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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              -------------------
                                 SCHEDULE 14D-1
                               (AMENDMENT NO. 1)
                              -------------------
                             TENDER OFFER STATEMENT
                          PURSUANT TO SECTION 14(D)(1)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                              -------------------
                                 BORDEN, INC.
                           (Name of Subject Company)
                              -------------------
    
   
                            BORDEN ACQUISITION CORP.
                           WHITEHALL ASSOCIATES, L.P.
                             KKR PARTNERS II, L.P.
                                   (Bidders)
                              -------------------
                    COMMON STOCK, PAR VALUE $.625 PER SHARE
                         (Title of Class of Securities)
                              -------------------
                                   099599102
                     (CUSIP Number of Class of Securities)
                              -------------------
                                HENRY R. KRAVIS
                         KOHLBERG KRAVIS ROBERTS & CO.
                         9 WEST 57TH STREET, SUITE 4200
                            NEW YORK, NEW YORK 10019
                                 (212) 750-8300
            (Name, Address and Telephone Number of Person Authorized
          to Receive Notices and Communications on Behalf of Bidders)
                              -------------------
                                    COPY TO:
                             CHARLES I. COGUT, ESQ.
                           SIMPSON THACHER & BARTLETT
                              425 LEXINGTON AVENUE
                            NEW YORK, NEW YORK 10017
                                 (212) 455-2000
    
 
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- --------------------------------------------------------------------------------

   
    This Amendment No. 1 amends and supplements the Tender Offer Statement on
Schedule 14D-1 filed on November 22, 1994 (as amended from time to time, the
"Schedule 14D-1") relating to the offer by Borden Acquisition Corp., a New
Jersey corporation (the "Purchaser"), a subsidiary of Whitehall Associates, L.P.
(the "Partnership"), an affiliate of Kohlberg Kravis Roberts & Co., L.P.
("KKR"), upon the terms and subject to the conditions set forth in the Offering
Circular/Prospectus dated November 22, 1994 (the "Offering Circular/Prospectus")
and in the related Letter of Transmittal (collectively, the "Exchange Offer"),
to exchange shares of common stock, par value $.01 per share (the "Holdings
Common Stock"), of RJR Nabisco Holdings Corp., a Delaware corporation
("Holdings"), owned by the Purchaser or its affiliates for all outstanding
shares (the "Borden Shares") of common stock, par value $.625 per share
(collectively, the "Borden Common Stock"), and the associated Preferred Stock
Purchase Rights (the "Rights"), of Borden, Inc., a New Jersey corporation
("Borden"), not already owned by the Purchaser or its affiliates. Unless
otherwise indicated, all capitalized terms used but not defined herein shall
have the meanings assigned to them in the Offering Circular/Prospectus.
    
 
ITEM 10. ADDITIONAL INFORMATION.
 
   
    Item 10(c) of the Schedule 14D-1 is hereby amended and supplemented as
follows:
    
 
   
    On November 24, 1994, the Commission of the European Communities issued a
Decision Letter, pursuant to Article 6(1)(b) of Council Regulation 4064/89
declaring the proposed acquisition of Borden by an affiliate of KKR compatible
with the common market and with the functioning of the EEA Agreement.
    
 
   
    Item 10(e) of the Schedule 14D-1 is hereby amended and supplemented as
follows:
    
 
   
    On November 30, 1994, a putative class action captioned Petersen, et al., v.
Borden, Inc., et al., Case No. 94 CIV 8648, was filed by purported shareholders
of Borden in the United States District Court for the Southern District of New
York against Borden, members of Borden's board of directors, Holdings, members
of Holdings' board of directors, KKR, certain partners and executives of KKR,
and Borden's financial advisors, Lazard Freres and First Boston. The complaint
alleges, among other things, (1) violations of Sections 14(e) and 20(a) of the
Securities Exchange Act of 1934, as amended, by Borden, KKR and Borden's board
of directors; (2) violations of Section 11 of the Securities Act of 1933, as
amended, by Lazard Freres, First Boston and certain officers and directors of
Holdings and partners or executives of KKR; and (3) breach of fiduciary duty by
Borden and Borden's board of directors, which breach of fiduciary duty allegedly
was aided and abetted by KKR. The complaint seeks equitable relief, including,
among other things, a preliminary injunction and declaratory relief, as well as
money damages. A copy of the complaint is attached hereto as Exhibit 11(g)(23)
and is incorporated herein by reference.
    
 
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
 
   
        
11(g)(23)  Class Action Complaint, Petersen, et al. v. Borden, Inc., et al., Case No. 94 CIV
           8648, dated November 30, 1994.
1 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. BORDEN ACQUISITION CORP. By: /s/ SCOTT M. STUART .................................. Name: Scott M. Stuart Title: Vice President WHITEHALL ASSOCIATES, L.P. By: KKR Associates, a limited partnership, its General Partner By: /s/ HENRY R. KRAVIS .................................. Name: Henry R. Kravis Title: General Partner KKR PARTNERS II, L.P. By: KKR Associates, a limited partnership, its General Partner By: /s/ HENRY R. KRAVIS .................................. Name: Henry R. Kravis Title: General Partner Date: December 2, 1994 2 EXHIBIT INDEX
EXHIBIT PAGE NO. DESCRIPTION NO. - -------- ---------------------------------------------------------------------------- ---- 11(g)(23) Class Action Complaint, Petersen, et al. v. Borden, Inc., et al., Case No. 94 CIV 8648, dated November 30, 1994......................................
                                                          EXHIBIT-11.(g)(23)

                                                          CLASS ACTION
                                                          COMPLAINT
                                                          ------------

                                                         Civil Action No.

                                                         JURY DEMAND



          UNITED STATES DISTRICT COURT
          SOUTHERN DISTRICT OF NEW YORK

          JAMES PETERSEN, SIDNEY GLICK, BARBARA LUBIN, MARTIN H. OLESH,
          PAMELA SKULSKY, MARTIN WEBER, NORMAN WEISS, STELLA COHORSKY,
          ABRAHAM JOSEPH, ROBERT WARING, ROBERT STROUGO, THOMAS TASSONE,
          MOISE KATZ, CHARLES MILLER, WILLIAM STEINER, PAUL L. KOHNSTAMM,
          JERRY KRIM, BERNARD STEPAK, DANIEL MARCUS, KATHLEEN DWYER,
          PITTMAN NEUROSURGICAL P.A. Defined Benefit Plan U.T.D. 9/1/77 and
          R. Clinton Pittman Trustee, MARGARET ALESSI, JOSEPH RABINOVITS,
          ESTATE OF HENRY F. WANGER, GEORGE MAZETY, JEFFREY E. KASSOWAY,
          TERRY STAPLES, ROBERT LEWIS and ERICA HARTMAN,

                                 Plaintiffs,

                        - against -

          BORDEN, INC., ERVIN SHAMES, FRANK J. TASCO, FREDERICK E. HENNIG,
          WILBERT J. LEMELLE, ROBERT B. LUCIANO, H. BARCLAY MORLEY, JOHN E.
          SEXTON, PATRICIA CARRY STEWART, RJR NABISCO HOLDINGS CORP.,
          KOHLBERG KRAVIS ROBERTS & CO., L.P., CHARLES M. HARPER, STEPHEN
          R. WILSON, ROBERT S. ROATH, H. JOHN GREENIAUS, JAMES W. JOHNSTON,
          JAMES H. GREENE, JR., HENRY R. KRAVIS, PAUL E. RAETHER, LAWRENCE
          R. RICCIARDI, CLIFTON S. ROBBINS, GEORGE R. ROBERTS, SCOTT M.
          STUART, MICHAEL T. TOKARZ, JOHN T. CHAIN, JR., JOHN L. CLENDENIN,
          JOHN G. MEDLIN, JR., ROZANNE L. RIDGWAY, LAZARD FRERES & CO. and
          CS FIRST BOSTON GROUP, INC.,

                                 Defendants.


                           Plaintiffs and all others similarly situated, by

          and through their attorneys, allege upon personal knowledge as to

          allegations concerning themselves and upon information and belief

          as to all other matters as follows:













































                             1.    This class action is brought by

          plaintiffs, shareholders of defendant Borden, Inc. ("Borden" or

          the "Company") for declaratory and injunctive relief, or,

          alternatively, for monetary damages resulting from the individual

          defendants' repeated breaches of the disclosure and fiduciary duties 

          owed by them, as directors of Borden, to plaintiffs, and defendants 

          Kohlberg Kravis Roberts & Co., L.P.'s ("KKR"), RJR  Nabisco Holdings 

          Corp. ("RJR"), Lazard Freres & Co. ("Lazard") and CS First Boston 

          ("First Boston") knowing direct participation in and aiding and 

          abetting of those breaches. The breaches occurred, and are 

          continuing, in connection with directors'  decision to sell Borden 

          and their abject failure to carry out their fiduciary and disclosure 

          duties to Borden shareholders in the many respects hereinafter 

          described.



                               SUMMARY OF THE COMPLAINT


                                      2.    Contrary to what the defendants

          are telling the world about KKR's offer to pay $14.25 for every

          Borden share -- that it is a "premium of 22.6 percent" and that

          it is the "best available alternative for Borden shareholders" --

          the merger agreement signed by Borden and KKR, in truth, does

          nothing more than force Borden shareholders to pay KKR $65

          million for the privilege of assuming one half of KKR's tobacco

          liability in exchange for selling their company on the cheap.

          Remarkably for 1994, KKR, in true 1980s style, has conceived and

          executed the first win/win tender offer. If the offer is

          successful, and KKR obtains the tender of over 50% of the

          outstanding shares of



                                         -2-












          Borden, KKR earns $65 million and owns Borden. If the offer is

          unsuccessful, and KKR receives less than 50% in the tender offer,

          KKR earns $65 million and obtains effective control of Borden by

          virtue of a 19.9% stock option and the 16% of Borden KKR already

          owns. The offer is even more diabolical in concealing the true

          nature of the "back end" the Borden shareholders will receive

          following the merger. While a "collar" protects the value of the

          securities to be received by tendering shareholders, no such

          collar protects those Borden shareholders who do not tender.

          Once the merger is consummated, non-tendering shareholders will

          receive "the same number" of RJR shares offered in the exchange,

          but the value of those shares is likely to be diminished as a
                  -----
          result of both the dilutive entry of millions of new, freely

          tradeable, RJR shares into the marketplace, as well as the price

          depression in RJR stock which will follow the sale of many of

          those newly tradeable shares by former Borden shareholders who do

          not wish to be shareholders of RJR.



                             2. With the willing collusion of the majority

          of the Borden board of directors, KKR has obtained an agreement

          that allows it to gain control of Borden at a discount to the

          true value of the corporation win, lose, or draw -- and receive

          $65 million for their trouble. In fact, the entire deal is

          nothing more than a mosaic of violations of the federal

          securities laws and breaches of fiduciary duty.



                             3.    The public filings of Borden and KKR

          failed to properly disclose:



                                         -3-

























                    (a) that while non-tendering Borden shareholders will

          receive the same number of RJR shares as those received by

          tendering shareholders in the exchange offer, the value of those

          shares is likely to be materially less. Borden's sole disclosure

          on this issue states that "nontendering shareholders will receive

          the same consideration for each Borden share as was paid in the
              ---- -------------

          exchange offer." (emphasis added) This statement is materially

          misleading because the value is likely to be less than the value

          of the shares received in the exchange.



                    (b) that in evaluating whether the KKR proposal was the

          best alternative for the company, the Board did not take into

          account the results of the third quarter of 1994 -- the first up

          quarter in three years;



                    (c) the full details of why the executive in charge of

          the Company and its restructuring refused to agree to the KKR

          offer and abstained from all voting on the merger;



                    (d) the fact that KKR need only obtain the tender of a

          mere 25% of Borden shares in order to reach the "Minimum

          Condition" of the offer;



                    (e) the fact that if RJR stock drops by as little as

          1/2 a point between November 22, and the undetermined date upon

          which the exchange ratio will be set, Borden stockholders will

          receive not $14.25 per share, but materially less -- and how much

          less is



                                         -4-










          simply the product of how low RJR stock goes, and how long the

          offer stays open;



                    (f) the fact that the value of the consideration to be

          received by Borden pursuant to the Stock Option is considerably

          less than the $300 million face value of the RJR stock;



                    (g) that another bona fide bidder had made a proposal

          for the company at significantly more per share than the KKR bid;



                    (h) that Lazard and First Boston are in fact acting as

          underwriters for this largest secondary offering in history, and

          being compensated as such;



                    (i) that the consideration to be received by the Borden

          shareholders in the offer is subject to enormous, quantifiable

          risk as a result of the tobacco component of RJR's business;



                    (j) that RJR's spin-off of 17% to 19% of its food

          business in an initial public offering and the subsequent

          absolute right of RJR to sell off the remaining 80% of that

          business leaves tendering Borden shareholders with the risk that

          they may be trading their shares in a preeminent food business

          for shares in a tobacco business; and,



                                         -5-































                   (k) the full details of why RJR terminated the agreement

          in principle relating to the Borden tender offer, signed by RJR

          and KKR.



                             4.    The Borden board has breached its

          fiduciary duties to the stockholders by agreeing to a merger with

          KKR:



                    (a) while knowing of the interest of other qualified

          and bona fide bidders for Borden, and without taking any steps to
              ---- ----

          inform themselves as to the actual amount that such interested

          parties were willing to pay for Borden;



                    (b) without taking steps to inform themselves as to the

          true value of Borden in a fair auction or other process and

          thereby agreeing to sell the company for a price which was at

          least more than $1.75 per share less than its true value as

          measured against the bottom of the range of value offered by a

          competing bidder;



                    (c) by entering into a merger agreement which contains

          provisions designed not only to thwart, impede, delay, and/or

          make prohibitively expensive bona fide competing bids for Borden,
                                       ---- ----

          but also to guarantee a "concentration of influence" and

          "significant influence" over Borden by KKR, including:



                                         -6-

































                    (i)     A lock up stock option (the "Stock Option"),

          which allows KKR to purchase 19.9% of Borden's outstanding common

          stock (approximately 28,138,000 shares) at the favorable price of

          $11 per share, payable in RJR stock, and permits KKR to obtain

          over 33% of Borden's board seats if the KKR offer is

          unsuccessful; and,



                   (ii)    A disproportionate number of success fees and

          "topping fees" which, in the aggregate, amount to no less than

          $65 million -- $20 million of which has already been paid to KKR.



                   (d) where the sole consideration to be paid to Borden

          shareholders consists of shares of RJR which the directors knew

          was in danger of severe decline due to (i) the inherent risk of

          RJR's tobacco holdings; (ii) the recent announcement of RJR's

          public offering of 17% - 20% of its non-tobacco assets and the

          absolute right of RJR to dispose of the remaining 80%; and, (iii)

          the dilutive effect of the entry into the market of at least 109

          million and at most 354 million shares of freely tradable RJR

          common shares;



                   (e) refusing to obtain an expert opinion on the risks

          inherent in tobacco liability and the effect such liability might

          have on the consideration to be received by the Borden

          stockholders;



                                         -7-

































                    (f) refusing to and failing to meet, discuss, or

          negotiate in good faith with known and identified bona fide
                                                            ---- ----

          competing bidders for Borden who were willing to offer, and did

          offer, to Borden and its stockholders financial consideration and

          other terms which were substantially better than those offered by

          KKR.



                    (g) without taking steps to inform themselves in any

          manner whatsoever whether Japonica Partners ("Japonica"), was

          willing to pay more for Borden than KKR; and,



                   (h) making materially false and misleading statements to

          Borden's shareholders with respect to the sale of Borden to KKR.



                             5.    Each of the Borden Director Defendants

          in their actions and inaction were acting under the domination of

          Borden's existing management, whose sole motivation is to deliver

          Borden to KKR in order to enrich themselves and secure continuing

          employment with the merged entity.



                             THE JURISDICTION AND PARTIES


                             6.    This is a class action which arises

          under Section 14(e) of the Securities Exchange Act of 1934 ("1934

          Act"), 15 U.S.C. 78n(e), Section 11 of the Securities Act of 1933

          (the "1933 Act"), 15 U.S.C. Paragraph 77k and applicable

          principles of common law. This Court has jurisdiction pursuant to

          Section 27 of the



                                         -8-















          1934 Act, Section 22 of the 1933 Act, 28 U.S.C. Paragraph 1331,

          and principles of supplemental jurisdiction.



                            7.    Venue is proper in this district pursuant

          to Section 27 of the Exchange Act, 15 U.S.C. Sec. 78aa, and 288

          U.S.C. Secs. 1391(b) and (c). A substantial part of the events

          giving rise to the claims alleged herein occurred in this

          district, including the dissemination of false and misleading

          statements in connection with the tender offer for Borden.



                             8.    In connection with the acts and conduct

          alleged in this complaint, defendants, directly and indirectly,

          used the means and. instrumentalities of interstate commerce,

          including the mails and telephone communication, and the

          facilities of the national securities markets, namely, the New

          York Stock Exchange.



                             9.    Plaintiffs herein are, and at all times

          relevant to this action have been, owners of the shares of the

          common stock of defendant Borden.



                             10. Defendant Borden is a New Jersey

          corporation maintaining its principal place of business at 180

          East Broad Street, Columbus, Ohio 43215. Borden is engaged

          primarily in manufacturing, processing, purchasing and

          distributing a broad range of products, including a variety of

          consumer food products, consumer and industrial adhesives, and

          plastic films and packaging.



                                         -9-



























                             11. The following defendants are, and at all

          times relevant hereto, have been directors and officers of Borden

          (collectively, the "Director Defendants").



                             12. Defendant Ervin Shames ("Shames") is, and

          at all relevant times hereto has been, a director of Borden, and

          its President and Chief Executive Officer.



                             13. Defendant Frank J. Tasco ("Tasco") is, and

          at all times relevant hereto has been, Chairman of the Board of

          Borden.



                             14. Defendants Frederick E. Hennig ("Hennig"),

          Wilbert J. Lemelle ("Lemelle"'), Robert P. Luciano ("Luciano"),

          H. Barclay Morley ("Morley"), John E. Sexton ("Sexton") and

          Patricia Carry Stewart ("Stewart") are, and at all times relevant

          hereto have been, directors of Borden.



                             15. Defendant RJR is a Delaware corporation

          with its principal place of business located at 1301 Avenue of

          the Americas, New York, New York. RJR, through its wholly owned

          subsidiary RJR Nabisco, Inc., is a global leader in the food and

          tobacco industries.



                             16. Defendant KKR is a Delaware limited

          partnership with its principal offices located at 9 West 57th

          Street, New York, New York 10019. KKR is a "buyout firm" that

          owns a substantial interest in, among others, RJR. According to

          an April 11, 1994 proxy statement of RJR, KKR, through its

          affiliate KKR Associates, owns 566,766,236 shares or 48.9% of the

          RJR



                                         -10-





















          common stock outstanding. An affiliate of KKR, Whitehall

          Associates, L.P. is the owner of Borden Acquisition Corp., the

          offeror in the KKR tender offer. Whitehall Associates is the

          beneficial owner of 16% of the outstanding common stock of

          Borden.



                             17. The following defendants are officers

          and/or directors of RJR and/or general or limited partners or

          executives of KKR (collectively, the "KKR Defendants").



                             18. Defendant Charles M. Harper ("Harper") is,

          and at all times relevant hereto has been, an RJR director, and

          is its Chief Executive Officer and Chairman of the Board.



                             19. Defendant Stephen R. Wilson ("Wilson") is,

          and at all times relevant hereto has been, Executive Vice

          President and Chief Financial Officer of RJR



                             20. Defendant Robert S. Roath ("Roath") is,

          and at all times relevant hereto has been, Senior Vice President

          and Controller of RJR.



                             21. Defendant H. John Greeniaus ("Greeniaus")

          is, and at all times relevant hereto has been, a director of RJR

          and is the Chairman and Chief Executive Officer of Nabisco Foods

          Group.



                             22. Defendant James W. Johnston ("Johnston")

          is a director of RJR and has served, at all times relevant

          hereto, as Chairman and Chief Executive Officer of R.J. Reynolds

          Tobacco Company.



                                         -11-





















                             23. Defendant James H. Greene, Jr. ("Greene")

          is, and at all times relevant hereto has been, a director of RJR,

          and a general partner of KKR and affiliated companies.



                             24. Defendant Henry R. Kravis ("Kravis") is,

          and at all times relevant hereto has been, a director of RJR and

          a general partner of KKR and affiliated companies.



                             25. Defendant Paul E. Raether ("Raether") is,

          and at all times relevant hereto has been, a director of RJR and

          a general partner of KKR and affiliated companies.



                             26. Defendant Lawrence R. Ricciardi

          ("Ricciardi") is, and at all times relevant hereto has been, a

          director of RJR and its President and General Counsel.



                            27. Defendant Clifton S. Robbins ("Robbins")

          is, and at all times relevant hereto has been, a director of RJR

          and an executive of KKR and a limited partner of a KKR affiliate.



                             28. Defendant George R. Roberts ("Roberts")

          is, and at all times relevant hereto has been, a director of RJR

          and a general partner of KKR and a KKR affiliate.



                             29. Defendant Scott M. Stuart ("Stuart") is,

          and at all times relevant hereto has been, a director of RJR and

          an executive of KKR and a limited partner of a KKR affiliate.



                                         -12-





























                             30. Defendant Michael T. Tokarz ("Tokarz") is,

          and at all times relevant hereto has been, a director of RJR and

          a general partner of KKR and a KKR affiliate.



                             31. Defendants John T. Chain, Jr. ("Chain"),

          John L. Clendenin ("Clendenin"), John G. Medlin, Jr. ("Medlin")

          and Rozanne L. Ridgway ("Ridgway") are and at all times relevant

          hereto have been directors of RJR.



                             32. Defendant Lazard is engaged in the

          business of, among other things, investment banking and the

          rendering of expert advice with respect to mergers and

          acquisitions. Beginning in October, 1993, Lazard advised Borden

          with respect to the consideration of certain transactions,

          including the proposed Exchange Offer and Merger Agreement.

          Lazard acted as an "underwriter" within the meaning of Section

          11 of the 1933 Act in connection with the Exchange Offer.



                             33. Defendant First Boston is a Delaware

          Corporation with its principal executive offices located at Park

          Avenue Plaza, New York, New York, 10055. First Boston, through

          its wholly owned subsidiaries, is engaged in, among other things,

          investment banking and the rendering of expert advice with

          respect to mergers and acquisitions. Beginning in September,

          1993, First Boston provided financial advice to Borden in

          connection with certain proposed transactions, including the

          proposed Exchange Offer and Merger Agreement. First Boston acted



                                         -13-

























          as an "underwriter" within the meaning of Section 11 of the 1933

          Act in connection with the Exchange Offer.



                               CLASS ACTION ALLEGATIONS


                             34. Plaintiffs bring this action on their own

          behalf and as a class action pursuant to Rule 23 of the Federal

          Rules of Civil Procedure, on behalf of all common stockholders of

          Borden (except defendants herein and any person, firm, trust,

          corporation, or other entity related to or affiliated with any of

          the defendants and except for all persons seeking to buy Borden

          as an entity, either by friendly or hostile means) who are being

          deprived of the opportunity to maximize the value of their Borden

          stock by the wrongful acts of the defendants described herein

          (the "Class").



                             35. This action is properly maintainable as a

          class action for the following reasons:



                                      a.    The Class is so numerous that

          joinder of all members is impracticable. There are approximately

          141,814,967 shares of Borden common stock outstanding owned by

          approximately 37,946 shareholders of record. The members of the

          Class are scattered throughout the United States and are so

          numerous as to make it impracticable to bring them all before

          this Court.



                                      b.    No unusual difficulties are

          likely to be encountered in the management of this Class Action.

          The



                                         -14-











          likelihood of individual Class members prosecuting separate

          claims is remote.



                                      c.    There are questions of law and

          fact which are common to the Class and which predominate over the

          questions affecting any individual Class member, including

          whether the defendants have breached the fiduciary duties owed by

          them to plaintiffs and members of the Class and the duties of

          disclosure mandated by the federal securities laws by reason of:



                             (i)    disseminating or permitting the 

          dissemination of public false and misleading statements concerning 

          the sale of the Company to KKR; and,



                             (ii) whether defendants' acts violate the

          Securities Act of 1933 and the Securities and Exchange Act of

          1934 and the rules and regulations promulgated thereunder;



                             (iii) engaging in plans and schemes to

          unlawfully thwart offers and proposals from third parties;



                             (iv) approving and causing Borden to approve

          and agree to onerous "lock up" provisions with KKR without any

          reasonable basis;



                             (v)    failing to adequately inform themselves

          prior to entering into a merger agreement with KKR; and



                                         -15-











                             (vi) failing to conduct an auction of the

          company in order to maximize shareholder value;



                             (vii) whether plaintiffs and the other members

          of the Class will be irreparably damaged were the transactions

          contemplated of herein consummated.



                                      d.    Plaintiffs are committed to

          prosecuting this action and have retained competent counsel

          experienced in litigation of this nature. The claims of

          plaintiffs are typical of the claims of the other members of the

          Class and plaintiffs have the same interests as the other members

          of the Class. Plaintiffs are adequate representatives of the

          Class.



                                      e.    The prosecution of separate

          actions by individual members of the Class would create the risk

          of inconsistent or varying adjudication with respect to

          individual members of the Class which would establish

          incompatible standards of conduct for the parties opposing the

          Class.



                                      f.    Defendants have acted and are

          about to act on grounds generally applicable to the Class,

          thereby making appropriate final injunctive or corresponding

          rescissory relief with respect to the Class as a whole.



                             36. For the reasons stated herein, a Class

          action is superior to other available methods for the fair and

          efficient adjudication of the claims asserted herein.



                                         -16-























                               SUBSTANTIVE ALLEGATIONS


                                      Background


                             37. Borden is a Fortune 500 company whose main

          emphasis is the food business. Borden's food assets include

          snacks, jams and jellies, pasta, dairy (including cheese) and

          seafood. Through its Packaging and Industrial Products Division

          Borden produces wallcoverings and packaging. In addition, Borden

          has a large adhesive and resin business. The largest division,

          and that for which Borden is best known, is the dairy business.

          Between 1989 and 1992 Borden made numerous acquisitions and saw

          its debt load rise while its earnings and stock price fell. In

          September, 1993, Borden shares traded at $19.875, a twelve month

          high. Prior to that, Borden's share price had been in the $30

          range.



                               Initial Overtures BY KKR


                             38. In early 1993, at a time when Borden was

          reevaluating its goals under a restructuring plan instituted in

          1992, Borden received an unsolicited expression of interest from

          KKR. Borden, having struggled for years to overcome declining

          earnings and falling sales through various failed restructuring

          plans, decided to enter into discussions with KKR, at the

          initiation of KKR, in order to determine whether a sale of the

          Company was a suitable alternative to restructuring.

          Representatives of KKR met with management of the Company and the

          Company's financial advisor, First Boston. Prior to that meeting

          KKR neither signed a confidentiality agreement, nor proffered



                                         -17-










          evidence of firm financing. Following those discussions, Borden

          informed KKR that it did not wish to proceed with a sale of the

          company. The Borden board had apparently concluded to continue to

          try to revive the Company, and remain independent. Despite the

          termination of those discussions, KKR remained interested in

          acquiring Borden.



                             The 1993 Restructuring Plan


                             39. Having decided to forego a sale of the

          company, the Borden board decided to replace management and

          pursue a more vigorous restructuring. To that end, the Company

          hired Ervin Shames as President and Chief Operating Officer in

          June 1993. Shames was hired for his expertise in the food

          business and given the mandate to review the assets of the

          Company and identify which assets to retain and which to divest

          in an effort to restructure the Company. To assist Mr. Shames,

          the Company hired the consulting firm of Booz Allen & Hamilton,

          Inc. ("Booz Allen") and the investment bank, First Boston. Borden

          also retained the law firm of Wachtell, Lipton, Rosen & Katz as

          special counsel to the Company and retained Lazard, to help the

          Company analyze its "strategic alternatives."



                             40. In the fall of 1993, Mr Shames and his

          advisors presented the Borden board with a new plan for

          restructuring the Company. The plan called for major

          divestitures, including the sale of the North American snacks

          business, its seafood business, its jams and jellies business,

          and other businesses which, in the



                                         -18-











          aggregate, amounted to approximately 20% of the Company's

          projected sales for 1993.



                              The Board Hedges Its Bets


                             41. Despite having been told by the Company

          that it was not interested in a transaction with KKR, KKR

          continued to express an interest in acquiring Borden throughout

          1993, and was even able to obtain non-public information about

          the 1993 restructuring plan. In December 1993, the Borden board,

          aware that two unsolicited inquiries regarding the sale of the

          company had been received, one from KKR and one from Hanson PLC

          ("Hanson"), instructed Lazard to make limited inquiries of

          potential buyers, including KKR. KKR, together with Lazard, then

          brought the possibility of a transaction with Borden to the

          attention of RJR, a company controlled by KKR. The talks with RJR

          did not however, produce a proposed transaction. Just as in the

          earlier discussion, no confidentiality agreement was signed, nor

          was evidence of financing proffered before substantive meetings

          were held.



                             42. On December 9, 1993, Lazard informed the

          board that Hanson had surfaced and was interested in acquiring

          all of the Company. At a board meeting, the board decided to

          continue the 1993 restructuring plan as its primary goal, but

          also to pursue discussions with Hanson. Those discussions

          resulted in a proposal for Hanson to acquire the Company's

          Packaging and Industrial Products Division and make a concurrent

          investment in



                                         -19-










          the remaining food businesses. The board rejected this proposal

          and in January of 1994, the board approved the 1993 restructuring

          plan. Despite early problems reaching the goals set by the 1993

          plan through the first half of 1994, in the third quarter of 1994

          Borden reported its first positive results in three years, with

          sales rising by 3.9%. During the course of implementing the 1993

          restructuring plan, but prior to the results for the third

          quarter, the board decided to revisit the idea of selling the

          Company as an alterative to seeing the restructuring through.



                                Borden Is Up For Sale


                             43. On May 24, 1994, in response to public

          disclosures that Borden might be up for sale, Japonica Partners

          ("Japonica"), a company headed by former a Goldman Sachs

          investment banker, Paul Kazarian ("Kazarian"), wrote to Borden

          and expressed an interest in entering into a transaction with the

          Company and seeking a meeting to discuss the possible

          transaction. Kazarian, the former chairman of Sunbeam-Oster,

          Inc., which was acquired by Kazarian with some $660 million in

          financing, is a well known turnaround expert. Kazarian recently

          turned around the consumer products company, Allegheny

          International. Kazarian's May 24 letter, and subsequent letters,

          went unanswered. It was not, in fact, until the middle of June,

          that Borden responded to Kazarian's letters, and informed him

          that his attention should be directed to Lazard. Japonica

          attempted to reach Lazard and after some time during which its

          calls were not returned, Japonica's overtures were rebuffed.



                                         -20-









                             44. On July 5, 1994, Kazarian wrote to Tasco,

          the Chairman of Borden, expressing continued interest in making a

          proposal and relaying Lazard's less than up-beat appraisal of the

          Company's situation. That letter, as well, went unanswered.

          Lazard and Tasco continued to refuse to have substantive

          discussions with Japonica and took the position that Japonica was

          avoiding answering questions regarding the proposed source of

          funds for the transaction Japonica was proposing. Japonica, for

          its part, denied that any questions relating to financing were

          posed by Lazard, and continued to seek a meeting to discuss its

          proposal.



                             45. On July 26, the Borden board met and

          instructed Lazard to pursue discussions with KKR. The board did

          not consider pursuing discussions with Japonica, nor did it

          consider seeking proposals from any other party, including the

          previous potential purchaser, Hanson. The board concluded that

          "given the publicity concerning the Company's efforts to find a

          buyer in late 1993 and the lack of inquiries, the Board

          determined that it was reasonable to conclude that no other

          bidder was interested." Thus, the board relied solely on the

          negative results of a limited, 6 month long, market canvass as

          the basis for pursuing discussions with only their suitor of

          choice -- KKR. Indeed, at the time of the 1993 market check, the

          stock of Borden was trading in the high twenties, ten points

          higher than July -- making Borden a more attractive target in July

          1994 than in December of 1993.



                                         -21-





























                             46. On July 27, 1994, the Company announced

          its results for the second quarter of 1994. Net income continued

          to decline, to $.08 per share, compared to $.22 per share in the

          same period of 1993. Net sales, however, rose 1.3% against the

          same comparable period one year earlier. The results were,

          however, below the expectations set in the 1993 restructuring

          plan and caused the Company to reconsider, once again, its

          restructuring goals. In order to further its restructuring plans,

          the Company obtained a $1.4 billion, 2 1/2 year financing

          facility from a syndicate of banks lead by Citibank and Credit

          Suisse. The Company also began to develop a new 1994

          restructuring plan which called for a divestiture of the majority

          of the dairy business, the main drain on the Company's earnings

          and cash, as well as the sale of two profitable assets of the

          Packaging and Industrial Products Division in order to generate

          cash to reduce debt. Working with its advisors, the board

          authorized management to finalize the details of the proposed

          1994 plan with a view toward its formal approval in early

          September 1994.



                       Borden Rebuffs Japonica and Embraces KKR


                             47. Aware of the news regarding the latest

          restructuring plan, Japonica continued to seek a meeting with

          Borden. Its overtures were again met with silence from Borden.

          Notwithstanding Borden's continued refusal to meet with Japonica,

          on August 3, 1994, a confidentiality agreement was signed with

          KKR pursuant to which KKR was provided with nonpublic information



                                         -22-










          concerning the Company, including projections. KKR then proposed

          exploring a transaction with Borden, the consideration for which

          would be securities owned by partnerships controlled by KKR. On

          August 16, KKR, through Lazard, communicated to Borden a proposal

          to acquire Borden using KKR controlled RJR stock as the

          consideration. On August 18, the board was informed at a formal

          meeting that KKR would require further due diligence before it

          could proffer a definitive proposal.



                             48. Over the objections of Shames, the board

          determined to shift its emphasis from the restructuring to the

          pursuit of a premium transaction with KKR. Shames stressed that

          the 1994 plan was achievable and would, in the long run, maximize

          shareholder value and, in the event the board chose to sell, make

          the company more saleable. Management was directed to complete

          the plans for the new restructuring, but Lazard was directed to

          pursue a transaction with KKR. The board never directed Lazard to

          enter into substantive discussions with Japonica to evaluate

          whether a higher, offer could be obtained in that transaction,

          nor was Japonica allowed access to nonpublic information

          concerning the Company.



                             49. On September 7, the board met once again

          and was informed of the state of negotiations with KKR. KKR

          agreed to offer $14.25 of RJR stock per Borden share and agreed

          on a collar, whereby the shareholders of Borden would reap the

          benefit if RJR stock rose about $8 per share and would bear the

          burden if the stock fell below $6 per share. The likelihood of

          RJR stock



                                         -23-

























          reaching the upside of the collar was, however, remote as RJR had

          not traded in this range in 1994, and in fact traded near or

          below $6 throughout 1994. KKR also agreed not to profit from the

          19.9% stock option in the event a topping bid was made by a third

          party. KKR, however, insisted on receiving a $20 million up front

          "fee," a topping fee of $50 million, and expense reimbursement of

          up to $15 million. Once again Shames stated his belief that the

          restructuring plan was the best alternative for the Company. Over

          Shames objections, the board voted to allow management to proceed

          with the KKR negotiations.



                             50. On September 11, 1994, the board

          authorized the Company to enter into an agreement in principle

          with KKR. The agreement called for KKR to exchange RJR stock

          worth $14.25 for each share of Borden stock so long as RJR stock

          trades between $6 and $8 per share. The agreement also called for

          the immediate payment of a $20 million fee to KKR, a 19.9% stock

          option at $11 per share, payable in RJR stock and a $50 million

          topping fee. The agreement was announced on September 12. At the

          same time, RJR announced that following KKR's successful

          acquisition of Borden, RJR would issue Borden $500 million of

          newly issued common shares in exchange for newly issued Borden

          common shares representing a 20% interest in Borden and a warrant

          to acquire an additional 10% of Borden shares. The RJR minority

          interest was an integral part of the transaction agreed to by the

          Borden board.



                             51. In the face of these announcements,

          Japonica



                                         -24-

























          continued to write to Borden and attempted obtain information and

          a substantive meeting. In response to Japonica's repeated

          requests, the Company finally forwarded a form confidentiality

          agreement for Japonica's signature and on September 17, Borden

          finally relented and agreed to a meeting with Japonica on

          September 21. At that meeting, and by letter, Japonica proposed

          paying between $16 and $18 per share in a combination of cash and

          securities. Japonica went on to outline its past abilities to

          arrange financing in transactions of comparable size and gave

          assurances that such could be arranged in the present

          transaction. Unbeknownst to Japonica, Lazard, with whom Japonica

          was meeting, had shortly before entered into a new fee

          arrangement with Borden, whereby Lazard would receive $3 million

          in fees upon the execution of the Merger Agreement with KKR and

          an additional $7 million in fees in the event that KKR acquired

          at least 50.1% of the outstanding shares of Borden. First Boston

          entered into an identical agreement on September 22. Thus, the

          investment bankers had no incentive whatsoever to present a bona
                                                                      ----
          fide proposal by Japonica to the Borden board. Indeed, these
          ----
          fees, far from being the usual "success fees" paid to financial

          advisors for producing a premium transaction, are, in fact,

          underwriting fees -- paid to Lazard and First Boston in exchange

          for bringing KKR's secondary offering to market through the

          Borden shareholders.



                              Borden Accepts KKR's Offer



                             52. On September 22, the board met and

          considered the



                                         -25-












          merger agreement (the "Merger Agreement") and the Conditional

          Purchase/Option Agreement (the "Option Agreement"). Once again,

          with Shames abstaining, the board voted in favor of the KKR

          transaction and on September 23, a joint press release was issued

          detailing the Merger Agreement and the Option Agreement. The

          Director Defendants approved the Merger Agreement after only

          limited deliberation and consideration during part of a single

          day, and without seeking information concerning any other offers,

          even though they knew that other bona fide offerors, such as
                                           ---- ----

          Japonica, existed and were interested in acquiring Borden.



                             53. The consideration to be received by

          Borden's shareholders and agreed to by the Director Defendants

          was grossly inadequate in that it was only slightly more than the

          nine-year low for the price of Borden shares. Under the terms of

          the Merger Agreement, the consideration will be common stock of

          RJR valued at $14.25 provided that no more than 2.375 RJR shares

          and no fewer than 1.78125 RJR shares will be exchanged for each

          Borden share. Thus, although the consideration purportedly has an

          imputed value of $14.25, if RJR stock falls below $6 per share,

          the Borden shares will be exchanged for less than that amount.

          Most important, the Merger Agreement does not require termination

          of the transaction if the price of the RJR stock falls below this

          collar.



                                         -26-



































                             54. In accepting this price for Borden shares,

          the board failed to make any inquiry into what the value of the

          RJR stock to be received by the Borden shareholders would be at

          the time the shareholders actually receive it. The board failed

          to ask its advisors to render an opinion as to the effect of the

          entry into the freely tradable market for those shares of no less

          than 109 million to 145 million RJR shares as a consequence of

          the exchange offer. In addition, the board failed to evaluate the

          risk of liability stemming from RJR's tobacco interests.

          The Board did not require the two financial advisors to opine on

          such risk -- indeed, the board accepted the excuses of Lazard and

          First Boston that their expertise did not extend into that area.

          Moreover, the board did not retain an advisor whose expertise

          would allow such expert to opine on the risk of tobacco liability

          and its potential effect on the consideration to be received by

          Borden shareholders.



                            55. The Merger Agreement also contains other

          material terms which disadvantage Borden's shareholders and were

          intended to thwart and impede any other competing bid: (i) the

          payment of a $20 million fee, in cash, to KKR upon execution of

          the letter of intent; (ii) the guarantee of reimbursement of

          expenses up to $15 million; (iii) the payment of a $50 million

          topping fee; and (iv) the payment of an additional $30 million

          fee, in cash, in the event that KKR acquires over 50% of the

          outstanding shares of Borden.



                                         -27-





























                             56. In addition, the Merger Agreement coerces

          the Borden shareholders to tender into the offer in order to

          avoid losing value on the "back-end" of the transaction. In a

          variation of the classic "coercive two-tier tender offer", which

          offers cash on the front end and securities of indeterminate

          value on the back-end (after the merger has been consummated) and

          thus compels shareholders to rush to tender in order to get the

          "certain" consideration, here, the Borden shares of non-tendering

          (back-end) shareholders will "be converted into the right to

          receive that number of fully paid, and non-assessable shares of

          [RJR] common stock equal to the final exchange ratio" as set in

          the exchange offer. The coercive element is that while a "collar"

          protects the value of the securities to be received by tendering

          shareholders, no such collar protects those Borden shareholders

          who do not tender. Once the merger is consummated, non-tendering

          shareholders will merely receive "the same number" of RJR shares

          offered in the exchange, but the value of those shares is likely

          to be diminished as a result of both of the dilutive entry of

          millions of new, freely tradeable, RJR shares into the

          marketplace, as well as the price depression in RJR stock which

          will follow the sale of many of those newly tradeable shares by

          former Borden shareholders who do not wish to be shareholders of

          RJR. The prospect of losing value in this way will serve to

          compel Borden shareholders to tender into the exchange offer.



                                         -28-



































                             57. The Stock Option Agreement also contains

          material terms which disadvantage Borden shareholders in the

          event that the merger is not consummated. These terms like the

          aforementioned, are designed to coerce Borden shareholders into

          tendering into the offer. If the Merger is not consummated, KKR

          will control, in addition to the shares of Borden already owned,

          the number of shares acquired in the exchange offer and the

          option shares pursuant to the Stock Option Agreement by which

          Borden has granted to KKR the irrevocable right to purchase 19.9%

          of the outstanding shares of Borden at $11 per share, payable in

          RJR stock. Despite the statements by the defendants that the

          option payment would give Borden $300 million in liquid assets,

          which could be used to pay down debt -- the real value of the RJR

          stock will be far less. The underwriting fees alone required to

          bring the stock to market would depress the price far below that

          level, even without taking into account the dilutive effect of

          the entry into the market of that amount of freely tradable RJR

          stock.



                             58. Indeed, the Option becomes mandatory in

          the event that KKR acquires more than 41% of Borden shares

          (including the 16% of Borden shares already owned by KKR) but

          less than 50%. In addition, Borden has agreed that in the event

          KKR acquires no less than 19.9% of the outstanding shares of

          Borden, KKR has the right to control 33 1/3% of the seats on the

          Borden board. The net effect of the Stock Option Agreement is

          thus to allow KKR to obtain virtual control of Borden even if it

          acquires not one



                                         -29-



























          share in the exchange offer, and absolute control if a mere 25%

          of Borden shareholders tender into the offer. The coercive effect

          of the option is therefore manifest -- with 16% of Borden shares

          in hand, and an additional 19.9% guaranteed to it, KKR need only

          obtain that 25% to insure complete control of Borden. The Borden

          board has contracted away control of the company in favor of KKR

          no matter what -- a virtual majority squeeze-out. In the face of

          these devices (which were designed and intended to lock up the

          deal in favor of the board's favored suitor) Japonica has thus

          far been deterred from making a competing offer for the Company.



                                Post Agreement Events


                           59. On October 25, RJR announced that its was

          unable to reach a definitive agreement with KKR regarding a

          minority position in Borden, ostensibly over "certain accounting

          issues." Coincidentally, a mere three days later, RJR announced

          that its Nabisco subsidiary was selling 51 million shares of its

          class A common stock in an Initial Public Offering amounting to

          between 17.4% and 19.5% of Nabisco's common equity, with the

          remaining equity interest residing in the Class B common stock

          which will be retained by RJR. Borden was informed of Nabisco's

          intentions prior to the announcement and the filing of the

          registration statement. As part of the registration statement,

          Nabisco has stated that RJR "has informed Nabisco that its

          current intent is to continue to hold all of the Class B common

          stock . . . However, [RJR] has no agreement with Nabisco not to

          sell or



                                         -30-








          distribute such shares, and there can be no assurance concerning

          the period of time during which [RJR] will maintain its

          beneficial ownership of Common Stock."



                             60. This development exposes Borden

          shareholders to the very real risk that RJR will, in future, sell

          the remainder of its Nabisco holdings, fully separating the

          tobacco interests of RJR from the food interests of Nabisco. To

          Borden's shareholders, this means that they are being coerced

          into accepting a security in a combined food and tobacco

          business, which could in the very near future become a security

          in an exclusively tobacco business -- with all the risks that

          entails - a fact which was has not been disclosed by the

          defendants.



                             61. Neither the Borden board, nor its

          advisors, analyzed the effect of the-Nabisco spin-off and the

          failure of KKR to secure RJR as a minority owner of the merged

          company. These two events are likely to have a significant effect

          on the consideration to be received by the Borden shareholders in

          the exchange offer.



                             62. In addition, the 1994 restructuring, as

          Shames had predicted, began to bear fruit. On October 25, 1994,

          management reported the third quarter results for the Company.

          Despite a net loss of $.92 cents per share (including charges of

          $52.2 million for the KKR fees and expenses) the Company posted

          gains in sales of 3.9%. But for the pretax charges, the Company

          would have earned $.12 per share. The board failed to give

          adequate



                                         -31-























          consideration to the nascent success of Mr. Shames' restructuring

          plan in giving final approval to the exchange offer. Indeed, it

          has been widely reported that KKR will undertake to continue the

          1994 restructuring plan and will sell off the dairy business and

          certain assets of the Products division following the acquisition

          of control of Borden.



                             63. After having expended countless hours,

          millions of shareholder dollars, and enormous management energies

          on numerous restructurings, the board, faced with the possibility

          of real success, simply cut and ran. The board, in a blatant

          abdication of its fiduciary duties, whether from fatigue or lack

          of will, decided to have done with the problem of turning around

          the company and turned over the store to KKR at a grossly

          inadequate price. As one investor noted "The board of directors

          of Borden is the same board that let this company deteriorate

          over the last couple of years. They just agreed to this

          transaction and walked away from the problem." In addition, the

          Merger Agreement secures for certain members of the board and

          management of the company continued employment with the merged

          entity and a guarantee of option payments in excess of $2

          million, thus revealing the self interest in entrenchment and

          enrichment of the Director Defendants.



                             64. Following the announcement of the Merger

          Agreement the Company has been contacted by various entities

          seeking to explore an alternative transaction. All have been met

          with inattention by the board and its advisors. One investment

          banker



                                         -32-

























          for Borden was quoted, anonymously, as saying they were told "not

          to waste their time" trying to find a superior transaction for

          the Borden shareholders.


                                       COUNT I

                       (Violations of Sections 14(e) and 20(a)
                      of the Securities and Exchange Act of 1934
                            and Against Defendants Borden,
                           KKR and the Director Defendants)
                    --------------------------------------------


                             65. Plaintiffs repeat and reallege the

          allegations in paragraphs 1 through 64 of this complaint.



                             66. In connection with the KKR tender offer,

          Borden filed its Form 14D-9, Solicitation/Recommendation

          Statement pursuant to Section 14(d)(4) of the 1934 Act. In

          connection with the offer, KKR has also filed a Form 14D-1

          pursuant to the 1934 Act. Both the 14D-9 and the 14D-1 are

          materially false and misleading for the following reasons:



                   a.    Borden's Form 14D-9 misleadingly represents that

          non-tendering Borden shareholders will receive the "same

          consideration" as was paid in the exchange.



                   b. They falsely represent that in evaluating whether the

          KKR proposal was the best alternative for the company, the Board

          considered the results of the third quarter of 1994.



                   c.    They fail to reveal the full details of why the

          executive in charge of the Company and its



                                         -33-











          restructuring refused to agree to the KKR offer and abstained

          from all voting on the merger.



                   d.    They fail to state the fact that KKR need only

          actually obtain the tender of a mere 25% of Borden shares in

          order to reach the "Minimum Condition" of the offer.



                   e.    They omit to disclose the fact that if RJR stock

          drops by as little as $.50 per share between November 22, and the

          undetermined date upon which the exchange ratio will be set,

          Borden stockholders will receive not $14.25 per share, but

          materially less. In fact, as of the filing of this complaint, RJR

          stock is trading within 1/8 of a point of the collar.



                   f.    They falsely stated that the value of the

          consideration to be received by Borden pursuant to the Stock

          Option is $300 million.



                   g.    They falsely stated that no other bona fide bidder

          made a proposal for the company at significantly more per share

          than the KKR bid.



                   h.    They failed to disclose that Lazard and First

          Boston are in fact acting as underwriters for the largest

          secondary offering in history, and being compensated as such.



                                         -34-

































                   i.    They falsely stated that the consideration to be

          received by the Borden shareholders in the offer is subject to

          "unknowable" risk as a result of the tobacco component of RJR's

          business when the risk can be quantified.



                   j.    They fail to disclose that RJR's spin-off of 17%

          to 19% of its food business in an initial public offering and the

          subsequent absolute right of RJR to sell of the remaining 80% of

          that business leaves tendering Borden shareholders with the risk

          that they may be trading their shares in a preeminent food

          business for shares in a tobacco business.



                   k.    They falsely stated that RJR terminated the

          agreement in principle relating to the Borden tender offer,

          signed by RJR and KKR over accounting issues.



                             67. The 14D-9 and 14D-1 are communications to

          Borden shareholders intended to solicit the tender of shares into

          the KKR tender offer and to effectuate the merger to which the

          Director Defendants committed the Company.





                              68. Section 14(e) provides, in pertinent part, 

          as follows:



                   It shall be unlawful for any person to make any untrue 
                   statement of a material fact or omit to state any material 
                   fact necessary in order to make the statements made, in 
                   light of the circumstances under which they are made, not 
                   misleading, it shall be unlawful for any person to make 
                   any untrue statement 



                                         -35-



























                   of material fact or omit to state any material fact 
                   necessary in order to make the statements made, in light 
                   of the circumstances under which they are made, not 
                   misleading, or to engage in any fraudulent, deceptive, 
                   or manipulative acts or practices, in connection with 
                   any tender offer or request or invitation for tenders, 
                   or any solicitation of security holders in opposition to
                   or in favor of any such offer, request, or invitation.



                           69. In disseminating the 14D-9 and 14D-l, the

          individual defendants intentionally, or with reckless disregard,

          misrepresented and omitted material facts, as set forth above.

          The individual defendants purpose in doing so was to disseminate

          communications which would induce Borden shareholders to tender

          their shares in the tender offer and thereby effectuate the

          merger.



                           70. The 14D-9 was disseminated by the Director

          Defendants on behalf of Borden. Thus, these defendants, who

          constitute the majority of the board of Borden and controlled the

          Company, participated in the violation of Section 14(e) and are

          liable for such violations under Section 20(a) of the 1934 Act.



                           71. Defendant KKR knew that the 14D-9 and the

          14D-1 contained false and misleading statements and omissions and

          that the solicitations were intended to induce Borden

          shareholders to tender their shares to KKR, thereby benefitting

          KKR at the expense of plaintiffs and the Class.



                                         -36-



































                             72. As a result of the actions of the

          defendants, plaintiffs and other members of the Class have been,

          and will be, damaged in that they will have been provided with

          the false and misleading solicitations and their decision to

          tender shares to defendant KKR will be influenced by the

          materially false and misleading 14D-9 and 14D-1.

          



                           73. Plaintiffs and the Class have no 

          adequate remedy at law.


                                       COUNT II

                           (Violations of Section 11 of the
                        Securities Act of 1933 Against Lazard,
                         First Boston and the KKR Defendants)
                        ------------------------------------


                             74. Plaintiffs repeat and reallege the

          allegations in paragraphs 1 through 64 of this complaint.



                             75. Pursuant to Section 11 of the Securities

          Act of 1933, the Class is entitled to injunctive relief "[i]n

          case any part of the registration statement, when such part

          became effective, contained an untrue statement of a material

          fact required to be stated therein or necessary to make the

          statements therein not misleading . . . ."  Alternatively, the

          Class is entitled to recover damages, jointly and severally from

          defendants, as follows:



                             a.  RJR as the Registrant;



                                         -37-










                   b.    the KKR Defendants who are directors of RJR as

          signatories to the Registration Statement, and/or directors and

          officers of RJR; and,



                   c.    Lazard and First Boston as Underwriters for the

          offering.



                             76. Pursuant to a Registration Rights

          Agreement between KKR and RJR, RJR filed a registration statement

          pursuant to the 1933 Act in relation to the KKR tender offer, and

          incorporates an offering circular and prospectus (the "Offering

          Materials"). The offering materials were declared effective on

          November 22, 1994. Said offering materials contained untrue

          statements of material facts and omitted facts necessary in order

          to make the statements made, in light of the circumstances under

          which they were made, not misleading. Those untrue statements are

          as follows:



                   a.    the Offering Materials falsely state that no

          other bidder made a proposal for the company at significantly

          more per share than the KKR bid; and



                   b.    the Offering Material falsely state that Lazard

          and First Boston are acting solely as financial advisors to

          Borden when, in fact, they are acting as underwriters for this

          largest secondary offering in history, and being compensated as

          such.



                                         -38-





























                             77. As a direct and proximate result of the

          defendants wrongful conduct, plaintiffs and the Class will suffer

          irreparable harm in connection with the offering of RJR common

          stock and have no adequate remedy at law.



                            78. The KKR Defendants, Lazard and First Boston

          were responsible for the materially false and misleading contents

          of the Offering Materials.



                             79. Plaintiffs and members of the Class have

          been solicited to accept the securities issued pursuant to the

          Offering Materials and are without knowledge of the materially

          false statements and omissions alleged herein.



                             80. Neither the named plaintiff nor any member

          of the Class seeks to recover for purchases of RJR securities

          after RJR had made generally available to security holders an

          earnings statement covering a period of at least twelve months

          beginning after the effective date of the Registration Statement

          and Prospectus.



                             81. This action was commenced within one year

          from when plaintiffs and other Class members were solicited to

          accept issued pursuant to the registration, and within the time

          provided in the appropriate statute of limitations.



                             82. Plaintiffs do not allege in this Section

          II claim that the defendants, or any of them, were guilty of

          scienter, that is, of any scheme to defraud or of any

          misrepresentations or



                                         -39-























          omissions that were made intentionally or recklessly.


                                      COUNT III

                     (Breach of Fiduciary Duty Against Defendants
                       Borden, the Director Defendants and KKR)
                      ----------------------------------------


                             83. Plaintiffs repeat and reallege the

          allegations in paragraphs 1 through 64 of this complaint.



                             84. By the acts described above and in breach

          of their fiduciary duties to plaintiffs and the other members of

          the Class, the Director Defendants are unfairly attempting to

          influence plaintiffs and other members of the Class to tender

          their Borden shares to KKR in order to benefit defendants. The

          Director Defendants were and are under a duty:



                   a.    to fully inform themselves before taking, or

          agreeing to refrain from taking, action;



                   b.    to elicit, promote, consider, and evaluate

          reasonable and bona fide offers for the Company;1
                         ---- ----



                   c.    to act in the interest of the equity owners of the

          Company;



                   d.    not to erect unreasonable barriers to superior

          offers for the Company;



                                         -40-









                   e.    not to act in their own personal self-interest or

          in the personal interest of other board members;



                   f.    to maximize shareholder value;



                   g.    to obtain the best financial and other terms when

          the Company, or control of the Company, is for sale or the

          Company's independent existence will be materially altered by a

          transaction;



                   h.    to establish a process designed to obtain the

          highest possible price for the Company; to assure that a "level

          playing field" exists when more than one bidder for the company

          emerges, and not to favor one bidder over another during the

          "auction" process unless it is designed to assure and is

          reasonably related to achieving the best possible price;



                   i.    to act with complete candor in communications with

          the shareholders and to ensure that their statements are true and

          complete in all material respects and are not materially

          misleading; and



                   j.    to act in accordance with their fundamental duties

          of care and loyalty.



                             85. In connection with the conduct described

          herein, the Director Defendants violated each of the fiduciary

          duties



                                         -41-



























          identified in Paragraph 84 above. In summary, the breaches

          consisted of agreeing to the merger with KKR:



                   a.    while knowing of the interest of other qualified

          and bona fide bidders for Borden but failing to take any steps to
              ---- ----

          inform themselves as to the actual amount that such interested

          parties were willing to pay for Borden;



                   b.    without taking steps to inform themselves as to

          the true value of Borden in a fair auction or other process

          thereby agreeing to sell the company for a price and which was at

          least more than $1.75 per share less than its true value;



                   c.    by entering into a merger agreement which contains

          provisions designed not only to thwart, impede, delay, and/or

          make prohibitively expensive bona fide competing bids for Borden,
                                       ---- ----

          but also to guarantee a "concentration of influence" and

          "significant influence" over Borden by KKR, including:



                    (i)     A lock up stock option (the "Stock Option"),

          which allows KKR to purchase 19.9% of Borden's outstanding common

          stock (approximately 28,138,000 shares) at the favorable price of

          $11 per share, payable in RJR stock, and thus permits KKR to

          obtain over 33% of Borden's board seats if the KKR offer is

          unsuccessful; and,



                                         -42-

































                    (ii)    A disproportionate numbers of success fees and

          "topping fees" which, in the aggregate, amount to no less than

          $65 million -- $20 million of which has already been paid to KKR.



                   d.    where the sole consideration to be paid to Borden

          shareholders consists of shares of RJR which the directors knew

          was in danger of severe decline due to: (i) the inherent risk of

          RJR's tobacco holdings (ii) the recent announcement of RJR's

          public offering of 17% - 20% of its non-tobacco assets and the

          absolute right of RJR to dispose of the remaining 80%; and, (iii)

          the dilutive effect of the entry into the market of at least 109

          million and at most 354 million shares of freely tradable RJR

          common shares;



                   e.    refusing to obtain an expert opinion on the risks

          inherent in tobacco liability and the effect such liability might

          have on the consideration to be received by the Borden

          stockholders;



                   f.    refusing to and failing to meet, discuss, or

          negotiate in good faith with known and identified bona fide
                                                            ---- ----

          competing bidders for Borden who were willing to offer, and did

          offer to Borden and its stockholders financial consideration and

          other terms which were substantially better than those offered by

          KKR.



                                         -43-

































                   g.    without taking steps to inform themselves in any

          manner whatsoever whether Japonica Partners ("Japonica"), was

          willing to pay more for Borden than KKR; and,



                   h.    making materially false and misleading statements

          to Borden's shareholders with respect to the sale of Borden to

          KKR.



                            86. If the breaches of fiduciary duty described

          herein are permitted to continue and are not remedied through the

          equitable powers of this Court, the shareholders of Borden will

          lose control of, and their equity interest in, the Company

          through a transaction designed and entered into not to benefit

          the shareholders, but the Director Defendants, management and

          KKR. Unless the transaction is enjoined, the shareholders will

          forever lose the opportunity to have the value of their Company

          arrived at through competitive bidding on a level playing field

          and the opportunity that other bidders may come forward and

          construct a transaction that financially superior to that offered

          by KKR. Damages for the losses suffered by plaintiffs and the

          Class are not readily or easily calculable and cannot, in any

          case, compensate them for special losses involved in the

          structuring of a sale of their Company as they only have one

          company to sell and once disposed of it will be forever gone.



                         87. Plaintiffs have no adequate remedy at law.



                                         -44-































                            WHEREFORE, Plaintiffs demand judgment and

          preliminary and permanent relief, including injunctive relief, in

          their favor and in favor of the Class and against the defendants

          as follows:



                            A.    Declaring that this action is properly

          maintainable as a class action under Rule 23 of the Federal Rules

          of Civil Procedure.



                             B.    Declaring and decreeing that the KKR

          Merger Agreement and Stock Option Agreement were entered into in

          breach of the fiduciary duties of the Director Defendants and is

          therefore unlawful and unenforceable.



                             C.    Enjoining defendants from proceeding

          with the Merger Agreement and Stock Option Agreement.



                             D.    Enjoining defendants from consummating

          the acquisition of Borden, or a business combination with a third

          party, unless and until the Company adopts and implements a

          procedure or process, such as an auction, to obtain the highest

          possible price for the Company.



                             E.    Invalidating as unlawful and in breach

          of the fiduciary duties of the Director Defendants the Stock

          Option Agreement and the topping fee and expense reimbursement

          provisions of the Merger Agreement.



                            F.    Invalidating as unlawful and in breach of

          the fiduciary duties of the Director Defendants the payment of

          the



                                         -45-





















          $20 million initial fee paid to KKR on or about September 12,

          1994 and directing its return to Borden.



                            G.    Invalidating as unlawful and in breach of

          the fiduciary duties of the Director Defendants the agreement to

          pay an additional $30 million to KKR in the event KKR acquires

          more than 50% of the outstanding common stock of Borden.



                            H.    Declaring that the defendants have

          violated Sections 14(e) and 20(a) of the 1934 Act.



                             I.    Declaring that defendants RJR, the RJR

          directors, Lazard and First Boston have violated Section 11 of

          the 1933 Act.



                            J.    Rescinding, to the extent already

          implemented, the Merger Agreement or any terms thereof.



                             K.    Requiring defendants to publicly

          disseminate a communication, in a form deemed appropriate by the

          Court, retracting and correcting the false and misleading

          statements contained the in the 14D-9 and 14D-1 and supplying the

          material information omitted therefrom.



                            L.    Enjoining the complained of transaction

          or any related transactions.



                            M.    Ordering defendants, jointly and

          severally, to pay to plaintiffs and the Class all damages

          suffered and to be suffered by them as a result of the acts and

          transactions alleged herein.



                                         -46-





















                            N.    Awarding plaintiffs the costs and

          disbursements of the action, including allowance for plaintiffs

          reasonable attorneys' and experts' fees; and



                            O.    Granting such other relief as may be just

          and proper in the premises.



                                     JURY DEMAND
                                     -----------



                     Trial by jury demanded.


          Dated:     November 30, 1994



                                             Respectfully submitted,

                                             ABBEY & ELLIS



                                       By:   /s/ Mark Gardy
                                             ------------------------------
                                             Arthur N. Abbey, Esq.(AA-8074)
                                             Mark C. Gardy, Esq. (MG-0338)
                                             Seth Lapidow, Esq. (SL-7033)
                                             212 East 39th Street
                                             New York, New York 10016
                                             (212) 889-3700

                                             Joseph Weiss, Esq.
                                             Joseph D. Cohen, Esq.
                                             LAW OFFICES OF JOSEPH H. WEISS
                                             319 Fifth Avenue
                                             New York, New York 10016
                                             (212) 532-4171

                                             Stanley Wolfe, Esq
                                             Stephen Ramos, Esq.
                                             Genna C. Drisco11, Esq.
                                             BERGER & MONTAGUE
                                             1622 Locust Street
                                             Philadelphia, PA 19103
                                             (215) 875-3000

                                         -47-










                                             Daniel Krasner, Esq.
                                             Lawrence P. Kolker, Esq.
                                             WOLF, HALDENSTEIN, ADLER
                                                 FREEMAN & HERZ
                                             270 Madison Avenue
                                             New York, NY 10016
                                             (212) 545-4600

                                             CHARLES PIVEN, ESQ.
                                             The Legg Mason Tower
                                             111 South Calvert Street
                                             Suite 2700
                                             Baltimore, Maryland 21202
                                             (410) 332-0030

                                             STULL, STULL & BRODY
                                             6 East 45th Street
                                             New York, NY 10017
                                             (212) 687-7230

                                             MILBERG WEISS BERSHAD HYNES
                                                 & LERACH
                                             One Pennsylvania Plaza
                                             49th Floor
                                             New York, New York 10119
                                             (212) 594-5300

                                             KAUFMAN, MALCHMANN, KIRBY
                                                 & SQUIRE
                                             919 Third Avenue
                                             New York, NY 10022
                                             (212) 371-6600

                                             WECHSLER, SKIRNICK, HARWOOD
                                                 HALEBIAN & FEFFER
                                             555 Madison Avenue
                                             New York, New York 10022
                                             (212) 935-7400

                                             GARWIN, BRONZAFT GERSTEIN
                                                 & FISHER
                                             1501 Broadway
                                             Suite 1416
                                             New York, NY 10036
                                             (212) 398-0055

                                         -48-










                                             A. ARNOLD GERSHON, ESQ.
                                             295 Madison Avenue
                                             New York, New York 10017
                                             (212) 684-3033

                                             ZACKARY STARR, ESQ.
                                             275 Madison Avenue
                                             New York, New York  10016
                                             (212) 808-5533


                                             ELWOOD S. SIMON AND ASSOCIATES
                                             Bloomfield Center
                                             1533 N. Woodward Avenue
                                             Suite 315
                                             Bloomfield Hills, MI 48304
                                             (810) 646-9730

                                             KOHN, NAST & GRAF, P.C.
                                             2400 One Reading Center
                                             1101 Market Street
                                             Philadelphia, PA 19107
                                             (215) 238-1700

                                             SIROTA & SIROTA
                                             747 Third Avenue
                                             New York, New York 10017
                                             (212) 759-5555

                                             Curtis V. Trinko, Esq.
                                             LAW OFFICES OF
                                                 CURTIS V. TRINKO
                                             310 Madison Avenue
                                             14th Floor
                                             New York, NY 10017
                                             (212) 490-9550

                                             Sam Sporn, Esq.
                                             SCHOENGOLD & SPORN
                                             233 Broadway
                                             New York, New York 10279
                                             (212) 964-0046

                                         -49-









                                             Harold Obstfeld, Esq.
                                             SILVERMAN, HARNES OBSTFELD
                                                 & HARNES
                                             750 Lexington Avenue
                                             New York, New York 10022
                                             (212) 754-2333

                                             Lynda Grant, Esq.
                                             GOODKIND, LABATON, RUDOFF
                                                 & SUCHAROW
                                             100 Park Avenue
                                             New York, NY 10017
                                             (212) 907-0700

                                             Frederic S. Fox, Esq.
                                             KAPLAN, KILSHEIMER & FOX
                                             685 Third Avenue
                                             New York, New York 10017

                                             I. Stephen Rabin, Esq.
                                             RABIN & GARLAND
                                             275 Madison Avenue
                                             34th Floor
                                             New York, New York 10016
                                             (212) 682-1818

                                             - and -

                                             Kenneth A. Elan, Esq.
                                             291 Broadway
                                             Suite 1501
                                             New York, New York 10007
                                             (212) 619-0261
                                             (212) 267-7464

                                             Frank Morris, Esq.
                                             MORRIS AND MORRIS
                                             1105 North Market Street
                                             Suite 1600
                                             Wilmington, DE 19801
                                             (302) 426-0400

                                             Alfred G. Yates, Jr.
                                             ALFRED G. YATES LAW FIRM
                                             519 Allegheny Building
                                             429 Forbes Avenue
                                             Pittsburgh, PA 15219
                                             (412) 391-5164

                                         -50-










                                             Amy M. Riel, Esq.
                                             GOLSTEIN TILL LITE & REIKEN
                                             744 Broad Street, Suite 800
                                             Newark, New Jersey 07102
                                             (201) 623-3000



                                             Miles M. Tepper, Esq.
                                             LAW OFFICES OF MILES M. TEPPER
                                             7 Becker Farm Road
                                             Roseland, New Jersey 07068
                                             (201) 740-1881

                                             Co-Liaison Counsel


















                                         -51-