BROOKE GROUP LTD, DFRN14A, 1996-01-02

BROOKE GROUP LTD
DFRN14A, 1996-01-02
CIGARETTES

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SCHEDULE 14A INFORMATION

CONSENT STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by registrant / /

Filed by a party other than the registrant /x/ / / Confidential,
for Use of the
Commission Only
Check the appropriate box: (as permitted by
/ / Preliminary consent statement Rule 14a-6(e)(2))

/X/ Definitive consent statement

/ / Definitive additional materials

/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

RJR NABISCO HOLDINGS CORP.
----------------------------------------------
(Name of Registrant as Specified in its Charter)

BROOKE GROUP LTD.
------------------------------------------
(Name of Person(s) Filing Consent Statement)

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

Payment of filing fee (Check the appropriate box):

/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:

/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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<PAGE>

SOLICITATION OF WRITTEN CONSENTS
BY BROOKE GROUP LTD.

To Our Fellow RJR Nabisco Shareholders:

This solicitation statement and the accompanying form of written consent
are first being furnished by Brooke Group Ltd., a Delaware corporation ("Brooke
Group"), on or about December 29, 1995, in connection with the solicitation by
Brooke Group from the holders of shares of common stock, par value $.01 per
share (the "Common Stock"), Series C Conversion Preferred Stock, par value $.01
per share ("PERCS"), and ESOP Convertible Preferred Stock, par value $.01 per
share and stated value $16 per share ("ESOP Preferred Stock" and, together with
the Common Stock and the PERCS, the "RJR Nabisco Voting Securities"), of RJR
Nabisco Holdings Corp., a Delaware corporation ("RJR Nabisco"), of written
consents to take the following actions without a stockholders' meeting, as
permitted by Delaware law:

(1) Adopt the following advisory resolution (the "Spinoff
Resolution"):

"RESOLVED, that the stockholders of RJR Nabisco, believing that the
full business potential and value of RJR Nabisco can best be realized and
reflected in the market for the benefit of stockholders by the separation
of the tobacco and food businesses, hereby request and recommend that the
RJR Nabisco Board of Directors immediately spin off the remaining 80.5% of
Nabisco Holdings Corp. held by RJR Nabisco to stockholders."

(2) Amend the By-Laws of RJR Nabisco (the "Bylaws") to (i) reinstate
the provision providing that special meetings of the stockholders shall be
called by the Chairman or Secretary of RJR Nabisco if requested in writing
by holders of not less than 25% of the Common Stock and (ii) delete the
provision establishing procedures governing action by written consent of
stockholders without a meeting (collectively, the "Bylaw Amendment").

Stockholders of RJR Nabisco are being asked to express their consent to the
Spinoff Resolution and the Bylaw Amendment (together, the "Proposals") on the
enclosed BLUE consent card.

BROOKE GROUP RECOMMENDS THAT YOU CONSENT
TO EACH OF THE PROPOSALS.

On December 29, 1995, pursuant to Article I, Section 9 of the Bylaws,
Brooke Group submitted a notice to the Secretary of RJR Nabisco requesting the
Board of Directors of RJR Nabisco (the "Board") to fix January 12, 1996 as the
record date for the solicitation (the "Record Date"). The Board may choose to
ignore our requested Record Date but must act by January 8, 1996 to fix a Record
Date which, pursuant to the Bylaws, can be no earlier than December 29, 1995 and
no later than January 18, 1996. Brooke Group will provide further information to
you once the Board has fixed the Record Date. To be effective, a written consent
with respect to the Proposals must be delivered to RJR Nabisco within 60 days of
the earliest dated written consent from a holder on the Record Date.

<PAGE>

SUMMARY

The information in this summary is qualified in its entirety by reference
to the more detailed information appearing elsewhere in this Solicitation
Statement.

Reasons for the Solicitation

Brooke Group believes an immediate spinoff of RJR Nabisco's remaining
equity interest in Nabisco Holdings Corp. ("Nabisco") to RJR Nabisco's
stockholders is the single most important action that the Board can take to
improve the performance of both the tobacco and food businesses of RJR Nabisco
and thereby to increase the value of stockholders' investment in RJR Nabisco
today. According to published research reports by respected stock market
analysts, spinning off Nabisco could increase the value of stockholders'
investment in RJR Nabisco by as much as 50% or more over the prices that
prevailed prior to the announcement of Brooke Group's involvement in RJR
Nabisco.* Although admitting that a majority of stockholders favor a spinoff of
Nabisco, the incumbent Board persists in adhering to a policy of delaying and
obstructing a spinoff. Brooke Group believes the justifications offered by the
Board for its policy of delaying a spinoff make no sense, and that the Board
should and will abandon this policy if informed by a majority of stockholders
that they do not support it and want an immediate spinoff of Nabisco.

Recently, the Board secretly took away stockholders' right to call a
special meeting and imposed burdensome new conditions on stockholders' right to
act by written consent without a meeting. These Bylaw amendments adopted in
secret by the Board impair stockholders' ability to hold a referendum on a
spinoff and to take other actions to increase the responsiveness of management
to stockholders and enhance the value of stockholders' investment. Brooke Group
believes these Bylaw amendments should be rescinded, so that stockholders will
have restored to them the rights they have enjoyed since the public offering of
RJR Nabisco stock in 1991.

The Proposals

Brooke Group is asking your consent to the Spinoff Resolution, which is an
advisory resolution telling the RJR Nabisco Board that it should work for
stockholders by completing the spinoff of Nabisco now, rather than advocating
further delay and standing in the way. While the adoption of the Spinoff
Resolution will have no binding legal effect, we believe that the Board should
act responsively if the stockholders approve the Spinoff Resolution and,
considering the Board's concerted opposition to this solicitation, would be hard
pressed to disregard stockholders' views. Brooke Group believes that, as the
true owners of RJR Nabisco, you and the other stockholders of RJR Nabisco should
take this opportunity to let the incumbent Board know that you think an
immediate spinoff of Nabisco is in your best interests. At the same time, Brooke
Group is asking you to consent to the Bylaw Amendment, which will restore the
stockholders' right to call a special meeting and remove the burdensome new
written consent procedure.

- ----------

* For information with respect to these analyses by stock market
professionals of the value of a spinoff to RJR Nabisco's stockholders, see
"Reasons for the Solicitation -- The Spinoff Resolution." Of course,
estimates of this kind are, by their nature, highly subjective and are
influenced heavily by the assumptions used. These estimates are not a
forecast by Brooke Group of the future trading value of any securities, and
no assurance can be given that the values actually achieved in a spinoff
would be the same as these estimates. No permission has been sought or
received to quote from, or refer to, published materials cited in this
Solicitation Statement.

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<PAGE>

BROOKE GROUP RECOMMENDS THAT YOU CONSENT TO EACH OF THE PROPOSALS. YOUR
CONSENT IS IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED BLUE CONSENT CARD
AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY. FAILURE TO RETURN
YOUR CONSENT WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE PROPOSALS.

Certain Information about Brooke Group

Brooke Group is principally engaged, through its subsidiaries and
affiliates, in the manufacture and sale of cigarettes and in the acquisition of
operating companies. Brooke Group also has investments in a number of additional
companies engaged in a diverse group of businesses. Brooke Group is a
stockholder of RJR Nabisco. Brooke Group and its affiliates beneficially own
4,892,950 shares of Common Stock, or approximately 1.8% of the outstanding
shares of Common Stock. In addition, Brooke Group and its wholly-owned
subsidiary BGLS Inc. ("BGLS") have entered into an agreement, as amended (the
"High River Agreement"), with High River Limited Partnership ("High River"), an
entity owned by Carl C. Icahn, which beneficially owns 8,013,000 shares of
Common Stock (or approximately 2.9% of the outstanding shares of Common Stock),
pursuant to which High River has agreed, among other things, to consent to the
Proposals with respect to all of its shares of Common Stock. See "Certain
Information Concerning Brooke Group."

Brooke Group has no economic interest in the Proposals other than through
its ownership of RJR Nabisco Voting Securities. Brooke Group is hereby pledging
to the stockholders of RJR Nabisco that it will not accept any form of greenmail
from RJR Nabisco during its solicitation of consents with respect to the
Proposals, and that, absent RJR Nabisco irrevocably committing to an immediate
spinoff, Brooke Group will continue this solicitation until either the Proposals
are adopted or the time in which to solicit has expired. Brooke Group will
terminate the solicitation of consents if RJR Nabisco irrevocably commits to an
immediate spinoff of its remaining equity interest in Nabisco. High River has
agreed in the High River Agreement that it will not accept any form of greenmail
from RJR Nabisco during the solicitation.

Consent Procedure

The Proposals will become effective when properly completed, unrevoked
consents are signed by the holders of record as of the Record Date of a majority
of the voting power of the then outstanding RJR Nabisco Voting Securities and
are delivered to RJR Nabisco and, pursuant to RJR Nabisco's recent bylaw
amendment, an independent inspector certifies to RJR Nabisco that the consents
delivered in accordance with Section 9(a) of the Bylaws represent at least the
minimum number of votes that would be necessary to take the corporate action,
provided that the requisite consents are so delivered within 60 days of the date
of the earliest dated consent delivered to RJR Nabisco.

Brooke Group has retained Georgeson & Company Inc. ("Georgeson") to assist
in the solicitation. If your shares are held in your own name, please sign, date
and mail the enclosed BLUE consent card to Georgeson in the postage-paid
envelope provided. If your shares are held in the name of a brokerage firm, bank
nominee or other institution, only it can execute a BLUE consent card with
respect to your shares and only upon receipt of specific instructions from you.
Accordingly, you should contact the person responsible for your account and give
instructions for

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<PAGE>

the BLUE consent card to be signed representing your shares. Brooke Group urges
you to confirm in writing your instructions to the person responsible for your
account and to provide a copy of those instructions to Brooke Group in care of
Georgeson at the address set forth below so that Brooke Group will be aware of
all instructions given and can attempt to ensure that such instructions are
followed.

If you have any questions about executing your consent or require
assistance, please contact:

GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Toll Free: (800) 223-2064

Banks and Brokerage Firms, please call collect:
(212) 440-9800

INTERNET INFORMATION

To access more information about our solicitation on the World Wide Web,
use the following address:

http://www.georgeson.com

<PAGE>

TABLE OF CONTENTS

PROPOSALS................................................................ 1
REASONS FOR THE SOLICITATION............................................. 2
The Spinoff Resolution............................................. 2
The Bylaw Amendment................................................ 14
SOLICITATION OF CONSENTS................................................. 15
CONSENT PROCEDURE........................................................ 16
Effectiveness and Revocation of Consents........................... 17
Consents Required.................................................. 18
Special Instructions............................................... 18
BACKGROUND............................................................... 19
CERTAIN LITIGATION ...................................................... 26
CERTAIN INFORMATION CONCERNING BROOKE GROUP.............................. 27

ANNEX A -- BYLAW PROVISION GOVERNING WRITTEN CONSENT PROCEDURE
ANNEX B -- INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF BROOKE GROUP AND ADDITIONAL INFORMATION
ANNEX C -- PRINCIPAL STOCKHOLDERS AND STOCK HOLDINGS OF RJR
NABISCO'S MANAGEMENT

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<PAGE>

PROPOSALS

This solicitation statement and the accompanying form of written consent
are first being furnished by Brooke Group on or about December 29, 1995, in
connection with the solicitation by Brooke Group from the holders of shares of
Common Stock, PERCS and ESOP Preferred Stock of written consents to take the
following actions without a stockholders' meeting, as permitted by Delaware law:

(1) Adopt the Spinoff Resolution, which is an advisory resolution to the
Board:

(2) Adopt the Bylaw Amendment, which would amend the Bylaws to (i)
reinstate the provision of Article I, Section 2 providing that special meetings
of the stockholders shall be called by the Chairman or Secretary of RJR Nabisco
if requested in writing by holders of not less than 25% of the Common Stock and
(ii) delete the provision setting forth procedures governing action by written
consent of stockholders without a meeting:

"RESOLVED, that Article I, Section 2 of the By-Laws of RJR Nabisco be
amended to read in its entirety as follows:

`Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of
Directors and to transact such other business as may properly come before
the meeting. Special meetings of stockholders may be called by the Chairman
for any purpose and shall be called by the Chairman or the Secretary if
directed by the Board of Directors or requested in writing by the holders
of not less than 25% of the common stock of the Corporation. Each such
stockholder request shall state the purpose of the proposed meeting.' and
that Article I, Section 9 of the By-Laws be repealed in its entirety."

Annex A sets forth the Bylaw provision recently adopted by RJR Nabisco
relating to procedures governing stockholders' action by written consent. Brooke
Group is proposing to delete this provision in its entirety.

Stockholders of RJR Nabisco are being asked to express their consent to the
Proposals on the enclosed BLUE consent card.

BROOKE GROUP RECOMMENDS THAT YOU CONSENT TO EACH OF THE PROPOSALS.

On December 29, 1995, pursuant to Article I, Section 9 of the Bylaws,
Brooke Group submitted a notice to the Secretary of RJR Nabisco requesting the
Board to fix January 12, 1996 as the Record Date for the solicitation. The Board
may choose to ignore our requested Record Date but must act by January 8, 1996
to fix a Record Date which, pursuant to the Bylaws, can be no earlier than
December 29, 1995 and no later than January 18, 1996. Brooke Group will provide
further information to you once the Board has fixed the Record Date. To be
effective, a written consent with respect to the Proposals must be delivered to
RJR Nabisco within 60 days of the earliest dated written consent from a holder
on the Record Date.

<PAGE>

REASONS FOR THE SOLICITATION

Recent research reports published by respected stock market analysts have
estimated that spinning off Nabisco to RJR Nabisco's stockholders could increase
the value of stockholders' investment in RJR Nabisco by as much as 50% or more
over the prices that prevailed prior to the announcement of Brooke Group's
involvement in RJR Nabisco.(1) The incumbent Board, however, has unilaterally
adopted a policy of advocating delay and obstructing a spinoff of Nabisco, and
recently decided secretly to take away stockholders' right to call a special
meeting where stockholders could hold a referendum on a spinoff and take other
actions to increase the responsiveness of management to stockholders and enhance
the value of stockholders' investment.

Until Brooke Group announced its intention to proceed with this
solicitation, the RJR Nabisco Board had maintained that there was no discernible
stockholder interest in a spinoff of Nabisco. RJR Nabisco Chairman Charles M.
Harper now concedes that there is overwhelming interest, and that a majority of
the stockholders want a Nabisco spinoff. But, labelling Brooke Group's present
initiative "irresponsible," Mr. Harper, and now Mr. Goldstone, the new Chief
Executive Officer, say that only the RJR Nabisco Board can determine when the
time is right to do the spinoff, and that now is not that time.

Brooke Group believes that attacks upon Brooke Group and the effort by the
Board to squelch discussion and consideration of the spinoff are the truly
irresponsible acts. We are asking your consent to an advisory resolution telling
the RJR Nabisco Board that it should work for stockholders by completing the
spinoff of Nabisco now, rather than advocating further delay and standing in the
way. We believe that if the Board hears, not only that stockholders want a
spinoff, but that they want it now, the Board would be remiss if it did not
adjust its policy to reflect stockholders' consensus.

Brooke Group believes that, as the true owners of RJR Nabisco, you and the
other stockholders of RJR Nabisco should take this opportunity to let the
incumbent Board know that you think an immediate spinoff is in your best
interests. At the same time, Brooke Group is asking you to help restore
stockholders' rights at RJR Nabisco by voting to reinstate your right as a
stockholder to call a special meeting and to remove the burdensome new written
consent procedure.

The Spinoff Resolution

Brooke Group believes that an immediate spinoff of RJR Nabisco's remaining
equity interest in Nabisco is the single most important action that the Board
could take to enhance the value of your investment today. The Board, as your
fiduciary, is supposed to act in the best interests of stockholders.
Nevertheless, the Board has repeatedly rejected the alternative of spinning off
Nabisco.

- ----------

(1) For information with respect to these analyses by stock market
professionals of the value of a spinoff to RJR Nabisco's stockholders, see
"-- The Spinoff Resolution." Of course, estimates of this kind are, by
their nature, highly subjective and are influenced heavily by the
assumptions used. These estimates are not a forecast by Brooke Group of the
future trading value of any securities, and no assurance can be given that
the values actually achieved in a spinoff would be the same as these
estimates. No permission has been sought or received to quote from, or to
refer to, published materials cited in this Solicitation Statement.

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<PAGE>

The Board's Failed Efforts to Improve Performance and Stockholder Value

Last year, when the Board sold a minority stake in Nabisco and used the
sale proceeds to prepay debt to banks and bondholders, it claimed that this sale
would be a better course of action for stockholders than a spinoff. The Board
stated that the stock market would recognize the value of Nabisco and reward RJR
Nabisco stockholders with a higher stock price. This year, when the Board
opposed a stockholder resolution recommending a spinoff, the Board reiterated
this assertion, claiming that the stock price would also be boosted by a
then-pending exchange of debt securities issued by Nabisco, Inc., a wholly owned
subsidiary of Nabisco ("Nabisco, Inc."), for outstanding debt securities of RJR
Nabisco, Inc., a wholly owned subsidiary of RJR Nabisco ("RJRN"), by a
then-proposed "reverse split" which would reduce the number of shares of Common
Stock outstanding and result in securities priced at a level which would be more
attractive to institutional investors and foster broker/dealer recommendations,
and by a new policy of paying quarterly dividends of 37-1/2 cents per share of
Common Stock. All of these transactions, the Board said, would provide tangible
benefits to stockholders.

But the last year has proven the incumbent Board wrong. The Board's
financial tinkering has done nothing to improve the market price of your stock.
Instead of encouraging financial markets to recognize the value of Nabisco, the
Board's actions have only highlighted the extent to which the value of your
investment in Nabisco is being dragged down by concerns about the tobacco
business and by the overall lackluster performance of the combined company. You
can see the results of the Board's strategy on the following chart, which
compares the rate of return to stockholders of RJR Nabisco during the year
ending on August 28, 1995, the day on which news of our involvement in RJR
Nabisco first became public, with the returns enjoyed by stockholders of the
four other major U.S. cigarette companies during such period, exclusive of
Brooke Group. All of the companies have other businesses and are diversified;
however, the principal source of income of each of the companies is derived from
their respective cigarette operations.

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---GRAPHICAL REPRESENTATION OF ONE YEAR RATE OF RETURN TABLE
FOR THE PERIOD AUGUST 26, 1994 TO AUGUST 28, 1995---
(New Valley's Hart-Scott-Rodino Filing was announced on August 29, 1995)

Loews .......... 44.2%
Philip Morris .. 32.8%
BAT ............ 26.2%
American ....... 23.5%
RJR ............ -12.0%
S&P Tobacco .... 28.6%
S&P 500 ........ 20.9%
DJIA ........... 21.2%

Return = Stock price appreciation + dividends + interest earned on dividends
(calculated using the 91-day T-Bill rate)

The one year rate of return for stockholders of Brooke Group during this period
was 190.8%, of which 83% is attributable to returns on MAI Systems Corporation
stock distributed to Brooke Group stockholders during 1995. This information has
been omitted from the above chart as the purpose of this Solicitation Statement
is not to compare Brooke Group or its management with RJR Nabisco.

As you can see, RJR Nabisco's stock was the worst-performing of any of the
cigarette company stocks over this period. It was the only cigarette company
stock to have a negative return, underperforming the S&P tobacco index by more
than 40 percentage points, and significantly underperforming broader stock
market indices as well.

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The poor performance of RJR Nabisco's stock is nothing new. Since the
initial public offering of Common Stock on February 1, 1991, through August 28,
1995, RJR Nabisco has been the worst-performing cigarette company stock. You can
see the facts for yourself:

COMPOUNDED ANNUAL RATES OF RETURN
(FEBRUARY 1, 1991 -- AUGUST 28, 1995)

(Period from RJR's IPO to Announcement
of New Valley's Hart-Scott-Rodino Filing)

BAT ............ 11.9%
Philip Morris .. 9.8%
Loews .......... 5.9%
American ....... 5.6%
RJR ............ -0.5%
S&P Tobacco .... 9.8%
S&P 500 ........ 14.0%
DJIA ........... 14.7%

Return = Stock price appreciation + dividends + interest earned on dividends
(calculated using the 91-day T-Bill rate)

The compounded annual rate of return for stockholders of Brooke Group during
this period was 29.3%, including returns on MAI Systems Corporation stock, as
well as on SkyBox International Inc. stock, distributed to Brooke Group
stockholders during 1995 and 1993, respectively. A $100 investment in Brooke
Group Ltd. on February 1, 1991 would have resulted in a total return of $324 to
shareholders. The $324 consists of the following amounts: Brooke Group Ltd. $61;
SkyBox International Inc. $217; MAI Systems Inc. $24; and Cash Dividends and
Interest $22. The total return has been computed assuming cash dividends have
been reinvested at the 91-Day T-Bill rate and stock distributions have been held
until the later of (i) August 28, 1995 or (ii) a tender offer for the stock.
This information has been omitted from the above chart as the purpose of this
Solicitation Statement is not to compare Brooke Group or its management with RJR
Nabisco.

While the value of the stockholders' investment has languished,
notwithstanding the various actions implemented by the Board, Brooke Group
believes that the real beneficiaries of these actions have been RJR Nabisco's
banks and bondholders. In order to maintain debt ratings at the time of the sale
to the public of the minority interest in Nabisco, the incumbent directors
adopted an anti-spinoff policy, declaring that they would not allow a spinoff of
Nabisco until 1997 at the earliest, and that even then a spinoff of Nabisco
would not be permitted before 1999 if RJR Nabisco's debt rating would fall below
investment grade. The Board then reaffirmed its anti-spinoff policy -- in
circumstances where it no longer made sense to do so (see discussion below) --
when proposing and implementing the debt exchange offer. In connection with this
partial sale and the subsequent debt exchange offer, the Board also adopted
policies restricting the amount of cash dividends that can be paid on your stock
and pledging to use the proceeds of any issuance and sale

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of equity of RJR Nabisco, any sale of tobacco assets outside the ordinary course
of business and any sale by RJR Nabisco of its Nabisco stock to prepay debt or
to purchase new properties, assets or businesses. We believe that all of these
policies benefit banks and bondholders, but demonstrably have not benefitted the
stockholders.

A Spinoff Now Presents the Strongest Prospect for Improved Performance and
Increased Stockholder Value

The reasons for an immediate spinoff of Nabisco are clear. RJR Nabisco
currently consists of two completely unrelated businesses -- the R.J. Reynolds
tobacco business and the Nabisco food business. The tobacco and food businesses
have distinct financial, investment and operating characteristics. Brooke Group
believes that there is no good reason to conduct these unrelated businesses
through a single corporate entity, and believes, as described below, that each
business would operate more efficiently and more profitably if separated from
the other.

In addition, the stock market's negative view of the tobacco business, due
to declining sales of tobacco in the United States, increased regulatory
attention and the potential liability from tobacco-related litigation, is
preventing you from enjoying the full value of your investment in RJR Nabisco.
Food companies like Nabisco typically trade at much higher multiples of earnings
and book value than do tobacco companies. The S&P index of food companies trades
at a multiple of 18.23 times the last twelve-months earnings per share, while
the S&P index of tobacco companies trades at a multiple of 13.77 times the last
twelve-months earnings per share.

Brooke Group believes that the potential benefits to both businesses
flowing from a separation are numerous. In the competitive and rapidly changing
food business, a sharply focused management team at an independent Nabisco
should be able to respond to future changes and challenges with greater
flexibility and speed, without being distracted by the problems of the tobacco
business. The recent decision of the Board to additionally charge John
Greeniaus, the President and Chief Executive Officer of Nabisco, with
responsibility for the tobacco business was a noteworthy example of the dilution
of Nabisco management's attention and impact that has resulted from trying to
combine unrelated businesses, rather than separating them. While the Board
subsequently announced that Mr. Greeniaus would give up his positions at the
tobacco company and return to Nabisco, we believe that this decision was made in
response to our criticism and that nothing prevents Mr. Greeniaus, or other
Nabisco managers, from taking on additional responsibilities at the tobacco
company now or in the future. Indeed, the shifting and reshifting of personnel
(as further evidenced by the recent election of Steven F. Goldstone as Chief
Executive Officer of RJR Nabisco) is indicative, in our view, of fundamental
problems, not curable without a definitive separation of the companies. Further,
we believe that the decision to make Nabisco an independent company should
assist Nabisco in recruiting new management and other personnel who might
otherwise feel reservations about joining Nabisco in view of the controversies
currently surrounding the tobacco industry. By creating a stand-alone company
separate from the tobacco business, Nabisco should be able to improve its
consumer image and shed the negative impact that the tobacco operations have on
the sale of its food products, as evidenced by consumer boycotts. Indeed, Ben &
Jerry's Homemade Inc.'s decision, as early as 1990, to stop using Nabisco's OREO
cookies in its ice cream products because of Nabisco's affiliation with tobacco
is one example of the negative impact that tobacco is having on the food
operations. Finally, by eliminating the need for RJR Nabisco to retain 80%
control of Nabisco for tax and financial reporting purposes, a Nabisco spinoff
would free Nabisco to use its common stock for acquisitions, incentive
compensation to help retain and hire qualified managers and for raising

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capital, which Brooke Group believes would enhance Nabisco's competitive
position. For example, Nabisco would be able to raise capital to finance recent
large marketing expenditures for product introductions.

A spinoff of Nabisco would similarly afford R.J. Reynolds the opportunity
to operate under the direction of focused managers. Mr. Harper, until recently
the top executive at RJR Nabisco, is a life-long food company manager,
inexperienced in the tobacco business. Similarly, Mr. Goldstone, the recently
elected Chief Executive Officer, had, until February of 1995, spent his entire
career as an attorney in private practice. The absence of strategic direction
from the top, in Brooke Group's view, is one of the major factors contributing
to the prolonged slide in R.J. Reynold's market share. According to data
obtained from The Maxwell Consumer Report, RJR Nabisco's share of the total U.S.
Cigarette market declined from 31.6% in 1985 to 25.8% in the nine months ended
September 30, 1995. Furthermore, RJR Nabisco began to experience significant
decline in the more profitable full-priced segment in 1985. Its share of this
segment declined from 32.8% in 1985 to 23.1% in 1995. This slide in market share
consisted primarily of the Winston and Salem brands, which declined from 13.0%
and 8.8%, respectively, to 8.3% and 5.3%, respectively. As a separate company,
R.J. Reynolds would be better able to attract and retain top management with a
deep knowledge of the challenges and opportunities in the tobacco business.
Independence would also give R.J. Reynolds greater flexibility in structuring
additional equity and debt financings and in pursuing other business
opportunities, and in developing stock-based management incentives tied solely
to results of tobacco operations. Separation of the food business would also
allow R.J. Reynolds to address more aggressively the spectrum of legal and
political issues which confront the tobacco industry.

In our view, all of this means that there is a tremendous opportunity to
unlock value for stockholders by separating RJR Nabisco into two independent,
publicly-held companies -- R.J. Reynolds and Nabisco. Brooke Group believes
that this could be accomplished by the Board acting now to spin off all of RJR
Nabisco's remaining interest in Nabisco to you and the other RJR Nabisco
stockholders. The stock market would then be free to evaluate the two businesses
separately, recognizing the inherent value of each business, and the businesses
themselves would be able to run more rationally and efficiently.

Scientific studies have confirmed the benefits of spinoffs to stockholders.
A study published in the Journal of Financial Economics in 1993, analyzing the
results of 146 spinoffs occurring during the 1965-1988 period, demonstrated that
return on shares of spun-off companies was an average of 52% in the two years
following the spinoff, and an average of 76% in the three years following the
spinoff, significantly exceeding the return on shares of 25% and 34%,
respectively, of comparable firms matched on the basis of market value and
industry classification during that period. The study also showed that the
return on shares of parents of the spun-off companies significantly outperformed
comparable firms over the two and three years following the spinoff, with the
return on shares of the parent averaging 54% and 67%, respectively, and the
return on shares of comparable firms averaging 27% and 18%, respectively.(2) The
benefits of spinoffs

- ----------

(2) Patrick J. Cusatis, James A. Miles and J. Randall Woolridge, "Restructuring
through spinoffs: The stock market evidence," Journal of Financial
Economics 33 (1993) 293-311. Mr. Cusatis currently is a Vice President at
Lehman Brothers. Messrs. Miles and Woolridge, currently are professors of
finance at Smeal College of Business Administration, Pennsylvania State
University. The authors analyzed only those spinoffs occurring during the
1965-1988 period that were a tax-free, pro-rata distribution of shares of a
wholly owned subsidiary to shareholders and for which stock prices were
available. Return (price appreciation and dividends) was computed using a
buy-and-hold investment strategy. The study did not analyze periods beyond
three years from the spinoff. Brooke Group has not made any additional
inquiry into whether the trend has continued beyond the indicated time
periods.

7
<PAGE>

demonstrated by this study have been confirmed by other empirical analyses by a
major Wall Street investment bank.

The managements of many public companies have used spinoffs to enhance
stockholder value. The number of spinoffs has been increasing dramatically, and
the companies announcing spinoffs recently have included giants like AT&T, ITT,
Sears, General Motors, W.R. Grace and The Limited. The following chart shows the
volume of completed U.S. spinoffs since 1991, as well as the volume of spinoffs
announced in 1995.

GRAPHICAL REPRESENTATION OF
VOLUME OF U.S. SPINOFFS

1991 1992 1993 1994 1995
---- ---- ---- ---- ----
(U.S. Dollars in Billions)
Completed (through
10/15/95) ......... 4.6 5.7 14.2 23.4 25.6
Pending ............. -- -- -- -- 39.0*

- ----------

Source: Barron's and Securities Data Company

* Pending spinoffs exclude the pending AT&T spinoff, as well as the spinoff
announced November 1, 1995 by Premark International of its Tupperware
business.

The experience of AT&T -- where the stock price increased by 10% on a
single day upon announcement of a spinoff plan and has risen since the beginning
of the year, through December 27, 1995, by a total of 29.1% to date -- is only
the most recent example of the way that spinoffs can enhance stockholder value.

RJR Nabisco Chairman Harper, however, is a non-believer. On November 2,
1995, citing unidentified investment bankers retained by RJR Nabisco, Mr. Harper
told Bloomberg Business News ("BBN") that a spinoff of Nabisco would provide
only a 5% to 10% increase in stock value, and that "if we could get two bucks
added (to the current price), we would do that tomorrow -- but we will not take
unreasonable risks." Mr. Goldstone, the new Chief Executive Officer, is also a
non-believer.

8
<PAGE>

Many respected stock market analysts disagree with current management and
believe that RJR Nabisco's stockholders could achieve far better results from a
spinoff of Nabisco -- gaining as much as 50% or more in the value of their
Common Stock, based on the $26.75 closing price per share of Common Stock on the
New York Stock Exchange on August 28, 1995, the day before the first public
announcement of our involvement in RJR Nabisco. Although some analysts hold
different opinions, Brooke Group believes that you should consider the views of
the following investment professionals who support our position that
stockholders would benefit from a spinoff:

o In a December 6, 1995 research report, Gary Black of Sanford C. Bernstein
& Co., Inc., who was selected by this year's Institutional Investor
magazine poll as the first team All-American tobacco industry analyst,
computed a value of $41 per share of Common Stock -- a 53% gain -- if
Nabisco is spun off and RJR Nabisco's dividend is increased from the
current level of $1.50 per share to $1.65 per share.(3)

o On September 26, 1995, Diana Temple, a tobacco industry analyst at the
well-known investment bank, Salomon Brothers Inc, and an Institutional
Investor runner-up, calculated a potential value of $40.40 per share of
Common Stock -- a 51% gain -- for a spinoff of Nabisco, even without an
increase in RJR Nabisco's dividend.(4)

o Ronald B. Morrow of Rodman & Renshaw, Inc., a respected investment
research company, was even more optimistic in his September 26, 1995
report to investors, estimating a value of $60.50 per share for the Common
Stock -- a 126% gain -- in a break-up scenario.(5)

Our own actions have demonstrated the strength of our conviction that a
spinoff will enhance stockholder value at RJR Nabisco. Brooke Group and its
affiliates have invested nearly $150 million in RJR Nabisco Voting Securities,
and have no economic interest in the Proposals other than through their
ownership of RJR Nabisco Voting Securities. Brooke Group is hereby pledging to
the stockholders of RJR Nabisco that it will not accept any form of greenmail
from RJR Nabisco during its solicitation of consents with respect to the
Proposals, and that, absent RJR Nabisco irrevocably committing to an immediate
spinoff, Brooke Group will continue this solicitation until either the Proposals
are adopted or the time in which to solicit has expired. Brooke Group will
terminate the solicitation of consents if RJR Nabisco irrevocably commits to
immediately spin off its remaining equity interest in Nabisco.

The Board's Opposition to a Spinoff Now

The Board has raised three basic arguments for refusing to commit to an
immediate spinoff: (1) preservation of financial integrity and binding
commitments, (2) potential litigation and (3)

- ----------

(3) The report assumes that a post spinoff Nabisco would be worth $18 per
share, based upon the distribution of the then market value of the shares
of Nabisco owned by RJR Nabisco to its stockholders. The report further
assumes that the price per share of post spinoff RJR Nabisco would be $23
per share based upon a 7% yield of the $1.65 dividend and a Cash P/E Ratio
of 8.3.

(4) Ms. Temple is currently a Director of research at Salomon Brothers Inc. The
$40.40 per share value is based on a $20.40 per share value for the post
spinoff Nabisco (based upon an earnings multiple of 20 times 1996 estimated
earnings per share of $1.02) and a $20 per share value for post spinoff RJR
Nabisco (based upon a 7.5% yield on a $1.50 pure tobacco dividend).

(5) Mr. Morrow is the senior director in the consumer non-durable sector at
Rodman & Renshaw, Inc. The $60.50 per share value is based on a $19.22 per
share value of a stand-alone Nabisco (based upon the aggregate market value
at July 22, 1995 of Nabisco stock held by RJR Nabisco, distributed pro rata
to RJR Nabisco stockholders) and a $41.27 per share value of the
stand-alone RJR Nabisco tobacco company. The $41.27 value was based upon a
total capitalization-to-cash flow multiple (based upon 1995 estimated
tobacco cash flow of $2.4 billion and estimated tobacco free cash flow of
$1.1 billion) equal to a 30% premium over the American Tobacco Company's
cash flow multiple of about 6.7x at its sale in December 1994 (as computed
by Mr. Morrow), because of strong global brands.

9
<PAGE>

tax-free treatment of the spinoff. Brooke Group believes that each of these
arguments is without merit and can be easily refuted.

The "Financial Integrity and Binding Commitments" Argument

The Board has stated that a spinoff "must preserve the financial integrity
of both the food and tobacco businesses." Although the Board does not state that
a spinoff would imperil the financial integrity of either the food or tobacco
businesses, the implication of the Board's recent remarks is that a spinoff
might have such an effect.

Brooke Group believes that Nabisco is well positioned to be spun off and
move forward successfully as an independent company, as evidenced by recent
analysts' reports. A November 1, 1995 research report by Bear, Stearns & Co.
Inc. gives Nabisco an "Attractive" rating and states that the "quality of the
company's earnings is high."(6) On November 3, 1995, Fitch Investors Service
("Fitch") noted that, following a spinoff, "Nabisco's `BBB/F-2' ratings could,
over the long term, be strengthened," and in fact "could improve markedly but
will be influenced by subsequent developments."(7)

Nor do the circumstances suggest that the tobacco business's financial
integrity will be compromised by a spinoff. The Board has asserted that the
Nabisco spinoff is impracticable because of the "binding financial commitments"
that RJR Nabisco has made in the past. The Board has raised the spectre of
possible litigation by bondholders to enjoin a spinoff. But the only "binding
commitments" which RJR Nabisco has disclosed are certain covenants in RJRN's
bank credit agreement, which supports $286 million of commercial paper
outstanding as of September 30, 1995. Brooke Group believes that this relatively
small indebtedness could be readily refinanced to eliminate any impediment to a
spinoff of Nabisco.

As the Board well knows, the policies voluntarily adopted by the Board to
delay a spinoff, to restrict the payment of dividends and to restrict the use of
proceeds of stock and asset sales are entirely non-binding. They are not the
equivalent of a bond indenture or other legally binding agreement, and the Board
can rescind them at any time. In its Form 10-K for 1994, filed with the
Securities and Exchange Commission (the "SEC") on March 1, 1995, and in the Form
S-4 Registration Statement filed with the SEC in connection with the debt
exchange offer, Nabisco describes the RJR Nabisco Board's spinoff-delay policy,
but notes that RJR Nabisco does not have an agreement with Nabisco not to sell
or distribute the Nabisco stock its holds, and that "there can be no assurance
concerning the period of time during which [RJR Nabisco] will maintain its
beneficial ownership" of Nabisco stock. Indeed, in discussions with Brooke Group
representatives earlier this year (see "Background"), representatives of RJR
Nabisco -- including its recently appointed Chief Executive Officer, Mr.
Goldstone -- confirmed the non-binding nature of these policies and stated that
the Board could and would change the policies in response to changed business
circumstances.

- ----------

(6) The Bear Stearns report was written by two of its analysts, Laurie Feldman
and Brian Sedrish. The authors' "Attractive" rating is based on the belief
that "volume reacceleration and earnings recovery could begin late in the
fourth quarter and could gain momentum in the first half of 1996,
especially in the face of very easy comparisons, benefits from recent
acquisitions, better volume growth due to further market penetration of new
products, and lower marketing expenditures." Additionally, the authors base
their opinion on the quality of the earnings on the fact that it has been
derived from positive fundamentals and not from corporate financial
maneuverings that bring onetime benefits.

(7) In stating the potential for improvement in Nabisco's rating, the Fitch
report also stated that RJR Nabisco's "BBB-/F-3 ratings would be negatively
impacted." The Fitch report, by way of example of "subsequent
developments," stated that if potential fraudulent conveyance claims are
successful (an assertion which Brooke Group strongly disputes) and the
Nabisco shares are sold to a financial buyer, a reevaluation of Nabisco's
credit quality would be appropriate.

10
<PAGE>

Brooke Group believes that these anti-spinoff policies have outlived their
usefulness. In large measure, the original reason for the anti-spinoff policy
was to assure cash flow from Nabisco to RJRN -- because essentially all of RJR
Nabisco's consolidated debt was lodged there. This RJRN debt was reduced,
however, by more than $4 billion through the debt exchange offer and related
refinancings, which made Nabisco, Inc. the obligor on this debt. The debt
service coverage of RJRN's debt was enhanced at the time of the debt exchange
and Nabisco can well service the $4 billion of debt incurred. As a consequence,
there was no need for the Board to reiterate its anti-spinoff policy. Indeed, as
more fully discussed below, RJRN's debtholders are better off, as far as we can
see, based on coverage, and the Nabisco debtholders benefit from the quality of
Nabisco's cash flow. Based on RJR Nabisco's actual results as disclosed in its
financial statements and the following tables, if R.J. Reynolds and Nabisco were
separated, R.J. Reynold's EBITDA/Interest Expense Coverage Ratio would have
increased from 4.81 to 5.38. Further, R.J. Reynold's current Net
Debt/Stockholders' Equity ratio would have decreased from 0.91 to 0.73.

The following tables(8) demonstrate our view of the spinoff on the
EBITDA/Interest Expense Coverage Ratio and Debt/Equity Ratio of the separated
companies:

<TABLE>
<CAPTION>
RJR Nabisco

Analysis of Coverage Ratios
(Dollars in Millions)

Combined RJR
RJR Nabisco Tobacco Nabisco
------------ -------- -------
<S> <C> <C> <C>
EBIT For the Year Ended December 31, 1994.......................... $2,440 $1,573 $ 867
------ ------ ------
EBITDA For the Year Ended December 31, 1994........................ $3,592 $2,282 $1,310
------ ------ ------
Interest Expense................................................... $ 747 $ 424 $ 323
------ ------ ------
EBIT/Interest Expense.............................................. 3.27 3.71 2.68
------ ------ ------
EBITDA/Interest Expense............................................ 4.81 5.38 4.06
====== ====== ======
</TABLE>

- ----------

EBIT = Earnings Before Interest and Taxes

EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization

Interest Expenses is based on debt and respective interest rates at 9/30/95
(based upon public financial statements). Interest Expense does not include
Interest on Trust Oriented Preferred Securities ($95) and dividends on Series B
Preferred Stock ($28). If such Fixed Charges were included, Holdings', RJR's and
Nabisco's respective EBIT Coverage ratios would be 2.80, 2.87 and 2.68 and
EBITDA Coverage ratios would be 4.13, 4.17 and 4.06, respectively.

- ----------

(8) The tables are based on information obtained from RJR Nabisco's and
Nabisco's respective Form 10-Ks (December 31, 1994) and Form 10-Qs
(September 30, 1995) filed with the SEC and Brooke Group has assumed that
the spinoff would be effected on a basis consistent with information
contained in these documents. Brooke Group can offer no assurance that the
spinoff would be accomplished on such a basis presented above. Furthermore,
changes in the assumptions, which include, but are not limited to,
allocation of debt owed by RJR Nabisco and Nabisco and headquarters'
expenses, could result in changes in the respective Net Debt/Stockholders'
Equity and Coverage Ratios. Expenses associated with a proposed spinoff
have not been included. Based upon a review of currently available
information, Brooke Group does not believe that a spinoff would require the
consent of public debtholders, other than with respect to the RJRN bank
credit agreement which supports $286 million of commercial paper
outstanding as of September 30, 1995.

11
<PAGE>
<TABLE>
<CAPTION>
RJR Nabisco

Analysis of Debt by Company
(Dollars in Millions)
As of September 30, 1996

Combined RJR
RJR Nabisco Tobacco Nabisco
------------ -------- -------
<S> <C> <C> <C>
Public Debt....................................................... $ 7,213 $4,267 $2,946
Commercial Paper ................................................. 1,634 286 1,348
Other Indebtedness................................................ 980 801 179
------- ------ ------
Total Debt(a)..................................................... 9,827 5,354 4,473
Less: Cash on Hand ............................................... (354) (221) (133)
------- ------ ------
Net Debt.......................................................... $ 9,473 $5,133 $4,340
======= ====== ======
Stockholders' Equity(b)........................................... $10,423 $7,079 $4,180
======= ====== ======
Net Debt/Stockholders' Equity Ratio .............................. 0.91 0.73 1.04
======= ====== ======
</TABLE>
- ----------

(a) Total Debt is composed of both Long-Term Debt and Notes Payable. Consistent
with RJR Nabisco's Financial Statements at September 30, 1995, RJR
Nabisco's Trust Oriented Preferred Securities ("Preferred Securities") of
$954 have not been classified as indebtedness. If the Preferred Securities
were included as debt, the respective Net Debt/Stockholders' Equity Ratios
would be 1.00, 0.86 and 1.04, respectively.

(b) RJR Nabisco's Stockholders' Equity is adjusted for minority Interest of
$836 in Nabisco's Stockholders' Equity.

Brooke Group recognizes, of course, that rating agencies such as Standard &
Poor's, Moody's and Fitch are naturally conservative and at times reluctant
immediately to embrace change. The Fitch report which noted the potential for
improvement in Nabisco's ratings, opined that the post-spinoff tobacco
business's ratings would likely be downgraded unless the company "demonstrate[s]
that it has adequate cash and other resources to satisfy its obligations to its
bondholders in the unlikely event of a significant tobacco judgment." While we
do not expect the rating agencies to applaud the spinoff of Nabisco, we do
expect that, particularly with the passage of time following a spinoff, the
agencies will give a fair rating to the debt of the separated food and tobacco
companies.

Based upon the publications described below, Brooke Group believes that a
spinoff of Nabisco would not harm, and might improve, the position of
bondholders and other creditors of RJR Nabisco. As Michael Dahood, a tobacco
industry credit analyst for Rodman & Renshaw, Inc., stated in an October 24,
1995 research report: "An eventual spin-off or other separation of [Nabisco]
would have some benefits for RJR Nabisco creditors, including lowering absolute
debt levels and related interest expense and capital spending requirements."
According to Mr. Dahood, a spinoff would reduce the absolute level of RJR
Nabisco's consolidated debt by about $4 billion, or more than 40% (based upon
Net Debt at 9/30/95 of $9.5 billion as detailed above). Based on this analysis
and as discussed above, RJR Nabisco's consolidated debt-to-equity ratio would,
thus, be reduced as well. Mr. Dahood further reports that Nabisco represented
only about one-third of RJR Nabisco's total EBITDA in 1994, but now holds
approximately 40% of RJR Nabisco's consolidated debt, and therefore we believe
that consolidated cash flow coverage ratios for RJR Nabisco would also improve
as a result of the spinoff. Indeed, in an article published in the December 4,
1995 Forbes Magazine, Frederick Taylor, a bond analyst at Salomon Brothers Inc,
recommends RJR Nabisco's $250 million of 8.75% bonds, due 2007, as the "cheapest
investment-grade paper out there" and Mr. Ronald Speaker, manager of the $588
million Janus Flexible Income Fund and an RJR Nabisco bondholder, indicates that
with a spinoff, Nabisco would take a substantial percentage of RJR Nabisco's
debt with it "-- leaving the balance with solid cover-

12
<PAGE>

age." More to the point, as described above, the spinoff can be expected to
result in improved operating performance by both the tobacco and food businesses
in future years, benefitting creditors as well as stockholders.

There is, thus, a strong case to be made that investment grade ratings
would be retained by both the food and tobacco companies following a spinoff of
Nabisco. In the final analysis, however, Brooke Group does not believe that
investment grade ratings are necessary to either Nabisco or, particularly, the
tobacco company.

The "Potential Litigation" Argument

The Board has also asserted that the Nabisco spinoff is not appropriate at
this time because of the "current litigative situation," and has specifically
expressed concern that implementation of the spinoff might be delayed, to the
financial detriment of RJR Nabisco stockholders, by litigation. We understand
the Board's remarks as reflecting a fear that plaintiffs in pending tobacco
product liability cases might seek to enjoin the spinoff by alleging that it
constitutes a fraudulent conveyance. The effect of the Board's position, in
refusing to act because of the fear that an injunction may be sought, is the
same as if the injunction had been obtained. Brooke Group finds the Board's view
to be singularly misguided, because neither Brooke Group -- nor, based on its
public disclosure, RJR Nabisco -- believes that an injunction barring the
spinoff is likely to be issued.

The key element of any potential lawsuit to enjoin the spinoff would be the
allegation that RJR Nabisco either (i) is insolvent prior to attempting to
effectuate the spinoff or (ii) would be rendered insolvent by the spinoff. A
plaintiff seeking an injunction would have to show a high probability of
establishing one or the other of the foregoing propositions at trial. Law
professors at Harvard Law School and Columbia University were quoted in the New
York Times on November 4, 1995 as expressing their doubt that such a showing
could be made, or that an injunction against the spinoff would be issued. RJR
Nabisco's 1994 annual report contains an unqualified report from RJR Nabisco's
auditors and includes a statement that management believes that the outcome of
all pending litigation will not have a material adverse effect on RJR Nabisco's
financial position. This statement was recently reiterated in RJR Nabisco's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 (the
"1995 Third Quarter 10-Q"), filed on October 31, 1995. These disclosures are
based upon more than 40 years of favorable litigation experience in the defense
of tobacco product liability claims.

We agree with this conclusion. RJR Nabisco Chairman Harper, however, seemed
to deviate from this conclusion when he told BBN on November 2, 1995 that
tobacco product liability plaintiffs had "decent odds" of getting an injunction
enjoining a spinoff of Nabisco. Mr. Harper's remarks are, in our view, an
irresponsible scare tactic intended to frighten stockholders into withholding
support for Brooke Group's solicitation and supporting, instead, the do-nothing
posture of the Board.

We heartily disagree with the Board's timidity in the face of potential
litigation, which has produced a paralysis detrimental to stockholders'
interests. Brooke Group believes that the full potential of the food and tobacco
businesses, and the full value of stockholders' investment, are being held
hostage by the Board because of a remote litigation contingency. Brooke Group
believes there are valid and compelling business reasons to do the spinoff now.
We believe that delay by the Board will cause further erosion in the performance
and competitive positions of both the food and tobacco companies. Throughout the
course of public debate since we wrote to

13
<PAGE>

the Board on October 30, 1995, representatives of RJR Nabisco have made vague
promises of improvements in the "litigative situation" at some future date. The
only "explanation" offered for how this might occur, however, has been Mr.
Goldstone's recent statements that the tobacco litigation tends to be "cycled"
and may be moving into an unexplained "third phase" which may be better for the
tobacco defendants. Through our Liggett Group Inc. subsidiary, we are involved
in the tobacco business and the product liability and other tobacco litigation.
We have no idea what Mr. Goldstone and the other RJR Nabisco representatives are
referring to in these statements. We are unable to discern in the Board's
position any suggestion of when or how the "litigative situation" might become
one in which the Board would comfortably act to authorize a spinoff, especially
in light of the fact that the tobacco product liability plaintiffs' bar, as
recently reported in the New York Times, has threatened "to file tens of
thousands of individual lawsuits around the country" if their present class
action is not certified. The Board's position is, in our view, merely a recipe
for open-ended delay.

The "Tax-Free" Argument

RJR Nabisco has publicly disclosed that it has acted and has been acting to
assure a tax-free spinoff. For example, in this year's proxy statement, filed
with the SEC on March 20, 1995, RJR Nabisco's management stated that the partial
sale of Nabisco and the subsequent exchange offer for RJRN debt were "structured
in a manner that preserves the option of separating such businesses on a
tax-free basis." As recently as October 9, 1995, a tobacco industry analyst
employed by RJR Nabisco's investment banker stated in a published report that
RJR Nabisco's management had assured him that "all tax-related preconditions" to
a spinoff of Nabisco "had been addressed."

Recently, Mr. Harper cautioned that, "The more [Brooke Group's] actions
focus attention on the non-business-related aspects of such a [spinoff]
transaction . . . the greater the likelihood that a development will arise to
jeopardize . . . a spin-off." In effect, the Board is saying that a spinoff
would not be tax-free if its only purpose were to increase the price of the
stock. The Board's comments are irrelevant to the proposed spinoff, however. Any
enhancement of the stock price would follow from and reflect the enhanced
potential for improved business performance. Brooke Group believes that the
separation of RJR Nabisco's food business from tobacco would unlock the value in
RJR Nabisco's depressed stock price by creating two distinct, unaffiliated
companies, each better able to operate and achieve strong results in their
respective businesses, as discussed at length earlier. See "A Spinoff Now
Presents the Strongest Prospect for Improved Performance and Increased
Stockholder Value."

The Bylaw Amendment

What did the incumbent directors do when they heard calls for a spinoff?
Brooke Group believes the responsible reaction would have been for the Board to
meet with stockholders and to work with stockholders for the enhancement of
value through a spinoff.

Instead, the Board took the opposite approach. The Board moved to silence
stockholders by making it more difficult for you to vote on a spinoff. The Board
amended the Bylaws -- without a stockholder vote -- eliminating the
stockholders' right to call a special meeting and imposing burdensome new
requirements for stockholders who seek to act by written consent without a
meeting. Significantly, the Board left intact its right to call a special
meeting. In attempting to explain its amendments to the Bylaws, RJR Nabisco
stated that it was not appropriate for corporate action to be approved at a
special stockholders meeting by a mere affirmative vote of a majority of the
shares needed to establish a quorum (possibly 25% of the outstanding, plus one
share). In

14
<PAGE>

order to correct this supposed "flaw," the Board eliminated the stockholders'
right to call a special meeting, but not its own. When and if the Board calls a
special meeting, any action the Board proposes can be passed by the same voting
percentage which the Board says is not appropriate for a stockholder proposed
matter. Additionally, we believe that the new written consent procedures permit
the Board to manipulate its corporate governance machinery by granting the Board
a 20-day period to set a record date. Since only the Board can know in advance
the exact record date, stockholders who wish to act by written consent are
placed at a distinct disadvantage. For more detailed information regarding the
procedural requirements the Board recently implemented with respect to the
exercises of written consent of stockholders, see "Consent Procedure."

This disturbing action was taken unilaterally and in secrecy, without
informing stockholders that their rights, which had existed since RJR Nabisco's
stock was first offered to the public in 1991, were being stripped away.
Fortunately, you have certain legal rights that the Board cannot take from you
without stockholders' permission. RJR Nabisco's stockholders still have the
power to act by written consent to restore their right to call a meeting. Brooke
Group urges you and the other stockholders to exercise this power by giving your
CONSENT to the Bylaw Amendment on the enclosed BLUE consent card.

The effectiveness of the Bylaw Amendment would occur when properly
completed, unrevoked consents are signed by the holders of record as of the
Record Date of a majority of the voting power of the then outstanding RJR
Nabisco Voting Securities and are delivered to RJR Nabisco and, in accordance
with the recent bylaw change by RJR Nabisco, an independent inspector certifies
to RJR Nabisco that the consents delivered in accordance with Section 9(a) of
the Bylaws represent at least the minimum number of votes necessary to adopt the
proposal (see "Effectiveness and Revocation of Consents" and "Consents
Required").

There are no provisions in the Bylaws or in RJR Nabisco's Amended and
Restated Certificate of Incorporation restricting the stockholders' ability to
amend or repeal provisions of the Bylaws without the consent of the Board.
Although, to Brooke Group's knowledge, there is no Delaware precedent precisely
on point, Brooke Group is confident this repeal is enforceable. If it were not,
Bylaws adopted by RJR Nabisco would not automatically be repealed, but would be
subject to challenge in court.

SOLICITATION OF CONSENTS

Solicitation of consents may be made by the directors, officers, investor
relations personnel and other employees of Brooke Group and certain of its
subsidiaries and affiliates, none of whom will receive additional compensation
for such solicitation. Consents may be solicited by mail, courier service,
advertisement, telephone or telecopier and in person.

In addition, Brooke Group has retained Georgeson to assist in the
solicitation, for which Georgeson is entitled, in the event the Proposals are
adopted, to receive a fee of $150,000, plus its reasonable out-of-pocket
expenses. Brooke Group has also agreed to indemnify Georgeson against certain
liabilities and expenses, including certain liabilities and expenses under the
Federal securities laws. It is anticipated that Georgeson will employ
approximately 30 persons to solicit stockholders.

New Valley, Brooke Group and Liggett (as defined in "Background") have
engaged Jefferies & Company, Inc. ("Jefferies") to act as financial advisor in
connection with New Valley's investment in RJR Nabisco and this solicitation by
Brooke Group. New Valley has

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agreed to pay Jefferies (i) an initial fee of $1,500,000, and (ii) monthly fees
of $250,000 and, in addition, during the first five full months of the
engagement an additional monthly fee of $100,000. These companies also have
agreed to pay Jefferies 10% of the net profit (up to a maximum of $15,000,000)
with respect to Common Stock (including any distributions made by RJR Nabisco)
held or sold by these companies and their affiliates after deduction of certain
expenses, including the costs of this solicitation and certain proxy
solicitations by the BGL Group and the costs of acquiring the shares of Common
Stock (all of which expenses will be borne by New Valley, ALKI or the BGL
Group). In addition, New Valley agreed to reimburse Jefferies for all reasonable
out-of-pocket expenses, including the fees and expenses of its counsel, incurred
by Jefferies in connection with its engagement and New Valley and Brooke Group
agreed to indemnify Jefferies and certain related persons against certain
liabilities and expenses. Jefferies will assist in the solicitation of consents
in favor of the Proposals, which will be carried out by a team of individuals
consisting of officers, associates and analysts of Jefferies numbering
approximately 10 persons.

Banks, brokers, custodians, nominees and fiduciaries will be requested to
forward solicitation materials to the beneficial owners of RJR Nabisco Voting
Securities. Brooke Group and its affiliates will reimburse these record holders
for customary clerical and mailing expense incurred by them in forwarding these
materials to the beneficial owners.

The cost of the solicitation of consents to the Proposals will be borne by
New Valley (as defined in "Background"). New Valley has entered into an
agreement with Brooke Group pursuant to which it has agreed to pay directly or
reimburse Brooke Group and its subsidiaries for reasonable out-of-pocket
expenses incurred in connection with pursuing the Proposals. New Valley has also
agreed to pay to BGLS a fee of 20% of the net profit received by New Valley or
its subsidiaries from the sale of shares of Common Stock after achieving a rate
of return of 20% and after deduction of certain expenses, including the costs of
this solicitation and of acquiring the shares of Common Stock. New Valley has
also agreed to indemnify Brooke Group against certain liabilities arising out of
the solicitation. Brooke Group, or New Valley, as applicable, will seek
reimbursement for such expenses from RJR Nabisco. Costs incidental to the
solicitation of consents include expenditures for printing, postage, legal and
related expenses, and are expected to be approximately $5 million.

CONSENT PROCEDURE

Section 228 of the Delaware General Corporation Law (the "DGCL") states
that, unless otherwise provided in the certificate of incorporation, any action
required to be taken at any annual or special meeting of stockholders, or any
action that may be taken at any annual or special meeting of stockholders, may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, is signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted, and those
consents are delivered to the corporation by delivery to its registered office
in Delaware, its principal place of business or an officer or agent of the
corporation having custody of the books in which proceedings of meetings of
stockholders are recorded. RJR Nabisco's certificate of incorporation does not
prohibit stockholder action by written consent.

Section 213(b) of the DGCL provides that if no record date has been fixed
by the board of directors, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting, when no prior
action by the board of directors is required, shall be the

16
<PAGE>

first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the corporation by delivery to its
registered office in Delaware, its principal place of business or an officer or
agent of the corporation having custody of the books in which proceedings of
meetings of the stockholders are recorded. Notwithstanding the foregoing, on
August 21, 1995, RJR Nabisco amended its Bylaws to add a new Section 9 to
Article I of the Bylaws which sets forth a lengthy process which stockholders
must follow in order to seek action by written consent without a meeting.
Pursuant to Section 9(a) thereof, a stockholder seeking to have the stockholders
of RJR Nabisco authorize or take corporate action by written consent is required
to request the RJR Nabisco Board to fix a record date. The RJR Nabisco Board is
required to promptly, but in all events within 10 days after the date on which
the request is received, adopt a resolution fixing the record date for the
solicitation (which may not be more than 10 days after the date of the
resolution). On December 29, 1995 pursuant to Article I, Section 9 of the
Bylaws, Brooke Group submitted a notice to the Secretary of RJR Nabisco
requesting the Board to fix January 12, 1996 as the Record Date for the
solicitation. The Board may choose to ignore our requested Record Date but must
act by January 8, 1996 to fix a Record Date which, pursuant to the Bylaws, can
be no earlier than December 29, 1995 and no later than January 18, 1996. Brooke
Group will provide further information to you once the Board has fixed the
Record Date.

Effectiveness and Revocation of Consents

The Proposals will become effective when properly completed, unrevoked
consents are signed by the holders of record as of the Record Date of a majority
of the voting power of the then outstanding RJR Nabisco Voting Securities and
are delivered to RJR Nabisco and, pursuant to RJR Nabisco's recent bylaw
amendment, nationally recognized independent inspectors of elections, hired by
RJR Nabisco for the purpose of performing a ministerial review of the validity
of the consents and revocations, certify to RJR Nabisco that the consents
delivered in accordance with Section 9(a) of the Bylaws represent at least the
minimum number of votes that would be necessary to take the corporate action,
provided that the requisite consents are so delivered within 60 days of the date
that the earliest dated consent was delivered to RJR Nabisco.

An executed consent card may be revoked at any time by marking, dating,
signing and delivering a written revocation before the time that the action
authorized by the executed consent becomes effective. A revocation may be in any
written form validly signed by the record holder as long as it clearly states
that the consent previously given is no longer effective. The delivery of a
subsequently dated consent card which is properly completed will constitute a
revocation of any earlier consent. The revocation may be delivered either to
Brooke Group, in care of Georgeson & Company Inc., Wall Street Plaza, New York,
New York 10005, or to RJR Nabisco at 1301 Avenue of the Americas, New York, New
York 10019 or any other address provided by RJR Nabisco. Although a revocation
is effective if delivered to RJR Nabisco, Brooke Group requests that either the
original or photostatic copies of all revocations of consents be mailed or
delivered to Brooke Group as set forth above, so that Brooke Group will be aware
of all revocations and can more accurately determine if and when the requisite
consents to the actions described herein have been received.

If the Proposals are adopted pursuant to the consent procedure, prompt
notice must be given by RJR Nabisco pursuant to Section 228(d) of the DGCL to
stockholders who have not executed consents. RJR Nabisco will promptly announce
when the action by written consent has been

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<PAGE>

taken, thus enabling stockholders desiring to withdraw their consents to learn
whether the action has become effective.

Consents Required

According to the 1995 Third Quarter 10-Q, there were 272,693,625 shares of
Common Stock, 26,675,000 shares of PERCS and 15,082,650 shares of ESOP Preferred
Stock outstanding at September 30, 1995. Each share of Common Stock entitles the
Record Date holder to one vote on the Proposals. Each share of PERCS and ESOP
Preferred Stock entitles the Record Date holder to one-fifth of a vote on the
Proposals, voting together as a single class with the holders of Common Stock.
Accordingly, based on the information in the 1995 Third Quarter 10-Q, written
consents by holders representing approximately 140,522,578 shares of Common
Stock, or shares of Common Stock and other RJR Nabisco Voting Securities
aggregating 140,522,578 votes (not including abstentions and broker non-votes),
will be required to adopt and approve each of the Proposals. Accordingly, each
abstention and broker non-vote with respect to the Bylaw Amendment and/or the
Spinoff Proposal will have the same effect as a vote against the adoption of
such proposal.

Special Instructions

If you were a record holder as of the close of business on the Record Date,
you may elect to consent to, withhold consent to or abstain with respect to each
Proposal by marking the "CONSENTS", "DOES NOT CONSENT" or "ABSTAINS" box, as
applicable, underneath each such Proposal on the accompanying BLUE consent card
and signing, dating and returning it promptly in the enclosed postage-paid
envelope.

IF THE STOCKHOLDER WHO HAS EXECUTED AND RETURNED THE CONSENT CARD HAS
FAILED TO CHECK A BOX MARKED "CONSENTS", "DOES NOT CONSENT" OR "ABSTAINS" FOR
EITHER OR BOTH OF THE PROPOSALS, SUCH STOCKHOLDER WILL BE DEEMED TO HAVE
CONSENTED TO SUCH PROPOSAL OR PROPOSALS.

If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can execute a consent with respect to your shares and
only upon receipt of specific instructions from you. Accordingly, you should
contact the person responsible for your account and give instructions for the
BLUE consent card to be signed representing your shares. Brooke Group urges you
to confirm in writing your instructions to the person responsible for your
account and provide a copy of those instructions to Brooke Group in care of
Georgeson at the address set forth above so that Brooke Group will be aware of
all instructions given and can attempt to ensure that such instructions are
followed.

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BACKGROUND

The purpose of this Section is to provide information relating to certain
events leading up to this solicitation, as of the most recent practicable date
prior to the mailing of this Consent Statement.

On October 31, 1994, RJR Nabisco announced that it would undertake an
initial public offering of approximately 19% of Nabisco and use the proceeds of
the offering to repay bank debt. RJR Nabisco's announcement also stated that RJR
Nabisco anticipated initiating a regular quarterly dividend of 37-1/2 cents per
share of Common Stock (adjusted for the 1-for-5 reverse stock split completed by
RJR Nabisco on April 12, 1995). RJR Nabisco also announced that, in connection
with these developments, the Board had set limits on the dividend payout for the
next four years and that an eventual spinoff of Nabisco to stockholders would
not be considered for at least two years. In subsequent filings, RJR Nabisco
disclosed that the Board had passed a resolution adopting a policy precluding a
spinoff of Nabisco until 1997 at the earliest, and stating that a spinoff of
Nabisco would not be permitted before 1999 if RJR Nabisco's debt ratings would
fall below investment grade. The partial sale of Nabisco was consummated on
January 26, 1995.

On March 11, 1995, it was announced that Nabisco, Inc. would exchange
approximately $1.9 billion aggregate principal amount of debt securities issued
by Nabisco, Inc. for approximately $1.9 billion aggregate principal amount of
notes and debentures of RJRN. According to documents filed by Nabisco, Inc. and
RJRN with the SEC with respect to the exchange offer, the purpose of these
transactions was to permit Nabisco and Nabisco, Inc. to establish long-term
borrowing capacity independent of RJRN and to reduce intercompany debt by
approximately $4.0 billion. The exchange offer documents reiterated the Board's
anti-spinoff policy. They also disclosed that the Board had adopted additional
policies providing that until December 31, 1998, RJR Nabisco will limit the
aggregate amount of cash dividends on its capital stock and will use the
proceeds of any issuance and sale of equity of RJR Nabisco, any sale of tobacco
assets outside the ordinary course of business and any sale by RJR Nabisco of
its Nabisco stock to prepay debt or to acquire new properties, assets or
businesses.

At the annual stockholders meeting on April 12, 1995, stockholders voted
down a stockholder proposal to separate the tobacco from the non-tobacco
businesses. In its arguments against the proposal, the Board stated in the proxy
statement that as part of its initiative to have the market recognize the value
of RJR Nabisco's stock, it had sold slightly less than 20% of Nabisco to the
public, declared a 37-1/2 cent quarterly dividend, and adopted certain
anti-dividend and anti-distribution policies.

On May 19, 1995, Bennett S. LeBow, the Chairman of the Board and Chief
Executive Officer of Brooke Group, met with Charles M. Harper, the Chairman of
the Board and then Chief Executive Officer of RJR Nabisco. In this meeting, Mr.
LeBow recommended to Mr. Harper that RJR Nabisco spin off its remaining 80.5%
equity interest in Nabisco. Mr. Harper informed Mr. LeBow that there were
several issues which made it difficult for RJR Nabisco to effect a spinoff. At
that time, Mr. LeBow proposed a business combination (described below) between
Brooke Group's domestic tobacco subsidiary, Liggett Group Inc. ("Liggett"), and
RJR Nabisco as a means of resolving Mr. Harper's issues. Mr. LeBow suggested
that Liggett was uniquely positioned to assist RJR Nabisco in effecting a
spinoff. Specifically, Mr. LeBow, addressing the RJR Nabisco Board's concern
over personal liability, informed Mr. Harper that Brooke Group's management had
confronted the issue of personal liability in connection with tobacco product
liability

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<PAGE>

claims and in connection with spinoffs within the prior two years of non-tobacco
operating subsidiaries, and had decided that the risk of such liability was
negligible; that Brooke Group's management had previously concluded, based on
its own experience at Liggett, that concurrent operation of a tobacco and a food
business does not present advantages; that Brooke Group therefore believed that
Liggett's record was such that a merger of Liggett and RJR Nabisco followed by a
spinoff of RJR Nabisco's non-tobacco operations, to wit: Nabisco, would be
consistent with Liggett's past actions and would not be for the purpose of
placing assets beyond the reach of creditors; and that Liggett, as the smallest
domestic cigarette manufacturer, would likely not cause major antitrust concerns
to be raised in the context of a merger with RJR Nabisco. Mr. Harper expressed
tentative interest in the spinoff concept, as so presented, and suggested that
representatives of Brooke Group and RJR Nabisco meet to explore the spinoff in
greater detail. Subsequently, on May 22, 1995 and May 24, 1995, representatives
of Brooke Group met with representatives of RJR Nabisco to review particular
aspects of the spinoff and the relationship between the spinoff and other
aspects of RJR Nabisco's business strategy. The RJR Nabisco representatives
indicated skepticism about whether the spinoff would increase stockholder value.
They also expressed concerns about the possibility that the spinoff would be
challenged as a fraudulent conveyance (although asserting that such a challenge
would be without merit), and would be contrary to the policy previously adopted
by the RJR Nabisco Board with respect to a spinoff (although acknowledging that
the subject policy could be changed by the Board in response to changed
circumstances, and could be changed by directors evaluating the policy for the
first time). At these meetings, Brooke Group's representatives set forth Brooke
Group's view that the risks, to the corporation and to the directors personally,
attending a spinoff of Nabisco were negligible.

Brooke Group's representatives also stated that, in the event the incumbent
directors of RJR Nabisco were unwilling to take action to spin off Nabisco as a
result of these concerns, Brooke Group would be willing to engage in a
transaction to effect the spinoff, pursuant to which (i) the tobacco interests
of Liggett would be combined with RJR Nabisco's tobacco business, (ii) the
incumbent RJR Nabisco directors would be replaced by nominees of Brooke Group
and (iii) the Brooke Group nominees would vote to spin off Nabisco. As
originally described by Mr. LeBow to Mr. Harper, this transaction would have
required a refinancing of $3 billion of existing RJR Nabisco bank debt, and Mr.
LeBow suggested that the Liggett interest should consist of 20% of the combined,
post-spinoff tobacco company. Mr. Harper commented that such percentage was too
large a participation, and was told by Mr. LeBow that this proposal was an
initial one, was not fixed and was entirely negotiable. No other material terms
were discussed at the meeting between Messrs. LeBow and Harper thereafter.
During the meeting on May 24, 1995, Brooke Group's representatives explained
that their plan would require RJR Nabisco to provide a stockholder list and
access to books and records, as required by Delaware Law, and would require a
special meeting of RJR Nabisco stockholders to approve the transactions.

RJR Nabisco's representatives responded that they perceived at least two
obstacles to Brooke Group's proposal. First, they suggested that, based upon the
small number of votes cast in favor of the stockholder proposal at the 1995
annual meeting, there was little stockholder interest in an immediate spinoff of
Nabisco; according to RJR Nabisco's representatives, this would inhibit their
discretion to invoke the corporate machinery or the provisions of Delaware Law
to allow Brooke Group's plan to advance. Second, they suggested that Brooke
Group, on its own, was not sufficiently credible as a merger partner. RJR
Nabisco's representatives stated that these

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<PAGE>

deficiencies would, in their view, cause the incumbent RJR Nabisco directors to
be named as defendants in a fraudulent conveyance action even if a slate of
directors proposed by Brooke Group actually authorized and implemented the
spinoff. RJR Nabisco's representatives did, however, indicate that they would be
interested to hear from Brooke Group how it might propose to address these
obstacles, and suggested that the parties might speak in several months, after
RJR Nabisco had completed its debt exchange offer.

On June 5, 1995 the debt exchange offer was consummated. In connection with
the exchange, Nabisco, Inc. and RJRN replaced their existing credit agreements
with new credit facilities, Nabisco, Inc. used the proceeds of borrowing under
its new credit facility to repay substantially all of its remaining intercompany
debt to RJRN, and RJRN used the cash proceeds received from Nabisco, Inc.,
together with additional borrowings under its new credit agreement, to repay all
outstanding borrowings under its old credit facilities.

Representatives of RJR Nabisco and Brooke Group next met on July 19, 1995.
At this meeting, Brooke Group's representatives reiterated their belief that an
immediate spinoff of Nabisco was in the best interests of RJR Nabisco's
stockholders and should be implemented by the RJR Nabisco Board. Brooke Group's
representatives also attempted to address the two concerns raised by RJR
Nabisco's representatives on May 24, 1995. At the conclusion of this meeting,
RJR Nabisco's representatives stated that they would continue to evaluate the
spinoff matter and asked for additional information from Brooke Group concerning
the economics of a possible merger with Liggett to implement the spinoff, which
was provided shortly thereafter.

On August 11, 1995, New Valley Corporation, an affiliate of Brooke Group
("New Valley"), filed a notification and report form under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR") with respect to the potential
acquisition of up to 15% of the outstanding voting securities of RJR Nabisco. On
the same date, as required by the HSR, New Valley notified RJR Nabisco of this
filing.

Thereafter, representatives of RJR Nabisco contacted representatives of
Brooke Group and requested another meeting for the purpose of reviewing in
greater detail information concerning the value of Liggett. This meeting took
place on August 22, 1995. At this meeting, which for the first time included
financial advisors to RJR Nabisco, Brooke Group's representatives responded to
questions raised by RJR Nabisco's representatives and expressed their view of
Liggett's value. Brooke Group's representatives underscored Brooke Group's
interest in effectuating a spinoff of Nabisco.

On August 21, 1995, without informing Brooke Group or the public, the Board
amended the Bylaws to eliminate the stockholders' right to call a special
meeting and to impose burdensome new requirements for stockholders who seek to
act by written consent without a meeting. The new procedure in the Bylaws for
stockholders to act by written consent requires any stockholder who seeks to act
by written consent to notify the Secretary of RJR Nabisco and to request the
Board to fix a record date. The Board then has 10 days to adopt a resolution
fixing a record date (which may be up to 10 days from the date of such
resolution). The new procedure also provides for the hiring of inspectors to
perform a "ministerial review" of written consents received by RJR Nabisco
before any action by written consent may become effective.

On August 29, 1995, the Federal Trade Commission notified Brooke Group and
RJR Nabisco that the waiting period under the HSR Act with respect to Brooke
Group's HSR notifica-

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<PAGE>

tion had been terminated. Later that day, RJR Nabisco issued a press release in
which RJR Nabisco stated, among other things, that it had determined that Brooke
Group's proposal was "neither viable nor in the best interests of RJR Nabisco's
shareholders."

On September 7, 1995, The Wall Street Journal reported that, in response to
inquiries regarding public speculation that Brooke Group might seek to call a
special meeting of stockholders, a spokeswoman for RJR Nabisco had asserted that
only the Chairman or the Board of Directors of RJR Nabisco had the right to call
a special meeting. Following this report, a number of prominent stock market
analysts speculated publicly that the Board had amended the Bylaws to eliminate
the right of stockholders to call a special meeting. On September 20, 1995,
Reuters reported that a spokeswoman for RJR Nabisco had confirmed this
speculation. In this report, the spokeswoman was quoted as saying that RJR
Nabisco had eliminated stockholders' right to call a meeting in order to "make
[the Bylaws] more consistent with other companies." She declined to comment on
when this amendment had been made, nor did RJR Nabisco disclose that the Board
had also amended the Bylaws to add the new written consent procedure.

On October 17, 1995, Brooke Group and its wholly-owned subsidiary BGLS
entered into an agreement with High River, an entity owned by Carl C. Icahn. New
Valley and ALKI Corp., a subsidiary of New Valley ("ALKI"), also entered into a
separate agreement with High River at that time. Pursuant to each of these
agreements, the parties agreed to take certain actions designed to cause RJR
Nabisco to effectuate a spinoff of Nabisco at the earliest possible date. These
actions are discussed in detail below, see "Certain Information Concerning
Brooke Group."

On October 30, 1995, Bennett S. LeBow, the Chairman of the Board, President
and Chief Executive Officer of Brooke Group, sent the following letter to each
of the members of the RJR Nabisco Board:

We at Brooke Group Ltd. believe that it's time to spin off Nabisco. We
believe that the market value of RJR Nabisco can be increased by as much as
50% as a result of a spinoff. The immediate and significant increase in
value that can be obtained for the Company's stockholders is recognized by
most knowledgeable investors.

Earlier this year, however, the Board vigorously opposed a resolution
proposed at the annual meeting by two stockholders that would have
recommended that management take steps to separate the tobacco and non-
tobacco businesses. The Board's stated reasons for opposing this initiative
were its prediction that the Company's stock would be boosted by the 1994
partial sale of Nabisco and by the Company beginning to pay a quarterly
dividend of 37-1/2 cents. Notably, the Board expressed its desire not to
be constrained by any specific program or timetable, putting off action
into the vague future. Since the Board's defeat of this small group of
stockholders, the Board has touted its victory as a sign that stockholders
do not want a spinoff. What the Board now ignores is that its predictions
about the benefits to our stock price were totally wrong.

Last year's sale of less that 20% of Nabisco has done nothing to
improve RJR Nabisco's stock price. The real beneficiaries were the banks
and bondholders. In order to maintain debt ratings at the time of the sale,
the Board adopted an anti-spinoff policy, declaring that they would not
allow a spinoff of Nabisco until 1997 at the earliest, and that even then
they would not allow a spinoff before 1999 if RJR Nabisco's debt ratings

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<PAGE>

would fall below investment grade. While the banks and other creditors
benefit from this policy, it is harming the stockholders.

The Company's stock price has continued to suffer, as you well know.
Rather than addressing its problems forthrightly through a complete
separation of the tobacco and food businesses, the Company has resorted
repeatedly to half-measures and quick fixes. Recently, the Board put John
Greeniaus, the head of Nabisco, in charge of its faltering tobacco
business. At that time, RJR Nabisco's spokeswoman admitted: "It's clear
that we need to strengthen our share performance. . . . That's one reason
why the marketing expertise of John Greeniaus could bring some additional
talent to that operation." When it was pointed out to her that this change
would be short-term if there was a spinoff, she commented: "There's nothing
temporary about this. We have no plans to split this company."

In moving John Greeniaus to cover both tobacco and foods, the Board is
diluting his attention and impact, and impractically trying to meld
unrelated businesses rather than sensibly split them. It is worth noting
that Nabisco's current earnings have slipped below expectations.* Most
recently, the Company announced that it expects poor performance for the
rest of 1995 and through 1996.

In the face of mounting evidence that its strategy has failed, the
Board apparently is no longer willing to let stockholders' voices be heard.
Soon after we presented the management with our spinoff proposal, the Board
acted secretly to eliminate the right of stockholders to call a special
meeting. When first asked by the press about the right to call a special
meeting the Company's spokeswoman maintained that "only the Chairman or the
board of directors can call a special meeting." This was ill-advised lack
of candor. When the secret action to cut out stockholder rights came to
light, the Company's spokeswoman then attempted to justify it by claiming
that the Board "changed the bylaws to make them more consistent with other
companies." This flimsy pretext cannot disguise the true nature of the
Board's grab for power -- which deprives stockholders of a right that RJR
Nabisco's bondholders continue to hold -- the right to convene a special
meeting at which they can express their views to management.

We and our affiliates hold a major position in RJR Nabisco stock. We
have entered into a binding agreement with Carl Icahn, who has agreed to
support our efforts. Together, we currently hold approximately 13 million
RJR Nabisco shares, making us the Company's second largest stockholder,
based on publicly available information. Other dissatisfied stockholders
have indicated publicly that they are interested in a spinoff.

We are today requesting a stockholders' list. In the next few days we
will be filing materials with the Securities and Exchange Commission for a
solicitation of stockholders. We will be soon asking them to adopt a
resolution advising the Board to

- ----------

* The New York Times reported on October 24, 1995 that Nabisco's net income
fell 20% in the third quarter of 1995 from the third quarter of 1994.
Nabisco stated that earnings per share fell to $.20 from $.28 in the third
quarter of 1994. It was further reported that, according to the average
estimate of 8 analysts surveyed by Zacks Investment Research, "Wall Street
had been expecting profits from operations of 29 cents." Mr. Greeniaus,
Nabisco's Chief Executive Officer was quoted as saying, "Our third-quarter
results are disappointing to us." This footnote did not appear in Mr.
LeBow's letter.

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<PAGE>

spin off Nabisco. We will also be asking them to vote to roll back the
change in the Company's by-laws to once again allow stockholders to be able
to call special meetings. We believe, as you must have when you changed the
Company's by-laws, that 25% or more of the outstanding shares would have
acted to call a special meeting, as permitted under the old by-laws, to
express their interest in a spinoff. In our impending solicitation, we
believe that other dissatisfied stockholders will join that nucleus.

There have been numerous reports by analysts and in the press which
indicate that the Board members' misguided fears of personal liability are
preventing the Board from entertaining and effectuating a spinoff. Recent
events have lent credence to these reports.

We believe that any actions the Board may take which would, directly
or indirectly, make it more difficult to effect a spinoff would be contrary
to the Board's fiduciary obligations to the stockholders, reflecting the
Board's effort, at the expense of the stockholders, to avoid a risk of
personal liability which we believe to be negligible. Should the Board
undertake any such actions, we will hold the directors personally
accountable and will strive, among other things, to assure that such
self-interested conduct is not indemnified by the Company or otherwise
underwritten by the stockholders.

As we indicated above, after our last meeting with you, the Board
acted in secret, behind the backs of the stockholders, to restrict the
ability of stockholders to take action at a special meeting, and then the
management attempted to mislead the press. Given the spotlight of public
scrutiny now upon you, we doubt that you would give serious thought to any
further such actions without notice to and approval of the stockholders.
Rest assured that we will react vigorously to prevent or nullify any Board
action which in our view makes more difficult the free exercise of
stockholder choice to spin off Nabisco.

We believe that it is time to spin off Nabisco, and that the
stockholders are entitled to the benefits of a spinoff now. We will be
proposing a slate of Directors for the annual meeting next year to
facilitate implementation of a spinoff resolution -- if the Board does not
follow the stockholders' advice. The Company's by-laws require us to
propose a slate by November 20, 1995, and we will be doing so to avoid
losing any rights. However, if the Company unequivocally commits to effect
a spinoff immediately, we will happily terminate our solicitation of
stockholders.

On October 31, 1995, Liggett caused its nominee, Cede & Co., to deliver to
RJR Nabisco a demand for a stockholder list and certain other information. Later
that day, Mr. LeBow received a letter from Charles M. Harper, the Chairman of
the Board of RJR Nabisco, reading in full as follows:

The RJR Nabisco board of directors has met to consider your October 30
letter demanding an immediate separation of our food and tobacco
businesses. The board rejects your demand and your characterization of its
position. As you know, the board has been and continues to be fully
committed to a spin-off of Nabisco Holdings Corp. The board will accomplish
a spin-off just as soon as it is able to determine that the

24
<PAGE>

spin-off is in the best interests of all the shareholders and consistent
with the corporation's commitments.

There is absolutely no need for a shareholder referendum on the
spin-off question. Based on discussions with shareholders, we know that a
majority are in favor of a spin-off just as soon as it can be reasonably
accomplished. In short, they agree with the board's position on this
matter.

The board has considered several significant transactions in the past
few years that would have resulted in a spin-off of Nabisco Holdings.
However, before being able to proceed, serious issues arose that forced the
corporation to not go forward. In order for a spin-off to be in the best
interests of the shareholders, it must meet three conditions:

o It must be tax-free;

o It must be accomplished in a manner that avoids long litigation
delays and the resulting uncertainty that would erode shareholder
value; and

o It must preserve the financial integrity of both the food and
tobacco businesses.

The board has periodically reviewed the spin-off issue and has
consulted with independent financial, tax and legal advisors and, to repeat
a point that needs no repeating, the board continues to be in favor of a
spin-off. Again, the board has authorized me to inform you and all the
shareholders that the corporation will spin-off Nabisco Holdings as soon as
the spin-off can be completed in a manner that the board determines is in
the best interests of the shareholders and is consistent with the
corporation's commitments.

Your threatened consent solicitation would, if carried out, endanger
this company's ability to successfully effect a spin-off at what would be
the right time. The more your actions focus attention on the
non-business-related aspects of such a transaction and the more your
actions ignore the current litigative situation, the greater the likelihood
that a development will arise to jeopardize the possibility of ever
completing a spin-off. That's not in the shareholders' interest.

Apart from an unnecessary referendum on the spin-off, you are, of
course, free to solicit proxies to elect a new board of directors at the
annual meeting of shareholders. We do not believe the shareholders will
support you and turn over to you control of their $9 billion investment.
Your proposal ignores the current dangers a spin-off presents for all
shareholders and fails to recognize the binding financial commitments the
company has made in the past. We do not believe our shareholders will
support your express intention to cause the corporation to violate its
commitments to the holders of our securities.

Our intention has been and continues to be to effect a separation of
our food and tobacco businesses. Given that both the litigative and policy
environments are currently at their most uncertain points in the company's
history, pursuing a consent solicitation to attempt to force a separation
of the businesses now is not only imprudent, it is irresponsible.

Also on October 31, 1995, RJR Nabisco filed the 1995 Third Quarter 10-Q,
which included a copy of its then current By-Laws as an exhibit. This filing was
the first time that RJR Nabisco had

25
<PAGE>

made its then current By-Laws publicly available since the Board's August 21,
1995 amendments were made. The filing also disclosed for the first time the
addition of the burdensome new written consent procedure.

On November 7, 1995, Mr. Harper sent a letter to the stockholders of RJR
Nabisco. The Board of Directors of RJR Nabisco filed with the SEC its Revocation
of Consent Statement in connection with the Board's opposition to the
solicitation by Brooke Group on November 9, 1995. On November 14, 1995, Mr.
LeBow sent a letter to the stockholders of RJR Nabisco. On November 20, 1995,
Brooke Group, acting to preserve its right to nominate a slate of directors at
RJR Nabisco's 1996 annual stockholders' meeting in the event RJR Nabisco does
not irrevocably commit to effectuate an immediate spinoff of Nabisco, submitted
to RJR Nabisco information with respect to nominees committed to an immediate
spinoff of Nabisco. Also, on November 20, 1995, RJR Nabisco filed a lawsuit in
U.S. District Court for the Middle District of North Carolina, naming Brooke
Group and Messrs. LeBow and Icahn as defendants. On November 20, 1995, Brooke
Group filed an action in the United States District Court of the Southern
District of Florida, naming RJR Nabisco and its tobacco subsidiary R.J. Reynolds
Tobacco Company("RJ Reynolds") as defendants. See "Certain Litigation" below.

On December 5, 1995, RJR Nabisco again filed its amended and restated
By-Laws in its Current Report on Form 8-K, dated December 5, 1995. The filing
did not disclose any additional By-Law amendments to which Brooke Group
currently objects. On December 11, 1995 and December 21, 1995, Mr. LeBow sent
letters to stockholders of RJR Nabisco. On December 19, 1995, Mr. Goldstone sent
a letter to the stockholders of RJR Nabisco.

CERTAIN LITIGATION

On November 20, 1995, RJR Nabisco filed an action against Brooke Group, Mr.
LeBow and Mr. Icahn in the United States District Court for the Middle District
of North Carolina. In that action, RJR Nabisco alleges that Brooke Group, LeBow
and Icahn violated sections 14(a) and 10(b) of the Securities Exchange Act of
1934, as amended, and Rules 14a-9 and 10b-5 promulgated thereunder, by allegedly
making materially false or incomplete statements concerning the purpose and
background of "their" consent solicitation. RJR Nabisco seeks temporary and
permanent injunctions barring Brooke Group, LeBow and Icahn from proceeding with
the consent solicitation until such time as they remedy the alleged disclosure
obligation violations. RJR Nabisco is alleging that Brooke Group, LeBow and
Icahn secretly attempted to form a group of investors to purchase a 21% interest
in RJR Nabisco on the open market, with the ultimate goal of combining the
tobacco businesses of RJR Nabisco and Brooke Group. According to the complaint,
the principal purpose for such a combination is to eliminate certain alleged
actual or potential issues with which Brooke and/or New Valley may be confronted
under the Investment Company Act of 1940. Mr. LeBow is alleged to have met with
persons involved in the international tobacco business in furtherance of this
claimed secret plan. Brooke Group and Mr.LeBow filed a motion to dismiss or
transfer the North Carolina action on December 13, 1995. On December 20, 1995,
Brooke Group, Mr. LeBow, and Mr. Icahn filed answers to the Complaint, and
Brooke Group and Mr. LeBow filed a counterclaim to this action. All defendants
denied RJR Nabisco's allegations, and Brooke Group and Mr. LeBow alleged in
their counterclaim that RJR Nabisco violated Section 14(a) of the Exchange Act,
and Rule 14a-9 promulgated thereunder, by making false and misleading statements
in, and by omitting material information from, communications and disclosures to
stockholders in opposition to Brooke Group's proposed consent soli-

26
<PAGE>

citation. The relief sought includes RJR Nabisco and its affiliates being
preliminarily and permanently enjoined from soliciting stockholders either to
grant revocations of consent or to withhold consents from Brooke Group.

RJR Nabisco's allegations directly contradict the repeated public
statements made by Mr. LeBow that the sole purpose of this solicitation is to
ask the stockholders of RJR Nabisco to inform RJR Nabisco's Board that they
desire an immediate spinoff of Nabisco. As Mr. LeBow has repeatedly stated, and
as we are reaffirming in this Consent Statement, we will abandon this
solicitation if the current RJR Nabisco Board of Directors unequivocally commits
to effectuate an immediate spinoff and allow stockholders to realize the true
value of their investment.

Simultaneously with its submission to RJR Nabisco of the names of nominees,
Brooke Group filed an action against RJR Nabisco and RJ Reynolds in the United
States District Court of the Southern District of Florida. In the action, Brooke
Group is seeking a declaratory judgment that the nominees are not barred from
serving as directors of RJR Nabisco under the terms of Section 8 of the Clayton
Act, 15 U.S.C. ss. 19 (the "Clayton Act"). Brooke Group brought the action
because it anticipated that RJR Nabisco would commence litigation under the
Clayton Act in an attempt to interfere with Brooke Group's right to nominate
and/or elect a slate of directors committed to an immediate spinoff of Nabisco.
Brooke Group believes that any such potential litigation would be meritless. In
response to Brooke Group's action for declaratory judgment, RJ Reynolds and RJR
Nabisco filed a motion to dismiss. Brooke Group filed a memorandum of law in
opposition to such motion on December 27, 1995.

CERTAIN INFORMATION CONCERNING BROOKE GROUP

Brooke Group is principally engaged, through its ownership of Liggett, in
the manufacture and sale of cigarettes and, through its affiliate, New Valley,
in the acquisition of operating companies. Brooke Group also has investments in
a number of additional companies engaged in a diverse group of businesses. The
principal executive offices of Brooke Group are located at 100 S.E. Second
Street, Miami, Florida 33131.

Brooke Group beneficially owns, directly, 200 shares of Common Stock.
Brooke Group beneficially owns 100% of the outstanding capital stock of BGLS,
which beneficially owns 100% of the outstanding capital stock of Liggett.
Liggett beneficially owns, directly, 200 shares of Common Stock and beneficially
owns, directly, 1,000 shares of Class A Common Stock, par value $.01 per share,
of Nabisco. In addition, BGLS directly and indirectly owns 618,326 Class A
Senior Preferred Shares (approximately 56% of such class), 250,885 Class B
Preferred Shares (approximately 9% of such class) and 79,794,229 Common Shares,
(approximately 42% of such class), of New Valley, which beneficially owns all of
the outstanding capital stock of ALKI which beneficially owns, directly,
4,892,550 shares of Common Stock, or approximately 1.8% of the outstanding
Common Stock. Bennett S. LeBow, who is the Chairman of the Board, President and
Chief Executive Officer of Brooke Group and of BGLS, may be deemed to be the
beneficial owner of 10,521,208 shares of common stock of Brooke Group, or
approximately 56.8% of Brooke Group's outstanding common stock, and thus may be
deemed to control Brooke Group. The disclosure of this information shall not be
construed as an admission that Mr. Lebow is the beneficial owner of any of the
Common Stock owned by Brooke Group, BGLS, New Valley, ALKI and/or Liggett either
for purposes of Section 13(d) of the Securities Exchange Act of 1934, as
amended, or for any other purpose, and such beneficial ownership is expressly
disclaimed.

27
<PAGE>

Likewise, Brooke Group beneficially owns 200 shares of Common Stock
directly, and may be deemed to beneficially own, indirectly, the 4,892,550
shares of Common Stock owned by ALKI and the 200 shares of Common Stock owned by
Liggett. The disclosure of this information shall not be construed as an
admission that Brooke Group is the beneficial owner of any of the Common Stock
owned by ALKI and/or Liggett, either for purposes of Section 13(d) of the
Exchange Act or for any other purpose, and such beneficial ownership is
expressly disclaimed.

For the same reasons, BGLS may be deemed to beneficially own, indirectly,
the 4,892,550 shares of Common Stock owned by ALKI and the 200 shares of Common
Stock owned by Liggett. The disclosure of this information shall not be
construed as an admission that BGLS is the beneficial owner of any of the Common
Stock owned by ALKI and/or Liggett, either for purposes of Section 13(d) of the
Exchange Act or for any other purpose, and such beneficial ownership is
expressly disclaimed.

For information concerning the directors and executive officers of Brooke
Group, see Annex B. For information about the number of RJR Nabisco Voting
Securities beneficially owned by certain principal stockholders and members of
RJR Nabisco's management, see Annex C.

On October 17, 1995, Brooke Group and BGLS entered into the High River
Agreement with High River, an entity owned by Carl C. Icahn. High River
beneficially owns 8,013,000 shares of Common Stock. High River agreed in the
High River Agreement to grant a written consent to the Proposals with respect to
all shares of Common Stock held by it, and to grant a proxy with respect to all
such shares in the event that Brooke Group or BGLS seeks to replace the
incumbent Board of Directors of RJR Nabisco at the 1996 annual meeting of
stockholders with a slate of directors committed to effect the spinoff. Brooke
Group and BGLS agreed in the High River Agreement to include, in any
solicitation statement relating to any solicitation of (i) stockholder demands
to call a special meeting, (ii) written consents or (iii) proxies, in respect of
a proposal to elect an opposing slate of directors, a pledge to the effect that
Brooke Group, BGLS and their affiliates (the "BGL Group") (A) will not engage in
certain mergers, material sales of stock or assets or other transactions
(including a sale of Liggett or shares of Common Stock to RJR Nabisco) providing
a material benefit to the BGL Group not available to other stockholders of RJR
Nabisco (each, a "Business Combination"), other than a Business Combination
consummated simultaneously with or subsequent to a spinoff of RJR Nabisco's
remaining equity interest in Nabisco or another transaction providing
substantially equivalent value to stockholders ("Permitted Business
Combination") (I) prior to the 1996 annual meeting of RJR Nabisco stockholders,
or earlier if the BGL Group is unsuccessful in (a) a solicitation of stockholder
demands to call a special meeting, (b) a solicitation of consents or proxies to
approve certain proposals or (c) having its nominees elected to constitute a
majority of RJR Nabisco's directors, or (II) during such time as nominees of the
BGL Group constitute a majority of the directors of RJR Nabisco; (B) prior to
the consummation of a spinoff of Nabisco, will not exercise management control
over Nabisco or Nabisco, Inc. or become involved in the ordinary course of its
business and will use its best efforts to ensure that a majority of the present
directors of Nabisco and Nabisco, Inc. remain as directors; and (C) will halt
any solicitation of stockholders demands, consents or proxies if the RJR Nabisco
Board effects a spinoff of Nabisco or a substantially equivalent transaction.
Similarly, High River agreed not to engage in or propose any Business
Combination prior to the earliest of (x) the later of the 1997 annual meeting of
stockholders of RJR Nabisco and the first anniversary of the termination of the
High River Agreement (the "Reference Date"), (y) any termination of the High
River Agreement that occurs at or after certain termination events relating to
failures or an inability to

28
<PAGE>

effect the transactions contemplated by the High River Agreement ("Termination
Events") and (z) any termination of the High River Agreement by Brooke Group or
BGLS, or the New Valley Agreement (as defined below) by New Valley or ALKI, at a
time when High River is not in material breach of its obligations.

The High River Agreement will automatically terminate on October 17, 1996
or upon the earlier termination of the New Valley Agreement (as defined below)
by High River. In addition, any party to the High River Agreement may terminate
it at any time, although the terminating party will be required to pay a fee of
$50 million to the nonterminating party if no Termination Event has occurred and
the nonterminating party is not in material breach of its obligations. The High
River Agreement also provides that any party may terminate the High River
Agreement and be entitled to receive a fee of $50 million from the
nonterminating party if the nonterminating party is in material breach of its
obligations and no Termination Event has occurred. The High River Agreement
further provides that BGLS will be required to pay a $50 million fee to High
River upon the consummation of a Business Combination (including a Permitted
Business Combination) between the BGL Group and RJR Nabisco if (x) such Business
Combination is consummated prior to the Reference Date, (y) a legally binding
agreement to enter into a Business Combination is entered into prior to the
Reference Date and such Business Combination is consummated prior to the second
anniversary of the date of such agreement or (z) nominees of BGL are elected to
constitute a majority of the directors of RJR Nabisco prior to the Reference
Date and a Business Combination is consummated prior to the fifth anniversary of
the date of such election. Finally, the High River Agreement provides that High
River will be entitled to a payment equal to 20% of the net profit with respect
to Common Stock held or sold by New Valley, ALKI or the BGL Group, after
deduction of certain expenses, including the costs of this solicitation and
certain proxy solicitations by the BGL Group and the costs of acquiring the
shares of the Common Stock (all of which expenses will be borne by New Valley,
ALKI or the BGL Group). Notwithstanding any such termination, the obligations of
the BGL Group and of High River not to engage in a Business Combination with RJR
Nabisco or the other activities described above will continue for the periods
described above.

Also on October 17, 1995, New Valley and ALKI Inc., a subsidiary of New
Valley ("ALKI"), entered into a separate agreement with High River, as amended
(the "New Valley Agreement"). Pursuant to the New Valley Agreement, New Valley
sold 1,611,550 shares of Common Stock to High River for an aggregate purchase
price of $51,000,755, thereby approximately equalizing the number of shares of
Common Stock and total investment therein by the parties. In addition, the
parties agreed that each of New Valley and ALKI, on the one hand, and High River
and its affiliates, on the other hand, would invest up to approximately $150
million in shares of Common Stock, and may invest up to approximately $250
million in shares of Common Stock in order to maximize profits. The obligations
of the parties to make any investments is subject to their ability to obtain and
maintain margin loans (using the shares of Common Stock purchased by them as
collateral) to fund the purchases, and to certain provisions of the New Valley
Agreement which do not require any party to purchase shares of Common Stock to
the extent the purchase price would exceed certain hurdles ($35.50 per share in
respect of the first $150 million in investments by each party, and $31.00 per
share in respect of the next $100 million in investments). New Valley and ALKI
also agreed in the New Valley Agreement to grant a stockholder demand, written
consent or proxy with respect to all shares of Common Stock held by them in the
event that Brooke Group or BGLS seeks to call a special meeting of stockholders,
obtain the approval of any

29
<PAGE>

of the Proposals or replace the incumbent Board of Directors of RJR Nabisco at
the 1996 annual meeting of stockholders. The New Valley Agreement automatically
terminates at the same time, and is subject to earlier termination by the
parties under the same circumstances as the High River Agreement. The parties to
the New Valley Agreement are required to pay fees in the same amounts and
generally under the same circumstances as described above under the High River
Agreement, although the fees payable to a party under the High River Agreement
generally will be offset by fees paid to such party under the New Valley
Agreement, and fees payable to a party under the New Valley Agreement generally
will be offset by fees paid to such party under the High River Agreement.

NO MATTER HOW MANY SHARES YOU OWN, YOUR CONSENT TO THE PROPOSALS IS VERY
IMPORTANT. PLEASE HELP US TO MAXIMIZE STOCKHOLDER VALUE BY COMPLETING, SIGNING
AND DATING THE ENCLOSED CONSENT AND RETURNING IT PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS NECESSARY IF THE ENVELOPE IS MAILED IN THE UNITED
STATES.

Sincerely,

BROOKE GROUP LTD.

December 29, 1995

<PAGE>

ANNEX A

BYLAW PROVISION GOVERNING WRITTEN CONSENT PROCEDURE

Brooke Group proposes to eliminate Article I, Section 9 of the Bylaws which
currently reads as follows:

"Section 9. Record Date for Action by Written Consent; Inspectors and
Effectiveness.

(a) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than 10 days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent shall, by written notice to the
Secretary, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within 10 days after the date on
which such a request is received, adopt a resolution fixing the record date. If
no record date has been fixed by the Board of Directors within 10 days of the
date on which such a request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business or to any officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded, to the attention of the Secretary of the Corporation. Delivery made to
the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
applicable law, the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting shall be at the close of
business on the date on which the Board of Directors adopts the resolution
taking such prior action.

(b) In the event of the delivery, in the manner provided by Section 9(a),
to the Corporation of the requisite written consent or consents to take
corporate action and/or any related revocation or revocations, the Corporation
shall engage nationally recognized independent inspectors of elections for the
purpose of promptly performing a ministerial review of the validity of the
consents and revocations. For the purpose of permitting the inspectors to
perform such review, no action by written consent without a meeting shall be
effective until such date as the independent inspectors certify to the
Corporation that the consents delivered to the Corporation in accordance with
Section 9(a) represent at least the minimum number of votes that would be
necessary to take the corporate action. Nothing contained in this paragraph
shall in any way be construed to suggest or imply that the Board of Directors or
any stockholder shall not be entitled to contest the validity of any consent or
revocation thereof, whether before or after such certification by the
independent inspectors, or to take any other action (including, without
limitation, the commencement, prosecution or defense of any litigation with
respect thereto, and the seeking of injunctive relief in such litigation).

(c) Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within 60 days of the
earliest dated written consent delivered in accordance with Section 9(a), a
written consent or consents signed by a sufficient number of stockholders to
take such action are delivered to the Corporation in the manner prescribed in
Section 9(a)."

A-1

<PAGE>
ANNEX B

INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF BROOKE GROUP AND ADDITIONAL INFORMATION

The following table sets forth the name and the present principal
occupation or employment of the directors and executive officers of Brooke Group
and the name, principal business and address of any corporation or other
organization in which such employment is carried on. Unless otherwise indicated,
the principal business address of each director or executive officer is 100 S.E.
Second Street, Miami, Florida 33131.

Principal Office or Other
Name and Principal Principal Occupation or
Business Address Employment
- ------------------ -------------------------
<S> <C>
Bennett S. LeBow ................ Chairman of the Board, President and Chief
Executive Officer of Brooke Group.
Chairman of the Board, President and Chief Executive Officer
of BGLS. Member of the Board of Directors of Liggett.
Chairman of the Board and Chief Executive Officer
of New Valley. Chairman of the Board, President and
Chief Executive Officer of ALKI Corp.

Gerald E. Sauter ................ Vice President, Chief Financial Officer and Treasurer
of Brooke Group. Vice President, Chief Financial
Officer and Treasurer of BGLS. Vice President, Chief
Financial Officer and Treasurer and member of the Board
of Directors of New Valley. Vice President, Chief Financial
Officer and Treasurer of ALKI Corp.

Robert J. Eide .................. Director of Brooke Group. Director of BGLS. Secretary and
70 E. Sunrise Hwy. Treasurer of Aegis Capital Corp., a registered broker-dealer.
Valley Stream, NY 11581

Jeffrey S. Podell ............... Director of Brooke Group. Director of BGLS. Chairman of the
26 Jefferson St. Board and President of Newsote, Inc., the Passaic, NJ
Passaic, NJ 07055 parent of Pantasote, Inc., a former manufacturer of
plastic products.
</TABLE>

The persons listed in the above table may be deemed to be "participants" in
the solicitation. Additionally, the following persons may also be deemed to be
participants in the solicitation: Brooke Group, BGLS, Liggett, New Valley,
Andrew E. Balog, Marc N. Bell, Karen Eisenbud, J. Bryant Kirkland, III, Richard
J. Lampen, Howard M. Lorber, Robert M. Lundgren, High River and Carl C. Icahn.
Information on the beneficial ownership of RJR Nabisco stock by Brooke Group,
BGLS, Liggett, New Valley and Mr. LeBow is set forth in the Consent Statement
under the section entitled "Certain Information Concerning Brooke Group." Mr.
Lampen beneficially owns 2,000 shares of Common Stock. High River beneficially
owns directly 8,013,000 shares of Common Stock, and therefore, Mr. Icahn may be
deemed to beneficially own, indirectly, such 8,013,000 shares of Common Stock.
To the best of Brooke Group's knowledge, except as otherwise provided herein,
none of the persons listed in this Annex B owns any shares of RJR Nabisco Voting
Securities.

B-1
<PAGE>

ANNEX C
PRINCIPAL STOCKHOLDERS AND STOCK HOLDINGS
OF RJR NABISCO'S MANAGEMENT

Security Ownership of Directors and Executive Officers

The following table (including the footnotes thereto) sets forth certain
information, as of December 11, 1995, the date RJR Nabisco filed its revised
preliminary revocation of consent statement ("Preliminary Revocation Statement")
with the SEC, regarding the beneficial ownership of (i) Common Stock and (ii)
Class A Common Stock, par value .01 per share, of Nabisco, by each director of
RJR Nabisco, by each of the five most highly compensated executive officers of
RJR Nabisco during the fiscal year,** and each associate of any such director or
officer and by all directors and executive officers of RJR Nabisco as a group.
Nabisco was a wholly-owned indirect subsidiary of RJR Nabisco prior to the
January 1995 initial public offering by Nabisco of its Class A Common Stock. As
of December 11, 1995, RJR Nabisco indirectly owned all 213,250,000 shares of
Nabisco Class B Common Stock outstanding, which represents approximately 80.5%
of the economic interest in Nabisco and approximately 97.6% of the combined
voting power of all classes of Nabisco voting stock. Except as otherwise noted,
the persons named in the table do not own any other capital stock of RJR Nabisco
or Nabisco and have sole voting and investment power with respect to all shares
shown as beneficially owned by them. All of the foregoing information and the
information set forth in the table below (including the footnotes thereto) have
been taken from RJR Nabisco's Preliminary Revocation Statement.

Number of Shares
of Nabisco Class A
Number of Shares Percent of Common Stock Percent of
Name of of RJR Nabisco Common Stock RJR Nabisco Beneficially Nabisco Class A
Beneficial Owner Beneficially Owned(1) Common Stock Owned(1)(3) Common Stock
---------------- --------------------------- ------------ ------------------- ---------------
<S> <C> <C> <C> <C>
John T. Chain, Jr. (2).............. 8,393 * 1,000 *
Julius L. Chambers (2).............. 6,393 * 0 *
John L. Clendenin (2)............... 6,846 * 500 *
Steven F. Goldstone................. 16,529 * 0 *
H. John Greeniaus (2)............... 126,308 * 10,100 *
Ray J. Groves (2)................... 7,000 * 0 *
Charles M. Harper (2)............... 524,882 0.1920 71,429 0.1380
James W. Johnston (2)(5)............ 114,381 * 1,000 *
John G. Medlin, Jr. (2)............. 7,259 * 1,000 *
Roxanne L. Ridgway (2).............. 6,393 * 0 *
Andrew J. Schindler (2)............. 28,891 * 0 *
All Directors and Officers
as a Group (2)(4)................. 1,351,824 0.4943% 91,229 0.1763%
</TABLE>
- ----------

* Less than 0.1%

** Item 5(a) of Schedule 14A of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires that RJR Nabisco disclose the
securities ownership of its directors and executive officers as of the
beginning of the last fiscal year. Item 6(d) of Schedule 14A and Items
403(b) and 402(a)(3) of Regulation S-K of the Exchange Act require that RJR
Nabisco disclose the securities ownership of its five most highly
compensated executives as of the end of the last fiscal year. Item
402(a)(3)(iii) also requires that RJR Nabisco update such disclosures with
the securities ownership of two more executives who are currently among RJR
Nabisco's five most highly compensated

C-1
<PAGE>

executives, but did not fall within the group of RJR Nabisco's five most
highly compensated executives at the end of the last fiscal year. Because
several directors and executive officers of RJR Nabisco have resigned since
the end of the last fiscal year, and in order to make the following table
easier to read, RJR Nabisco included only the beneficial ownership of the
current directors and executive officers in such table. RJR Nabisco has
disclosed that it has complied with its obligations under the Exchange Act
by disclosing in the footnotes to this table the beneficial ownership of
the Common Stock by the directors and executive officers who served in such
capacities at the beginning and the end, respectively, of the last fiscal
year but no longer serve in such capacities.

(1) For purposes of this table, a person or group of persons 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 or group of persons named above on a
given date, any security that such person or persons has the right to
acquire within 60 days is deemed to be outstanding, but is not deemed to be
outstanding for the purpose of computing the percentage ownership of any
other person.

(2) The number of shares of Common Stock beneficially owned includes (i) 6,393
shares subject to currently exercisable options granted to each of Gen.
Chain, Messrs. Chambers and Clendenin and Ms. Ridgway; 6,000 shares and 393
shares respectively subject to currently exercisable options granted to
each of Messrs. Groves and Medlin; 462,500 and 741,664 shares subject to
currently exercisable options granted to Mr. Harper and all directors and
executive officers as a group, respectively; and (ii) 272, 160, 274, 271
and 2,466 shares of Common Stock currently issuable on conversion of shares
of ESOP Preferred Stock owned by, respectively, Messrs. Greeniaus, Harper,
Johnston, Schindler and all directors and executive officers as a group.

(3) No director or officer of RJR Nabisco holds any options exercisable within
60 days to acquire shares of Nabisco Class A Common Stock.

(4) On March 14, 1995, Kohlberg Kravis Roberts & Co. LLP ("KKR") sold all of
its then remaining holdings in RJR Nabisco. James H. Greene, Jr., Henry R.
Kravis, Paul E. Raether, Clifton S. Robbins, George R. Roberts, Scott M.
Stuart, and Michael T. Tokarz previously served on the Board as
representatives of KKR. Messrs. Greene, Kravis, Raether, Robbins, Roberts,
Stuart and Tokarz (the "KKR Directors") did not run for reelection at RJR
Nabisco's Annual Meeting of Stockholders held on April 12, 1995. Their
respective terms in office expired effective as of that date. RJR Nabisco
has disclosed that it cannot independently verify the exact nature of their
current holdings in RJR Nabisco because they are no longer subject to the
disclosure requirements of Section 16(a) of the Exchange Act, discussed
below. However, their last Section 16(a) filings with the Securities and
Exchange Commission (the "SEC") dated as of April 7, 1995 indicate that, as
of that date, none of the KKR Directors had any beneficial ownership in the
capital stock of RJR Nabisco.

(5) The outstanding shares of Common Stock shown as beneficially owned by Mr.
Johnston include 12,000 shares held in trust for the benefit of Mr.
Johnston's children, as to which Mr. Johnston disclaims beneficial
ownership.

(6) Lawrence R. Ricciardi retired as both an executive officer and a director
of RJR Nabisco effective March 3, 1995. Mr. Ricciardi is no longer subject
to the disclosure requirements of Section 16(a) of the Exchange Act.
Therefore, RJR Nabisco has disclosed that it cannot

C-2
<PAGE>

independently verify Mr. Ricciardi's current stock ownership. As of
September 3, 1995, Mr. Ricciardi beneficially owned 407,845 shares of
Common Stock of RJR Nabisco.

(7) Eugene R. Croisant retired as an executive officer of RJR Nabisco effective
March 3, 1995. Mr. Croisant is no longer subject to the disclosure
requirements of Section 16(a) of the Exchange Act. Therefore, RJR Nabisco
has disclosed that it cannot independently verify Mr. Croisant's current
stock ownership. As of September 3, 1995, Mr. Croisant beneficially owned
324,597 shares of Common Stock of RJR Nabisco.

Security Ownership of Certain Beneficial Owners

The following table (including the footnotes thereto) sets forth certain
information, as of December 11, 1995, regarding the beneficial ownership of
persons known to RJR Nabisco to be the beneficial owners of more than five
percent of any class of RJR Nabisco Voting Securities. The information set forth
in the table below (including the footnotes thereto) have been taken from RJR
Nabisco's Preliminary Revocation Statement. 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.

Title Name and Address Number of Shares Percent
of Class of Beneficial Owner Beneficially Owned of Class
-------- ------------------- ------------------ --------
<S> <C> <C> <C>
Common Stock FMR Corp.(1)...................................... 35,305,862 12.58%
82 Devonshire Street
Boston, MA 02109

Series C College Retirement Equities Fund(2)............... 1,782,680 6.68%
Conversion 730 Third Avenue
Preferred Stock New York, NY 10017

Series C Brinson Partners, Inc.(3)......................... 1,745,310 6.54%
Conversion 209 South LaSalle
Preferred Stock Chicago, IL 60604-1295

Series C The Prudential Insurance Company
Conversion of America(4)................................... 1,680,205 6.30%
Preferred Stock Prudential Plaza
Newark, NJ 07102-3777

ESOP Convertible Wachovia Bank of North Carolina, N.A.(5).......... 15,187,141 100.00%
Preferred Stock Box 3075, Trust Operations
Winston-Salem, NC 27102

Nabisco Class A Janus Capital Corporation(6)...................... 4,472,875 9.90%
Common Stock 100 Fillmore Street, Suite 300
Denver, CO 80206-4923

Nabisco Class A Tiger Management Corporation(7)................... 9,145,300 17.7%
Common Stock 101 Park Avenue
New York, NY 10178
</TABLE>
- ----------

(1) According to Amendment No. 1 to Schedule 13G dated February 13, 1995
jointly filed by FMR Corp. and Edward C. Johnson 3d, Chairman of FMR Corp.
and a member of a controlling group with respect to FMR Corp., the
34,305,862 shares of Common Stock shown as beneficially owned by FMR Corp.
and Mr. Johnson as of December 31, 1994

C-3
<PAGE>

include (i) 32,551,043 shares beneficially owned by Fidelity Management &
Research Company, a registered investment adviser and wholly owned
subsidiary of FMR Corp., as a result of acting as investment adviser to
several registered investment companies that own such shares (the "Fidelity
Funds"), (ii) 2,712,180 shares beneficially owned by Fidelity Management
Trust Company ("Fidelity Trust"), a bank and wholly owned subsidiary of FMR
Corp., as a result of serving as investment manager of institutional
accounts, (iii) 10,400 shares owned directly by Mr. Johnson or in trusts
for the benefit of Mr. Johnson or a member of his family and (iv) 65,400
shares beneficially owned by Fidelity International Limited ("Fidelity
International"), an investment advisor of which Mr. Johnson is also
Chairman and a member of a controlling group, but which is managed
independently from FMR Corp. Each of FMR Corp. and Fidelity International
disclaim beneficial ownership of shares beneficially owned by the other.
According to the Schedule 13G, FMR Corp. and Mr. Johnson also beneficially
own 5,165,800 shares of Series C Preferred Stock as a result of (i) the
Fidelity Funds owning 4,071,700 Series C Depositary Shares and (ii) the
institutional accounts managed by Fidelity Trust owning 1,094,100 Series C
Depositary Shares. According to the Schedule 13G, (a) FMR Corp. and Mr.
Johnson each has sole investment power, but neither has sole voting power,
over the shares owned by the Fidelity Funds, (b) FMR Corp. and Mr. Johnson
each has sole investment power over all of, has sole voting power over
certain of, and has no voting power over the remainder of, the shares owned
by the institutional accounts managed by Fidelity Trust and (c) Mr. Johnson
has sole voting and investment power over certain of, has shared voting and
investment power over certain of, and has no voting or investment power
over the remainder of, the shares owned directly by him or in family
trusts. All of the figures in this footnote related to holdings of the
Common Stock have been revised to reflect a one-for-five split of the
Common Stock which occurred on April 12, 1995.

(2) College Retirement Equities Fund, a registered investment company,
beneficially owned 1,782,680 shares of Series C Preferred Stock as of
December 31, 1994 as a result of its beneficial ownership of 17,826,800
Series C Depositary Shares as reported in its Schedule 13G dated February
10, 1995.

(3) According to the Schedule 13G dated February 10, 1995 jointly filed by
Brinson Partners, Inc. ("Brinson Partners"), Brinson Trust Company
("Brinson Trust") and Brinson Holdings, Inc. ("Brinson Holdings"), as of
December 31, 1994 (i) Brinson Partners, a registered investment adviser and
wholly owned subsidiary of Brinson Holdings, beneficially owned 1,238,560
shares of Series C Preferred Stock as a result of its beneficial ownership
of 12,385,600 Series C Depositary Shares and (ii) Brinson Trust, a bank and
wholly owned subsidiary of Brinson Partners, beneficially owned 506,750
shares of Series C Preferred Stock as a result of its beneficial ownership
of 5,067,500 Series C Depositary Shares.

(4) According to the Schedule 13G dated March 10, 1995 filed by The Prudential
Insurance Company of America ("Prudential"), a registered insurance
company, broker-dealer and investment adviser Prudential beneficially owned
an aggregate of 1,680,205 shares of Series C Preferred Stock as of December
31, 1994 as a result of having shared voting and investment discretion over
16,802,050 Series C Depositary Shares which were held for the benefit of
its clients.

C-4
<PAGE>

(5) Wachovia Bank holds the shares of the ESOP Preferred Stock in its capacity
as Trustee of the RJR Nabisco Defined Contribution Master Trust. Under the
terms of the Master Trust, Wachovia Bank is required to vote shares of ESOP
Preferred Stock allocated to participants' accounts in accordance with
instructions received from such participants and to vote allocated shares
of ESOP Preferred Stock for which it has not received instructions and
unallocated shares in the same ratio as shares with respect to which
instructions have been received. The holders of the ESOP Preferred Stock
vote as a class with the common stock at a ratio of one vote for each share
of ESOP Preferred Stock for every five shares of the Common Stock. Wachovia
has no investment power with respect to shares of ESOP Preferred Stock.

(6) According to Amendment No. 2 to the Schedule 13G dated September 8, 1995
jointly filed by the Janus Capital Corporation ("Janus Capital"), a
registered investment adviser, and Thomas H. Bailey ("Bailey"), President
and Chairman of, stockholder in, and thereby, a control person of Janus
Capital, Janus Capital and Bailey beneficially own 4,472,875 shares of the
Nabisco Class A Common Stock as a result of shared voting and dispositive
power over such shares held for the benefit of its clients. Such beneficial
ownership includes 4,169,500 shares of the Nabisco Class A Common Stock, or
9.3% of the Nabisco Class A Common Stock outstanding, beneficially owned by
the Janus Fund, a registered investment company to which Janus Capital
provides investment advice.

(7) According to Amendment No. 1 to the Schedule 13G dated June 6, 1995 filed
jointly by Tiger Management Corporation ("Tiger"), Panther Partners L.P.
("Panther") and Panther Management Company L.P. ("PMCLP"), and Julian H.
Robertson, Jr. ("Robertson") as the ultimate controlling person of Tiger
and PMCLP, (i) Tiger, a registered investment adviser, beneficially owned
9,145,300 shares of Nabisco Class A Common Stock, (ii) Panther, a
registered investment company, beneficially owned 744,700 shares of Nabisco
Class A Common Stock, and (iii) PMCLP, a registered investment adviser,
beneficially owned 744,700 shares of Nabisco Class A Common Stock. As
ultimate controlling person of Tiger and PMCLP, Robertson beneficially
owned 9,890,000 shares of Nabisco Class A Common Stock. According to the
Schedule 13G, Tiger, Panther, PMCLP and Robertson, by virtue of his
controlling interest in Tiger and PMCLP, each possess shared voting and
investment discretion over such shares that they respectively beneficially
own on behalf of their clients.

The information concerning RJR Nabisco and Nabisco contained herein has
been taken from or is based upon RJR Nabisco's Preliminary Revocation Statement,
which was filed with the SEC on December 11, 1995. Although Brooke Group does
not have any knowledge that would indicate that any statements contained herein
based on such filing are untrue, Brooke Group does not take responsibility for
the accuracy or completeness of the information contained in such document, or
for any failure by RJR Nabisco to disclose events that may have occurred and may
affect the significance or accuracy of any such information but which are
unknown to Brooke Group.

C-5

<PAGE>

IMPORTANT

1. If your shares are held in your own name, please sign, date and mail the
enclosed BLUE consent card to our Information Agent, Georgeson & Company
Inc., in the postage-paid envelope provided.

2. If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can execute a consent with respect to your
shares and only upon receipt of your specific instructions. Accordingly,
you should contact the person responsible for your account and give
instructions for a BLUE consent card to be signed representing your shares.
Brooke Group urges you to confirm in writing your instructions to the
person responsible for your account and to provide a copy of those
instructions to Brooke Group in care of Georgeson & Company Inc. so that
Brooke Group will be aware of all instructions given and can attempt to
ensure that such instructions are followed.

If you have any questions or require any assistance in executing your
consent, please call Georgeson & Company Inc. at the following number:

GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Toll Free: (800) 223-2064

Banks and Brokerage Firms, please call collect:
(212) 440-9800

INTERNET INFORMATION

To access more information about our solicitation on the World Wide Web,
use the following address:

http://www.georgeson.com

<PAGE>

APPENDIX

(Pursuant to Rule 304 of Regulation S-T)

1. Page 4 contains a description in tabular form of a graph entitled "One Year
Rate of Return" which represents the comparison of peer group members for
the one year period commencing August 24, 1994 and ending August 28, 1995,
which graph is contained in the paper format of this Consent Statement
being sent to Stockholders.

2. Page 5 contains a description in tabluar form of a graph entitled
"Compounded Annual Rates of Return" which represents the comparison of peer
group members for the period commencing February 1, 1991 and ending August
28, 1995, which graph is contained in the paper format of this Consent
Statement being sent to Stockholders.

3. Page 8 contains a description in tabular form of a graph entitled "Volume
of U.S. Spinoffs" which represents in Dollars the volume of corporate
spinoffs for the five year period from 1991 to 1995 including completed and
pending spinoffs, which graph is contained in the paper format of this
Consent Statement being sent to Stockholders.

<PAGE>

[FRONT OF CONSENT CARD FOR HOLDERS OF COMMON STOCK]

CONSENT CARD

Solicited by Brooke Group Ltd.

The undersigned is the record holder of shares of Common Stock, par value
$.01 per share (the "Shares"), of RJR Nabisco Holdings Corp. ("RJR Nabisco") and
hereby acts as follows concerning the following two proposals.

PLEASE SIGN AND DATE REVERSE SIDE AND MAIL YOUR CONSENT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE ENCLOSED.

Unless otherwise indicated below, the action taken on the following
proposals relates to all Shares held by the undersigned.

(Continued and to be signed on the reverse side)

<PAGE>

[REVERSE OF CONSENT CARD FOR HOLDERS OF COMMON STOCK]

[X] Please mark your vote as in this example.

INSTRUCTION: TO TAKE ACTION WITH REGARD TO THE FOLLOWING PROPOSALS, CHECK
THE APPROPRIATE BOX. IF NO BOX IS MARKED BELOW WITH RESPECT TO THE PROPOSAL, THE
UNDERSIGNED WILL BE DEEMED TO CONSENT TO SUCH PROPOSAL.

BROOKE GROUP RECOMMENDS THAT YOU CONSENT TO THE SPINOFF RESOLUTION.

1. SPINOFF RESOLUTION: relating to the spinoff of Nabisco to the
stockholders of RJR Nabisco.

[ ] CONSENTS [ ] DOES NOT CONSENT [ ] ABSTAINS

BROOKE GROUP RECOMMENDS THAT YOU CONSENT TO THE BYLAW AMENDMENT.

2. BYLAW AMENDMENT: relating to reinstating the right of stockholders to
call a Special Meeting and repealing the new procedures governing action by
written consent.

[ ] CONSENTS [ ] DOES NOT CONSENT [ ] ABSTAINS

Please see the Solicitation Statement for additional details regarding the
above Proposals.

Please note any change in your address from that set forth to the left. If
no label has been affixed hereto, please fill in the Stockholder information in
the space provided.

SIGNATURE

When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, guardian, corporate officer or
partner, please give full title as such. If a corporation, please sign in
corporate name by President or other authorized officer. If a partnership,
please sign a partnership name by authorized person.

_______________________________________________ __________________
Signature(s) of Stockholder(s) Date

_______________________________________________
Title, if any

<PAGE>

[FRONT OF CONSENT CARD FOR HOLDERS OF PERCS]

CONSENT CARD

Solicited by Brooke Group Ltd.

The undersigned is the record holder of shares of Series C Conversion
Preferred Stock, par value $.01 per share (the "Shares"), of RJR Nabisco
Holdings Corp. ("RJR Nabisco") and hereby acts as follows concerning the
following two proposals.

PLEASE SIGN AND DATE REVERSE SIDE AND MAIL YOUR CONSENT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE ENCLOSED.

Unless otherwise indicated below, the action taken on the following
proposals relates to all Shares held by the undersigned.

(Continued and to be signed on the reverse side)

<PAGE>

[REVERSE OF CONSENT CARD FOR HOLDERS OF PERCS]

[X] Please mark your vote as in this example.

BROOKE GROUP RECOMMENDS THAT YOU CONSENT TO THE SPINOFF RESOLUTION.

1. SPINOFF RESOLUTION: relating to the spinoff of Nabisco to the
stockholders of RJR Nabisco.

[ ] CONSENTS [ ] DOES NOT CONSENT [ ] ABSTAINS

BROOKE GROUP RECOMMENDS THAT YOU CONSENT TO THE BYLAW AMENDMENT.

2. BYLAW AMENDMENT: relating to reinstating the right of stockholders to
call a Special Meeting and repealing the new procedure governing action by
written consent.

[ ] CONSENTS [ ] DOES NOT CONSENT [ ] ABSTAINS

Please see the Solicitation Statement for additional details regarding the
above Proposals.

Please note any change in your address from that set forth to the left. If
no label has been affixed hereto, please fill in the Stockholder information in
the space provided.

SIGNATURE

_______________________________________________ __________________
Signature(s) of Stockholder(s) Date

_______________________________________________
Title, if any

<PAGE>

[FRONT OF CONSENT CARD FOR HOLDERS OF ESOP PREFERRED STOCK]

CONSENT CARD

Solicited by Brooke Group Ltd.

The undersigned is the record holder of shares of ESOP Convertible
Preferred Stock, par value $.01 per share and stated value $16 per share (the
"Shares"), of RJR Nabisco Holdings Corp. ("RJR Nabisco") and hereby acts as
follows concerning the following two proposals.

PLEASE SIGN AND DATE REVERSE SIDE AND MAIL YOUR CONSENT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE ENCLOSED.

Unless otherwise indicated below, the action taken on the following
proposals relates to all Shares held by the undersigned.

(Continued and to be signed on the reverse side)

<PAGE>

[REVERSE OF CONSENT CARD FOR HOLDERS OF ESOP PREFERRED STOCK]

[X] Please mark your vote as in this example.

BROOKE GROUP RECOMMENDS THAT YOU CONSENT TO THE SPINOFF RESOLUTION.

1. SPINOFF RESOLUTION: relating to the spinoff of Nabisco to the
stockholders of RJR Nabisco.

[ ] CONSENTS [ ] DOES NOT CONSENT [ ] ABSTAINS

BROOKE GROUP RECOMMENDS THAT YOU CONSENT TO THE BYLAW AMENDMENT.

2. BYLAW AMENDMENT: relating to reinstating the right of stockholders to
call a Special Meeting and repealing the new procedure governing action by
written consent.

[ ] CONSENTS [ ] DOES NOT CONSENT [ ] ABSTAINS

Please see the Solicitation Statement for additional details regarding the
above Proposals.

Please note any change in your address from that set forth to the left. If
no label has been affixed hereto, please fill in the Stockholder information in
the space provided.

SIGNATURE

_______________________________________________ __________________
Signature(s) of Stockholder(s) Date

_______________________________________________
Title, if any

<PAGE>

IMPORTANT

RE: RJR Nabisco Holdings Corp.
Solicitation of Written Consents to Spinoff Resolution
and Bylaw Amendment Made by Brooke Group Ltd.

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

To RJR Nabisco Stockholders:

Enclosed for your consideration is soliciting material furnished to us by
Brooke Group Ltd. in connection with their solicitation of your written consent.

Only we, as the holder of record, can execute a written consent on your
behalf.

If you wish us to execute a written consent on your behalf, please
complete, sign, date and mail the BLUE consent card in the postage-free envelope
provided.

WE CANNOT EXECUTE A WRITTEN CONSENT FOR YOUR SHARES UNLESS WE RECEIVE YOUR
SPECIFIC INSTRUCTIONS.

If you have any questions or any difficulty in executing a BLUE consent
card for your shares, please call:

GEORGESON & COMPANY INC.
(800) 223-2064

A REPLY IS NECESSARY TO EXECUTE A CONSENT

PLEASE ACT PROMPTLY