required to be performed at or prior to closing.                    

RJR's obligation to complete the NGH merger is subject to additional conditions,
including:                                                                      

    - NGH must have at least $11.728 billion (less transaction costs) in cash in
its bank accounts; and                                              

 - NGH must have complied with its covenant to require Nabisco Holdings to
pay its customary quarterly cash dividend prior to the time NGH's   
customary quarterly cash dividend is due.                           

TERMINATION OF THE NGH MERGER AGREEMENT (SEE PAGE III-6)                        

NGH and RJR may mutually agree at any time prior to the completion of the NGH   
merger to terminate the NGH merger agreement. In addition, either NGH or RJR may
terminate the NGH merger agreement if:                                          

  (1) the NGH merger has not been completed by April 30, 2001 (or such later
       date on which any agreement relating to an alternative Nabisco Holdings
merger shall terminate);                                        

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(2) there is a permanent legal prohibition to the completion of the NGH 
merger;                                                         

(3) NGH stockholders do not adopt the NGH merger agreement;             

    (4) the Nabisco Holdings merger agreement has been terminated for any reason
 other than acceptance by Nabisco Holdings of a superior proposal;

  (5) the information set forth in representation letters supporting the tax
 opinion of Davis Polk & Wardwell delivered in connection with the
transactions is not true in all material respects; or           

  (6) a change in tax law occurs that would reasonably be expected to result
in specified adverse tax consequences.                          

RJR may terminate the NGH merger agreement if:                                  

  (7) the NGH Board fails to recommend the NGH merger, withdraws or modifies
    in a manner adverse to RJR its approval or recommendation of the NGH
merger or approves or recommends a superior proposal;           

 (8) NGH enters into or announces its intention to enter into a definitive
agreement with respect to a superior proposal;                  

(9) NGH fails to perform in any material respect any material obligation
under the NGH merger agreement, or materially breaches its      
representations and warranties; or                              

    (10) a law, court order, verdict or injunction shall cause completion of the
      NGH merger to constitute a breach of the fiduciary duties of the Board
of Directors of RJR.                                            

NGH may terminate the NGH merger agreement if:                                  

    (11) its Board authorizes NGH to enter into a written agreement concerning a
       superior proposal with respect to NGH, so long as NGH has complied with
   the non-solicitation, board recommendation, notice, negotiation and
      termination fee provisions of the NGH merger agreement and RJR has not
     made a definitive, binding offer that is at least as favorable to the
NGH stockholders as the superior proposal;                      

 (12) RJR fails to perform in any material respect any material obligation
 under the NGH merger agreement, or materially breaches any of its
representations and warranties; or                              

    (13) a law, court order, verdict or injunction shall cause completion of the
      NGH merger to constitute a breach of the fiduciary duties of the Board
of Directors of NGH.                                            

TERMINATION FEES AND EXPENSE REIMBURSEMENT (SEE PAGE III-7)                     

NGH must pay RJR a termination fee of $300 million if:                          

  - the NGH merger agreement terminates as described in items (7), (8), (11)
or (13) above;                                                      

   - the NGH merger agreement terminates as described in item (9) above, if at
      the time of termination a third party has made an acquisition proposal and
 within nine months after termination of the NGH merger agreement, NGH
      enters into a definitive agreement relating to any acquisition proposal or
such a transaction is completed;                                    

- the NGH merger agreement terminates as described in item (3) above and
   prior to the NGH stockholder meeting, a third party or NGH has publicly
announced an                                                        

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    acquisition proposal and within nine months after termination of the NGH
    merger agreement, NGH enters into a definitive agreement relating to any
acquisition proposal or such a transaction is completed; or         

   - the NGH merger agreement terminates as described in item (4) above and at
    such time a third party has made an acquisition proposal with respect to
     NGH and within nine months after termination of the NGH merger agreement,
NGH enters into a definitive agreement relating to any acquisition  
proposal with respect to NGH or such a transaction is completed.    

NGH must pay RJR up to $30 million for RJR's transaction-related expenses if:   

   - the NGH merger agreement terminates as described in item (9) above, if at
   the time of termination, a third party has made an acquisition proposal
for NGH; or                                                         

- the NGH merger agreement terminates as described in item (3) above.   

The expense reimbursement payment would reduce the $300 million payment if it   
becomes payable.                                                                

RJR must pay NGH up to $30 million for NGH's transaction-related expenses if the
NGH merger agreement terminates as described in item (12) above.                

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NGH STOCKHOLDERS OF THE NGH    
MERGER (SEE PAGE III-9)                                                     

The receipt by an NGH stockholder of cash for NGH shares will be a taxable      
transaction for United States federal income tax purposes. An NGH stockholder   
generally will recognize gain or loss in an amount equal to the difference      
between the cash received by the stockholder and the stockholder's tax basis in 
the NGH shares surrendered in the NGH merger. That gain or loss will be a       
capital gain or loss if the NGH shares are held as a capital asset by the NGH   
stockholder.                                                                    

APPRAISAL RIGHTS (SEE PAGE III-10)                                              

Each NGH stockholder will be entitled to appraisal rights under Section 262 of  
the Delaware General Corporation Law in connection with the NGH merger so long  
as such stockholder does not vote its outstanding shares of NGH common stock in 
favor of adoption of the NGH merger agreement and so long as such stockholder   
takes all steps necessary to perfect such stockholder(1)s rights. Section 262 is
reprinted in its entirety as Annex F to this proxy statement.                   

Annex F should be reviewed carefully by anyone who wishes to exercise statutory 
appraisal rights or who wishes to preserve the right to do so, because failure  
to comply strictly with the procedures set forth in Annex F may result in the   
loss of appraisal rights.                                                       

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TRANSACTIONS OVERVIEW 

GENERAL                                                                         

 NGH's Board of Directors is using this proxy statement to solicit proxies
from the stockholders of NGH for use at the special meeting. At the special     
meeting, NGH stockholders will vote on two transactions:                        

   - the sale of NGH's 80.5% interest in Nabisco Holdings to Philip Morris for
$55 per Nabisco Holdings share; and                                 

   - the subsequent acquisition of NGH by RJR for $30 per share (collectively,
the "transactions").                                                

The NGH Board of Directors has approved, and recommends that NGH        
stockholders approve, the sale of all 213,250,000 shares of Class B common stock
of Nabisco Holdings currently owned by NGH (the "Nabisco Sale"). We are seeking 
approval from NGH stockholders for this transaction because it constitutes the  
disposition of substantially all of the assets of NGH. Although none of the     
executive officers or directors of NGH has entered into any voting agreement    
with respect to the transactions, all such executive officers and directors have
indicated their intention to vote their shares in favor of the transactions.    

   The proposed Nabisco Sale would occur pursuant to the Agreement and Plan of
Merger dated as of June 25, 2000 among Nabisco Holdings, Philip Morris and      
Strike Acquisition Corp., a wholly-owned subsidiary of Philip Morris (the       
"Nabisco Holdings merger agreement"). As more fully described in Chapter Two of 
this proxy statement, under this agreement all outstanding shares of Nabisco    
Holdings common stock--consisting of the Class A shares held by Nabisco         
Holdings' public stockholders and the Class B shares held by NGH--will at the   
completion of the Nabisco Holdings merger be converted into the right to receive
$55 per share in cash. This represents approximately $11.728 billion in gross   
proceeds to NGH from the sale of its Class B shares of Nabisco Holdings.        

If NGH stockholders approve the Nabisco Sale, NGH will act by written   
consent, as controlling stockholder of Nabisco Holdings, to adopt the Nabisco   
Holdings merger agreement. Since NGH holds 97.6% of the voting power of Nabisco 
Holdings, no approval by the Nabisco Holdings' public stockholders will be      
required. NGH's obligation to vote in favor of the Nabisco Holdings merger      
agreement, and against any competing proposals, is set forth in the NGH voting  
and indemnity agreement described in Chapter Two of this proxy statement.       

    After completion of the Nabisco Holdings merger, NGH will have approximately
$11.728 billion in proceeds from the Nabisco Sale and estimated net liabilities 
of approximately $450 million, before taking into account any potential tax     
benefits. As more fully described in Chapter Three of this proxy statement, the 
NGH Board of Directors has approved, and recommends that NGH stockholders       
approve, a second transaction in which NGH would then be acquired pursuant to an
Agreement and Plan of Merger dated as of June 25, 2000 among NGH, RJR and RJR   
Acquisition Corp., a wholly-owned subsidiary of RJR (the "NGH merger            
agreement"). As more fully described in Chapter Three of this proxy statement,  
under this agreement all outstanding shares of NGH common stock will at the     
completion of the NGH merger be converted into the right to receive $30 per     
share in cash. Based on 326,398,507 NGH shares outstanding as of August 31,     
2000, this represents approximately $9.8 billion payable for all shares of NGH, 
or approximately 86.9% of NGH's anticipated net assets of approximately         
$11.278 billion after the sale of its Nabisco Holdings shares.                  

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    Each of the Nabisco Sale and the NGH merger requires the affirmative vote of
a majority of the outstanding shares of NGH common stock. NGH stockholders will 
vote on each transaction separately. Completion of the Nabisco Sale is not      
conditioned on approval of the NGH merger. However, the NGH merger cannot and   
will not be completed unless the Nabisco Sale, or another comparable acquisition
transaction involving Nabisco Holdings, is completed. Failure by NGH            
stockholders to approve the Nabisco Sale means that the Nabisco Sale will not   
occur and, unless a comparable acquisition transaction relating to Nabisco      
Holdings is approved, NGH and RJR will not be obligated to, and will not,       
proceed with the NGH merger.                                                    

Chapter One of this proxy statement provides an overview of the         
transactions, including the background of and reasons for the transactions and  
the interests of officers and directors in the transactions. Chapter Two        
discusses the sale of the Nabisco Holdings shares pursuant to the Nabisco       
Holdings merger agreement. Chapter Three discusses the subsequent acquisition of
NGH pursuant to the NGH merger agreement.                                       

COMPANY INFORMATION AND THE 1999 RESTRUCTURING                                  

NGH is a holding company which owns 100% of the outstanding shares of   
Class B common stock of Nabisco Holdings, representing approximately 80.5% of   
the economic interest and 97.6% of the total voting power of Nabisco Holdings'  
outstanding common stock. Nabisco Holdings, through its operating subsidiaries, 
is one of the largest food companies in the world, and the largest manufacturer 
and marketer of cookies and crackers in the United States.                      

 Prior to the second quarter of 1999, NGH also owned 100% of R.J. Reynolds
Tobacco Holdings, Inc. ("RJR"), a holding company which owns R. J. Reynolds     
Tobacco Company ("Reynolds Tobacco"). During the second quarter of 1999, a      
series of reorganization transactions was completed, as a result of which NGH,  
Nabisco Holdings and its subsidiaries are no longer affiliated with RJR,        
Reynolds Tobacco and its subsidiaries. The principal transactions that affected 
NGH were the following:                                                         

- On May 12, 1999, RJR and Reynolds Tobacco completed the sale of their 
international tobacco business to Japan Tobacco Inc. for $8 billion,
including the assumption of approximately $200 million of net debt. 
     Proceeds from the sale were used to reduce debt and for general corporate
purposes.                                                           

  - On May 18, 1999, pursuant to an internal reorganization, RJR transferred
  all of the outstanding Class B common stock of Nabisco Holdings to its
parent, NGH, through a merger transaction (the "Nabisco Holdings    
Distribution").                                                     

- On June 14, 1999, NGH distributed all of the outstanding shares of RJR
     common stock to NGH common stockholders of record as of May 27, 1999 (the
"RJR Spinoff").                                                     

 In connection with the 1999 restructuring, NGH, RJR, Nabisco Holdings and
Reynolds Tobacco entered into a Tax Sharing Agreement dated as of June 14, 1999.
The Tax Sharing Agreement contains a number of covenants that are intended to   
protect the tax-free nature of the RJR Spinoff and the Nabisco Holdings         
Distribution, including a covenant that neither NGH nor Nabisco Holdings will   
merge with any other person before June 14, 2001, unless the companies obtain an
opinion of Davis Polk & Wardwell acceptable to RJR and Reynolds Tobacco, or a   
ruling from the IRS, in either case to the effect that the proposed transactions
will not cause the RJR Spinoff to be taxable to NGH or the Nabisco Holdings     
Distribution to be taxable to RJR or NGH.                                       

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BACKGROUND OF THE TRANSACTIONS                                                  

  On February 4, 2000, Carl C. Icahn and certain of his affiliates ("Icahn")
filed a statement of beneficial ownership on Schedule 13D disclosing that since 
December 3, 1999 Icahn had acquired 6.7% of NGH's shares "because [Icahn]       
believe[d] that they are undervalued compared to their intrinsic worth". The    
statement further indicated that Icahn "may, from time to time, communicate with
[NGH] concerning its affairs, including, possibly, exploring methods to enhance 
stockholder value". On March 1, 2000, Icahn filed an amendment to the           
Schedule 13D, indicating that Icahn's ownership of NGH had increased to 7.8%.   

On March 10, 2000, Icahn & Co., Inc., an Icahn affiliate, sent a letter 
notifying NGH of its intention to propose nominations of persons for election as
directors at NGH's 2000 Annual Meeting of Stockholders. By this time, Mr. Icahn 
had also increased his beneficial ownership of NGH to 8.9%.                     

On March 13, 2000, in response to the risk that Mr. Icahn might acquire 
control of NGH without paying a fair price, the Board of Directors of NGH       
adopted a stockholder rights plan, which would be triggered if any person       
acquired 10% or more of NGH's stock. The rights plan provides that if any person
becomes the beneficial owner of 10% or more of NGH's stock, all stockholders,   
other than such acquiring person, will be entitled to receive, for each right   
held, upon payment of the exercise price of $50, NGH common stock (or other     
securities) equal in value to twice such amount.                                

   On March 30, 2000, Mr. Icahn sent a letter to the Board of Directors of NGH
stating that he was prepared to commence a tender offer for 100 million shares  
of NGH's common stock at $13.00 per share, subject to certain conditions,       
including that the Board of Directors (1) eliminate NGH's stockholder rights    
plan, (2) approve his purchase of shares in the proposed tender offer for       
purposes of Section 203 of the Delaware General Corporation Law and (3) change  
the 2000 Annual Meeting so that he would be able to vote the shares he purchased
in the proposed tender offer at that meeting. By March 30, 2000, Mr. Icahn had  
further increased his beneficial ownership of NGH to 9.6%. Consummation of the  
proposed offer would have resulted in Icahn owning over 131 million shares in   
total, or approximately 40% of NGH.                                             

   On the same day, NGH issued a press release stating that the proposal would
be reviewed by the Board of Directors and urging that NGH stockholders take no  
action pending further announcement from the Board.                             

   On April 3, 2000, the Board of Directors held a special meeting to consider
the proposal set forth in Mr. Icahn's letter. At that meeting, the Board of     
Directors unanimously determined that the price offered in Mr. Icahn's letter   
was inadequate and that his proposal was not in the best interests of NGH's     
stockholders. It was the consensus of the Board that, in the absence of         
Mr. Icahn's proposal and threatened proxy contest, NGH and its stockholders     
would be best served by continuing with Nabisco Holdings' strategic plan and    
staying the course as an independent public company while Nabisco Holdings'     
business and financial results continued to improve. However, the Board         
concluded, based on the advice of its financial and legal advisors and proxy    
solicitor, that continuing with this strategy in the face of Mr. Icahn's actions
presented a substantial risk that Icahn could gain control of NGH without       
providing stockholders adequate value, and thus that the Board should explore   
all practicable alternatives. As a result, NGH issued a press release announcing
that its Board of Directors had directed its management to explore all          
alternatives to maximize stockholder value, including the sale of NGH or the    
sale of NGH's 80.5% ownership interest in Nabisco Holdings. NGH also announced  
that it had engaged UBS Warburg LLC ("UBS Warburg") and Morgan Stanley & Co.    
Incorporated ("Morgan Stanley") as financial advisors.                          

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   The following day, Mr. Icahn sent a letter to the Board of Directors of NGH
indicating that, subject to due diligence by himself and his banking            
institutions for a three-week period, he would be willing to pay $16 per share  
for all outstanding NGH shares in a transaction to be completed on a "friendly" 
basis.                                                                          

 NGH responded on April 5, 2000 with a letter to Mr. Icahn inviting him to
join the process then being implemented by NGH's financial advisors, aimed at   
assuring that NGH stockholders received the greatest value possible for their   
shares. NGH encouraged Mr. Icahn to contact NGH's financial advisors to obtain a
confidentiality agreement and a schedule for submission of bids. NGH noted that 
the Board of Directors would consider all bona fide proposals at the appropriate
time.                                                                           

   On April 10, 2000, Icahn executed a confidentiality agreement with NGH. The
agreement contained a limited standstill provision, under which Icahn agreed to 
refrain from making an unsolicited offer for NGH or waging a proxy contest until
the earlier of July 15, 2000 and the date a definitive agreement is executed    
with any person for the sale of NGH or Nabisco Holdings.                        

Beginning the first week of April 2000, management and the financial and
legal advisors of NGH conducted an auction process for the sale of NGH and      
Nabisco Holdings. The financial and legal advisors contacted numerous potential 
bidders. On April 6, 2000, confidentiality agreements were sent to a number of  
these parties, and 15 such agreements in total were signed over the following   
weeks. In particular, confidentiality agreements were signed with Philip Morris 
on April 19, 2000 and with RJR on May 5, 2000. After the confidentiality        
agreements were signed, informational packages were sent to potential bidders,  
or in the case of Mr. Icahn, to his financing source. Starting on April 12,     
2000, NGH's legal and financial advisors began meeting with the potential       
bidders who had signed confidentiality agreements to discuss due diligence      
issues. Numerous such meetings were held during April and May. During this same 
time period, management and the financial and legal advisors of NGH also        
explored the alternative of converting NGH to a registered investment company   
following the sale of its 80.5% interest in Nabisco Holdings. As described      
below, the Board subsequently determined that the sale of NGH to RJR at $30 per 
share would provide greater value to the stockholders than conversion of NGH to 
an investment company.                                                          

  Representatives of NGH contacted several parties, including RJR, regarding
their possible interest in the acquisition of NGH after the sale of Nabisco     
Holdings. NGH's legal advisors met with the legal advisors of one party, other  
than RJR, to discuss the prior restructuring transactions and how an acquisition
of NGH would be structured. A meeting between senior management of NGH and that 
party followed. The party later reported it would not be submitting a bid in the
auction process, but would continue to evaluate making a proposal once a        
definitive agreement for the sale of Nabisco Holdings had been signed. In       
addition, because of RJR's status as a party to the Tax Sharing Agreement       
described above and as a member of the NGH consolidated tax group prior to the  
RJR Spinoff, management and legal advisors of NGH and RJR had a number of       
conversations about the impact of the proposed transactions on the tax treatment
of the 1999 restructuring.                                                      

   On May 11, 2000, the financial advisors received preliminary indications of
interest from a number of bidders. Three parties, including Philip Morris,      
submitted bids for Nabisco Holdings. One party submitted a bid for the          
non-biscuit portion of Nabisco Holdings' assets. Icahn submitted a bid for NGH; 
RJR submitted a bid for NGH after the sale of Nabisco Holdings. These parties   
were invited to pursue a further due diligence investigation of NGH and Nabisco 
Holdings through management presentations and visits to a data room, each of    
which began on May 22 and continued for several weeks thereafter. After May 11, 
2000, one additional party presented a preliminary proposal to acquire Nabisco  
Holdings, and that party thereafter was permitted to participate in the due     
diligence process.                                                              

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On June 7, 2000, draft merger agreements and a draft NGH voting and     
indemnity agreement were sent to the bidders. However, NGH did not enter into   
negotiations with any of the seven parties who had submitted preliminary        
indications of interest with respect to such indications at that time. Of those 
seven parties, three (for reasons that were not disclosed to NGH) did not submit
final bids. Four bidders submitted final bids at the close of business on       
June 21, 2000.                                                                  

   In its June 21st bid, Philip Morris offered to purchase 100% of the capital
stock of Nabisco Holdings for $54 per share. On June 22, 2000, Steven F.        
Goldstone, Chairman of NGH and Nabisco Holdings, met with Geoffrey Bible, Chief 
Executive Officer and Chairman of Philip Morris, and Louis Camilleri, Chief     
Financial Officer of Philip Morris, and requested that Philip Morris increase   
its bid and assume NGH and Nabisco Holdings transaction costs. After further    
negotiations, Mr. Bible stated that Philip Morris would be prepared to increase 
its bid to $55 per share and pay up to $50 million in transaction-related       
expenses if the parties could come to agreement quickly on the other terms      
outlined in Philip Morris's June 21st proposal. In response to Philip Morris's  
request for a period of exclusive negotiations, Mr. Goldstone sent a letter to  
Philip Morris committing not to negotiate with anyone else for the sale of      
Nabisco Holdings until the Board had either accepted or rejected Philip Morris's
offer.                                                                          

Another all-cash bid for Nabisco Holdings was submitted on June 21st by 
another party at a lower price than the Philip Morris bid. On June 23rd, the    
financial advisors for this other party contacted Nabisco Holdings' financial   
advisors and indicated that they were in the process of putting together a      
higher bid. Nabisco Holdings' financial advisors responded that, in view of the 
late stage of the auction process, any enhanced bid should be submitted as soon 
as possible. No such bid was ever submitted.                                    

  In its June 21st bid, RJR offered to purchase 100% of the capital stock of
NGH, after the sale of Nabisco Holdings had been completed, for a specified     
percentage of the net after-tax proceeds received by NGH from such sale, which  
percentage varied depending on the sale price of Nabisco Holdings. Based on a   
$55 per share price for Nabisco Holdings and RJR's assumptions as to NGH's net  
liabilities, this bid implied a per share price for NGH of $28.22. On June 22,  
2000, a series of discussions occurred between the legal and financial advisors 
for NGH and RJR regarding certain of the terms and conditions contained in RJR's
bid, in particular, the assumptions regarding and the calculation of NGH's net  
liabilities underlying RJR's bid. Following these discussions, Mr. Goldstone and
Andrew Schindler, Chairman and Chief Executive Officer of RJR, had several      
conversations regarding RJR's offer. During the course of those conversations,  
Mr. Goldstone advised Mr. Schindler that RJR needed to improve its offer, that  
RJR was in a competitive situation, and that RJR's bid was insufficient. In a   
subsequent conversation, Mr. Schindler agreed to improve RJR's offer to more    
than $29 per share; but Mr. Goldstone responded that the improved offer was     
still insufficient for him to recommend to the NGH Board and that RJR's bid     
would need to be at least $30 per share. Mr. Goldstone also advised             
Mr. Schindler that he should assume that NGH and Nabisco Holdings would be      
accepting an offer for Nabisco Holdings at $55 per share. At the conclusion of  
these discussions, Mr. Schindler agreed to increase RJR's bid to $30 per NGH    
share.                                                                          

 In his June 21st bid, Mr. Icahn offered to acquire NGH, assuming no prior
sale of Nabisco Holdings, for a combination of $19 in cash and $9 face value in 
two-year 14% notes for each NGH share. The bid contemplated increasing the      
leverage at Nabisco Holdings by approximately $3.5 billion in order to finance a
substantial portion of the NGH acquisition. Financing for the transactions was  
not committed and was subject to further due diligence by Mr. Icahn's lenders.  
On June 22, 2000, Mr. Goldstone telephoned Mr. Icahn to request that he consider
raising his bid for NGH. Later that day, Mr. Icahn sent a letter to             
Mr. Goldstone increasing his bid to $19 in cash and $12 face value in two-year  
14% notes for each NGH share. Alternatively, Mr. Icahn offered to acquire NGH   
after the                                                                       

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sale of Nabisco Holdings for 88% of the cash proceeds to NGH from such sale, net
of taxes and other liabilities. This offer was conditioned on obtaining         
financing, which Mr. Icahn estimated would take three weeks.                    

On June 23, 2000, the NGH Board and Nabisco Holdings Board held a joint 
meeting to evaluate the bids. The Boards received a presentation from UBS       
Warburg and Morgan Stanley regarding the financial aspects of the proposals, and
from Davis Polk & Wardwell regarding the legal aspects of the proposals. At the 
conclusion of the meeting, the Boards instructed management, along with the     
financial and legal advisors, to pursue negotiations with Philip Morris for the 
acquisition of Nabisco Holdings and with RJR for the acquisition of NGH, subject
to final approval by the Boards.                                                

 Management and the legal advisors for the parties negotiated the terms of
the definitive agreements, including the amount of the "break-up" fee and       
expense reimbursement, the conditions to closing, the termination provisions and
the "fiduciary out" provisions, in the following days. Davis Polk & Wardwell    
delivered the tax opinion required under the Tax Sharing Agreement with respect 
to the proposed transactions, and RJR confirmed that such opinion was acceptable
to RJR for purposes of these transactions.                                      

On June 25, 2000, the NGH Board and Nabisco Holdings Board held a joint 
meeting to give final consideration to the transactions. Davis Polk & Wardwell  
made a presentation regarding the terms and conditions of the Nabisco Holdings  
merger agreement with Philip Morris, the related NGH voting and indemnity       
agreement and the NGH merger agreement with RJR. Each of UBS Warburg and Morgan 
Stanley delivered its oral opinion to the Nabisco Holdings and NGH Boards, which
was subsequently confirmed in writing, that as of such date and based upon and  
subject to the matters stated in the opinion, the consideration to be received  
in the Nabisco Holdings merger is fair from a financial point of view to Nabisco
Holdings stockholders, including NGH. The NGH Board did not request, and did not
receive, a fairness opinion from its financial advisors relating to the NGH     
merger. The NGH Board believed it could conclude on its own that the RJR        
acquisition of NGH at $30 per share would provide greater value than the        
alternative uses for the cash proceeds from the Nabisco Sale, specifically the  
investment of such proceeds and conversion of NGH to a registered investment    
company. The NGH Board's conclusion was based, in part, on calculations prepared
by NGH's financial advisors regarding the range of likely discounts to net asset
value at which NGH stock would trade if NGH were converted to a registered      
investment company, which range was based on a review of the historical trading 
discount of NGH's stock relative to its underlying asset value. By the          
affirmative vote of all directors present, the Nabisco Holdings Board then      
approved the Nabisco Holdings merger agreement and the NGH voting and indemnity 
agreement, and the NGH Board approved the NGH merger agreement, the NGH voting  
and indemnity agreement and the sale of the Nabisco Holdings shares by NGH. NGH 
issued a press release that afternoon announcing the transactions.              

NGH'S REASONS FOR THE TRANSACTIONS; RECOMMENDATION OF THE NGH BOARD OF DIRECTORS

   At its June 25, 2000 meeting, members of the NGH Board of Directors present
at the meeting unanimously determined that the NGH merger and the Nabisco Sale  
are each fair to and in the best interests of NGH and its stockholders, and     
approved the NGH merger agreement, the NGH voting and indemnity agreement and   
the Nabisco Sale. Accordingly, the Board of Directors of NGH recommends that    
NGH's stockholders vote "FOR" approval of (1) the Nabisco Sale and (2) the NGH  
merger. All but one member of the NGH Board of Directors attended the meeting.  
The absent member was unavailable.                                              

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   In the course of reaching its decision to approve the Nabisco Sale, the NGH
Board of Directors consulted with NGH's management, as well as its financial and
legal advisors, and considered the following factors:                           

(1) the broad scope of the auction for NGH and Nabisco Holdings 
    conducted by management and the financial and legal advisors, which involved
contacting all parties that were likely to have a potential interest and
providing substantial due diligence information to bidders;             

      (2) the fact that the merger consideration of $55 per Nabisco Holdings
   share represented a premium of approximately 101% over the closing price of
   Nabisco Holdings stock on March 29, 2000, the day prior to the announcement
  by Mr. Ichan of his proposal to acquire 100 million NGH shares for $13 per
share;                                                                  

       (3) the opinions of UBS Warburg and Morgan Stanley that, as of June 25,
  2000 and based upon and subject to the matters stated in the opinions, the
   consideration to be received in the Nabisco Holdings merger is fair, from a
  financial point of view, to Nabisco Holdings' stockholders, including NGH;

       (4) the fact that the Nabisco Holdings merger agreement did not include
    a financing condition and the Board's conclusion, based on consultation with
   its legal and financial advisors and information provided by Philip Morris,
that Philip Morris could reasonably finance the purchase price for the  
Nabisco Holdings merger;                                                

      (5) the lack of any required approval by Philip Morris stockholders to
complete the Nabisco Holdings merger;                                   

       (6) the opinion of Davis Polk & Wardwell that the proposed transactions
 will not cause the Nabisco Holdings Distribution or the RJR Spinoff to be
taxable, which opinion was required under the Tax Sharing Agreement; and

     (7) the terms and conditions of the Nabisco Holdings merger agreement
 and the NGH voting and indemnity agreement, including the provisions that
   permit Nabisco Holdings or NGH to furnish information to and participate in
   discussions or negotiations with a third party that has made an unsolicited
    acquisition proposal if the applicable Board of Directors determines in good
 faith that such an acquisition proposal is likely to result in a superior
proposal (as described under "Chapter Two--Nabisco Holdings Merger      
    Agreement--Covenants--No Solicitation by Nabisco Holdings") and to terminate
   the Nabisco Holdings merger agreement to accept such superior proposal upon
    prior notice to, and further negotiations with, Philip Morris and payment of
a $445 million termination fee.                                         

 In the course of reaching its decision to approve the NGH merger, the NGH
Board of Directors consulted with NGH's management, as well as its financial and
legal advisors, and considered the following factors:                           

(1) the broad scope of the auction for NGH and Nabisco Holdings 
    conducted by management and the financial and legal advisors, which involved
contacting all parties that were likely to have a potential interest and
providing substantial due diligence information to bidders;             

(2) the fact that the merger consideration of $30 per NGH share 
 represented a premium of approximately 222% over the closing price of NGH
  stock on March 29, 2000, the day prior to the announcement by Mr. Icahn of
his proposal to acquire 100 million NGH shares for $13 per share;       

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       (3) the historical discount between the trading price of NGH shares and
  the value of NGH's 80.5% interest in Nabisco Holdings based on the trading
price for the Class A common stock of Nabisco Holdings, which discount  
reached a high of 57.9%, a low of 21.3% and averaged 39.6% since the RJR
Spinoff on June 14, 1999;                                               

      (4) the fact that $30 per NGH share represents a 16.3% discount to the
    $55 per share price being paid in the Nabisco Holdings merger, substantially
less than the historical trading discount;*                             

     (5) the Board's belief that, while the price offered by Mr. Icahn for
NGH (after the sale of Nabisco Holdings) was comparable to RJR's $30 per
share price after taking into account net liabilities, Mr. Icahn's offer
 presented greater risk of non-completion because (x) the offer would have
involved negotiation with Mr. Icahn about the amount of NGH's net       
liabilities upon which his offer was based (which could have led to a   
lengthy dispute over what the actual purchase price would be and the    
  possibility that the net liabilities as calculated by Mr. Icahn would have
   resulted in a purchase price of less than $30 per share), (y) the offer did
 not address the terms and conditions upon which Mr. Icahn would have been
willing to sign a definitive merger agreement, in contrast to the RJR   
proposal and (z) statements made by RJR to NGH representatives indicated
   that there was a substantial risk that any transaction with Mr. Icahn could
 give rise to a dispute with RJR under the Tax Sharing Agreement (since no
  agreement was reached with Mr. Icahn, NGH did not request or receive a tax
opinion regarding any transaction with Mr. Icahn);                      

       (6) the opinion of Davis Polk & Wardwell that the proposed transactions
 will not cause the Nabisco Holdings Distribution or the RJR Spinoff to be
taxable, which opinion was required under the Tax Sharing Agreement;    

       (7) the Board's consideration of alternative uses for the cash proceeds
 from the Nabisco Sale, specifically, the investment of such cash proceeds
    and conversion of NGH to a registered investment company, and its conclusion
 (based, in part, upon the views of NGH's financial advisors regarding the
  likely range of discounts to net asset value at which the stock of such an
    investment company would trade--which, based on the prior trading history of
   NGH stock, ranged from a high of 58% to a low of 21% and a mean of 40%--and
the Board's knowledge of the prices at which NGH stock had been trading,
   which reflected a discount to its underlying asset value resulting at least
    in part from the perceived risks of tobacco litigation) that the sale of NGH
at $30 per share provided greater value to NGH stockholders than such   
alternative;                                                            

       (8) the fact that distributing the cash proceeds of the Nabisco Sale to
NGH stockholders would have entailed compliance with the dissolution and
   liquidation provisions of the Delaware General Corporation Law, which could
  have resulted in a substantial delay of any distribution and the potential
  restriction in the transferability of NGH shares pending the completion of
the dissolution procedures; and                                         

------------------------                                                        
*   To calculate the relative discount of an NGH share to a Nabisco Holdings    
share, you need to take into account NGH's 80.5% ownership interest in  
   Nabisco Holdings and the number of shares outstanding of both companies. If
  there were no discount, the price of an NGH share would equal 65.2% of the
  price of a Nabisco Holdings share. As such, $30 per NGH share represents a
16.3% discount to $55 per Nabisco Holdings share because:               

($55) X (0.652) = $35.86                            
$30.00 versus $35.86 . 16.3% discount               

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       (9) the terms and conditions of the NGH merger agreement, including the
provisions that permit NGH to furnish information to and participate in 
   discussions or negotiations with a third party that has made an unsolicited
   acquisition proposal if the NGH Board of Directors determines in good faith
 that such acquisition proposal is likely to result in a superior proposal
(as described under "Chapter Three--NGH Merger Agreement--Covenants--No 
 Solicitation by NGH") and to terminate the NGH merger agreement to accept
   such superior proposal upon prior notice to, and further negotiations with,
RJR and payment of a $300 million termination fee.                      

In view of the wide variety of factors considered in connection with its
evaluation of the Nabisco Sale and the NGH merger and the complexity of these   
matters, the NGH Board of Directors did not find it useful to and did not       
attempt to quantify, rank or otherwise assign relative weights to the factors   
considered in connection with each recommendation. The NGH Board relied on the  
experience and expertise of UBS Warburg and Morgan Stanley, its financial       
advisors, for quantitative analysis of the financial terms of the Nabisco Sale  
(see "Chapter Two--Opinions of Financial Advisors") and the NGH merger. In      
addition, the NGH Board did not undertake to make any specific determination as 
to whether any particular factor was essential to the NGH Board's ultimate      
determination, but rather the NGH Board conducted an overall analysis of the    
factors described above, including thorough discussions with and questioning of 
NGH's management and legal and financial advisors. In considering the factors   
described above, individual members of the NGH Board of Directors may have given
different weight to different factors.                                          

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INTERESTS OF OFFICERS AND DIRECTORS IN THE TRANSACTIONS 

In considering the recommendations of the NGH Board with respect to the 
transactions, you should be aware that the officers and directors of NGH have   
interests in the transactions that are different from, or in addition to, their 
interests as stockholders of NGH generally. The NGH Board was aware of these    
interests and considered them, among other matters, in approving the Nabisco    
Sale, the NGH merger agreement, the NGH voting and indemnity agreement and the  
transactions contemplated by these agreements.                                  

STOCK OPTIONS, RESTRICTED STOCK AND RESTRICTED STOCK UNITS                      

NGH's and Nabisco Holdings' Long-Term Incentive Plans (each, an "LTIP") 
contain change of control provisions that will give rise to accelerated vesting 
of outstanding unvested options as a result of the transactions. In addition,   
shares of restricted stock, restricted stock units and certain contingent       
performance shares outstanding under each LTIP will also be subject to          
accelerated vesting upon stockholder approval of the transactions. Any NGH or   
Nabisco Holdings option held by a current or former employee or director that is
not exercised before completion of the transactions will be cancelled in        
exchange for a cash payment. Outstanding NGH options held by individuals        
actively employed by the predecessor to NGH or its subsidiaries on October 11,  
1995 and NGH options granted thereafter and prior to January 15, 1999, will be  
cancelled in exchange for a cash payment equal to the value of the NGH options  
using a specified "Black-Scholes Methodology" (see Note 4 to the following      
table). All other NGH options and all Nabisco Holdings options will be cancelled
in exchange for a cash payment equal to the difference between the option       
exercise price and $30.00 (for NGH options) or $55.00 (for Nabisco Holdings     
options), respectively (in each case, the "Option Spread").                     

 The following table shows the number of unvested NGH and Nabisco Holdings
options held by NGH's and Nabisco Holdings' executive officers and directors    
whose vesting will accelerate as a result of the transactions, the number of    
already vested options and the estimated value of all NGH options and Nabisco   
Holdings options held by such persons.                                          

                                                        [Enlarge/Download Table]

                                                                               NUMBER OF                                  
                                                                               UNVESTED                                   
                            NUMBER OF                                           NABISCO                      AGGREGATE    
                          UNVESTED NGH                                         HOLDINGS        ALREADY     OPTION SPREAD  
                          OPTIONS THAT                                       OPTIONS THAT      VESTED       VALUE OF ALL  
                         ACCELERATE AS A                  AGGREGATE VALUE    ACCELERATE AS     NABISCO        NABISCO     
                          RESULT OF THE   ALREADY VESTED    OF ALL NGH       RESULT OF THE    HOLDINGS        HOLDINGS    
                         TRANSACTIONS(1)   NGH OPTIONS      OPTIONS(2)      TRANSACTIONS(1)    OPTIONS       OPTIONS(3)   
         NAME                  (#)             (#)              ($)               (#)            (#)            ($)       
-----------------------  ---------------  --------------  ---------------   ---------------  -----------  ----------------
                                                                                                                          
Steven F. Goldstone....             0       3,021,323       $54,721,010(4)            0        460,000      $ 7,648,700   
  Chairman of NGH and                                                                                                     
  Nabisco Holdings and                                                                                                    
  Former Chief                                                                                                            
  Executive Officer of                                                                                                    
  NGH                                                                                                                     
James M. Kilts.........     1,557,298         421,813        34,405,391(5)      559,100        405,900       11,992,405   
  President and Chief                                                                                                     
  Executive Officer of                                                                                                    
  Nabisco Holdings and                                                                                                    
  NGH                                                                                                                     
Richard H. Lenny.......       454,000          66,000         8,675,000         124,100         75,900        2,690,570   
  President, Nabisco                                                                                                      
  Biscuit Company                                                                                                         

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                                                        [Enlarge/Download Table]

                                                                               NUMBER OF                                  
                                                                               UNVESTED                                   
                            NUMBER OF                                           NABISCO                      AGGREGATE    
                          UNVESTED NGH                                         HOLDINGS        ALREADY     OPTION SPREAD  
                          OPTIONS THAT                                       OPTIONS THAT      VESTED       VALUE OF ALL  
                         ACCELERATE AS A                  AGGREGATE VALUE    ACCELERATE AS     NABISCO        NABISCO     
                          RESULT OF THE   ALREADY VESTED    OF ALL NGH       RESULT OF THE    HOLDINGS        HOLDINGS    
                         TRANSACTIONS(1)   NGH OPTIONS      OPTIONS(2)      TRANSACTIONS(1)    OPTIONS       OPTIONS(3)   
         NAME                  (#)             (#)              ($)               (#)            (#)            ($)       
-----------------------  ---------------  --------------  ---------------   ---------------  -----------  ----------------
                                                                                                                          
Douglas R. Conant......       392,250          57,750         7,485,938          88,950        275,902        6,840,288   
  President, Nabisco                                                                                                      
  Foods Company                                                                                                           
James E. Healey........       332,500          49,500         6,338,750          79,350        106,150        2,647,320   
  Executive Vice                                                                                                          
  President & Chief                                                                                                       
  Financial Officer of                                                                                                    
  Nabisco Holdings and                                                                                                    
  Senior Vice President                                                                                                   
  and Chief Financial                                                                                                     
  Officer of NGH                                                                                                          
C. Michael Sayeau......       285,750          41,250         5,463,750          77,850        280,868        7,600,969   
  Executive Vice                                                                                                          
  President & Chief                                                                                                       
  Personnel Officer of                                                                                                    
  Nabisco Holdings                                                                                                        
James A. Kirkman III...       237,000          33,000         4,546,875          64,600        224,997        5,771,453   
  Executive Vice                                                                                                          
  President, Genera                                                                                                       
  Counsel and Secretary                                                                                                   
  of Nabisco Holdings                                                                                                     
  and Senior Vice                                                                                                         
  President, General                                                                                                      
  Counsel and Secretary                                                                                                   
  of NGH                                                                                                                  
David B. Rickard.......             0         388,993         6,741,985(4)            0              0                0   
  Former Senior Vice                                                                                                      
  President & Chief                                                                                                       
  Financial Officer of                                                                                                    
  NGH                                                                                                                     
William L. Rosoff......             0         233,480         4,025,195(4)            0              0                0   
  Former Senior Vice                                                                                                      
  President & General                                                                                                     
  Counsel of NGH                                                                                                          
All other executive                                                                                                       
  officers as a                                                                                                           
  group................     1,526,250         222,750        29,157,702         461,451        811,018       23,255,039   
Non-Employee directors                                                                                                    
  as a group...........        31,503         132,198         1,704,529           9,330         33,870          910,453   

------------------------------                                                  

(1) This represents the number estimated to be unvested as of August 31, 2000.  

(2) The estimated value of NGH options shown in this column assumes a value of  
NGH common stock of $30 per share and, except as noted for              
    Messrs. Goldstone, Kilts, Rickard and Rosoff, is based on the Option Spread.

(3) The estimated Option Spread value shown in this column assumes a value of   
Nabisco Holdings common stock of $55 per share.                         

(4) Following completion of the NGH merger, the NGH options held by             
    Messrs. Goldstone, Rickard and Rosoff will be cancelled in exchange for cash
payments equal to the value of the NGH options under a Black-Scholes    
methodology using the following assumptions: a value of $30 per share; a
term equal to the remaining portion of the original option term; a      

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  risk-free factor equal to the average yield on zero-coupon U.S. government
 issues; a maturity coincident with the expiration of the remaining option
    term; a dividend yield of $.49 per year as a percent of $30 per share; and a
volatility based on the daily share closing prices from June 15, 1999   
  through completion of the NGH merger. The values noted are estimates based
  on these assumptions, and assume a closing date of November 15, 2000 and a
    stable market price of $27.00 through the closing date. Actual valuations of
these options may vary from the above numbers.                          

(5) The value shown for Mr. Kilts includes the Option Spread value of 1,590,000 
NGH options and, based on the assumptions in Note 4 above, the estimated
Black-Scholes value of 389,111 NGH options.                             

   The following table shows the number of NGH and Nabisco Holdings restricted
stock units held by NGH's and Nabisco Holdings' officers and directors and the  
estimated value of such shares and units (based on the applicable transaction   
price). These shares and units will vest upon stockholder approval of the       
transactions.                                                                   

                                                        [Enlarge/Download Table]

                                                             NUMBER (AND VALUE)  NUMBER (AND VALUE) 
                                                                   OF NGH        OF NABISCO HOLDINGS
                                                              RESTRICTED STOCK    RESTRICTED STOCK  
NAME                                                              UNITS(1)            UNITS(1)      
----                                                         ------------------  -------------------
                                                                                                    
Mr. Goldstone...............................................        200,000                    0    
                                                                $(6,000,000)        $         (0)   

Mr. Kilts...................................................              0              310,000    
                                                                $        (0)        $(17,050,000)   

Mr. Lenny...................................................         42,000               38,500    
                                                                $(1,260,000)        $ (2,117,500)   

Mr. Conant..................................................         36,000               46,200    
                                                                $(1,080,000)        $ (2,541,000)   

Mr. Healey..................................................         29,000               17,500    
                                                                $  (870,000)        $   (962,500)   

Mr. Sayeau..................................................         28,000               39,000    
                                                                $  (840,000)        $ (2,145,000)   

Mr. Kirkman.................................................         24,500               25,800    
                                                                $  (735,000)        $ (1,419,000)   

Mr. Rickard.................................................              0                    0    
                                                                $        (0)        $         (0)   

Mr. Rosoff..................................................              0                    0    
                                                                $        (0)        $         (0)   

All other executive officers as a group.....................        141,500              142,529    
                                                                $(4,245,000)        $ (7,839,095)   

Non-Employee Directors as a group...........................        127,600                  502    
                                                                $(3,828,000)        $    (27,610)   

------------------------------                                                  

(1) The estimated values assume a value of NGH common stock of $30 and a value  
of Nabisco Holdings common stock of $55.                                

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AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS                                      

NGH and Mr. Goldstone are parties to an agreement providing that        
Mr. Goldstone will serve as Chairman of the NGH and the Nabisco Holdings Boards 
of Directors. While serving as Chairman of both Boards of Directors,            
Mr. Goldstone will receive an annual fee of $1,250,000 and NGH-provided office  
facilities in lieu of any other compensation or benefits. Mr. Goldstone will not
receive any additional benefits upon termination of his service as Chairman of  
the NGH and Nabisco Holdings Boards. Under a separation agreement with NGH,     
dated December 31, 1999, pursuant to which Mr. Goldstone ceased to be the CEO of
NGH, Mr. Goldstone is entitled to benefit continuation through December 31,     
2002, and will be eligible for retiree health and life coverage thereafter.     
Under his separation agreement, Mr. Goldstone is also entitled to the payment   
through 2006 of annual insurance premiums of $74,000 and related                
tax-reimbursement payments, as well as NGH-provided office facilities until     
age 65 and to tax-reimbursement payments in connection therewith. Mr. Goldstone 
also holds 301,725 NGH contingent performance shares which will be payable as a 
result of the NGH transaction, with a value of $9,051,750. If a "parachute      
excise tax" is imposed on any payments to Mr. Goldstone (including with respect 
to the options and restricted stock units noted above), he will be entitled to  
tax reimbursement payments.                                                     

Mr. Kilts is a party to an employment agreement with Nabisco Holdings,  
Nabisco, Inc. and NGH pursuant to which Mr. Kilts serves as President and Chief 
Executive Officer of Nabisco Holdings, Nabisco, Inc. and NGH and as a member of 
the Board of Directors of Nabisco Holdings, Nabisco Inc. and NGH. Pursuant to   
the employment agreement, Mr. Kilts is entitled to receive an annual base salary
of at least $1,000,000 per year and is eligible for an annual target bonus      
opportunity of not less than 100% of his base salary for the relevant year. Upon
his completion of five years of active service (or certain earlier involuntary  
terminations of employment), Mr. Kilts is entitled to a minimum annual pension  
of $200,000 (payable generally as a single life annuity beginning at age 60).   
Under the employment agreement, Nabisco Holdings also provides Mr. Kilts with   
additional term life insurance and will provide Mr. Kilts with retiree medical  
coverage, with a minimum of 10 years' credited service, upon his retirement on  
or after age 55.                                                                

Mr. Kilts' employment agreement provides that if his employment is      
terminated without "cause" by Nabisco Holdings or if he terminates his          
employment for "good reason," then he will be entitled to two times his annual  
salary and annual target bonus opportunity, payable over three years, and       
benefit continuation for three years, and his annual incentive award will vest  
pro-rata and be paid in a lump sum. In addition, Mr. Kilts will be entitled to  
secretarial services and an office for six months, outplacement benefits, and a 
cash payment for his 125,000 Nabisco Holdings contingent performance shares in  
the amount of $6,875,000. However, if such a termination occurs within          
two years after stockholder approval of the transactions, then Mr. Kilts will be
entitled to three times such salary and bonus and three times his annual        
perquisite allowance, in a lump sum, in lieu of the continued payment of salary 
and bonus for two years as noted above, and he will also be entitled to receive 
his company automobile with a related tax reimbursement payment. If Mr. Kilts'  
employment is terminated without cause immediately after the consummation of the
transaction, he will be entitled to a cash severance payment of approximately   
$6,600,000. "Cause" includes a crime involving moral turpitude or misconduct    
materially damaging to Nabisco Holdings, Nabisco, Inc. or NGH. "Good reason"    
includes a reduction in Mr. Kilts' responsibilities, a reduction in his salary  
or certain incentive opportunities, relocation, or a change of control or       
divestiture of Nabisco Holdings or Nabisco, Inc. following which the Chairman of
Nabisco Holdings is anyone other than the immediately prior Chairman of NGH.    
Compensation continuance is based on the highest annual rate of salary in effect
prior to termination or a change of control and the higher of the current target
incentive award opportunity for the                                             

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                                CHAPTER ONE -- SUMMARY AND TRANSACTIONS OVERVIEW

calendar year in which employment terminates or a change of control occurs, or, 
if higher, the actual award for the prior year. The transactions will constitute
a change of control under Mr. Kilts' employment agreement. If a "parachute"     
excise tax is imposed on any payments to Mr. Kilts (including with respect to   
the options, stock units and performance shares noted above), he will be        
entitled to tax reimbursement payments.                                         

    Each of Messrs. Lenny, Conant, Healey, Sayeau, Kirkman and the other Nabisco
Holdings executive officers is a party to an employment agreement with Nabisco  
Holdings, Nabisco, Inc. and NGH which provides that if the executive's          
employment is involuntarily terminated other than for "cause" by Nabisco, Inc.  
or if the executive terminates his employment for "good reason," he will be     
entitled to two years base salary plus bonus, payable over three years, benefit 
continuation for three years and certain other benefits, including the vesting  
pro-rata and payment in a lump sum of annual incentive awards. In addition, if  
the executive will be age 50 with 10 years of service at the end of benefit     
continuation, he will be deemed eligible for retiree benefits under all welfare 
benefit and executive compensation plans. However, if such a termination occurs 
within two years after stockholder approval of the transactions, then the       
executive will be entitled to two times such salary and bonus and three times   
his annual perquisite allowance, in a lump sum, in lieu of the continued payment
of salary and bonus for two years as noted above, and he will also be entitled  
to receive his company automobile with a related tax reimbursement payment. The 
2000 base salary and annual target bonus opportunity (as a percentage of base   
salary) for Messrs. Lenny, Conant, Healey, Sayeau and Kirkman is: $470,000, 85%;
$400,000, 85%; $385,000, 75%; $340,000, 65%; and $305,000, 60%, respectively. If
Messrs. Lenny, Conant, Healey, Sayeau and Kirkman are terminated without cause  
immediately after the transactions, they will be entitled to cash severance     
payments of approximately $1,900,000, $1,650,000, $1,500,000, $1,400,000, and   
$1,200,000, respectively. Under their agreements, "cause" generally includes    
certain criminal conduct, certain other misconduct and the failure to perform   
certain employment duties; and "good reason" generally includes, but is not     
limited to, certain reductions in duties, pay, grade, or incentive              
opportunities, and relocation. Compensation continuance is based on the highest 
annual rate of salary in effect prior to termination or a change of control and 
the current target incentive award opportunity for the calendar year in which   
employment terminates or a change of control occurs, or in the case of          
Messrs. Sayeau and Kirkman, if higher, the actual award for the prior year. Upon
involuntary termination, annual incentive awards will be paid and all vested and
a portion of the unvested retention awards under the Nabisco Holdings 1999      
Retention Program will be paid. (The aggregate of such retention payments for   
Messrs. Lenny, Conant, Healey, Sayeau and Kirkman is approximately: $799,500;   
$793,000; $633,750; $509,000; and $416,000, respectively, assuming termination  
without cause immediately after the transactions.) In the event that a          
"parachute" excise tax is imposed on any payments to any of Messrs. Lenny,      
Conant, Healey, Sayeau and Kirkman, or any other Nabisco Holdings executive     
officers (including with respect to the options and stock units noted above),   
the officer will also be entitled to tax reimbursement payments.                

    Under their separation agreements with NGH, pursuant to which they ceased to
be NGH officers and employees, Messrs. Rickard and Rosoff are entitled to       
benefit continuation for three years following their terminations of employment,
and each will be eligible for retiree health and life insurance coverage. If a  
"parachute" excise tax is imposed on any payments to Mr. Rickard or Mr. Rosoff, 
each will be entitled to tax reimbursement payments.                            

Under the Deferred Compensation Plan of Nabisco, Inc., participants were
permitted to elect to have their accounts paid immediately upon a change of     
control. In addition, participants in this plan were permitted to elect to defer
amounts payable to them with respect to the cashout of their options and        
restricted stock units, as described above, and any severance payable to them   
under the                                                                       

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employment agreements described above. All deferred amounts are required to be  
funded through a Nabisco grantor trust. In addition, participants who are       
terminated within two years after completion of the transactions will be allowed
to have payments of their accounts made over periods of up to 10 years, even if 
they have less than five years of service; absent a change of control, such     
participants would have received a lump sum distribution. Finally, under this   
plan Nabisco is obligated to pay legal fees incurred by participants to enforce 
their rights under the plan after completion of the transactions.               

    Under the Nabisco Holdings Annual Incentive Award Plan, upon consummation of
the transactions, all participants will receive a pro-rata bonus based upon     
their target awards. The payments that will be made to Messrs. Kilts, Lenny,    
Conant, Healey, Sayeau and Kirkman under this provision, assuming a closing date
of November 15, 2000, will be approximately $875,000, $350,000, $298,000,       
$253,000, $193,000, and $160,000, respectively (assuming termination without    
cause immediately after the transactions).                                      

It is anticipated that Philip Morris will enter into an agreement with  
Mr. Kilts, effective as of the closing of the transaction. If the proposed      
agreement becomes final, Mr. Kilts would make himself available for consultation
and would be subject to certain restrictive covenants, including a noncompete   
covenant and a nonsolicitation covenant and would be entitled to an office and  
secretary. Furthermore, under the proposed agreement, Mr. Kilts would be        
entitled to enhanced supplemental retirement benefits. In lieu of the cashing   
out of Mr. Kilts' unvested Nabisco Holdings options and certain restricted      
shares, those options and restricted shares would be converted, upon the closing
of the transaction, into Philip Morris options and restricted shares. It is     
possible that no agreement between Philip Morris and Mr. Kilts will be reached  
or that any agreement reached will be on terms different from those described   
above.                                                                          

PRIOR EMPLOYMENT RELATIONSHIPS                                                  

Prior to joining Nabisco Holdings in 1998, Mr. Kilts was Executive Vice 
President--Worldwide Food of Philip Morris Companies from 1994 to 1997. Prior   
thereto, Mr. Kilts was President of Kraft USA from 1989 to 1994.                

    Prior to joining Nabisco Holdings as President of Nabisco Biscuit Company in
1998, Mr. Lenny was President of Pillsbury North America from 1996 to 1998 and  
President, Pillsbury Specialty Brands, from 1995 to 1996. Prior thereto,        
Mr. Lenny was an employee of Kraft Foods from 1977 to 1995.                     

INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE                             

See "Chapter Three--NGH Merger Agreement--Covenants--Indemnification and
Insurance of NGH Directors and Officers."                                       

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CHAPTER TWO 
SALE OF NABISCO HOLDINGS SHARES 

The NGH Board of Directors has approved, and recommends that NGH        
stockholders approve, the sale of all 213,250,000 shares of Class B common stock
of Nabisco Holdings currently owned by NGH for $55 per Nabisco Holdings share   
pursuant to the Nabisco Holdings merger. We are seeking approval from NGH       
stockholders for this transaction because it constitutes the disposition of     
substantially all of the assets of NGH. The proposed sale would occur pursuant  
to the Nabisco Holdings merger agreement described below. If NGH stockholders   
approve the Nabisco Sale, NGH will act by written consent, in its capacity as   
controlling stockholder of Nabisco Holdings, to adopt the Nabisco Holdings      
merger agreement. NGH's obligation to vote in favor of adoption of the Nabisco  
Holdings merger agreement, and against any competing proposals, is set forth in 
the NGH voting and indemnity agreement described below.                         

NABISCO HOLDINGS MERGER AGREEMENT 

The following is a summary of the material terms of the Nabisco Holdings
merger agreement and is qualified by reference to the complete text of the      
Nabisco Holdings merger agreement, which is incorporated by reference and       
attached as Annex A.                                                            

THE NABISCO HOLDINGS MERGER                                                     

  Under the Nabisco Holdings merger agreement, a subsidiary of Philip Morris
will merge with and into Nabisco Holdings in accordance with Delaware law. The  
separate existence of the merger subsidiary will cease and Nabisco Holdings will
become a wholly-owned subsidiary of Philip Morris.                              

COMPLETION OF THE NABISCO HOLDINGS MERGER                                       

   As soon as practicable after all of the conditions set forth in the Nabisco
Holdings merger agreement have been satisfied or waived, the parties will file a
certificate of merger with the Secretary of State of the State of Delaware. The 
Nabisco Holdings merger will be completed at the time the certificate is filed. 

MERGER CONSIDERATION                                                            

 The Nabisco Holdings merger agreement provides that each share of Nabisco
Holdings common stock outstanding immediately prior to the completion of the    
Nabisco Holdings merger (except for shares as to which appraisal rights have    
been properly exercised), will, at the completion of the Nabisco Holdings       
merger, be converted into the right to receive $55 per share in cash, without   
interest. However, shares of Nabisco Holdings held as treasury shares or owned  
by Philip Morris or its subsidiaries will be canceled without any payment for   
those shares.                                                                   

STOCK OPTIONS                                                                   

 At or immediately prior to the completion of the Nabisco Holdings merger,
each employee and director option to purchase shares outstanding under any stock
option or compensation plan or arrangement of Nabisco Holdings, whether or not  
vested or exercisable, will be canceled, and Nabisco Holdings will pay each     
optionholder an amount in cash determined by multiplying (1) the excess, if any,
of $55 over the applicable exercise price of such option by (2) the number of   
shares to which such option relates (assuming full vesting of all outstanding   
options). The payment shall be made before, at or promptly after the completion 
of the Nabisco Holdings merger in the case of options that were outstanding on  
the date of the Nabisco Holdings merger agreement. Otherwise, the payment shall 
be                                                                              

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made when and if such option is exercised (or vests, if converted into the right
to receive cash) in accordance with its terms.                                  

COVENANTS                                                                       

  Nabisco Holdings and Philip Morris have agreed to certain covenants in the
Nabisco Holdings merger agreement. A description of the covenants follows:      

NO SOLICITATION BY NABISCO HOLDINGS. The Nabisco Holdings merger
agreement prohibits Nabisco Holdings from soliciting, initiating or     
encouraging any proposal for an alternative acquisition transaction     
involving Nabisco Holdings or its subsidiaries, or negotiating with or  
furnishing nonpublic information to, any third party regarding such an  
acquisition transaction, except that Nabisco Holdings may engage in such
   activities prior to receipt of approval of the Nabisco Holdings merger from
Nabisco Holdings stockholders if:                                       

      - Nabisco Holdings has received an unsolicited acquisition proposal from
       that third party, has so notified Philip Morris and has complied with
the non-solicitation provisions of the Nabisco Holdings merger
agreement;                                                    

      - the Nabisco Holdings Board determines in good faith that such proposal
         is likely to result in a superior proposal, as defined below, and after
        consultation with outside legal counsel, that the failure to take such
action would constitute a breach of its fiduciary duties;     

       - the third party executes a confidentiality agreement with terms no less
favorable to Nabisco Holdings than those contained in the     
confidentiality agreement with Philip Morris; and             

   - Nabisco Holdings notifies Philip Morris of the action it intends to
take with respect to the acquisition proposal.                

    NABISCO HOLDINGS BOARD'S COVENANT TO RECOMMEND. The Nabisco Holdings
   Board of Directors has agreed to recommend the approval and adoption of the
    Nabisco Holdings merger agreement to Nabisco Holdings stockholders. However,
  the Nabisco Holdings Board is permitted to withdraw, or modify in a manner
adverse to Philip Morris, its recommendation, if:                       

      - Nabisco Holdings has received an unsolicited acquisition proposal from
        a third party, has so notified Philip Morris and has complied with the
       non-solicitation provisions of the Nabisco Holdings merger agreement;

      - the Nabisco Holdings Board determines in good faith that such proposal
constitutes a superior proposal, as defined below, and after  
        consultation with outside legal counsel, that the failure to take such
action would constitute a breach of its fiduciary duties; and 

   - Nabisco Holdings notifies Philip Morris of the action it intends to
take with respect to its recommendation.                      

 A "superior proposal" is a bona fide written acquisition proposal
  (1) on terms that the Board of Directors of Nabisco Holdings determines in
 good faith (after consultation with its financial advisor and taking into
account all terms and conditions of the proposal, including the legal,  
    financial and regulatory aspects) provide greater value to Nabisco Holdings'
stockholders than the Nabisco Holdings merger (or, if applicable, the   
    amended proposal offered by Philip Morris) and (2) that is reasonably likely
to be completed.                                                        

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    REASONABLE BEST EFFORTS COVENANT. Nabisco Holdings and Philip Morris
have agreed to use their reasonable best efforts to take all actions    
necessary, proper or advisable under applicable laws and regulations to 
 complete the Nabisco Holdings merger. In particular, Nabisco Holdings and
Philip Morris have agreed to take all actions necessary to cause the    
expiration or termination of the applicable waiting period under the    
  Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and to obtain the necessary approvals under foreign laws governing
 antitrust or merger control matters as soon as practicable, including, in
the case of Philip Morris, entering into any required settlement,       
  undertaking, consent decree or stipulation with any governmental entity or
   implementing any required divestiture, hold separate or similar transaction
   with respect to any assets. However, Philip Morris is not required to waive
any substantial rights or to accept any substantial limitation on its   
operations or to dispose of any significant assets in connection with   
  obtaining any such consent or authorization unless such waiver, limitation
  or disposition would not reasonably be expected to have a material adverse
   effect on Nabisco Holdings, Philip Morris or Philip Morris's food business.

      NABISCO HOLDINGS' INTERIM OPERATIONS. Nabisco Holdings has agreed that
 until the completion of the Nabisco Holdings merger, Nabisco Holdings and
    its subsidiaries will conduct their business and operate their properties in
 the ordinary course consistent with past practice and will use reasonable
best efforts to preserve intact their business organizations and        
    relationships with third parties and to keep available the services of their
present officers and employees. Nabisco Holdings has also agreed, with  
  certain exceptions, that neither it nor its subsidiaries will prior to the
 completion of the Nabisco Holdings merger do any of the following without
the consent of Philip Morris:                                           

   - declare dividends other than customary quarterly cash dividends and
intercompany dividends;                                       

     - repurchase, redeem or otherwise acquire shares or other securities of
Nabisco Holdings or any of its subsidiaries;                  

- issue, encumber or sell any shares of Nabisco Holdings, or any  
        securities convertible into shares, or any rights, warrants or options
    to acquire any shares, other than pursuant to existing stock-based
       awards or options, or additional options awarded pursuant to existing
        stock plans in the ordinary course not in excess of 100,000 shares and
not granted to any officers or directors of Nabisco Holdings; 

   - amend the certificate of incorporation, by-laws or the terms of any
 outstanding securities of Nabisco Holdings or its subsidiaries;

   - merge with, invest in or acquire the stock or assets of any entity,
        other than pursuant to existing disclosed commitments, ordinary course
         purchases of materials and other items, planned capital expenditures or
any transaction in the ordinary course not over $5 million;   

      - sell, lease, license or otherwise dispose of any subsidiary or assets,
 other than pursuant to existing disclosed commitments, sales of
      inventory and equipment in the ordinary course or any transaction in
the ordinary course not over $10 million;                     

- incur or guarantee indebtedness in excess of $4.6 billion in the
aggregate outstanding at any time;                            

- adopt or amend an existing employee benefits or compensation    
arrangement;                                                  

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   - increase the compensation of executive officers or directors by any
    amount or of other employees in the aggregate by more than 2% over
existing compensation;                                        

 - renew or enter into any material collective bargaining agreement;

   - contribute to any trust or employee arrangement, except as required
under existing agreements;                                    

- adopt a plan of liquidation, dissolution, merger, consolidation,
 recapitalization or reorganization, or enter into any agreement
       providing for acceleration of payment or performance as a result of a
change in control;                                            

     - enter into or renew any material noncompete or exclusivity agreement;

      - enter into, amend or terminate any agreement with a term longer than a
year and having an aggregate value over $10 million;          

- renew, enter into, amend or waive any material rights under any 
        affiliate contract or loan, certain distribution agreements or certain
joint venture agreements;                                     

  - exercise any voting or veto rights under the United Biscuits joint
         venture agreements relating to acquisitions, dispositions or additional
indebtedness, other than the fulfillment of certain existing  
commitments;                                                  

    - settle or compromise any material litigation or waive or release any
material claim;                                               

- change accounting policies;                                     

      - sell, license, lease or otherwise dispose of any intellectual property
rights, other than existing disclosed commitments; or         

- agree or commit to do any of the foregoing.                     

        EMPLOYEE BENEFITS MATTERS. Philip Morris has agreed that for a period of
two years after the completion of the Nabisco Holdings merger, Nabisco  
Holdings will provide employee compensation and benefits for current and
 former employees of Nabisco Holdings and its subsidiaries that are in the
  aggregate not less favorable to such employees than the benefits plans and
arrangements currently maintained by Nabisco Holdings. In the event the 
employment of any Nabisco Holdings employee is terminated other than for
 cause during this two-year period, the employee will receive severance or
  separation benefits in an aggregate amount at least equal to the severance
or separation benefits the employee would have received under such      
    circumstances under the benefits plans and arrangements currently maintained
by Nabisco Holdings. Philip Morris has also agreed that Nabisco Holdings
will after the merger give Nabisco Holdings employees full credit for   
    purposes of eligibility, vesting and, for purposes of vacation and severance
  benefits only, benefit accrual under any new plans or arrangements for the
 employees' service recognized for these purposes under benefits plans and
arrangements currently maintained by Nabisco Holdings. The obligations  
outlined above do not extend to employees represented by collective     
bargaining units and employees with employment agreements, because these
 employees will receive compensation and benefits in accordance with their
respective collective bargaining agreements or employment agreements.   

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INDEMNIFICATION AND INSURANCE OF NABISCO HOLDINGS DIRECTORS AND 
  OFFICERS. Philip Morris has agreed that it will cause Nabisco Holdings for
six years after the Nabisco Holdings merger:                            

- to indemnify Nabisco Holdings' present and former officers and  
 directors for liabilities from their acts or omissions in those
      capacities occurring prior to the completion of the Nabisco Holdings
        merger, to the fullest extent permitted by applicable laws or provided
under Nabisco Holdings' charter and bylaws; and               

     - to provide officers' and directors' liability insurance in respect of
    acts or omissions occurring prior to the completion of the Nabisco
      Holdings merger on terms with respect to coverage and amount no less
        favorable than the existing policy, provided that the aggregate annual
       premium paid need not exceed 200% of the current rate paid by Nabisco
Holdings.                                                     

REPRESENTATIONS AND WARRANTIES                                                  

 Nabisco Holdings made certain customary representations and warranties to
Philip Morris, including as to:                                                 

                                                                [Download Table]
                                                                               
- corporate existence and power;       - tax matters;                          
- corporate authorization;             - employee benefits matters;            
- governmental authorization;          - compliance with laws and court orders;
- non-contravention;                   - finders' fees;                        
- capitalization;                      - receipt of opinion of financial       
                                       advisors;                               
- subsidiaries;                        - environmental matters;                
- SEC filings;                         - intellectual property rights;         
- disclosure documents;                - ownership and condition of real       
                                       property;                               
- accuracy of financial statements;    - material contracts and joint ventures;
- absence of certain changes;          - indebtedness; and                     
- absence of undisclosed liabilities;  - inapplicability of anti-takeover      
                                       statute.                                
- no material litigation;                                                      

Philip Morris made certain customary representations and warranties to  
Nabisco Holdings, including as to:                                              

                                                                [Download Table]
                                                                      
- corporate existence;                    - disclosure documents;     
- corporate authorization;                - finders' fees; and        
- governmental authorization;             - availability of financing.
- non-contravention;                                                  

   The representations and warranties contained in the Nabisco Holdings merger
agreement do not survive the completion of the Nabisco Holdings merger or the   
termination of the Nabisco Holdings merger agreement.                           

CONDITIONS TO THE NABISCO HOLDINGS MERGER                                       

  MUTUAL CLOSING CONDITIONS. The obligations of Nabisco Holdings and
Philip Morris to complete the Nabisco Holdings merger are subject to the
satisfaction of the following conditions:                               

- adoption of the Nabisco Holdings merger agreement by NGH, as    
controlling stockholder of Nabisco Holdings;                  

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       - no law, court order, injunction or other legal restraint shall prohibit
the merger;                                                   

- expiration or termination of the HSR Act waiting period;        

- approval by the European Commission;                            

     - accuracy as of the closing of the representations and warranties made
         by the other party to the extent specified in the merger agreement; and

- performance in all material respects by the other party of the  
obligations required to be performed at or prior to closing.  

ADDITIONAL CLOSING CONDITION FOR PHILIP MORRIS'S BENEFIT. Philip
 Morris's obligation to complete the Nabisco Holdings merger is subject to
receipt of all required consents and approvals of government entities,  
  except for consents and approvals which, if not received, would not have a
material adverse effect on Nabisco Holdings.                            

TERMINATION                                                                     

   Nabisco Holdings and Philip Morris may mutually agree, at any time prior to
the completion of the Nabisco Holdings merger, to terminate the Nabisco Holdings
merger agreement. In addition, either Nabisco Holdings or Philip Morris may     
terminate the Nabisco Holdings merger agreement if:                             

 (1) the Nabisco Holdings merger has not been completed by April 30, 2001.
  Neither Nabisco Holdings nor Philip Morris may terminate the Nabisco
    Holdings merger agreement on this basis, however, if its breach of the
      Nabisco Holdings merger agreement results in the Nabisco Holdings merger
not being completed by this date;                                 

   (2) there is a permanent legal prohibition to the completion of the Nabisco
Holdings merger;                                                  

 (3) the Nabisco Holdings merger agreement has not been adopted by Nabisco
      Holdings stockholders because the requisite vote of the NGH stockholders
to approve the Nabisco Sale was not obtained at a duly held NGH   
stockholders' meeting;                                            

 (4) the NGH voting and indemnity agreement has terminated because the NGH
   Board has withdrawn its recommendation of the Nabisco Holdings merger
agreement or NGH has accepted a superior proposal or breached its 
    obligation to vote in favor of the Nabisco Holdings merger and against
competing proposals; or                                           

(5) a change in tax law occurs that (i) would apply to a transaction    
completed after such change in tax law (despite a binding written 
      agreement for such transaction) and (ii) would reasonably be expected to
  result in (A) the imposition of tax on gain realized with respect to
      Nabisco Holdings shares arising out of the Nabisco Holdings Distribution
   or on gain realized with respect to RJR shares arising out of the RJR
      Spinoff or (B) a material increase in the tax liability of NGH resulting
from the Nabisco Holdings merger.                                 

Philip Morris may terminate the Nabisco Holdings merger agreement if:   

(6) the Nabisco Holdings Board fails to recommend the Nabisco Holdings  
    merger, withdraws or modifies in a manner adverse to Philip Morris its
      approval or recommendation of the Nabisco Holdings merger or the Nabisco
   Holdings merger agreement, approves or recommends a superior proposal
      relating to an acquisition of Nabisco Holdings, or resolves to do any of
the foregoing;                                                    

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(7) Nabisco Holdings enters into, or publicly announces its intention to
  enter into, a definitive agreement or an agreement in principle with
  respect to a superior proposal relating to an acquisition of Nabisco
Holdings; or                                                      

  (8) Nabisco Holdings fails to perform in any material respect any material
     obligation to be performed under the Nabisco Holdings merger agreement,
    or breaches any of its representations and warranties such that Philip
       Morris's condition to closing in this respect cannot be satisfied, and in
   either case such failure is not cured within 15 business days or such
       longer period during which Nabisco Holdings exercises its reasonable best
efforts to cure.                                                  

Nabisco Holdings may terminate the Nabisco Holdings merger agreement if:

   (9) its Board authorizes Nabisco Holdings to enter into a written agreement
      concerning a superior proposal, so long as Nabisco Holdings has complied
      with the non-solicitation, board recommendation, notice, negotiation and
     termination fee provisions of the Nabisco Holdings merger agreement and
     Philip Morris has not made a definitive, binding offer that the Nabisco
  Holdings Board determines, in good faith after consultation with its
  financial advisors, is at least as favorable to the Nabisco Holdings
stockholders as the superior proposal; or                         

(10) Philip Morris fails to perform in any material respect any material
       obligation to be performed under the Nabisco Holdings merger agreement or
  breaches any of its representations and warranties such that Nabisco
     Holdings' condition to closing in this respect cannot be satisfied, and
      in either case such failure is not cured within 15 business days or such
    longer period during which Philip Morris exercises its reasonable best
efforts to cure.                                                  

If the Nabisco Holdings merger agreement is validly terminated, it will 
become void without any liability on any party unless such party is in willful  
breach. However, the provisions relating to termination fees and expenses and   
certain other provisions will continue in effect.                               

CERTAIN FEES AND EXPENSES                                                       

Except as described below, all costs and expenses incurred in connection
with the Nabisco Holdings merger agreement and related transactions will be paid
by the party incurring such costs or expenses.                                  

    NABISCO HOLDINGS AND NGH ADVISOR FEES.  The parties have agreed that Nabisco
Holdings will be responsible for fees and expenses of the financial, legal and  
other advisors to Nabisco Holdings and NGH up to $50 million, and NGH will be   
responsible for all such fees and expenses in excess of $50 million.            

TERMINATION FEES.  Nabisco Holdings has agreed to pay Philip Morris $445
million in cash, net of any expenses paid as described below, in any of the     
following circumstances:                                                        

      - the Nabisco Holdings merger agreement terminates as described in items
(6), (7) or (9) under "--Termination;"                        

     - the Nabisco Holdings merger agreement terminates as described in item
  (8) under "--Termination" (other than as a result of a breach of
         representation not caused by action of Nabisco Holdings and not capable
  of being cured using reasonable best efforts), if at the time of
        termination a third party has made an acquisition proposal relating to
 an acquisition of Nabisco Holdings and within nine months after
termination of the Nabisco Holdings                           

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       merger agreement, Nabisco Holdings enters into a definitive agreement
 in respect of any acquisition proposal or such a transaction is
completed; or                                                 

      - the Nabisco Holdings merger agreement terminates as described in items
    (3) or (4) under "--Termination" and, prior to the NGH stockholder
      meeting, a third party or Nabisco Holdings has publicly announced an
         acquisition proposal relating to an acquisition of Nabisco Holdings and
     within nine months after termination of the Nabisco Holdings merger
   agreement, Nabisco Holdings enters into a definitive agreement in
         respect of any acquisition proposal or such a transaction is completed.

   EXPENSE REIMBURSEMENT.  Nabisco Holdings has agreed to pay Philip Morris up
to $30 million as reimbursement for expenses relating to the negotiation and    
execution of the merger agreement in any of the following circumstances:        

     - the Nabisco Holdings merger agreement terminates as described in item
         (8) under "--Termination" if, at the time of termination, a third party
has made an acquisition proposal for Nabisco Holdings; or     

     - the Nabisco Holdings merger agreement terminates as described in item
(3) under "--Termination."                                    

  The expense reimbursement payment would reduce the $445 million payment if
it becomes payable.                                                             

Philip Morris has agreed to pay Nabisco Holdings up to $30 million as   
reimbursement for expenses relating to the negotiation and execution of the     
Nabisco Holdings merger agreement if the Nabisco Holdings merger agreement      
terminates as described in item (10) under "--Termination."                     

AMENDMENTS AND WAIVERS                                                          

The parties may amend the Nabisco Holdings merger agreement or waive its
terms and conditions before the completion of the Nabisco Holdings merger, but, 
after Nabisco Holdings' stockholders have approved the Nabisco Holdings merger  
agreement, the parties may not amend the Nabisco Holdings merger agreement in a 
manner that would reduce or change the kind of consideration Nabisco Holdings   
stockholders will receive in the Nabisco Holdings merger without further        
approval of Nabisco Holdings' stockholders.                                     

OTHER MATTERS 

FINANCING OF THE MERGER                                                         

    Philip Morris has obtained commitments from Chase Securities Inc. and Credit
Suisse First Boston Corp. to provide financing to Philip Morris in an amount    
sufficient, together with Philip Morris's existing credit facilities, cash on   
hand and other liquid securities, to pay all required amounts under the Nabisco 
Holdings merger agreement to Nabisco Holdings stockholders, to effect all       
necessary refinancing of Nabisco Holdings' or Philip Morris's existing          
indebtedness that is required as a result of the Nabisco Holdings merger and to 
pay all related fees and expenses. There is no financing condition to the       
closing of the Nabisco Holdings merger.                                         

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REGULATORY MATTERS                                                              

U.S. ANTITRUST.  Under the HSR Act and the related rules, the Nabisco   
Holdings merger may not be completed until notifications have been given,       
certain information has been furnished to the Federal Trade Commission and the  
Antitrust Division of the United States Department of Justice and specified     
waiting period requirements have been satisfied. On July 21, 2000, NGH (as      
controlling stockholder of Nabisco Holdings) and Philip Morris each filed the   
required notification and report forms under the HSR Act with the Federal Trade 
Commission and the Antitrust Division of the United States Department of        
Justice. On August 18, 2000, the Federal Trade Commission requested additional  
information in connection with the Nabisco Holdings merger, thereby extending   
the HSR Act waiting period to the 20th day after substantial compliance with the
information request. Expiration or termination of the HSR Act waiting period is 
a condition to the completion of the Nabisco Holdings merger.                   

 EUROPEAN UNION.  Under EC Council Regulation No. 4064/89 and accompanying
regulations, the Nabisco Holdings merger is subject to review by the European   
Commission. Philip Morris formally notified the European Commission of the      
Nabisco Holdings merger on September 14, 2000. Completion of review under the   
European Commission merger regulation is a condition to the Nabisco Holdings    
merger.                                                                         

OTHER LAWS.  Nabisco Holdings and Philip Morris conduct operations in a 
number of jurisdictions where other regulatory filings or approvals may be      
required or advisable in connection with the completion of the merger. Nabisco  
Holdings and Philip Morris are currently in the process of reviewing whether    
filings or approvals may be required or desirable in these other jurisdictions. 
It is currently anticipated that filings will be made in Argentina, Brazil,     
Canada, Colombia, Hungary, Mexico, South Africa and Taiwan.                     

    GENERAL.  It is possible that governmental entities having jurisdiction over
Nabisco Holdings and Philip Morris may seek concessions as conditions for       
granting approval of the Nabisco Holdings merger. We can give no assurance that 
the required regulatory approvals will be obtained on terms that satisfy the    
conditions to closing of the Nabisco Holdings merger or within the time frame   
contemplated by Nabisco Holdings and Philip Morris.                             

APPRAISAL RIGHTS                                                                

    Holders of NGH common stock are not entitled to dissenters' appraisal rights
under Delaware law in connection with the Nabisco Sale.                         

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NGH VOTING AND INDEMNITY AGREEMENT

The following is a summary of the material terms of the NGH voting and  
indemnity agreement and is qualified by reference to the complete text of such  
agreement, which is incorporated by reference and attached as Annex B.          

COVENANTS                                                                       

NGH has agreed to certain covenants in the NGH voting and indemnity     
agreement. The material covenants are as follows:                               

  AGREEMENT TO VOTE IN FAVOR OF THE NABISCO HOLDINGS MERGER.  If NGH
 stockholders approve the Nabisco Sale, NGH has agreed, in its capacity as
   controlling stockholder of Nabisco Holdings, to adopt by written consent or
   otherwise the Nabisco Holdings merger agreement, and to execute and deliver
   such written consent immediately following (i.e., the same day as) approval
   of the Nabisco Sale by NGH stockholders. No further approval by the Nabisco
    Holdings public stockholders will be required in connection with the Nabisco
 Holdings merger. NGH has further agreed that, if NGH stockholders approve
the Nabisco Sale, NGH will vote against any competing transaction or    
proposal.                                                               

NO SOLICITATION BY NGH.  The NGH voting and indemnity agreement 
    prohibits NGH from soliciting, initiating or encouraging any proposal for an
 alternative acquisition transaction involving NGH or its subsidiaries, or
negotiating with or furnishing nonpublic information to, any third party
regarding such an acquisition transaction, except that NGH may engage in
   such activities prior to receipt of NGH stockholder approval of the Nabisco
Sale if:                                                                

    - NGH has received an unsolicited acquisition proposal from that third
party, has so notified Philip Morris and has complied with the
        non-solicitation provisions of the NGH voting and indemnity agreement;

      - the NGH Board determines in good faith that such proposal is likely to
         result in a superior proposal, as defined below, and after consultation
        with outside legal counsel, that the failure to take such action would
constitute a breach of its fiduciary duties;                  

       - the third party executes a confidentiality agreement with terms no less
        favorable to NGH than those contained in the confidentiality agreement
with Philip Morris; and                                       

- NGH notifies Philip Morris of the action it intends to take with
respect to the acquisition proposal.                          

  NGH BOARD'S COVENANT TO RECOMMEND.  The NGH Board of Directors has
    agreed to recommend the sale of NGH's shares of Nabisco Holdings pursuant to
  the Nabisco Holdings merger agreement. However, the NGH Board is permitted
to withdraw, or modify in a manner adverse to Philip Morris, its        
recommendation, if:                                                     

 - NGH has received an unsolicited acquisition proposal from a third
party, has so notified Philip Morris and has complied with the
        non-solicitation provisions of the NGH voting and indemnity agreement;
and                                                           

       - the NGH Board determines in good faith that such proposal constitutes a
  superior proposal, as defined below, and after consultation with
   outside legal counsel, that the failure to take such action would
constitute a breach of its fiduciary duties; and              

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- NGH notifies Philip Morris of the action it intends to take with
respect to its recommendation.                                

 A "superior proposal" is a bona fide written acquisition proposal
(1) on terms that the Board of Directors of NGH determines in good faith
  (after consultation with its financial advisor and taking into account all
terms and conditions of the proposal, including the legal, financial and
 regulatory aspects) are more favorable to NGH's stockholders (taking into
account the consideration to be received by NGH in the Nabisco Holdings 
merger) than the Nabisco Holdings merger (or, if applicable, the amended
  proposal offered by Philip Morris) and (2) that is reasonably likely to be
completed.                                                              

NO AMENDMENTS TO CERTAIN AGREEMENTS.  NGH has agreed not to:    

    - amend the NGH merger agreement or waive any of its rights under that
       agreement in any manner that would materially delay completion of the
       Nabisco Holdings merger or create any material additional liabilities
of Nabisco Holdings;                                          

      - amend or terminate NGH's stockholder rights plan, except to permit the
       transactions contemplated by the NGH merger agreement and the Nabisco
    Holdings merger agreement or any other transaction to be completed
after the Nabisco Holdings merger; or                         

    - amend the Distribution Agreement dated as of May 12, 1999 among NGH,
     RJR and Reynolds Tobacco in any manner adverse to Nabisco Holdings'
rights under specified provisions of that agreement.          

TERMINATION                                                                     

The NGH voting and indemnity agreement may be terminated in any of the  
following ways:                                                                 

  (a) The NGH voting and indemnity agreement will automatically terminate on
the earlier to occur of:                                                        

(1) the completion of the Nabisco Holdings merger;                

(2) the termination of the Nabisco Holdings merger agreement; and 

(3) the date of the NGH stockholder meeting (including reasonable 
    extensions up to 30 days to obtain additional proxies), if NGH
    stockholders fail to approve the Nabisco Sale at such meeting.

  (b) The NGH voting and indemnity agreement may be terminated by NGH if its
Board authorizes NGH to enter into a written agreement concerning a superior    
proposal, so long as NGH has complied with the non-solicitation, board          
recommendation, notice, negotiation and termination fee provisions of the NGH   
voting and indemnity agreement and Philip Morris has not made a definitive,     
binding offer that the NGH Board determines, in good faith after consultation   
with its financial advisors, is at least as favorable to NGH stockholders       
(taking into account the consideration to be received by NGH in the Nabisco     
Holdings merger) as the superior proposal.                                      

(c) The NGH voting and indemnity agreement may be terminated by Philip  
Morris if:                                                                      

 (1) the NGH Board fails to recommend, or withdraws or modifies in a
        manner adverse to Philip Morris, its approval or recommendation of
    the sale of the Nabisco Holdings shares, recommends a superior
proposal, or resolves to do any of the foregoing;         

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       (2) NGH enters into, or publicly announces its intention to enter into, a
  definitive agreement with respect to a superior proposal; or

       (3) NGH breaches its obligations to vote in favor of the Nabisco Holdings
merger and against any competing proposal.                

    If the NGH voting and indemnity agreement is validly terminated, most of its
provisions will cease to have effect. The expenses and indemnification          
provisions will survive any termination, but the indemnification provisions will
terminate automatically if both the Nabisco Holdings merger agreement and the   
NGH merger agreement have terminated.                                           

CERTAIN FEES AND EXPENSES                                                       

Except as described below, all costs and expenses incurred in connection
with the NGH voting and indemnity agreement and related transactions will be    
paid by the party incurring such costs or expenses.                             

    NABISCO HOLDINGS AND NGH ADVISOR FEES.  The parties have agreed that Nabisco
Holdings will be responsible for fees and expenses of the financial, legal and  
other advisors to Nabisco Holdings and NGH up to $50 million, and NGH will be   
responsible for all such fees and expenses in excess of $50 million.            

    TERMINATION FEES.  NGH has agreed to pay Philip Morris $445 million in cash,
less termination fees or expenses previously paid under the Nabisco Holdings    
merger agreement, in any of the following circumstances:                        

  - NGH terminates the NGH voting and indemnity agreement as described
above in paragraph (b) under "--Termination;"                 

       - the NGH voting and indemnity agreement terminates as described above in
paragraph (a)(3) under "--Termination" and, prior to the NGH  
 stockholder meeting, a third party, NGH or Nabisco Holdings has
announced an acquisition proposal and within nine months after
       termination of the NGH voting and indemnity agreement, NGH or Nabisco
       Holdings enters into a definitive agreement involving any acquisition
        proposal with respect to Nabisco Holdings or NGH or such a transaction
is completed; or                                              

  - Philip Morris terminates the NGH voting and indemnity agreement as
described above in paragraph (c) under "--Termination."       

 If termination fees become payable under both the Nabisco Holdings merger
agreement and the NGH voting and indemnity agreement, a single fee will be paid 
by Nabisco Holdings. However, if Nabisco Holdings fails to pay such fee in full 
on a timely basis, NGH will immediately pay the fee, in which case NGH shall    
have the right to obtain reimbursement of the fee from Nabisco Holdings.        

INDEMNIFICATION                                                                 

    After completion of the Nabisco Holdings merger, NGH has generally agreed to
indemnify Philip Morris and its affiliates for liabilities relating to NGH's    
business and Nabisco Holdings has generally agreed to indemnify NGH and its     
affiliates for liabilities relating to Nabisco Holdings' business.              

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OPINIONS OF FINANCIAL ADVISORS

    NGH and Nabisco Holdings jointly retained UBS Warburg LLC and Morgan Stanley
& Co. Incorporated to act as financial advisors in connection with the          
transactions.                                                                   

OPINION OF UBS WARBURG LLC                                                      

    At the joint meeting of the NGH Board and the Nabisco Holdings Board held on
June 25, 2000, UBS Warburg delivered its oral opinion to the effect that, as of 
the date of the opinion and based on and subject to the matters described in the
opinion, including a review of the definitive agreements for the transaction,   
the consideration of $55.00 per share in cash that each of the holders of       
Nabisco Holdings common stock other than Philip Morris and its affiliates is to 
receive pursuant to the Nabisco Holdings merger agreement is fair, from a       
financial point of view, to the holders of Nabisco Holdings common stock,       
including NGH. The opinion was confirmed by delivery of a written opinion dated 
June 25, 2000, the date of execution of the Nabisco Holdings merger agreement.  

THE FOLLOWING SUMMARY OF THE UBS WARBURG OPINION IS QUALIFIED IN ITS    
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION. THE FULL TEXT OF THE UBS 
WARBURG OPINION SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS   
CONSIDERED AND LIMITATIONS ON THE SCOPE OF THE REVIEW UNDERTAKEN AND IS ATTACHED
AS ANNEX D TO THIS PROXY STATEMENT AND INCORPORATED HEREIN BY REFERENCE. WE     
ENCOURAGE YOU TO READ CAREFULLY THE UBS WARBURG OPINION IN ITS ENTIRETY.        

UBS Warburg's opinion:                                                  

- is directed to the NGH Board and the Nabisco Holdings Board;          

- relates only to the fairness, from a financial point of view, to the  
holders of Nabisco Holdings common stock, including NGH, of the     
consideration to be received by such holders in the Nabisco Holdings
merger;                                                             

- does not address the relative fairness of the consideration to be paid
   pursuant to the Nabisco Holdings merger agreement to the holders of the
    Class A common stock and to NGH, the holder of the Class B common stock;

    - does not constitute a recommendation to holders of NGH or Nabisco Holdings
common stock about how to vote on the transactions;                 

  - does not address NGH's or Nabisco Holdings' underlying business decision
     to effect the Nabisco Holdings merger, the form of the transaction or the
after-tax consequences of the transaction to any holder of Nabisco  
Holdings common stock; and                                          

   - is necessarily based upon economic, monetary, market and other conditions
 as they existed as of the date of the opinion and should be evaluated
based upon those conditions.                                        

In arriving at its opinion, UBS Warburg, among other things:            

   - reviewed publicly available business and historical financial information
relating to Nabisco Holdings;                                       

- reviewed the reported prices and trading activity for Nabisco Holdings
Class A common stock;                                               

- reviewed internal financial information and other data concerning the 
     business and financial prospects of Nabisco Holdings, including estimates
   and financial forecasts prepared by the management of Nabisco Holdings,
which were provided to UBS Warburg by Nabisco Holdings;             

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- held discussions with members of senior management of Nabisco Holdings
      regarding the business and prospects of Nabisco Holdings, as well as other
matters it believed relevant to its inquiry;                        

  - reviewed publicly available financial and stock market data with respect
 to selected companies in lines of business UBS Warburg believed to be
generally comparable to those of Nabisco Holdings;                  

- compared the financial terms of the Nabisco Holdings merger with the  
      publicly available financial terms of selected other transactions that UBS
Warburg believed to be generally relevant;                          

- reviewed drafts of the Nabisco Holdings merger agreement and related  
agreements; and                                                     

    - conducted and considered other financial studies, analyses, investigations
and information that it considered necessary or appropriate.        

    In connection with its review, at NGH's and Nabisco Holdings' direction, UBS
Warburg:                                                                        

   - did not independently verify any of the information referred to above and
 relied on it as being complete and accurate in all material respects;

   - assumed that the financial forecasts and estimates referred to above were
  reasonably prepared on a basis reflecting the best currently available
   estimates and judgments of the management of Nabisco Holdings as to the
future financial performance of Nabisco Holdings;                   

   - did not make any independent evaluation or appraisal of any of the assets
      or liabilities of Nabisco Holdings, nor was UBS Warburg furnished with any
similar evaluation or appraisal;                                    

    - did not express any opinion as to the prices at which the NGH common stock
would trade subsequent to the Nabisco Holdings merger or the use of 
 proceeds from the Nabisco Holdings merger by NGH or any other Nabisco
Holdings stockholder; and                                           

   - assumed that Nabisco Holdings, Philip Morris and Strike Acquisition Corp.
would comply with all material terms of the Nabisco Holdings merger 
agreement.                                                          

UBS Warburg was not asked to and did not recommend the specific         
consideration payable in the Nabisco Holdings merger, which was determined      
through negotiation between NGH and Nabisco Holdings, on the one hand, and      
Philip Morris, on the other hand. At NGH's and Nabisco Holdings' direction, UBS 
Warburg contacted third parties to solicit indications of interest in possible  
business combination transactions with NGH and Nabisco Holdings. UBS Warburg    
held discussions with a number of these parties before the date of its opinion. 
Except to the extent set forth above, neither NGH nor Nabisco Holdings limited  
UBS Warburg regarding the procedures to be followed or factors to be considered 
in rendering its opinion.                                                       

  In preparing its opinion, UBS Warburg performed a variety of financial and
comparative analyses. The material analyses are summarized below. The           
preparation of a fairness opinion is a complex analytical process involving     
various determinations as to the most appropriate and relevant methods of       
financial analysis and the application of those methods to the particular       
circumstances and, therefore, is not susceptible to partial analysis or summary 
descriptions. In arriving at its opinion, UBS Warburg made qualitative judgments
as to the significance and relevance of each analysis and factor considered by  
it. Accordingly, UBS Warburg believes that its analyses must be considered as a 
whole and that selecting portions of its analyses and the factors considered by 
it, without considering all analyses and                                        

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factors, could create an incomplete view of the processes underlying the        
analyses set forth in its opinion.                                              

In performing its analyses, UBS Warburg made numerous assumptions with  
respect to industry performance, general business, financial, market and        
economic conditions and other matters, many of which are beyond the control of  
NGH or Nabisco Holdings. No company, transaction or business used in those      
analyses as a comparison is identical to Nabisco Holdings or its businesses or  
the Nabisco Holdings merger, nor is an evaluation of the results entirely       
mathematical. Rather, the analyses involve complex considerations and judgments 
concerning financial and operating characteristics and other factors that could 
affect the acquisition, public trading or other values of the companies,        
business segments or transactions being analyzed.                               

The estimates contained in the analyses performed by UBS Warburg and the
ranges of valuations resulting from any particular analysis are not necessarily 
indicative of actual values or predictive of future results or values, which may
be significantly more or less favorable than suggested by these analyses. In    
addition, analyses relating to the value of businesses or securities do not     
purport to be appraisals or to reflect the prices at which a business might     
actually be sold or the prices at which any securities may trade at the present 
time or at any time in the future.                                              

NGH and Nabisco Holdings selected UBS Warburg based on its experience,  
expertise and reputation. UBS Warburg is an internationally recognized          
investment banking firm that regularly engages in the valuation of businesses   
and their securities in connection with mergers and acquisitions, negotiated    
underwritings, competitive bids, secondary distributions of listed and unlisted 
securities, private placements and valuations for estate, corporate and other   
purposes. In the past, UBS Warburg and its predecessors have provided investment
banking services to NGH, Nabisco Holdings and Philip Morris and received        
customary compensation for the rendering of these services. In the ordinary     
course of its business, UBS Warburg, its successors and affiliates may trade or 
have traded securities of NGH, Nabisco Holdings and Philip Morris for their own 
accounts and, accordingly, may at any time hold a long or short position in such
securities. UBS Warburg and its affiliates, including UBS AG, may have other    
business relationships with NGH, Nabisco Holdings, Philip Morris and their      
respective affiliates.                                                          

 The following is a summary of the material financial analyses used by UBS
Warburg in connection with the rendering of its opinion. The financial analyses 
summarized below include information presented in tabular format. In order to   
fully understand the financial analyses, the tables must be read together with  
the text of each summary. Considering the data set forth below without          
considering the full narrative description of the financial analyses, including 
the methodologies and assumptions underlying the analyses, could create a       
misleading or incomplete view of the financial analyses.                        

HISTORICAL STOCK PRICE ANALYSIS.  UBS Warburg reviewed the historical   
trading prices for Nabisco Holdings Class A common stock for the period from    
June 15, 1999 through June 21, 2000, and compared the movements in those prices 
to the movements of an index of publicly-traded branded foods companies for the 
same period. The branded food company index consists of Campbell Soup Company,  
ConAgra, Inc., General Mills, Inc., H.J. Heinz Company, Hershey Foods           
Corporation, Keebler Foods Company, Kellogg Company, The Quaker Oats Company,   
Ralston Purina Company and Sara Lee Corporation. UBS Warburg observed that,     
during the period from March 29, 2000 (the last day prior to the announcement of
Mr. Icahn's intention to commence a tender offer for 100 million shares of NGH's
common stock) to June 21, 2000, the per share price of Nabisco Holdings Class A 
common stock increased 94.1% from $27.31 on March 21, 2000 to $53.00 on         
June 21, 2000. During the same period, the branded food company index increased 
by 15.2%.                                                                       

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SELECTED PUBLIC COMPANIES TRADING ANALYSIS.  UBS Warburg reviewed and   
analyzed selected financial information, ratios and public market multiples for 
the following 10 publicly-traded branded food companies:                        

- Campbell Soup Company                                                 

- ConAgra, Inc.                                                         

- General Mills, Inc.                                                   

- H.J. Heinz Company                                                    

- Hershey Foods Corporation                                             

- Keebler Foods Company                                                 

- Kellogg Company                                                       

- The Quaker Oats Company                                               

- Ralston Purina Company                                                

- Sara Lee Corporation                                                  

UBS Warburg chose the selected public companies because they were       
publicly-traded companies that, for purposes of the analysis, UBS Warburg       
considered reasonably similar to Nabisco Holdings in that these companies       
operate in the branded foods industry. The selected public companies may        
significantly differ from Nabisco Holdings based on, among other things, the    
size of the companies, the geographic coverage of the companies' operations, and
the particular segments of the branded foods industry in which the companies    
focus.                                                                          

UBS Warburg reviewed, among other things, the following:                

   - enterprise values, calculated as the market value of fully diluted equity
securities plus indebtedness and minority interests less cash, as of
     June 21, 2000, as a multiple of actual trailing 12 months sales, earnings
    before interest, taxes, depreciation and amortization, commonly referred
      to as EBITDA, and earnings before interest and taxes, commonly referred to
as EBIT;                                                            

 - equity values, calculated as per share closing stock prices on June 21,
2000, as a multiple of estimated calendar 2000 earnings per share,  
commonly referred to as EPS; and                                    

   - the ratio of 2000 estimated price/earnings ratio to five-year growth rate
provided by I/B/E/S International Inc., or IBES.                    

This analysis indicated the following implied multiples for the selected
public companies:                                                               

                                                        [Enlarge/Download Table]

                                         IMPLIED RANGE OF MULTIPLES OF SELECTED PUBLIC COMMPANIES:
                                         ---------------------------------------------------------
                                             LOW            HIGH           MEAN          MEDIAN   
                                         ------------   ------------   ------------   ------------
                                                                                                  
ENTERPRISE VALUE                                                                                  
Actual Trailing 12 Months Sales.........     0.6x           2.7x           1.9x           2.0x    
Actual Trailing 12 Months EBITDA........     7.5x          12.7x          10.0x          10.2x    
Actual Trailing 12 Months EBIT..........    10.0x          15.0x          12.6x          12.5x    
EQUITY VALUE                                                                                      
Estimated Calendar 2000 EPS.............    11.1x          22.2x          17.3x          17.7x    
2000 P/E                                                                                          
IBES Five-Year Growth Rate..............     1.1x           2.2x           1.7x           1.7x    

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UBS Warburg then compared the implied multiples derived for the selected
public companies with the relevant financial statistics for Nabisco Holdings.   
This comparison yielded an implied valuation range of $32 to $42 per Nabisco    
Holdings share versus the $55 per Nabisco Holdings share offered by Philip      
Morris. Actual trailing 12 months data for Nabisco Holdings and the selected    
companies were based on the respective companies' Forms 10-K and 10-Q. Estimated
financial data for the selected companies were based on publicly available      
research analysts' estimates. Estimated financial data for Nabisco Holdings were
based on internal estimates provided by the management of Nabisco Holdings.     

   SELECTED TRANSACTIONS ANALYSIS.  UBS Warburg reviewed and compared publicly
available information relating to the following 10 selected transactions in the 
branded foods industry announced since 1985:                                    

                                                                [Download Table]

                                                             ANNOUNCEMENT
TARGET                       ACQUIROR                            DATE    
------                       --------                        ------------
                                                                         
Bestfoods                    Unilever N.V. and Unilever PLC  5/25/00     
American Home Products Corp. Hicks, Muse, Tate & Furst Inc.  9/6/96      
  (Food Division)                                                        
Pet Incorporated             Grand Metropolitan plc          1/9/95      
Gerber Products Company      Sandoz Ltd.                     5/23/94     
Borden, Inc.                 Kohlberg Kravis Roberts & Co.   9/12/94     
Snapple Beverage Corp.       The Quaker Oats Company         11/2/94     
Beatrice Company             ConAgra, Inc.                   6/7/90      
The Pillsbury Company        Grand Metropolitan plc          10/4/88     
Kraft Foods, Inc.            Philip Morris                   10/18/88    
General Foods Corporation    Philip Morris                   9/27/85     

UBS Warburg chose the selected transactions because they were business  
combinations that, for the purposes of the analysis, UBS Warburg considered to  
be reasonably similar to the Nabisco Holdings merger in that these transactions 
involved companies in the branded foods industry. The selected transactions may 
significantly differ from the Nabisco Holdings merger based on, among other     
things, the size of the transactions, the structure of the transactions and the 
date the transactions were consummated.                                         

  UBS Warburg reviewed, among other things, the enterprise values implied in
the relevant transactions as a multiple of actual trailing 12-months sales,     
EBITDA and EBIT.                                                                

This analysis indicated the following implied multiples for the selected
transactions:                                                                   

                                                        [Enlarge/Download Table]

                                                      IMPLIED MULTIPLES OF SELECTED TRANSACTIONS: 
                                                     ---------------------------------------------
                                                        LOW        HIGH        MEAN       MEDIAN  
                                                     ---------   ---------   ---------   ---------
                                                                                                  
ENTERPRISE VALUE TO ACTUAL TRAILING 12 MONTHS:                                                    
Sales...............................................   0.5x         3.2x        1.6x        1.3x  
EBITDA..............................................   5.2x        16.9x       11.5x       11.4x  
EBIT................................................   7.6x        24.0x       15.4x       14.9x  

UBS Warburg then compared the implied multiples derived for the selected
transactions with the relevant financial statistics for Nabisco Holdings. This  
comparison yielded an implied valuation range of $48 to $59 per Nabisco Holdings
share versus the $55 per Nabisco Holdings share offered by Philip Morris. All   
multiples for the selected transactions were based on publicly available        
information at the                                                              

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time of the announcement of the particular transaction. Actual trailing         
12-months data for Nabisco Holdings was based on its applicable Forms 10-K and  
10-Q.                                                                           

    DISCOUNTED CASH FLOW ANALYSIS.  UBS Warburg performed a discounted cash flow
analysis, using internal estimates of the management of Nabisco Holdings, in    
order to derive an implied equity value reference range for Nabisco Holdings.   
This analysis was based on:                                                     

 - the present value of the estimated unlevered, after-tax free cash flows
that Nabisco Holdings could generate over the five-year period 2000 
through 2004; and                                                   

   - the present value of the 2004 terminal value of Nabisco Holdings based on
a range of multiples applied to its estimated future 2004 EBITDA.   

 For purposes of this analysis, UBS Warburg used discount rates of 8.5% to
10.0%, which were based on Nabisco Holdings' estimated weighted average cost of 
capital, and terminal 2004 EBITDA multiples of 9.0x to 11.0x, which were derived
by reference to the selected public companies trading analysis. This analysis   
implied a per share equity value reference range for Nabisco Holdings of $44 to 
$58.                                                                            

OPINION OF MORGAN STANLEY & CO. INCORPORATED                                    

    Pursuant to a letter agreement dated as of April 3, 2000, Morgan Stanley was
engaged by NGH and Nabisco Holdings to provide financial advisory services in   
connection with the Nabisco Holdings merger. At the joint meeting of the Boards 
of Directors of NGH and Nabisco Holdings on June 25, 2000, Morgan Stanley       
rendered its oral opinion, subsequently confirmed in writing on the same day,   
that based upon and subject to the various considerations set forth in the      
opinion, the aggregate consideration to be paid pursuant to the Nabisco Holdings
merger agreement to the holders of the Class A common stock and Class B common  
stock of Nabisco Holdings (other than Philip Morris and its affiliates) is fair 
from a financial point of view to such holders, including NGH. Morgan Stanley   
did not opine on the relative fairness of the consideration to be paid to NGH,  
as the holder of the Class B common stock, and to the holders of the Class A    
common stock.                                                                   

    THE FULL TEXT OF THE WRITTEN OPINION OF MORGAN STANLEY, DATED JUNE 25, 2000,
WHICH SETS FORTH, AMONG OTHER THINGS, ASSUMPTIONS MADE, PROCEDURES FOLLOWED,    
MATTERS CONSIDERED AND LIMITATIONS ON THE SCOPE OF THE REVIEW UNDERTAKEN BY     
MORGAN STANLEY IN RENDERING ITS OPINION, IS ATTACHED AS ANNEX E TO THIS PROXY   
STATEMENT. STOCKHOLDERS ARE URGED TO, AND SHOULD, READ THE OPINION CAREFULLY AND
IN ITS ENTIRETY. MORGAN STANLEY'S OPINION IS DIRECTED TO THE BOARDS OF DIRECTORS
OF NGH AND NABISCO HOLDINGS AND ADDRESSES ONLY THE FAIRNESS, FROM A FINANCIAL   
POINT OF VIEW, OF THE CONSIDERATION TO BE PAID PURSUANT TO THE NABISCO HOLDINGS 
MERGER AGREEMENT IN THE AGGREGATE TO THE HOLDERS OF SHARES OF NABISCO HOLDINGS  
COMMON STOCK AS OF THE DATE OF THE OPINION, DOES NOT ADDRESS ANY OTHER ASPECT OF
THE NABISCO HOLDINGS MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY     
STOCKHOLDER OF NABISCO HOLDINGS OR NGH AS TO HOW TO VOTE WITH RESPECT TO THE    
NABISCO HOLDINGS MERGER. THE SUMMARY OF THE OPINION OF MORGAN STANLEY SET FORTH 
IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL   
TEXT OF SUCH OPINION.                                                           

In connection with rendering its opinion, Morgan Stanley, among other   
things:                                                                         

  - reviewed certain publicly available financial statements and other
information of Nabisco Holdings;                              

      - reviewed certain internal financial statements and other financial and
       operating data concerning Nabisco Holdings prepared by the management
of Nabisco Holdings;                                          

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 - reviewed certain financial projections regarding Nabisco Holdings
prepared by the management of Nabisco Holdings;               

     - discussed the past and current operations and financial condition and
     the prospects of Nabisco Holdings with senior executives of Nabisco
Holdings;                                                     

       - reviewed the reported prices and trading activity of the Class A common
stock;                                                        

     - compared the financial performance of Nabisco Holdings and the prices
       and trading activity of the Class A common stock with that of certain
comparable publicly-traded companies and their securities;    

  - reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;                  

- participated in certain discussions and negotiations among      
      representatives of Nabisco Holdings, NGH and Philip Morris and their
financial and legal advisors;                                 

    - reviewed certain drafts of the Nabisco Holdings merger agreement, as
well as the NGH voting and indemnity agreement;               

 - discussed the tax implications of the consummation of the Nabisco
   Holdings merger with Nabisco Holdings, NGH and their counsel; and

  - performed such other analyses and considered such other factors as
Morgan Stanley deemed appropriate.                            

 In rendering its opinion, Morgan Stanley assumed and relied upon, without
independent verification, the accuracy and completeness of the information      
reviewed by it for the purposes of its opinion. With respect to the financial   
projections, Morgan Stanley assumed that they were reasonably prepared on bases 
reflecting the best currently available estimates and judgments of the future   
financial performance of Nabisco Holdings.                                      

Morgan Stanley did not make, and did not assume any responsibility for  
making, any independent valuation or appraisal of the assets or liabilities of  
Nabisco Holdings, nor was it furnished with any such appraisals. Morgan Stanley 
assumed that the executed versions of the Nabisco Holdings merger agreement and 
the NGH voting and indemnity agreement would not differ in any material respect 
from the last drafts reviewed by Morgan Stanley. Morgan Stanley assumed that the
Nabisco Holdings merger will be consummated in accordance with the terms set    
forth in the Nabisco Holdings merger agreement without material modification or 
waiver. Morgan Stanley also assumed that the consummation of the Nabisco        
Holdings merger would not adversely affect the tax-free treatment of the RJR    
Spinoff. Morgan Stanley's opinion is necessarily based on financial, economic,  
market and other conditions as in effect on, and the information made available 
to it, as of June 25, 2000, but its opinion did not address Nabisco Holdings'   
underlying business decision to effect the transactions contemplated by the     
Nabisco Holdings merger agreement.                                              

The following is a brief summary of all material analyses performed by  
Morgan Stanley in connection with its oral opinion and the preparation of its   
written opinion letter dated June 25, 2000. Some of these summaries of financial
analyses include information presented in tabular format. In order to fully     
understand the financial analyses used by Morgan Stanley, the tables must be    
read together with the text of each summary.                                    

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HISTORICAL SHARE PRICE PERFORMANCE.  Morgan Stanley reviewed the stock  
performance of Nabisco Holdings and compared such performance with the stock    
performance of the companies comprising a U.S.-based, large capitalization food 
company index (the "Large Capitalization Food Company Index"), which consists of
the following companies: Bestfoods, Campbell Soup Company, ConAgra, Inc.,       
General Mills, Inc., Hershey Foods Corporation, H.J. Heinz Company, Kellogg     
Company, The Quaker Oats Company, Ralston Purina Company and Sara Lee           
Corporation. Morgan Stanley observed that during the period from March 29, 2000 
(the last day prior to the announcement of Mr. Icahn's intention to commence a  
tender offer for 100 million shares of NGH common stock) to June 21, 2000, the  
price per share of Nabisco Holdings Class A common stock increased 94.1%.       
Nabisco Holdings Class A common stock closed at $27.31 per share on March 29,   
2000 (the "Unaffected Price") and closed at $53.00 per share on June 21, 2000.  
In comparison, the Large Capitalization Food Company Index increased 15.9%      
during the period from March 29, 2000 to June 21, 2000. Morgan Stanley noted    
that the trading range for the 52-week period ended March 29, 2000 for the      
Class A common stock was from $26.94 per share to $43.75 per share and compared 
that to the consideration to be paid in the Nabisco Holdings merger of $55.00   
per share. Morgan Stanley also noted that the implied premium of the            
consideration in the Nabisco Holdings merger of $55.00 per share to the         
Unaffected Price was 101.4%.                                                    

PEER GROUP COMPARISON.  Morgan Stanley compared financial information of
Nabisco Holdings with publicly-available information for the following          
U.S.-based, large capitalization food companies:                                

- Bestfoods;                                                            

- Campbell Soup Company;                                                

- ConAgra, Inc.;                                                        

- General Mills, Inc.;                                                  

- Hershey Foods Corporation;                                            

- H.J. Heinz Company;                                                   

- Kellogg Company; and                                                  

- The Quaker Oats Company.                                              

For this analysis, Morgan Stanley examined a range of estimates based on
securities research analysts' estimates. The following table presents, as of    
June 21, 2000, the low, high and median of the ratio of aggregate value, defined
as market capitalization plus total debt less cash and cash equivalents, to     
estimated calendar year 2000 EBITDA, the ratio of share price to estimated      
calendar year 2000 EPS, the estimated growth in earnings per share over a       
five-year period, as provided by selected research analysts on publicly-traded  
companies, and the ratio of the estimated calendar year 2000 price-to-earnings  
ratio to the estimated five-year growth in earnings per share. Morgan Stanley   
then compared this information to similar information for Nabisco Holdings based
on the consideration to be received pursuant to the Nabisco Holdings merger     
agreement and Nabisco Holdings based on the Unaffected Price.                   

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                                                        [Enlarge/Download Table]

                                                                                      2000E PRICE-TO-
                                               AGGREGATE                                 EARNINGS    
                                              VALUE/2000E  PRICE/2000  FIVE-YEAR EPS  RATIO/FIVE-YEAR
                                                EBITDA        EPS         GROWTH        EPS GROWTH   
                                              -----------  ----------  -------------  ---------------
                                                                                                     
Low..........................................      7.0x       11.1x         9.0%            1.1x     
High.........................................     12.4        25.3         10.0             2.5      
Median.......................................      9.8        17.7         10.0             1.8      
Nabisco Holdings merger consideration........     12.6        23.8         10.0             2.4      
Nabisco Holdings (Unaffected Price)..........      7.5        11.8         10.0             1.2      

  Morgan Stanley noted that a trading comparable multiple range for the peer
group companies of 9.0x-11.5x of 2000E EBITDA would imply a Nabisco Holdings    
price range for the Class A common stock of approximately $36 to $49 per share. 

 No company utilized in the peer group comparison analysis is identical to
Nabisco Holdings. In evaluating the peer group, Morgan Stanley made judgments   
and assumptions with regard to industry performance, general business, economic,
market and financial conditions and other matters, many of which are beyond the 
control of Nabisco Holdings, such as the impact of competition on the business  
of Nabisco Holdings or the industry generally, industry growth and the absence  
of any material adverse change in the financial condition and prospects of      
Nabisco Holdings or the industry or in the financial markets in general.        
Mathematical analysis, such as determining the average or median, is not in     
itself a meaningful method of using peer group data.                            

ANALYSIS OF SELECTED PRECEDENT TRANSACTIONS.  Morgan Stanley compared   
statistics based on publicly available information for selected precedent       
transactions to the relevant financial statistics for Nabisco Holdings. Morgan  
Stanley reviewed the following 15 food industry transactions:                   

                                                                [Download Table]

TARGER                          ACQUIROR                       ANNOUNCEMENT DATE
------                          --------                       -----------------
                                                                                
Bestfoods                       Unilever PLC and Unilever N.V.    5/25/00       
Slim-Fast Foods Company         Unilever N.V.                     4/12/00       
The Iams Company                The Procter & Gamble Company      8/11/99       
United Biscuits (Holdings) plc  Finalrealm Limited                12/17/99      
Tropicana Products, Inc.        PepsiCo, Inc.                     7/20/98       
Keebler Foods Company           Flowers Industries, Inc.          2/3/98        
Pet Incorporated                Grand Metropolitan plc            1/9/95        
Pace Foods Ltd.                 Campbell Soup Company             11/28/94      
Snapple Beverage Corp.          The Quaker Oats Company           11/2/94       
Borden Inc.                     Kohlberg Kravis Roberts & Co.     9/12/94       
Gerber Products Company         Sandoz Ltd.                       5/23/94       
Beatrice Company                ConAgra, Inc.                     6/7/90        
RJR Nabisco, Inc.               Kohlberg Kravis Roberts & Co.     10/24/88      
Kraft Foods, Inc.               Philip Morris Companies Inc.      10/17/88      
The Pillsbury Company           Grand Metropolitan plc            10/4/88       

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 The following table presents the high, low and median ratios of aggregate
value to last twelve-month ("LTM") sales, EBITDA and earnings before interest   
and taxes ("EBIT") for the selected precedent transactions and compared this    
information to similar information for Nabisco Holdings based on the            
consideration to be received pursuant to the Nabisco Holdings merger agreement. 

                                                        [Enlarge/Download Table]

                                                   AGGREGATE        AGGREGATE        AGGREGATE   
                                                VALUE/LTM SALES  VALUE/LTM EBITDA  VALUE/LTM EBIT
                                                ---------------  ----------------  --------------
                                                                                                 
Low............................................       0.6x              5.4x             7.9x    
High...........................................       4.7              18.6             32.0     
Median.........................................       1.8              12.4             18.3     
Nabisco Holdings merger consideration..........       2.3              13.9             22.6     

Morgan Stanley observed that a trading comparable multiple range of     
12.0x-15.0x of LTM EBITDA for selected precedent transactions would imply a     
Nabisco Holdings price range for the Class A common stock of approximately $46  
to $60 per share.                                                               

No transaction utilized as a comparison in the selected precedent       
transactions analysis is identical to the Nabisco Holdings merger. In evaluating
the transactions listed above, Morgan Stanley made judgments and assumptions    
with regard to industry performance, general business, economic, market and     
financial conditions and other matters, many of which are beyond the control of 
Nabisco Holdings, such as the impact of competition on the business of Nabisco  
Holdings or the industry generally, industry growth and the absence of any      
adverse material change in the financial condition and prospects of Nabisco     
Holdings or the industry or in the financial markets in general. Mathematical   
analysis, such as determining the average or median, is not in itself a         
meaningful method of using comparable transaction data.                         

  DISCOUNTED CASH FLOW ANALYSIS.  Morgan Stanley performed a discounted cash
flow analysis, which is an analysis of the present value of projected unlevered 
free cash flows using terminal year EBITDA multiples and discount rates of      
Nabisco Holdings. Morgan Stanley analyzed Nabisco Holdings' business using      
publicly-available information, discussions with Nabisco Holdings' management   
and certain financial forecasts prepared by Nabisco Holdings management for the 
fiscal years 2000 through 2004. The terminal value was calculated using terminal
multiples of estimated 2004 EBITDA ranging from 9.0x to 11.0x. For purposes of  
this analysis, Morgan Stanley estimated Nabisco Holdings' discounted unlevered  
free cash flow value using discount rates ranging from 8.5% to 9.5%. The range  
of discount rates was selected based in part on an analysis of food industry    
companies used to derive a range of estimated weighted average costs of capital 
and the experience and judgment of Morgan Stanley with respect to the food      
industry. The discounted cash flow analysis implied a range of values for       
Nabisco Holdings Class A common stock of approximately $43 to $55 per share.    

  In connection with the review of the Nabisco Holdings merger by the Boards
of Directors of NGH and Nabisco Holdings, Morgan Stanley performed a variety of 
financial and comparative analyses for purposes of its opinion given in         
connection therewith. The preparation of a fairness opinion is a complex process
and is not necessarily susceptible to partial analysis or summary description.  
In arriving at its opinion, Morgan Stanley considered the results of all of its 
analyses as a whole and did not attribute any particular weight to any analysis 
or factor considered by it. Furthermore, Morgan Stanley believes that selecting 
any portion of its analyses, without considering all analyses, would create an  
incomplete view of the process underlying its opinion. In addition, Morgan      
Stanley may have given various analyses and factors more or less weight than    
other analyses and factors and may have deemed various assumptions more or less 
probable than other assumptions, so that the ranges of valuations               

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resulting from any particular analysis described above should not be taken to be
Morgan Stanley's view of the actual value of Nabisco Holdings.                  

 In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and   
other matters, many of which are beyond the control of Nabisco Holdings. Any    
estimates contained in Morgan Stanley's analyses are not necessarily indicative 
of future results or actual values, which may be significantly more or less     
favorable than those suggested by such estimates. The analyses performed were   
prepared solely as part of Morgan Stanley's analysis of the fairness from a     
financial point of view of the consideration to be paid pursuant to the Nabisco 
Holdings merger agreement in the aggregate to the holders of Nabisco Holdings   
common stock, including NGH, and were conducted in connection with the delivery 
of the Morgan Stanley opinion to the Boards of Directors of NGH and Nabisco     
Holdings. The consideration to be received by the holders of the common stock   
pursuant to the Nabisco Holdings merger agreement and other terms of the Nabisco
Holdings merger agreement and the NGH voting and indemnity agreement were       
determined through arm's-length negotiations between NGH, Nabisco Holdings and  
Philip Morris and were approved by the NGH and the Nabisco Holdings Boards of   
Directors. Morgan Stanley provided advice to NGH and Nabisco Holdings during    
such negotiations; however, Morgan Stanley did not recommend any specific       
consideration to Nabisco Holdings or that any specific consideration constituted
the only appropriate consideration for the Nabisco Holdings merger. In addition,
as described above, Morgan Stanley's opinion and presentation to the NGH and the
Nabisco Holdings Boards of Directors was one of many factors taken into         
consideration by such Boards of Directors in making their decision to approve   
the Nabisco Holdings merger. Consequently, the Morgan Stanley analyses as       
described above should not be viewed as determinative of the opinion of the NGH 
and the Nabisco Holdings Boards of Directors with respect to the value of       
Nabisco Holdings or of whether the NGH or the Nabisco Holdings Boards of        
Directors would have been willing to agree to a different consideration.        

    The NGH and the Nabisco Holdings Boards of Directors retained Morgan Stanley
based upon Morgan Stanley's qualifications, experience and expertise and its    
knowledge of the business affairs of NGH and Nabisco Holdings. Morgan Stanley is
an internationally recognized investment banking and advisory firm. Morgan      
Stanley, as part of its investment banking and financial advisory business, is  
continuously engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,  
secondary distributions of listed and unlisted securities, private placements   
and valuations for corporate and other purposes. In the past, Morgan Stanley has
provided financial advisory and financing services for NGH, Nabisco Holdings and
Philip Morris and has received fees for the rendering of these services. In the 
ordinary course of business, Morgan Stanley may from time to time trade in the  
securities or indebtedness of NGH, Nabisco Holdings or Philip Morris for its own
account, the accounts of investment funds and other clients under the management
of Morgan Stanley and for the accounts of customers and, accordingly, may at any
time hold a long or short position in such securities or indebtedness.          

FEE ARRANGEMENTS                                                                

Pursuant to an engagement letter dated March 13, 2000 among NGH, Nabisco
Holdings and UBS Warburg, and an engagement letter dated April 3, 2000 among    
NGH, Nabisco Holdings and Morgan Stanley, each of UBS Warburg and Morgan Stanley
provided financial advisory services and a fairness opinion to NGH and Nabisco  
Holdings in connection with the Nabisco Holdings merger. Pursuant to the        
engagement letters, NGH and Nabisco Holdings have agreed to pay UBS Warburg and 
Morgan Stanley in the aggregate as compensation for their services the following
amounts: (i) retainer fees of                                                   

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$200,000 per month, (ii) opinion fees of $10,000,000, and (iii) transaction fees
of $41,000,000 upon the completion of an acquisition transaction involving NGH  
or Nabisco Holdings, against which any retainer fees and opinion fees paid will 
be credited, it being understood that no more than $41,000,000 in transaction   
fees will be payable even if more than one such transaction is completed. In    
addition, pursuant to the engagement letters, Nabisco Holdings has agreed to pay
the financial advisors incentive fees of $8,000,000 in the aggregate upon the   
closing of the Nabisco Holdings merger based upon the $55 per share             
consideration, and NGH and Nabisco Holdings have agreed to pay additional       
discretionary incentive fees of $8,000,000 in the aggregate to the financial    
advisors.                                                                       

NGH and Nabisco Holdings have also agreed to reimburse UBS Warburg and  
Morgan Stanley for their expenses reasonably incurred in performing their       
services. In addition, NGH and Nabisco Holdings have agreed to indemnify each of
UBS Warburg and Morgan Stanley and their respective affiliates, and their       
respective directors, officers, agents and employees and each person, if any,   
controlling UBS Warburg or Morgan Stanley or any of their affiliates against    
certain liabilities and expenses related to or arising out of UBS Warburg's or  
Morgan Stanley's engagement and any related transactions.                       

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CHAPTER THREE 
ACQUISITION OF NGH BY RJR 

The NGH Board of Directors has approved, and recommends that NGH        
stockholders adopt, the NGH merger agreement pursuant to which RJR will acquire 
NGH after NGH's sale of its 80.5% interest in Nabisco Holdings.                 

NGH MERGER AGREEMENT

    The following is a summary of the material terms of the NGH merger agreement
and is qualified by reference to the complete text of the NGH merger agreement, 
which is incorporated by reference and attached as Annex C.                     

THE NGH MERGER                                                                  

    Under the NGH merger agreement, a subsidiary of RJR will merge with and into
NGH (or, at the election of RJR, NGH will merge with and into the subsidiary) in
accordance with Delaware law. By virtue of the merger, NGH will become a        
wholly-owned subsidiary of RJR.                                                 

COMPLETION OF THE NGH MERGER                                                    

As soon as practicable after all of the conditions set forth in the NGH 
merger agreement have been satisfied or waived, the parties will file a         
certificate of merger with the Secretary of State of the State of Delaware. The 
NGH merger will be completed at the time the certificate is filed.              

MERGER CONSIDERATION                                                            

The NGH merger agreement provides that each share of NGH common stock   
outstanding immediately prior to the completion of the NGH merger (except for   
shares as to which appraisal rights have been properly exercised), together with
the preferred stock purchase rights associated with each such share, will, at   
the completion of the NGH merger, be converted into the right to receive $30 per
share in cash, without interest, prorated for fractional shares. However, shares
of NGH held as treasury shares or owned by RJR or its subsidiaries will be      
canceled without any payment for those shares.                                  

In the event (1) the Nabisco Holdings merger agreement is terminated in 
accordance with its terms, (2) RJR has not terminated the NGH merger agreement  
and (3) a transaction is completed where NGH receives, in its capacity as a     
stockholder of Nabisco Holdings, more than $55 per Nabisco Holdings share, an   
automatic adjustment to the merger consideration payable by RJR will be made.   
The amount of the merger consideration will be increased so that in addition to 
the $30 per share in cash described above, NGH stockholders will generally      
receive one-half of the per share net proceeds (as defined in the NGH merger    
agreement) to NGH in excess of $55 per Nabisco Holdings share.                  

SURRENDER OF CERTIFICATES AND PAYMENT PROCEDURES                                

RJR will appoint an exchange agent to handle the exchange of your share 
certificates for the merger consideration. Soon after the NGH merger is         
completed, the exchange agent will send you a letter of transmittal and         
instructions explaining how to surrender your share certificates. If you        
surrender your certificates to the exchange agent, together with a properly     
completed letter of transmittal, and all other documents the exchange agent may 
reasonably require, you will receive the appropriate merger consideration. Until
surrendered in accordance with the foregoing instructions, each certificate     
formerly representing shares of NGH will only represent the right to receive the
merger consideration. No interest will be paid or will accrue on the merger     
consideration payable.                                                          

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   At the completion of the NGH merger, the stock transfer book of NGH will be
closed and there will be no further registration of transfers of shares. If     
certificates of shares are presented after the completion of the NGH merger they
will be canceled and exchanged for the right to receive the merger              
consideration.                                                                  

STOCK OPTIONS                                                                   

  At or immediately prior to the completion of the NGH merger, each employee
and director option to purchase shares outstanding under any stock option or    
compensation plan or arrangement of NGH, whether or not vested or exercisable,  
will be canceled, and NGH will pay each optionholder at or promptly after the   
completion of the NGH merger an amount in cash equal to (1) the excess, if any, 
of the merger consideration per share over the applicable exercise price of such
option multiplied by the number of shares to which such option relates (assuming
full vesting of all outstanding options) or (2) for certain specified options,  
the greater of the amount calculated under clause (1) or the Black-Scholes value
of such option determined in accordance with the terms of the merger agreement. 

COVENANTS                                                                       

   NGH and RJR have agreed to certain covenants in the NGH merger agreement. A
description of the covenants follows:                                           

    NO SOLICITATION BY NGH.  The NGH merger agreement prohibits NGH from
soliciting, initiating or encouraging any proposal for an alternative   
 acquisition transaction involving NGH or its subsidiaries, or negotiating
   with or furnishing nonpublic information to, any third party regarding such
 an acquisition transaction, except that NGH may engage in such activities
prior to receipt of approval of the NGH merger from NGH stockholders if:

    - NGH has received an unsolicited acquisition proposal from that third
       party, has so notified RJR and has complied with the non-solicitation
provisions of the NGH merger agreement;                       

      - the NGH Board determines in good faith that such proposal is likely to
         result in a superior proposal, as defined below, and after consultation
        with outside legal counsel, that the failure to take such action would
constitute a breach of its fiduciary duties;                  

       - the third party executes a confidentiality agreement with terms no less
        favorable to NGH than those contained in the confidentiality agreement
with RJR; and                                                 

     - NGH notifies RJR of the action it intends to take with respect to the
acquisition proposal.                                         

  NGH BOARD'S COVENANT TO RECOMMEND.  The NGH Board of Directors has
    agreed to recommend the approval and adoption of the NGH merger agreement to
    NGH stockholders. However, the NGH Board is permitted to withdraw, or modify
in a manner adverse to RJR, its recommendation, if:                     

 - NGH has received an unsolicited acquisition proposal from a third
       party, has so notified RJR and has complied with the non-solicitation
provisions of the NGH merger agreement;                       

       - the NGH Board determines in good faith that such proposal constitutes a
  superior proposal, as defined below, and after consultation with
   outside legal counsel, that the failure to take such action would
constitute a breach of its fiduciary duties; and              

     - NGH notifies RJR of the action it intends to take with respect to its
recommendation.                                               

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 A "superior proposal" is a bona fide written acquisition proposal
(1) on terms that the Board of Directors of NGH determines in good faith
  (after consultation with its financial advisor and taking into account all
terms and conditions of the proposal, including the legal, financial and
    regulatory aspects) provide greater value to NGH's stockholders than the NGH
merger (or, if applicable, the amended proposal offered by RJR) and     
(2) that is reasonably likely to be completed.                          

       REASONABLE BEST EFFORTS COVENANT.  NGH and RJR have agreed to use their
  reasonable best efforts to take all actions necessary, proper or advisable
under applicable laws and regulations to complete the NGH merger. In    
  particular, NGH and RJR have agreed to take all actions necessary to cause
    the expiration or termination of the applicable waiting period under the HSR
Act.                                                                    

      NGH'S INTERIM OPERATIONS.  NGH has agreed that until the completion of
the NGH merger, NGH will conduct its business in the ordinary course    
consistent with past practice and will use reasonable best efforts to   
preserve intact its business organizations and relationships with third 
parties and to keep available the services of its present officers and  
 employees. NGH has also agreed, with certain exceptions, that it will not
 prior to the completion of the NGH merger do any of the following without
the consent of RJR:                                                     

- declare dividends other than customary quarterly cash dividends;

      - repurchase, redeem or otherwise acquire or offer to acquire any shares
or other securities of NGH;                                   

       - issue, encumber or sell any voting securities of NGH, or any securities
        convertible into voting securities, or any rights, warrants or options
        to acquire any voting securities or convertible securities, other than
       pursuant to existing stock-based awards or options, or split, combine
      or reclassify any of its capital stock or issue any other securities
for shares of its capital stock;                              

     - amend the certificate of incorporation, by-laws or any material terms
of any outstanding securities of NGH;                         

    - merge or consolidate with any entity or acquire a material amount of
stock or assets of any other entity;                          

     - sell or otherwise dispose of the Nabisco Holdings shares or any other
  assets except pursuant to the Nabisco Holdings merger agreement;

  - incur or guarantee any indebtedness or issue or guarantee any debt
securities;                                                   

     - adopt or amend any employee plan or benefit arrangement or materially
         change any funding assumptions of any existing employee plan or benefit
arrangement;                                                  

    - increase the compensation of officers, directors or employees or pay
     any benefit or amount not required by any existing employee plan or
benefit arrangement;                                          

   - settle or satisfy any claims or liabilities, other than liabilities
        disclosed and reserved for in NGH's financial statements, or waive the
benefits of any standstill agreement;                         

     - encumber or dispose of any of its properties or assets except through
the Nabisco Holdings merger agreement;                        

- make any material tax election or settle any material income tax
liability;                                                    

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  - fail to cause Nabisco Holdings to pay its customary quarterly cash
       dividend prior to the time NGH's customary quarterly cash dividend is
due;                                                          

  - fail to cause Nabisco Holdings to comply with the Nabisco Holdings
merger agreement and the NGH voting and indemnity agreement;  

  - fail to comply with, amend or waive any right under the NGH voting
         agreement, or permit Nabisco Holdings to amend or waive any right under
         the NGH voting agreement or the Nabisco Holdings merger agreement, in a
        manner that would create additional liability for NGH or delay the NGH
merger;                                                       

    - take any other action that would cause the representation in the NGH
        merger agreement with respect to the absence of certain changes not to
be true and correct;                                          

- adopt a plan of liquidation, dissolution, merger, consolidation,
recapitalization or reorganization, or enter into any material
 agreement providing for acceleration of any material payment or
performance as a result of a change in control; or            

- agree or commit to do any of the foregoing.                     

      EMPLOYEE BENEFITS MATTERS.  RJR has agreed, jointly and severally with
NGH, that NGH will expressly assume, honor, comply with and uphold in   
   accordance with their terms certain specified employee benefits agreements,
understandings or undertakings.                                         

     INDEMNIFICATION AND INSURANCE OF NGH DIRECTORS AND OFFICERS.  RJR has
agreed, jointly and severally with NGH, that it will cause NGH for      
six years after the NGH merger:                                         

- to indemnify NGH's present and former officers and directors for
        liabilities from their acts or omissions in those capacities occurring
  prior to the completion of the NGH merger, to the fullest extent
      permitted by applicable laws or provided under NGH's charter and by-
laws; and                                                     

     - to provide officers' and directors' liability insurance in respect of
       acts or omissions occurring prior to the completion of the NGH merger
         on terms with respect to coverage and amount no less favorable than the
       existing policy, provided that the aggregate annual premium paid need
         not exceed 200% of the current rate of premium and brokerage costs paid
by NGH.                                                       

   TRUST ORIGINATED PREFERRED SECURITIES.  NGH has agreed to cause the
trustees of Nabisco Group Holdings Capital Trust II to (1) dissolve the 
trust and (2) cause NGH's 9 1/2% Junior Subordinated Debentures to be   
   distributed to holders of the preferred and common securities of such trust
   in exchange therefor, which in each case will occur prior to the completion
   of the NGH merger. In addition, NGH will prior to the completion of the NGH
  merger (1) deliver an irrevocable notice to the Debentures trustee stating
    that all outstanding Debentures are to be redeemed on September 30, 2003 and
(2) take all necessary action to cause a "covenant defeasance" of the   
Debentures.                                                             

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REPRESENTATIONS AND WARRANTIES                                                  

   NGH made certain customary representations and warranties to RJR, including
as to:                                                                          

                                                                [Download Table]
                                                                         
- corporate existence and power;       - no material litigation*;        
- corporate authorization;             - tax matters;                    
- governmental authorization;          - employee benefits matters;      
- non-contravention;                   - compliance with laws and court  
                                         orders;                         
- capitalization;                      - finders' fees;                  
- matters relating to the Nabisco      - environmental matters;          
  Holdings merger;                                                       
- SEC filings;                         - certain contracts;              
- disclosure documents;                - insurance;                      
- accuracy of financial statements;    - other agreements;               
- absence of certain changes;          - certain agreements; and         
- absence of undisclosed liabilities;  - inapplicability of anti-takeover
                                       statute and amendment of rights   
                                         agreement.                      

   RJR made certain customary representations and warranties to NGH, including
as to:                                                                          

                                                                [Download Table]
                                                                          
    - corporate existence;                     - non-contravention;       
    - corporate authorization;                 - disclosure documents; and
    - governmental authorization;              - finders' fees.           

   The representations and warranties contained in the NGH merger agreement do
not survive the completion of the NGH merger or the termination of the NGH      
merger agreement.                                                               

CONDITIONS TO THE NGH MERGER                                                    

  MUTUAL CLOSING CONDITIONS.  The obligations of NGH and RJR to complete the
NGH merger are subject to the satisfaction of the following conditions:         

- adoption of the NGH merger agreement by the stockholders of NGH;      

 - no law, court order, verdict, injunction or other legal restraint shall
prohibit the NGH merger or cause the completion of the NGH merger to
    constitute a breach of the fiduciary duties of the Board of Directors of
  either party in the judgment of such Board as determined in good faith
based on the advice of outside legal counsel;                       

- expiration or termination of the HSR Act waiting period;              

- completion of the Nabisco Holdings merger or an alternative Nabisco   
Holdings merger. An "alternative Nabisco Holdings merger" is another
      comparable transaction by which all Nabisco Holdings stockholders receive,
    or have the right to receive upon the surrender of their shares, cash in
    payment for their shares of Nabisco Holdings common stock and which does
not result in any material additional liabilities to NGH or RJR;    

  - accuracy as of the closing of the representations and warranties made by
    the other party to the extent specified in the NGH merger agreement; and

------------------------                                                        
*    NGH does not believe that the filing of the purported shareholder actions  
    described under "--Litigation" in any way causes this representation to be
inaccurate.                                                           

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    - performance in all material respects by the other party of the obligations
required to be performed at or prior to closing.                    

ADDITIONAL CLOSING CONDITIONS FOR RJR'S BENEFIT.  RJR's obligation to   
complete the NGH merger is subject to the following additional conditions:      

  - NGH must have at least $11.728 billion in cash, net of certain expenses,
in immediately available funds in its bank accounts;                

 - NGH must have complied with its covenant to require Nabisco Holdings to
pay its customary quarterly cash dividend prior to the time NGH's   
customary quarterly cash dividend is due; and                       

- RJR's designees must constitute all of the members of the Board of    
Trustees of the Nabisco Foundation.                                 

TERMINATION                                                                     

    NGH and RJR may mutually agree to terminate the NGH merger agreement without
completing the NGH merger. In addition, either NGH or RJR may terminate the NGH 
merger agreement if:                                                            

    (1) the NGH merger has not been completed by April 30, 2001 (or such
later date on which any agreement relating to an alternative Nabisco    
   Holdings merger shall terminate). Neither NGH nor RJR may terminate the NGH
merger agreement on this basis, however, if its breach of the NGH merger
agreement results in the NGH merger not being completed by this date;   

       (2) there is a permanent legal prohibition to the completion of the NGH
merger;                                                                 

        (3) the NGH merger agreement has not been adopted by NGH stockholders at
a duly held stockholders' meeting;                                      

(4) the Nabisco Holdings merger agreement has been terminated in
  accordance with its terms for any reason other than in connection with the
acceptance by Nabisco Holdings of a superior proposal;                  

      (5) the information and representations set forth in the letters dated
June 25, 2000 provided by Steven F. Goldstone and James M. Kilts in     
connection with the opinion of Davis Polk & Wardwell dated June 25, 2000
   delivered to NGH and RJR pursuant to the Tax Sharing Agreement are not true
and complete in all material respects; or                               

    (6) a change in tax law occurs that (i) would apply to a transaction
   completed after such change in tax law (despite a binding written agreement
for such transaction) and (ii) would reasonably be expected to result in
   (A) the imposition of tax on gain realized with respect to Nabisco Holdings
   shares arising out of the Nabisco Holdings Distribution or on gain realized
   with respect to RJR shares arising out of the RJR Spinoff or (B) a material
increase in the tax liability of NGH resulting from the Nabisco Holdings
merger.                                                                 

RJR may terminate the NGH merger agreement if:                          

 (7) the NGH Board fails to recommend the NGH merger, withdraws or
 modifies in a manner adverse to RJR its approval or recommendation of the
 NGH merger or the NGH merger agreement, approves or recommends a superior
proposal, or resolves to do any of the foregoing;                       

       (8) NGH enters into, or publicly announces its intention to enter into,
a definitive agreement or an agreement in principle with respect to a   
superior proposal;                                                      

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        (9) NGH fails to perform in any material respect any material obligation
to be performed under the NGH merger agreement, or breaches any of its  
   representations and warranties such that RJR's condition to closing in this
 respect cannot be satisfied, and in either case such failure is not cured
    within 15 business days or such longer period during which NGH exercises its
reasonable best efforts to cure; or                                     

        (10) a law, court order, verdict or injunction shall cause completion of
  the NGH merger to constitute a breach of the fiduciary duties of the Board
of Directors of RJR in the judgment of such Board as determined in good 
faith based on advice of outside legal counsel.                         

NGH may terminate the NGH merger agreement if:                          

(11) its Board authorizes NGH to enter into a written agreement 
concerning a superior proposal with respect to NGH, so long as NGH has  
complied with the non-solicitation, board recommendation, notice,       
  negotiation and termination fee provisions of the NGH merger agreement and
   RJR has not made a definitive, binding offer that the NGH Board determines,
    in good faith after consultation with its financial advisors, is at least as
favorable to the NGH stockholders as the superior proposal;             

(12) RJR fails to perform in any material respect any material  
  obligation to be performed under the NGH merger agreement, or breaches any
  of its representations and warranties such that NGH's condition to closing
   in this respect cannot be satisfied, and in either case such failure is not
cured within 15 business days or such longer period during which RJR    
exercises its reasonable best efforts to cure; or                       

        (13) a law, court order, verdict or injunction shall cause completion of
  the NGH merger to constitute a breach of the fiduciary duties of the Board
of Directors of NGH in the judgment of such Board as determined in good 
faith based on advice of outside legal counsel.                         

If the NGH merger agreement is validly terminated, it will become void  
without any liability on any party unless such party is in willful breach.      
However, the provisions relating to termination fees and expenses, and certain  
other specified provisions, will continue in effect.                            

CERTAIN FEES AND EXPENSES                                                       

Except as described below, all costs and expenses incurred in connection
with the NGH merger agreement and related transactions will be paid by the party
incurring such costs or expenses.                                               

    NABISCO HOLDINGS AND NGH ADVISOR FEES.  The parties have agreed that Nabisco
Holdings will be responsible for fees and expenses of the financial, legal and  
other advisors to Nabisco Holdings and NGH up to $50 million, and NGH will be   
responsible for all such fees and expenses in excess of $50 million.            

 TERMINATION FEES.  NGH has agreed to pay RJR $300 million in cash, net of
any expenses paid as described below, in any of the following circumstances:    

  - the NGH merger agreement terminates as described in items (7), (8), (11)
or (13) under "--Termination;"                                      

- the NGH merger agreement terminates as described in item (9) under    
     "--Termination" (other than as a result of a breach of representation not
   caused by action of NGH and not capable of being cured using reasonable
  best efforts), if at the time of termination a third party has made an
     acquisition proposal and, within nine months after termination of the NGH
merger                                                              

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agreement, NGH enters into a definitive agreement in respect of any 
acquisition proposal or such a transaction is completed;            

- the NGH merger agreement terminates as described in item (3) under    
      "--Termination" and prior to the NGH stockholder meeting, a third party or
     NGH has publicly announced an acquisition proposal and within nine months
after termination of the NGH merger agreement, NGH enters into a    
 definitive agreement in respect of any acquisition proposal or such a
transaction is completed; or                                        

- the NGH merger agreement terminates as described in item (4) under    
  "--Termination" and at such time a third party has made an acquisition
    proposal with respect to NGH and within nine months after termination of
the NGH merger agreement, NGH enters into a definitive agreement in 
respect of any acquisition proposal with respect to NGH or such a   
transaction is completed.                                           

EXPENSE REIMBURSEMENT.  NGH has agreed to pay RJR up to $30 million as  
reimbursement for expenses relating to the negotiation and execution of the NGH 
merger agreement in any of the following circumstances:                         

- the NGH merger agreement terminates as described in item (9) under    
     "--Termination" if, at the time of termination, a third party has made an
acquisition proposal for NGH; or                                    

- the NGH merger agreement terminates as described in item (3) under    
"--Termination."                                                    

  The expense reimbursement payment would reduce the $300 million payment if
it becomes payable.                                                             

 RJR has agreed to pay NGH up to $30 million as reimbursement for expenses
relating to the negotiation and execution of the NGH merger agreement if the NGH
merger agreement terminates as described in item (12) under "--Termination."    

AMENDMENTS AND WAIVERS                                                          

The parties may amend the NGH merger agreement or waive its terms and   
conditions before the completion of the NGH merger, but, after NGH's            
stockholders have approved the NGH merger agreement, the parties may not amend  
the NGH merger agreement in a manner that would reduce or change the kind of    
consideration NGH stockholders will receive in the NGH merger without further   
approval of NGH's stockholders.                                                 

OTHER MATTERS 

REGULATORY MATTERS                                                              

    U.S. ANTITRUST.  Under the HSR Act and the related rules, the NGH merger may
not be completed until notifications have been given, certain information has   
been furnished to the Federal Trade Commission and the Antitrust Division of the
United States Department of Justice and specified waiting period requirements   
have been satisfied. On July 24, 2000, NGH and RJR each filed the required      
notification and report forms under the HSR Act with the Federal Trade          
Commission and the Antitrust Division of the United States Department of        
Justice. Expiration or termination of the HSR Act waiting period is a condition 
to the NGH merger. The HSR Act waiting period expired on August 23, 2000.       

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STOCKHOLDER RIGHTS PLAN                                                         

 On June 25, 2000, NGH entered into an amendment to its stockholder rights
plan to exempt the NGH merger and the Nabisco Sale from the provisions of such  
plan.                                                                           

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NGH STOCKHOLDERS OF   
THE NGH MERGER                                                                  

  This summary of the material United States federal income tax consequences
to NGH stockholders of the NGH merger is based on the law as currently in       
effect. This summary does not discuss all of the tax consequences that may be   
relevant to an NGH stockholder in light of its particular circumstances or to   
stockholders subject to special rules, such as financial institutions,          
broker-dealers, tax-exempt organizations, stockholders that hold their NGH      
shares as part of a straddle or a hedging or conversion transaction and         
stockholders who acquired their NGH shares through the exercise of an employee  
stock option or otherwise as compensation.                                      

NGH stockholders are urged to consult their own tax advisors as to the  
particular tax consequences to them of the NGH merger, including the effect of  
United States state and local tax laws or foreign tax laws.                     

A United States holder refers to:                                       

- a citizen or resident of the United States,                           

    - a corporation or other entity created or organized in the United States or
      under the laws of the United States or of any political subdivision of the
United States, or                                                   

   - an estate or trust, the income of which is includible in gross income for
federal income tax purposes regardless of its source.               

    A Non-United States holder refers to an NGH stockholder that is not a United
States holder.                                                                  

UNITED STATES HOLDERS                                                   

The receipt in the NGH merger by a United States holder of cash for NGH 
shares will be a taxable transaction for United States federal income tax       
purposes. An NGH stockholder that is a United States holder will recognize gain 
or loss in an amount equal to the difference between the cash received by the   
stockholder in the NGH merger and the stockholder's tax basis in the NGH shares 
surrendered in the NGH merger. That gain or loss will be a capital gain or loss 
if the NGH shares are held as a capital asset by the NGH stockholder, and will  
be long term capital gain or loss if the NGH shares have been held for more than
one year at the time of the NGH merger.                                         

  An NGH stockholder that is a United States holder may be subject to backup
withholding at a rate of 31% unless, at the time it surrenders NGH shares in the
NGH merger, it provides its taxpayer identification number and certifies that   
the number is correct or properly certifies that it is awaiting a taxpayer      
identification number, or unless an exemption is demonstrated to apply. Backup  
withholding is not an additional tax. Amounts so withheld can be refunded or    
credited against the federal income tax liability of the United States holder,  
provided appropriate information is forwarded to the IRS.                       

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NON-UNITED STATES HOLDERS                                               

    An NGH stockholder that is a Non-United States holder will not be subject to
United States federal income tax on any gain realized on a disposition of NGH   
shares in the NGH merger unless:                                                

  - the gain is effectively connected with a trade or business in the United
States of that Non-United States holder,                            

    - that Non-United States holder is a non-resident alien individual who holds
     the NGH shares as a capital asset and who is present in the United States
    for 183 or more days during the calendar year in which the NGH merger is
completed, or                                                       

 - that Non-United States holder is subject to tax under the provisions of
   the Internal Revenue Code on the taxation of United States expatriates.

 Information reporting and backup withholding imposed at a rate of 31% may
apply under specified circumstances to cash payments received in the NGH merger 
by a Non-United States holder unless, at the time it surrenders NGH shares in   
the NGH merger, the Non-United States holder certifies as to its foreign status 
or otherwise establishes an exemption. Backup withholding is not an additional  
tax. Amounts so withheld can be refunded or credited against the federal income 
tax liability of the Non-United States holder, provided appropriate information 
is forwarded to the IRS.                                                        

LITIGATION                                                                      

During the week of June 26, 2000, two actions were filed in the Court of
Chancery for the State of Delaware and one action was filed in the Chancery     
Division of the Superior Court of New Jersey, in each case by alleged common    
stockholders of NGH on behalf of a purported class of similarly situated NGH    
stockholders. The actions are styled ALFONSE MAYER, ET AL. V. NABISCO GROUP     
HOLDINGS CORPORATION, ET AL., C.A. 18126, HARRIET RAND, ET AL. V. NABISCO GROUP 
HOLDINGS CORPORATION, ET AL., C.A. 18129NC, and MARK SCHNEIDER V. STEVEN F.     
GOLDSTONE, ET AL., Docket No. L-2028-00. The complaints in the actions name as  
defendants NGH and the members of its Board of Directors, and allege that the   
NGH directors breached their fiduciary duties to NGH stockholders by agreeing to
the NGH merger and by allegedly failing to obtain the highest value for NGH     
stockholders in the NGH merger. The complaints seek injunctive relief and       
monetary damages in an unspecified amount. Defendants believe that the factual  
allegations on which these complaints are premised are groundless and intend to 
defend the actions vigorously. None of these complaints challenges the validity 
or fairness of the Nabisco Holdings merger or seeks injunctive relief or        
monetary damages in connection with the Nabisco Holdings merger.                

APPRAISAL RIGHTS                                                                

 Under Section 262 ("Section 262") of the Delaware General Corporation Law
(the "DGCL"), if you do not vote your outstanding shares of NGH common stock in 
favor of adoption of the NGH merger agreement, you will be entitled to dissent  
and elect to have the "fair value" of your shares, exclusive of any element of  
value arising from the accomplishment or expectation of the NGH merger, together
with a fair rate of interest, if any, judicially determined by the Delaware     
Court of Chancery and paid to you in cash.                                      

  The following is a summary of the law pertaining to appraisal rights under
the DGCL and is qualified in its entirety by the full text of Section 262, a    
copy of which is provided as Annex F to this proxy statement. All references in 
Section 262 and in this summary to a "stockholder" are to the record holder of  
the shares of NGH common stock as to which appraisal rights are asserted. If you

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have a beneficial interest in shares of common stock held of record in the name 
of another person, such as a broker or nominee, you must act promptly to cause  
the record holder to follow the steps summarized below properly and in a timely 
manner to perfect your appraisal rights.                                        

   Under Section 262, where a merger agreement is to be submitted for adoption
at a meeting of stockholders, as in the case of the special meeting of NGH      
stockholders described in this proxy statement, the corporation, not less than  
20 days prior to the meeting, must notify each person who was a stockholder on  
the record date entitled to appraisal rights that appraisal rights are available
and include in the notice a copy of Section 262. This proxy statement is that   
notice to you, and a copy of Section 262 is attached to this proxy statement as 
Annex F. If you wish to exercise your appraisal rights or wish to preserve the  
right to do so, you should review carefully Section 262 and seek advice of legal
counsel, since failure to comply fully with the procedures of Section 262 will  
result in the loss of appraisal rights.                                         

   If you wish to exercise the right to dissent from the NGH merger and demand
appraisal under Section 262, you must satisfy each of the following conditions: 

    - You must deliver to NGH written demand for appraisal of your shares of NGH
   common stock before the vote on adoption of the NGH merger agreement at
 the special meeting, which demand will be sufficient if it reasonably
    informs NGH of your identity and that you intend to demand the appraisal
of your shares;                                                     

- You must not vote in favor of adoption of the NGH merger agreement.   
  Because a proxy that does not contain voting instructions will, unless
  revoked, be voted in favor of the NGH merger agreement, if you vote by
proxy and wish to exercise appraisal rights, you must vote against  
      adoption of the NGH merger agreement or abstain from voting on adoption of
the NGH merger agreement; and                                       

- You must continuously hold your shares from the date of making your   
   written demand through the completion of the NGH merger. If you are the
      record holder of shares of common stock on the date the written demand for
appraisal is made but thereafter transfer these shares prior to the 
 completion of the NGH merger, you will lose any right to appraisal in
respect of the shares.                                              

  Neither voting in person or by proxy against, abstaining from voting on or
failing to vote on the proposal to adopt the NGH merger agreement will          
constitute a written demand for appraisal within the meaning of Section 262. The
written demand for appraisal must be in addition to and separate from any such  
proxy or vote.                                                                  

    Only a holder of record of shares of NGH common stock issued and outstanding
immediately prior to the completion of the NGH merger is entitled to assert     
appraisal rights for the shares of common stock registered in that holder's     
name. A demand for appraisal should be executed by or on behalf of the          
stockholder of record, fully and correctly, as that stockholder's name appears  
on the stock certificates, should specify the stockholder's name and mailing    
address, the number of shares of common stock owned and that the stockholder    
intends thereby to demand appraisal of the stockholder's shares of NGH common   
stock.                                                                          

If your shares of NGH common stock are owned of record in a fiduciary   
capacity, such as by a trustee, guardian or custodian, execution of a written   
demand should be made in that capacity. If your shares of NGH common stock are  
owned of record by more than one person as in a joint tenancy or tenancy in     
common, the demand should be executed by or on behalf of all owners. An         
authorized agent, including one or more joint owners, may execute a demand for  
appraisal on behalf of a                                                        

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stockholder; however, the agent must identify the record owner or owners and    
expressly disclose the fact that, in executing the demand, the agent is acting  
as agent for the owner or owners.                                               

A record holder such as a broker who holds shares of NGH common stock as
nominee for several beneficial owners may exercise appraisal rights with respect
to the shares of NGH common stock held for one or more beneficial owners while  
not exercising those rights with respect to the shares of NGH common stock held 
for one or more other beneficial owners; in that case, the written demand should
set forth the number of shares of NGH common stock as to which appraisal is     
sought, and where no number of shares is expressly mentioned, the demand will be
presumed to cover all shares of NGH common stock held in the name of the record 
owner. If you hold your shares of NGH common stock in brokerage accounts or     
other nominee forms and wish to exercise appraisal rights, you are urged to     
consult with your broker to determine the appropriate procedures for the making 
of a demand for appraisal by the nominee.                                       

A stockholder who elects to exercise appraisal rights under Section 262 
should mail or deliver a written demand to Nabisco Group Holdings Corp.,        
7 Campus Drive, Parsippany, New Jersey, 07054-0311, Attention: Secretary.       

Within ten days after the completion of the NGH merger, the surviving   
corporation must send a notice as to the effectiveness of the NGH merger to each
former NGH stockholder who has made a written demand for appraisal in accordance
with Section 262 and who has not voted in favor of adoption of the NGH merger   
agreement. Within 120 days after the completion of the NGH merger, but not      
thereafter, either NGH or any holder of dissenting shares of NGH common stock   
who has complied with the requirements of Section 262 may file a petition in the
Delaware Court of Chancery demanding a determination of the fair value of all   
shares of NGH common stock held by dissenting stockholders. NGH is under no     
obligation to and has no present intent to file a petition for appraisal, and   
you should not assume that NGH will file a petition or that NGH will initiate   
any negotiations with respect to the fair value of the shares. Accordingly, if  
you desire to have your shares appraised, you should initiate any petitions     
necessary for the perfection of your appraisal rights within the time periods   
and in the manner prescribed in Section 262.                                    

   Within 120 days after the completion of the NGH merger, any stockholder who
has complied with the provisions of Section 262 to that point in time will be   
entitled to receive from NGH, upon written request, a statement setting forth   
the aggregate number of shares of NGH common stock not voted in favor of        
adoption of the NGH merger agreement and with respect to which demands for      
appraisal have been received and the aggregate number of holders of the shares. 
NGH must mail this statement to the stockholder within 10 days of receipt of a  
request.                                                                        

    A stockholder timely filing a petition for appraisal with the Delaware Court
of Chancery must deliver a copy to NGH, which will then be obligated within     
20 days to provide the Delaware Court of Chancery with a duly verified list     
containing the names and addresses of all stockholders who have demanded        
appraisal of their shares of NGH common stock. After notice to the stockholders,
the Delaware Court of Chancery is empowered to conduct a hearing on the petition
to determine which stockholders are entitled to appraisal rights. The Delaware  
Court of Chancery may require stockholders who have demanded an appraisal for   
their shares and who hold stock represented by certificates to submit their     
certificates to the Register in Chancery for notation thereon of the pendency of
the appraisal proceedings, and if any stockholder fails to comply with the      
requirement, the Delaware Court of Chancery may dismiss the proceedings as to   
that stockholder.                                                               

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                                       CHAPTER THREE - ACQUISITION OF NGH BY RJR

 After determining the stockholders entitled to an appraisal, the Delaware
Court of Chancery will appraise the "fair value" of their shares, exclusive of  
any element of value arising from the accomplishment or expectation of the NGH  
merger, together with a fair rate of interest, if any, to be paid upon the      
amount determined to be the fair value. The costs of the action may be          
determined by the Delaware Court of Chancery and taxed upon the parties as the  
Delaware Court of Chancery deems equitable. Upon application of a holder of     
dissenting shares of NGH common stock, the Delaware Court of Chancery may also  
order that all or a portion of the expenses incurred by any stockholder in      
connection with the appraisal proceeding, including, reasonable attorneys' fees 
and the fees and expenses of experts, be charged pro rata against the value of  
all of the shares of NGH common stock entitled to appraisal.                    

  IF YOU CONSIDER SEEKING APPRAISAL, YOU SHOULD BE AWARE THAT THE FAIR VALUE
OF YOUR SHARES AS DETERMINED UNDER SECTION 262 COULD BE MORE THAN, THE SAME AS  
OR LESS THAN THE MERGER CONSIDERATION YOU WOULD RECEIVE UNDER THE NGH MERGER    
AGREEMENT IF YOU DID NOT SEEK APPRAISAL OF YOUR SHARES.                         

  In determining fair value and, if applicable, a fair rate of interest, the
Delaware Court of Chancery is to take into account all relevant factors. In     
WEINBERGER V. UOP, INC., the Delaware Supreme Court discussed the factors that  
could be considered in determining fair value in an appraisal proceeding,       
stating that "proof of value by any techniques or methods which are generally   
considered acceptable in the financial community and otherwise admissible in    
court" should be considered, and that "fair price obviously requires            
consideration of all relevant factors involving the value of a company." The    
Delaware Supreme Court stated that, in making this determination of fair value, 
the court must consider market value, asset value, dividends, earnings          
prospects, the nature of the enterprise and any other facts that could be       
ascertained as of the date of the merger that throw any light on future         
prospects of the merged corporation. In WEINBERGER, the Delaware Supreme Court  
further stated that "elements of future value, including the nature of the      
enterprise, which are known or susceptible of proof as of the date of the merger
and not the product of speculation, may be considered." Section 262 provides    
that fair value is to be "exclusive of any element of value arising from the    
accomplishment or expectation of the merger."                                   

Any stockholder who has duly demanded appraisal in compliance with      
Section 262 will not, after the completion of the NGH merger, be entitled to    
vote the shares subject to this demand for any purpose or to receive payment of 
dividends or other distributions on those shares (except dividends or other     
distributions payable to holders of record of shares as of a record date prior  
to the completion of the NGH merger).                                           

    If any stockholder who demands appraisal of shares of NGH common stock under
Section 262 fails to perfect, or effectively withdraws or loses, the right to   
appraisal, the stockholder's shares of NGH common stock will be converted into  
the right to receive the merger consideration in cash in accordance with the NGH
merger agreement, without interest. A stockholder will fail to perfect, or      
effectively lose or withdraw, the right to appraisal if no petition for         
appraisal is filed within 120 calendar days after the completion of the NGH     
merger. A stockholder may withdraw a demand for appraisal by delivering to NGH a
written withdrawal of the demand for appraisal and acceptance of the merger     
consideration, except that any such attempt to withdraw made more than          
60 calendar days after the completion of the NGH merger will require the written
approval of NGH. Once a petition for appraisal has been filed, the appraisal    
proceeding may not be dismissed as to any stockholder, absent approval of the   
Delaware Court of Chancery.                                                     

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CHAPTER FOUR
INFORMATION ABOUT THE MEETING AND VOTING

 NGH's Board of Directors is using this proxy statement to solicit proxies
from the holders of NGH common stock for use at the meeting. We are first       
mailing this proxy statement and accompanying form of proxy to NGH stockholders 
on or about September 27, 2000.                                                 

MATTERS RELATING TO THE MEETING                                                 

                                                                [Download Table]


                                                                                   
DATE, TIME AND PLACE:  October 27, 2000                                            
                       10:30 a.m., Eastern Time                                    
                       Hotel DuPont                                                
                       11th and Market Streets                                     
                       Wilmington, Delaware 19801                                  

PURPOSE OF MEETING IS  1. the sale of NGH's 80.5% interest in Nabisco Holdings to  
       TO VOTE ON THE  Philip Morris pursuant to the Nabisco Holdings merger;      
     FOLLOWING ITEMS:  2. the subsequent acquisition of NGH by RJR for $30 per     
                       share pursuant to the NGH merger;                           
                       3. such other matters as may properly come before the       
                       meeting, including the approval of any adjournment of the   
                          meeting.                                                 

                       NGH stockholders will vote on each proposal separately. RJR 
                       and NGH are not obligated to, and will not, complete the NGH
                       merger unless, among other things, the Nabisco Sale or a    
                       comparable acquisition transaction involving Nabisco        
                       Holdings is completed. The Nabisco Sale may be completed    
                       whether or not the NGH merger is completed.                 
         RECORD DATE:  The record date for shares entitled to vote is August 29,   
                       2000.                                                       
   OUTSTANDING SHARES  As of August 29, 2000, there were 326,398,507 shares of NGH 
 HELD ON RECORD DATE:  common stock outstanding.                                   
   SHARES ENTITLED TO  Shares entitled to vote are NGH common stock held at the    
                VOTE:  close of business on the record date, August 29, 2000.      

                       Each share of NGH common stock that you own entitles you to 
                       one vote.                                                   

                       Shares held by NGH in its treasury are not voted.           
  QUORUM REQUIREMENT:  A quorum of stockholders is necessary to hold a valid       
                       meeting.                                                    
                       The presence in person or by proxy at the meeting of holders
                       of shares representing a majority of the votes of the NGH   
                       common stock entitled to vote at the meeting is a quorum.   
                       Abstentions and broker "non-votes" count as present for     
                       establishing a quorum. Shares held by NGH in its treasury do
                       not count toward a quorum.                                  

                       A broker non-vote occurs on an item when a broker is not    
                       permitted to vote on that item without instruction from the 
                       beneficial owner of the shares and no instruction is given. 
                       As of August 31, 2000, NGH directors and executive officers 
                       beneficially owned 3,811,164 shares of NGH common stock,    
                       including exercisable options. These shares represent in    
                       total approximately 1.15% of the voting power of NGH common 
                       stock.                                                      
                       These individuals have indicated that they will vote in     
                       favor of the proposals recommended by the NGH Board.        
  SHARES BENEFICIALLY                                                              
         OWNED BY NGH                                                              
        DIRECTORS AND                                                              
   EXECUTIVE OFFICERS                                                              
     AS OF AUGUST 31,                                                              
                2000:                                                              

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CHAPTER FOUR - INFORMATION ABOUT THE MEETING AND VOTING                         

VOTE NECESSARY TO APPROVE PROPOSALS                                             

                                                        [Enlarge/Download Table]


                                                                                     
          ITEM                                  VOTE NECESSARY*                      

1. NABISCO SALE PROPOSAL  Approval of the Nabisco Sale requires the affirmative vote 
                          of a majority of the outstanding shares of NGH common      
                          stock. Withheld votes and abstentions have the same effect 
                          as a vote against.                                         
 2. NGH MERGER PROPOSAL   Approval of the NGH merger requires the affirmative vote of
                          a majority of the outstanding shares of NGH common stock.  
                          Withheld votes and abstentions have the same effect as a   
                          vote against.                                              

Your Board recommends that you vote "FOR" each of these proposals.              

------------------------------                                                  

*   Under New York Stock Exchange rules, if your broker holds your shares in its
name, your broker may not vote your shares on Items 1 or 2 absent       
  instructions from you. Without your voting instructions, a broker non-vote
  will occur on Items 1 and 2 and will, as to Items 1 and 2, have the effect
of a vote against.                                                      

PROXIES                                                                         

 VOTING YOUR PROXY.  You may vote in person at the meeting or by proxy. We
recommend you vote by proxy even if you plan to attend the meeting in person.   
You can always change your vote at the meeting.                                 

 Voting instructions are included on your proxy card. If you properly give
your proxy and submit it to us in time to vote, one of the individuals named as 
your proxy will vote your shares as you have directed. You may vote for or      
against the proposals or abstain from voting.                                   

HOW TO VOTE BY PROXY                                                    

                                                                [Download Table]


                                                                            
BY TELEPHONE*:  Call 1-877-PRX-VOTE (1-877-779-8683) in the United States or
                1-201-536-8073 outside the United States and follow the     
                instructions. You will need to give the personal            
                identification number contained on your proxy card.         
 BY INTERNET*:  Go to the website specified on your proxy card and follow   
                the instructions. You will need to give the personal        
                identification number contained on your proxy card.         
   IN WRITING:  Complete, sign, date and return your proxy card in the      
                enclosed envelope.                                          

------------------------------                                                  

*   If your shares are held in the name of a bank or broker, follow the voting  
  instructions you receive on your proxy card. Telephone and internet voting
are offered to stockholders owning Nabisco Group Holdings shares through
   most banks and brokers. Section 212 of the Delaware General Corporation Law
 authorizes the use of electronic transmission, such as transmissions over
the internet, to grant a proxy.                                         

  IF YOU SUBMIT YOUR PROXY BUT DO NOT MAKE SPECIFIC CHOICES, YOUR PROXY WILL
FOLLOW THE BOARD OF DIRECTOR'S RECOMMENDATIONS AND VOTE YOUR SHARES:            

- "FOR" the proposed sale of Nabisco Holdings shares;                   

- "FOR" the proposed acquisition of NGH by RJR; and                     

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                         CHAPTER FOUR - INFORMATION ABOUT THE MEETING AND VOTING

    - In its discretion as to any other business as may properly come before the
meeting.                                                            

REVOKING YOUR PROXY.  You may revoke your proxy before it is voted by:  

- submitting a new proxy with a later date, including a proxy given by  
telephone or internet,                                              

- notifying NGH's Secretary in writing before the meeting that you have 
revoked your proxy, or                                              

- voting in person at the meeting.                                      

ATTENDANCE AT THE MEETING.  Attendance at the meeting will be limited to
stockholders as of the record date, and to guests of NGH. Admittance tickets    
will be required. If you are a stockholder and plan to attend, you must request 
an admittance ticket by writing to the Office of the Secretary of NGH at 7      
Campus Drive, Parsippany, NJ 07054-0311. If your shares are not registered in   
your own name, evidence of your stock ownership must accompany your letter. You 
can obtain this evidence from your bank or brokerage firm, typically in the form
of your most recent monthly statement. An admittance ticket will be held in your
name at the registration desk, not mailed to you in advance of the meeting. The 
auditorium will open at 10:00 a.m.                                              

VOTING IN PERSON.  If you plan to attend the meeting and wish to vote in
person, we will give you a ballot at the meeting.                               

   PEOPLE WITH DISABILITIES.  We can provide reasonable assistance to help you
participate in the meeting if you tell us about your disability and your plan to
attend. Please call or write the Secretary of NGH at least two weeks before the 
meeting at 7 Campus Drive, Parsippany, NJ 07054-0311, (973) 682-5000.           

CONFIDENTIAL VOTING.  Independent inspectors count the votes. Your      
individual vote is kept confidential from us unless special circumstances exist.

PROXY SOLICITATION.  We will pay our own costs of soliciting proxies.   

  In addition to this mailing, NGH employees may solicit proxies personally,
electronically or by telephone. NGH is paying MacKenzie Partners, Inc. a fee of 
$25,000 plus expenses to help with the solicitation.                            

    The extent to which these proxy soliciting efforts will be necessary depends
entirely upon how promptly proxies are submitted. You should send in your proxy 
by mail, telephone or internet without delay. We also reimburse brokers and     
other nominees for their expenses in sending these materials to you and getting 
your voting instructions.                                                       

 Do not send in any stock certificates with your proxy cards. The exchange
agent will mail transmittal forms with instructions for the surrender of stock  
certificates for NGH common stock to former NGH stockholders as soon as         
practicable after the completion of the NGH merger.                             

OTHER BUSINESS; ADJOURNMENTS                                                    

We are not currently aware of any other business to be acted upon at the
meeting. If, however, other matters are properly brought before the meeting, or 
any adjourned meeting, your proxies will have discretion to vote or act on those
matters according to their best judgment, including to adjourn the meeting.     

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CHAPTER FOUR - INFORMATION ABOUT THE MEETING AND VOTING                         

   Adjournments may be made for the purpose of, among other things, soliciting
additional proxies. Any adjournment may be made from time to time by approval of
the holders of shares representing a majority of the votes present in person or 
by proxy at the meeting, whether or not a quorum exists, without further notice 
other than by an announcement made at the meeting. We do not currently intend to
seek an adjournment of the meeting.                                             

SECURITY OWNERSHIP OF MANAGEMENT                                                

  The following table sets forth certain information, as of August 31, 2000,
regarding the beneficial ownership of (i) NGH common stock and (ii) Nabisco     
Holdings Class A common stock, by each director of NGH, by each of the five most
highly compensated executive officers of NGH (as required by SEC rules) and by  
all directors and executive officers of NGH as a group. Most of these           
individuals have the opportunity to become the beneficial owners of additional  
shares of NGH common stock as a result of stock options vesting or becoming     
exercisable. See "Chapter One--Interests of Officers and Directors in the       
Transactions." Otherwise, except as noted, the persons named in the table below 
do not own, beneficially or of record, any other securities of NGH or its       
subsidiaries and have sole voting and investment power over all securities for  
which they are shown as beneficial owners.                                      

                                                        [Enlarge/Download Table]

                                                                           NUMBER OF SHARES  PERCENT 
                                                                              OF NABISCO        OF   
                                                                               HOLDINGS      NABISCO 
                                              NUMBER OF SHARES   PERCENT       CLASS A       HOLDINGS
                                               OF NGH COMMON      OF NGH     COMMON STOCK    CLASS A 
                                             STOCK BENEFICIALLY   COMMON     BENEFICIALLY     COMMON 
          NAME OF BENEFICIAL OWNER              OWNED(1)(2)       STOCK      OWNED(1)(3)      STOCK  
          ------------------------           ------------------  --------  ----------------  --------
                                                                                                     
John T. Chain, Jr...........................         21,837        *            11,300         *     
Julius L. Chambers..........................         19,866        *                 0         *     
John L. Clendenin...........................         20,290        *               500         *     
Douglas R. Conant...........................         57,750        *           215,903       0.41%   
Steven F. Goldstone (4).....................      3,037,852      0.92%         274,981       0.53%   
Ray J. Groves...............................         19,165        *                 0         *     
James E. Healey.............................         49,500        *            58,000       0.11%   
David B. Jenkins............................              0        *            11,900         *     
Nancy Karch (5).............................          6,000        *                 0         *     
James M. Kilts..............................        421,813      0.13%          11,000         *     
James A. Kirkman III........................         33,236        *           182,098       0.35%   
Fred H. Langhammer..........................         11,651        *                 0         *     
Richard H. Lenny............................         67,000        *             4,225         *     
H. Eugene Lockhart..........................         13,929        *                 0         *     
Theodore E. Martin..........................         12,884        *                 0         *     
Rozanne L. Ridgway..........................         11,494        *                 0         *     
All Directors and Executive Officers                                                                 
  as a Group................................      3,811,164      1.15%         923,281       1.75%   
David B. Rickard............................        390,993        *                 0         *     
William L. Rosoff (6).......................        254,424        *                 0         *     

------------------------------                                                  

*   Less than 0.1%.                                                             

(1) For purposes of this table, a person is deemed to be the "beneficial owner" 
   of any shares that such person has the right to acquire within 60 days. For
purposes of computing the percentage of outstanding shares held by each 
person named above,                                                     

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                         CHAPTER FOUR - INFORMATION ABOUT THE MEETING AND VOTING

any security that such person has the right to acquire within 60 days is
deemed to be outstanding, but it is not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person.      

(2) The number of shares of NGH common stock beneficially owned includes shares 
subject to currently exercisable options in the following amounts:      
(i) 19,837 shares for each of General Chain and Messrs. Chambers and    
Clendenin; (ii) 57,750 shares for Mr. Conant; (iii) 3,021,323 shares for
Mr. Goldstone; (iv) 18,000 shares for Mr. Groves; (v) 49,500 shares for 
Mr. Healey; (vi) 6,000 shares for Ms. Karch; (vii) 33,000 shares for    
Mr. Kirkman; (viii) 421,813 shares for Mr. Kilts; (ix) 11,651 shares for
Mr. Langhammer; (x) 66,000 shares for Mr. Lenny; (xi) 13,659 shares for 
  Mr. Lockhart; (xii) 12,884 shares for Mr. Martin; (xiii) 10,494 shares for
  Ms. Ridgway; (xiv) 388,993 shares for Mr. Rickard; (xv) 233,480 shares for
Mr. Rosoff; and (xvi) 3,781,585 shares for all directors and executive  
  officers as a group. The number of shares of NGH common stock beneficially
owned does not include the following stock units, which are common stock
equivalents received as equity incentives or as deferred fees and other 
    compensation: 7,955 units for each of General Chain and Mr. Chambers; 33,004
units for Mr. Clendenin; 36,000 units for Mr. Conant; 200,000 units for 
Mr. Goldstone; 25,570 units for Mr. Groves; 29,000 units for Mr. Healey;
1,005 units for each of Mr. Jenkins and Ms. Karch; 24,500 units for     
 Mr. Kirkman; 11,890 units for Mr. Langhammer; 42,000 units for Mr. Lenny;
   15,146 units for Mr. Lockhart; 17,119 units for Mr. Martin; 6,951 units for
    Ms. Ridgway; and 459,100 units for all directors and executive officers as a
group.                                                                  

(3) The number of shares of Nabisco Holdings Class A common stock beneficially  
owned includes shares subject to currently exercisable options in the   
following amounts: (i) 10,300 shares for General Chain and Mr. Jenkins; 
   (ii) 214,852 shares for Mr. Conant; (iii) 260,000 shares for Mr. Goldstone;
  (iv) 55,000 shares for Mr. Healey; (v) 182,097 shares for Mr. Kirkman; and
    (vi) 884,467 shares for all directors and executive officers as a group. The
    number of shares of Nabisco Holdings Class A common stock beneficially owned
does not include Nabisco Holdings stock units in the following amounts: 
(i) 46,200 units for Mr. Conant; (ii) 17,500 units for Mr. Healey;      
(iii) 310,000 units for Mr. Kilts; (iv) 25,800 units for Mr. Kirkman;   
    (v) 38,500 units for Mr. Lenny; and (vi) 466,150 units for all directors and
executive officers as a group.                                          

(4) Mr. Goldstone is also the holder of 301,725 contingent performance shares   
  each equal in value to one share of NGH common stock which will be paid to
Mr. Goldstone only if (i) Mr. Goldstone remains Chairman of NGH through 
December 31, 2001 (unless he is terminated as Chairman by NGH or he     
voluntarily terminates his service as Chairman with good reason) and    
  (ii) the market price for NGH common stock averages $29.00 or more for any
consecutive 30-day period ending on or prior to December 31, 2001.      

(5) Until December 31, 1999 and for more than five years prior thereto,         
   Ms. Karch was a Senior Partner and Director of McKinsey & Company, Inc., an
 international consulting firm. McKinsey & Company, Inc. has, from time to
 time, provided consulting services to NGH and its subsidiaries during the
past few years, for which the consulting firm has been paid usual and   
customary fees.                                                         

(6) Mr. Rosoff is a partner at Davis Polk & Wardwell, a New York law firm.      
 Mr. Rosoff was Senior Vice President and General Counsel from January 15,
1998 through October 15, 1999. Until December 31, 1997 and for more than
    five years prior thereto, Mr. Rosoff was a partner at Davis Polk & Wardwell.
    Davis Polk & Wardwell has, from time to time, provided legal services to NGH
  and its subsidiaries during the past few years, for which the law firm has
been paid usual and customary fees.                                     

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS                                 

  The following table sets forth certain information, as of August 31, 2000,
regarding the beneficial ownership of persons known to NGH to be the beneficial 
owners of more than five percent of any class of NGH's voting securities. The   
information was obtained from NGH records and information supplied by the       
stockholders, including information on Schedules 13D and 13G. Except as         
otherwise noted, the persons named in the table below have sole voting and      
investment power with respect to all shares shown as beneficially owned by them.

                                                        [Enlarge/Download Table]

                                                                     NUMBER OF SHARES          
                                          NAME AND ADDRESS             BENEFICIALLY    PERCENT 
         TITLE OF CLASS                  OF BENEFICIAL OWNER              OWNED        OF CLASS
         --------------           ---------------------------------  ----------------  --------
                                                                                               
Common Stock..................... Capital Research and Management       43,950,000       13.5% 
                                    Company (1)                                                
                                  333 South Hope Street                                        
                                  Los Angeles, CA 90071                                        
Common Stock..................... Carl C. Icahn (2)                     31,000,000        9.5% 
                                  c/o Carl Icahn Associates Corp.                              
                                  767 Fifth Avenue, 47th Floor                                 
                                  New York, NY 10153                                           

------------------------------                                                  

(1) Share numbers and percentages are based on information available to NGH as  
of August 31, 2000. According to Amendment No. 2 to a Schedule 13G dated
February 11, 2000 filed with the SEC by Capital Research and Management 
   Company ("Capital"), Capital, a registered investment advisor, is deemed to
    be the beneficial owner of 42,625,000 shares of NGH common stock as a result
   of acting as investment adviser to various registered investment companies.

(2) Share numbers and percentages are based on information available to NGH as  
of August 31, 2000. On June 22, 2000, Carl C. Icahn, Icahn & Co., Inc   
 ("Icahn & Co."), High River Limited Partnership ("High River"), Riverdale
LLC ("Riverdale") and Barberry Corp. ("Barberry" and, collectively, the 
 "Icahn Affiliates") filed Amendment No. 9 to a Schedule 13D (the "Amended
   Schedule 13D"). According to the Amended Schedule 13D, the Icahn Affiliates
 may be deemed to beneficially own, in the aggregate, 31,237,200 shares of
    NGH common stock. Mr. Icahn has shared voting and dispositive power over the
 31,237,200 shares. Icahn & Co. has sole voting and dispositive power over
    8,272,900 of the shares. High River has sole and Riverdale has shared voting
and dispositive power over 14,347,200 of the shares. Barberry has sole  
voting and dispositive power over 8,617,100 of the shares.              

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CHAPTER FIVE
ADDITIONAL INFORMATION FOR STOCKHOLDERS 

FUTURE STOCKHOLDER PROPOSALS

NGH will hold an annual meeting in the year 2001 only if the NGH merger 
described in this proxy statement has not already been completed. If such       
meeting is held, proposals of stockholders intended to be included in NGH's 2001
Annual Meeting Proxy Statement must be received by the Secretary of NGH no later
than November 30, 2000 at NGH's principal executive offices: Nabisco Group      
Holdings Corp., 7 Campus Drive, Parsippany, NJ 07054-0311. Other stockholder    
proposals intended to be presented at NGH's 2001 Annual Meeting but not in the  
Annual Meeting Proxy Statement, must be received in writing at the same address,
together with other required information as set forth in NGH's By-Laws, between 
February 9, 2001 and March 10, 2001.                                            

WHERE YOU CAN FIND MORE INFORMATION 

   NGH files annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information NGH files at the SEC's public reference rooms in Washington, D.C.,  
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 
for further information on the public reference rooms. Our SEC filings are also 
available to the public from commercial document retrieval services and at the  
web site maintained by the SEC at "http://www.sec.gov."                         

    The SEC allows NGH to "incorporate by reference" information into this proxy
statement, which means that we can disclose important information to you by     
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this proxy statement, except  
for any information superseded by information in, or incorporated by reference  
in, this proxy statement. This proxy statement incorporates by reference the    
documents set forth below that NGH has previously filed with the SEC. These     
documents contain important information about NGH and our finances.             

                                                                [Download Table]

NGH SEC FILINGS (FILE NO. 1-10215)                          PERIOD                  
-----------------------------------------  -----------------------------------------
                                                                                    
Annual Report on Form 10-K                 Fiscal Year ended December 31, 1999      
Quarterly Reports on Form 10-Q             Fiscal Quarters ended March 31, 2000 and 
                                           June 30, 2000                            
Current Report on Form 8-K                 Filed on March 14, 2000                  

We are also incorporating by reference additional documents that we file
with the SEC between the date of this proxy statement and the date of the       
meeting.                                                                        

 If you are an NGH stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the SEC.
Documents incorporated by reference are available from us without charge,       
excluding all exhibits unless we have specifically incorporated by reference an 
exhibit in this proxy statement. Stockholders may obtain documents incorporated 
by reference in this proxy statement by requesting them in writing or by        
telephone from NGH at the following address:                                    

Nabisco Group Holdings Corp.                                      
7 Campus Drive                                                    
Parsippany, NJ 07054-0311                                         
Attention: Investor Relations                                     
Telephone: (973) 682-6478                                         

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CHAPTER FIVE - ADDITIONAL INFORMATION FOR STOCKHOLDERS                          

   If you would like to request documents from us, please do so by October 19,
2000 to receive them before the meeting.                                        

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY    
REFERENCE IN THIS PROXY STATEMENT TO VOTE ON THE PROPOSALS. WE HAVE NOT         
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS
CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED SEPTEMBER 26,  
2000. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THE PROXY         
STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND THE MAILING OF   
THIS PROXY STATEMENT TO STOCKHOLDERS SHALL NOT CREATE ANY IMPLICATION TO THE    
CONTRARY.                                                                       

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ANNEXES 

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                                                                         ANNEX A

AGREEMENT AND PLAN OF MERGER
dated as of 
June 25, 2000 
among 
NABISCO HOLDINGS CORP., 
PHILIP MORRIS COMPANIES INC., 
and 
STRIKE ACQUISITION CORP.

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TABLE OF CONTENTS 

------------------------

                                                                [Download Table]

                                                                           PAGE
                                                                           ----
                                                                               
                                  ARTICLE 1                                    
                                 DEFINITIONS                                   

Section 1.01. DEFINITIONS.................................................  A-1

                                  ARTICLE 2                                    
                                  THE MERGER                                   
Section 2.01. THE MERGER..................................................  A-4
Section 2.02. CONVERSION OF SHARES........................................  A-5
Section 2.03. SURRENDER AND PAYMENT.......................................  A-5
Section 2.04. DISSENTING SHARES...........................................  A-6
Section 2.05. STOCK OPTIONS...............................................  A-6
Section 2.06. ADJUSTMENTS.................................................  A-7
Section 2.07. WITHHOLDING RIGHTS..........................................  A-7
Section 2.08. LOST CERTIFICATES...........................................  A-7

                                  ARTICLE 3                                    
                          THE SURVIVING CORPORATION                            

Section 3.01. CERTIFICATE OF INCORPORATION................................  A-7
Section 3.02. BYLAWS......................................................  A-7
Section 3.03. DIRECTORS AND OFFICERS......................................  A-7

                                  ARTICLE 4                                    
                REPRESENTATIONS AND WARRANTIES OF THE COMPANY                  

Section 4.01. CORPORATE EXISTENCE AND POWER...............................  A-8
Section 4.02. CORPORATE AUTHORIZATION.....................................  A-8
Section 4.03. GOVERNMENTAL AUTHORIZATION..................................  A-8
Section 4.04. NON-CONTRAVENTION...........................................  A-8
Section 4.05. CAPITALIZATION..............................................  A-9
Section 4.06. SUBSIDIARIES................................................  A-9
Section 4.07. SEC FILINGS................................................. A-10
Section 4.08. FINANCIAL STATEMENTS........................................ A-10
Section 4.09. DISCLOSURE DOCUMENTS........................................ A-11
Section 4.10. ABSENCE OF CERTAIN CHANGES.................................. A-11
Section 4.11. NO UNDISCLOSED LIABILITIES.................................. A-12
Section 4.12. COMPLIANCE WITH LAWS AND COURT ORDERS....................... A-12
Section 4.13. LITIGATION.................................................. A-12
Section 4.14. FINDERS' FEES............................................... A-13
Section 4.15. OPINION OF FINANCIAL ADVISORS............................... A-13
Section 4.16. TAXES....................................................... A-13
Section 4.17. EMPLOYEE BENEFIT PLANS...................................... A-14
Section 4.18. ENVIRONMENTAL MATTERS....................................... A-16
Section 4.19. INTELLECTUAL PROPERTY....................................... A-16
Section 4.20. ANTITAKEOVER STATUTE........................................ A-17
Section 4.21. REAL PROPERTY............................................... A-17
Section 4.22. CONTRACTS; JOINT VENTURES................................... A-17
Section 4.23. INDEBTEDNESS................................................ A-18

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                                                                            PAGE
                                                                            ----
                                                                                
                                   ARTICLE 5                                    
                    REPRESENTATIONS AND WARRANTIES OF PARENT                    

Section 5.01.  CORPORATE EXISTENCE AND POWER............................... A-18
Section 5.02.  CORPORATE AUTHORIZATION..................................... A-18
Section 5.03.  GOVERNMENTAL AUTHORIZATION.................................. A-18
Section 5.04.  NON-CONTRAVENTION........................................... A-18
Section 5.05.  DISCLOSURE DOCUMENTS........................................ A-19
Section 5.06.  FINDERS' FEES............................................... A-19
Section 5.07.  FINANCING................................................... A-19

                                   ARTICLE 6                                    
                            COVENANTS OF THE COMPANY                            

Section 6.01.  CONDUCT OF THE COMPANY...................................... A-19
               STOCKHOLDER ACTION BY WRITTEN CONSENT; INFORMATION               
Section 6.02.  MATERIAL.................................................... A-22
Section 6.03.  ACCESS TO INFORMATION....................................... A-22
Section 6.04.  NO SOLICITATION; OTHER OFFERS............................... A-22
Section 6.05.  THIRD PARTY STANDSTILL AGREEMENTS........................... A-24

                                   ARTICLE 7                                    
                              COVENANTS OF PARENT                               

Section 7.01.  CONFIDENTIALITY............................................. A-24
Section 7.02.  OBLIGATIONS OF MERGER SUBSIDIARY............................ A-24
Section 7.03.  DIRECTOR AND OFFICER LIABILITY.............................. A-24
Section 7.04.  EMPLOYEE MATTERS............................................ A-25

                                   ARTICLE 8                                    
                      COVENANTS OF PARENT AND THE COMPANY                       

Section 8.01.  REASONABLE BEST EFFORTS..................................... A-26
Section 8.02.  CERTAIN FILINGS............................................. A-26
Section 8.03.  PUBLIC ANNOUNCEMENTS........................................ A-27
Section 8.04.  FURTHER ASSURANCES.......................................... A-27
Section 8.05.  NOTICES OF CERTAIN EVENTS................................... A-27

                                   ARTICLE 9                                    
                            CONDITIONS TO THE MERGER                            

Section 9.01.  CONDITIONS TO OBLIGATIONS OF EACH PARTY..................... A-27
               CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER               
Section 9.02.  SUBSIDIARY.................................................. A-28
Section 9.03.  CONDITIONS TO THE OBLIGATIONS OF THE COMPANY................ A-28

                                   ARTICLE 10                                   
                                  TERMINATION                                   

Section 10.01. TERMINATION................................................. A-29
Section 10.02. EFFECT OF TERMINATION....................................... A-30

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                                                                            PAGE
                                                                            ----
                                                                                
                                   ARTICLE 11                                   
                                 MISCELLANEOUS                                  

Section 11.01. NOTICES..................................................... A-31
Section 11.02. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.............. A-32
Section 11.03. AMENDMENTS; NO WAIVERS...................................... A-32
Section 11.04. EXPENSES.................................................... A-32
Section 11.05. SUCCESSORS AND ASSIGNS...................................... A-33
Section 11.06. GOVERNING LAW............................................... A-33
Section 11.07. JURISDICTION................................................ A-33
Section 11.08. WAIVER OF JURY TRIAL........................................ A-33
Section 11.09. COUNTERPARTS; EFFECTIVENESS; BENEFIT........................ A-33
Section 11.10. ENTIRE AGREEMENT............................................ A-34
Section 11.11. CAPTIONS.................................................... A-34
Section 11.12. SEVERABILITY................................................ A-34
Section 11.13. SPECIFIC PERFORMANCE........................................ A-34

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER dated as of June 25, 2000, among Nabisco   
Holdings Corp., a Delaware corporation (the "COMPANY"), Philip Morris           
Companies Inc., a Virginia corporation ("PARENT"), and Strike Acquisition Corp.,
a Delaware corporation and a wholly-owned subsidiary of Parent ("MERGER         
SUBSIDIARY").                                                                   

    WHEREAS, the respective Boards of Directors of Parent, Merger Subsidiary and
the Company have approved this Agreement, and deem it advisable and in the best 
interests of their respective stockholders to consummate the merger of Merger   
Subsidiary with and into the Company on the terms and conditions set forth      
herein; and                                                                     

 WHEREAS, as a condition and inducement to Parent entering this Agreement,
concurrently with the execution and delivery of this Agreement, Parent and      
Nabisco Group Holdings Corp., a Delaware corporation ("NGH"), a significant     
stockholder of the Company, are entering into a voting and indemnity agreement  
(the "NGH VOTING AGREEMENT") pursuant to which, among other things, NGH has     
agreed to vote its Shares in favor of the above-described merger, subject to    
approval by NGH's stockholders.                                                 

NOW, THEREFORE, the parties hereto agree as follows:                    

ARTICLE 1 
DEFINITIONS 

  Section 1.01.  DEFINITIONS.  (a) The following terms, as used herein, have
the following meanings:                                                         

   "AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person. 

  "BENEFIT ARRANGEMENT" means any employment, severance or similar contract,
plan, policy, fund or arrangement (whether or not written) providing for        
compensation, bonus, profit-sharing, stock option, or other stock-related rights
or other forms of incentive or deferred compensation, perquisites, vacation     
benefits, insurance coverage (including any self-insured arrangements), health  
or medical benefits, disability benefits, worker's compensation, supplemental   
unemployment benefits, severance benefits and post-employment or retirement     
benefits (including compensation, pension, health, medical or life insurance or 
other benefits) that (i) is not an Employee Plan, (ii) is entered into,         
maintained, administered or contributed to, as the case may be, by the Company  
or any of its Affiliates and (iii) covers any employee or former employee of the
Company or any of its Subsidiaries employed in the United States.               

    "BUSINESS DAY" means a day other than Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to     
close.                                                                          

   "CLASS A SHARES" means the shares of Class A common stock, $0.01 par value,
of the Company.                                                                 

   "CLASS B SHARES" means the shares of Class B common stock, $0.01 par value,
of the Company.                                                                 

"CODE" means the Internal Revenue Code of 1986.                         

   "COMPANY BALANCE SHEET" means the consolidated balance sheet of the Company
as of December 31, 1999 and the footnotes thereto set forth in the Company 10-K.

"COMPANY INTELLECTUAL PROPERTY RIGHTS" means all material Intellectual  
Property Rights owned or licensed and used or held for use by the Company or any
of its Subsidiaries.                                                            

    "COMPANY 10-K" means the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1999.                                                   

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ANNEX A -- NABISCO HOLDINGS MERGER AGREEMENT                                    

  "CONTROLLED GROUP LIABILITY" means any and all liabilities (i) under Title
IV of ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412 and 4971 
of the Code, (iv) as a result of a failure to comply with the continuation      
coverage requirements of Section 601 ET SEQ. of ERISA and Section 4980B of the  
Code and (v) under corresponding or similar provisions of foreign laws or       
regulations, other than such liabilities that arise solely out of, or relate    
solely to, the Employee Plans, Benefit Arrangements and International Plans     
listed in the Company Disclosure Schedule.                                      

  "DELAWARE LAW" means the General Corporation Law of the State of Delaware.

"EMPLOYEE ARRANGEMENT" means any Benefit Arrangement, Employee Plan or  
International Plan.                                                             

"EMPLOYEE PLAN" means any "employee benefit plan", as defined in        
Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is   
maintained, administered or contributed to by the Company or any of its         
Affiliates and (iii) covers any employee or former employee of the Company or   
any of its Subsidiaries.                                                        

"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law,    
regulation, rule, order or decree, in each case as in effect on the date hereof,
that has as its principal purpose the protection of the environment or the      
effect of the environment on human health and safety.                           

"ENVIRONMENTAL PERMITS" means all permits, licenses, certificates or    
approvals necessary for the operation of the Company or any of its Subsidiaries 
as currently conducted to comply with all applicable Environmental Laws.        

"ERISA" means the Employee Retirement Income Security Act of 1974.      

  "ERISA AFFILIATE" of any entity means any other entity that, together with
such entity, would be treated as a single employer under Section 414 of the Code
or Section 4001(b)(1) or 4001(a)(14) of ERISA.                                  

   "GOVERNMENTAL ENTITY" means any federal, state, local or foreign government
or any court, tribunal, administrative agency or commission or other            
governmental or other regulatory authority or agency, domestic, foreign or      
supranational.                                                                  

 "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

    "INTELLECTUAL PROPERTY RIGHT" means any trademark, service mark, trade name,
mask work, invention, patent, trade secret, copyright, know-how or proprietary  
information contained on any website, processes, formulae, products,            
technologies, discoveries, apparatus, Internet domain names, trade dress and    
general intangibles of like nature (together with goodwill), customer lists,    
confidential information, licenses, software, databases and compilations        
including any and all collections of data and all documentation thereof         
(including any registrations or applications for registration of any of the     
foregoing) or any other similar type of proprietary intellectual property right.

   "INTERNATIONAL PLAN" means any employment, severance or similar contract or
arrangement (whether or not written) or any plan, policy, fund, program or      
arrangement or contract providing for compensatory severance, insurance coverage
(including any self-insured arrangements), workers' compensation, disability    
benefits, supplemental unemployment benefits, vacation benefits, pension or     
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive compensation or  
post-retirement insurance, compensation or benefits that (i) is not an Employee 
Plan or a Benefit Arrangement, (ii) is entered into, maintained, administered or
contributed to by the Company or any of its Affiliates and (iii) covers any     
employee or former employee of the Company or any of its Subsidiaries.          

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                                    ANNEX A -- NABISCO HOLDINGS MERGER AGREEMENT

"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any    
kind in respect of such property or asset. For purposes of this Agreement, a    
Person shall be deemed to own subject to a Lien, any property or asset that it  
has acquired or holds subject to the interest of a vendor or lessor under any   
conditional sale agreement, capital lease or other title retention agreement    
relating to such property or asset.                                             

"MATERIAL ADVERSE EFFECT" means, with respect to any Person, a material 
adverse effect on the condition (financial or otherwise), business, assets or   
results of operations of such Person and its Subsidiaries, taken as a whole     
except any such effect resulting from or arising in connection with:            
(i) changes in circumstances or conditions affecting food companies in general, 
(ii) changes in general economic or business conditions or in financial markets 
in the United States or (iii) this Agreement or the transactions contemplated   
hereby or the announcement hereof.                                              

"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in          
Section 3(37) of ERISA.                                                         

"1933 ACT" means the Securities Act of 1933.                            

"1934 ACT" means the Securities Exchange Act of 1934.                   

"PBGC" means the Pension Benefit Guaranty Corporation.                  

 "PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a        
government or political subdivision or an agency or instrumentality thereof.    

"SEC" means the Securities and Exchange Commission.                     

"SHARES" means the Class A Shares and the Class B Shares.               

"SIGNIFICANT JOINT VENTURES" means, together with their Subsidiaries,   
(i) Bladeland Limited, (ii) Nabisco South Africa (Proprietary) Limited,         
(iii) PT Nabisco Foods, (iv) Beijing Yili Food Company, (v) Beijing Nabisco Food
Company and (vi) any comparable joint venture or partnership of the Company or  
any of its Subsidiaries.                                                        

"SUBSIDIARY" means, with respect to any Person, any entity of which     
securities or other ownership interests having ordinary voting power to elect a 
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.                    

"TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as of     
June 14, 1999 among NGH, R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds   
Tobacco Company and the Company, as such agreement may be amended from time to  
time.                                                                           

"TITLE IV PLAN" means a plan subject to Title IV of ERISA other than any
Multiemployer Plan.                                                             

    "WITHDRAWAL LIABILITY" means liability to or with respect to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer    
Plan, as those terms are defined in Part I of Subtitle E of Title IV of ERISA.  

 Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated         
thereunder.                                                                     

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ANNEX A -- NABISCO HOLDINGS MERGER AGREEMENT                                    

(b)  Each of the following terms is defined in the Section set forth    
opposite such term:                                                             

                                                                [Download Table]

TERM                                                           SECTION 
----                                                          ---------
                                                                       
Acquisition Proposal........................................       6.04
Agents......................................................       6.04
Certificates................................................       2.03
Change in Tax Law...........................................      10.01
Company Disclosure Schedule.................................  Article 4
Company Employees...........................................       7.04
Company Information Statement...............................       4.09
Company Properties..........................................       4.21
Company SEC Documents.......................................       4.07
Company Securities..........................................       4.05
Company Subsidiary Securities...............................       4.06
Confidentiality Agreement...................................       6.03
Contracts...................................................       4.22
Effective Time..............................................       2.01
Exchange Agent..............................................       2.03
Filed Contracts.............................................       4.22
Financing Agreements........................................       5.07
GAAP........................................................       4.08
Indemnified Person..........................................       7.03
IRS.........................................................       4.16
JV Agreements...............................................       4.22
Merger......................................................       2.01
Merger Consideration........................................       2.02
NGH.........................................................   recitals
NGH Stockholder Meeting.....................................      10.01
NGH Voting Agreement........................................   recitals
Preferred Shares............................................       4.05
RJR.........................................................      10.01
Superior Proposal...........................................       6.04
Surviving Corporation.......................................       2.01
Tax Return..................................................       4.16
Taxes.......................................................       4.16
Taxing Authority............................................       4.16

ARTICLE 2 
THE MERGER

Section 2.01.  THE MERGER.  (a) At the Effective Time, Merger Subsidiary
shall be merged (the "MERGER") with and into the Company in accordance with     
Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease,
and the Company shall be the surviving corporation (the "SURVIVING              
CORPORATION").                                                                  

  (b)  As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, the Company and Merger       
Subsidiary will file a certificate of merger with the Delaware Secretary of     
State and make all other filings or recordings required by Delaware Law in      

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                                    ANNEX A -- NABISCO HOLDINGS MERGER AGREEMENT

connection with the Merger. The Merger shall become effective at such time (the 
"EFFECTIVE TIME") as the certificate of merger is duly filed with the Delaware  
Secretary of State or at such later time as is specified in the certificate of  
merger.                                                                         

(c)  From and after the Effective Time, the Surviving Corporation shall 
possess all the rights, powers, privileges and franchises and be subject to all 
of the obligations, liabilities, restrictions and disabilities of the Company   
and Merger Subsidiary, all as provided under Delaware Law.                      

Section 2.02.  CONVERSION OF SHARES.  At the Effective Time:            

  (a)  except as otherwise provided in Section 2.02(b) or Section 2.04, each
Share outstanding immediately prior to the Effective Time shall be converted    
into the right to receive $55.00 in cash, without interest (the "MERGER         
CONSIDERATION");                                                                

   (b)  each Share held by the Company as treasury stock or owned by Parent or
any of its Subsidiaries immediately prior to the Effective Time shall be        
canceled, and no payment shall be made with respect thereto; and                

    (c)  each share of common stock of Merger Subsidiary outstanding immediately
prior to the Effective Time shall be converted into and become one share of     
common stock of the Surviving Corporation with the same rights, powers and      
privileges as the shares so converted and shall constitute the only outstanding 
shares of capital stock of the Surviving Corporation.                           

Section 2.03.  SURRENDER AND PAYMENT.  (a) Prior to the Effective Time, 
Parent shall appoint an agent (the "EXCHANGE AGENT") reasonably acceptable to   
the Company for the purpose of exchanging certificates representing Shares (the 
"CERTIFICATES") for the Merger Consideration. At the Effective Time, Parent will
deposit with the Exchange Agent the Merger Consideration to be paid in respect  
of the Shares. Promptly after the Effective Time, Parent will send, or will     
cause the Exchange Agent to send, to each holder of Shares at the Effective Time
a letter of transmittal and instructions (which shall specify that the delivery 
shall be effected, and risk of loss and title shall pass, only upon proper      
delivery of the Certificates to the Exchange Agent) for use in such exchange.   

(b)  Each holder of Shares that have been converted into the right to   
receive the Merger Consideration will be entitled to receive, upon surrender to 
the Exchange Agent of a Certificate, together with a properly completed letter  
of transmittal, the Merger Consideration payable for each Share represented by  
such Certificate. Until so surrendered, each such Certificate shall represent   
after the Effective Time for all purposes only the right to receive such Merger 
Consideration.                                                                  

 (c)  If any portion of the Merger Consideration is to be paid to a Person
other than the Person in whose name the surrendered Certificate is registered,  
it shall be a condition to such payment that the Certificate so surrendered     
shall be properly endorsed or otherwise be in proper form for transfer and that 
the Person requesting such payment shall pay to the Exchange Agent any transfer 
or other taxes required as a result of such payment to a Person other than the  
registered holder of such Certificate or establish to the satisfaction of the   
Exchange Agent that such tax has been paid or is not payable.                   

(d)  After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be canceled and exchanged for the Merger  
Consideration provided for, and in accordance with the procedures set forth, in 
this Article 2.                                                                 

   (e)  Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.03(a) (and any interest or other income earned      
thereon) that remains unclaimed by the                                          

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ANNEX A -- NABISCO HOLDINGS MERGER AGREEMENT                                    

holders of Shares one year after the Effective Time shall be returned to Parent,
upon demand, and any such holder who has not exchanged Shares for the Merger    
Consideration in accordance with this Section 2.03 prior to that time shall     
thereafter look only to Parent for payment of the Merger Consideration in       
respect of such Shares without any interest thereon. Notwithstanding the        
foregoing, Parent shall not be liable to any holder of Shares for any amount    
paid to a public official pursuant to applicable abandoned property, escheat or 
similar laws. Any amounts remaining unclaimed by holders of Shares three years  
after the Effective Time (or such earlier date immediately prior to such time   
when the amounts would otherwise escheat to or become property of any           
governmental authority) shall become, to the extent permitted by applicable law,
the property of Parent free and clear of any claims or interest of any Person   
previously entitled thereto.                                                    

   (f)  Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.03(a) to pay for Shares for which appraisal rights  
have been perfected shall be returned to Parent, upon demand.                   

Section 2.04.  DISSENTING SHARES.  Notwithstanding Section 2.02, Shares 
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has    
demanded appraisal for such Shares in accordance with Delaware Law shall not be 
converted into a right to receive the Merger Consideration, unless such holder  
fails to perfect, withdraws or otherwise loses its right to appraisal. If, after
the Effective Time, such holder fails to perfect, withdraws or loses its right  
to appraisal, such Shares shall be treated as if they had been converted as of  
the Effective Time into a right to receive the Merger Consideration. The Company
shall give Parent prompt notice of any demands received by the Company for      
appraisal of Shares. Except as required by applicable law or with the prior     
written consent of Parent, the Company shall not make any payment with respect  
to, or settle or offer to settle, any such demands.                             

   Section 2.05.  STOCK OPTIONS.  (a) At or immediately prior to the Effective
Time, each employee or director stock option to purchase Shares outstanding     
under any stock option or compensation plan or arrangement of the Company,      
whether or not vested or exercisable, shall be canceled, and the Company shall  
pay each holder of any such option at the time provided below for each such     
option an amount in cash determined by multiplying (i) the excess, if any, of   
the Merger Consideration per Share over the applicable exercise price of such   
option by (ii) the number of Shares such holder could have purchased (assuming  
full vesting of all options) had such holder exercised such option in full      
immediately prior to the Effective Time. In the case of each such option that is
outstanding on the date hereof, such payment shall be made before, at or        
promptly after the Effective Time. In all other cases, such payment shall be    
made when and if such option is exercised (or vests, if converted into a right  
to receive cash) in accordance with its terms.                                  

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    (b)  Prior to the Effective Time, the Company shall (i) use its best efforts
to obtain any consents from holders of options to purchase Shares granted under 
the Company's stock option or compensation plans or arrangements and (ii) make  
any amendments to the terms of such stock option or compensation plans or       
arrangements that, in the case of either clauses (i) or (ii), are necessary to  
give effect to the transactions contemplated by Section 2.05(a). Notwithstanding
any other provision of this Section, payment may be withheld in respect of any  
employee stock option until such necessary consents are obtained, and the       
Company shall withhold from such payments all amounts required by applicable law
or regulation to be withheld for taxes or otherwise.                            

   Section 2.06.  ADJUSTMENTS.  If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding Shares shall    
occur, including by reason of any reclassification, recapitalization, stock     
split or combination, exchange or readjustment of Shares, or stock dividend     
thereon with a record date during such period, the Merger Consideration and any 
other amounts payable pursuant to this Agreement shall be appropriately         
adjusted.                                                                       

 Section 2.07.  WITHHOLDING RIGHTS.  Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article 2 such amounts as it is required 
to deduct and withhold with respect to the making of such payment under any     
provision of federal, state, local or foreign tax law. If the Surviving         
Corporation or Parent, as the case may be, so withholds amounts, such amounts   
shall be treated for all purposes of this Agreement as having been paid to the  
holder of the Shares in respect of which the Surviving Corporation or Parent, as
the case may be, made such deduction and withholding.                           

   Section 2.08.  LOST CERTIFICATES.  If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person 
claiming such Certificate to be lost, stolen or destroyed and, if required by   
the Surviving Corporation, the posting by such Person of a bond, in such        
reasonable amount as the Surviving Corporation may direct, as indemnity against 
any claim that may be made against it with respect to such Certificate, the     
Exchange Agent will pay, in exchange for such lost, stolen or destroyed         
Certificate, the Merger Consideration to be paid in respect of the Shares       
represented by such Certificate, as contemplated by this Article.               

ARTICLE 3 
THE SURVIVING CORPORATION 

Section 3.01.  CERTIFICATE OF INCORPORATION.  The certificate of        
incorporation of the Company in effect at the Effective Time shall be the       
certificate of incorporation of the Surviving Corporation until amended in      
accordance with applicable law.                                                 

Section 3.02.  BYLAWS.  The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.                                                 

  Section 3.03.  DIRECTORS AND OFFICERS.  From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with 
applicable law, (i) the directors of Merger Subsidiary at the Effective Time    
shall be the directors of the Surviving Corporation and (ii) the officers of the
Company at the Effective Time shall be the officers of the Surviving            
Corporation.                                                                    

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ARTICLE 4 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

Except as set forth in the corresponding sections or subsections of the 
disclosure schedule delivered by the Company to Parent on or prior to the date  
hereof (the "COMPANY DISCLOSURE SCHEDULE") or in the Company SEC Documents, the 
Company represents and warrants to Parent that:                                 

   Section 4.01.  CORPORATE EXISTENCE AND POWER.  The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the  
State of Delaware and has all corporate powers and all governmental licenses,   
authorizations, permits, consents and approvals required to carry on its        
business as now conducted, except for those licenses, authorizations, permits,  
consents and approvals the absence of which would not reasonably be expected to 
have, individually or in the aggregate, a Material Adverse Effect on the        
Company. The Company is duly qualified to do business as a foreign corporation  
and is in good standing in each jurisdiction where such qualification is        
necessary, except for those jurisdictions where failure to be so qualified would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. The Company has heretofore made available to     
Parent true and complete copies of the certificate of incorporation and bylaws  
of the Company as currently in effect.                                          

Section 4.02.  CORPORATE AUTHORIZATION.  (a) The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate      
powers and, except for the affirmative vote of the holders of a majority of the 
outstanding Shares in connection with the consummation of the Merger, have been 
duly authorized by all necessary corporate action on the part of the Company.   
The affirmative vote of the holders of a majority of the outstanding Shares is  
the only vote of the holders of any of the Company's capital stock necessary in 
connection with the consummation of the Merger. This Agreement has been duly    
executed and delivered by the Company and constitutes a valid and binding       
agreement of the Company.                                                       

    (b)  At a meeting duly called and held, the Company's Board of Directors has
(i) determined that this Agreement and the transactions contemplated hereby are 
fair to and in the best interests of the Company's stockholders, (ii) declared  
advisable, approved and adopted this Agreement and the transactions contemplated
hereby and (iii) resolved (subject to Section 6.04(c)) to recommend approval and
adoption of this Agreement and the Merger by its stockholders.                  

Section 4.03.  GOVERNMENTAL AUTHORIZATION.  The execution, delivery and 
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,  
or filing with, any Governmental Entity, other than (i) the filing of a         
certificate of merger with respect to the Merger with the Delaware Secretary of 
State and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, (ii) compliance with any         
applicable requirements of the HSR Act and of laws, rules and regulations in    
foreign jurisdictions governing antitrust or merger control matters, (iii)      
compliance with any applicable requirements of the 1933 Act, the 1934 Act and   
any other applicable securities or takeover laws, whether state or foreign and  
(iv) any actions or filings the absence of which would not reasonably be        
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company or materially to impair the ability of the Company to consummate the
transactions contemplated by this Agreement.                                    

  Section 4.04.  NON-CONTRAVENTION.  The execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions       
contemplated hereby do not and will not (i) contravene, conflict with, or result
in any violation or breach of any provision of the certificate of               

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incorporation or bylaws of the Company or of the similar organizational         
documents of any of its material Subsidiaries, (ii) assuming compliance with the
matters referred to in Section 4.03, contravene, conflict with, or result in a  
violation or breach of any provision of any applicable law, regulation,         
judgment, injunction, order or decree, (iii) require any consent or other action
by any Person under, constitute (with or without notice or lapse of time or     
both) a default under, or cause or permit the termination, cancellation,        
acceleration or other change of any right or obligation or the loss of any      
benefit to which the Company or any of its Subsidiaries is entitled under any   
provision of any agreement or other instrument binding upon the Company or any  
of its Subsidiaries (or their respective Company Properties) or any license,    
franchise, permit, certificate, approval or other similar authorization         
affecting, or relating in any way to, the assets or business of the Company and 
its Subsidiaries or (iv) result in the creation or imposition of any Lien on any
asset of the Company or any of its Subsidiaries, except, in the case of clauses 
(ii), (iii) and (iv), for such matters as would not reasonably be expected to   
have, individually or in the aggregate, a Material Adverse Effect on the Company
or prevent or materially delay the consummation of the Merger.                  

Section 4.05.  CAPITALIZATION.  (a) The authorized capital stock of the 
Company consists of (i) 1 billion shares of common stock, $0.01 par value per   
share, of which (x) 265,000,000 shares have been designated as Class A Shares,  
(y) 213,250,000 shares have been designated as Class B Shares and (z) the       
remaining 521,750,000 shares may be designated by the Board of Directors of the 
Company as either Class A Shares or Class B Shares prior to issuance, and (ii)  
75,000,000 shares of preferred stock, par value $0.01 per share (the "PREFERRED 
SHARES"). As of June 22, 2000, there were outstanding: (1) 52,704,984 Class A   
Shares (including equivalents payable in cash or Class A Shares);               
(2) 213,250,000 Class B Shares; (3) employee and director stock options to      
purchase an aggregate of 20,913,569 Class A Shares; and (4) no Preferred Shares.
All shares of capital stock of the Company outstanding as of the date hereof    
have been duly authorized and validly issued and are fully paid and             
nonassessable. All Class A Shares issuable upon exercise of outstanding employee
or director stock options have been duly authorized and, when issued in         
accordance with the terms thereof, will be validly issued and will be fully paid
and nonassessable.                                                              

(b)  Except as set forth in this Section 4.05 and for changes since     
June 22, 2000 resulting from the exercise of employee or director stock options 
outstanding on such date, there are no outstanding (i) shares of capital stock  
or voting securities of the Company, (ii) securities of the Company convertible 
into or exchangeable for shares of capital stock or voting securities of the    
Company or (iii) options or other rights to acquire from the Company or other   
obligation of the Company to issue, any capital stock, voting securities or     
securities convertible into or exchangeable for capital stock or voting         
securities of the Company (the items in clauses (i), (ii) and (iii) being       
referred to collectively as the "COMPANY SECURITIES"). There are no outstanding 
obligations of the Company or any of its Subsidiaries to repurchase, redeem or  
otherwise acquire any of the Company Securities.                                

Section 4.06.  SUBSIDIARIES.  (a) Each Subsidiary of the Company is a   
corporation duly incorporated, validly existing and in good standing under the  
laws of its jurisdiction of incorporation, has all powers and all governmental  
licenses, authorizations, permits, consents and approvals required to carry on  
its business as now conducted, except for those licenses, authorizations,       
permits, consents and approvals the absence of which would not reasonably be    
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company. Each such Subsidiary is duly qualified to do business as a foreign 
corporation and is in good standing in each jurisdiction where such             
qualification is necessary, except for those jurisdictions where failure to be  
so qualified would not reasonably be expected to have, individually or in the   
aggregate, a Material Adverse Effect on the Company. All material Subsidiaries  
of the Company and their respective jurisdictions of incorporation are          
identified                                                                      

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in the Company 10-K. Section 4.06 of the Company Disclosure Schedule identifies 
the Company's direct and indirect percentage ownership of each Subsidiary.      

   (b)  All of the outstanding capital stock of, or other voting securities or
ownership interests in, each Subsidiary of the Company, is owned by the Company,
directly or indirectly, free and clear of any Lien and free of any other        
limitation or restriction (including any restriction on the right to vote, sell 
or otherwise dispose of such capital stock or other voting securities or        
ownership interests). There are no outstanding (i) securities of the Company or 
any of its Subsidiaries convertible into or exchangeable for shares of capital  
stock or other voting securities or ownership interests in any Subsidiary of the
Company or (ii) options or other rights to acquire from the Company or any of   
its Subsidiaries, or other obligation of the Company or any of its Subsidiaries 
to issue, any capital stock or other voting securities or ownership interests   
in, or any securities convertible into or exchangeable for any capital stock or 
other voting securities or ownership interests in, any Subsidiary of the Company
(the items in clauses (i) and (ii) being referred to collectively as the        
"COMPANY SUBSIDIARY SECURITIES"). There are no outstanding obligations of the   
Company or any of its Subsidiaries (i) to repurchase, redeem or otherwise       
acquire any of the Company Subsidiary Securities, (ii) to register any Company  
Subsidiary Securities under the 1933 Act or any state securities law or         
(iii) to grant preemptive or antidilutive rights with respect to any Company    
Subsidiary Securities.                                                          

 Section 4.07.  SEC FILINGS.  (a) The Company has made available to Parent
(i) the Company's annual reports on Form 10-K for its fiscal years ended        
December 31, 1999 and 1998, (ii) its quarterly report on Form 10-Q for its      
fiscal quarter ended March 31, 2000, (iii) its proxy or information statements  
relating to meetings of, or actions taken without a meeting by, the stockholders
of the Company held since December 31, 1999 and (iv) all of its other reports,  
statements, schedules and registration statements filed with the SEC since      
December 31, 1999 (the documents referred to in this Section 4.07(a),           
collectively, the "COMPANY SEC DOCUMENTS").                                     

    (b)  As of its filing date, each Company SEC Document complied as to form in
all material respects with the applicable requirements of the 1933 Act and the  
1934 Act, as the case may be.                                                   

  (c)  As of its filing date (or, if amended or superceded by a filing prior
to the date hereof, on the date of such filing), each Company SEC Document filed
pursuant to the 1934 Act did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements    
made therein, in the light of the circumstances under which they were made, not 
misleading.                                                                     

   (d)  Each Company SEC Document that is a registration statement, as amended
or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date  
such statement or amendment became effective, did not contain 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.      

 (e)  Other than Nabisco, Inc., no Subsidiary of the Company is subject to
the periodic reporting requirements of the 1934 Act.                            

Section 4.08.  FINANCIAL STATEMENTS.  The audited consolidated financial
statements and unaudited consolidated interim financial statements (including   
the related notes) of the Company included in the Company SEC Documents fairly  
present in all material respects, in conformity with United States generally    
accepted accounting principles ("GAAP") applied on a consistent basis (except as
may be indicated in the notes thereto), the consolidated financial position of  
the Company and its consolidated Subsidiaries as of the dates thereof and their 
consolidated results of operations and cash flows for the periods then ended    
(subject to normal year-end adjustments that are not expected to be material in 
amount in the case of any unaudited interim financial statements).              

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Section 4.09.  DISCLOSURE DOCUMENTS.  The information statement of the  
Company to be filed with the SEC in connection with the Merger (the "COMPANY    
INFORMATION STATEMENT") and any amendments or supplements thereto will, when    
filed, comply as to form in all material respects with the applicable           
requirements of the 1934 Act. At the time the Company Information Statement or  
any amendment or supplement thereto is first mailed to stockholders of the      
Company, the Company Information Statement, as supplemented or amended, if      
applicable, will not contain any untrue statement of a material fact or omit to 
state any material fact necessary in order to make the statements made therein, 
in the light of the circumstances under which they were made, not misleading.   
The representations and warranties contained in this Section 4.09 will not apply
to statements or omissions included in the Company Information Statement based  
upon information furnished to the Company by Parent specifically for use        
therein.                                                                        

Section 4.10.  ABSENCE OF CERTAIN CHANGES.  Since December 31, 1999, the
business of the Company and its Subsidiaries has been conducted in the ordinary 
course consistent with past practices and there has not been:                   

  (a)  any event, occurrence, development or state of circumstances or facts
that, either individually or in the aggregate, has had or is reasonably likely  
to have a Material Adverse Effect on the Company;                               

(b)  any declaration, setting aside or payment of any dividend or other 
distribution with respect to any shares of capital stock of the Company (other  
than customary quarterly cash dividends on the Shares in an amount not greater  
than $.188 per Share per quarter), or any repurchase, redemption or other       
acquisition by the Company or any of its Subsidiaries of any outstanding shares 
of capital stock or other securities of, or other ownership interests in, the   
Company or any of its Subsidiaries;                                             

  (c)  any amendment of any material term of any outstanding security of the
Company or any of its Subsidiaries;                                             

 (d)  any incurrence, assumption or guarantee by the Company or any of its
Subsidiaries of any indebtedness for borrowed money other than in the ordinary  
course of business and in amounts and on terms consistent with past practices;  

(e)  any creation or other incurrence by the Company or any of its      
Subsidiaries of any Lien on any material asset other than in the ordinary course
of business consistent with past practices;                                     

(f)  any making of any loan, advance or capital contributions to or     
investment in any Person not wholly owned, directly or indirectly, by the       
Company, other than immaterial amounts in the ordinary course of business       
consistent with past practices;                                                 

   (g)  any damage, destruction or other casualty loss (whether or not covered
by insurance) affecting the business or assets of the Company or any of its     
Subsidiaries that has had or would reasonably be expected to have a Material    
Adverse Effect on the Company;                                                  

(h)  any transaction or commitment made, or any contract or agreement   
entered into, by the Company or any of its Subsidiaries relating to its assets  
or business (including the acquisition or disposition of any assets) or any     
relinquishment by the Company or any of its Subsidiaries of any contract or     
other right, in either case, material to the Company and its Subsidiaries, taken
as a whole, other than transactions and commitments in the ordinary course of   
business consistent with past practices and those contemplated by this          
Agreement;                                                                      

(i)  any change in any method of accounting, method of tax accounting or
accounting principles or practice by the Company or any of its Subsidiaries,    
including, without limitation, any amendment of the Tax Sharing Agreement,      
except for any such change which is not significant or which is required by     
reason of a concurrent change in GAAP;                                          

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  (j)  any (i) grant of any severance or termination pay to (or amendment to
any existing arrangement with) any director, officer or (to the extent material 
in the aggregate) employee of the Company or any of its Subsidiaries, (ii)      
establishment, adoption or amendment (except as required by applicable law) of  
any collective bargaining, bonus, profit-sharing, thrift, pension, retirement or
other benefit plan or arrangement covering any director, officer or employee of 
the Company or any of its Subsidiaries, (iii) other than as disclosed in        
Section 4.10(j)(iii) of the Company Disclosure Schedule, increase in            
compensation, bonus or other benefits payable to any director or executive      
officer (or other officer with an employment agreement) of the Company, or (iv) 
other than in the ordinary course of business consistent with past practice,    
increase in compensation, bonus or other benefits payable to any employee not   
described in clause (iii) of the Company or any of its Subsidiaries;            

  (k)  any material labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative thereof to     
organize any employees of the Company or any of its Subsidiaries, which         
employees were not subject to a collective bargaining agreement at December 31, 
1999, or any material lockouts, strikes, slowdowns, work stoppages or threats   
thereof by or with respect to such employees;                                   

(l)  any settlement or waiver of a material litigation or claim; or     

(m)  any agreement to do any of the foregoing.                          

Section 4.11.  NO UNDISCLOSED LIABILITIES.  There are no liabilities or 
obligations of the Company or any of its Subsidiaries of any kind whatsoever,   
whether accrued, contingent, absolute, determined, determinable or otherwise,   
other than:                                                                     

(a)  liabilities or obligations disclosed or provided for in the Company
Balance Sheet or in the notes thereto or in the Company SEC Documents filed     
prior to the date hereof,                                                       

   (b)  liabilities or obligations incurred in the ordinary course of business
that would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company,                                       

(c)  immaterial liabilities or obligations not incurred in the ordinary 
course which, taken together, are not material to the Company and its           
Subsidiaries taken as a whole,                                                  

(d)  liabilities or obligations under this Agreement, or                

    (e)  liabilities or obligations incurred in connection with the transactions
contemplated hereby and disclosed in the Company Disclosure Schedule.           

  No representations or warranties with respect to environmental matters are
being made in this Section 4.11.                                                

  Section 4.12.  COMPLIANCE WITH LAWS AND COURT ORDERS.  Neither the Company
nor any of its Subsidiaries nor any of their respective properties is in        
violation of, or has since December 31, 1999 violated, any applicable law,      
statute, ordinance, rule, regulation, judgment, injunction, order or decree,    
except for violations that have not had and would not reasonably be expected to 
have, individually or in the aggregate, a Material Adverse Effect on the Company
or prevent or materially delay the consummation of the Merger. The Company and  
its Subsidiaries are in compliance with the terms of all required governmental  
licenses, authorizations, permits, consents and approvals, except where the     
failure so to comply would not, individually or in the aggregate, reasonably be 
expected to have a Material Adverse Effect on the Company.                      

Section 4.13.  LITIGATION.  There is no action, suit, investigation or  
proceeding pending, or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries, or any of their respective properties before
any court or arbitrator or before or by any Governmental Entity, that, if       

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determined or resolved adversely in accordance with the plaintiff's demands,    
would reasonably be expected to have a Material Adverse Effect on the Company or
prevent or materially delay the consummation of the Merger. Neither the Company 
nor any of its Subsidiaries is subject to any outstanding order, writ,          
injunction or decree that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company or prevent or         
materially delay the consummation of the Merger.                                

   Section 4.14.  FINDERS' FEES.  Except for UBS Warburg LLC, Morgan Stanley &
Co. Incorporated and Bear, Stearns & Co. Inc., copies of whose engagement       
agreements have been provided to Parent, there is no investment banker, broker, 
finder or other intermediary that has been retained by or is authorized to act  
on behalf of the Company or any of its Subsidiaries who might be entitled to any
fee or commission from the Company or any of its Affiliates in connection with  
the transactions contemplated by this Agreement. The fees, commissions and      
expenses of UBS Warburg, LLC, Morgan Stanley & Co. Incorporated, Bear,          
Stearns & Co. Inc., Davis Polk & Wardwell, Deloitte & Touche LLP and any other  
advisors retained by the Company or NGH in connection with the transactions     
contemplated by this Agreement to be paid by the Company will not exceed        
$50 million.                                                                    

  Section 4.15.  OPINION OF FINANCIAL ADVISORS.  The Company has received an
opinion of UBS Warburg LLC and an opinion of Morgan Stanley & Co. Incorporated, 
each dated as of the date of this Agreement and each to the effect that, as of  
the date of such opinion, the Merger Consideration is fair to the Company's     
stockholders from a financial point of view. Complete and correct signed copies 
of such opinions will be delivered to Parent as soon as practicable after the   
date of this Agreement.                                                         

Section 4.16.  TAXES.  (a) The Company and each of its Subsidiaries has 
timely filed (or has had timely filed on its behalf) or will file or cause to be
timely filed all material Tax Returns required by applicable law to be filed by 
it or on its behalf prior to or as of the Effective Time, and all such Tax      
Returns are, or will be at the time of filing, true and complete in all material
respects.                                                                       

  (b)  The Company and each of its Subsidiaries has paid (or has had paid on
its behalf), or, where payment is not yet due, has established (or has had      
established on its behalf and for its sole benefit and recourse) or (with       
respect to new contingencies arising after the date hereof) will establish or   
cause to be established in accordance with GAAP on or before the Effective Time 
an adequate accrual for the payment of, all taxes due with respect to any period
ending prior to or as of the Effective Time.                                    

 (c)  The federal income Tax Returns filed with respect to the Company and
its Subsidiaries have been examined and settled with the Internal Revenue       
Service (the "IRS") (or the applicable statutes of limitation for the assessment
of federal income Taxes for such periods have expired) for all years through    
1994.                                                                           

(d)  There are no material Liens or encumbrances for Taxes on any of the
assets of the Company or any of its Subsidiaries.                               

    (e)  The Company and its Subsidiaries have complied in all material respects
with all applicable laws, rules and regulations relating to the payment and     
withholding of Taxes.                                                           

(f)  No federal, state, local or foreign audits or administrative       
proceedings are pending with regard to any material Taxes or Tax Return of the  
Company or its Subsidiaries and none of them has received a written notice of   
any proposed audit or proceeding regarding any pending audit or proceeding.     

 (g)  "TAXES" shall mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal         
property, sales, withholding, social security, retirement, unemployment,        
occupation, use, goods and services, service use, license, value added, capital,
net worth,                                                                      

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payroll, profits, withholding, franchise, transfer and recording taxes, fees and
charges, and any other taxes, assessment or similar charges imposed by the IRS  
or any taxing authority (whether domestic or foreign including any state,       
county, local or foreign government or any subdivision or taxing agency thereof 
(including a United States possession)) (a "TAXING AUTHORITY"), whether computed
on a separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest whether paid or received, fines, penalties or        
additional amounts attributable to, or imposed upon, or with respect to, any    
such taxes, charges, fees, levies or other assessments. "TAX RETURN" shall mean 
any report, return, document, declaration or other information or filing        
required to be supplied to any Taxing Authority or jurisdiction (foreign or     
domestic) with respect to Taxes, including information returns, any documents   
with respect to or accompanying payments of estimated Taxes, or with respect to 
or accompanying requests for the extension of time in which to file any such    
report, return, document, declaration or other information.                     

  Section 4.17.  EMPLOYEE BENEFIT PLANS.  (a) The Company has made available
to Parent copies of each material Employee Plan (and, if applicable, related    
trust agreements) and all amendments thereto and written interpretations thereof
together with the most recent annual report (Form 5500 including, if applicable,
Schedule B thereto), summary plan description and any material modifications    
thereto, annual financial report and actuarial valuation report prepared in     
connection with any such Employee Plan and all trust agreements, insurance      
contracts and other funding vehicles relating thereto. The Company Disclosure   
Schedule identifies each such Employee Plan that is (i) a Multiemployer Plan,   
(ii) a Title IV Plan or (iii) maintained in connection with any trust described 
in Section 501(c)(9) of the Code.                                               

(b)  Each material Employee Plan that is intended to be qualified under 
Section 401(a) of the Code is so qualified and has been so qualified during the 
period since its adoption; each trust created under any such Plan is exempt from
tax under Section 501(a) of the Code and has been so exempt since its creation. 
The Company has made available to Parent the most recent determination letter of
the Internal Revenue Service relating to each such Employee Plan. Each material 
Employee Plan has been maintained in substantial compliance with its terms and  
with the requirements prescribed by any and all applicable statutes, orders,    
rules and regulations, including ERISA and the Code.                            

(c)  The Company has made available to Parent copies (or if there is no 
written plan document, any existing written descriptions) of each material      
Benefit Arrangement (and, if applicable, related trust agreements) and all      
amendments thereto and written interpretations thereof. Each such Benefit       
Arrangement has been maintained in substantial compliance with its terms and    
with the requirements prescribed by any and all applicable statutes, orders,    
rules and regulations and has been maintained in good standing with applicable  
regulatory authorities.                                                         

(d)  There has been no failure of a group health plan (as defined in    
Section 5000(b)(1) of the Code) to meet the requirements of Code                
Section 4980B(f) with respect to a qualified beneficiary (as defined in         
Section 4980B(g)). Neither the Company nor any of its Subsidiaries has          
contributed to a nonconforming group health plan (as defined in                 
Section 5000(c)) and no ERISA Affiliate of the Company or any of its            
Subsidiaries has incurred a tax under Section 5000(a) that is or could become a 
liability of the Company or any of its Subsidiaries.                            

(e)  The Company has made available to Parent copies of each material   
International Plan. Each such International Plan has been maintained in         
substantial compliance with its terms and with the requirements prescribed by   
any and all applicable statutes, orders, rules and regulations (including any   
special provisions relating to qualified plans where such Plan was intended so  
to qualify) and has been maintained in good standing with applicable regulatory 
authorities. There has been no amendment to, written interpretation of or       
announcement (whether or not written) by the Company or any of its              

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Subsidiaries relating to, or change in employee participation or coverage under,
any material International Plan that would increase materially the expense of   
maintaining such International Plan above the level of expense incurred in      
respect thereof for the most recent fiscal year ended prior to the date hereof. 
Each such International Plan that is intended to be funded and/or book-reserved 
is fully funded and/or book-reserved, as appropriate, based upon reasonable     
actuarial assumptions.                                                          

(f)  The Company Disclosure Schedule contains a complete list of all    
material Employee Arrangements. Except as specifically provided in the foregoing
documents made available to Parent, no amendments to any such Employee          
Arrangement have been adopted or approved nor has the Company or any of its     
Affiliates undertaken to make any such amendments or to adopt or approve any new
material Employee Arrangement.                                                  

(g)  All material contributions required to be made to any Employee     
Arrangement or any trust or other arrangement funding any of the foregoing by   
applicable law or regulation or by any plan document or other contractual       
undertaking, and all material premiums due or payable with respect to insurance 
policies funding any Employee Arrangement, for any period through the date      
hereof have been timely made or paid in full.                                   

(h)  With respect to each Title IV Plan: (i) there does not exist any   
accumulated funding deficiency within the meaning of Code Section 412 or        
Section 302 of ERISA, whether or not waived; (ii) no reportable event within the
meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has 
not been waived has occurred, and the consummation of the transactions          
contemplated by this Agreement will not result in the occurrence of any such    
reportable event; (iii) all premiums to the PBGC have been timely paid in full; 
(iv) no material liability (other than for premiums to the PBGC) under Title IV 
of ERISA has been or is expected to be incurred by the Company or any of its    
Subsidiaries; and (v) the PBGC has not instituted proceedings to terminate any  
such Title IV Plan and, to the Company's knowledge, no condition exists that    
presents a risk that such proceedings will be instituted or which would         
constitute grounds under Section 4042 of ERISA for the termination of, or the   
appointment of a trustee to administer, any such Title IV Plan.                 

(i)  There does not now exist, nor do any circumstances exist that could
result in, any Controlled Group Liability that would be a material liability of 
the Company or any of its Subsidiaries following the Closing. None of the       
Company and its Subsidiaries nor any of their respective ERISA Affiliates has   
incurred any material Withdrawal Liability that has not been satisfied in full. 
With respect to each Employee Plan that is a Multiemployer Plan: (i) if the     
Company or any of its Subsidiaries or any of their respective ERISA Affiliates  
were to experience a withdrawal or partial withdrawal from such plan, no        
material Withdrawal Liability would be incurred; and (ii) none of the Company   
and its Subsidiaries, nor any of their respective ERISA Affiliates has received 
any notification, nor has any reason to believe, that any such Employee Plan is 
in reorganization, has been terminated, is insolvent, or may reasonably be      
expected to be in reorganization, to be insolvent, or to be terminated.         

(j)  The Company Disclosure Schedule sets forth: (i) an accurate and    
complete list of each material Employee Arrangement under which the execution   
and delivery of this Agreement or the consummation of the transactions          
contemplated hereby could (either alone or in conjunction with any other event  
such as termination of employment) result in, cause the accelerated vesting,    
funding or delivery of, or increase the amount or value of, any payment or      
benefit to any employee, officer or director of the Company, or any of its      
Subsidiaries, or for which the Company or any of its Subsidiaries could be      
liable, or would limit the right of the Company or any of its Subsidiaries to   
amend, merge, terminate or receive a reversion of assets from any material      
Employee Arrangement or related trust; (ii) the aggregate dollar amounts payable
by the Company and its Subsidiaries pursuant to or with respect to bonuses and  
other incentive compensation in connection with or as a result of the           

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consummation of the transactions contemplated hereby; (iii) the aggregate       
liabilities of the Company and its Subsidiaries, together with any corresponding
assets held in any grantor trust of the Company and its Subsidiaries, pursuant  
to each Employee Arrangement (other than Employee Plans that are qualified under
Section 401(a) of the Code) providing any supplemental or excess retirement     
benefits or other deferred compensation (whether elective or nonelective), in   
each case determined as of the date set forth in the Company Disclosure Schedule
and (iv) the aggregate amounts of change-of-control severance and other         
change-of-control payments (whether contingent or not) that have been or will be
deferred under the Company's Deferred Compensation Plan. No outstanding options 
to purchase Shares granted to any current or former employee or director of the 
Company or any of its Affiliates contain any provision that would entitle the   
holder to receive any cash payment with respect thereto in connection with the  
consummation of the transactions contemplated hereby in excess of the amounts   
provided for in Section 2.05 hereof.                                            

(k)  There are no pending or threatened claims (other than claims for   
benefits in the ordinary course), investigations, lawsuits or arbitrations which
have been asserted or instituted, and, to the Company's knowledge, no set of    
circumstances exists which may reasonably be expected to give rise to a claim or
lawsuits, against the material Employee Arrangements, any fiduciaries thereof   
with respect to their duties to such Employee Arrangements or the assets of any 
of the trusts under any of such Employee Arrangements which could reasonably be 
expected to result in any material liability of the Company or any of its       
Subsidiaries to the PBGC, the Department of Treasury, the Department of Labor,  
or any other U.S. or foreign governmental authority, or to any of such Employee 
Arrangements, any participant in any such Employee Arrangement, or any other    
party. Without limiting the generality of the foregoing, neither the Company nor
any of its Affiliates has any actual or contingent liability under any such     
Employee Arrangement or under any applicable law or regulation for pay or       
benefits incurred as a result of corporate restructuring, downsizing, layoffs or
similar events that has not been fully satisfied or adequately reserved for in  
the audited consolidated financial statements (including the related notes) and 
unaudited consolidated financial statements (including the related notes) of the
Company included in the Company SEC Documents.                                  

Section 4.18.  ENVIRONMENTAL MATTERS.  Except as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company:                                                                    

  (i)  no written notice, demand, request for information, citation,
summons or order has been received, no penalty has been assessed, and no
investigation, action, claim, suit or proceeding is pending or, to the  
knowledge of the Company, threatened by any Governmental Entity or other
Person which alleges a violation by the Company or any Subsidiary of the
Company of any Environmental Law;                                       

 (ii)  the Company and its Subsidiaries are in compliance with all
Environmental Laws and all Environmental Permits; and                   

       (iii)  there are no liabilities or obligations of the Company or any of
its Subsidiaries of any kind whatsoever, whether accrued, contingent,   
absolute, determined, determinable or otherwise arising (x) under or in 
connection with any Environmental Law or any related claim or (y) in    
connection with any environmental matter.                               

    Section 4.19.  INTELLECTUAL PROPERTY.  The Company and its Subsidiaries own,
or are validly licensed or otherwise have the right to use, all Company         
Intellectual Property Rights used in the conduct of their businesses, except    
where the failure to own or possess valid rights to such Company Intellectual   
Property Rights would not, individually or in the aggregate, reasonably be      
expected to have a Material Adverse Effect on the Company. No Company           
Intellectual Property Right is subject to any outstanding                       

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judgment, injunction, order, decree or agreement restricting the use thereof by 
the Company or any of its Subsidiaries or restricting the licensing thereof by  
the Company or any of its Subsidiaries to any Person, except for any judgment,  
injunction, order, decree or agreement which would not, individually or in the  
aggregate, reasonably be expected to have a Material Adverse Effect on the      
Company. Neither the Company nor any of its Subsidiaries is infringing on any   
other Person's Intellectual Property Rights and to the knowledge of the Company 
no Person is infringing on any Company Intellectual Property Rights, except, in 
either case, as would not reasonably be expected, individually or in the        
aggregate, to have a Material Adverse Effect on the Company. Except for such    
matters as would not reasonably be expected to have a Material Adverse Effect on
the Company, as of May 31, 2000 (i) neither the Company nor any of its          
Subsidiaries was a defendant in any action, suit, investigation or proceeding   
relating to, or otherwise was notified of, any alleged claim of infringement of 
any Intellectual Property Right and (ii) the Company and its Subsidiaries had no
outstanding claim or suit for any continuing infringement by any other Person of
any Company Intellectual Property Rights.                                       

Section 4.20.  ANTITAKEOVER STATUTE.  The Company has taken all action  
necessary to exempt the Merger and this Agreement and the transactions          
contemplated hereby from the provisions of Section 203 of Delaware Law.         

  Section 4.21.  REAL PROPERTY.  Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the      
Company: (i) the Company or its Subsidiaries have good and marketable fee title 
or a valid leasehold interest in all of the real property and related equipment 
used by the Company or its Subsidiaries or otherwise reflected in the Company's 
financial statements identified in Section 4.08 above (collectively, the        
"COMPANY PROPERTIES"), in each case free and clear of any Liens or rights of    
third parties and (ii) the Company Properties (taking into account, without     
limitation, all Liens related thereto, all zoning and other restrictions        
applicable thereto and the condition thereof) are suitable and adequate for the 
conduct of the businesses of the Company and its Subsidiaries as currently      
conducted.                                                                      

  Section 4.22.  CONTRACTS; JOINT VENTURES.  (a) Except for employee benefit
plans and any contracts filed as an exhibit to any Company SEC Documents ("FILED
CONTRACTS"), Section 4.22(a) of the Company Disclosure Schedule lists all oral  
or written contracts, agreements, guarantees and leases that exist as of the    
date hereof to which the Company or any of its Subsidiaries is a party or by    
which it is bound which are or would be required to be filed as an exhibit to   
the Company SEC Documents (the listed contracts and the Filed Contracts, the    
"CONTRACTS"). All of the Contracts governed by the laws of the United States or 
any state and, to the knowledge of the Company, all of the Contracts governed by
the laws of any foreign jurisdiction, are valid and binding obligations of the  
Company or such Subsidiary and, to the knowledge of the Company, the valid and  
binding obligation of each other party thereto, with only such exceptions as    
would not, individually or in the aggregate, have a Material Adverse Effect on  
the Company. Neither the Company or such Subsidiary nor, to the knowledge of the
Company, any other party thereto is in violation of or in default in respect of,
nor has there occurred an event or condition which with the passage of time or  
giving of notice (or both) would constitute a default under or permit the       
termination of, any such Contract, except such violations or defaults under or  
terminations which would not, individually or in the aggregate, reasonably be   
expected to have a Material Adverse Effect on the Company.                      

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    (b)  The Company has made available to Parent complete and correct copies of
all agreements relating to the formation and governance of the Significant Joint
Ventures (the "JV AGREEMENTS"). Other than as contained in the JV Agreements,   
the Company has no obligations of any kind whatsoever, whether accrued,         
contingent, absolute, determined, determinable or otherwise, to loan funds to,  
make capital contributions to, or guarantee indebtedness or other obligations   
of, the Significant Joint Ventures.                                             

Section 4.23.  INDEBTEDNESS.  At the date hereof, the Company and its   
Subsidiaries have outstanding indebtedness for borrowed money (including,       
without limitation, off-balance sheet indebtedness, guarantees of third party   
indebtedness and capitalized lease obligations) in an aggregate principal amount
not greater than $4.5 billion.                                                  

ARTICLE 5 
REPRESENTATIONS AND WARRANTIES OF PARENT

Parent represents and warrants to the Company that:                     

Section 5.01.  CORPORATE EXISTENCE AND POWER.  Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good     
standing under the laws of its jurisdiction of incorporation and has all        
corporate powers and all governmental licenses, authorizations, permits,        
consents and approvals required to carry on its business as now conducted,      
except for those licenses, authorizations, permits, consents and approvals the  
absence of which would not reasonably be expected to have, individually or in   
the aggregate, a Material Adverse Effect on Parent. Since the date of its       
incorporation, Merger Subsidiary has not engaged in any activities other than in
connection with or as contemplated by this Agreement or in connection with      
arranging any financing required to consummate the transactions contemplated    
hereby.                                                                         

Section 5.02.  CORPORATE AUTHORIZATION.  The execution, delivery and    
performance by Parent and Merger Subsidiary of this Agreement and the           
consummation by Parent and Merger Subsidiary of the transactions contemplated   
hereby are within the corporate powers of Parent and Merger Subsidiary and have 
been duly authorized by all necessary corporate action. This Agreement has been 
duly executed and delivered by Parent and Merger Subsidiary and constitutes a   
valid and binding agreement of each of Parent and Merger Subsidiary.            

Section 5.03.  GOVERNMENTAL AUTHORIZATION.  The execution, delivery and 
performance by Parent and Merger Subsidiary of this Agreement and the           
consummation by Parent and Merger Subsidiary of the transactions contemplated   
hereby require no action by or in respect of, or filing with, any Governmental  
Entity, other than (i) the filing of a certificate of merger with respect to the
Merger with the Delaware Secretary of State and appropriate documents with the  
relevant authorities of other states in which Parent is qualified to do         
business, (ii) compliance with any applicable requirements of the HSR Act and of
laws, rules and regulations in foreign jurisdictions governing antitrust or     
merger control matters, (iii) compliance with any applicable requirements of the
1933 Act, the 1934 Act and any other applicable securities or takeover laws,    
whether state or foreign and (iv) any actions or filings the absence of which   
would not reasonably be expected to have, individually or in the aggregate, a   
Material Adverse Effect on Parent or materially to impair the ability of Parent 
and Merger Subsidiary to consummate the transactions contemplated by this       
Agreement.                                                                      

  Section 5.04.  NON-CONTRAVENTION.  The execution, delivery and performance
by Parent and Merger Subsidiary of this Agreement and the consummation by Parent
and Merger Subsidiary of the transactions contemplated hereby do not and will   
not (i) contravene, conflict with, or result in any                             

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violation or breach of any provision of the certificate of incorporation or     
bylaws of Parent or Merger Subsidiary, (ii) assuming compliance with the matters
referred to in Section 5.03, contravene, conflict with, or result in any        
violation or breach of any provision of any law, regulation, judgment,          
injunction, order or decree or (iii) require any consent or other action by any 
Person under, constitute (with or without notice of lapse of time or both) a    
default under, or cause or permit the termination, cancellation, acceleration or
other change of any right or obligation or the loss of any benefit to which     
Parent or Merger Subsidiary is entitled under any provision of any agreement or 
other instrument binding upon Parent or Merger Subsidiary, except, in the case  
of clauses (ii) and (iii), for such matters as would not reasonably be expected 
to have, individually or in the aggregate, a Material Adverse Effect on Parent  
or prevent or materially delay the consummation of the Merger.                  

    Section 5.05.  DISCLOSURE DOCUMENTS.  The information with respect to Parent
and any of its Subsidiaries that Parent furnishes to the Company specifically   
for use in the Company Information Statement will not contain any untrue        
statement of a material fact or omit to state any material fact necessary in    
order to make the statements made therein, in the light of the circumstances    
under which they were made, not misleading at the time such Company Information 
Statement or any amendment or supplement thereto is first mailed to stockholders
of the Company.                                                                 

Section 5.06.  FINDERS' FEES.  Except for Chase Securities Inc., Credit 
Suisse First Boston and Wasserstein Perella & Co., Inc., whose fees will be paid
by Parent, there is no investment banker, broker, finder or other intermediary  
that has been retained by or is authorized to act on behalf of Parent who might 
be entitled to any fee or commission from the Company or any of its Affiliates  
upon consummation of the transactions contemplated by this Agreement.           

  Section 5.07.  FINANCING.  Parent has received and furnished copies to the
Company of fully executed and operative agreements (the "FINANCING AGREEMENTS") 
with Chase Securities Inc. and Credit Suisse First Boston Corp. dated as of     
June 22, 2000 pursuant to which such entities have agreed, subject to the terms 
and conditions thereof, to provide financing to Parent in an amount sufficient, 
together with existing credit facilities, cash on hand and other liquid         
securities owned directly or indirectly by Parent, to pay all cash amounts      
payable to Company stockholders and optionholders in connection with the        
transactions contemplated by this Agreement, to effect, assuming the accuracy of
the Company's representations in this Agreement, all necessary refinancing of   
existing indebtedness of the Company and its Subsidiaries or of Parent and its  
Subsidiaries that is required as a result of the transactions contemplated by   
this Agreement, and to pay all related fees and expenses. As of the date hereof,
Parent knows of no facts or circumstances that could reasonably be expected to  
result in any of the conditions set forth in the Financing Agreements not being 
satisfied.                                                                      

ARTICLE 6 
COVENANTS OF THE COMPANY

The Company agrees that:                                                

Section 6.01.  CONDUCT OF THE COMPANY.  From the date hereof until the  
Effective Time, the Company and its Subsidiaries shall conduct their business   
and operate their properties in the ordinary course consistent with past        
practice and shall use their reasonable best efforts to preserve intact their   
business organizations and relationships with third parties and to keep         
available the services of their present officers and employees. Without limiting
the generality of the foregoing, except with the prior written consent of Parent
or as contemplated by this Agreement or as set forth in the Company             

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Disclosure Schedule, from the date hereof until the Effective Time neither the  
Company nor any of its Subsidiaries shall:                                      

(a)  declare, set aside or pay any dividend or other distribution with  
respect to any share of its capital stock, other than (x) customary quarterly   
cash dividends on the Shares in an amount not to exceed $.188 per Share per     
quarter and (y) dividends and other distributions paid by any Subsidiary of the 
Company to the Company or any wholly-owned Subsidiary of the Company;           

   (b)  repurchase, redeem or otherwise acquire any shares of capital stock or
other securities of, or other ownership interests in, the Company or any of its 
Subsidiaries;                                                                   

   (c)  issue, deliver, pledge, encumber or sell any Shares, or any securities
convertible into Shares, or any rights, warrants or options to acquire any      
Shares, other than (i) issuances pursuant to stock-based awards or options that 
are outstanding on the date hereof, as referenced in Section 4.05 of this       
Agreement, or are granted in accordance with the following clause (ii), and (ii)
additional options to acquire Shares granted at fair market value or other      
awards based on Shares under the terms of the Company's stock plans as in effect
on the date hereof in the ordinary course consistent with past practice, but in 
no event shall such options and awards relate to more than 100,000 Shares, nor  
shall any such options or awards be granted to any officers or directors of the 
Company or contain any provisions relating to the acceleration of vesting that  
are triggered by the execution of this Agreement or the consummation of the     
Merger;                                                                         

  (d)  amend its Certificate of Incorporation or By-Laws or other comparable
organizational documents or amend any terms of the outstanding securities of the
Company or its Subsidiaries;                                                    

   (e)  merge or consolidate with any other Person, make any investment in any
other Person, including any joint venture, or acquire the stock or assets or    
rights of any other Person other than (i) pursuant to existing contracts or     
commitments as set forth in Section 6.01 of the Company Disclosure Schedule,    
(ii) in each case in the ordinary course of business consistent with past       
practice, purchases of raw materials, property, plant and equipment, services   
and items used or consumed in the manufacturing process, (iii) capital          
expenditures made pursuant to the Company's 2000 Capital Expenditure Program, a 
copy of which has been made available to Parent, or (iv) transactions that are  
in the ordinary course consistent with past practice and not individually in    
excess of $5 million;                                                           

(f)  sell, lease, license or otherwise dispose of any Subsidiary or any 
assets, securities, rights or property other than (but for purposes of clauses  
(i)--(iii), excluding matters addressed in Section 6.01(r)) (i) pursuant to     
existing contracts or commitments as set forth in Section 6.01 of the Company   
Disclosure Schedule, (ii) sales of inventory and equipment in the ordinary      
course of business consistent with past practice, or (iii) transactions that are
in the ordinary course consistent with past practice and not individually in    
excess of $10 million;                                                          

(g)  incur any indebtedness (whether or not reflected on the Company's  
balance sheet) for borrowed money, guarantee any such indebtedness, enter into  
any new or amend existing facilities relating to indebtedness, issue or sell any
debt securities or warrants or other rights to acquire any debt securities or   
guarantee any debt securities, other than any indebtedness, guarantee or        
issuance incurred under current facilities (or renewals or replacements thereof 
made in consultation with Parent) in the ordinary course of business consistent 
with past practice in an aggregate amount not to exceed $4.6 billion outstanding
at any time or incurred between the Company and any of its wholly owned         
Subsidiaries or between any of such wholly owned Subsidiaries;                  

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  (h)  except as required under any collective bargaining agreement (whether
now or hereafter in effect) or under Section 2.05 or as may be mutually agreed  
upon between Parent and the Company, enter into or adopt any new, or amend any  
existing, Employee Arrangement, other than as required by law, except that, in  
order to retain a current employee or recruit a new employee, in each case      
consistent with past practice, the Company or its Subsidiaries may amend        
Employee Arrangements with individual employees who are not officers or         
directors of the Company if such amendments will result in not more than a DE   
MINIMIS additional cost to the Company or its Subsidiaries and will not         
materially increase the obligations of the Company or its Subsidiaries;         

(i)  except (i) as permitted under Section 6.01(h) or (ii) to the extent
required under any collective bargaining agreement (whether now or hereafter in 
effect) or by written employment agreements existing on the date of this        
Agreement and listed in the Company Disclosure Schedule, increase the           
compensation payable or to become payable to its officers, directors or         
employees, except for increases in the ordinary course of business consistent   
with past practice in salaries or wages of employees (who are not executive     
officers or directors of the Company or any of its Subsidiaries) that, in any   
event, do not result in aggregate increases in such compensation by more than 2%
over the compensation in effect on the date of this Agreement;                  

(j)  renew any collective bargaining agreement or enter into any new    
collective bargaining agreement, if such renewed or new collective bargaining   
agreement would materially increase the costs and/or obligations imposed on the 
Company and its Subsidiaries thereunder;                                        

    (k)  contribute any amount to any Employee Arrangement or any trust or other
arrangement funding any Employee Arrangement, except to the extent required by  
the existing terms of such Employee Arrangement, trust or other funding         
arrangement, by any collective bargaining agreement now or hereafter in effect, 
by any written employment agreement existing on the date of this Agreement and  
listed in the Company Disclosure Schedule, or by applicable law;                

(l)  (i) adopt a plan of complete or partial liquidation, dissolution,  
merger, consolidation, restructuring, recapitalization or other reorganization  
or (ii) enter into any agreement or exercise any discretion providing for       
acceleration of payment or performance as a result of a change of control of the
Company or its Subsidiaries;                                                    

  (m)  renew or enter into any non-compete, exclusivity or similar agreement
that would restrict or limit, in any material respect, the operations of the    
Company or its Subsidiaries, or, after the Effective Time, of Parent or its     
Subsidiaries;                                                                   

(n)  enter into, modify in any material respect, amend in any material  
respect or terminate any (i) Contract or (ii) agreement having a term longer    
than one year and having an aggregate value over its term greater than          
$10 million;                                                                    

   (o)  (i) renew, enter into, amend or waive any material right under (a) any
contract with or loan to any Affiliate of the Company (other than its           
wholly-owned Subsidiaries), except with respect to certain employment matters as
permitted under other covenants contained herein, (b) any distribution agreement
that is not terminable without penalty on thirty days notice, other than any    
distribution agreement which involves or would be expected to involve monthly   
sales not in excess of $25,000 and which is otherwise in the ordinary course of 
business consistent with past practice or (c) any JV Agreement except as        
permitted under Section 6.01(e)(2) of the Company Disclosure Schedule, or       
(ii) exercise any voting or veto rights under the United Biscuits transaction   
documents (as set forth in Section 4.10(h) of the Company Disclosure Schedule)  
with respect to acquisitions, dispositions or the incurrence of additional      
indebtedness, other than (x) the refinancing described in such documents and    

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(y) the fulfillment of any existing commitments of the Company and its          
Subsidiaries under such documents;                                              

(p)  settle or compromise any material litigation, or waive, release or 
assign any material claims, including with respect to any Company Intellectual  
Property Rights;                                                                

   (q)  adopt any change, other than as required by the SEC or by GAAP, in its
accounting policies, procedures or practices;                                   

  (r)  sell, license, lease or otherwise dispose of any Company Intellectual
Property Rights or any brand or line of business, other than pursuant to        
agreements in place on the date hereof and disclosed in Section 6.01(r) of the  
Company Disclosure Schedule;                                                    

(s)  agree or commit to do any of the foregoing.                        

Section 6.02.  STOCKHOLDER ACTION BY WRITTEN CONSENT; INFORMATION       
MATERIAL.  In lieu of calling a meeting of the Company's stockholders, the      
Company will seek approval and adoption of this Agreement and the Merger by     
written consent of NGH. Such approval will be sought so that, on the same       
Business Day as the NGH Stockholder Meeting, such consent shall be obtained and 
shall be effective (assuming that the NGH Stockholder Approval (as defined in   
the NGH Voting Agreement) is obtained). Subject to Section 6.04(c), the Board of
Directors of the Company shall recommend approval and adoption of this Agreement
and the Merger by the Company's stockholders. In connection with such action by 
written consent, the Company will (i) promptly prepare and file with the SEC,   
use its best efforts to have cleared by the SEC and thereafter mail to its      
stockholders as promptly as practicable the Company Information Statement,      
(ii) use its best efforts to obtain the necessary approvals by its stockholders 
of this Agreement and the transactions contemplated hereby and (iii) otherwise  
comply with all legal requirements applicable to such approvals.                

Section 6.03.  ACCESS TO INFORMATION.  From the date hereof until the   
Effective Time and subject to applicable law and the Confidentiality Agreement  
dated as of April 19, 2000 between NGH and Parent, as modified (the             
"CONFIDENTIALITY AGREEMENT"), the Company shall (i) give Parent, its counsel,   
financial advisors, auditors and other authorized representatives reasonable    
access to the offices, properties, books and records of the Company and its     
Subsidiaries, (ii) furnish to Parent, its counsel, financial advisors, auditors 
and other authorized representatives such financial and operating data and other
information as such Persons may reasonably request, (iii) instruct the          
employees, counsel, financial advisors, auditors and other authorized           
representatives of the Company and its Subsidiaries to cooperate with Parent in 
its investigation of the Company and its Subsidiaries and (iv) promptly advise  
Parent orally and in writing of any fact or circumstance reasonably likely to   
have a Material Adverse Effect on the Company. Any investigation pursuant to    
this Section shall be conducted in such manner as not to interfere unreasonably 
with the conduct of the business of the Company and its Subsidiaries. No        
information or knowledge obtained by Parent in any investigation pursuant to    
this Section shall affect or be deemed to modify any representation or warranty 
made by the Company hereunder.                                                  

Section 6.04.  NO SOLICITATION; OTHER OFFERS.  (a) From the date hereof 
until the earlier of the Effective Time and the termination of this Agreement in
accordance with Article 10, the Company and its Subsidiaries will not, and the  
Company will use its reasonable best efforts to cause the officers, directors,  
employees, investment bankers, consultants or other agents or representatives   
(collectively, "AGENTS") of the Company and its Subsidiaries not to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Acquisition
Proposal, (ii) engage in discussions or negotiations with any Person concerning 
an Acquisition Proposal, (iii) disclose any nonpublic information relating to   
the Company or any of its Subsidiaries to any Person who, to the knowledge of   
the Company, is                                                                 

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considering making, or has made, an Acquisition Proposal or (iv) take any other 
action to facilitate any inquiries or the making of any proposal that           
constitutes or that could reasonably be expected to lead to an Acquisition      
Proposal. The Company will notify Parent promptly (but in no event later than   
24 hours) after receipt by the Company of any Acquisition Proposal or any       
request for nonpublic information relating to the Company or any of its         
Subsidiaries by any Person who, to the knowledge of the Company, is making, or  
has made, an Acquisition Proposal. The Company shall promptly provide such      
notice orally and in writing and shall identify the Person making, and all terms
and conditions of, any such Acquisition Proposal or request. The Company shall  
keep Parent promptly informed of the status and details of any such Acquisition 
Proposal (including amendments or proposed amendments) or request and any       
discussions or negotiations pursuant to Section 6.04(b) and the Company shall   
provide to Parent copies of any written communications between the Company and  
any Person making the Acquisition Proposal. The Company shall, and the Company  
shall use reasonable best efforts to cause its Subsidiaries and the Agents of   
the Company and its Subsidiaries to, cease immediately and cause to be          
terminated all activities, discussions and negotiations, if any, with any       
Persons conducted prior to the date hereof with respect to any Acquisition      
Proposal. Nothing contained in this Agreement shall prevent the Board of        
Directors of the Company from complying with Rule 14d-9 or Rule 14e-2 under the 
1934 Act with respect to any Acquisition Proposal.                              

   (b)  Notwithstanding the foregoing, the Company may prior to receipt of the
NGH Stockholder Approval (as defined in the NGH Voting Agreement), negotiate or 
otherwise engage in substantive discussions with, and furnish nonpublic         
information to, any Person in response to an unsolicited Acquisition Proposal by
such Person if (i) the Company has complied with the terms of Section 6.04(a),  
(ii) the Board of Directors of the Company determines in good faith that such   
Acquisition Proposal is likely to result in a Superior Proposal and, after      
consultation with outside legal counsel, that the failure to take such action   
would constitute a breach of its fiduciary duties under applicable law, (iii)   
such Person executes a confidentiality agreement with terms no less favorable to
the Company than those contained in the Confidentiality Agreement (except as to 
the standstill provisions) and (iv) the Company shall have delivered to Parent  
prior written notice advising Parent that it intends to take such action.       

  (c)  The Board of Directors of the Company shall be permitted to withdraw,
or modify in a manner adverse to Parent, its recommendation to its stockholders 
referred to in Section 6.02 hereof, but only if (i) the Company has complied    
with the terms of Section 6.04(a), (ii) the Company has received an unsolicited 
Acquisition Proposal which the Board of Directors determines in good faith      
constitutes a Superior Proposal, (iii) the Board of Directors of the Company    
determines in good faith, after consultation with outside legal counsel, that   
the failure to take such action would constitute a breach of its fiduciary      
duties under applicable law and (iv) the Company shall have delivered to Parent 
a prior written notice advising Parent that it intends to take such action.     

(d)  For purposes of this Agreement:                                    

"ACQUISITION PROPOSAL" means any offer or proposal for a merger,        
reorganization, consolidation, share exchange, business combination, or other   
similar transaction involving the Company or any of its Subsidiaries or any     
proposal or offer to acquire, directly or indirectly, more than 35% of the      
voting securities of the Company, or a substantial portion of the assets of the 
Company and its Subsidiaries taken as a whole, other than the transactions      
contemplated by this Agreement.                                                 

   "SUPERIOR PROPOSAL" means any bona fide written Acquisition Proposal (i) on
terms that the Board of Directors of the Company determines in good faith (after
consultation with a financial advisor of nationally recognized reputation and   
taking into account all the terms and conditions of the Acquisition             

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Proposal including the legal, financial and regulatory aspects of the proposal) 
provide greater value to the Company's stockholders than the transaction        
contemplated hereunder, as amended pursuant to Section 10.01(d) if applicable   
and (ii) that is reasonably likely to be consummated by the Person making such  
Acquisition Proposal.                                                           

  (e)  The Company will promptly provide to Parent any information regarding
the Company provided to any Person making an Acquisition Proposal that was not  
previously provided to Parent.                                                  

 Section 6.05.  THIRD PARTY STANDSTILL AGREEMENTS.  During the period from
the date of this Agreement until the Effective Time or earlier termination of   
this Agreement, the Company shall not terminate, amend, modify or waive any     
provision of any confidentiality or standstill agreement relating to the making 
of an Acquisition Proposal to which it or any of its Subsidiaries is a party    
(other than any involving Parent or its Subsidiaries). During such period, the  
Company agrees to use reasonable best efforts to enforce, to the fullest extent 
permitted under applicable law, the provisions of any such agreements, including
seeking injunctions to prevent any breaches of such agreements and to enforce   
specifically the terms and provisions thereof in any court of the United States 
or any state thereof having jurisdiction.                                       

ARTICLE 7 
COVENANTS OF PARENT 

Parent agrees that:                                                     

  Section 7.01.  CONFIDENTIALITY.  Prior to the Effective Time and after any
termination of this Agreement, Parent will hold, and will use its reasonable    
best efforts to cause its officers, directors, employees, accountants, counsel, 
consultants, advisors and agents to hold, in confidence all documents and       
information concerning the Company or any of its Subsidiaries furnished to      
Parent or its Affiliates in connection with the transactions contemplated by    
this Agreement in accordance with the terms of the Confidentiality Agreement.   

Section 7.02.  OBLIGATIONS OF MERGER SUBSIDIARY.  Parent will take all  
action necessary to cause Merger Subsidiary to perform its obligations under    
this Agreement and to consummate the Merger on the terms and conditions set     
forth in this Agreement.                                                        

Section 7.03.  DIRECTOR AND OFFICER LIABILITY.  Parent shall cause the  
Surviving Corporation, and the Surviving Corporation hereby agrees, to do the   
following:                                                                      

    (a)  For six years after the Effective Time, the Surviving Corporation shall
indemnify and hold harmless each present and former officer and director of the 
Company (each an "INDEMNIFIED PERSON") in respect of acts or omissions occurring
at or prior to the Effective Time to the fullest extent permitted by Delaware   
Law or any other applicable laws or provided under the Company's certificate of 
incorporation and bylaws in effect on the date hereof, PROVIDED that such       
indemnification shall be subject to any limitation imposed from time to time    
under applicable law.                                                           

   (b)  The Surviving Corporation shall pay all expenses, including reasonable
fees and expenses of counsel, that an Indemnified Person may incur in enforcing 
the indemnity and other obligations provided for in this Section 7.03. The      
Surviving Corporation shall be entitled to assume the defense of any action,    
suit, investigation or proceeding and the Surviving Corporation shall not be    
liable to any Indemnified Person for any legal expenses of separate counsel or  
any other expenses subsequently incurred by such Indemnified Person in          
connection with the defense thereof, except that if the Surviving Corporation   
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that there are issues that raise conflicts of interest between the Surviving    
Corporation and the Indemnified Person, the Indemnified Person may retain       
counsel reasonably satisfactory to the Surviving Corporation, and the Surviving 
Corporation shall pay all reasonable fees and expenses of such counsel for the  
Indemnified Person promptly as statements therefor are received; PROVIDED that  
the Surviving Corporation shall not be liable for the fees of more than one     
counsel for all Indemnified Persons, other than local counsel, unless a conflict
of interest shall be caused thereby, and PROVIDED FURTHER that the Surviving    
Corporation shall not be liable for any settlement effected without its written 
consent (which consent shall not be unreasonably withheld).                     

    (c)  For six years after the Effective Time, the Surviving Corporation shall
provide officers' and directors' liability insurance in respect of acts or      
omissions occurring prior to the Effective Time covering each such Indemnified  
Person currently covered by the Company's officers' and directors' liability    
insurance policy on terms with respect to coverage and amount no less favorable 
than those of such policy in effect on the date hereof; PROVIDED if the         
aggregate annual premiums for such insurance at any time during such period     
shall exceed 200% of the per annum rate of premium paid by the Company and its  
Subsidiaries as of the date hereof for such insurance, then Parent shall, or    
shall cause its Subsidiaries to, provide only such coverage as shall then be    
available at an annual premium equal to 200% of such rate.                      

 (d)  If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the          
continuing or surviving corporation or entity of such consolidation or merger,  
or (ii) transfers or conveys all or substantially all of its properties and     
assets to any Person, then, and in each such case, to the extent necessary,     
proper provision shall be made so that the successors and assigns of the        
Surviving Corporation, as the case may be, shall assume the obligations set     
forth in this Section 7.03.                                                     

   (e)  The rights of each Indemnified Person under this Section 7.03 shall be
in addition to any rights such Person may have under the certificate of         
incorporation or bylaws of the Company or any of its Subsidiaries, under        
Delaware Law or any other applicable laws or under any agreement of any         
Indemnified Person with the Company or any of its Subsidiaries. These rights    
shall survive consummation of the Merger and are intended to benefit, and shall 
be enforceable by, each Indemnified Person.                                     

Section 7.04.  EMPLOYEE MATTERS  (a) For a period of two years after the
Effective Time, the Surviving Corporation will provide employee compensation and
benefits for the benefit of current and former employees of the Company and its 
Subsidiaries, other than employees represented by collective bargaining units   
and employees with which the Company or NGH have entered into employment        
agreements (the compensation and benefits for which such employees shall be in  
accordance with their respective collective bargaining agreement or employment  
agreement), ("COMPANY EMPLOYEES") that are in the aggregate not less favorable  
to such employees than the Employee Arrangements. The foregoing notwithstanding,
in the event the employment of any Company Employee is terminated other than for
cause during the two-year period beginning at the Effective Time, such employee 
shall receive severance or separation benefits in an aggregate amount at least  
equal to the severance or separation benefits such employee would have received 
under such circumstances under the Employee Arrangements listed in the Company  
Disclosure Schedule.                                                            

   (b)  The Surviving Corporation shall give Company Employees full credit for
purposes of eligibility, vesting and, for purposes of vacation and severance    
benefits only, benefit accrual under any such plans or arrangements maintained  
by the Surviving Corporation pursuant to Section 7.04(a) for such employees'    
service recognized for such purposes under the Employee Arrangements.           

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 (c)  As soon as practicable after the date of this Agreement, the Company
shall take all steps necessary or appropriate to (i) delete from the Company's  
Deferred Compensation Plan and all other Employee Arrangements (other than      
Employee Plans that are qualified under Section 401(a) of the Code and contracts
currently in effect with individual employees with respect to benefits accrued  
as of the date of this Agreement) providing any supplemental or excess          
retirement benefits or other deferred compensation (whether elective or         
nonelective) any and all provisions limiting or eliminating the ability to amend
or terminate such plans after a "change of control" or similar events, except   
for such limitations that merely prevent the reduction or elimination of rights 
and benefits that have already vested or accrued thereunder, and (ii) ensure    
that the provision for employer matching contributions under the Company's      
Deferred Compensation Plan does not apply to amounts deferred under that plan   
that are payable as a result of a "change of control" or otherwise in connection
with the consummation of the transactions contemplated hereby, and to eliminate 
such provision effective not later than the Effective Time.                     

  (d)  Nothing contained in this Agreement shall be construed to prevent the
termination of employment of any Company Employee or the amendment or           
termination of any particular Employee Arrangement to the extent permitted by   
its terms as in effect immediately before the Effective Time.                   

ARTICLE 8 
COVENANTS OF PARENT AND THE COMPANY 

The parties hereto agree that:                                          

    Section 8.01.  REASONABLE BEST EFFORTS.  Subject to the terms and conditions
of this Agreement, Company and Parent will use their reasonable best efforts to 
take, or cause to be taken, all actions and to do, or cause to be done, all     
things necessary, proper or advisable under applicable laws and regulations to  
consummate the transactions contemplated by this Agreement. In furtherance and  
not in limitation of the foregoing, each of Parent and Company agrees (i) to    
make an appropriate filing of a Notification and Report Form pursuant to the HSR
Act (and to make such other filings as are required under laws, rules and       
regulations in foreign jurisdictions governing antitrust or merger control      
matters) with respect to the transactions contemplated hereby as promptly as    
practicable after the date hereof and to supply as promptly as practicable any  
additional information and documentary material that may be requested pursuant  
to the HSR Act (or pursuant to such foreign laws, rules or regulations) and     
(ii) to take all other actions necessary to cause the expiration or termination 
of the applicable waiting periods under the HSR Act (and to obtain the necessary
approvals under such foreign laws, rules or regulations) as soon as practicable,
including, in the case of Parent, entering into any required settlement,        
undertaking, consent decree or stipulation with any Governmental Entity or      
implementing any required divestiture, hold separate or similar transaction with
respect to any assets; PROVIDED, that, Parent shall not be required to agree,   
and the Company shall not agree without Parent's consent, to waive any          
substantial rights or to accept any substantial limitation on its operations or 
to dispose of any significant assets in connection with obtaining any such      
consent or authorization unless such waiver, limitation or disposition would not
reasonably be expected to have a Material Adverse Effect on the Company, Parent 
or Parent's food business, and PROVIDED, further, that at Parent's written      
request, the Company shall agree to any such waiver, limitation or disposal,    
which agreement may, at the Company's option, be conditioned upon and effective 
only as of the Effective Time.                                                  

    Section 8.02.  CERTAIN FILINGS.  The Company and Parent shall cooperate with
one another and use their best efforts (i) in connection with the preparation of
the Company Information Statement, (ii) in determining whether any action by or 
in respect of, or filing with, any governmental body, agency,                   

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official, or authority is required, or any actions, consents, approvals or      
waivers are required to be obtained from parties to any material contracts, in  
connection with the consummation of the transactions contemplated by this       
Agreement and (iii) in taking such actions or making any such filings,          
furnishing information required in connection therewith or with the Company     
Information Statement and seeking timely to obtain any such actions, consents,  
approvals or waivers.                                                           

 Section 8.03.  PUBLIC ANNOUNCEMENTS.  Parent and the Company will consult
with each other before issuing any press release or making any public statement 
with respect to this Agreement or the transactions contemplated hereby and,     
except as may be required by applicable law or any listing agreement with any   
national securities exchange, will not issue any such press release or make any 
such public statement prior to such consultation.                               

Section 8.04.  FURTHER ASSURANCES.  At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to       
execute and deliver, in the name and on behalf of the Company or Merger         
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and 
do, in the name and on behalf of the Company or Merger Subsidiary, any other    
actions and things to vest, perfect or confirm of record or otherwise in the    
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.    

 Section 8.05.  NOTICES OF CERTAIN EVENTS.  Each of the Company and Parent
shall promptly notify the other of:                                             

(a)  any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;                                                 

(b)  any notice or other communication from any Governmental Entity in  
connection with the transactions contemplated by this Agreement; and            

    (c)  any actions, suits, claims, investigations or proceedings commenced or,
to its knowledge, threatened against, relating to or involving or otherwise     
affecting the Company, Parent or any of their respective Subsidiaries that      
relate to the consummation of the transactions contemplated by this Agreement.  

ARTICLE 9 
CONDITIONS TO THE MERGER

   Section 9.01.  CONDITIONS TO OBLIGATIONS OF EACH PARTY.  The obligations of
the Company, Parent and Merger Subsidiary to consummate the Merger are subject  
to the satisfaction of the following conditions:                                

    (a)  this Agreement shall have been approved and adopted by the stockholders
of the Company in accordance with Delaware Law;                                 

(b)  no provision of any applicable law or regulation and no judgment,  
temporary restraining order, preliminary or permanent injunction, order, decree 
or other legal restraint or prohibition shall prohibit the consummation of the  
Merger;                                                                         

   (c)  any applicable waiting period under the HSR Act relating to the Merger
shall have expired or been terminated; and                                      

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    (d)  Parent and the Company shall have received in respect of the Merger and
any matters arising therefrom confirmation by way of a decision from the        
Commission of the European Communities under Regulation No. 4064/89 (with or    
without the initiation of proceedings under Article 6(1)(c) thereof) that the   
Merger and any matters arising therefrom are compatible with the common market. 

Section 9.02.  CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER       
SUBSIDIARY.  The obligations of Parent and Merger Subsidiary to consummate the  
Merger are subject to the satisfaction of the following further conditions:     

 (a)  the Company shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the         
Effective Time;                                                                 

(b)  except with respect to the representations and warranties of the   
Company contained in Section 4.10(a) of this Agreement, the representations and 
warranties of the Company contained in this Agreement and in any certificate or 
other writing delivered by the Company pursuant hereto, disregarding all        
qualifications and exceptions contained therein relating to materiality or      
Material Adverse Effect or any similar standard or qualification, shall be true 
in all material respects at and as of the Effective Time as if made at and as of
such time (or, if given as of a specific date, at and as of such date) with only
such exceptions as would not reasonably be expected to have, individually or in 
the aggregate, a Material Adverse Effect on the Company;                        

(c)  the representations and warranties of the Company contained in     
Section 4.10(a) of this Agreement shall be true at and as of the Effective Time 
as if made at and as of such time;                                              

   (d)  Parent shall have received a certificate signed by an executive of the
Company to the foregoing effect; and                                            

(e)  all consents or approvals of any Governmental Entity required in   
connection with the consummation of the transactions contemplated hereby shall  
have been obtained, except for such consents or approvals which, if not         
obtained, would not, individually or in the aggregate, have a Material Adverse  
Effect on the Company;                                                          

Section 9.03.  CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.  The       
obligations of the Company to consummate the Merger are subject to the          
satisfaction of the following further conditions:                               

(a)  each of Parent and Merger Subsidiary shall have performed in all   
material respects all of its obligations hereunder required to be performed by  
it at or prior to the Effective Time;                                           

(b)  the representations and warranties of Parent and Merger Subsidiary 
contained in this Agreement and in any certificate or other writing delivered by
Parent or Merger Subsidiary pursuant hereto, disregarding all qualifications and
exceptions contained therein relating to materiality or Material Adverse Effect 
or any similar standard or qualification, shall be true in all material respects
at and as of the Effective Time as if made at and as of such time (or, if given 
as of a specific date, at and as of such date) with only such exceptions as     
would not reasonably be expected to have, individually or in the aggregate, a   
Material Adverse Effect on Parent; and                                          

 (c)  the Company shall have received a certificate signed by an executive
officer of Parent to the foregoing effect.                                      

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ARTICLE 10
TERMINATION 

Section 10.01.  TERMINATION.  This Agreement may be terminated and the  
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):             

(a)  by mutual written agreement of the Company and Parent;             

(b)  by either the Company or Parent, if:                               

     (i)  the Merger has not been consummated on or before April 30, 2001,
PROVIDED that the right to terminate this Agreement pursuant to this    
   Section 10.01(b)(i) shall not be available to any party whose breach of any
provision of this Agreement results in the failure of the Merger to be  
consummated by such time;                                               

     (ii)  there shall be any law or regulation that makes consummation of
the Merger illegal or otherwise prohibited or any judgment, injunction, 
   order or decree of any Governmental Entity enjoining Company or Parent from
   consummating the Merger is entered and such judgment, injunction, decree or
order shall have become final and nonappealable;                        

 (iii)  this Agreement shall not have been approved and adopted in
   accordance with Delaware Law by the Company's stockholders by reason of the
 failure to obtain the required vote of NGH's stockholders for approval of
the sale of NGH's Shares pursuant this Agreement at a duly held meeting 
(including any adjournments thereof) of NGH's stockholders (the "NGH    
STOCKHOLDER MEETING"); or                                               

(iv)  the NGH Voting Agreement shall have terminated pursuant to
Section 7(b) or 7(c) thereof;                                           

(c)  by Parent, if                                                      

(i)  the Board of Directors of the Company shall have failed to 
recommend or shall have withdrawn, or modified in a manner adverse to   
Parent, its approval or recommendation of this Agreement or the Merger, 
shall have approved or recommended a Superior Proposal, or shall have   
resolved to do any of the foregoing,                                    

    (ii)  the Company shall have entered into, or publicly announced its
    intention to enter into, a definitive agreement or an agreement in principle
with respect to a Superior Proposal; or                                 

   (iii)  the Company shall have (1) failed to perform in any material
 respect any material obligation or to comply in any material respect with
any material agreement or covenant of the Company to be performed or    
complied with by it under this Agreement or (2) breached any of its     
representations or warranties such that the condition set forth in      
Section 9.02(b) or 9.02(c) cannot be satisfied, which failure under     
   clause (1) or (2) shall not be cured within 15 Business Days of notice from
   Parent (or such longer period during which the Company exercises reasonable
best efforts to cure);                                                  

    (d)  by the Company, if the Board of Directors of the Company authorizes the
Company, subject to complying with the terms of this Agreement, to enter into a 
written agreement concerning a Superior Proposal, PROVIDED however that (i) the 
Company shall have complied with Section 6.04, (ii) the Company shall have given
Parent at least three Business Days written prior notice of its intention to    
terminate the Agreement, attaching a description of all material terms and      
conditions of                                                                   

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the Superior Proposal to such notice, (iii) during such three Business Days or  
greater period, the Company engages in good faith negotiations with Parent with 
respect to such changes as Parent may propose to the terms of the Merger and    
this Agreement, (iv) Parent does not make prior to such termination of this     
Agreement a definitive, binding offer which the Board of Directors of the       
Company determines, in good faith after consultation with its financial         
advisors, is at least as favorable to the stockholders of the Company as the    
Superior Proposal, and (v) the Company prior to such termination pursuant to    
this Section 10.01(d) pays to Parent in immediately available funds the fee     
required to be paid pursuant to Section 11.04(b). The Company agrees to notify  
Parent promptly if its intention to enter into a written agreement referred to  
in its notification shall change at any time after giving such notification;    

    (e)  by the Company, if Parent or Merger Subsidiary shall have (i) failed to
perform in any material respect any material obligation or to comply in any     
material respect with any material agreement or covenant of Parent or Merger    
Subsidiary to be performed or complied with by it under this Agreement or (ii)  
breached any of such party's representations or warranties contained in this    
Agreement such that the condition set forth in Section 9.03(b) cannot be        
satisfied, which failure or breach described in such clause (i) or (ii) shall   
not be cured within 15 Business Days of notice from the Company (or such longer 
period during which Parent or Merger Subsidiary exercises reasonable best       
efforts to cure); or                                                            

  (f)  by either the Company or Parent, if since the date of this Agreement,
there has been a change in the Code, final or temporary Treasury Regulations    
promulgated under Section 355(e) or Section 358(g), published pronouncements of 
the Internal Revenue Service having the same force and effect as final or       
temporary Treasury Regulations promulgated under Section 355(e) or              
Section 358(g), case law applying Section 355(e) or Section 358(g), or other    
relevant binding legal authority relating to Section 355(e) or Section 358(g)   
(collectively "CHANGE IN TAX LAW"), that (i) would apply to a transaction       
consummated subsequent to such Change in Tax Law notwithstanding the existence  
of a binding written agreement with respect to such transaction, and (ii) would 
reasonably be expected to result in (a) the imposition of tax on gain realized  
with respect to the stock of the Company arising out of the distribution on     
May 18, 1999 by R.J. Reynolds Tobacco Holdings, Inc. ("RJR") to NGH of all of   
the outstanding Class B Shares or on gain realized with respect to the stock of 
RJR arising out of the distribution on June 14, 1999 by NGH to the holders of   
its common stock of all of the outstanding common stock of RJR, or (b) a        
material increase in the tax liability of NGH resulting from the Merger as      
compared to the tax liability that would have arisen in the absence of such     
Change in Tax Law.                                                              

The party desiring to terminate this Agreement pursuant to this Section 10.01   
(other than pursuant to Section 10.01(a)) shall give notice of such termination 
to the other party.                                                             

Section 10.02.  EFFECT OF TERMINATION.  If this Agreement is terminated 
pursuant to Section 10.01, this Agreement shall become void and of no effect    
with no liability on the part of any party (or any stockholder, director,       
officer, employee, agent, consultant or representative of such party) to the    
other party hereto, PROVIDED that, if such termination shall result from the    
willful (i) failure of either party to fulfill a condition to the performance of
the obligations of the other party or (ii) failure of either party to perform a 
covenant hereof, such party shall be fully liable for any and all liabilities   
and damages incurred or suffered by the other party as a result of such failure.
The provisions of Sections 7.01, 11.04, 11.06, 11.07 and 11.08 shall survive any
termination hereof pursuant to Section 10.01.                                   

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ARTICLE 11
MISCELLANEOUS 

   Section 11.01.  NOTICES.  All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and  
shall be given,                                                                 

if to Parent or Merger Subsidiary, to:                                  

                Philip Morris Companies Inc.
   120 Park Avenue
            New York, New York 10017
              Attention: Charles R. Wall
       Fax: (917) 663-5817
   with a copy to:
                  Wachtell, Lipton, Rosen & Katz
       51 West 52nd Street
            New York, New York 10019
            Attention: Martin Lipton
                      Andrew J. Nussbaum
       Fax: (212) 403-2000
and         
     Hunton & Williams
   200 Park Avenue
            New York, New York 10166
               Attention: Jerry E. Whitson
       Fax: (212) 309-1100

if to the Company, to:                                                  

          Nabisco Holdings Corp.
  7 Campus Drive
                Parsippany, New Jersey 07054
                   Attention: James A. Kirkman III
       Fax: (973) 539-9150
   with a copy to:
         Davis Polk & Wardwell
        450 Lexington Avenue
            New York, New York 10017
                Attention: William L. Rosoff
       Fax: (212) 450-4800

or such other address or facsimile number as such party may hereafter specify   
for the purpose by notice to the other parties hereto. All such notices,        
requests and other communications shall be deemed received on the date of       
receipt by the recipient thereof if received prior to 5 p.m. in the place of    
receipt and such day is a Business Day in the place of receipt. Otherwise, any  
such notice, request or                                                         

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communication shall be deemed not to have been received until the next          
succeeding Business Day in the place of receipt.                                

Section 11.02.  NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  The    
representations and warranties contained herein and in any certificate or other 
writing delivered pursuant hereto shall not survive the Effective Time or the   
termination of this Agreement.                                                  

    Section 11.03.  AMENDMENTS; NO WAIVERS.  (a) Any provision of this Agreement
may be amended or waived prior to the Effective Time if, but only if, such      
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement or, in the case of a waiver, by each party against 
whom the waiver is to be effective, PROVIDED that, after the adoption of this   
Agreement by the stockholders of the Company and without their further approval,
no such amendment or waiver shall reduce the amount or change the kind of       
consideration to be received in exchange for the Shares.                        

(b)  No failure or delay by any party in exercising any right, power or 
privilege hereunder shall operate as a waiver thereof nor shall any single or   
partial exercise thereof preclude any other or further exercise thereof or the  
exercise of any other right, power or privilege. The rights and remedies herein 
provided shall be cumulative and not exclusive of any rights or remedies        
provided by law.                                                                

    Section 11.04.  EXPENSES.  (a) Except as otherwise provided in this Section,
all costs and expenses incurred in connection with this Agreement shall be paid 
by the party incurring such cost or expense.                                    

(b)  If:                                                                

(i)  the Company shall terminate this Agreement pursuant to     
Section 10.01(d);                                                       

(ii)  Parent shall terminate this Agreement (a) pursuant to     
Section 10.01(c)(i) or 10.01(c)(ii), or (b) pursuant to                 
   Section 10.01(c)(iii) (other than as a result of a breach of representation
 not caused by action (including breach of a covenant contained herein) of
the Company after the date hereof and not capable of being cured using  
   reasonable best efforts) if, in the case of this clause (B), at such time a
  third party shall have made an Acquisition Proposal and within nine months
after termination of this Agreement the Company enters into a definitive
 agreement in respect of any Acquisition Proposal or such a transaction is
consummated; or                                                         

  (iii)  either the Company or Parent shall terminate this Agreement
  pursuant to Section 10.01(b)(iii) or 10.01(b)(iv) and (A) prior to the NGH
Stockholder Meeting a third party or the Company shall have publicly    
announced an Acquisition Proposal and (B) within nine months after      
    termination of this Agreement the Company enters into a definitive agreement
    in respect of any Acquisition Proposal or such a transaction is consummated;

then in any case as described in clause (i), (ii) or (iii), the Company shall   
pay to Parent (by wire transfer of immediately available funds not later than   
the date of termination of this Agreement or, in the case of clauses (ii)(B) and
(iii), the earlier of the date of such definitive agreement or consummation of  
such a transaction) an amount equal to $445 million, less any amounts previously
paid pursuant to Section 11.04(c); PROVIDED however that such amount shall be   
reduced by the amount of any fee paid by NGH to Parent pursuant to Section 8(b) 
of the NGH Voting Agreement. The Company shall be entitled to deduct and        
withhold from any payments made to Parent under this Section 11.04(b) such      
amounts as may be required to be deducted or withheld therefrom under the Code  
or under any applicable provisions of state or local tax law. To the extent such
amounts are so deducted or withheld, such amounts shall be treated for purposes 
of this Section 11.04(b) as having been paid to Parent.                         

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(c)  If:                                                                

(i)  Parent shall terminate this Agreement pursuant to          
Section 10.01(c)(iii) and at such time a third party shall have made an 
Acquisition Proposal; or                                                

      (ii)  the Company or Parent shall terminate this Agreement pursuant to
Section 10.01(b)(iii);                                                  

then the Company shall within five Business Days pay to Parent in immediately   
available funds up to $30 million as reimbursement for documented expenses      
incurred in connection with the negotiation and execution of this Agreement.    

(d)  If the Company shall terminate this Agreement pursuant to          
Section 10.01(e), then Parent shall within five Business Days pay to the Company
in immediately available funds up to $30 million as reimbursement for documented
expenses incurred in connection with the negotiation and execution of this      
Agreement.                                                                      

 Section 11.05.  SUCCESSORS AND ASSIGNS.  The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their  
respective successors and assigns, PROVIDED that no party may assign, delegate  
or otherwise transfer any of its rights or obligations under this Agreement     
without the consent of each other party hereto, except that Parent or Merger    
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of its Affiliates, the right to enter into the transactions contemplated
by this Agreement, but no such transfer or assignment will relieve Parent or    
Merger Subsidiary of its obligations hereunder.                                 

Section 11.06.  GOVERNING LAW.  This Agreement shall be governed by and 
construed in accordance with the law of the State of Delaware, without regard to
the conflicts of law rules of such state.                                       

Section 11.07.  JURISDICTION.  Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in  
any federal court located in the State of Delaware or any Delaware state court, 
and each of the parties hereby consents to the jurisdiction of such courts (and 
of the appropriate appellate courts therefrom) in any such suit, action or      
proceeding and irrevocably waives, to the fullest extent permitted by law, any  
objection that it may now or hereafter have to the laying of the venue of any   
such suit, action or proceeding in any such court or that any such suit, action 
or proceeding brought in any such court has been brought in an inconvenient     
form. Process in any such suit, action or proceeding may be served on any party 
anywhere in the world, whether within or without the jurisdiction of any such   
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 11.01 shall be deemed effective service of 
process on such party.                                                          

Section 11.08.  WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING   
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED    
HEREBY.                                                                         

    Section 11.09.  COUNTERPARTS; EFFECTIVENESS; BENEFIT.  This Agreement may be
signed in any number of counterparts, each of which shall be an original, with  
the same effect as if the signatures thereto and hereto were upon the same      
instrument. This Agreement shall become effective when each party hereto shall  
have received counterparts hereof signed by all of the other parties hereto.    
Except as provided in Section 7.03, no provision of this Agreement is intended  
to confer any rights, benefits, remedies,                                       

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obligations, or liabilities hereunder upon any Person other than the parties    
hereto and their respective successors and assigns.                             

 Section 11.10.  ENTIRE AGREEMENT.  This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to   
the subject matter of this Agreement and supersedes all prior agreements and    
understandings, both oral and written, between the parties with respect to the  
subject matter of this Agreement.                                               

   Section 11.11.  CAPTIONS.  The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation    
hereof.                                                                         

Section 11.12.  SEVERABILITY.  If any term, provision, covenant or      
restriction of this Agreement is held by a court of competent jurisdiction or   
other authority to be invalid, void or unenforceable, the remainder of the      
terms, provisions, covenants and restrictions of this Agreement shall remain in 
full force and effect and shall in no way be affected, impaired or invalidated  
so long as the economic or legal substance of the transactions contemplated     
hereby is not affected in any manner materially adverse to any party. Upon such 
a determination, the parties shall negotiate in good faith to modify this       
Agreement so as to effect the original intent of the parties as closely as      
possible in an acceptable manner in order that the transactions contemplated    
hereby be consummated as originally contemplated to the fullest extent possible.

Section 11.13.  SPECIFIC PERFORMANCE.  The parties hereto agree that    
irreparable damage would occur if any provision of this Agreement were not      
performed in accordance with the terms hereof and that the parties shall be     
entitled, without posting a bond or similar indemnity, to an injunction or      
injunctions to prevent breaches of this Agreement or to enforce specifically the
performance of the terms and provisions hereof in any federal court located in  
the State of Delaware or any Delaware state court, in addition to any other     
remedy to which they are entitled at law or in equity.                          

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first   
above written.                                                                  

                                                                [Download Table]
                                              
NABISCO HOLDINGS CORP.                        

By:  /s/ JAMES M. KILTS                       
     -----------------------------------------
     Name:  James M. Kilts                    
     Title:   President and Chief Executive   
     Officer                                  

PHILIP MORRIS COMPANIES INC.                  

By:  /s/ LOUIS CAMILLERI                      
     -----------------------------------------
     Name:  Louis Camilleri                   
     Title:   Senior Vice President and Chief 
             Financial Officer                

STRIKE ACQUISITION CORP.                      

By:  /s/ NANCY DELISI                         
     -----------------------------------------
     Name:  Nancy DeLisi                      
     Title:   President                       

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                                                                         ANNEX B

VOTING AND INDEMNITY AGREEMENT

Voting and Indemnity Agreement dated as of June 25, 2000 between Nabisco
Group Holdings Corp. ("NGH"), a Delaware corporation, Philip Morris             
Companies Inc., a Virginia corporation ("PARENT"), and, solely for purposes of  
Sections 5(d), 8(c) and 9 of this Agreement, Nabisco Holdings Corp., a Delaware 
corporation (the "COMPANY").                                                    

WHEREAS, the Company, Parent and Strike Acquisition Corp. ("MERGER      
SUBSIDIARY") are concurrently with the execution and delivery of this Agreement 
entering into an Agreement and Plan of Merger (the "MERGER AGREEMENT") pursuant 
to which Merger Subsidiary will merge with and into the Company on the terms and
conditions set forth therein; and                                               

WHEREAS, in order to induce Parent to enter into the Merger Agreement,  
Parent has requested NGH, and NGH has agreed, to enter into this Agreement.     

NOW, THEREFORE, the parties hereto agree as follows:                    

Section 1.  DEFINITIONS.  Capitalized terms used and not defined herein 
shall have the meaning assigned to such terms in the Merger Agreement.          

Section 2.  NGH STOCKHOLDER MEETING; PROXY MATERIAL.  NGH shall cause a 
meeting of its stockholders (the "NGH STOCKHOLDER MEETING") to be duly called   
and held (as promptly as practicable following filing of the proxy statement of 
NGH relating to such meeting) at which its stockholders will vote on a          
resolution to authorize the sale of the Shares (as defined below) pursuant to   
the Merger Agreement (the "NA SALE") and related matters. Unless Parent         
otherwise agrees, the NGH Stockholder Meeting will be held either simultaneously
with or prior to any other meeting of the NGH stockholders to be held in        
connection with the NGH Merger Agreement or any other transaction replacing the 
NGH Merger Agreement. Subject to Section 6(C), the Board of Directors of NGH    
shall recommend approval of the NA Sale by NGH's stockholders. In connection    
with such meeting, NGH will (i) romptly prepare and file with the SEC, use its  
best efforts to have cleared by the SEC and thereafter mail to its stockholders 
as promptly as practicable a proxy statement of NGH and all other proxy         
materials for such meeting, (ii) use its reasonable best efforts (including     
postponing or adjourning the NGH Stockholder Meeting to solicit additional      
proxies for a period of up to 30 days) to obtain the approval of the NA Sale by 
holders of a majority of the outstanding stock of NGH entitled to vote thereon  
(the "NGH STOCKHOLDER APPROVAL") and (iii) otherwise comply with all legal      
requirements applicable to such meeting. The NGH Stockholder Approval will be   
presented as a single proposal in the NGH proxy statement and will not be       
conditioned on approval of any other proposal. Parent and its counsel shall be  
given an opportunity to review and comment on the NGH proxy statement prior to  
its being filed with the SEC or mailed to NGH stockholders, and NGH shall       
provide to Parent copies of any comments received from the SEC in connection    
therewith and shall consult with Parent in responding to the SEC.               

Section 3.  AGREEMENT TO VOTE.  Subject to obtaining the NGH Stockholder
Approval, NGH agrees to vote all Shares (as defined below) at any meeting of    
stockholders of the Company, or pursuant to any action by written consent (which
consent, in the case of clause (a) of this Section 3, it shall execute and      
deliver to the Company immediately following (i.e. on the same day) receipt of  
the NGH Stockholder Approval), in each case where such matters arise (a) in     
favor of the adoption of the Merger Agreement and the transactions contemplated 
by the Merger Agreement and (b) against (i) any proposal made in opposition to  
or in competition with the Merger and the transactions contemplated by the      
Merger Agreement, (ii) any merger, reorganization, consolidation, share         
exchange, business combination, sale of assets or other similar transaction with
or involving the Company and any party other than Parent, or (iii) any other    
action the consummation of which would reasonably be                            

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expected to prevent or delay consummation of the transactions contemplated by   
the Merger Agreement.                                                           

 Section 4.  REPRESENTATIONS AND WARRANTIES OF NGH.  NGH hereby represents
and warrants to Parent that:                                                    

    (a)  OWNERSHIP OF SHARES.  NGH owns, beneficially and of record, 213,250,000
shares (the "SHARES") of Class B common stock, $0.01 par value per share, of the
Company, free and clear of any Lien and, subject to applicable law, free of any 
other limitation or restriction (including any restriction on the right to vote 
or otherwise dispose of the Shares). None of the Shares is subject to any voting
trust or other agreement or arrangement with respect to the voting of such      
Shares. Except for the Shares, NGH does not beneficially own any (i) shares of  
capital stock or voting securities of the Company, (ii) securities of the       
Company convertible into or exchangeable for shares of capital stock or voting  
securities of the Company or (iii) options or other rights to acquire from the  
Company any capital stock, voting securities or securities convertible into or  
exchangeable for capital stock or voting securities of the Company, other than  
as provided in the Corporate Agreement dated as of June 14, 1999 among NGH, the 
Company and R.J. Reynolds Tobacco Holdings, Inc. ("RJR").                       

(b)  CORPORATE AUTHORIZATION.  Subject to obtaining the NGH Stockholder 
Approval, the execution, delivery and performance by NGH of this Agreement and  
the consummation by NGH of the transactions contemplated hereby are within NGH's
corporate powers and have been duly authorized by all necessary corporate action
on the part of NGH. This Agreement has been duly executed and delivered by NGH  
and constitutes a valid and binding Agreement of NGH.                           

  (c)  NON-CONTRAVENTION.  Subject to obtaining the NGH Stockholder Approval
and to compliance with the matters set forth in Section 10, the execution,      
delivery and performance by NGH of this Agreement and the consummation of the   
transactions contemplated hereby do not and will not (i) contravene, conflict   
with, or result in any violation or breach of any provision of the certificate  
of incorporation or bylaws of NGH, (ii) contravene, conflict with, or result in 
any violation or breach of any applicable law, rule, regulation, judgment,      
injunction, order or decree, (iii) require any consent or other action by any   
Person under, constitute (with or without notice or lapse of time or both) a    
default under, or cause or permit the termination, cancellation or acceleration 
or other change of any right or obligation or the loss of any benefit to which  
NGH is entitled under any provision of any agreement or other instrument binding
on NGH, except in the case of clauses (ii) and (iii) for such matters as would  
not materially impair NGH's ability to perform its obligations under this       
Agreement.                                                                      

(d)  OPINION OF FINANCIAL ADVISORS.  NGH has received an opinion of UBS 
Warburg LLC and an opinion of Morgan Stanley & Co. Incorporated, each dated as  
of the date of this Agreement and each to the effect that, as of the date of    
such opinion, the NA Sale is fair from a financial point of view to the         
Company's stockholders, including NGH. Complete and correct signed copies of    
such opinions will be delivered to Parent as soon as practicable after the date 
of this Agreement. NGH has received the consent of each of UBS Warburg LLC and  
Morgan Stanley & Co. Incorporated to include the above-referenced opinions in   
the NGH proxy statement relating to the NA Sale.                                

  (e)  TAX REPRESENTATION.  NGH represents and warrants that the requirement
set forth in Section 4.06 of the Tax Sharing Agreement with respect to this     
Agreement, the Merger Agreement and consummation of the transactions            
contemplated by this Agreement and the Merger Agreement (collectively, the      
"TRANSACTIONS") has been fully satisfied on or prior to the date hereof, each   
party to the Tax Sharing Agreement has irrevocably waived any right it may      
otherwise have had to consent to the Transactions, and no such party will have  
any claim or right under the Tax Sharing Agreement to payment from the Company  
or Parent in connection with the consummation of the Transactions insofar       

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as such claim or right to payment relates to the taxability of the Internal     
Distribution or the Distribution (each as defined in the Tax Sharing Agreement) 
by reason of the consummation of the Transactions.                              

    (f)  NGH MERGER AGREEMENT.  (i) NGH hereby represents and warrants to Parent
that the NGH Merger Agreement will be substantially in the form previously      
provided to Parent. NGH will not amend or modify the NGH Merger Agreement or    
waive any of its rights thereunder in any manner that would reasonably be       
expected to materially delay or prevent consummation of the Merger or create any
material additional liabilities of the Company.                                 

(ii)  With respect to NGH's actions under Section 6.05 (Surety  
Obligations) of the NGH Merger Agreement, NGH shall take such actions in
consultation with the Company and in a manner that does not unreasonably
disrupt the Company's business or operations.                           

      (iii)  Without the prior written consent of Parent, NGH will not amend
   or modify Section 7.04 of the NGH Merger Agreement in any manner that would
adversely affect Parent or the Company.                                 

 (g)  Without limiting the indemnification provided in Section 9(a) herein
and the assumption of liability for certain employee obligations in             
Section 7.04 of the NGH Merger Agreement, the Company and NGH, after the date   
hereof, will consider in good faith making appropriate arrangements to provide  
for the administration of such employee obligations, PROVIDED that in no event  
will the Company be required to incur any additional costs or liabilities in    
connection therewith (other than routine administrative costs that do not impose
any incremental costs on the Company).                                          

Section 5.  CERTAIN COVENANTS.  (a) Except pursuant to the terms of this
Agreement and the Merger Agreement, NGH shall not, without the prior written    
consent of Parent, directly or indirectly (i) grant any proxies or enter into   
any voting trust or other agreement or arrangement with respect to the voting of
any Shares or (ii) acquire, sell, assign, transfer, encumber or otherwise       
dispose of, or enter into any contract, option or other arrangement or          
understanding with respect to the direct or indirect acquisition or sale,       
assignment, transfer, encumbrance or other disposition of, any Shares during the
term of this Agreement.                                                         

  (b)  During the period from the date of this Agreement until the Effective
Time or earlier termination of this Agreement, NGH shall not terminate, amend,  
modify or waive any provision of any confidentiality or standstill agreement    
relating to the making of an Acquisition Proposal to which it or any of its     
Subsidiaries is a party (other than any involving Parent or its Subsidiaries).  
During such period, NGH agrees to use reasonable best efforts to enforce, to the
fullest extent permitted under applicable law, the provisions of any such       
agreements, including seeking injunctions to prevent any breaches of such       
agreements and to enforce specifically the terms and provisions thereof in any  
court of the United States or any state thereof having jurisdiction.            

  (c)  During the period from the date of this Agreement until the Effective
Time or earlier termination of this Agreement, NGH shall not terminate, amend,  
modify or waive any provision of the Rights Agreement, dated as of March 13,    
2000, between NGH and EquiServe Trust Company, N.A., as Rights Agent (the       
"RIGHTS AGREEMENT"), except (i) that NGH shall take all action necessary to     
ensure that the transactions contemplated by the Merger Agreement and the NGH   
Merger Agreement (as defined below) are exempt from the provisions of the Rights
Agreement and (ii) NGH may take any action necessary to permit any transaction  
that is to be completed after consummation of the NA Sale, so long as such      
action would not adversely affect NGH's ability to obtain the NGH Stockholder   
Approval.                                                                       

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    (d)  The Company shall pay the fees, commissions and expenses of UBS Warburg
LLC, Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc., Davis Polk &  
Wardwell, Deloitte & Touche LLP and any other advisors retained by the Company  
or NGH in connection with the transactions contemplated by this Agreement and   
the Merger Agreement up to a maximum of $50 million (as permitted by            
Section 4.14 of the Merger Agreement). NGH shall pay, or at or prior to the     
Effective Time shall reimburse the Company for, all such fees, commission, and  
expenses in excess of $50 million.                                              

(e)  Either before or after the Effective Time, NGH shall not amend the 
Distribution Agreement, dated as of May 12, 1999, among RJR Nabisco Holdings    
Corp., RJR Nabisco, Inc. and R.J. Reynolds Tobacco Company (the "DISTRIBUTION   
AGREEMENT") in any manner adverse to the Company's rights under Articles 7 or 8 
or Section 10.06 of the Distribution Agreement.                                 

  Section 6.  NO SOLICITATION; OTHER OFFERS.  (a) From the date hereof until
the earlier of the Effective Time and the termination of this Agreement in      
accordance with Section 7, NGH will not, and NGH will use its reasonable best   
efforts to cause the officers, directors, employees, investment bankers,        
consultants or other agents or representatives (collectively, "AGENTS") of NGH  
not to, directly or indirectly, (i) solicit, initiate or encourage the          
submission of any Acquisition Proposal, (ii) engage in discussions or           
negotiations with any Person concerning an Acquisition Proposal, (iii) disclose 
any nonpublic information relating to NGH or any of its Subsidiaries to any     
Person who, to the knowledge of NGH, is considering making, or has made, an     
Acquisition Proposal or (iv) take any other action to facilitate any inquiries  
or the making of any proposal that constitutes, or that could reasonably be     
expected to lead to, an Acquisition Proposal. NGH will notify Parent promptly   
(but in no event later than 24 hours) after receipt by NGH of any Acquisition   
Proposal or any request for nonpublic information relating to NGH or any of its 
Subsidiaries by any Person who, to the knowledge of NGH, is making, or has made,
an Acquisition Proposal. NGH shall promptly provide such notice orally and in   
writing and shall identify the Person making, and all terms and conditions of,  
any such Acquisition Proposal or request. NGH shall keep Parent promptly        
informed of the status and details of any such Acquisition Proposal (including  
any amendments or proposed amendments) or request and any discussions or        
negotiations pursuant to Section 6(B) and NGH shall provide to Parent copies of 
any written communications between NGH and the Person making the Acquisition    
Proposal. NGH shall, and NGH shall use reasonable best efforts to cause the     
Agents of NGH to, cease immediately and cause to be terminated all activities,  
discussions and negotiations, if any, with any Persons conducted prior to the   
date hereof with respect to any Acquisition Proposal. Nothing contained in this 
Agreement shall prevent the Board of Directors of NGH from complying with       
Rule 14d-9 or Rule 14e-2 under the 1934 Act with respect to any Acquisition     
Proposal.                                                                       

(b)  Notwithstanding the foregoing, NGH may prior to receipt of the NGH 
Stockholder Approval negotiate or otherwise engage in substantive discussions   
with, and furnish nonpublic information to, any Person in response to an        
unsolicited Acquisition Proposal by such Person if (i) NGH has complied with the
terms of Section 6(A), (ii) the Board of Directors of NGH determines in good    
faith that such Acquisition Proposal is likely to result in a Superior Proposal 
and, after consultation with outside legal counsel, that the failure to take    
such action would constitute a breach of its fiduciary duties under applicable  
law, (iii) such Person executes a confidentiality agreement with terms no less  
favorable to NGH than those contained in the Confidentiality Agreement (except  
as to the standstill provisions) and (iv) NGH shall have delivered to Parent    
prior written notice advising Parent that it intends to take such action.       

    (c)  The Board of Directors of NGH shall be permitted to withdraw, or modify
in a manner adverse to Parent, its recommendation to its stockholders referred  
to in Section 2 hereof, but only if                                             

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(i) NGH has complied with the terms of Section 6(A), (ii) NGH has received an   
unsolicited Acquisition Proposal which the Board of Directors determines in good
faith constitutes a Superior Proposal, (iii) the Board of Directors of NGH      
determines in good faith, after consultation with outside legal counsel, that   
the failure to take such action would constitute a breach of its fiduciary      
duties under applicable law and (iv) NGH shall have delivered to Parent a prior 
written notice advising Parent that it intends to take such action.             

(d)  For purposes of this Agreement:                                    

"ACQUISITION PROPOSAL" means any offer or proposal for a merger,        
reorganization, consolidation, share exchange, business combination, or other   
similar transaction involving NGH or any of its Subsidiaries or any proposal or 
offer to acquire, directly or indirectly, more than 35% of the voting securities
of NGH or the Company, or a substantial portion of the assets of NGH and its    
Subsidiaries taken as a whole, other than the transactions contemplated by the  
Merger Agreement or any transaction to be completed after consummation of the NA
Sale.                                                                           

   "SUPERIOR PROPOSAL" means any bona fide written Acquisition Proposal (i) on
terms that the Board of Directors of NGH determines in good faith (after        
consultation with a financial advisor of nationally recognized reputation and   
taking into account all the terms and conditions of the Acquisition Proposal    
including the legal, financial and regulatory aspects of the proposal) are more 
favorable to NGH's stockholders (taking into account the consideration to be    
received by NGH in the NA Sale) than the transaction contemplated by the Merger 
Agreement, as amended pursuant to Section 10.01(d) of the Merger Agreement, if  
applicable, and (ii) that is reasonably likely to be consummated by the Person  
making such Acquisition Proposal.                                               

(e)  NGH will promptly provide to Parent any information regarding NGH  
provided to any Person making an Acquisition Proposal which was not previously  
provided to Parent.                                                             

Section 7.  TERMINATION.  (a) Unless earlier terminated pursuant to this
Section, this Agreement will terminate on the earlier to occur of: (i) the      
consummation of the Merger, (ii) termination of the Merger Agreement in         
accordance with its terms and (iii) the date of the NGH Stockholder Meeting,    
including reasonable extensions thereof up to 30 days to obtain additional      
proxies, if the NGH Stockholder Approval shall not have been obtained at such   
meeting by reason of the failure to obtain the required vote.                   

(b)  NGH may terminate this Agreement if the Board of Directors of NGH  
authorizes NGH, subject to complying with the terms of this Agreement, to enter 
into a written agreement concerning a Superior Proposal, PROVIDED, however that 
(i) NGH shall have complied with Section 6 hereof, (ii) NGH shall have given    
Parent at least three Business Days written prior notice of its intention to    
terminate the Agreement, attaching a description of all material terms and      
conditions of the Superior Proposal to such notice, (iii) during such three     
Business Days or greater period, the Company and NGH engage in good faith       
negotiations with Parent with respect to such changes as Parent may propose to  
the terms of this Agreement, the Merger and the Merger Agreement, (iv) Parent   
does not make, prior to such termination of this Agreement, a definitive,       
binding offer which the Board of Directors of NGH determines, in good faith     
after consultation with its financial advisors, is at least as favorable to the 
NGH stockholders (taking into account the consideration to be received by NGH in
the NA Sale) as the Superior Proposal and (v) NGH, prior to such termination    
pursuant to this clause (b), pays to Parent in immediately available funds the  
fee required to be paid pursuant to Section 8(B). NGH agrees to notify Parent   
promptly if its intention to enter into a written agreement in connection with a
Superior Proposal shall change at any time after giving such notification.      

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(c)  Parent may terminate this Agreement if:                            

    (i)  the Board of Directors of NGH shall have failed to recommend or
shall have withdrawn, or modified in a manner adverse to Parent, its    
approval or recommendation of the NA Sale, shall have approved or       
recommended a Superior Proposal, or shall have resolved to do any of the
foregoing;                                                              

      (ii)  NGH shall have entered into, or publicly announced its intention
to enter into, a definitive agreement or an agreement in principle with 
respect to a Superior Proposal; or                                      

     (iii)  NGH shall breach its obligations set forth in Section 3, which
breach shall not be cured within two Business Days.                     

(d)  The provisions of Sections 8, 9, 15, 16 and 17 will survive any    
termination of this Agreement pursuant to Section 7. The provisions of Sections 
4(E), 5(D), 5(E), 11 and 14 will survive termination of this Agreement pursuant 
to Section 7(A)(I). The provisions of Section 9 of this Agreement will terminate
automatically if both the Merger Agreement and the NGH Merger Agreement shall   
have been terminated.                                                           

  Section 8.  EXPENSES.  (a) Except as otherwise provided in this Agreement,
all costs and expenses incurred in connection with this Agreement shall be paid 
by the party incurring such cost or expense.                                    

(b)  If:                                                                

 (i)  NGH shall terminate this Agreement pursuant to Section 7(b);

      (ii)  this Agreement shall terminate pursuant to Section 7(A)(III) and
    (A) prior to the NGH Stockholder Meeting a third party or NGH or the Company
shall have announced an Acquisition Proposal and (B) within nine months 
after termination of this Agreement the Company or NGH enters into a    
   definitive agreement in respect of any Acquisition Proposal with respect to
  the Company or NGH, respectively, or such a transaction is consummated; or

      (iii)  Parent shall terminate this Agreement pursuant to Section 7(C);

then NGH shall pay to Parent (by wire transfer of immediately available funds   
not later than the date of termination of this Agreement or, in the case of     
clause (ii), the date of such definitive agreement) an amount equal to          
$445 million less any amounts previously paid pursuant to Section 11.04(b) or   
11.04(c) of the Merger Agreement. NGH shall be entitled to deduct and withhold  
from any payments made to Parent under this Section 8(B) such amounts as may be 
required to be deducted or withheld therefrom under the Code or under any       
applicable provisions of state or local tax law. To the extent such amounts are 
so deducted or withheld, such amounts shall be treated for purposes of this     
Section 8(B) as having been paid to Parent.                                     

  (c)  Notwithstanding the foregoing, if a fee shall become payable pursuant
to both Section 8(B) of this Agreement and Section 11.04(b) of the Merger       
Agreement, the Company shall, and NGH shall cause the Company to, pay such fee  
in accordance with and at the time provided for in the Merger Agreement and no  
fee shall be initially payable by NGH hereunder; PROVIDED that NGH shall remain 
liable and shall immediately pay such fee to the extent that the Company shall  
fail timely to pay such fee in full, in which case NGH shall have the right to  
obtain reimbursement of the fee from the Company.                               

Section 9.  INDEMNIFICATION.                                            

(a)  NGH INDEMNIFICATION OF PARENT FOR NGH LIABILITIES.  Subject to     
Section 9(C), on and after the Effective Time, NGH shall indemnify and hold     
harmless Parent and its affiliates (including the Company after the Merger) and 
their respective present and former directors, officers and employees           

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(each, a "PARENT INDEMNITEE") from and against any and all damage, loss,        
liability and expense (including reasonable expenses of investigation and       
reasonable attorneys' fees and expenses in connection with any action, suit or  
proceeding) ("LOSSES") incurred or suffered by any Parent Indemnitee arising out
of any NGH Liabilities, regardless of whether such Losses arise as a result of  
the negligence or strict liability (or any other liability under any theory of  
law or equity) of such Parent Indemnitee.                                       

(b)  COMPANY INDEMNIFICATION OF NGH FOR COMPANY LIABILITIES.  Subject to
Section 9(C), on and after the Effective Time, the Company shall indemnify and  
hold harmless NGH and its affiliates and their respective present and former    
directors, officers and employees (each, an "NGH INDEMNITEE") from and against  
any and all Losses incurred or suffered by any NGH Indemnitee arising out of any
Company Liabilities, regardless of whether such Losses arise as a result of the 
negligence or strict liability (or any other liability under any theory of law  
or equity) of such NGH Indemnitee.                                              

(c)  THIRD-PARTY RIGHTS; TAX BENEFITS AND INSURANCE PROCEEDS.  Any      
indemnification pursuant to Section 9(A) or Section 9(B) shall be paid net of   
any tax benefit or insurance proceeds to the Indemnified Party attributable to  
the relevant payment. It is expressly agreed that no insurer or any other third 
party shall be (i) entitled to a benefit (as a third-party beneficiary or       
otherwise) that it would not be entitled to receive in the absence of           
Section 9(A) or Section 9(B), (ii) relieved of the responsibility to pay any    
claims to which it is obligated or (iii) entitled to any subrogation rights with
respect to any obligation under Section 9(A) or Section 9(B).                   

    (d)  INSURANCE.  NGH agrees to provide reasonable cooperation at the expense
of the Company in connection with any claims the Company may have under         
insurance policies in effect at any time prior to the Effective Time that in any
way relate to Company Liabilities or Liabilities in respect of officers and     
directors of the Company acting in their capacities as such. The Company agrees 
to provide reasonable cooperation at the expense of NGH in connection with any  
claims NGH may have under insurance policies in effect at any time prior to the 
Effective Time that in any way relate to NGH Liabilities or Liabilities in      
respect of officers and directors of NGH acting in their capacities as such.    

   (e)  DEFINITIONS.  For purposes of this Section 9, the following terms have
the following meanings:                                                         

  "COMPANY LIABILITIES" means all Liabilities, whether arising before, at or
after the Effective Time, of or in any way relating, in whole or in part, to    
(a) the Company or any of its Subsidiaries or their respective employees (except
to the extent defined as NGH Liabilities below or expressly assumed by NGH      
pursuant to Section 7.04 of the NGH Merger Agreement as in effect on the date   
hereof or as amended with the prior written consent of Parent) or arising from  
the conduct of, in connection with or in any way relating to, in whole or in    
part, the business of the Company and its Subsidiaries, or the ownership or use 
of assets or property in connection with that business or (b) any Benefit       
Arrangement or Employee Plan (as such terms are defined in the Merger Agreement)
except to the extent expressly assumed by NGH pursuant to Section 7.04 of the   
NGH Merger Agreement as in effect on the date hereof or as amended with the     
prior written consent of Parent. Notwithstanding the foregoing, "COMPANY        
LIABILITIES" shall exclude all Liabilities for Taxes of the Company or any of   
its Subsidiaries and all Liabilities for Taxes that may otherwise be collected  
from the Company or any of its Subsidiaries, in each case to the extent governed
by the Tax Sharing Agreement.                                                   

  "LIABILITIES" means any and all claims, debts, liabilities and obligations
of any kind, character or description (whether known or unknown, accrued,       
absolute, contingent or otherwise) whenever arising, including all costs and    
expenses relating thereto.                                                      

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 "NGH LIABILITIES" means all Liabilities (other than Company Liabilities),
whether arising before, at or after the Effective Time, of or in any way        
relating, in whole or in part, to (a) NGH or its employees or arising from the  
conduct of, in connection with or in any way relating to, in whole or in part,  
NGH's business, or the ownership or use of assets or property in connection with
that business or (b) the Liabilities expressly assumed by NGH pursuant to       
Section 7.04 of the NGH Merger Agreement as in effect on the date hereof or as  
amended with the prior written consent of Parent. Notwithstanding the foregoing,
"NGH LIABILITIES" shall exclude all (i) Liabilities for Taxes of NGH and all    
Liabilities for Taxes that may otherwise be collected from NGH, in each case to 
the extent governed by the Tax Sharing Agreement and (ii) Liabilities addressed 
in Section 8.02 of the Distribution Agreement dated as of May 12, 1999 among    
NGH, RJR and R. J. Reynolds Tobacco Company, which provision shall remain in    
effect in accordance with its terms. Without limiting the generality of the     
foregoing, "NGH LIABILITIES" shall also include all Liabilities (i) for         
compensation deferred pursuant to any deferred compensation plan, arrangement or
agreement of NGH (which such plan shall not include the Company's Deferred      
Compensation Plan); (ii) for compensation, benefits, severance pay and benefits,
or any similar payment or benefit that is payable with respect to service by any
individual as an employee or director of NGH, whether or not such compensation  
has been deferred pursuant to the Company's Deferred Compensation Plan or any   
other Employee Arrangement, except to the extent NGH has previously contributed 
assets to fund such amounts to the Retention Plan and Deferred Compensation Plan
trust of Nabisco, Inc. (the "TRUST"); (iii) with respect to or arising out of   
any option to acquire equity securities of NGH or any award of restricted stock,
restricted stock units, performance shares, performance units or other awards,  
in each case based on equity securities of NGH or granted pursuant to the       
Nabisco Group Holdings Corp. 1990 Long Term Incentive Program, (iv) any         
"grossup" or similar make-whole or indemnity payment required to be made under  
any Employee Arrangement with respect to excise, income or other taxes imposed  
on any of the foregoing; and (v) Taxes imposed on the income of the Trust       
attributable to assets thereof funding any of the foregoing.                    

 "NGH MERGER AGREEMENT" means the Agreement and Plan of Merger dated as of
June 25, 2000 among NGH, R.J. Reynolds Tobacco Holdings, Inc. and RJR           
Acquisition Corp.                                                               

"TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as of     
June 14, 1999 among NGH, RJR, the Company and R. J. Reynolds Tobacco Company, as
such agreement may be amended from time to time by agreement of all the parties 
thereto.                                                                        

 Section 10.  TRUST ORIGINATED PREFERRED SECURITIES.  Reference is made to
the Amended and Restated Declaration of Trust of Nabisco Group Holdings Capital 
Trust II (formerly called RJR Nabisco Holdings Capital Trust II) dated as of    
September 16, 1998, as amended by Amendment No. 1 thereto dated as of July 12,  
1999 (the "DECLARATION"). Capitalized terms used in this Section 10 but not     
defined elsewhere in this Agreement shall have the meanings assigned to such    
terms in the Declaration. After the date hereof, and at such time as will not   
delay consummation of the Merger, NGH shall exercise its option under the       
Declaration to cause the Trustees to (i) dissolve the Trust and (ii) cause the  
Debentures to be distributed to Holders of the Preferred Securities and Common  
Securities in exchange therefor, which in each case shall occur prior to the    
Effective Time. In addition, NGH will (x) deliver an irrevocable notice to the  
Debenture Trustee stating that all outstanding Debentures are to be redeemed on 
September 30, 2003 and (y) take all necessary action to cause the conditions set
forth in Section 10.1(C) of the Indenture to be satisfied such that a "covenant 
defeasance" under such section will occur concurrently with the above-described 
dissolution of the Trust and distribution of the Debentures.                    

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 Section 11.  NAME CHANGE.  As promptly as practicable after the Effective
Time, NGH shall change its name and the names of any of its Subsidiaries or     
related entities to new names that do not include the word "Nabisco" or any     
derivatives thereof and shall cease to use such name or derivatives in its      
business or operations.                                                         

    Section 12.  NOTICES.  All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and shall
be given,                                                                       

if to Parent, to:                                                       

Philip Morris Companies Inc.                          
120 Park Avenue                                       
New York, New York 10017                              
Attention: Charles R. Wall                            
Fax: (917) 663-5817                                   

with a copy to:                                       

Wachtell, Lipton, Rosen & Katz                        
51 West 52nd Street                                   
New York, New York 10019                              
Attention: Martin Lipton                              
Andrew J. Nussbaum                
Fax: (212) 403-2000               

and                                                   

Hunton & Williams                                     
200 Park Avenue                                       
New York, New York 10166                              
Attention: Jerry E. Whitson                           
Fax: (212) 309-1100                                   

if to NGH, to:                                                          

Nabisco Group Holdings Corp.                          
7 Campus Drive                                        
Parsippany, New Jersey 07054                          
Attention: James A. Kirkman III                       
Fax: (973) 539-9150                                   

with a copy to:                                       

Davis Polk & Wardwell                                 
450 Lexington Avenue                                  
New York, New York 10017                              
Attention: William L. Rosoff                          
Fax: (212) 450-4800                                   

or such other address or facsimile number as such party may hereafter specify   
for the purpose by notice to the other parties hereto. All such notices,        
requests and other communications shall be deemed received on the date of       
receipt by the recipient thereof if received prior to 5 p.m. in the place of    
receipt and such day is a business day in the place of receipt. Otherwise, any  
such notice, request or communication shall be deemed not to have been received 
until the next succeeding business day in the place of receipt.                 

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 Section 13.  AMENDMENTS; NO WAIVERS.  (a) Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement or, 
in the case of a waiver, by each party against whom the waiver is to be         
effective.                                                                      

(b)  No failure or delay by any party in exercising any right, power or 
privilege hereunder shall operate as a waiver thereof nor shall any single or   
partial exercise thereof preclude any other or further exercise thereof or the  
exercise of any other right, power or privilege. The rights and remedies herein 
provided shall be cumulative and not exclusive of any rights or remedies        
provided by law.                                                                

    Section 14.  SUCCESSORS AND ASSIGNS.  The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their        
respective successors and assigns, provided that no party may assign, delegate  
or otherwise transfer any of its rights or obligations under this Agreement     
without the consent of each other party hereto. If Parent, NGH or the Surviving 
Corporation or any of its respective successors or assigns (i) consolidates with
or merges into any other Person and shall not be the surviving corporation or   
entity of such consolidation or merger, or (ii) transfers or conveys all or     
substantially all of its properties and assets to any Person, then, and in each 
such case, proper provision shall be made so that the successors and assigns of 
Parent, NGH, or the Surviving Corporation, as the case may be, shall assume the 
obligations set forth in this Agreement.                                        

Section 15.  GOVERNING LAW.  This Agreement shall be governed by and    
construed in accordance with the laws of the State of Delaware, without regard  
to the conflicts of laws rules of such state.                                   

Section 16.  JURISDICTION.  Any suit, action or proceeding seeking to   
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in  
any federal court located in the State of Delaware or any Delaware state court, 
and each of the parties hereby consents to the jurisdiction of such courts (and 
of the appropriate appellate courts therefrom) in any such suit, action or      
proceeding and irrevocably waives, to the fullest extent permitted by law, any  
objection that it may now or hereafter have to the laying of the venue of any   
such suit, action or proceeding in any such court or that any such suit, action 
or proceeding brought in any such court has been brought in an inconvenient     
form. Process in any such suit, action or proceeding may be served on any party 
anywhere in the world, whether within or without the jurisdiction of any such   
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 12 shall be deemed effective service of    
process on such party.                                                          

Section 17.  WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY   
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING   
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED    
HEREBY.                                                                         

 Section 18.  COUNTERPARTS; EFFECTIVENESS; BENEFIT.  This Agreement may be
signed in any number of counterparts, each of which shall be an original, with  
the same effect as if the signatures thereto and hereto were upon the same      
instrument. This Agreement shall become effective when each party hereto shall  
have received counterparts hereof signed by all of the other parties hereto.    
Except as provided in Section 9, no provision of this Agreement is intended to  
confer any rights, benefits, remedies, obligations, or liabilities hereunder    
upon any Person other than the parties hereto and their respective successors   
and assigns.                                                                    

Section 19.  ENTIRE AGREEMENT.  This Agreement, the Confidentiality     
Agreement and the Merger Agreement constitute the entire agreement between the  
parties with respect to the subject matter of                                   

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this Agreement and supersedes all prior agreements and understandings, both oral
and written, between the parties with respect to the subject matter of this     
Agreement.                                                                      

   Section 20.  CAPTIONS.  The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation       
hereof.                                                                         

   Section 21.  SEVERABILITY.  If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other         
authority to be invalid, void, unenforceable, the remainder of the terms,       
provisions, covenants and restrictions of this Agreement shall remain in full   
force and effect and shall in no way be affected, impaired or invalidated so    
long as the economic or legal substance of the transactions contemplated hereby 
is not affected in any manner materially adverse to any party. Upon such a      
determination, the parties shall negotiate in good faith to modify this         
Agreement so as to effect the original intent of the parties as closely as      
possible in an acceptable manner in order that the transactions contemplated    
hereby be consummated as originally contemplated to the fullest extent possible.

Section 22.  SPECIFIC PERFORMANCE.  The parties hereto agree that       
irreparable damage would occur if any provision of this Agreement were not      
performed in accordance with the terms hereof and that the parties shall be     
entitled, without posting a bond or similar indemnity, to an injunction or      
injunctions to prevent breaches of this Agreement or to enforce specifically the
performance of the terms and provisions hereof in any federal court located in  
the State of Delaware or any Delaware state court, in addition to any other     
remedy to which they are entitled at law or in equity.                          

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first   
above written.                                                                  

                                                                [Download Table]
                                               
PHILIP MORRIS COMPANIES INC.                   

By:  /s/ LOUIS CAMILLERI                       
     ----------------------------------------- 
     Name:  Louis Camilleri                    
     Title:   Senior Vice President and Chief  
             Executive Officer                 

NABISCO GROUP HOLDINGS CORP.                   

By:  /s/ JAMES M. KILTS                        
     ----------------------------------------- 
     Name:  James M. Kilts                     
     Title:   President and Chief Executive    
     Officer                                   

NABISCO HOLDINGS CORP.,                        
solely for purposes of Section 5(D), 8(C) and 9
hereof                                         

By:  /s/ JAMES M. KILTS                        
     ----------------------------------------- 
     Name:  James M. Kilts                     
     Title:   President and Chief Executive    
     Officer                                   

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                                                                         ANNEX C

    AGREEMENT AND PLAN OF MERGER
dated as of 
June 25, 2000*
among 
NABISCO GROUP HOLDINGS CORP., 
R.J. REYNOLDS TOBACCO HOLDINGS, INC., 
and 
RJR ACQUISITION CORP. 

*   Text of Annex C reflects Amendment No. 1 dated as of September 20, 2000 to  
the Agreement and Plan of Merger.                                       

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TABLE OF CONTENTS 

------------------------

                                                                [Download Table]

                                                                           PAGE
                                                                           ----
                                                                               
                                  ARTICLE 1                                    
                                 DEFINITIONS                                   

Section 1.01. DEFINITIONS.................................................  C-1

                                  ARTICLE 2                                    
                                  THE MERGER                                   

Section 2.01. THE MERGER..................................................  C-4
Section 2.02. CONVERSION OF SHARES........................................  C-5
Section 2.03. SURRENDER AND PAYMENT.......................................  C-6
Section 2.04. DISSENTING SHARES...........................................  C-6
Section 2.05. STOCK OPTIONS...............................................  C-7
Section 2.06. ADJUSTMENTS.................................................  C-7
Section 2.07. TRUST ORIGINATED PREFERRED SECURITIES.......................  C-7
Section 2.08. WITHHOLDING RIGHTS..........................................  C-8
Section 2.09. LOST CERTIFICATES...........................................  C-8
Section 2.10. ASSOCIATED RIGHTS...........................................  C-8

                                  ARTICLE 3                                    
                               THE SURVIVING CORPORATION                       

Section 3.01. CERTIFICATE OF INCORPORATION................................  C-8
Section 3.02. BYLAWS......................................................  C-8
Section 3.03. DIRECTORS AND OFFICERS......................................  C-8

                                  ARTICLE 4                                    
                     REPRESENTATIONS AND WARRANTIES OF THE COMPANY             

Section 4.01. CORPORATE EXISTENCE AND POWER...............................  C-8
Section 4.02. CORPORATE AUTHORIZATION.....................................  C-9
Section 4.03. GOVERNMENTAL AUTHORIZATION..................................  C-9
Section 4.04. NON-CONTRAVENTION...........................................  C-9
Section 4.05. CAPITALIZATION.............................................. C-10
Section 4.06. MATTERS RELATING TO THE NA MERGER........................... C-10
Section 4.07. SEC FILINGS................................................. C-11
Section 4.08. FINANCIAL STATEMENTS........................................ C-11
Section 4.09. DISCLOSURE DOCUMENTS........................................ C-12
Section 4.10. CERTAIN CONTRACTS........................................... C-12
Section 4.11. ABSENCE OF CERTAIN CHANGES.................................. C-12
Section 4.12. NO UNDISCLOSED MATERIAL LIABILITIES......................... C-13
Section 4.13. COMPLIANCE WITH LAWS AND COURT ORDERS....................... C-13
Section 4.14. LITIGATION.................................................. C-14
Section 4.15. FINDERS' FEES............................................... C-14
Section 4.16. TAXES....................................................... C-14
Section 4.17. EMPLOYEE BENEFIT PLANS...................................... C-15
Section 4.18. ENVIRONMENTAL MATTERS....................................... C-16
Section 4.19. ANTITAKEOVER STATUTE AND RIGHTS AGREEMENT................... C-16
Section 4.20. INSURANCE................................................... C-16
Section 4.21. OTHER AGREEMENTS............................................ C-17
Section 4.22. CERTAIN AGREEMENTS.......................................... C-17

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                                                                            ----
                                                                                
                                   ARTICLE 5                                    
                    REPRESENTATIONS AND WARRANTIES OF PARENT                    

Section 5.01.  CORPORATE EXISTENCE AND POWER............................... C-17
Section 5.02.  CORPORATE AUTHORIZATION..................................... C-17
Section 5.03.  GOVERNMENTAL AUTHORIZATION.................................. C-17
Section 5.04.  NON-CONTRAVENTION........................................... C-18
Section 5.05.  DISCLOSURE DOCUMENTS........................................ C-18
Section 5.06.  FINDERS' FEES............................................... C-18

                                   ARTICLE 6                                    
                            COVENANTS OF THE COMPANY                            

Section 6.01.  CONDUCT OF THE COMPANY...................................... C-18
Section 6.02.  STOCKHOLDER MEETING; PROXY MATERIAL......................... C-20
Section 6.03.  ACCESS TO INFORMATION....................................... C-20
Section 6.04.  NO SOLICITATION; OTHER OFFERS............................... C-21
Section 6.05.  SURETY OBLIGATIONS.......................................... C-22
Section 6.06.  RIGHTS AGREEMENT............................................ C-22

                                   ARTICLE 7                                    
                              COVENANTS OF PARENT                               

Section 7.01.  CONFIDENTIALITY............................................. C-23
Section 7.02.  OBLIGATIONS OF MERGER SUBSIDIARY............................ C-23
Section 7.03.  DIRECTOR AND OFFICER LIABILITY.............................. C-23
Section 7.04.  EMPLOYEE MATTERS............................................ C-24

                                   ARTICLE 8                                    
                      COVENANTS OF PARENT AND THE COMPANY                       

Section 8.01.  REASONABLE BEST EFFORTS..................................... C-24
Section 8.02.  CERTAIN FILINGS............................................. C-24
Section 8.03.  PUBLIC ANNOUNCEMENTS........................................ C-24
Section 8.04.  FURTHER ASSURANCES.......................................... C-25
Section 8.05.  NOTICES OF CERTAIN EVENTS................................... C-25

                                   ARTICLE 9                                    
                            CONDITIONS TO THE MERGER                            

Section 9.01.  CONDITIONS TO OBLIGATIONS OF EACH PARTY..................... C-25
               CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER               
Section 9.02.  SUBSIDIARY.................................................. C-26
Section 9.03.  CONDITIONS TO THE OBLIGATIONS OF THE COMPANY................ C-26

                                   ARTICLE 10                                   
                                  TERMINATION                                   

Section 10.01. TERMINATION................................................. C-27
Section 10.02. EFFECT OF TERMINATION....................................... C-29

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                                   ARTICLE 11                                   
                                 MISCELLANEOUS                                  

Section 11.01. NOTICES..................................................... C-29
Section 11.02. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.............. C-30
Section 11.03. AMENDMENTS; NO WAIVERS...................................... C-30
Section 11.04. EXPENSES.................................................... C-30
Section 11.05. SUCCESSORS AND ASSIGNS...................................... C-31
Section 11.06. GOVERNING LAW............................................... C-31
Section 11.07. JURISDICTION................................................ C-31
Section 11.08. WAIVER OF JURY TRIAL........................................ C-31
Section 11.09. COUNTERPARTS; EFFECTIVENESS; BENEFIT........................ C-32
Section 11.10. ENTIRE AGREEMENT............................................ C-32
Section 11.11. CAPTIONS.................................................... C-32
Section 11.12. SEVERABILITY................................................ C-32
Section 11.13. SPECIFIC PERFORMANCE........................................ C-32

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AGREEMENT AND PLAN OF MERGER

   AGREEMENT AND PLAN OF MERGER dated as of June 25, 2000, among Nabisco Group
Holdings Corp., a Delaware corporation (the "COMPANY"), R.J. Reynolds Tobacco   
Holdings, Inc., a Delaware corporation ("PARENT"), and RJR Acquisition Corp., a 
Delaware corporation and a wholly-owned subsidiary of Parent ("MERGER           
SUBSIDIARY").                                                                   

WHEREAS, the Company owns 213,250,000 shares of Class B common stock of 
Nabisco Holdings Corp., a Delaware corporation ("NA"), representing an 80.6%    
ownership interest in NA;                                                       

   WHEREAS, Philip Morris Companies Inc., Strike Acquisition Corp. and NA have
entered into an Agreement and Plan of Merger dated the date hereof (the "NA     
MERGER AGREEMENT") pursuant to which Strike Acquisition Corp. will merge (the   
"NA MERGER") with and into NA on the terms and conditions set forth therein;    

 WHEREAS, Philip Morris Companies Inc. and the Company have entered into a
Voting and Indemnity Agreement (the "NA VOTING AGREEMENT") pursuant to which the
Company has agreed to vote its shares of Class B Common Stock of NA in favor of 
the NA Merger, subject to approval by the Company's stockholders;               

  WHEREAS, by virtue of the NA Merger, each share of Class B common stock of
NA held by the Company will be converted into the right to receive $55.00 in    
cash;                                                                           

    WHEREAS, the respective Boards of Directors of Parent, Merger Subsidiary and
the Company have approved this Agreement, and deem it advisable and in the best 
interests of their respective stockholders to consummate the merger of Merger   
Subsidiary with and into the Company on the terms and conditions set forth      
herein; and                                                                     

WHEREAS, the merger contemplated by this Agreement will occur only after
consummation of the NA Merger.                                                  

NOW, THEREFORE, the parties hereto agree as follows:                    

ARTICLE 1 
DEFINITIONS 

  Section 1.01.  DEFINITIONS.  (a) The following terms, as used herein, have
the following meanings:                                                         

   "AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person. 

    "BENEFIT ARRANGEMENT" means any employment, severance or similar contract or
arrangement (whether or not written) providing for compensation, bonus,         
profit-sharing, stock option, or other stock-related rights or other forms of   
incentive or deferred compensation, perquisites, vacation benefits, insurance   
coverage (including any self-insured arrangements), health or medical benefits, 
disability benefits, worker's compensation, supplemental unemployment benefits, 
severance benefits and post-employment or retirement benefits (including        
compensation, pension, health, medical or life insurance or other benefits) that
on or after January 1, 1994 (i) is or was not an Employee Plan, (ii) is or was  
entered into, maintained, administered or contributed to, as the case may be, by
the Company or any of its Affiliates and (iii) covers or covered any employee or
former employee of the Company or any of its Subsidiaries employed in the United
States.                                                                         

    "BUSINESS DAY" means a day other than Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to     
close.                                                                          

"CODE" means the Internal Revenue Code of 1986.                         

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   "COMPANY BALANCE SHEET" means the consolidated balance sheet of the Company
as of December 31, 1999 and the footnotes thereto set forth in the Company 10-K.

    "COMPANY 10-K" means the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1999.                                                   

  "DELAWARE LAW" means the General Corporation Law of the State of Delaware.

"EMPLOYEE PLAN" means any "employee benefit plan", as defined in        
Section 3(3) of ERISA, that on or after January 1, 1994 (i) is or was subject to
any provision of ERISA, (ii) is or was maintained, administered or contributed  
to by the Company or any of its Affiliates and (iii) covers or covered any      
employee or former employee of the Company or any of its Subsidiaries.          

"ENVIRONMENTAL LAWS" means any and all federal, foreign, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,        
decisions, injunctions, decrees, requirements of any governmental entity, any   
and all common law requirements, rules and bases of liability regulating,       
relating to or imposing liability or standards of conduct concerning pollution, 
Hazardous Materials or protection of human health or safety as relating to the  
environment or workplace, or the protection of the environment, as currently in 
effect and includes the Comprehensive Environmental Response, Compensation, and 
Liability Act, 42 U.S.C. SectionSection9601, ET SEQ., the Hazardous Materials   
Transportation Act, 49 U.S.C. SectionSection1801, ET SEQ., the Resource         
Conservation and Recovery Act, 42 U.S.C. SectionSection6901, ET SEQ., the Clean 
Water Act, 33 U.S.C. SectionSection1251, ET SEQ., the Clean Air Act, 42 U.S.C.  
Section7401, ET SEQ., the Toxic Substance Control Act, 15 U.S.C.                
SectionSection2601, ET SEQ., the Federal Insecticide, Fungicide and Rodenticide 
Act, 7 U.S.C. SectionSection136, ET SEQ., Occupational Safety and Health Act, 29
U.S.C. SectionSection651, ET SEQ. and the Oil Pollution Act of 1990, 33 U.S.C.  
SectionSection2701, ET SEQ., as such laws have been amended or supplemented, and
the regulations promulgated pursuant thereto, and all analogous state or local  
statutes.                                                                       

"ENVIRONMENTAL PERMITS" means all permits, licenses, certificates or    
approvals necessary for the operation of the Company as currently conducted to  
comply with all applicable Environmental Laws.                                  

"ERISA" means the Employee Retirement Income Security Act of 1974.      

  "ERISA AFFILIATE" of any entity means any other entity that, together with
such entity, would be treated as a single employer under Section 414 of the     
Code.                                                                           

   "GOVERNMENTAL ENTITY" means any federal, state, local or foreign government
or any court, tribunal, administrative agency or commission or other            
governmental or other regulatory authority or agency, domestic, foreign or      
supranational.                                                                  

 "HAZARDOUS MATERIAL" mean any hazardous or toxic substances, materials or
wastes, defined, listed, classified or regulated as such in or under any        
Environmental Law which includes petroleum, petroleum products, friable         
asbestos, urea formaldehyde and polychlorinated biphenyls and any other         
substance that could result in liability under any Environmental Laws.          

 "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

   "INTERNATIONAL PLAN" means any employment, severance or similar contract or
arrangement (whether or not written) or any plan, policy, fund, program or      
arrangement or contract providing for severance, insurance coverage (including  
any self-insured arrangements), workers' compensation, disability benefits,     
supplemental unemployment benefits, vacation benefits, pension or retirement    
benefits or for deferred compensation, profit-sharing, bonuses, stock options,  
stock appreciation rights or other forms of incentive compensation or           
post-retirement insurance, compensation or benefits that on or after January 1, 
1994 (i) is or was not an Employee Plan or a Benefit Arrangement, (ii) is or was

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                                                 ANNEX C -- NGH MERGER AGREEMENT

entered into, maintained, administered or contributed to by the Company or any  
of its Affiliates and (iii) covers or covered any employee or former employee of
the Company or any of its Subsidiaries.                                         

"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any    
kind in respect of such property or asset. For purposes of this Agreement, a    
Person shall be deemed to own subject to a Lien, any property or asset that it  
has acquired or holds subject to the interest of a vendor or lessor under any   
conditional sale agreement, capital lease or other title retention agreement    
relating to such property or asset.                                             

"MATERIAL ADVERSE EFFECT" means, with respect to any Person, any event, 
change, circumstance or effect that is or would reasonably be expected to be    
materially adverse to the condition (financial or otherwise), business, assets  
or results of operations of such Person except any such effect resulting from or
arising in connection with: (i) changes in circumstances or conditions affecting
the food industry in general, in the case of the Company, or the tobacco        
industry in general, in the case of Parent, and not in either case specifically 
relating to or having a materially disproportionate effect on such Person, or   
(ii) changes in general economic or business conditions or in financial markets 
in the United States.                                                           

   "MULTIEMPLOYER PLAN" means each Employee Plan that is a multiemployer plan,
as defined in Section 3(37) of ERISA.                                           

"1933 ACT" means the Securities Act of 1933.                            

"1934 ACT" means the Securities Exchange Act of 1934.                   

 "PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a        
government or political subdivision or an agency or instrumentality thereof.    

 "RIGHTS" means the preferred stock purchase rights issued pursuant to the
terms of Rights Agreement dated as of March 13, 2000 between the Company and    
EquiServe Trust Company, N.A., as Rights Agent.                                 

"SEC" means the Securities and Exchange Commission.                     

   "SHARES" means the shares of common stock, $0.01 par value, of the Company.

"SUBSIDIARY" means, with respect to any Person, any entity of which     
securities or other ownership interests having ordinary voting power to elect a 
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.                    

"TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as of     
June 14, 1999 among the Company, Parent, R. J. Reynolds Tobacco Company and NA, 
as such agreement may be amended from time to time.                             

 "TITLE IV PLAN" means an Employee Plan subject to Title IV of ERISA other
than any Multiemployer Plan.                                                    

 Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated         
thereunder.                                                                     

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ANNEX C -- NGH MERGER AGREEMENT                                                 

(b)  Each of the following terms is defined in the Section set forth    
opposite such term:                                                             

                                                                [Download Table]

TERM                                                           SECTION 
----                                                          ---------
                                                                       
Acquisition Proposal........................................       6.04
Agents......................................................       6.04
Alternative NA Merger.......................................       9.03
Certificates................................................       2.03
Change in Tax Law...........................................      10.01
Company Disclosure Schedule.................................  Article 4
Company Proxy Statement.....................................       4.09
Company SEC Documents.......................................       4.07
Company Securities..........................................       4.05
Company Stock Options.......................................       2.05
Company Stockholder Meeting.................................       6.02
Confidentiality Agreement...................................       6.03
Declaration.................................................       2.07
Effective Time..............................................       2.01
Exchange Agent..............................................       2.03
GAAP........................................................       4.08
Indemnified Person..........................................       7.03
IRS.........................................................       4.16
Merger......................................................       2.01
Merger Consideration........................................       2.02
NA..........................................................   recitals
NA Merger...................................................   recitals
NA Merger Agreement.........................................   recitals
NA Shares...................................................       4.06
NA Voting Agreement.........................................   recitals
Preferred Shares............................................       4.05
Special Board Determination.................................       9.01
Superior Proposal...........................................       6.04
Surviving Corporation.......................................       2.01
Tax Return..................................................       4.16
Taxes.......................................................       4.16
Taxing Authority............................................       4.16
TOPrS Documents.............................................       2.07

ARTICLE 2 
THE MERGER

Section 2.01.  THE MERGER.  (a) At the Effective Time, Merger Subsidiary
shall be merged (the "MERGER") with and into the Company in accordance with     
Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease,
and the Company shall be the surviving corporation (the "SURVIVING              
CORPORATION").                                                                  

  (b)  As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, the Company and Merger       
Subsidiary will file a certificate of merger with the Delaware Secretary of     
State and make all other filings or recordings required by Delaware Law in      

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connection with the Merger. The Merger shall become effective at such time (the 
"EFFECTIVE TIME") as the certificate of merger is duly filed with the Delaware  
Secretary of State or at such later time as is specified in the certificate of  
merger.                                                                         

(c)  From and after the Effective Time, the Surviving Corporation shall 
possess all the rights, powers, privileges and franchises and be subject to all 
of the obligations, liabilities, restrictions and disabilities of the Company   
and Merger Subsidiary, all as provided under Delaware Law.                      

(d)  Notwithstanding Section 2.01(a), at the election of Parent, at the 
Effective Time the Company shall be merged with and into Merger Subsidiary, and 
Merger Subsidiary shall be the surviving corporation. In such event: all        
references to the term "Merger" shall be deemed references to the merger        
contemplated by this Section 2.01(d); all references to the term "Surviving     
Corporation" shall be deemed references to Merger Subsidiary; all references to 
the term "Effective Time" shall be deemed references to the time at which the   
certificate of merger is duly filed with the Delaware Secretary of State or at  
such later time as is specified in the certificate of merger with respect to the
merger contemplated by this Section 2.01(d). Notwithstanding Section 3.01, in   
the event the merger contemplated by this Section 2.01(d) is implemented, the   
certificate of incorporation of Merger Subsidiary in effect at the Effective    
Time shall be the certificate of incorporation of the Surviving Corporation     
until amended in accordance with applicable law.                                

Section 2.02.  CONVERSION OF SHARES  (a) At the Effective Time:         

(i)  except as otherwise provided in Section 2.02(a)(ii) or     
Section 2.04, each Share outstanding immediately prior to the Effective 
   Time, together with the associated Right, shall be converted into the right
 to receive $30.00 in cash, without interest (the "MERGER CONSIDERATION"),
prorated for fractional shares;                                         

  (ii)  each Share held by the Company as treasury stock or owned by
 Parent or any of its Subsidiaries immediately prior to the Effective Time
 shall be canceled, and no payment shall be made with respect thereto; and

  (iii)  each share of common stock of Merger Subsidiary outstanding
  immediately prior to the Effective Time shall be converted into and become
    one share of common stock of the Surviving Corporation with the same rights,
 powers and privileges as the shares so converted and shall constitute the
only outstanding shares of capital stock of the Surviving Corporation.  

 (b)  In the event that (i) the NA Merger Agreement has been terminated in
accordance with its terms, (ii) Parent has not terminated this Agreement        
pursuant to Section 10.01, and (iii) a transaction has been consummated wherein 
the Company has received, in its capacity as a stockholder of NA, more than $55 
per NA share in such transaction, then the Merger Consideration shall be        
increased by one-half of the difference between the Net Proceeds and            
$11.729 billion divided by the number of then-outstanding Shares. For purposes  
of this Agreement, "NET PROCEEDS" is defined as the cash amount received by the 
Company in such transaction after deducting (A) any costs and expenses          
(including, without limitation any termination fees) incurred by the Company in 
connection with the termination of the NA Merger Agreement, including, without  
limitation pursuant to the NA Merger Agreement or the NA Voting Agreement and   
(B) the amounts by which the following items increase as a result of such       
transaction or the increase in the Merger Consideration pursuant to this        
Section 2.02(b): (w) the costs and expenses incurred by Parent in connection    
with the transactions contemplated hereby, (x) amounts payable by Parent (other 
than the Merger Consideration) pursuant to this Agreement, (y) liabilities      
assumed or retained by Parent and the Company, and (z) Taxes incurred by Parent 
and the Company.                                                                

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Section 2.03.  SURRENDER AND PAYMENT.  (a) Prior to the Effective Time, 
Parent shall appoint an agent (the "EXCHANGE AGENT") reasonably acceptable to   
the Company for the purpose of exchanging certificates representing Shares (the 
"CERTIFICATES") for the Merger Consideration. Promptly after the Effective Time,
Parent will cause to be deposited with the Exchange Agent the Merger            
Consideration to be paid in respect of the Shares. Promptly after the Effective 
Time, Parent will send, or will cause the Exchange Agent to send, to each holder
of record of Shares at the Effective Time a letter of transmittal and           
instructions (which shall specify that the delivery shall be effected, and risk 
of loss and title shall pass, only upon proper delivery of the Certificates to  
the Exchange Agent) for use in such exchange.                                   

(b)  Each holder of Shares that have been converted into the right to   
receive the Merger Consideration will be entitled to receive, upon surrender to 
the Exchange Agent of a Certificate, together with a properly completed letter  
of transmittal, and all other documents the Exchange Agent may reasonably       
require, the Merger Consideration payable for each Share represented by such    
Certificate. Until so surrendered, each such Certificate shall represent after  
the Effective Time for all purposes only the right to receive such Merger       
Consideration. No interest shall be paid or will accrue on the Merger           
Consideration payable pursuant to the provisions of this Article 2.             

 (c)  If any portion of the Merger Consideration is to be paid to a Person
other than the Person in whose name the surrendered Certificate is registered,  
it shall be a condition to such payment that the Certificate so surrendered     
shall be properly endorsed or otherwise be in proper form for transfer and that 
the Person requesting such payment shall pay to the Exchange Agent any transfer 
or other taxes required as a result of such payment to a Person other than the  
registered holder of such Certificate or establish to the satisfaction of Parent
that such tax has been paid or is not payable.                                  

   (d)  At the Effective Time, the stock transfer books of the Company will be
closed and there shall be no further registration of transfers of Shares. If,   
after the Effective Time, Certificates are presented to the Surviving           
Corporation, they shall be canceled and exchanged for the Merger Consideration  
provided for, and in accordance with the procedures set forth, in this          
Article 2.                                                                      

   (e)  Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.03(a) (and any interest or other income earned      
thereon) that remains unclaimed by the holders of Shares one year after the     
Effective Time shall be returned to Parent, upon demand, and any such holder who
has not exchanged Shares for the Merger Consideration in accordance with this   
Section 2.03 prior to that time shall thereafter look only to Parent for payment
of the Merger Consideration in respect of such Shares without any interest      
thereon. Notwithstanding the foregoing, Parent shall not be liable to any holder
of Shares for any amount paid to a public official pursuant to applicable       
abandoned property, escheat or similar laws. Any amounts remaining unclaimed by 
holders of Shares three years after the Effective Time (or such earlier date    
immediately prior to such time when the amounts would otherwise escheat to or   
become property of any governmental authority) shall become, to the extent      
permitted by applicable law, the property of Parent free and clear of any claims
or interest of any Person previously entitled thereto.                          

   (f)  Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.03(a) to pay for Shares for which appraisal rights  
have been perfected shall be returned to Parent, upon demand.                   

Section 2.04.  DISSENTING SHARES.  Notwithstanding Section 2.02, Shares 
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has    
demanded appraisal for such Shares in accordance with                           

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Delaware Law shall not be converted into a right to receive the Merger          
Consideration, unless such holder fails to perfect, withdraws or otherwise loses
its right to appraisal. If, after the Effective Time, such holder fails to      
perfect, withdraws or loses its right to appraisal, such Shares shall be treated
as if they had been converted as of the Effective Time into a right to receive  
the Merger Consideration. The Company shall give Parent prompt notice of any    
demands received by the Company for appraisal of Shares. Except as required by  
applicable law or with the prior written consent of Parent, the Company shall   
not make any payment with respect to, or settle or offer to settle, any such    
demands.                                                                        

   Section 2.05.  STOCK OPTIONS.  (a) At or immediately prior to the Effective
Time, each employee or director stock option to purchase Shares outstanding     
under any stock option or compensation plan or arrangement of the Company,      
whether or not vested or exercisable ("COMPANY STOCK OPTIONS"), shall be        
canceled, and the Company shall pay each holder of any such option at or        
promptly after the Effective Time for each such option an amount in cash equal  
to (i) the excess, if any, of the Merger Consideration per Share over the       
applicable exercise price of such options multiplied by the number of Shares    
such holder could have purchased (assuming full vesting of all Company Stock    
Options) had such holder exercised such option in full immediately prior to the 
Effective Time (the "SPREAD") or (ii) in the case of each Company Stock Option  
specified in Section 2.05 of the Company Disclosure Schedule, the greater of the
Spread or the Black-Scholes value of such option, determined using the          
assumptions set forth on Section 2.05 of the Company Disclosure Schedule.       

  (b)  Prior to the Effective Time, the Company shall (i) use its reasonable
best efforts to obtain any consents from holders of Company Stock Options and   
(ii) make any amendments to the terms of such stock option or compensation plans
or arrangements that, in the case of either clauses (i) or (ii), the Company    
deems reasonably necessary to give effect to the transactions contemplated by   
Section 2.05(a). Notwithstanding any other provision of this Section, payment   
may be withheld in respect of any employee stock option until such necessary    
consents are obtained.                                                          

   Section 2.06.  ADJUSTMENTS.  If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding Shares shall    
occur, including by reason of any reclassification, recapitalization, stock     
split or combination, exchange or readjustment of Shares, or stock dividend (or 
dividend payable in any other securities) thereon with a record date during such
period, the Merger Consideration and any other amounts payable pursuant to this 
Agreement shall be appropriately adjusted to provide to the holders of Shares   
the same economic effect as contemplated by this Agreement prior to such event. 

   Section 2.07.  TRUST ORIGINATED PREFERRED SECURITIES.  Reference is made to
the Amended and Restated Declaration of Trust of Nabisco Group Holdings Capital 
Trust II (formerly called RJR Nabisco Holdings Capital Trust II) dated as of    
September 16, 1998, as amended by Amendment No. 1 thereto dated as of July 12,  
1999 (the "DECLARATION") and all related documentation, including the Terms of  
the Preferred Securities and of the Common Securities (all such documentation,  
together with the Declaration, the "TOPRS DOCUMENTS"). Capitalized terms used in
this Section 2.07 but not defined elsewhere in this Agreement shall have the    
meanings assigned to such terms in the Declaration. After the date hereof, the  
Company shall exercise its option under the Declaration to cause the Trustees to
(i) dissolve the Trust and (ii) cause the Debentures to be distributed to       
Holders of the Preferred Securities and Common Securities in exchange therefor  
(and comply with all applicable provisions of the TOPrS Documents in respect of 
such exercise (including to seek a listing, if required, of the Debentures)),   
which in each case shall occur prior to the Effective Time. In addition, the    
Company will prior to the Effective Time (x) deliver an irrevocable notice to   
the Debenture Trustee stating that all outstanding Debentures are to be redeemed
on September 30, 2003 and (y) take all necessary action to                      

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cause the conditions set forth in Section 10.1(C) of the Indenture to be        
satisfied such that a "covenant defeasance" under such section will occur       
concurrently with the above-described dissolution of the Trust and distribution 
of the Debentures. All of the actions set forth in this Section 2.07 shall be   
carried out in accordance with the terms of the TOPrS Documents.                

 Section 2.08.  WITHHOLDING RIGHTS.  Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article 2 such amounts as it is required 
to deduct and withhold with respect to the making of such payment under any     
provision of federal, state, local or foreign tax law. If the Surviving         
Corporation or Parent, as the case may be, so withholds amounts, such amounts   
shall be treated for all purposes of this Agreement as having been paid to the  
holder of the Shares in respect of which the Surviving Corporation or Parent, as
the case may be, made such deduction and withholding.                           

   Section 2.09.  LOST CERTIFICATES.  If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person 
claiming such Certificate to be lost, stolen or destroyed and, if required by   
the Surviving Corporation, the posting by such Person of a bond, in such        
reasonable amount as the Surviving Corporation may direct, as indemnity against 
any claim that may be made against it with respect to such Certificate, the     
Exchange Agent will pay, in exchange for such lost, stolen or destroyed         
Certificate, the Merger Consideration to be paid in respect of the Shares       
represented by such Certificate, as contemplated by this Article.               

   Section 2.10.  ASSOCIATED RIGHTS.  References in Article 1 and Article 2 of
this Agreement to Shares shall include, unless the context requires otherwise,  
the associated Rights.                                                          

ARTICLE 3 
THE SURVIVING CORPORATION 

Section 3.01.  CERTIFICATE OF INCORPORATION.  The certificate of        
incorporation of the Company in effect at the Effective Time shall be the       
certificate of incorporation of the Surviving Corporation until amended in      
accordance with applicable law, PROVIDED that, at the Effective Time, Article   
First of such certificate of incorporation shall be amended to read as follows: 
"The name of the Corporation is RJR Acquisition Corp.".                         

Section 3.02.  BYLAWS.  The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.                                                 

  Section 3.03.  DIRECTORS AND OFFICERS.  From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with 
applicable law, (i) the directors of Merger Subsidiary at the Effective Time    
shall be the directors of the Surviving Corporation and (ii) the officers of    
Merger Subsidiary at the Effective Time shall be the officers of the Surviving  
Corporation.                                                                    

ARTICLE 4 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

Except as set forth in the corresponding sections or subsections of the 
disclosure schedule delivered by the Company to Parent on or prior to the date  
hereof (the "COMPANY DISCLOSURE SCHEDULE") or in the Company SEC Documents, the 
Company represents and warrants to Parent that:                                 

   Section 4.01.  CORPORATE EXISTENCE AND POWER.  The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the  
State of Delaware and has all corporate powers and all governmental licenses,   
authorizations, permits, consents and approvals required to carry               

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on its business as now conducted, except for those licenses, authorizations,    
permits, consents and approvals the absence of which would not reasonably be    
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company. The Company is duly qualified to do business as a foreign          
corporation and is in good standing in each jurisdiction where such             
qualification is necessary, except for those jurisdictions where failure to be  
so qualified would not reasonably be expected to have, individually or in the   
aggregate, a Material Adverse Effect on the Company. The Company has heretofore 
made available to Parent true and complete copies of the certificate of         
incorporation and bylaws of the Company as currently in effect.                 

Section 4.02.  CORPORATE AUTHORIZATION.  (a) The execution, delivery and
performance by the Company of this Agreement and the NA Voting Agreement and the
consummation by the Company of the transactions contemplated hereby are within  
the Company's corporate powers and, except for the affirmative vote of the      
holders of a majority of the outstanding Shares in connection with the          
consummation of the Merger, have been duly authorized by all necessary corporate
action on the part of the Company. The affirmative vote of the holders of a     
majority of the outstanding Shares is the only vote of the holders of any of the
Company's capital stock necessary in connection with the consummation of the    
Merger. This Agreement has been duly executed and delivered by the Company and  
constitutes a valid and binding agreement of the Company and is enforceable in  
accordance with its terms.                                                      

    (b)  At a meeting duly called and held, the Company's Board of Directors has
(i) determined that this Agreement and the NA Voting Agreement and the          
transactions contemplated hereby are fair to and in the best interests of the   
Company's stockholders, (ii) declared advisable and approved this Agreement and 
the NA Voting Agreement and the transactions contemplated hereby and            
(iii) resolved (subject to Section 6.04(c)) to recommend adoption of this       
Agreement by its stockholders.                                                  

Section 4.03.  GOVERNMENTAL AUTHORIZATION.  The execution, delivery and 
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,  
or filing with, any Governmental Entity, other than (i) the filing of a         
certificate of merger with respect to the Merger with the Delaware Secretary of 
State and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, (ii) compliance with any         
applicable requirements of the HSR Act and of laws, rules and regulations in    
foreign jurisdictions governing antitrust or merger control matters, (iii       
compliance with any applicable requirements of the 1933 Act, the 1934 Act and   
any other applicable securities or takeover laws, whether state or foreign and  
(iv) any actions or filings the absence of which would not reasonably be        
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company or materially to impair the ability of the Company to consummate the
transactions contemplated by this Agreement.                                    

  Section 4.04.  NON-CONTRAVENTION.  The execution, delivery and performance
by the Company of this Agreement and the NA Voting Agreement and the            
consummation of the transactions contemplated hereby do not and will not (i)    
contravene, conflict with, or result in any violation or breach of any provision
of the certificate of incorporation or bylaws of the Company, (ii) assuming     
compliance with the matters referred to in Section 4.03, contravene, conflict   
with, or result in a violation or breach of any provision of any applicable law,
regulation, judgment, injunction, order or decree, (iii) require any consent or 
other action by any Person under, constitute a default under, or cause or permit
the termination, cancellation, acceleration or other change of any right or     
obligation or the loss of any benefit to which the Company is entitled under any
provision of any agreement or other instrument binding upon the Company or any  
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authorization affecting, or relating in any way to, the assets or business of   
the Company or (iv) result in the creation or imposition of any Lien on any     
asset of the Company, except, in the case of clauses (ii), (iii) and (iv), for  
such matters as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company or materially impair the    
ability of the Company to consummate the transactions contemplated by this      
Agreement.                                                                      

Section 4.05.  CAPITALIZATION.  (a) The authorized capital stock of the 
Company consists of 440,000,000 Shares and 150,000,000 shares of preferred      
stock, par value $0.01 per share (the "PREFERRED SHARES"), of which 4,400,000   
shares are designated Series A Participating Cumulative Preferred Stock. As of  
June 21, 2000, there were outstanding: (1) 327,398,402 Shares (including        
equivalents payable in cash or Shares); (2) employee and director stock options 
to purchase an aggregate of 23,178,436 Shares; and (3) no Preferred Shares. All 
shares of capital stock of the Company outstanding as of the date hereof have   
been duly authorized and validly issued and are fully paid and nonassessable and
free of any preemptive rights. The Shares were not issued in violation of the   
terms of any agreement or understanding binding on the Company and were issued  
in compliance with all applicable Laws, including all federal, state and foreign
securities laws, rules and regulations. All of the Company's treasury shares    
were acquired by the Company in compliance with all applicable Laws, including  
all federal, state and foreign securities laws, rules and regulations. All      
Shares issuable upon exercise of outstanding employee or directors stock options
have been duly authorized and, when issued in accordance with the terms thereof,
will be validly issued and will be fully paid and nonassessable and free of any 
preemptive rights.                                                              

(b)  Except as set forth in this Section 4.05 and for changes since     
June 21, 2000 resulting from the exercise of employee or director stock options 
outstanding on such date, there are no outstanding (i) shares of capital stock  
or voting securities of the Company, (ii) securities of the Company convertible 
into or exchangeable for shares of capital stock or voting securities of the    
Company or (iii) options or other rights to acquire from the Company or other   
obligation of the Company to issue, any capital stock, voting securities or     
securities convertible into or exchangeable for capital stock or voting         
securities of the Company (the items in clauses (i), (ii) and (iii) being       
referred to collectively as the "COMPANY SECURITIES"). There are no outstanding 
obligations of the Company or any of its Subsidiaries to repurchase, redeem or  
otherwise acquire any of the Company Securities.                                

Section 4.06.  MATTERS RELATING TO THE NA MERGER.  (a) The Company owns 
213,250,000 shares (the "NA SHARES") of Class B common stock, $0.01 par value   
per share, of NA, free and clear of any Lien and, subject to applicable law,    
free of any other limitation or restriction (including any restriction on the   
right to vote or otherwise dispose of such shares).                             

    (b)  The execution, delivery and performance by the Company of the NA Voting
Agreement and the consummation by the Company of the transactions contemplated  
thereby are within the Company's corporate powers and, except for the           
affirmative vote of the holders of a majority of the outstanding Shares in      
connection with the sale of the NA Shares pursuant to the NA Merger Agreement,  
have been duly authorized by all necessary corporate action on the part of the  
Company. The affirmative vote of the holders of a majority of the outstanding   
Shares is the only vote of the holders of any of the Company's capital stock    
necessary in connection with the sale of the NA Shares pursuant to the NA Merger
Agreement. The NA Voting Agreement constitutes a valid and binding agreement of 
the Company enforceable against the Company in accordance with its terms. The   
Company has provided Parent with a true and complete copy of the NA Voting      
Agreement and no provisions thereof have been amended or the rights thereunder  
waived in any manner that would create any additional liability                 

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of the Company or materially impair or delay the consummation of the            
transactions contemplated hereby.                                               

(c)  The execution, delivery and performance by NA of the NA Merger     
Agreement and the consummation by NA of the transactions contemplated thereby   
are within NA's corporate powers and, except for the affirmative vote of the    
holders of a majority of the outstanding shares of common stock of NA in        
connection with the consummation of the NA Merger, have been duly authorized by 
all necessary corporate action on the part of NA. The affirmative vote of the   
holders of a majority of the outstanding shares of common stock of NA is the    
only vote of the holders of any of NA's capital stock necessary in connection   
with the consummation of the NA Merger. The NA Merger Agreement constitutes a   
valid and binding agreement of NA enforceable against NA in accordance with its 
terms. The Company has provided Parent with a true and complete copy of the NA  
Merger Agreement and no provisions thereof have been amended or the rights      
thereunder waived in any manner that would create any additional liability of   
the Company or materially impair or delay the consummation of the transactions  
contemplated hereby.                                                            

(d)  After consummation of the NA Merger, the Company will have no      
Subsidiaries and will conduct no business operations. Except for NA, the Company
owns no shares of any corporation and has no other ownership or other investment
interest, either of record, beneficially or equitably, in any association,      
partnership, joint venture or legal entity, except for marketable securities and
bank, checking and money market accounts and other cash equivalent instruments  
and common securities under the TOPrS Documents. The Company does not conduct,  
and has not since June 14, 1999 conducted, any operating activities except      
through NA.                                                                     

 Section 4.07.  SEC FILINGS.  (a) The Company has filed all forms, reports
and documents required to be filed by it by the SEC or pursuant to relevant     
securities statutes, regulations and rules. The Company has made available to   
Parent (i) the Company's annual reports on Form 10-K for its fiscal years ended 
December 31, 1999 and 1998, (ii) its quarterly report on Form 10-Q for its      
fiscal quarter ended March 31, 2000, (iii) its proxy or information statements  
relating to meetings of, or actions taken without a meeting by, the stockholders
of the Company held since December 31, 1999 and (iv) all of its other reports,  
statements, schedules and registration statements filed with the SEC since      
December 31, 1999 (the documents referred to in this Section 4.07(a),           
collectively, the "COMPANY SEC DOCUMENTS"). The Company has filed all           
registration statements, prospectuses, reports, schedules, forms, statements and
other documents required to be filed by it with the SEC since January 1, 1998.  

    (b)  As of its filing date, each Company SEC Document complied as to form in
all material respects with the applicable requirements of the 1933 Act and the  
1934 Act, as the case may be.                                                   

  (c)  As of its filing date (or, if amended or superceded by a filing prior
to the date hereof, on the date of such filing), no Company SEC Document filed  
pursuant to the 1934 Act contained any untrue statement of a material fact or   
omit to state any material fact necessary in order to make the statements made  
therein, in the light of the circumstances under which they were made, not      
misleading.                                                                     

  (d)  No Company SEC Document filed pursuant to the 1933 Act, as amended or
supplemented, if applicable, as of the date such document or amendment became   
effective, contained 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.                                              

Section 4.08.  FINANCIAL STATEMENTS.  The audited consolidated financial
statements and unaudited consolidated interim financial statements of the       
Company included in the Company SEC Documents fairly present in all material    
respects, in conformity with United States generally accepted accounting        

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principles ("GAAP") applied on a consistent basis (except as may be indicated in
the notes thereto), the consolidated financial position of the Company and its  
consolidated Subsidiaries as of the dates thereof and their consolidated results
of operations and cash flows for the periods then ended (subject to normal      
year-end adjustments in the case of any unaudited interim financial statements  
that have not been and are not expected to be material in nature or amount).    

   Section 4.09.  DISCLOSURE DOCUMENTS.  The proxy statement of the Company to
be filed with the SEC in connection with the Merger (the "COMPANY PROXY         
STATEMENT") and any amendments or supplements thereto will, when filed, comply  
as to form in all material respects with the applicable requirements of the 1934
Act. At the time the Company Proxy Statement or any amendment or supplement     
thereto is first mailed to stockholders of the Company, and at the time such    
stockholders vote on adoption of this Agreement, the Company Proxy Statement, as
supplemented or amended, if applicable, will not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make   
the statements made therein, in the light of the circumstances under which they 
were made, not misleading. The representations and warranties contained in this 
Section 4.09 will not apply to statements or omissions included in the Company  
Proxy Statement based upon information furnished to the Company by Parent       
specifically for use therein.                                                   

Section 4.10.  CERTAIN CONTRACTS.  As of the date hereof, except as set 
forth in the Company SEC Documents filed prior to the date of this Agreement,   
the Company is not a party to or bound by any "material contracts" (as such term
is defined in Item 601(b)(10) of Regulation S-K of the SEC), which agreements or
arrangements could reasonably be expected, individually or in the aggregate, to 
have a Material Adverse Effect on the Company and its Subsidiaries (including   
the Surviving Corporation and its Subsidiaries), taken together, after giving   
effect to the Merger.                                                           

Section 4.11.  ABSENCE OF CERTAIN CHANGES.  Since December 31, 1999, the
business of the Company has been conducted in the ordinary course consistent    
with past practices and there has not been:                                     

  (a)  any event, occurrence, development or state of circumstances or facts
that, either individually or in the aggregate, has had or is reasonably likely  
to have a Material Adverse Effect on the Company;                               

(b)  any declaration, setting aside or payment of any dividend or other 
distribution with respect to any shares of capital stock of the Company (other  
than customary quarterly cash dividends on the Shares in an amount not greater  
than $.1225 per Share per quarter), or any repurchase, redemption or other      
acquisition by the Company of any outstanding shares of capital stock or other  
securities of, or other ownership interests in, the Company;                    

(c)  any amendment to the certificate of incorporation or by-laws of the
Company;                                                                        

  (d)  any amendment of any material term of any outstanding security of the
Company;                                                                        

(e)  any incurrence, assumption or guarantee by the Company of any      
indebtedness for borrowed money other than in the ordinary course of business   
and in amounts and on terms consistent with past practices;                     

(f)  any creation or other incurrence by the Company of any Lien on any 
material asset other than in the ordinary course of business consistent with    
past practices;                                                                 

    (g)  any making of any material loan, advance or capital contributions to or
investment in any Person other than in the ordinary course of business          
consistent with past practices;                                                 

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   (h)  any damage, destruction or other casualty loss (whether or not covered
by insurance) affecting the business or assets of the Company that has had or   
would reasonably be expected to have a Material Adverse Effect on the Company;  

(i)  any transaction or commitment made, or any contract or agreement   
entered into, by the Company relating to its assets or business (including the  
acquisition or disposition of any assets) or any relinquishment by the Company  
of any contract or other right, in either case, material to the Company, other  
than transactions and commitments in the ordinary course of business consistent 
with past practices and those contemplated by this Agreement, the NA Voting     
Agreement and the NA Merger Agreement;                                          

(j)  any change in any method of accounting, method of tax accounting or
accounting principles or practice by the Company, except for any such change    
which is not significant or which is required by reason of a concurrent change  
in GAAP or Regulation S-X under the 1934 Act;                                   

    (k)  any (i) grant of any bonus, severance or termination pay or award under
a long term incentive plan to (or amendment to any existing arrangement with)   
any director, officer or (to the extent material in the aggregate) employee of  
the Company, (ii) establishment, adoption or amendment (except as required by   
applicable law) of any collective bargaining, bonus, profit-sharing, thrift,    
pension, retirement or other benefit plan or arrangement covering any director, 
officer or employee of the Company, or (iii) increase in compensation, bonus or 
other benefits payable to any director, officer or employee of the Company;     

  (l)  any material labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative thereof to     
organize any employees of the Company, which employees were not subject to a    
collective bargaining agreement at December 31, 1999, or any material lockouts, 
strikes, slowdowns, work stoppages or threats thereof by or with respect to such
employees;                                                                      

(m)  any settlement or waiver of a material litigation or claim; or     

(n)  any agreement to do any of the foregoing.                          

Section 4.12.  NO UNDISCLOSED MATERIAL LIABILITIES.  There are no       
liabilities or obligations of the Company of any kind whatsoever, whether       
accrued, contingent, absolute, determined, determinable or otherwise, other     
than:                                                                           

(a)  liabilities or obligations disclosed or provided for in the Company
Balance Sheet or in the notes thereto or in the Company SEC Documents filed     
prior to the date hereof,                                                       

(b)  liabilities or obligations that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the        
Company, and                                                                    

(c)  liabilities or obligations under this Agreement, the NA Merger     
Agreement, the NA Voting Agreement or incurred in connection with the           
transactions contemplated hereby or thereby.                                    

  Section 4.13.  COMPLIANCE WITH LAWS AND COURT ORDERS.  Neither the Company
nor any of its Subsidiaries is in violation of, and since December 31, 1999 has 
not violated, any applicable law, statute, ordinance, rule, regulation,         
judgment, injunction, order or decree, except for violations that have not had  
and would not reasonably be expected to have, individually or in the aggregate, 
a Material Adverse Effect on the Company. The Company has not failed to obtain  
or comply with the requirements of any license, permit or other authorization   
necessary to the ownership of its assets and                                    

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property except for failures that have not had and could not reasonably be      
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.                                                                    

  Section 4.14.  LITIGATION.  There is no claim, action, suit, investigation
or proceeding pending, or, to the knowledge of the Company, threatened, against 
the Company or any of its Subsidiaries, or any of their respective properties   
before any court or arbitrator or before or by any governmental body, agency or 
official, domestic or foreign, that, if determined or resolved adversely in     
accordance with the plaintiff's demands, would reasonably be expected to have a 
Material Adverse Effect on the Company or prevent, make illegal or materially   
delay or impair the ability of the Company to consummate the transactions       
contemplated by this Agreement, the NA Voting Agreement and the NA Merger       
Agreement. Neither the Company nor any of its Subsidiaries is subject to any    
outstanding order, writ, injunction or decree that, individually or in the      
aggregate, would reasonably be expected to have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Merger.          

Section 4.15.  FINDERS' FEES.  Except for UBS Warburg LLC and Morgan    
Stanley & Co. Incorporated, copies of whose engagement agreements have been     
provided to Parent, there is no investment banker, broker, finder or other      
intermediary that has been retained by or is authorized to act on behalf of the 
Company who might be entitled to any fee or commission from the Company in      
connection with the transactions contemplated by this Agreement.                

Section 4.16.  TAXES.  (a) The Company and each of its Subsidiaries has 
timely filed (or has had timely filed on its behalf) or will timely file or     
cause to be timely filed all material Tax Returns required by applicable law to 
be filed by it prior to or as of the Effective Time, and all such Tax Returns   
are, or will be at the time of filing, true and complete in all material        
respects.                                                                       

  (b)  The Company and each of its Subsidiaries has paid (or has had paid on
its behalf), or, where payment is not yet due, has established (or has had      
established on its behalf and for its sole benefit and recourse) or will        
establish or cause to be established (or have established on its behalf and for 
its sole benefit and recourse) in accordance with GAAP on or before the         
Effective Time an adequate accrual for the payment of, all taxes and interest   
due with respect to any period or portion thereof ending prior to or as of the  
Effective Time.                                                                 

    (c)  The federal income Tax Returns of the Company and its Subsidiaries have
been examined and settled with the Internal Revenue Service (the "IRS") (or the 
applicable statutes of limitation for the assessment of federal income Taxes for
such periods have expired) for all years through 1994.                          

(d)  There are no material Liens or encumbrances for Taxes on any of the
assets of the Company or any of its Subsidiaries.                               

    (e)  The Company and its Subsidiaries have complied in all material respects
with all applicable laws, rules and regulations relating to the reporting,      
payment and withholding of Taxes.                                               

(f)  No federal, state, local or foreign audits or administrative       
proceedings are pending with regard to any material Taxes or Tax Return of the  
Company or its Subsidiaries and none of them has received a written notice of   
any proposed audit or proceeding regarding any pending audit or proceeding.     

(g)  No waivers of statutes of limitations have been given or requested.

 (h)  "TAXES" shall mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal         
property, sales, withholding, social security, retirement,                      

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unemployment, occupation, use, goods and services, service use, license, value  
added, capital, net worth, payroll, profits, withholding, franchise, transfer   
and recording taxes, fees and charges, and any other taxes, assessment or       
similar charges imposed by the IRS or any taxing authority (whether domestic or 
foreign including any state, county, local or foreign government or any         
subdivision or taxing agency thereof (including a United States possession)) (a)
"TAXING AUTHORITY"), whether computed on a separate, consolidated, unitary,     
combined or any other basis; and such term shall include any interest whether   
paid or received, fines, penalties or additional amounts attributable to, or    
imposed upon, or with respect to, any such taxes, charges, fees, levies or other
assessments. "TAX RETURN" shall mean any report, return, document, declaration  
or other information or filing required to be supplied to any Taxing Authority  
or jurisdiction (foreign or domestic) with respect to Taxes, including          
information returns, any documents with respect to or accompanying payments of  
estimated Taxes, or with respect to or accompanying requests for the extension  
of time in which to file any such report, return, document, declaration or other
information.                                                                    

Section 4.17.  EMPLOYEE BENEFIT PLANS.  (a) Section 4.17 of the Company 
Disclosure Schedule includes, and the Company has made available to Parent      
copies of each Employee Plan (and, if applicable, related trust agreements) and 
all amendments thereto and written interpretations thereof together with the    
most recent annual report (Form 5500 including, if applicable, Schedule B       
thereto) and actuarial valuation report prepared in connection with any such    
Employee Plan. Section 4.17 of the Company Disclosure Schedule identifies each  
such Employee Plan that is (i) a Multiemployer Plan, (ii) a Title IV Plan or    
(iii) maintained in connection with any trust described in Section 501(c)(9) of 
the Code.                                                                       

(b)  Each Employee Plan that is intended to be qualified under          
Section 401(a) of the Code is so qualified and has been so qualified during the 
period since its adoption; each trust created under any Employee Plan is exempt 
from tax under Section 501(a) of the Code and has been so exempt since its      
creation. The Company has made available to Parent the most recent determination
letter of the Internal Revenue Service relating to each such Employee Plan. Each
Employee Plan has been maintained in substantial compliance with its terms and  
with the requirements prescribed by any and all applicable statutes, orders,    
rules and regulations, including ERISA and the Code.                            

(c)  Section 4.17 of the Company Disclosure Schedule includes, and the  
Company has made available to Parent copies or descriptions of each Benefit     
Arrangement (and, if applicable, related trust agreements) and all amendments   
thereto and written interpretations thereof. Each such Benefit Arrangement has  
been maintained in substantial compliance with its terms and with the           
requirements prescribed by any and all applicable statutes, orders, rules and   
regulations and has been maintained in good standing with applicable regulatory 
authorities.                                                                    

(d)  There has been no failure of a group health plan (as defined in    
Section 5000(b)(1) of the Code) to meet the requirements of Code Sections       
4980B(f), 9801 or 9802 with respect to a qualified beneficiary (as defined in   
Section 4980B(g)) or other individual. Neither the Company nor any of its       
Subsidiaries has contributed to a nonconforming group health plan (as defined in
Section 5000(c)) and no ERISA Affiliate of the Company or any of its            
Subsidiaries has incurred a tax under Section 5000(a) that is or could become a 
liability of the Company or any of its Subsidiaries.                            

(e)  The Company neither maintains nor is obligated to contribute to any
International Plan.                                                             

   (f)  No Title IV Plan has or has incurred an accumulated funding deficiency
within the meaning of Section 302 of ERISA or Section 412 of the Code, nor has  
any waiver of the minimum funding standards of Section 302 of ERISA and         
Section 412 of the Code been requested of or granted by the                     

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Internal Revenue Service with respect to any Title IV Plan, nor has any lien in 
favor of any Title IV Plan arisen under Section 412(n) of the Code or           
Section 302(f) of ERISA.                                                        

  (g)  Neither the Company nor an ERISA Affiliate has incurred or will incur
prior to the Effective Time any unpaid withdrawal liability (within the meaning 
or Part 1 of Subtitle E of Title I of ERISA) with respect to a Multiemployer    
Plan in excess of $5,000,000.                                                   

(h)  The Company has delivered to Parent a complete list of any and all 
current or former employees or directors of the Company or an Affiliate who are 
entitled to the Black-Scholes value of their Company Stock Options in accordance
with Section 2.05.                                                              

(i)  No grant agreement for any Original Options (as defined in         
Section 2.05 of the Company Disclosure Schedule) granted after January 15, 1999 
provides for Black-Scholes valuation upon cash-out.                             

Section 4.18.  ENVIRONMENTAL MATTERS.  Except as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company:                                                                    

  (a)  no written notice, demand, request for information, citation, summons
or order has been received, no penalty has been assessed, and no investigation, 
action, claim, suit or proceeding is pending or, to the knowledge of the        
Company, threatened by any governmental entity or other Person which alleges a  
violation by the Company of any Environmental Law or involves any real property 
currently, or to the knowledge of the Company, formerly owned, operated or      
leased by the Company or its Subsidiaries;                                      

  (b)  the Company has been and is in compliance with all Environmental Laws
and all Environmental Permits;                                                  

   (c)  all real property owned and, to the knowledge of the Company, all real
property operated or leased by the Company or its Subsidiaries is free of       
contamination of Hazardous Materials that would have an adverse effect on human 
health or the environment; and                                                  

    (d)  there are no liabilities of the Company of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise arising    
under any Environmental Law.                                                    

  Section 4.19.  ANTITAKEOVER STATUTE AND RIGHTS AGREEMENT.  (a) The Company
has taken all action necessary to exempt the Merger and this Agreement and the  
transactions contemplated hereby from the provisions of Section 203 of Delaware 
Law.                                                                            

   (b)  The Board of Directors of the Company has approved an amendment to the
Rights Agreement and has resolved to take all other action necessary to render  
the Rights inapplicable to the Merger, this Agreement and the transactions      
contemplated hereby, and the Company will cause the Rights Agent to execute such
amendment promptly after execution of this Agreement. The Company has delivered 
to Parent a true and correct copy of the Rights Agreement in effect as of the   
execution and delivery of this Agreement.                                       

  Section 4.20.  INSURANCE.  Section 4.20 of the Company Disclosure Schedule
attached hereto contains a list that is complete in all material respects of all
policies of directors' and officers' liability insurance and fiduciary insurance
owned or held by, or the premiums and the brokerage fees of which are paid by   
the Company or its Subsidiaries. There have been no claims under any such       
policies since January 1, 1998.                                                 

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  Section 4.21.  OTHER AGREEMENTS.  The Company has delivered to Parent true
and correct copies of each of the NA Merger Agreement and the NA Voting         
Agreement, duly executed by the parties thereto.                                

Section 4.22.  CERTAIN AGREEMENTS.  Except with respect to Company Stock
Options, neither the execution and delivery of this Agreement nor the           
consummation of the transactions contemplated hereby will (i) result in any     
payment (including severance, unemployment compensation, parachute payment,     
bonus or otherwise) becoming due to any director, employee or independent       
contractor of the Company under any Employee Plan, Benefit Arrangement or       
otherwise, (ii) materially increase any benefits otherwise payable under any    
Employee Plan, Benefit Arrangement or otherwise or (iii) result in the          
acceleration of the time of payment or vesting of any such benefits.            

ARTICLE 5 
REPRESENTATIONS AND WARRANTIES OF PARENT

Parent represents and warrants to the Company that:                     

Section 5.01.  CORPORATE EXISTENCE AND POWER.  Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good     
standing under the laws of its jurisdiction of incorporation and has all        
corporate powers and all governmental licenses, authorizations, permits,        
consents and approvals required to carry on its business as now conducted,      
except for those licenses, authorizations, permits, consents and approvals the  
absence of which would not reasonably be expected to have, individually or in   
the aggregate, a Material Adverse Effect on Parent. Since the date of its       
incorporation, Merger Subsidiary has not engaged in any activities other than in
connection with or as contemplated by this Agreement or in connection with      
arranging any financing required to consummate the transactions contemplated    
hereby.                                                                         

Section 5.02.  CORPORATE AUTHORIZATION.  The execution, delivery and    
performance by Parent and Merger Subsidiary of this Agreement and the           
consummation by Parent and Merger Subsidiary of the transactions contemplated   
hereby are within the corporate powers of Parent and Merger Subsidiary and have 
been duly authorized by all necessary corporate action. This Agreement          
constitutes a valid and binding agreement of each of Parent and Merger          
Subsidiary.                                                                     

Section 5.03.  GOVERNMENTAL AUTHORIZATION.  The execution, delivery and 
performance by Parent and Merger Subsidiary of this Agreement and the           
consummation by Parent and Merger Subsidiary of the transactions contemplated   
hereby require no action by or in respect of, or filing with, any governmental  
body, agency, official or authority, domestic or foreign, other than (i) the    
filing of a certificate of merger with respect to the Merger with the Delaware  
Secretary of State and appropriate documents with the relevant authorities of   
other states in which Parent is qualified to do business, (ii) compliance with  
any applicable requirements of the HSR Act and of laws, rules and regulations in
foreign jurisdictions governing antitrust or merger control matters, (iii)      
compliance with any applicable requirements of the 1933 Act, the 1934 Act and   
any other applicable securities or takeover laws, whether state or foreign and  
(iv) any actions or filings the absence of which would not reasonably be        
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent or materially to impair the ability of Parent and Merger Subsidiary to   
consummate the transactions contemplated by this Agreement.                     

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  Section 5.04.  NON-CONTRAVENTION.  The execution, delivery and performance
by Parent and Merger Subsidiary of this Agreement and the consummation by Parent
and Merger Subsidiary of the transactions contemplated hereby do not and will   
not (i) contravene, conflict with, or result in any violation or breach of any  
provision of the certificate of incorporation or bylaws of Parent or Merger     
Subsidiary, (ii) assuming compliance with the matters referred to in            
Section 5.03, contravene, conflict with, or result in any violation or breach of
any provision of any law, regulation, judgment, injunction, order or decree or  
(iii) require any consent or other action by any Person under, constitute a     
default under, or cause or permit the termination, cancellation, acceleration or
other change of any right or obligation or the loss of any benefit to which     
Parent or Merger Subsidiary is entitled under any provision of any agreement or 
other instrument binding upon Parent or Merger Subsidiary, except, in the case  
of clauses (ii) and (iii), for such matters as would not reasonably be expected 
to have, individually or in the aggregate, a Material Adverse Effect on Parent. 

    Section 5.05.  DISCLOSURE DOCUMENTS.  The information with respect to Parent
and any of its Subsidiaries that Parent furnishes to the Company specifically   
for use in the Company Proxy Statement will not contain any untrue statement of 
a material fact or omit to state any material fact necessary in order to make   
the statements made therein, in the light of the circumstances under which they 
were made, not misleading at the time such Company Proxy Statement or any       
amendment or supplement thereto is first mailed to stockholders of the Company. 

 Section 5.06.  FINDERS' FEES.  Except for Lehman Brothers Inc. whose fees
will be paid by Parent, there is no investment banker, broker, finder or other  
intermediary that has been retained by or is authorized to act on behalf of     
Parent who might be entitled to any fee or commission from the Company upon     
consummation of the transactions contemplated by this Agreement.                

ARTICLE 6 
COVENANTS OF THE COMPANY

The Company agrees that:                                                

Section 6.01.  CONDUCT OF THE COMPANY.  From the date hereof until the  
Effective Time, the Company shall conduct its business in the ordinary course   
consistent with past practice and shall use its reasonable best efforts to      
preserve intact its business organizations and relationships with third parties 
and to keep available the services of its present officers and employees.       
Without limiting the generality of the foregoing, except with the prior written 
consent of Parent or as contemplated by this Agreement or as set forth in the   
Company Disclosure Schedule, from the date hereof until the Effective Time the  
Company shall not:                                                              

(a)  declare, set aside or pay any dividend or other distribution with  
respect to any share of its capital stock, other than customary quarterly cash  
dividends on the Shares not to exceed $.1225 per Share per quarter;             

   (b)  repurchase, redeem or otherwise acquire or offer to acquire any shares
of capital stock or other securities of, or other ownership interests in, the   
Company;                                                                        

    (c)  issue, deliver, sell, grant, pledge or otherwise encumber or subject to
any Lien any Shares, any other voting securities or any securities convertible  
into Shares, or any rights, warrants or options to acquire any Shares, voting   
securities or convertible securities other than issuances pursuant to stock-    
based awards or options that are outstanding on the date hereof or split,       
combine or reclassify any of its capital stock or issue or authorize the        
issuance of any other securities in respect of, in lieu of or in substitution   
for shares of its capital stock;                                                

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  (d)  amend its Certificate of Incorporation or By-Laws or other comparable
organizational documents or amend any material terms of the outstanding         
securities of the Company;                                                      

    (e)  merge or consolidate with any other Person or acquire a material amount
of stock or assets of any other Person;                                         

 (f)  sell or otherwise dispose of the NA Shares except pursuant to the NA
Merger Agreement;                                                               

(g)  incur any indebtedness for borrowed money, guarantee any such      
indebtedness, issue or sell any debt securities or warrants or other rights to  
acquire any debt securities or guarantee any debt securities;                   

    (h)  except as required under Section 2.05 or as may be mutually agreed upon
between Parent and the Company, enter into or adopt any new, or amend any       
existing, Employee Plan or Benefit Arrangement, other than as required by law,  
or materially change any actuarial or other assumption used to calculate funding
obligations with respect to any Employee Plan or Benefit Arrangement, or change 
the manner in which contributions to any pension plan are made or the basis on  
which such contributions are determined;                                        

(i)  except as permitted under Section 6.01(h) or by written employment 
agreements existing on the date of this Agreement, increase the compensation    
payable or to become payable to its directors, officers or employees or pay any 
benefit or amount not required by an Employee Plan or Benefit Arrangement as in 
effect on the date of this Agreement to any such person;                        

   (j)  sell, lease, license, mortgage or otherwise encumber or subject to any
Lien or otherwise dispose of any of its properties or assets (including         
securitizations) except pursuant to the NA Merger Agreement;                    

(k)  without the prior consent of Parent, which consent shall not be    
unreasonably withheld, pay, discharge, settle or satisfy any claims,            
liabilities, obligations or litigation (absolute, accrued, asserted or          
unasserted, contingent or otherwise), other than the payment, discharge,        
settlement or satisfaction, in the ordinary course of business consistent with  
past practice or in accordance with its terms, of any liability recognized or   
disclosed in the most recent consolidated financial statements (or described in 
the notes thereto and included in such financial statements) of the Company     
included in the Company SEC Documents or incurred since the date of such        
financial statements for an amount in cash not to exceed (in the case of        
liabilities other than those incurred since the date hereof) the amount of      
specific reserve in respect of such claim, liability, obligation or litigation  
included in such financial statements (or described in the notes thereto and    
included in such financial statements), or waive the benefits of, or agree to   
modify in any manner, any standstill or similar agreement to which the Company  
or any of its Subsidiaries is a party;                                          

   (l)  make any tax election that has, or fail to make any tax election which
failure could reasonably be expected to have, individually or in the aggregate, 
a Material Adverse Effect on the tax liability or tax attributes of the Company 
or any of its Subsidiaries or settle or compromise any material income tax      
liability;                                                                      

   (m)  fail to cause NA to pay its customary quarterly cash dividend prior to
the time at which payment of the Company's customary quarterly cash dividend is 
due;                                                                            

    (n)  fail to cause NA to comply with the terms of the NA Merger Agreement or
the NA Voting Agreement;                                                        

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(o)  fail to comply with the NA Voting Agreement or amend, or waive any 
right, power or privilege under, the NA Voting Agreement or permit NA to amend, 
or waive any right, power or privilege under, the NA Merger Agreement or the    
Voting Agreement, in each case in any manner that would create any additional   
liability of the Company or materially impair or delay the consummation of the  
transactions contemplated hereby;                                               

    (p)  take any action not otherwise specified in this Section 6.01 that would
cause the representations and warranties set forth in Section 4.11 to no longer 
be true and correct;                                                            

(q)  (i) adopt a plan of complete or partial liquidation, dissolution,  
merger, consolidation, restructuring, recapitalization or other reorganization  
or (ii) enter into any material agreement or exercise any discretion providing  
for acceleration of any material payment or performance as a result of a change 
of control of the Company; and                                                  

(r)  agree or commit to do any of the foregoing.                        

    Section 6.02.  STOCKHOLDER MEETING; PROXY MATERIAL.  The Company shall cause
a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to be duly    
called and held as soon as reasonably practicable for the purpose of voting on  
the approval and adoption of this Agreement and the Merger. In connection with  
such meeting, the Company will (i) promptly prepare and file with the SEC, use  
its best efforts to have cleared by the SEC and thereafter mail to its          
stockholders as promptly as practicable the Company Proxy Statement and any     
amendments or supplements thereto and all other proxy materials for such        
meeting, (ii) use its reasonable best efforts (including postponing or          
adjourning the Company Stockholder Meeting to solicit additional proxies for a  
period of up to 30 days) to obtain the necessary approvals by its stockholders  
of this Agreement and the transactions contemplated hereby and (iii) otherwise  
comply with all legal requirements applicable to such meeting. Approval of the  
Merger will be presented as a single proposal in the Company Proxy Statement and
will be conditioned solely upon the approval of the sale of NA Shares pursuant  
to the NA Merger Agreement. The Company shall provide Parent and its legal      
counsel with sufficient opportunity to comment upon the form and substance of   
the Company Proxy Statement (including any amendments or supplements thereto)   
prior to filing such with the SEC and the Company shall use its reasonable      
efforts to incorporate Parent's reasonable comments into the Company Proxy      
Statement (including any amendments or supplements thereto). The Company shall  
provide to Parent copies of any comments received from the SEC in connection    
therewith and shall consult with Parent in responding to the SEC. Subject to    
Section 6.04(c), the Company Proxy Statement shall contain the unqualified      
recommendation of the Board of Directors of the Company that its stockholders   
vote in favor of the approval and adoption of this Agreement, the Merger and the
transactions contemplated hereby.                                               

Section 6.03.  ACCESS TO INFORMATION.  From the date hereof until the   
Effective Time and subject to applicable law and the Confidentiality Agreement  
dated as of May 5, 2000 between the Company and Parent (the "CONFIDENTIALITY    
AGREEMENT"), the Company shall (i) give Parent, its counsel, financial advisors,
auditors and other authorized representatives reasonable access to the offices, 
properties, books and records of the Company, (ii) furnish to Parent, its       
counsel, financial advisors, auditors and other authorized representatives such 
financial, operating data and other information as such Persons may reasonably  
request and (iii) instruct the employees, counsel, financial advisors, auditors 
and other authorized representatives of the Company to cooperate with Parent in 
its investigation of the Company and (iv) promptly advise Parent orally and in  
writing of any fact or circumstances reasonably likely to have a Material       
Adverse Effect on the Company. Any investigation pursuant to this Section shall 
be conducted in such manner as not to interfere unreasonably with the conduct of
the business of the Company. No information or knowledge obtained by Parent in  
any investigation pursuant to this                                              

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Section shall affect or be deemed to modify any representation or warranty made 
by the Company hereunder.                                                       

Section 6.04.  NO SOLICITATION; OTHER OFFERS.  (a) From the date hereof 
until the earlier of the Effective Time and the termination of this Agreement in
accordance with Article 10, the Company and its Subsidiaries will not, and the  
Company will use its reasonable best efforts to cause the officers, directors,  
employees, investment bankers, consultants or other agents or representatives   
(collectively, "AGENTS") of the Company and its Subsidiaries not to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Acquisition
Proposal, (ii) engage in discussions or negotiations with any Person concerning 
an Acquisition Proposal, (iii) disclose any nonpublic information relating to   
the Company or any of its Subsidiaries to any Person who, to the knowledge of   
the Company, is considering making, or has made, an Acquisition Proposal or     
(iv) take any other action to facilitate any inquiries or the making of any     
proposal that constitutes or that could reasonably be expected to lead to an    
Acquisition Proposal. The Company will notify Parent promptly (but in no event  
later than 24 hours) after receipt by the Company of any Acquisition Proposal or
any request for nonpublic information relating to the Company or any of its     
Subsidiaries by any Person who, to the knowledge of the Company, is making, or  
has made, an Acquisition Proposal. The Company shall promptly provide such      
notice orally and in writing and shall identify the Person making, and all terms
and conditions of, any such Acquisition Proposal or request. The Company shall  
keep Parent promptly informed of the status and details of any such Acquisition 
Proposal (including amendments or proposed amendments) or request and any       
discussions or negotiations pursuant to Section 6.04(b) and the Company shall   
provide to Parent copies of any written communications between the Company and  
any Person making the Acquisition Proposal. The Company shall, and the Company  
shall use reasonable best efforts to cause the Agents of the Company and its    
Subsidiaries to, cease immediately and cause to be terminated all activities,   
discussions and negotiations, if any, with any Persons conducted prior to the   
date hereof with respect to any Acquisition Proposal or request. Nothing        
contained in this Agreement shall prevent the Board of Directors of the Company 
from complying with Rule 14d-9 or Rule 14e-2 under the 1934 Act with respect to 
any Acquisition Proposal or shall prevent NA and its Agents from taking any     
action permitted under Section 6.04 of the NA Merger Agreement.                 

 (b)  Notwithstanding the foregoing, the Company may, at any time prior to
the time the Company's stockholders shall have voted to approve this Agreement, 
negotiate or otherwise engage in substantive discussions with, and furnish      
nonpublic information to, any Person in response to an unsolicited Acquisition  
Proposal by such Person if (i) the Company has complied with the terms of       
Section 6.04(a), (ii) the Board of Directors of the Company determines in good  
faith that such Acquisition Proposal is likely to result in a Superior Proposal 
and, after consultation with outside legal counsel, that the failure to take    
such action would constitute a breach of its fiduciary duties under applicable  
law, (iii) such Person executes a confidentiality agreement with terms no less  
favorable to the Company than those contained in the Confidentiality Agreement  
(except as to the standstill provisions) and (iv) the Company shall have        
delivered to Parent prior written notice advising Parent that it intends to take
such action.                                                                    

  (c)  The Board of Directors of the Company shall be permitted to withdraw,
or modify in a manner adverse to Parent, its recommendation to its stockholders 
referred to in Section 6.02 hereof, but only if (i) the Company has complied    
with the terms of Section 6.04(a), (ii) the Company has received an unsolicited 
Acquisition Proposal which the Board of Directors determines in good faith      
constitutes a Superior Proposal, (iii) the Board of Directors of the Company    
determines in good faith, after consultation with outside legal counsel, that   
the failure to take such action would constitute a                              

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breach of its fiduciary duties under applicable law and (iv) the Company shall  
have delivered to Parent 24 hours prior written notice advising Parent that it  
intends to take such action.                                                    

(d)  For purposes of this Agreement:                                    

"ACQUISITION PROPOSAL" means any offer or proposal for a merger,        
reorganization, consolidation, share exchange, business combination, or other   
similar transaction involving the Company or any of its Subsidiaries or any     
proposal or offer to acquire, directly or indirectly, more than 35% of the      
voting securities of the Company or NA, or a substantial portion of the assets  
of the Company and its Subsidiaries taken as a whole, other than the            
transactions contemplated by this Agreement and the NA Merger Agreement.        

   "SUPERIOR PROPOSAL" means any bona fide written Acquisition Proposal (i) on
terms that the Board of Directors of the Company determines in good faith (after
consultation with a financial advisor of nationally recognized reputation and   
taking into account all the terms and conditions of the Acquisition Proposal    
including the legal, financial and regulatory aspects of the proposal) provide  
greater value to the Company's stockholders than the transaction contemplated   
hereunder, as amended pursuant to Section 10.01(d) if applicable and (ii) that  
is reasonably likely to be consummated by the Person making such Acquisition    
Proposal.                                                                       

  (e)  The Company will promptly provide to Parent any information regarding
the Company provided to any Person making an Acquisition Proposal that was not  
previously provided to Parent.                                                  

  (f)  During the period from the date of this Agreement until the Effective
Time or earlier termination of this Agreement, the Company shall not terminate, 
amend, modify or waive any provision of any confidentiality or standstill       
agreement relating to the making of an Acquisition Proposal to which it or any  
of its Subsidiaries is a party (other than any involving Parent or its          
Subsidiaries). During such period, the Company agrees to use reasonable best    
efforts to enforce, to the fullest extent permitted under applicable law, the   
provisions of any such agreements, including seeking injunctions to prevent any 
breaches of such agreements and to enforce specifically the terms and provisions
thereof in any court of the United States or any state thereof having           
jurisdiction.                                                                   

   Section 6.05.  SURETY OBLIGATIONS.  The Company will, and will cause NA to,
obtain any amendments, novations, releases, waivers, consents or approvals      
necessary to release the Company and the Surviving Corporation, effective as of 
the Effective Time, from all liability under any guarantee, performance bond,   
letter of credit or other agreement guaranteeing or securing obligations of NA, 
such actions to be taken in consultation with NA and in a manner that does not  
unreasonably disrupt NA's business or operations.                               

Section 6.06.  RIGHTS AGREEMENT.  The Board of Directors of the Company 
shall take all further action (in addition to that referred to in               
Section 4.19(b)) reasonably requested in writing by Parent in order to render   
the Rights inapplicable to the transactions contemplated by this Agreement to   
the extent provided herein. Except as provided with respect to the transactions 
contemplated by this Agreement and the NA Merger Agreement and except as set    
forth in the Company Disclosure Letter, the Board of Directors of the Company   
shall not, without the prior written consent of Parent (a) amend the Rights     
Agreement or (b) take any action with respect to, or make any determinations    
under, the Rights Agreement, including a redemption of the Rights or any action 
to facilitate an Acquisition Proposal.                                          

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ARTICLE 7 
COVENANTS OF PARENT 

Parent agrees that:                                                     

  Section 7.01.  CONFIDENTIALITY.  Prior to the Effective Time and after any
termination of this Agreement, Parent will hold, and will use its reasonable    
best efforts to cause its officers, directors, employees, accountants, counsel, 
consultants, advisors and agents to hold, in confidence all documents and       
information concerning the Company or any of its Subsidiaries furnished to      
Parent or its Affiliates in connection with the transactions contemplated by    
this Agreement in accordance with the terms of the Confidentiality Agreement.   

Section 7.02.  OBLIGATIONS OF MERGER SUBSIDIARY.  Parent will take all  
action necessary to cause Merger Subsidiary to perform its obligations under    
this Agreement and to consummate the Merger on the terms and conditions set     
forth in this Agreement.                                                        

Section 7.03.  DIRECTOR AND OFFICER LIABILITY.  Parent shall cause the  
Surviving Corporation, and the Surviving Corporation hereby agrees, to do the   
following:                                                                      

    (a)  For six years after the Effective Time, the Surviving Corporation shall
indemnify and hold harmless each present and former officer and director of the 
Company (each an "INDEMNIFIED PERSON") in respect of acts or omissions occurring
at or prior to the Effective Time to the fullest extent permitted by Delaware   
Law or any other applicable laws or provided under the Company's certificate of 
incorporation and bylaws in effect on the date hereof, PROVIDED that such       
indemnification shall be subject to any limitation imposed from time to time    
under applicable law.                                                           

   (b)  The Surviving Corporation shall pay all expenses, including reasonable
fees and expenses of counsel, that an Indemnified Person may incur in enforcing 
the indemnity and other obligations provided for in this Section 7.03. The      
Surviving Corporation shall be entitled to control the defense of any action,   
suit, investigation or proceeding with counsel of its own choosing reasonably   
acceptable to the Indemnified Person and the Indemnified Person shall cooperate 
in the defense thereof. The Surviving Corporation shall not be liable for the   
fees, costs or expenses of any other counsel for an Indemnified Person, other   
than local counsel, unless a conflict of interest shall be caused thereby in    
which case the Surviving Corporation shall pay the fees, costs and expenses of  
one additional counsel of the Indemnified Person's choosing but reasonably      
accepted to the Surviving Corporation, PROVIDED that the Surviving Corporation  
shall not be liable for any settlement effected without its written consent     
(which consent shall not be unreasonably withheld).                             

    (c)  For six years after the Effective Time, the Surviving Corporation shall
provide officers' and directors' liability insurance in respect of acts or      
omissions occurring prior to the Effective Time covering each such Indemnified  
Person currently covered by the Company's officers' and directors' liability    
insurance policy on terms with respect to coverage and amount no less favorable 
than those of such policy in effect on the date hereof; PROVIDED if the         
aggregate annual premiums for such insurance at any time during such period     
shall exceed 200% of the per annum rate of premium and brokerage costs paid by  
the Company and its Subsidiaries as of the date hereof for such insurance, then 
the Surviving Corporation shall provide only such coverage as shall then be     
available at an annual premium equal to 200% of such rate.                      

(d)  If Parent, the Surviving Corporation or any of its successors or   
assigns (i) consolidates with or merges into any other Person and shall not be  
the continuing or surviving corporation or entity of such                       

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consolidation or merger, or (ii) transfers or conveys all or substantially all  
of its properties and assets to any Person, then, and in each such case, to the 
extent necessary, proper provision shall be made so that the successors and     
assigns of Parent or the Surviving Corporation, as the case may be, shall assume
the obligations set forth in this Section 7.03.                                 

   (e)  The rights of each Indemnified Person under this Section 7.03 shall be
in addition to any rights such Person may have under the certificate of         
incorporation or bylaws of the Company or any of its Subsidiaries, under        
Delaware Law or any other applicable laws or under any agreement of any         
Indemnified Person with the Company or any of its Subsidiaries. These rights    
shall survive consummation of the Merger and are intended to benefit, and shall 
be enforceable by, each Indemnified Person.                                     

 (f)  The obligations of the Surviving Corporation under this Section 7.03
shall be joint and several obligations of Parent and the Surviving Corporation. 

Section 7.04.  EMPLOYEE MATTERS.  (a) The Surviving Corporation shall   
expressly assume, honor, comply with and uphold in accordance with their terms  
each of the agreements, understandings or undertakings listed on                
Section 7.04(a) of the Company Disclosure Schedule.                             

  (b)  The obligations of the Surviving Corporation under this 7.04 shall be
the joint and several obligation of Parent and the Surviving Corporation.       

ARTICLE 8 
COVENANTS OF PARENT AND THE COMPANY 

The parties hereto agree that:                                          

    Section 8.01.  REASONABLE BEST EFFORTS.  Subject to the terms and conditions
of this Agreement, Company and Parent will use their reasonable best efforts to 
take, or cause to be taken, all actions and to do, or cause to be done, and to  
assist and cooperate with the other parties in doing all things necessary,      
proper or advisable under applicable laws and regulations to consummate the     
transactions contemplated by this Agreement. In furtherance and not in          
limitation of the foregoing, each of Parent and Company agrees to make an       
appropriate filing of a Notification and Report Form pursuant to the HSR Act    
with respect to the transactions contemplated hereby as promptly as practicable 
after the date hereof and to supply as promptly as practicable any additional   
information and documentary material that may be requested pursuant to the HSR  
Act and to take all other actions necessary to cause the expiration or          
termination of the applicable waiting periods under the HSR Act as soon as      
practicable.                                                                    

    Section 8.02.  CERTAIN FILINGS.  The Company and Parent shall cooperate with
one another and use their reasonable best efforts (i) in connection with the    
preparation of the Company Proxy Statement, (ii) in determining whether any     
action by or in respect of, or filing with, any governmental body, agency,      
official, or authority is required, or any actions, consents, approvals or      
waivers are required to be obtained from parties to any material contracts, in  
connection with the consummation of the transactions contemplated by this       
Agreement and (iii) in taking such actions or making any such filings,          
furnishing information required in connection therewith or with the Company     
Proxy Statement and seeking timely to obtain any such actions, consents,        
approvals or waivers.                                                           

 Section 8.03.  PUBLIC ANNOUNCEMENTS.  Parent and the Company will consult
with each other before issuing any press release or making any public statement 
with respect to this Agreement or the transactions contemplated hereby and,     
except as may be required by applicable law or any listing                      

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agreement with any national securities exchange, will not issue any such press  
release or make any such public statement prior to such consultation. The       
parties agree that the initial press releases to be issued with respect to the  
transactions contemplated hereby shall be in the form heretofore agreed by the  
parties.                                                                        

Section 8.04.  FURTHER ASSURANCES.  At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to       
execute and deliver, in the name and on behalf of the Company or Merger         
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and 
do, in the name and on behalf of the Company or Merger Subsidiary, any other    
actions and things to vest, perfect or confirm of record or otherwise in the    
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.    

 Section 8.05.  NOTICES OF CERTAIN EVENTS.  Each of the Company and Parent
shall promptly notify the other of:                                             

(a)  any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;                                                 

  (b)  any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this    
Agreement; and                                                                  

    (c)  any actions, suits, claims, investigations or proceedings commenced or,
to its knowledge, threatened against, relating to or involving or otherwise     
affecting the Company, Parent or any of their respective Subsidiaries that      
relate to the consummation of the transactions contemplated by this Agreement.  

ARTICLE 9 
CONDITIONS TO THE MERGER

   Section 9.01.  CONDITIONS TO OBLIGATIONS OF EACH PARTY.  The obligations of
the Company, Parent and Merger Subsidiary to consummate the Merger are subject  
to the satisfaction of the following conditions:                                

    (a)  this Agreement shall have been approved and adopted by the stockholders
of the Company in accordance with Delaware Law;                                 

(b)  No provision of any applicable law or regulation and no judgment,  
temporary restraining order, preliminary or permanent injunction, verdict, order
or decree or other legal restraint or prohibition shall (i) make illegal or     
prohibit the consummation of the Merger or (ii) cause the consummation of the   
Merger to constitute a breach of the fiduciary duties of the Board of Directors 
of the terminating party in the judgment of such Board of Directors as          
determined in good faith based upon the advice of outside legal counsel (a      
"SPECIAL BOARD DETERMINATION");                                                 

   (c)  any applicable waiting period under the HSR Act relating to the Merger
shall have expired or been terminated; and                                      

  (d)  there shall have been consummated the NA Merger or another comparable
transaction by which all NA stockholders shall have received, or have the right 
to receive upon the surrender of their                                          

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shares, cash in payment for their shares of NA common stock and such transaction
shall not have resulted in any material additional liabilities of the Company or
Parent (the "ALTERNATIVE NA MERGER").                                           

Section 9.02.  CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER       
SUBSIDIARY.  The obligations of Parent and Merger Subsidiary to consummate the  
Merger are subject to the satisfaction of the following further conditions:     

 (a)  the Company shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the         
Effective Time;                                                                 

(b)  except with respect to the representations and warranties of the   
Company contained in Section 4.11(a) of this Agreement, the representations and 
warranties of the Company contained in this Agreement and in any certificate or 
other writing delivered by the Company pursuant hereto, disregarding all        
qualifications and exceptions contained therein relating to materiality or      
Material Adverse Effect or any similar standard or qualification, shall be true 
in all material respects at and as of the Effective Time as if made at and as of
such time (or, if given as of a specific date, at and as of such date) with only
such exceptions as would not reasonably be expected to have, individually or in 
the aggregate, a Material Adverse Effect on the Company;                        

(c)  the representations and warranties of the Company contained in     
Section 4.11(a) of this Agreement shall be true at and as of the Effective Time 
as if made at and as of such time;                                              

   (d)  Parent shall have received a certificate signed by an executive of the
Company to the foregoing effect;                                                

(e)  The Company shall have at least $11.728 billion (less any costs and
expenses paid in connection with the transactions contemplated hereby) in cash  
in immediately available funds in its bank accounts;                            

 (f)  The Company shall have complied with its covenant in Section 6.01(m)
(dividends); and                                                                

    (g)  designees of Parent shall constitute all of the members of the Board of
Trustees of the Nabisco Foundation.                                             

Section 9.03.  CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.  The       
obligations of the Company to consummate the Merger are subject to the          
satisfaction of the following further conditions:                               

(a)  each of Parent and Merger Subsidiary shall have performed in all   
material respects all of its obligations hereunder required to be performed by  
it at or prior to the Effective Time;                                           

(b)  the representations and warranties of Parent and Merger Subsidiary 
contained in this Agreement and in any certificate or other writing delivered by
Parent or Merger Subsidiary pursuant hereto, disregarding all qualifications and
exceptions contained therein relating to materiality or Material Adverse Effect 
or any similar standard or qualification, shall be true in all material respects
at and as of the Effective Time as if made at and as of such time (or, if given 
as of a specific date, at and as of such date) with only such exceptions as     
would not reasonably be expected to have, individually or in the aggregate, a   
Material Adverse Effect on Parent; and                                          

 (c)  the Company shall have received a certificate signed by an executive
officer of Parent to the foregoing effect.                                      

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ARTICLE 10
TERMINATION 

Section 10.01.  TERMINATION.  This Agreement may be terminated and the  
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):             

(a)  by mutual written agreement of the Company and Parent;             

(b)  by either the Company or Parent, if:                               

        (i)  the Merger has not been consummated on or before April 30, 2001 (or
   such later date on which any agreement relating to an Alternative NA Merger
shall terminate), PROVIDED that the right to terminate this Agreement   
pursuant to this Section 10.01(b)(i) shall not be available to any party
 whose breach of any provision of this Agreement results in the failure of
the Merger to be consummated by such time;                              

     (ii)  there shall be any law or regulation that makes consummation of
the Merger illegal or otherwise prohibited or any judgment, injunction, 
order or decree of any Governmental Entity having competent jurisdiction
    enjoining Company or Parent from consummating the Merger is entered and such
judgment, injunction, judgment or order shall have become final and     
nonappealable;                                                          

 (iii)  this Agreement shall not have been approved and adopted in
   accordance with Delaware Law by the Company's stockholders by reason of the
  failure to obtain the required vote at a duly held meeting of stockholders
or any adjournment thereof;                                             

      (iv)  the NA Merger Agreement shall have terminated in accordance with
   its terms for any reason other than in connection with the acceptance by NA
of a Superior Proposal;                                                 

(c)  by Parent, if                                                      

(i)  the Board of Directors of the Company shall have failed to 
recommend or shall have withdrawn, or modified in a manner adverse to   
Parent, its approval or recommendation of this Agreement or the Merger, 
shall have approved or recommended a Superior Proposal, or shall have   
resolved to do any of the foregoing;                                    

    (ii)  the Company shall have entered into, or publicly announced its
    intention to enter into, a definitive agreement or an agreement in principle
with respect to a Superior Proposal; or                                 

   (iii)  the Company shall have (1) failed to perform in any material
 respect any material obligation or to comply in any material respect with
any material agreement or covenant of the Company to be performed or    
complied with by it under this Agreement or (2) breached any of its     
representations or warranties such that the condition set forth in      
Section 9.02(b) or 9.02(c) cannot be satisfied, which failure under     
   clause (1) or (2) shall not be cured within 15 Business Days of notice from
   Parent (or such longer period during which the Company exercises reasonable
best efforts to cure); or                                               

      (iv)  the Board of Directors of Parent shall have made a Special Board
Determination.                                                          

    (d)  by the Company, if the Board of Directors of the Company authorizes the
Company, subject to complying with the terms of this Agreement, to enter into a 
written agreement concerning a Superior Proposal with respect to the Company,   
PROVIDED however that (i) the Company shall have                                

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complied with Section 6.04, (ii) the Company shall have given Parent at least   
three Business Days written prior notice of its intention to terminate the      
Agreement, attaching a description of all material terms and conditions of such 
Superior Proposal to such notice, (iii) during such three Business Days or      
greater period, the Company engages in good faith negotiations with Parent with 
respect to such changes as Parent may propose to the terms of the Merger and    
this Agreement, (iv) Parent does not make prior to such termination of this     
Agreement a definitive, binding offer which the Board of Directors of the       
Company determines, in good faith after consultation with its financial         
advisors, is at least as favorable to the stockholders of the Company as such   
Superior Proposal, and (v) the Company prior to such termination pursuant to    
this Section 10.01(d) pays to Parent in immediately available funds the fee     
required to be paid pursuant to Section 11.04(b). The Company agrees to notify  
Parent promptly if its intention to enter into a written agreement referred to  
in its notification shall change at any time after giving such notification.    

    (e)  by the Company, if Parent or Merger Subsidiary shall have (i) failed to
perform in any material respect any material obligation or to comply in any     
material respect with any material agreement or covenant of Parent or Merger    
Subsidiary to be performed or complied with by it under this Agreement or (ii)  
breached any of such party's representations or warranties contained in this    
Agreement such that the condition set forth in Section 9.03(b) cannot be        
satisfied, which failure or breach described in such clause (i) or (ii) shall   
not be cured within 15 Business Days of notice from the Company (or such longer 
period during which Parent or Merger Subsidiary exercises reasonable best       
efforts to cure).                                                               

(f)  by the Company or Parent, if                                       

       (i)  the information and representations set forth in the letters dated
June 25, 2000 provided by Steven F. Goldstone and James M. Kilts in     
connection with the opinion of Davis Polk & Wardwell dated June 25, 2000
 delivered to the Company and Parent pursuant to the Tax Sharing Agreement
are not true and complete in all material respects; or                  

      (ii)  since the date of this Agreement, there has been a change in the
Code, final or temporary Treasury Regulations promulgated under         
  Section 355(e) or Section 358(g), published pronouncements of the Internal
Revenue Service having the same force and effect as final or temporary  
Treasury Regulations promulgated under Section 355(e) or Section 358(g),
case law applying Section 355(e) or Section 358(g), or other relevant   
binding legal authority relating to Section 355(e) or Section 358(g)    
 (collectively "CHANGE IN TAX LAW"), that (A) would apply to a transaction
consummated subsequent to such Change in Tax Law notwithstanding the    
  existence of a binding written agreement with respect to such transaction,
   and (B) would reasonably be expected to result in (1) the imposition of tax
on gain realized with respect to the stock of NA arising out of the     
distribution on May 18, 1999 by Parent to the Company of all of the     
outstanding shares of the Class B common stock of NA or on gain realized
with respect to the stock of Parent arising out of the distribution on  
 June 14, 1999 by the Company to the holders of its common stock of all of
 the outstanding common stock of Parent, or (2) a material increase in the
    tax liability of the Company resulting from the NA Merger as compared to the
 tax liability that would have arisen in the absence of such Change in Tax
Law.                                                                    

(g)  by the Company, if the Board of Directors of the Company shall have
made a Special Board Determination and the Company, prior to such termination   
pursuant to this clause (g), pays to Parent in immediately available funds the  
fee required to be paid pursuant to Section 11.04(b).                           

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The party desiring to terminate this Agreement pursuant to this Section 10.01   
(other than pursuant to Section 10.01(a)) shall give notice of such termination 
to the other party.                                                             

Section 10.02.  EFFECT OF TERMINATION.  If this Agreement is terminated 
pursuant to Section 10.01, this Agreement shall become void and of no effect    
with no liability on the part of any party (or any stockholder, director,       
officer, employee, agent, consultant or representative of such party) to the    
other party hereto, PROVIDED that, if such termination shall result from the    
willful (i) failure of either party to fulfill a condition to the performance of
the obligations of the other party or (ii) failure of either party to perform a 
covenant hereof, such party shall be fully liable for any and all liabilities   
and damages incurred or suffered by the other party as a result of such failure.
The provisions of Sections 7.01, 11.04, 11.06, 11.07 and 11.08 shall survive any
termination hereof pursuant to Section 10.01.                                   

ARTICLE 11
MISCELLANEOUS 

   Section 11.01.  NOTICES.  All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and  
shall be given,                                                                 

if to Parent or Merger Subsidiary, to:                                  

R.J. Reynolds Tobacco Holdings, Inc.                      
401 North Main Street                                     
Winston-Salem, North Carolina 27102-2866                  
Attention: General Counsel                                
Fax: (336) 741-2998                                       
with a copy to:                                           
Jones, Day, Reavis & Pogue                                
599 Lexington Avenue                                      
New York, New York 10022                                  
Attention: Jere R. Thomson                                
Fax: (212) 755-7306                                       

if to the Company, to:                                                  

Nabisco Group Holdings Corp.                              
7 Campus Drive                                            
Parsippany, New Jersey 07054                              
Attention: James A. Kirkman III                           
Fax: (973) 539-9150                                       
with a copy to:                                           
Davis Polk & Wardwell                                     
450 Lexington Avenue                                      
New York, New York 10017                                  
Attention: William L. Rosoff                              
Fax: (212) 450-4800                                       

or such other address or facsimile number as such party may hereafter specify   
for the purpose by notice to the other parties hereto. All such notices,        
requests and other communications shall be                                      

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deemed received on the date of receipt by the recipient thereof if received     
prior to 5 p.m. in the place of receipt and such day is a Business Day in the   
place of receipt. Otherwise, any such notice, request or communication shall be 
deemed not to have been received until the next succeeding Business Day in the  
place of receipt.                                                               

Section 11.02.  NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  The    
representations and warranties contained herein and in any certificate or other 
writing delivered pursuant hereto shall not survive the Effective Time or the   
termination of this Agreement.                                                  

    Section 11.03.  AMENDMENTS; NO WAIVERS.  (a) Any provision of this Agreement
may be amended or waived prior to the Effective Time if, but only if, such      
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement or, in the case of a waiver, by each party against 
whom the waiver is to be effective, PROVIDED that, after the adoption of this   
Agreement by the stockholders of the Company and without their further approval,
no such amendment or waiver shall reduce the amount or change the kind of       
consideration to be received in exchange for the Shares.                        

(b)  No failure or delay by any party in exercising any right, power or 
privilege hereunder shall operate as a waiver thereof nor shall any single or   
partial exercise thereof preclude any other or further exercise thereof or the  
exercise of any other right, power or privilege. The rights and remedies herein 
provided shall be cumulative and not exclusive of any rights or remedies        
provided by law.                                                                

    Section 11.04.  EXPENSES.  (a) Except as otherwise provided in this Section,
all costs and expenses incurred in connection with this Agreement shall be paid 
by the party incurring such cost or expense.                                    

(b)  If:                                                                

(i)  the Company shall terminate this Agreement pursuant to     
Section 10.01(d) or 10.01(g);                                           

(ii)  Parent shall terminate this Agreement (A) pursuant to     
Section 10.01(c)(i) or 10.01(c)(ii), or (B) pursuant to                 
   Section 10.01(c)(iii) (other than as a result of a breach of representation
 not caused by action (including breach of a covenant contained herein) of
the Company after the date hereof and not capable of being cured using  
   reasonable best efforts) if, in the case of this clause (B), at such time a
  third party shall have made an Acquisition Proposal and within nine months
after termination of this Agreement the Company enters into a definitive
 agreement in respect of any Acquisition Proposal or such a transaction is
consummated;                                                            

  (iii)  either the Company or Parent shall terminate this Agreement
  pursuant to Section 10.01(b)(iii) and (A) prior to the Company Stockholder
Meeting a third party or the Company shall have publicly announced an   
 Acquisition Proposal and (B) within nine months after termination of this
  Agreement the Company enters into a definitive agreement in respect of any
Acquisition Proposal or such a transaction is consummated; or           

 (iv)  either the Company or Parent shall terminate this Agreement
  pursuant to Section 10.01(b)(iv) and at such time a third party shall have
made an Acquisition Proposal with respect to the Company and within nine
months after termination of this Agreement the Company enters into a    
   definitive agreement in respect of any Acquisition Proposal with respect to
the Company or such a transaction is consummated;                       

then in any case as described in clause (i), (ii), (iii) or (iv), the Company   
shall pay to Parent (by wire transfer of immediately available funds not later  
than the earlier of the date of termination of this Agreement or, in the case of
clauses (ii)(B), (iii) and (iv), the date of such definitive agreement or       

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consummation of such a transaction) an amount equal to $300 million, less any   
amounts previously paid pursuant to Section 11.04(c). The Company shall be      
entitled to deduct and withhold from any payments made to Parent under this     
Section 11.04(b) such amounts as may be required to be deducted or withheld     
therefrom under the Code or under any applicable provisions of state or local   
tax law. To the extent such amounts are so deducted or withheld, such amounts   
shall be treated for purposes of this Section 11.04(b) as having been paid to   
Parent.                                                                         

(c)  If:                                                                

(i)  Parent shall terminate this Agreement pursuant to          
Section 10.01(c)(iii) and at such time a third party shall have made an 
Acquisition Proposal; or                                                

      (ii)  the Company or Parent shall terminate this Agreement pursuant to
Section 10.01(b)(iii);                                                  

then the Company shall within five Business Days pay to Parent in immediately   
available funds up to $30 million as reimbursement for documented expenses      
incurred in connection with the negotiation and execution of this Agreement.    

(d)  If the Company shall terminate this Agreement pursuant to          
Section 10.01(e), then Parent shall within five Business Days pay to the Company
in immediately available funds up to $30 million as reimbursement for documented
expenses incurred in connection with the negotiation and execution of this      
Agreement.                                                                      

 Section 11.05.  SUCCESSORS AND ASSIGNS.  The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their  
respective successors and assigns, PROVIDED that no party may assign, delegate  
or otherwise transfer any of its rights or obligations under this Agreement     
without the consent of each other party hereto, except that Parent or Merger    
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of its Affiliates, the right to enter into the transactions contemplated
by this Agreement, but no such transfer or assignment will relieve Parent or    
Merger Subsidiary of its obligations hereunder.                                 

Section 11.06.  GOVERNING LAW.  This Agreement shall be governed by and 
construed in accordance with the law of the State of Delaware, without regard to
the conflicts of law rules of such state.                                       

Section 11.07.  JURISDICTION.  Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in  
any federal court located in the State of Delaware or any Delaware state court, 
and each of the parties hereby consents to the jurisdiction of such courts (and 
of the appropriate appellate courts therefrom) in any such suit, action or      
proceeding and irrevocably waives, to the fullest extent permitted by law, any  
objection that it may now or hereafter have to the laying of the venue of any   
such suit, action or proceeding in any such court or that any such suit, action 
or proceeding brought in any such court has been brought in an inconvenient     
form. Process in any such suit, action or proceeding may be served on any party 
anywhere in the world, whether within or without the jurisdiction of any such   
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 11.01 shall be deemed effective service of 
process on such party.                                                          

Section 11.08.  WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING   
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED    
HEREBY.                                                                         

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    Section 11.09.  COUNTERPARTS; EFFECTIVENESS; BENEFIT.  This Agreement may be
signed in any number of counterparts, each of which shall be an original, with  
the same effect as if the signatures thereto and hereto were upon the same      
instrument. This Agreement shall become effective when each party hereto shall  
have received counterparts hereof signed by all of the other parties hereto.    
Except as provided in Section 7.03, no provision of this Agreement is intended  
to confer any rights, benefits, remedies, obligations, or liabilities hereunder 
upon any Person other than the parties hereto and their respective successors   
and assigns.                                                                    

 Section 11.10.  ENTIRE AGREEMENT.  This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to   
the subject matter of this Agreement and supersedes all prior agreements and    
understandings, both oral and written, between the parties with respect to the  
subject matter of this Agreement. Notwithstanding the foregoing, the            
Confidentiality Agreement is hereby amended to delete the sixth and twelfth     
paragraphs thereof to the extent necessary to permit Parent to pursue any       
Acquisition Proposal with respect to the Company that would be completed after  
the NA Merger or any Alternative NA Merger.                                     

   Section 11.11.  CAPTIONS.  The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation    
hereof.                                                                         

Section 11.12.  SEVERABILITY.  If any term, provision, covenant or      
restriction of this Agreement is held by a court of competent jurisdiction or   
other authority to be invalid, void, unenforceable, the remainder of the terms, 
provisions, covenants and restrictions of this Agreement shall remain in full   
force and effect and shall in no way be affected, impaired or invalidated so    
long as the economic or legal substance of the transactions contemplated hereby 
is not affected in any manner materially adverse to any party. Upon such a      
determination, the parties shall negotiate in good faith to modify this         
Agreement so as to effect the original intent of the parties as closely as      
possible in an acceptable manner in order that the transactions contemplated    
hereby be consummated as originally contemplated to the fullest extent possible.

Section 11.13.  SPECIFIC PERFORMANCE.  The parties hereto agree that    
irreparable damage would occur if any provision of this Agreement were not      
performed in accordance with the terms hereof and that the parties shall be     
entitled (without posting a bond or similar indemnity) to an injunction or      
injunctions to prevent breaches of this Agreement or to enforce specifically the
performance of the terms and provisions hereof in any federal court located in  
the State of Delaware or any Delaware state court, in addition to any other     
remedy to which they are entitled at law or in equity.                          

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                                                 ANNEX C -- NGH MERGER AGREEMENT

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first   
above written.                                                                  

                                                                [Download Table]
                                              
NABISCO GROUP HOLDINGS CORP.                  

By:  /s/ JAMES M. KILTS                       
     -----------------------------------------
     Name:  James M. Kilts                    
     Title:   President and Chief Executive   
     Officer                                  

R.J. REYNOLDS TOBACCO HOLDINGS, INC.          

By:  /s/ CHARLES A. BLIXT                     
     -----------------------------------------
     Name:  Charles A. Blixt                  
     Title:   Executive Vice President and    
             General Counsel                  

RJR ACQUISITION CORP.                         

By:  /s/ CHARLES A. BLIXT                     
     -----------------------------------------
     Name:  Charles A. Blixt                  
     Title:   Executive Vice President and    
             General Counsel                  

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                                                                         ANNEX D

                                                   UBS WARBURG LLC

[LOGO]                                                                          
                                                   299 Park Avenue
                                                New York, NY
                                              10171-0026
                                                          Telephone 212 821-4000
                                                      www.ubswarburg.com

                                                                   June 25, 2000

Board of Directors                                                              
Nabisco Group Holdings Corp.                                                    
7 Campus Drive                                                                  
Parsippany, NJ 07054                                                            

Board of Directors                                                              
Nabisco Holdings Corp.                                                          
7 Campus Drive                                                                  
Parsippany, NJ 07054                                                            

Members of the Boards of Directors:                                             

We understand that Nabisco Group Holdings Corp., a Delaware corporation 
("NGH"), and Nabisco Holdings Corp., a Delaware corporation ("NA"), are         
considering a transaction (the "Transaction") whereby Philip Morris             
Companies Inc., a Delaware corporation ("PM"), will acquire NA. Pursuant to the 
terms of an Agreement and Plan of Merger, dated as of June 25, 2000 (the "Merger
Agreement"), by and among PM, Strike Acquisition Corp., a Delaware corporation  
("Merger Sub") and a wholly owned subsidiary of PM, and NA, among other things, 
(i) Merger Sub will be merged with and into NA (the "Merger"), and (ii) in      
connection with the Merger, each issued and outstanding share of Class A common 
stock, par value $.01 per share ("Class A Common Stock"), and Class B common    
stock, par value $.01 per share ("Class B Common Stock" and, together with the  
Class A Common Stock, the "NA Common Stock"), of NA (other than shares held by  
NA as treasury stock or owned by PM or any of its subsidiaries and dissenting   
shares under Section 2.04 of the Merger Agreement) will be converted into the   
right to receive $55.00, without interest (the "Merger Consideration"). The     
terms and conditions of the Transaction are more fully set forth in the Merger  
Agreement and the Voting Agreement, dated as of June 25, 2000 (the "Voting      
Agreement"), between NGH and PM.                                                

You have requested our opinion as to the fairness to the holders of NA  
Common Stock from a financial point of view of the Merger Consideration.        

UBS Warburg LLC ("UBSW") has acted as financial advisor to the Board of 
Directors of each of NGH and NA in connection with the Transaction, which joint 
engagement was consented to by each of NGH and NA. UBSW will receive a fee from 
NGH and NA the majority of which is payable upon the consummation of the        
Transaction. In the past, UBSW and its predecessors have provided investment    
banking services to NGH, NA and PM and received customary compensation for the  
rendering of such services. In the ordinary course of business, UBSW, its       
successors and affiliates may trade or have traded securities of NGH, NA and PM 
for their own accounts and, accordingly, may at any time hold a long or short   
position in such securities.                                                    

                                                                [Download Table]
                                                                                   
                                                     MEMBER SIPC                   

UBS WARBURG LLC IS A SUBSIDIARY OF UBS AG.           MEMBER NEW YORK STOCK EXCHANGE
UBS WARBURG IS A FINANCIAL SERVICES GROUP OF UBS AG. AND OTHER PRINCIPAL EXCHANGES 

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ANNEX D -- OPINION OF UBS WARBURG LLC                                           

  Our opinion does not address NGH's or NA's underlying business decision to
effect the Transaction or constitute a recommendation to any stockholder of NGH 
or NA as to how such stockholder should vote with respect to the Transaction. At
your direction, we have not been asked to, nor do we, offer any opinion as to   
the material terms of the Merger Agreement or the Voting Agreement, the form of 
the Transaction or the after-tax consequences to any holder of NA Common Stock  
of the Transaction. In addition, at your direction, we have considered the value
of NA as a whole on the assumption that all NA stockholders would receive equal 
consideration for their shares of NA Common Stock. Furthermore, at your         
direction, UBSW is not expressing any opinion as to the prices at which the NGH 
common stock will trade subsequent to the Transaction or the use of the proceeds
from the Transaction by NGH or any other NA stockholder. In rendering this      
opinion, we have assumed, with your consent, that the final executed form of the
Merger Agreement and the Voting Agreement does not differ in any material       
respect from the drafts that we have examined, and that NA, PM and Merger Sub   
will comply with all the material terms of the Merger Agreement and the Voting  
Agreement. At your request, we have contacted third parties to solicit          
indications of interest in a possible business combination transaction with NGH 
and NA.                                                                         

In arriving at our opinion, we have, among other things: (i) reviewed   
certain publicly available business and historical financial information        
relating to NA, (ii) reviewed the reported prices and trading activity for the  
Class A Common Stock, (iii) reviewed certain internal financial information and 
other data relating to the business and financial prospects of NA, including    
estimates and financial forecasts prepared by management of NA, that were       
provided to us by NA and not publicly available, (iv) conducted discussions with
members of the senior management of NA, (v) reviewed publicly available         
financial and stock market data with respect to certain other companies in lines
of business we believe to be generally comparable to those of NA, (vi) compared 
the financial terms of the Transaction with the publicly available financial    
terms of certain other transactions which we believe to be generally relevant,  
(vii) reviewed drafts of the Merger Agreement and the Voting Agreement, and     
(viii) conducted such other financial studies, analyses, and investigations, and
considered such other information as we deemed necessary or appropriate.        

 In connection with our review, at your direction, we have not assumed any
responsibility for independent verification for any of the information reviewed 
by us for the purpose of this opinion and have, at your direction, relied on its
being complete and accurate in all material respects. In addition, at your      
direction, we have not made any independent evaluation or appraisal of any of   
the assets or liabilities (contingent or otherwise) of NA, nor have we been     
furnished with any such evaluation or appraisal. With respect to the financial  
forecasts and estimates referred to above, we have assumed, at your direction,  
that they have been reasonably prepared on a basis reflecting the best currently
available estimates and judgments of the management of NA as to the future      
performance of NA. Our opinion is necessarily based on economic, monetary,      
market and other conditions as in effect on, and the information made available 
to us as of, the date hereof.                                                   

  Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Merger Consideration is fair, from a financial point of view,  
to the holders of NA Common Stock.                                              

                     Very truly yours,
                   UBS WARBURG LLC

                       /s/ UBS Warburg LLC

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                                                                         ANNEX E

MORGAN STANLEY DEAN WITTER                                                      

                                 1585 BROADWAY
                                            NEW YORK, NEW YORK 10036
                                  (212) 761-4000

                                                 June 25, 2000

Board of Directors                                                              
Nabisco Holdings Corp.                                                          
7 Campus Drive                                                                  
Parsippany, NJ 07054-0311                                                       

Board of Directors                                                              
Nabisco Group Holdings Corp.                                                    
7 Campus Drive                                                                  
Parsippany, NJ 07054-0311                                                       

Ladies and Gentlemen:                                                           

We understand that Nabisco Holdings Corp. ("Target" or the "Company"),  
Philip Morris Companies Inc. ("Buyer") and Strike Acquisition Corp., a wholly   
owned subsidiary of Buyer ("Acquisition Sub"), propose to enter into an         
Agreement and Plan of Merger, substantially in the form of the draft dated      
June 21, 2000 (the "Merger Agreement"), which provides, among other things, for 
the merger (the "Merger") of Acquisition Sub with and into Target. Pursuant to  
the Merger, Target will become a wholly owned subsidiary of Buyer and each      
outstanding share of Class A common stock, par value $.01 per share, of Target  
(the "Class A Common Stock") and Class B Common Stock, par value $.01 per share,
of Target (the "Class B Common Stock", and together with the Class A Common     
Stock, the "Common Stock") other than shares held in treasury or held by Buyer  
or any affiliate of Buyer or as to which dissenters' rights have been perfected,
will be converted into the right to receive $55.00 per share in cash. The terms 
and conditions of the Merger are more fully set forth in the Merger Agreement.  

 You have asked for our opinion as to whether the consideration to be paid
pursuant to the Merger Agreement in the aggregate is fair from a financial point
of view to the holders of Common Stock other than Buyer and its affiliates.     

For purposes of the opinion set forth herein, we have:                  

(i) reviewed certain publicly available financial statements and other  
information of the Company;                                     

   (ii) reviewed certain internal financial statements and other financial and
         operating data concerning the Company prepared by the management of the
Company;                                                      

 (iii) reviewed certain financial projections regarding the Company prepared
by the management of the Company;                             

  (iv) discussed the past and current operations and financial condition and
     the prospects of the Company with senior executives of the Company;

   (v) reviewed the reported prices and trading activity of the Class A Common
Stock;                                                          

 (vi) compared the financial performance of the Company and the prices and
   trading activity of the Class A Common Stock with that of certain
comparable publicly-traded companies and their securities;    

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ANNEX E -- OPINION OF MORGAN STANLEY & CO. INCORPORATED                         

(vii) reviewed the financial terms, to the extent publicly available, of  
certain comparable acquisition transactions;                  

(viii) participated in certain discussions and negotiations among           
   representatives of the Company, Nabisco Group Holdings Corp. (the
"Parent") and Buyer and their financial and legal advisors;   

(ix) reviewed the drafts dated June 21, 2000 of the Merger Agreement, as
    well as the Voting Agreement to be entered into between Parent and
Buyer (the "Voting Agreement");                               

 (x) discussed the tax implications of the consummation of the Merger with
the Company, Parent and their counsel; and                      

  (xi) performed such other analyses and considered such other factors as we
have deemed appropriate.                                      

We have assumed and relied upon, without independent verification, the  
accuracy and completeness of the information reviewed by us for the purposes of 
this opinion. With respect to the financial projections, we have assumed that   
they have been reasonably prepared on bases reflecting the best currently       
available estimates and judgments of the future financial performance of the    
Company. We have not made and have not assumed responsibility for making any    
independent valuation or appraisal of the assets or liabilities of the Company, 
nor have we been furnished with any such appraisals. We have assumed that the   
executed versions of the Merger Agreement and the Voting Agreement will not     
differ in any material respect from the last drafts thereof that we have        
reviewed. We have assumed that the Merger will be consummated in accordance with
the terms set forth in the Merger Agreement without material modification or    
waiver. We have also assumed that the consummation of the Merger will not       
adversely affect the tax-free treatment of the spin-off of R.J. Reynolds Tobacco
Holdings, Inc. completed June 14, 1999. Our opinion is necessarily based on     
financial, economic, market and other conditions as in effect on, and the       
information made available to us as of, the date hereof, but our opinion does   
not address the Company's underlying business decision to effect the            
transactions contemplated by the Merger Agreement.                              

   We have acted as financial advisor to the Board of Directors of the Company
and the Board of Directors of Parent in connection with the Merger and will     
receive a fee from each of the Company and Parent for our services. In the past,
Morgan Stanley & Co. Incorporated and its affiliates ("Morgan Stanley") have    
provided financial advisory and financing services for the Company, Parent and  
Buyer and have received fees for the rendering of these services. In the        
ordinary course of business, Morgan Stanley may from time to time trade in the  
securities or indebtedness of the Company, Parent or Buyer for its own account, 
the accounts of investment funds and other clients under the management of      
Morgan Stanley and for the accounts of its customers and, accordingly, may at   
any time hold a long or short position in such securities or indebtedness.      

It is understood that this letter is for the information of the Board of
Directors of the Company and Parent and may not be used for any other purpose   
without our prior written consent, except that this opinion may be included in  
its entirety, if required, in any filing made by the Company, Parent or Buyer in
respect of the Merger with the Securities and Exchange Commission. This opinion 
does not address the relative fairness of the consideration to be paid pursuant 
to the Merger Agreement to the holders of the Class A Common Stock and the      
Class B Common Stock, and we express no opinion or recommendation as to how the 
stockholders of the Company or the Parent should vote with respect to the       
Merger.                                                                         

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                         ANNEX E -- OPINION OF MORGAN STANLEY & CO. INCORPORATED

 Based on the foregoing, we are of the opinion on the date hereof that the
consideration to be paid pursuant to the Merger Agreement in the aggregate is   
fair from a financial point of view to the holders of Common Stock other than   
Buyer and its affiliates.                                                       

                 Very truly yours,

                                                                [Download Table]
                                 
MORGAN STANLEY & CO. INCORPORATED

                        [LOGO]

                                                                [Download Table]
                                              
By:            /s/ RAYMOND J. MCGUIRE         
     -----------------------------------------
                 Raymond J. McGuire           
                 Managing Director            

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                                                                         ANNEX F

SECTION 262 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE

SECTION 262--APPRAISAL RIGHTS.                                                  

(a)  Any stockholder of a corporation of this State who holds shares of 
stock on the date of the making of a demand pursuant to subsection (d) of this  
section with respect to such shares, who continuously holds such shares through 
the effective date of the merger or consolidation, who has otherwise complied   
with subsection (d) of this section and who has neither voted in favor of the   
merger or consolidation nor consented thereto in writing pursuant to sec. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the    
fair value of the stockholder's shares of stock under the circumstances         
described in subsections (b) and (c) of this section. As used in this section,  
the word "stockholder" means a holder of record of stock in a stock corporation 
and also a member of record of a nonstock corporation; the words "stock" and    
"share" mean and include what is ordinarily meant by those words and also       
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a       
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository. 

(b)  Appraisal rights shall be available for the shares of any class or 
series of stock of a constituent corporation in a merger or consolidation to be 
effected pursuant to sec. 251 (other than a merger effected pursuant to sec.    
251(g) of this title), sec. 252, sec. 254, sec. 257, sec. 258, sec. 263 or sec. 
264 of this title:                                                              

   (1)  Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
  stock, or depository receipts in respect thereof, at the record date fixed
  to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or      
  consolidation, were either (i) listed on a national securities exchange or
   designated as a national market system security on an interdealer quotation
   system by the National Association of Securities Dealers, Inc. or (ii) held
    of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent    
corporation surviving a merger if the merger did not require for its    
approval the vote of the stockholders of the surviving corporation as   
provided in subsection (f) of sec. 251 of this title.                   

       (2)  Notwithstanding paragraph (1) of this subsection, appraisal rights
   under this section shall be available for the shares of any class or series
    of stock of a constituent corporation if the holders thereof are required by
  the terms of an agreement of merger or consolidation pursuant to sec. 251,
252, 254, 257, 258, 263 and 264 of this title to accept for such stock  
anything except:                                                        

        a.  Shares of stock of the corporation surviving or resulting from
      such merger or consolidation, or depository receipts in respect thereof;

          b.  Shares of stock of any other corporation, or depository receipts
  in respect thereof, which shares of stock (or depository receipts in
  respect thereof) or depository receipts at the effective date of the
    merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an 
    interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;       

    c.  Cash in lieu of fractional shares or fractional depository
 receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or                                                     

         d.  Any combination of the shares of stock, depository receipts and
 cash in lieu of fractional shares or fractional depository receipts
       described in the foregoing subparagraphs a., b. and c. of this paragraph.

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ANNEX F -- SECTION 262 -- APPRAISAL RIGHTS                                      

       (3)  In the event all of the stock of a subsidiary Delaware corporation
   party to a merger effected under sec. 253 of this title is not owned by the
  parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.     

 (c)  Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any    
class or series of its stock as a result of an amendment to its certificate of  
incorporation, any merger or consolidation in which the corporation is a        
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision, 
the procedures of this section, including those set forth in subsections        
(d) and (e) of this section, shall apply as nearly as is practicable.           

(d)  Appraisal rights shall be perfected as follows:                    

     (1)  If a proposed merger or consolidation for which appraisal rights
    are provided under this section is to be submitted for approval at a meeting
of stockholders, the corporation, not less than 20 days prior to the    
 meeting, shall notify each of its stockholders who was such on the record
   date for such meeting with respect to shares for which appraisal rights are
 available pursuant to subsections (b) or (c) hereof that appraisal rights
   are available for any or all of the shares of the constituent corporations,
 and shall include in such notice a copy of this section. Each stockholder
   electing to demand the appraisal of such stockholder's shares shall deliver
to the corporation, before the taking of the vote on the merger or      
   consolidation, a written demand for appraisal of such stockholder's shares.
  Such demand will be sufficient if it reasonably informs the corporation of
   the identity of the stockholder and that the stockholder intends thereby to
  demand the appraisal of such stockholder's shares. A proxy or vote against
the merger or consolidation shall not constitute such a demand. A       
 stockholder electing to take such action must do so by a separate written
  demand as herein provided. Within 10 days after the effective date of such
    merger or consolidation, the surviving or resulting corporation shall notify
   each stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or  
consolidation of the date that the merger or consolidation has become   
effective; or                                                           

        (2)  If the merger or consolidation was approved pursuant to sec. 228 or
sec. 253 of this title, each constituent corporation, either before the 
    effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
    constituent corporation who are entitled to appraisal rights of the approval
  of the merger or consolidation and that appraisal rights are available for
any or all shares of such class or series of stock of such constituent  
corporation, and shall include in such notice a copy of this section;   
   provided that, if the notice is given on or after the effective date of the
merger or consolidation, such notice shall be given by the surviving or 
    resulting corporation to all such holders of any class or series of stock of
    a constituent corporation that are entitled to appraisal rights. Such notice
may, and, if given on or after the effective date of the merger or      
    consolidation, shall, also notify such stockholders of the effective date of
 the merger or consolidation. Any stockholder entitled to appraisal rights
may, within 20 days after the date of mailing of such notice, demand in 
 writing from the surviving or resulting corporation the appraisal of such
    holder's shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder 
intends thereby to demand the appraisal of such holder's shares. If such
 notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation  
notifying each of the holders of any class or series of stock of such   
constituent                                                             

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                                      ANNEX F -- SECTION 262 -- APPRAISAL RIGHTS

  corporation that are entitled to appraisal rights of the effective date of
  the merger or consolidation or (ii) the surviving or resulting corporation
shall send such a second notice to all such holders on or within 10 days
   after such effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice, such  
second notice need only be sent to each stockholder who is entitled to  
  appraisal rights and who has demanded appraisal of such holder's shares in
   accordance with this subsection. An affidavit of the secretary or assistant
 secretary or of the transfer agent of the corporation that is required to
   give either notice that such notice has been given shall, in the absence of
   fraud, be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each    
    constituent corporation may fix, in advance, a record date that shall be not
  more than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or     
 consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the  
    record date shall be the close of business on the day next preceding the day
on which the notice is given.                                           

(e)  Within 120 days after the effective date of the merger or          
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to   
appraisal rights, may file a petition in the Court of Chancery demanding a      
determination of the value of the stock of all such stockholders.               
Notwithstanding the foregoing, at any time within 60 days after the effective   
date of the merger or consolidation, any stockholder shall have the right to    
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of   
the merger or consolidation, any stockholder who has complied with the          
requirements of subsections (a) and (d) hereof, upon written request, shall be  
entitled to receive from the corporation surviving the merger or resulting from 
the consolidation a statement setting forth the aggregate number of shares not  
voted in favor of the merger or consolidation and with respect to which demands 
for appraisal have been received and the aggregate number of holders of such    
shares. Such written statement shall be mailed to the stockholder within        
10 days after such stockholder's written request for such a statement is        
received by the surviving or resulting corporation or within 10 days after      
expiration of the period for delivery of demands for appraisal under subsection 
(d) hereof, whichever is later.                                                 

(f)  Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which   
shall within 20 days after such service file in the office of the Register in   
Chancery in which the petition was filed a duly verified list containing the    
names and addresses of all stockholders who have demanded payment for their     
shares and with whom agreements as to the value of their shares have not been   
reached by the surviving or resulting corporation. If the petition shall be     
filed by the surviving or resulting corporation, the petition shall be          
accompanied by such a duly verified list. The Register in Chancery, if so       
ordered by the Court, shall give notice of the time and place fixed for the     
hearing of such petition by registered or certified mail to the surviving or    
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at    
least 1 week before the day of the hearing, in a newspaper of general           
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication  
shall be approved by the Court, and the costs thereof shall be borne by the     
surviving or resulting corporation.                                             

(g)  At the hearing on such petition, the Court shall determine the     
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an   
appraisal for their shares and who hold stock represented by certificates to    
submit their certificates of stock to the Register in Chancery for notation     
thereon of the                                                                  

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pendency of the appraisal proceedings; and if any stockholder fails to comply   
with such direction, the Court may dismiss the proceedings as to such           
stockholder.                                                                    

   (h)  After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or        
consolidation, together with a fair rate of interest, if any, to be paid upon   
the amount determined to be the fair value. In determining such fair value, the 
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of 
interest which the surviving or resulting corporation would have had to pay to  
borrow money during the pendency of the proceeding. Upon application by the     
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery 
or other pretrial proceedings and may proceed to trial upon the appraisal prior 
to the final determination of the stockholder entitled to an appraisal. Any     
stockholder whose name appears on the list filed by the surviving or resulting  
corporation pursuant to subsection (f) of this section and who has submitted    
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally          
determined that such stockholder is not entitled to appraisal rights under this 
section.                                                                        

(i)  The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court 
may direct. Payment shall be so made to each such stockholder, in the case of   
holders of uncertificated stock forthwith, and the case of holders of shares    
represented by certificates upon the surrender to the corporation of the        
certificates representing such stock. The Court's decree may be enforced as     
other decrees in the Court of Chancery may be enforced, whether such surviving  
or resulting corporation be a corporation of this State or of any state.        

 (j)  The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon        
application of a stockholder, the Court may order all or a portion of the       
expenses incurred by any stockholder in connection with the appraisal           
proceeding, including, without limitation, reasonable attorney's fees and the   
fees and expenses of experts, to be charged pro rata against the value of all   
the shares entitled to an appraisal.                                            

 (k)  From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of  
this section shall be entitled to vote such stock for any purpose or to receive 
payment of dividends or other distributions on the stock (except dividends or   
other distributions payable to stockholders of record at a date which is prior  
to the effective date of the merger or consolidation); provided, however, that  
if no petition for an appraisal shall be filed within the time provided in      
subsection (e) of this section, or if such stockholder shall deliver to the     
surviving or resulting corporation a written withdrawal of such stockholder's   
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as       
provided in subsection (e) of this section or thereafter with the written       
approval of the corporation, then the right of such stockholder to an appraisal 
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems  
just.                                                                           

(l)  The shares of the surviving or resulting corporation to which the  
shares of such objecting stockholders would have been converted had they        
assented to the merger or consolidation shall have the status of authorized and 
unissued shares of the surviving or resulting corporation. (Last amended by Ch. 
339, L.'98, eff. 7-1-98).                                                       

F-4 

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P R O X Y                                                               [COMMON]
NABISCO GROUP HOLDINGS CORP.

SPECIAL MEETING OF STOCKHOLDERS OCTOBER 27, 2000
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby, with respect to all shares of Common Stock of Nabisco   
Group Holdings Corp. (the "Company") which the undersigned may be entitled to   
vote, constitutes and appoints each of Steven F. Goldstone, James M. Kilts and  
James A. Kirkman III as his true and lawful agent and proxy, with full power of 
substitution in each, to represent the undersigned and directs First Chicago    
Trust Company of New York, as Depositary, in each case at the Special Meeting of
Stockholders of the Company to be held at the Hotel DuPont, 11th and Market     
Streets, Wilmington, Delaware 19801, on Friday, October 27, 2000 at 10:30 a.m., 
Eastern Time, and at any adjournments or postponements thereof, to vote such    
stock on all matters coming before said meeting as set forth below.             

 1.  To authorize the disposition of Nabisco Group Holdings Corp.'s entire
     interest in Nabisco Holdings Corp., consisting of 213,250,000 shares of
       Class B common stock of Nabisco Holdings Corp., which disposition will be
effected pursuant to the Agreement and Plan of Merger dated as of 
      June 25, 2000 among Nabisco Holdings Corp., Philip Morris Companies Inc.
and Strike Acquisition Corp.                                      

  2.  To approve and adopt the Agreement and Plan of Merger (the "NGH Merger
       Agreement") dated as of June 25, 2000 among Nabisco Group Holdings Corp.,
R.J. Reynolds Tobacco Holdings, Inc. and RJR Acquisition Corp.    

  3.  To grant discretionary authority to vote in favor of an adjournment of
the meeting, if necessary.                                        

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED  
FOR PROPOSALS 1, 2 AND 3. PLEASE MARK THIS PROXY CARD, FILL IN THE DATE, SIGN ON
THE REVERSE SIDE AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES.                                       

                                                        [Enlarge/Download Table]
                                                                                            
Change of address:                                                                          
-------------------------------------------                                                 
-------------------------------------------                                                 
-------------------------------------------                                                 

(If you have written in the above space,                                                    
please mark the corresponding box on the                                                    
reverse side of this card.)                                                                 
                                                                          (SEE REVERSE SIDE)
--------------------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

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/X/ Please mark your votes as in this example.                                  

   THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1, FOR PROPOSAL 2 AND
FOR PROPOSAL 3.                                                                 

                                                        [Enlarge/Download Table]
                                                                                              
1. Authorize the disposition of Nabisco Group     FOR / /       AGAINST / /        ABSTAIN / /
   Holdings Corp.'s entire interest in Nabisco                                                
   Holdings Corp. (see reverse)                                                               

2. Approve and adopt the NGH Merger Agreement     FOR / /       AGAINST / /        ABSTAIN / /
   (see reverse)                                                                              

3. Grant discretionary authority to vote in       FOR / /       AGAINST / /        ABSTAIN / /
   favor of an adjournment of the meeting, if                                                 
   necessary                                                                                  

                                                  SPECIAL ACTION                              
                                                  Change of Address on the Reverse Side: / /  
   ---------------------------------------------                                              
   Signature(s)                                                                               
   ---------------------------------------------                                              
   Date                              Title                                                    

   NOTE:  Please sign exactly as name appears                                                 
          hereon. Joint owners should each sign.                                              
          When signing as attorney, executor,                                                 
          administrator, trustee or guardian,                                                 
          please give full title as such.                                                     

--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

Nabisco Group Holdings Corp. encourages you to take advantage of new and        
convenient ways by which you can vote your shares. You can vote your shares     
electronically over the internet or the telephone. This eliminates the need to  
return your proxy card.                                                         

To vote your shares electronically, you must use the control number printed in  
the box above, just below the perforation. The series of numbers that appears in
this box must be used to access the system.                                     

TO VOTE OVER THE INTERNET:                                                      

  - Log on the internet and go to the web site http://www.eproxyvote.com/ngh

TO VOTE OVER THE TELEPHONE:                                                     

    - On a touch-tone telephone, call 1-877-PRX-VOTE (1-877-779-8683) 24 hours a
day, 7 days a week; outside the U.S. call 1-201-536-8073.           

Your electronic vote authorizes the named proxies in the same manner as if you  
marked, signed, dated and returned the proxy card.                              

If you choose to vote your shares electronically, there is no need for you to   
mail back your proxy card. If you choose to vote by mail, please mark, sign and 
date your card and return your proxy card in the postage-paid envelope provided.

If you have any questions or require assistance, please call: 

MACKENZIE PARTNERS, INC.
(212) 929-5500 (COLLECT) OR (800) 322-2885 (TOLL-FREE)
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING. 

Section 212 of the Delaware General Corporation Law authorizes the use of       
electronic transmission, such as transmissions over the internet, to grant a    
proxy.                                                                          

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P R O X Y                                                    [COMMON/BENEFICIAL]

NABISCO GROUP HOLDINGS CORP.

SPECIAL MEETING OF STOCKHOLDERS OCTOBER 27, 2000
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby, with respect to all shares of Common Stock of Nabisco   
Group Holdings Corp. (the "Company") which the undersigned may be entitled to   
vote, constitutes and appoints each of Steven F. Goldstone, James M. Kilts and  
James A. Kirkman III as his true and lawful agent and proxy, with full power of 
substitution in each, to represent the undersigned and directs First Chicago    
Trust Company of New York, as Depositary, in each case at the Special Meeting of
Stockholders of the Company to be held at the Hotel DuPont, 11th and Market     
Streets, Wilmington, Delaware 19801, on Friday, October 27, 2000 at 10:30 a.m., 
Eastern Time, and at any adjournments or postponements thereof, to vote such    
stock on all matters coming before said meeting as set forth below.             

 1.  To authorize the disposition of Nabisco Group Holdings Corp.'s entire
     interest in Nabisco Holdings Corp., consisting of 213,250,000 shares of
       Class B common stock of Nabisco Holdings Corp., which disposition will be
effected pursuant to the Agreement and Plan of Merger dated as of 
      June 25, 2000 among Nabisco Holdings Corp., Philip Morris Companies Inc.
and Strike Acquisition Corp.                                      

  2.  To approve and adopt the Agreement and Plan of Merger (the "NGH Merger
       Agreement") dated as of June 25, 2000 among Nabisco Group Holdings Corp.,
R.J. Reynolds Tobacco Holdings, Inc. and RJR Acquisition Corp.    

  3.  To grant discretionary authority to vote in favor of an adjournment of
the meeting, if necessary.                                        

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED  
FOR PROPOSALS 1, 2 AND 3. PLEASE MARK THIS PROXY CARD, FILL IN THE DATE, SIGN ON
THE REVERSE SIDE AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES.                                       
--------------------------------------------------------------------------------

                                                              (SEE REVERSE SIDE)

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/X/ Please mark your votes as in this example.                                  

   THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1, FOR PROPOSAL 2 AND
FOR PROPOSAL 3.                                                                 

                                                                [Download Table]
                                                                                   
1. Authorize the disposition of Nabisco Group     FOR / /  AGAINST / /  ABSTAIN / /
   Holdings Corp.'s entire interest in Nabisco                                     
   Holdings Corp. (see reverse)                                                    

2. Approve and adopt the NGH Merger Agreement     FOR / /  AGAINST / /  ABSTAIN / /
   (see reverse)                                                                   

3. Grant discretionary authority to vote in       FOR / /  AGAINST / /  ABSTAIN / /
   favor of an adjournment of the meeting, if                                      
   necessary                                                                       

   ---------------------------------------------                                   
   Signature(s)                                                                    
   ---------------------------------------------                                   
   Date                              Title                                         

   NOTE: Please sign exactly as name appears                                       
   hereon. Joint owners should each sign. When                                     
         signing as attorney, executor,                                            
         administrator, trustee or guardian,                                       
         please give full title as such.                                           

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P R O X Y                                       [COMMON/$.835 DEPOSITARY SHARES]

NABISCO GROUP HOLDINGS CORP.

SPECIAL MEETING OF STOCKHOLDERS OCTOBER 27, 2000
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby, with respect to all shares of Common Stock of Nabisco   
Group Holdings Corp. (the "Company") which the undersigned may be entitled to   
vote, constitutes and appoints each of Steven F. Goldstone, James M. Kilts and  
James A. Kirkman III as his true and lawful agent and proxy, with full power of 
substitution in each, to represent the undersigned and directs First Chicago    
Trust Company of New York, as Depositary, in each case at the Special Meeting of
Stockholders of the Company to be held at the Hotel DuPont, 11th and Market     
Streets, Wilmington, Delaware 19801, on Friday, October 27, 2000 at 10:30 a.m., 
Eastern Time, and at any adjournments or postponements thereof, to vote such    
stock on all matters coming before said meeting as set forth below.             

 1.  To authorize the disposition of Nabisco Group Holdings Corp.'s entire
     interest in Nabisco Holdings Corp., consisting of 213,250,000 shares of
       Class B common stock of Nabisco Holdings Corp., which disposition will be
effected pursuant to the Agreement and Plan of Merger dated as of 
      June 25, 2000 among Nabisco Holdings Corp., Philip Morris Companies Inc.
and Strike Acquisition Corp.                                      

  2.  To approve and adopt the Agreement and Plan of Merger (the "NGH Merger
       Agreement") dated as of June 25, 2000 among Nabisco Group Holdings Corp.,
R.J. Reynolds Tobacco Holdings, Inc. and RJR Acquisition Corp.    

  3.  To grant discretionary authority to vote in favor of an adjournment of
the meeting, if necessary.                                        

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED  
FOR PROPOSALS 1, 2 AND 3. PLEASE MARK THIS PROXY CARD, FILL IN THE DATE, SIGN ON
THE REVERSE SIDE AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES.                                       

Change of address:                                                              
______________________________                                                  
______________________________                                                  
______________________________                                                  

(If you have written in the above space,                                        
please mark the corresponding box on the                                        
reverse side of this card.)                                                     

                                                              (SEE REVERSE SIDE)
--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

IMPORTANT MESSAGE!

TO FORMER HOLDERS OF $.835 DEPOSITARY SHARES:                                   

- You are entitled to vote at the Nabisco Group Holdings Corp. ("NGH") Special  
Meeting of Stockholders to be held on October 27, 2000.                     

- You may use the proxy card attached above to vote. Please vote early!         

- If you have any questions about voting, please call MacKenzie Partners, Inc.  
toll free at 1-800-322-2885.                                                

- Each $.835 Depositary Share formerly owned by you has been converted into     
one-fifth of a share of NGH Common Stock, after adjustment to reflect the   
 Company's April 1995 reverse Common Stock split. The number of shares printed
on the reverse side of this card is the number of shares of NGH Common Stock
that you are entitled to receive upon exchange of your certificate(s)       
representing $.835 Depositary Shares.                                       

- UNTIL THE CERTIFICATES REPRESENTING YOUR $.835 DEPOSITARY SHARES ARE EXCHANGED
FOR NGH COMMON STOCK, WE CANNOT SEND YOU ANY NGH COMMON STOCK DIVIDENDS. TO 
  DATE, CASH DIVIDENDS AGGREGATING APPROXIMATELY $8.6050 PER SHARE OF NGH COMMON
STOCK HAVE ACCRUED ON YOUR ACCOUNT.                                         

- If you need assistance exchanging your $.835 Depositary Share certificate(s), 
please call the Exchange Agent, First Chicago Trust Company of New York,    
toll-free at 1-800-317-4432 and ask for the Tenders & Exchanges Department. 

Thank you for acting promptly.                                                  

                                      NABISCO GROUP HOLDINGS CORP.

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/X/ Please mark your votes as in this example.                                  

   THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1, FOR PROPOSAL 2 AND
FOR PROPOSAL 3.                                                                 

                                                        [Enlarge/Download Table]
                                                                                              
1. Authorize the disposition of Nabisco Group     FOR / /       AGAINST / /        ABSTAIN / /
   Holdings Corp.'s entire interest in Nabisco                                                
   Holdings Corp. (see reverse)                                                               

2. Approve and adopt the NGH Merger Agreement     FOR / /       AGAINST / /        ABSTAIN / /
   (see reverse)                                                                              

3. Grant discretionary authority to vote in       FOR / /       AGAINST / /        ABSTAIN / /
   favor of an adjournment of the meeting, if                                                 
   necessary                                                                                  
                                                  SPECIAL ACTION                              
                                                  Change of Address on the Reverse Side: / /  

   ---------------------------------------------                                              
   Signature(s)                                                                               
   ---------------------------------------------                                              
   Date                                      Title                                            

   NOTE: Please sign exactly as name appears                                                  
   hereon. Joint owners should each sign. When                                                
         signing as attorney, executor,                                                       
         administrator, trustee or guardian,                                                  
         please give full title as such.                                                      

--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

Nabisco Group Holdings Corp. encourages you to take advantage of new and        
convenient ways by which you can vote your shares. You can vote your shares     
electronically over the internet or the telephone. This eliminates the need to  
return your proxy card.                                                         

To vote your shares electronically, you must use the control number printed in  
the box above, just below the perforation. The series of numbers that appears in
this box must be used to access the system.                                     

TO VOTE OVER THE INTERNET:                                                      

   - Log on the internet and go to the web site http://www.eproxyvote.com/ngh3

TO VOTE OVER THE TELEPHONE:                                                     

    - On a touch-tone telephone, call 1-877-PRX-VOTE (1-877-779-8683) 24 hours a
day, 7 days a week; outside the U.S. call 1-201-536-8073.           

Your electronic vote authorizes the named proxies in the same manner as if you  
marked, signed, dated and returned the proxy card.                              

If you choose to vote your shares electronically, there is no need for you to   
mail back your proxy card. If you choose to vote by mail, please mark, sign and 
date your card and return your proxy card in the postage-paid envelope provided.

   If you have any questions or require assistance, please call:

MACKENZIE PARTNERS, INC.
(212) 929-5500 (COLLECT) OR (800) 322-2885 (TOLL-FREE)
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING. 

Section 212 of the Delaware General Corporation Law authorizes the use of       
electronic transmission, such as transmissions over the internet, to grant a    
proxy.                                                                          

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P R O X Y                                                        [COMMON/BORDEN]
NABISCO GROUP HOLDINGS CORP.

SPECIAL MEETING OF STOCKHOLDERS OCTOBER 27, 2000
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby, with respect to all shares of Common Stock of Nabisco   
Group Holdings Corp. (the "Company") which the undersigned may be entitled to   
vote, constitutes and appoints each of Steven F. Goldstone, James M. Kilts and  
James A. Kirkman III as his true and lawful agent and proxy, with full power of 
substitution in each, to represent the undersigned and directs First Chicago    
Trust Company of New York, as Depositary, in each case at the Special Meeting of
Stockholders of the Company to be held at the Hotel DuPont, 11th and Market     
Streets, Wilmington, Delaware 19801, on Friday, October 27, 2000 at 10:30 a.m., 
Eastern Time, and at any adjournments or postponements thereof, to vote such    
stock on all matters coming before said meeting as set forth below.             

1. To authorize the disposition of Nabisco Group Holdings Corp.'s entire
     interest in Nabisco Holdings Corp., consisting of 213,250,000 shares of
       Class B common stock of Nabisco Holdings Corp., which disposition will be
effected pursuant to the Agreement and Plan of Merger dated as of 
      June 25, 2000 among Nabisco Holdings Corp., Philip Morris Companies Inc.
and Strike Acquisition Corp.                                      

 2. To approve and adopt the Agreement and Plan of Merger (the "NGH Merger
       Agreement") dated as of June 25, 2000 among Nabisco Group Holdings Corp.,
R.J. Reynolds Tobacco Holdings, Inc. and RJR Acquisition Corp.    

 3. To grant discretionary authority to vote in favor of an adjournment of
the meeting, if necessary.                                        

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED  
FOR PROPOSALS 1, 2 AND 3. PLEASE MARK THIS PROXY CARD, FILL IN THE DATE, SIGN ON
THE REVERSE SIDE AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES.                                       

                                                                [Download Table]
                                                                   
Change of address:                                                 
-------------------------------------------                        
-------------------------------------------                        
-------------------------------------------                        

(If you have written in the above space, please                    
mark the corresponding box on the reverse side                     
of this card.)                                                     
                                                 (SEE REVERSE SIDE)

--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

IMPORTANT MESSAGE!

TO FORMER HOLDERS OF BORDEN, INC. COMMON STOCK:                                 

- You are entitled to vote at the Nabisco Group Holdings Corp. ("NGH") Special  
Meeting of Stockholders to be held on October 27, 2000.                     

- You may use the proxy card attached above to vote. Please vote early!         

- If you have any questions about voting, please call MacKenzie Partners, Inc.  
toll free at 1-800-322-2885.                                                

- Each share of Borden common stock reflected in your account is exchangeable   
for .45829 of a share of NGH Common Stock, after adjustment to reflect NGH's
April 1995 reverse Common Stock split. The number of shares printed on the  
  reverse side of this card is the number of shares of NGH Common Stock that you
are entitled to receive upon exchange of your Borden common stock.          

- UNTIL THE CERTIFICATES REPRESENTING YOUR BORDEN COMMON STOCK ARE EXCHANGED FOR
 NGH COMMON STOCK, WE CANNOT SEND YOU ANY NGH COMMON STOCK DIVIDENDS. TO DATE,
CASH DIVIDENDS AGGREGATING APPROXIMATELY $8.59 PER SHARE OF NGH COMMON STOCK
HAVE ACCRUED ON YOUR ACCOUNT.                                               

- If you need assistance exchanging your Borden common stock certificate(s),    
please call the Exchange Agent, First Chicago Trust Company of New York,    
toll-free at 1-800-619-1696 and ask for the Tenders & Exchanges Department. 

Thank you for acting promptly.                                                  

                                Nabisco Group Holdings Corp.

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/X/ Please mark your votes as in this example.                                  

   THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1, FOR PROPOSAL 2 AND
FOR PROPOSAL 3.                                                                 

                                                        [Enlarge/Download Table]
                                                                                              
1. Authorize the disposition of Nabisco Group     FOR / /       AGAINST / /        ABSTAIN / /
   Holdings Corp.'s entire interest in Nabisco                                                
   Holdings Corp. (see reverse)                                                               

2. Approve and adopt the NGH Merger Agreement     FOR / /       AGAINST / /        ABSTAIN / /
   (see reverse)                                                                              

3. Grant discretionary authority to vote in       FOR / /       AGAINST / /        ABSTAIN / /
   favor of an adjournment of the meeting, if                                                 
   necessary                                                                                  
                                                  SPECIAL ACTION                              
                                                  Change of Address on the Reverse Side: / /  

   ---------------------------------------------                                              
   Signature(s)                                                                               
   ---------------------------------------------                                              
   Date                              Title                                                    

   NOTE: Please sign exactly as name appears                                                  
   hereon. Joint owners should each sign. When                                                
         signing as attorney, executor,                                                       
         administrator, trustee or guardian,                                                  
         please give full title as such.                                                      

--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

Nabisco Group Holdings Corp. encourages you to take advantage of new and        
convenient ways by which you can vote your shares. You can vote your shares     
electronically over the internet or the telephone. This eliminates the need to  
return your proxy card.                                                         

To vote your shares electronically, you must use the control number printed in  
the box above, just below the perforation. The series of numbers that appears in
this box must be used to access the system.                                     

TO VOTE OVER THE INTERNET:                                                      

   - Log on the internet and go to the web site http://www.eproxyvote.com/ngh2

TO VOTE OVER THE TELEPHONE:                                                     

    - On a touch-tone telephone, call 1-877-PRX-VOTE (1-877-779-8683) 24 hours a
day, 7 days a week; outside the U.S. call 1-201-536-8073.           

Your electronic vote authorizes the named proxies in the same manner as if you  
marked, signed, dated and returned the proxy card.                              

If you choose to vote your shares electronically, there is no need for you to   
mail back your proxy card. If you choose to vote by mail, please mark, sign and 
date your card and return your proxy card in the postage-paid envelope provided.

If you have any questions or require assistance, please call: 

MACKENZIE PARTNERS, INC.
(212) 929-5500 (COLLECT) OR (800) 322-2885 (TOLL-FREE)
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING. 
Section 212 of the Delaware General Corporation Law authorizes the use of       
electronic transmission, such as transmissions over the internet, to grant a    
proxy.                                                                          

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P R O X Y                                                                       

VOTING INSTRUCTION CARD 

NABISCO GROUP HOLDINGS CORP.

SPECIAL MEETING OF STOCKHOLDERS OCTOBER 27, 2000
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby constitutes and appoints Fidelity Management Trust       
Company ("Fidelity"), as Trustee, his true and lawful agent and proxy, to       
represent the undersigned at the Special Meeting of Stockholders of Nabisco     
Group Holdings Corp. (the "Company"), to be held at the Hotel DuPont, 11th and  
Market Streets, Wilmington, Delaware 19801, on Friday, October 27, 2000 at      
10:30 a.m., Eastern Time, and at any adjournments or postponements thereof, and 
to vote all the shares of stock of the Company which the undersigned may be     
entitled to vote on all matters coming before said meeting as set forth below.  

 1.  To authorize the disposition of Nabisco Group Holdings Corp.'s entire
     interest in Nabisco Holdings Corp., consisting of 213,250,000 shares of
       Class B common stock of Nabisco Holdings Corp., which disposition will be
effected pursuant to the Agreement and Plan of Merger dated as of 
      June 25, 2000 among Nabisco Holdings Corp., Philip Morris Companies Inc.
and Strike Acquisition Corp.                                      

  2.  To approve and adopt the Agreement and Plan of Merger (the "NGH Merger
       Agreement") dated as of June 25, 2000 among Nabisco Group Holdings Corp.,
R.J. Reynolds Tobacco Holdings, Inc. and RJR Acquisition Corp.    

  3.  To grant discretionary authority to vote in favor of an adjournment of
the meeting, if necessary.                                        

THIS INSTRUCTION CARD WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER        
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, IF YOUR
CARD IS NOT PROPERLY COMPLETED, OR IF YOUR CARD IS NOT TIMELY RECEIVED, FIDELITY
WILL VOTE THE SHARES CREDITED TO YOUR ACCOUNT IN THE SAME PROPORTION AS THE     
SHARES FOR WHICH INSTRUCTIONS ARE RECEIVED. PLEASE MARK THIS INSTRUCTION CARD,  
FILL IN THE DATE, SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE           
ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.  

                                                              (SEE REVERSE SIDE)
--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

                                                                        FIDELITY

Fidelity Management Trust Company                                               
300 Puritan Way MM3A                                                            
Marlborough, MA 01752-3078                                                      

September 2000                                                                  

To:  Participants in the Nabisco, Inc. Capital Investment Plan                  

As a participant in a Company sponsored employee benefit savings plan that      
requires pass through voting, you are entitled to instruct Fidelity, in its     
capacity as Trustee of the above named plan, how to vote shares of Common Stock 
allocated to your plan account. Enclosed are the following:                     

1. Notice of Special Meeting of Stockholders to be held on October 27, 2000 and 
the accompanying Proxy Statement.                                         

2. This Voting Instruction Card.                                                

3. A postage-paid return envelope.                                              

These shares will be voted as you direct if this card is completed by you and   
received by First Chicago Trust Company of New York on or before October 23,    
2000. First Chicago Trust Company of New York is responsible for tabulating the 
returns. Shares for which no instructions are received shall be voted in the    
same proportion as the shares for which instructions are received.              

We appreciate your completing, dating and signing the card above and returning  
it promptly in the postage-paid return envelope.                                

Cordially yours,                                                                
Fidelity Management Trust Company                                               
Trustee                                                                         
Enclosures                                                                      

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/X/ Please mark your votes as in this example.                                  

   THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1, FOR PROPOSAL 2 AND
FOR PROPOSAL 3.                                                                 

                                                                [Download Table]
                                                                                    
1.  Authorize the disposition of Nabisco Group     FOR / /  AGAINST / /  ABSTAIN / /
    Holdings Corp.'s entire interest in Nabisco                                     
    Holdings Corp. (see reverse)                                                    

2.  Approve and adopt the NGH Merger Agreement     FOR / /  AGAINST / /  ABSTAIN / /
    (see reverse)                                                                   

3.  Grant discretionary authority to vote in       FOR / /  AGAINST / /  ABSTAIN / /
    favor of an adjournment of the meeting, if                                      
    necessary                                                                       

-------------------------------------------------                                   
Signature(s)                                                                        
-------------------------------------------------                                   
Date                                                                                

NOTE: Please sign exactly as name appears hereon.                                   

--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

Nabisco Group Holdings Corp. encourages you to take advantage of new and        
convenient ways by which you can vote your shares. You can vote your shares     
electronically over the internet or the telephone. This eliminates the need to  
return your proxy card.                                                         

To vote your shares electronically, you must use the control number printed in  
the box above, just below the perforation. The series of numbers that appears in
this box must be used to access the system.                                     

TO VOTE OVER THE INTERNET:                                                      

   - Log on the internet and go to the web site http://www.eproxyvote.com/ngh4

TO VOTE OVER THE TELEPHONE:                                                     

    - On a touch-tone telephone, call 1-877-PRX-VOTE (1-877-779-8683) 24 hours a
day, 7 days a week; outside the U.S. call 1-201-536-8073.           

Your electronic vote authorizes the named proxies in the same manner as if you  
marked, signed, dated and returned the proxy card.                              

If you choose to vote your shares electronically, there is no need for you to   
mail back your proxy card. If you choose to vote by mail, please mark, sign and 
date your card and return your proxy card in the postage-paid envelope provided.

   If you have any questions or require assistance, please call:

MACKENZIE PARTNERS, INC.
(212) 929-5500 (COLLECT) OR (800) 322-2885 (TOLL-FREE)

YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING. 

Section 212 of the Delaware General Corporation Law authorizes the use of       
electronic transmission, such as transmissions over the internet, to grant a    
proxy.                                                                          

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P R O X Y                                                                       
VOTING INSTRUCTION CARD 

NABISCO GROUP HOLDINGS CORP.

SPECIAL MEETING OF STOCKHOLDERS OCTOBER 27, 2000
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby constitutes and appoints Fidelity Management Trust       
Company ("Fidelity"), as Trustee, his true and lawful agent and proxy, to       
represent the undersigned at the Special Meeting of Stockholders of Nabisco     
Group Holdings Corp. (the "Company"), to be held at the Hotel DuPont, 11th and  
Market Streets, Wilmington, Delaware 19801, on Friday, October 27, 2000 at      
10:30 a.m., Eastern Time, and at any adjournments or postponements thereof, and 
to vote all the shares of stock of the Company which the undersigned may be     
entitled to vote on all matters coming before said meeting as set forth below.  

1. To authorize the disposition of Nabisco Group Holdings Corp.'s entire
     interest in Nabisco Holdings Corp., consisting of 213,250,000 shares of
       Class B common stock of Nabisco Holdings Corp., which disposition will be
effected pursuant to the Agreement and Plan of Merger dated as of 
      June 25, 2000 among Nabisco Holdings Corp., Philip Morris Companies Inc.
and Strike Acquisition Corp.                                      

 2. To approve and adopt the Agreement and Plan of Merger (the "NGH Merger
       Agreement") dated as of June 25, 2000 among Nabisco Group Holdings Corp.,
R.J. Reynolds Tobacco Holdings, Inc. and RJR Acquisition Corp.    

 3. To grant discretionary authority to vote in favor of an adjournment of
the meeting, if necessary.                                        

THIS INSTRUCTION CARD WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER        
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, IF YOUR
CARD IS NOT PROPERLY COMPLETED, OR IF YOUR CARD IS NOT TIMELY RECEIVED, FIDELITY
WILL VOTE THE SHARES CREDITED TO YOUR ACCOUNT IN THE SAME PROPORTION AS THE     
SHARES FOR WHICH INSTRUCTIONS ARE RECEIVED. PLEASE MARK THIS INSTRUCTION CARD,  
FILL IN THE DATE, SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE           
ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.  
                                                              (SEE REVERSE SIDE)

--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

                                                                        FIDELITY

Fidelity Management Trust Company                                               
300 Puritan Way MM3A                                                            
Marlborough, MA 01752-3078                                                      

September 2000                                                                  

To:  Participants in the Nabisco, Inc. Employee Savings Plan                    

As a participant in a Company sponsored employee benefit savings plan that      
requires pass through voting, you are entitled to instruct Fidelity, in its     
capacity as Trustee of the above named plan, how to vote shares of Common Stock 
allocated to your plan account. Enclosed are the following:                     

1. Notice of Special Meeting of Stockholders to be held on October 27, 2000 and 
the accompanying Proxy Statement.                                         

2. This Voting Instruction Card.                                                

3. A postage-paid return envelope.                                              

These shares will be voted as you direct if this card is completed by you and   
received by First Chicago Trust Company of New York on or before October 23,    
2000. First Chicago Trust Company of New York is responsible for tabulating the 
returns. Shares for which no instructions are received shall be voted in the    
same proportion as the shares for which instructions are received.              

We appreciate your completing, dating and signing the card above and returning  
it promptly in the postage-paid return envelope.                                

Cordially yours,                                                                
Fidelity Management Trust Company                                               
Trustee                                                                         
Enclosures                                                                      

DEFM14A
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/X/ Please mark your votes as in this example.                                  

   THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1, FOR PROPOSAL 2 AND
FOR PROPOSAL 3.                                                                 

                                                                [Download Table]
                                                                                   
1. Authorize the disposition of Nabisco Group     FOR / /  AGAINST / /  ABSTAIN / /
   Holdings Corp.'s entire interest in Nabisco                                     
   Holdings Corp. (see reverse)                                                    

2. Approve and adopt the NGH Merger Agreement     FOR / /  AGAINST / /  ABSTAIN / /
   (see reverse)                                                                   

3. Grant discretionary authority to vote in       FOR / /  AGAINST / /  ABSTAIN / /
   favor of an adjournment of the meeting, if                                      
   necessary                                                                       

   ---------------------------------------------                                   
   Signature(s)                                                                    
   ---------------------------------------------                                   
   Date                                                                            

   NOTE: Please sign exactly as name appears                                       
   hereon.                                                                         

--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

Nabisco Group Holdings Corp. encourages you to take advantage of new and        
convenient ways by which you can vote your shares. You can vote your shares     
electronically over the internet or the telephone. This eliminates the need to  
return your proxy card.                                                         

To vote your shares electronically, you must use the control number printed in  
the box above, just below the perforation. The series of numbers that appears in
this box must be used to access the system.                                     

TO VOTE OVER THE INTERNET:                                                      

   - Log on the internet and go to the web site http://www.eproxyvote.com/ngh5

TO VOTE OVER THE TELEPHONE:                                                     

    - On a touch-tone telephone, call 1-877-PRX-VOTE (1-877-779-8683) 24 hours a
day, 7 days a week; outside the U.S. call 1-201-536-8073.           

Your electronic vote authorizes the named proxies in the same manner as if you  
marked, signed, dated and returned the proxy card.                              

If you choose to vote your shares electronically, there is no need for you to   
mail back your proxy card. If you choose to vote by mail, please mark, sign and 
date your card and return your proxy card in the postage-paid envelope provided.

If you have any questions or require assistance, please call: 

MACKENZIE PARTNERS, INC.
(212) 929-5500 (COLLECT) OR (800) 322-2885 (TOLL-FREE)
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING. 

Section 212 of the Delaware General Corporation Law authorizes the use of       
electronic transmission, such as transmissions over the internet, to grant a    
proxy.                                                                          

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P R O X Y                                                                       

VOTING INSTRUCTION CARD 

NABISCO GROUP HOLDINGS CORP.

SPECIAL MEETING OF STOCKHOLDERS OCTOBER 27, 2000
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby constitutes and appoints Vanguard Group, Custodian under 
the Nabisco/Life Savers Puerto Rico Capital Accumulation Plan his true and      
lawful agent and proxy, to represent the undersigned at the Special Meeting of  
Stockholders of Nabisco Group Holdings Corp. (the "Company"), to be held at the 
Hotel DuPont, 11th and Market Streets, Wilmington, Delaware 19801, on Friday,   
October 27, 2000 at 10:30 a.m., Eastern Time, and at any adjournments or        
postponements thereof, and to vote all the shares of stock of the Company which 
the undersigned may be entitled to vote on all matters coming before said       
meeting as set forth below.                                                     

 1.  To authorize the disposition of Nabisco Group Holdings Corp.'s entire
     interest in Nabisco Holdings Corp., consisting of 213,250,000 shares of
       Class B common stock of Nabisco Holdings Corp., which disposition will be
effected pursuant to the Agreement and Plan of Merger dated as of 
      June 25, 2000 among Nabisco Holdings Corp., Philip Morris Companies Inc.
and Strike Acquisition Corp.                                      

  2.  To approve and adopt the Agreement and Plan of Merger (the "NGH Merger
       Agreement") dated as of June 25, 2000 among Nabisco Group Holdings Corp.,
R.J. Reynolds Tobacco Holdings, Inc. and RJR Acquisition Corp.    

  3.  To grant discretionary authority to vote in favor of an adjournment of
the meeting, if necessary.                                        

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED  
FOR PROPOSALS 1, 2 AND 3. PLEASE MARK THIS PROXY CARD, FILL IN THE DATE, SIGN ON
THE REVERSE SIDE AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES.                                       

                                                              (SEE REVERSE SIDE)
--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

                                                                        VANGUARD

Vanguard Group                                                                  
100 Vanguard Boulevard                                                          
Malvern, PA 19355                                                               
--------------------------------------------------------------------------------

DE TENER ALGUNA DUDA RELATIVO A ESTOS DOCUMENTOS FAVOR DE COMUNICARSE CON EL
DEPARTAMENTO DE RECURSOS HUMANOS. 
--------------------------------------------------------------------------------

September 2000                                                                  

To: Participants in the Nabisco/Life Savers Puerto Rico Capital Accumulation    
Plan                                                                            

As a participant in a Company sponsored employee benefit savings plan that      
requires pass through voting, you are entitled to instruct Vanguard, in its     
capacity as Custodian of the above named plan, how to vote shares of Common     
Stock allocated to your plan account. Enclosed are the following:               

1.  Notice of Special Meeting of Stockholders to be held on October 27, 2000 and
the accompanying Proxy Statement.                                       

2.  This Proxy/Voting Instruction Card.                                         

3.  A postage-paid return envelope.                                             

These shares will be voted as you direct if this card is completed by you and   
received by First Chicago Trust Company of New York on or before October 23,    
2000. First Chicago Trust Company of New York is responsible for tabulating the 
returns. Shares for which no instructions are received shall be voted in the    
same proportion as the shares for which instructions are received.              

We appreciate your completing, dating and signing the card above and returning  
it promptly in the postage-paid return envelope.                                

Cordially yours,                                                                
Vanguard Group                                                                  
Custodian                                                                       
Enclosures                                                                      

DEFM14A
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/X/ Please mark your votes as in this example.                                  

   THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1, FOR PROPOSAL 2 AND
FOR PROPOSAL 3.                                                                 

                                                                [Download Table]
                                                                                    
1.  Authorize the disposition of Nabisco Group     FOR / /  AGAINST / /  ABSTAIN / /
    Holdings Corp.'s entire interest in Nabisco                                     
    Holdings Corp. (see reverse)                                                    

2.  Approve and adopt the NGH Merger Agreement     FOR / /  AGAINST / /  ABSTAIN / /
    (see reverse)                                                                   

3.  Grant discretionary authority to vote in       FOR / /  AGAINST / /  ABSTAIN / /
    favor of an adjournment of the meeting, if                                      
    necessary                                                                       

-------------------------------------------------                                   
Signature(s)                                                                        
-------------------------------------------------                                   
Date                                  Title                                         

NOTE: Please sign exactly as name appears hereon.                                   

--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

Nabisco Group Holdings Corp. encourages you to take advantage of new and        
convenient ways by which you can vote your shares. You can vote your shares     
electronically over the internet or the telephone. This eliminates the need to  
return your proxy card.                                                         

To vote your shares electronically, you must use the control number printed in  
the box above, just below the perforation. The series of numbers that appears in
this box must be used to access the system.                                     

TO VOTE OVER THE INTERNET:                                                      

   - Log on the internet and go to the web site http://www.eproxyvote.com/ngh6

TO VOTE OVER THE TELEPHONE:                                                     

    - On a touch-tone telephone, call 1-877-PRX-VOTE (1-877-779-8683) 24 hours a
day, 7 days a week; outside the U.S. call 1-201-536-8073.           

Your electronic vote authorizes the named proxies in the same manner as if you  
marked, signed, dated and returned the proxy card.                              

If you choose to vote your shares electronically, there is no need for you to   
mail back your proxy card. If you choose to vote by mail, please mark, sign and 
date your card and return your proxy card in the postage-paid envelope provided.

If you have any questions or require assistance, please call: 

MACKENZIE PARTNERS, INC.
(212) 929-5500 (COLLECT) OR (800) 322-2885 (TOLL-FREE)
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING. 

Section 212 of the Delaware General Corporation Law authorizes the use of       
electronic transmission, such as transmissions over the internet, to grant a    
proxy.                                                                          

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P R O X Y                                    [COMMON/SERIES C DEPOSITARY SHARES]

NABISCO GROUP HOLDINGS CORP.

SPECIAL MEETING OF STOCKHOLDERS OCTOBER 27, 2000
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby, with respect to all shares of Common Stock of Nabisco   
Group Holdings Corp. (the "Company") which the undersigned may be entitled to   
vote, constitutes and appoints each of Steven F. Goldstone, James M. Kilts and  
James A. Kirkman III as his true and lawful agent and proxy, with full power of 
substitution in each, to represent the undersigned and directs First Chicago    
Trust Company of New York, as Depositary, in each case at the Special Meeting of
Stockholders of the Company to be held at the Hotel DuPont, 11th and Market     
Streets, Wilmington, Delaware 19801, on Friday, October 27, 2000 at 10:30 a.m., 
Eastern Time, and at any adjournments or postponements thereof, to vote such    
stock on all matters coming before said meeting as set forth below.             

 1.  To authorize the disposition of Nabisco Group Holdings Corp.'s entire
     interest in Nabisco Holdings Corp., consisting of 213,250,000 shares of
       Class B common stock of Nabisco Holdings Corp., which disposition will be
effected pursuant to the Agreement and Plan of Merger dated as of 
      June 25, 2000 among Nabisco Holdings Corp., Philip Morris Companies Inc.
and Strike Acquisition Corp.                                      

  2.  To approve and adopt the Agreement and Plan of Merger (the "NGH Merger
       Agreement") dated as of June 25, 2000 among Nabisco Group Holdings Corp.,
R.J. Reynolds Tobacco Holdings, Inc. and RJR Acquisition Corp.    

  3.  To grant discretionary authority to vote in favor of an adjournment of
the meeting, if necessary.                                        

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED  
FOR PROPOSALS 1, 2 AND 3. PLEASE MARK THIS PROXY CARD, FILL IN THE DATE, SIGN ON
THE REVERSE SIDE AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES.                                       

                                                                [Download Table]
                                                                   
Change of address:                                                 
(If you have written in the above space, please                    
mark the corresponding box on the reverse side                     
of this card.)                                                     
                                                 (SEE REVERSE SIDE)

--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

IMPORTANT MESSAGE!

TO FORMER HOLDERS OF SERIES C DEPOSITARY SHARES:                                

- You are entitled to vote at the Nabisco Group Holdings Corp. ("NGH") Special  
Meeting of Stockholders to be held on October 27, 2000.                     

- You may use the proxy card attached above to vote. Please vote early!         

- If you have any questions about voting, please call MacKenzie Partners, Inc.  
toll free at 1-800-322-2885.                                                

- Each Series C Depositary Share formerly owned by you has been converted into  
one-fifth of a share of NGH Common Stock, after adjustment to reflect the   
 Company's April 1995 reverse Common Stock split. The number of shares printed
on the reverse side of this card is the number of shares of NGH Common Stock
that you are entitled to receive upon exchange of your certificate(s)       
representing Series C Depositary Shares.                                    

- UNTIL THE CERTIFICATES REPRESENTING YOUR SERIES C DEPOSITARY SHARES ARE       
EXCHANGED FOR NGH COMMON STOCK, WE CANNOT SEND YOU ANY NGH COMMON STOCK     
  DIVIDENDS. TO DATE, CASH DIVIDENDS AGGREGATING APPROXIMATELY $5.1025 PER SHARE
OF NGH COMMON STOCK HAVE ACCRUED ON YOUR ACCOUNT.                           

- If you need assistance exchanging your Series C Depositary Share              
  certificate(s), please call the Exchange Agent, First Chicago Trust Company of
New York, toll-free at 1-800-317-4432 and ask for the Tenders & Exchanges   
Department.                                                                 

Thank you for acting promptly.                                                  

                                Nabisco Group Holdings Corp.

DEFM14A
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/X/ Please mark your votes as in this example.                                  

   THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1, FOR PROPOSAL 2 AND
FOR PROPOSAL 3.                                                                 

                                                        [Enlarge/Download Table]
                                                                                               
1.  Authorize the disposition of Nabisco Group     FOR / /       AGAINST / /        ABSTAIN / /
    Holdings Corp.'s entire interest in Nabisco                                                
    Holdings Corp. (see reverse)                                                               

2.  Approve and adopt the NGH Merger Agreement     FOR / /       AGAINST / /        ABSTAIN / /
    (see reverse)                                                                              

3.  Grant discretionary authority to vote in       FOR / /       AGAINST / /        ABSTAIN / /
    favor of an adjournment of the meeting, if                                                 
    necessary                                                                                  

                                                   SPECIAL ACTION                              
                                                   Change of Address on the Reverse Side: / /  

-------------------------------------------------                                              
Signature(s)                                                                                   
-------------------------------------------------                                              
Date                                  Title                                                    
NOTE: Please sign exactly as name appears hereon.                                              
      Joint owners should each sign. When signing                                              
      as attorney, executor, administrator,                                                    
      trustee or guardian, please give full title                                              
      as such.                                                                                 

--------------------------------------------------------------------------------

TRIANGLE     FOLD AND DETACH HERE     TRIANGLE

Nabisco Group Holdings Corp. encourages you to take advantage of new and        
convenient ways by which you can vote your shares. You can vote your shares     
electronically over the internet or the telephone. This eliminates the need to  
return your proxy card.                                                         

To vote your shares electronically, you must use the control number printed in  
the box above, just below the perforation. The series of numbers that appears in
this box must be used to access the system.                                     

TO VOTE OVER THE INTERNET:                                                      

   - Log on the internet and go to the web site http://www.eproxyvote.com/ngh1

TO VOTE OVER THE TELEPHONE:                                                     

    - On a touch-tone telephone, call 1-877-PRX-VOTE (1-877-779-8683) 24 hours a
day, 7 days a week; outside the U.S. call 1-201-536-8073.           

Your electronic vote authorizes the named proxies in the same manner as if you  
marked, signed, dated and returned the proxy card.                              

If you choose to vote your shares electronically, there is no need for you to   
mail back your proxy card. If you choose to vote by mail, please mark, sign and 
date your card and return your proxy card in the postage-paid envelope provided.

If you have any questions or require assistance, please call: 

MACKENZIE PARTNERS, INC.
(212) 929-5500 (COLLECT) OR (800) 322-2885 (TOLL-FREE)
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING. 

Section 212 of the Delaware General Corporation Law authorizes the use of       
electronic transmission, such as transmissions over the internet, to grant a    
proxy.