A L LABORATORIES INC, DEFM14A, 1994-08-22

A L LABORATORIES INC
DEFM14A, 1994-08-22
PHARMACEUTICAL PREPARATIONS

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

PROXY STATEMENT
PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)

Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_] Preliminary proxy statement
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

A. L. LABORATORIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

A. L. LABORATORIES, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)

Payment of filing fee (Check the appropriate box):

[_] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.

(1) Title of each class of securities to which transaction applies:
_______________________________________________________________________________

(2) Aggregate number of securities to which transactions applies:
_______________________________________________________________________________

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
_______________________________________________________________________________

(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________________

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

(1) Amount previously paid:
_______________________________________________________________________________

(2) Form, schedule or registration statement no.:
_______________________________________________________________________________

(3) Filing party:
_______________________________________________________________________________

(4) Date filed:
_______________________________________________________________________________
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(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.

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[A. L. LABORATORIES LETTERHEAD]

August 22, 1994

Dear Stockholder:

You are cordially invited to attend a Special Meeting of Stockholders of A.
L. Laboratories, Inc. ("A. L. Laboratories" or the "Company") to be held on
September 27, 1994, at 11:00 a.m., local time, at The Clinton Inn Hotel, 145
Dean Drive, Tenafly, New Jersey 07670 (the "Special Meeting").

At the Special Meeting, you will be asked to approve the Restructuring
Agreement dated as of May 16, 1994 by and among Apothekernes Laboratorium A.S,
a corporation organized and existing under the laws of the Kingdom of Norway
("A. L. Oslo"), and the Company (the "Restructuring Agreement") and the
transactions contemplated thereby. The Restructuring Agreement provides, among
other things, for the acquisition (the "Acquisition") by the Company of the
pharmaceutical, animal health, aquatic animal health and bulk antibiotics
businesses of A. L. Oslo (the pharmaceutical, animal health, aquatic animal
health and bulk antibiotics businesses of A. L. Oslo, including certain of its
subsidiaries, being collectively referred to herein as the "Related Norwegian
Businesses") for approximately $23.1 million (subject to adjustments) and
warrants to purchase 3,600,000 shares of the Company's Class A Common Stock,
par value $0.20 per share (the "Class A Stock"). The warrants will have an
exercise price equal to 140% of the average trading price of the Class A Stock
over a specified period, subject to adjustments, generally become exercisable
one year after closing and expire on the later of December 31, 1998 or the date
which is 51 months after the closing date of the transactions contemplated by
the Restructuring Agreement. The Restructuring Agreement also provides for A.
L. Oslo to transfer the Related Norwegian Businesses to a newly formed
Norwegian corporation ("New A. L. Oslo") through a "demerger" (a transaction
similar to a spin-off in the United States). In the demerger, each holder of a
share of capital stock of A. L. Oslo will be entitled to receive one share of
capital stock of New A. L. Oslo for each share of capital stock of A. L. Oslo
that it holds. The Company will make the Acquisition through an offer (the
"Exchange Offer") to acquire all shares of New A. L. Oslo which the A. L. Oslo
shareholders are entitled to receive in the demerger.

The Restructuring Agreement further provides that the Company will transfer
substantially all of its operations, consisting primarily of its animal health
business and its administrative personnel and facilities, to a newly formed,
wholly owned subsidiary to be named "A. L. Laboratories, Inc." In addition, if
the Restructuring Agreement and the transactions contemplated thereby are
approved, you will be asked to approve an amendment to the Company's
Certificate of Incorporation (the "Certificate of Incorporation Amendment"),
which will be effective upon consummation of the Acquisition, to increase the
percentage of directors elected by the holders of the Class A Stock from 25% to
33 1/3% of the Company's Board of Directors (rounded to the nearest whole
number, but not less than two members of the Company's Board of Directors) and
to change the name of the Company to "A.L. Pharma Inc."

A. L. Laboratories was formed as a wholly owned subsidiary of A. L. Oslo in
1975. The Company went public in 1984 and A. L. Oslo remains the Company's
largest shareholder through ownership of all of the Company's shares of Class B
Common Stock, representing approximately 38% of all outstanding shares of the
Company.

There has been interest for some time in combining the Related Norwegian
Businesses with the Company because of their related and complementary nature.
The objective of the combination is to create an entity that will be in a
stronger position to compete on a worldwide basis in specialized pharmaceutical
and animal health products. Among other things, the proposed transaction offers
opportunities for strengthened and more effective marketing including sales
force consolidation, broadening of the Company's product lines and
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more effective research and development through coordinated efforts. Further,
the Company's Board of Directors believes that the Acquisition has the
potential to add to the earnings of the Company for 1994 and 1995.

The proposed transaction more than doubles the Company's sales of finished
dosage-form pharmaceuticals in the Nordic countries, opens the Company's access
to the world market outside North America for bacitracin-based feed additives,
including BMD (R), adds important pharmaceutical grade bulk antibiotic products
to the present product line and expands specialized fermentation capabilities,
while creating the world's leading supplier of fish vaccines. For the year
ended December 31, 1993, the Related Norwegian Businesses to be acquired by the
Company had total revenues of $78,467,000 and operating income of $8,599,000,
and at June 30, 1994 had total assets of $115,746,000, long-term debt of
$65,157,000, and stockholders' equity of $21,966,000.

FOLLOWING A RECOMMENDATION BY A SPECIAL COMMITTEE OF THE COMPANY'S BOARD OF
DIRECTORS CONSISTING OF DIRECTORS ELECTED BY THE HOLDERS OF CLASS A STOCK, THE
COMPANY'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE RESTRUCTURING
AGREEMENT AND THE TRANSACTIONS (INCLUDING THE CERTIFICATE OF INCORPORATION
AMENDMENT) CONTEMPLATED THEREBY AS FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY AND FAIR TO THE HOLDERS OF CLASS A STOCK AND RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE PROPOSALS RELATING THERETO. Further, Lehman Brothers,
a nationally recognized investment banking firm, was retained by the Special
Committee of the Company's Board of Directors and has issued a written opinion
that the consideration to be paid by the Company in the Exchange Offer is fair,
from a financial point of view, to the Company and the holders of Class A
Stock.

At the Special Meeting, if the Restructuring Agreement and the Transactions
are approved, you will also be asked to elect one director to the Board of
Directors to serve effective upon consummation of the Acquisition until the
1995 Annual Meeting of Stockholders. THE COMPANY'S BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT IF THE RESTRUCTURING AGREEMENT AND THE TRANSACTIONS
ARE APPROVED, YOU VOTE FOR ELECTION AS A DIRECTOR THE BOARD'S NOMINEE LISTED IN
THE PROXY STATEMENT ACCOMPANYING THIS LETTER.

In the material accompanying this letter, you will find a Notice of Special
Meeting of Stockholders, a Proxy Statement relating to the actions to be taken
by the Company's stockholders at the Special Meeting and a proxy card. The
Proxy Statement more fully describes the proposed Transactions and other
matters to be considered at the Special Meeting and includes certain
information concerning the Company, New A. L. Oslo and the Related Norwegian
Businesses.

YOUR VOTE IS IMPORTANT. APPROVAL OF THE RESTRUCTURING AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY REQUIRES, AMONG OTHER THINGS, THE AFFIRMATIVE
VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF CLASS A STOCK,
VOTING AS A SINGLE CLASS. IF A SHARE OF CLASS A STOCK IS NOT VOTED IT WILL HAVE
THE EFFECT OF A VOTE AGAINST SUCH MATTER. THEREFORE, WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON, STOCKHOLDERS ARE URGED TO PROMPTLY SIGN, DATE AND
MAIL THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THIS WILL
NOT PREVENT YOU FROM VOTING IN PERSON SHOULD YOU ATTEND THE MEETING. PLEASE ACT
AT YOUR EARLIEST CONVENIENCE.

Very truly yours,

/s/ Einar W. Sissener

Einar W. Sissener
Chairman of the Board and Chief
Executive Officer
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LOGO

A. L. LABORATORIES, INC.
ONE EXECUTIVE DRIVE
P.O. BOX 1399
FORT LEE, NEW JERSEY 07024

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 27, 1994

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To the Stockholders of A. L. Laboratories, Inc.:

NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of A. L.
Laboratories, Inc., a Delaware corporation (the "Company"), will be held at THE
CLINTON INN HOTEL, 145 DEAN DRIVE, TENAFLY, NEW JERSEY 07670, on Tuesday,
September 27, 1994 at 11:00 a.m., local time, to consider and act upon the
following matters:

1. Approval of a Restructuring Agreement dated as of May 16, 1994 by and
between Apothekernes Laboratorium A.S, a corporation organized and existing
under the laws of the Kingdom of Norway ("A. L. Oslo"), and the Company and
the transactions contemplated thereby, including, among other things, (i)
the acquisition (the "Acquisition") by the Company of the pharmaceutical,
animal health, aquatic animal health and bulk antibiotics businesses of A.
L. Oslo and (ii) the transfer of substantially all of the Company's
operations to a newly formed subsidiary of the Company.

2. If the matter referred to in item 1 is approved, approval of an
amendment to the Company's Certificate of Incorporation to increase the
percentage of directors elected by holders of the Company's Class A Common
Stock (the "Class A Stockholders") from 25% to 33 1/3% of the Company's
Board of Directors (rounded to the nearest whole number, but not less than
two members of the Company's Board of Directors).

3. If the matter referred to in item 1 is approved, approval of an
amendment to the Company's Certificate of Incorporation to change the
Company's name to "A.L. Pharma Inc."

4. If the matter referred to in item 1 is approved, election by the Class
A Stockholders of one director to the Company's Board of Directors to hold
office effective upon consummation of the Acquisition until the 1995 Annual
Meeting of Stockholders and until such person's successors shall be elected
and shall qualify.

5. Transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.

If the matter referred to in item 1 is not approved by the Company's
stockholders, including holders of a majority of the outstanding shares of the
Company's Class A Common Stock voting as a separate class, or the Acquisition
is not consummated for any other reason, the amendments to the Company's
Certificate of Incorporation (the matters referred to in items 2 and 3) and the
election of a new director by the Class A Stockholders (the matter referred to
in item 4) will not take effect as they are expressly conditioned upon the
consummation of the Acquisition.
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The Board of Directors has fixed the close of business on August 18, 1994 as
the record date for determining the stockholders entitled to notice of and to
vote at the meeting or any adjournment thereof.

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL
MEETING IN PERSON, PLEASE COMPLETE, SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED
PROXY. AN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE WHICH, IF MAILED IN THE
UNITED STATES, REQUIRES NO ADDITIONAL POSTAGE. IF YOU ATTEND THE SPECIAL
MEETING, YOU MAY THEN WITHDRAW YOUR PROXY AND VOTE IN PERSON IF YOU SO DESIRE.
YOUR COOPERATION IS APPRECIATED.

A Proxy Statement accompanies this notice.

By order of the Board of Directors,

Beth P. Hecht
Secretary

August 22, 1994

--IMPORTANT--

IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THE SPECIAL
MEETING. APPROVAL OF THE MATTERS REFERRED TO IN ITEMS 1, 2 AND 3 REQUIRES,
AMONG OTHER THINGS, THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF CLASS A STOCK, VOTING AS A SINGLE CLASS. IF A SHARE OF
CLASS A STOCK IS NOT VOTED IT WILL HAVE THE EFFECT OF A VOTE AGAINST SUCH
MATTERS. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE TAKE A MOMENT TO
SIGN, DATE AND MAIL YOUR PROXY CARD IN THE ENCLOSED ENVELOPE. YOUR PROMPTNESS
WILL ASSIST YOUR COMPANY IN AVOIDING ADDITIONAL COSTS OF SOLICITATION.
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LOGO

A. L. LABORATORIES, INC.
ONE EXECUTIVE DRIVE
P.O. BOX 1399
FORT LEE, NEW JERSEY 07024

MAILING DATE
AUGUST 22, 1994

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Proxy Statement for Special Meeting of Stockholders

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To Be Held on September 27, 1994

This proxy statement (the "Proxy Statement") is furnished in connection with
the solicitation of proxies by the Board of Directors of A. L. Laboratories,
Inc., a Delaware corporation (the "Company"), for use at the Special Meeting of
Stockholders (the "Special Meeting") to be held on September 27, 1994, at The
Clinton Inn Hotel, 145 Dean Drive, Tenafly, New Jersey 07670, at 11:00 a.m.,
local time, and at any adjournment or postponement thereof.

The Special Meeting has been called to consider and vote upon, among other
things, the approval of a Restructuring Agreement (the "Restructuring
Agreement") dated as of May 16, 1994 by and between the Company and
Apothekernes Laboratorium A.S, a corporation organized and existing under the
laws of the Kingdom of Norway ("A. L. Oslo"), and the transactions contemplated
thereby, which generally provide for the combination of the related businesses
of the Company and A. L. Oslo. The transactions contemplated by the
Restructuring Agreement (such transactions, each one conditioned on the others,
being referred to as the "Transactions") are (i) the acquisition (the
"Acquisition") by the Company of the pharmaceutical, animal health, aquatic
animal health and bulk antibiotics businesses of A. L. Oslo (the
pharmaceutical, animal health, aquatic animal health and bulk antibiotics
businesses of A. L. Oslo, including certain of its subsidiaries, being
collectively referred to herein as the "Related Norwegian Businesses"), and
(ii) certain actions (the "A. L. Labs Actions") to change the Company's name,
to increase the percentage of directors elected by the holders of the Company's
Class A Common Stock, par value $0.20 per share (the "Class A Stock"), and to
transfer substantially all of the Company's operations to a newly formed
subsidiary of the Company. A. L. Oslo, as the beneficial owner of 100% of the
outstanding shares of the Company's Class B Common Stock, par value $0.20 per
share (the "Class B Stock"), is currently entitled to elect 75% of the members
of the Company's Board of Directors and to cast in excess of a majority of the
votes generally entitled to be cast on matters presented to the stockholders of
the Company. Accordingly, A. L. Oslo is able to control the Company. The
Restructuring Agreement and the Transactions, however, are subject to approval
of the holders of a majority of the outstanding shares of Class A Stock, voting
as a separate class.

The Restructuring Agreement provides that the Company will acquire the Related
Norwegian Businesses for a consideration ("Consideration") equal to (i) a cash
amount, which is subject to adjustment under certain circumstances, of
170,000,000 Norwegian kroner ($24.6 million based on an exchange rate as of
June 30, 1994) and (ii) warrants (the "Warrants") to purchase 3,600,000 shares
of Class A Stock. The
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cash portion of the Consideration has already been reduced to NOK 160,000,000
($23.1 million based on an exchange rate as of June 30, 1994) as a result of a
NOK 10,000,000 cash dividend paid by A. L. Oslo to its shareholders on June 8,
1994. The Acquisition will be made pursuant to an offer (the "Exchange Offer")
by the Company to the holders of ordinary shares of A. L. Oslo capital stock
("A. L. Oslo Shares") to exchange for each share of capital stock (the "New A.
L. Oslo Shares") of a new corporation to be organized under the laws of the
Kingdom of Norway ("New A. L. Oslo") to be issued to them upon consummation of
the Demerger (as defined below) a pro rata portion of the Consideration. If the
Company obtains more than 90% of the outstanding New A. L. Oslo Shares upon
consummation of the Exchange Offer, it intends to compel, as permitted under
Norwegian law, any remaining holders of New A. L. Oslo Shares who did not
accept the Exchange Offer to sell such shares to the Company. Immediately prior
to the consummation of the Exchange Offer, A. L. Oslo will transfer all of the
assets and liabilities of the Related Norwegian Businesses to New A. L. Oslo in
a demerger (the "Demerger") under the laws of the Kingdom of Norway. A
Norwegian demerger is similar to a spin-off in the United States in that it
divides one company (A. L. Oslo) into two companies (A. L. Oslo and New A. L.
Oslo). Upon consummation of the Demerger, each holder of A. L. Oslo Shares will
be entitled to receive one New A. L. Oslo Share for each A. L. Oslo Share held
by such holder and A. L. Oslo will be renamed, "A.L. Industrier A.S," and will
use its best efforts to permit New A. L. Oslo to use the name, "Apothekernes
Laboratorium AS."

The Restructuring Agreement further provides that the Company will transfer
substantially all of its operations, consisting primarily of its animal health
business and its administrative personnel and facilities, to a newly formed,
wholly owned subsidiary to be named "A. L. Laboratories, Inc." ("New A. L.
Labs") (such transfer to New A. L. Labs being referred to as the "New A. L.
Labs Transfer"). In addition, if the Transactions are approved, the Company's
Certificate of Incorporation will also be amended (such amendment being
referred to as the "Certificate of Incorporation Amendment") to increase the
percentage of directors elected by the holders of the Class A Stock from 25% to
33 1/3% of the Company's Board of Directors (rounded to the nearest whole
number, but not less than two members of the Company's Board of Directors)
(such provision being referred to as the "Class A Board Representation Increase
Provision") and to change the name of the Company to "A.L. Pharma Inc." (the
"Name Change").

A detailed description of the Restructuring Agreement and the Transactions is
set forth in this Proxy Statement.
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TABLE OF CONTENTS

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PAGE
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SUMMARY................................................................... 1
The Special Meeting..................................................... 1
The Transactions........................................................ 3
Election of Directors................................................... 10
Certain Historical and Pro Forma Financial Data......................... 11
THE SPECIAL MEETING....................................................... 18
Date, Time and Place.................................................... 18
Purpose of the Special Meeting.......................................... 18
Record Date............................................................. 18
Quorum.................................................................. 18
Required Vote........................................................... 19
Proxies................................................................. 20
Manner of Solicitation.................................................. 21
No Dissenters' Rights................................................... 21
THE TRANSACTIONS.......................................................... 21
The Parties to the Transactions......................................... 21
Benefits to be Obtained from the Transactions by Certain Interested
Persons................................................................ 22
Transactions Between the Company and A. L. Oslo......................... 22
The Transactions........................................................ 23
Financing of the Transactions and Refinancing of Indebtedness of the
Related Norwegian Businesses........................................... 26
Unaudited Pro Forma Condensed Combined Financial Statements............. 27
Conflicts of Interest................................................... 40
Background of the Transactions.......................................... 40
Recommendations of the Company's Board of Directors; Reasons for the
Transactions........................................................... 48
Opinion of the Special Committee's Financial Advisor.................... 52
Accounting Treatment of the Transactions................................ 56
Certain Federal Income Tax Consequences of the Transactions............. 56
Regulatory Approvals.................................................... 57
Conduct of the Business and Management of the Company Following the
Closing................................................................ 57
Certain Information Regarding the Related Norwegian Businesses.......... 58
DESCRIPTION OF WARRANTS AND CLASS A STOCK................................. 74
Warrants................................................................ 74
Class A Stock........................................................... 76
DESCRIPTION OF CERTAIN AGREEMENTS......................................... 77
Certain Provisions of the Restructuring Agreement....................... 77
The Demerger Agreement.................................................. 83
Skoyen Lease............................................................ 83
Administrative Services Agreement....................................... 85
ELECTION OF DIRECTOR...................................................... 85
Election of Director.................................................... 85
Nominee for Class A Director............................................ 85
Members of the Company's Board of Directors............................. 86
Certain Relationships................................................... 87
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS........................... 88
INDEPENDENT AUDITORS...................................................... 90
STOCKHOLDERS' PROPOSALS FOR THE 1995 ANNUAL MEETING....................... 90
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 90
OTHER BUSINESS............................................................ 91
</TABLE>

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<TABLE>
<C> <S>
EXHIBITS:
Exhibit A --Restructuring Agreement, dated as of May 16, 1994,
between A. L. Laboratories, Inc. and Apothekernes
Laboratorium A.S
Exhibit B --Form of Warrant Agreement between A.L. Pharma Inc.
(formerly known as A. L. Laboratories, Inc.) and The First
National Bank of Boston, as warrant agent
Exhibit C --Form of Demerger Agreement between Apothekernes
Laboratorium A.S (to be renamed A.L. Industrier A.S) and
Apothekernes Laboratorium AS (under incorporation)
Exhibit D --Opinion of Lehman Brothers
--Combined Financial Statements of the Related Norwegian
Exhibit E Businesses
</TABLE>

ii
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SUMMARY

The following is a brief summary of certain information contained elsewhere
in this Proxy Statement. This summary is not intended to be a complete
description of the matters covered in this Proxy Statement and is subject to
and qualified in its entirety by reference to the more detailed information and
financial statements contained elsewhere in this Proxy Statement, including the
Exhibits hereto and the documents incorporated herein by reference.
Stockholders are urged to read carefully the entire Proxy Statement, including
the Exhibits. As used in this Proxy Statement, the terms the "Company", "A. L.
Oslo" and "New A. L. Oslo" refer to such corporations respectively and, where
the context requires, such entities and their respective subsidiaries, except
that for purposes of this Proxy Statement the Company is not considered a
subsidiary of A. L. Oslo. As used in this Proxy Statement, "NOK" refers to
Norwegian kroner and "$" or "dollars" refers to United States dollars. Except
as otherwise specified herein, all Norwegian kroner amounts that are also
expressed in United States dollars have been translated into United States
dollars using the June 30, 1994 currency exchange rate (or NOK 6.9219 to
$1.00).

THE SPECIAL MEETING

TIME, DATE AND PLACE. The Special Meeting will be held on Tuesday, September
27, 1994 at The Clinton Inn Hotel, 145 Dean Drive, Tenafly, New Jersey 07670,
at 11:00 a.m., local time.

PURPOSE OF THE SPECIAL MEETING. The purpose of the Special Meeting is to
consider and act upon the following matters:

1. Approval of the Restructuring Agreement and the Transactions (other
than the Certificate of Incorporation Amendment). (Proposal #1) See "The
Transactions."

2. If Proposal #1 is approved, approval of the Class A Board
Representation Increase Provision. (Proposal #2) See "The Transactions --
A. L. Labs Actions."

3. If Proposal #1 is approved, approval of the Name Change. (Proposal #3)
See "The Transactions -- A. L. Labs Actions."

4. If Proposal #1 is approved, election by the holders of Class A Stock
of one director to the Company's Board of Directors to hold office
effective upon consummation of the Acquisition until the 1995 Annual
Meeting of Stockholders and until such person's successor shall be elected
and shall qualify. (Proposal #4) See "Election of Director."

5. Transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.

If Proposal #1 is not approved by the Company's stockholders, including
holders of a majority of the outstanding shares of Class A Stock voting as a
separate class, or the Acquisition is not consummated for any other reason, the
Certificate of Incorporation Amendment (Proposal #2 and Proposal #3) and the
election of a new director by the holders of Class A Stock will not take effect
as they are expressly conditioned upon the consummation of the Acquisition.

RECORD DATE. The close of business on August 18, 1994 (the "Record Date") has
been fixed as the record date for determining holders of outstanding shares of
Class A Stock and Class B Stock, entitled to notice of, and entitled to vote
at, the Special Meeting. As of the Record Date, 13,349,560 shares of Class A
Stock and 8,226,562 shares of Class B Stock were outstanding and entitled to
vote. See "The Special Meeting --Record Date."

QUORUM. For each matter to be voted upon at the Special Meeting, the presence
in person or by proxy, of holders of stock entitled to be voted with respect to
such matter representing a majority of the aggregate

1
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voting power of all shares of stock entitled to be voted with respect to such
matter is necessary to constitute a quorum with respect to such matter and to
transact business with respect to such matter at the Special Meeting. Shares
abstaining on Proposal #1, Proposal #2 and Proposal #3, shares as to which
authority to vote on Proposal #4 is withheld and broker non-votes (where a
broker submits a proxy but does not have authority to vote a customer's shares
on one or more matters) on any of the Proposals will be considered present at
the Special Meeting for purposes of establishing a quorum. See "The Special
Meeting -- Quorum."

REQUIRED VOTE. The Transactions (other than the Certificate of Incorporation
Amendment) are being submitted to the stockholders as a single matter as
Proposal #1. The two components of the Certificate of Incorporation Amendment,
namely the Class A Board Representation Increase Provision and the Name Change,
are being submitted to the stockholders as two separate matters as Proposal #2
and Proposal #3, respectively. Under the Company's Certificate of Incorporation
and applicable Delaware law, approval of Proposal #1, Proposal #2 and Proposal
#3 requires the affirmative vote of a majority of the aggregate number of votes
cast by the holders of the Class A Stock and the Class B Stock voting together
as a single class, with the holders of the Class A Stock casting one vote per
share of Class A Stock held and the holders of the Class B Stock casting four
votes per share of Class B Stock held. Pursuant to a resolution of the
Company's Board of Directors and the Restructuring Agreement, approval of
Proposal #1, Proposal #2 and Proposal #3 will also require the affirmative vote
of the holders of a majority of the outstanding shares of Class A Stock voting
as a single class. The affirmative vote of a majority of the aggregate number
of votes cast by the holders of the Class B Stock, voting as a separate class,
is also required under Delaware law to approve Proposal #2 since the Class A
Board Representation Increase Provision would have the effect of decreasing the
voting power of the holders of Class B Stock when voting for directors. A. L.
Oslo, the beneficial owner of 100% of the outstanding shares of Class B Stock,
has agreed to vote its shares in favor of Proposal #1, Proposal #2 and Proposal
#3.

If Proposal #1 is approved, one director will be elected by the holders of
Class A Stock. Under the Company's Certificate of Incorporation as presently in
effect, the holders of the Class A Stock are entitled, voting as a separate
class, to elect at least 25% of the Company's Board of Directors (or if such
25% is not a whole number, the nearest higher whole number of directors that is
at least 25% of such membership), and the holders of the Class B Stock are
entitled, voting separately as a class, to elect the remaining directors. At
the Annual Meeting of the Company's stockholders held on June 20, 1994 (the
"1994 Annual Meeting"), the holders of Class A Stock elected two directors
(directors elected or to be elected by the holders of Class A Stock being
referred to as the "Class A Directors") and the holders of Class B Stock
elected six directors (directors elected by the holders of Class B Stock being
referred to as the "Class B Directors"). Prior to the Special Meeting, the
Company's Board of Directors will adopt a resolution to amend the Company's
bylaws, effective upon consummation of the Acquisition, to increase the size of
the Company's Board of Directors from eight members to nine members if and when
Proposal #1 is approved. Therefore, if Proposal #1 is approved, there will be a
newly created directorship which the holders of Class A Stock will be entitled
to fill. Such director will be elected by the affirmative vote of a plurality
of the votes cast at the Special Meeting by the holders of the Class A Stock
voting as a single class. (A plurality of the votes cast means the greatest
number of votes cast for a director.)

PROXIES. Shares of Class A Stock represented by properly executed proxies
received at or prior to the Special Meeting and which have not been revoked
will be voted in accordance with the instructions indicated therein. If no
instructions are indicated, such proxies will be voted FOR: (i) Proposal #1 and
(ii) if Proposal #1 is approved, Proposal #2, Proposal #3 and the election of
the nominee for Class A Director nominated by the Company's Board of Directors;
and, in the discretion of the proxy holder, as to any other matter which may
properly come before the Special Meeting or any adjournment or postponement
thereof, including, without limitation, any adjournment or postponement thereof
and a motion to adjourn or postpone the Special Meeting to another time and/or
place, for the purpose of soliciting additional proxies or otherwise;

2
<PAGE>

provided, however, that no proxy which is voted against Proposal #1 will be
voted in favor of any such adjournment or postponement. See "The Special
Meeting -- Proxies" for a description of the treatment of abstentions and
broker non-votes.

YOUR VOTE IS IMPORTANT. APPROVAL OF PROPOSALS #1, #2 AND #3 REQUIRES, AMONG
OTHER THINGS, THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF CLASS A STOCK, VOTING AS A SINGLE CLASS. IF A SHARE OF
CLASS A STOCK IS NOT VOTED IT WILL HAVE THE EFFECT OF A VOTE AGAINST SUCH
PROPOSALS. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY IN ORDER TO ENSURE THAT YOUR SHARES
WILL BE REPRESENTED AT THE SPECIAL MEETING. THE GIVING OF SUCH PROXY DOES NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE SPECIAL
MEETING.

The holders of the Class A Stock may revoke a proxy at any time prior to
exercise at the Special Meeting by giving notice of revocation to the Secretary
of the Company, properly submitting to the Company a duly executed proxy
bearing a later date, or by attending the Special Meeting and voting in person.
See "The Special Meeting -- Proxies."

THE TRANSACTIONS

THE PARTIES TO THE TRANSACTIONS

THE COMPANY. The Company is a specialized international pharmaceutical
company engaged in developing, manufacturing and marketing specialty generic
and proprietary human pharmaceuticals, animal health products and bulk
antibiotics. The Company's mailing address for its principal executive offices
is One Executive Drive, P.O. Box 1399, Fort Lee, New Jersey 07024 and its
telephone number at its principal executive offices is (201) 947-7774.
Additional information concerning the Company is set forth under "Security
Ownership of Certain Beneficial Owners" and is disclosed in certain other
documents which are incorporated herein by reference. See "Incorporation of
Certain Documents by Reference."

A. L. OSLO. A. L. Oslo is a Norwegian corporation that develops, manufactures
and markets finished generic and specialty pharmaceuticals, animal, aquatic
animal and human health products, bulk antibiotics, food products and certain
other products. Its antibiotic products are marketed on a worldwide basis, and
its pharmaceutical and other products are sold primarily in Norway and the
other Nordic countries. Immediately prior to the consummation of the Exchange
Offer, all of the assets and liabilities of the Related Norwegian Businesses
will be transferred to New A. L. Oslo in the Demerger. After the Demerger,
New A. L. Oslo will own A. L. Oslo's pharmaceutical, animal health, aquatic
animal health and bulk antibiotics divisions and certain of its subsidiaries
which are engaged in such businesses. A. L. Oslo will retain ownership of the
shares of Class B Stock, the land and facility in Oslo, Norway where the
Related Norwegian Businesses' principal administrative offices and fermentation
plant for its bulk antibiotics and animal health businesses are located (the
"Skoyen Facility"), its food businesses and its investments in various
affiliates. The Skoyen Facility will be leased to New A. L. Oslo on a long-term
basis as more fully described below.

3
<PAGE>

138,232 A. L. Oslo Shares (representing approximately 34.6% of the outstanding
A. L. Oslo Shares), consisting of 52,462 A. L. Oslo Shares he owns directly and
85,770 A. L. Oslo Shares owned by A/S Swekk, his family-controlled private
holding company ("Swekk"). In addition, Mr. Sissener has the authority to vote
most of the Sissener family's 64,850 A. L. Oslo Shares, which shares represent
approximately 16.2% of the outstanding A. L. Oslo Shares.

A. L. Oslo receives significant income from the Company from products sold to
the Company and in the form of royalties payable pursuant to certain license
agreements with the Company. See "The Transactions -- Transactions Between the
Company and A. L. Oslo."

A. L. Oslo's principal executive offices are located at Harbitzalleen 3-5,
0275 Oslo, Norway and its telephone number is 47 22 52 90 00. Upon consummation
of the Transactions, New A. L. Oslo's principal executive offices will be
located at Harbitzalleen 3-5, 0275 Oslo, Norway and its telephone number will
be 47 22 52 90 00. Additional information concerning the Related Norwegian
Businesses is set forth under "The Transactions -- Certain Information
Regarding the Related Norwegian Businesses."

THE TRANSACTIONS

THE ACQUISITION. The Company will acquire the Related Norwegian Businesses
for the Cash Purchase Price (as defined below) and the Warrants. The cash
portion of the Consideration has already been reduced to NOK 160,000,000 ($23.1
million based on an exchange rate as of June 30, 1994) as a result of a NOK
10,000,000 cash dividend paid by A. L. Oslo to its Shareholders on June 8,
1994. The Acquisition will be made by the Exchange Offer, pursuant to which the
Company will pay to each holder of A. L. Oslo Shares who properly tenders the
New A. L. Oslo Shares it is entitled to receive upon consummation of the
Demerger a pro rata portion (based upon the number of New A. L. Oslo Shares
outstanding on the date the Exchange Offer is consummated) of the Cash Purchase
Price and the Warrants. The Company will, subject to the receipt of all
governmental and regulatory approvals, commence the Exchange Offer
contemporaneously with or as soon as practicable after the mailing of this
Proxy Statement to its stockholders and, if the Transactions are approved and
all conditions to Closing (as defined below) are satisfied or waived, will
consummate the Exchange Offer after the Demerger is consummated.

The Demerger will occur immediately prior to the consummation of the Exchange
Offer. In the Demerger, A. L. Oslo will transfer to New A. L. Oslo all of the
assets and liabilities which comprise the Related Norwegian Businesses. Upon
consummation of the Demerger, the holders of A. L. Oslo Shares will be entitled
to receive one New A. L. Oslo Share for each A. L. Oslo Share. After
consummation of the Demerger, New A. L. Oslo will own A. L. Oslo's
pharmaceutical, animal health, aquatic animal health and bulk antibiotics
divisions and certain of its subsidiaries which are engaged in such businesses.
A. L. Oslo will retain ownership of the shares of Class B Stock, the Skoyen
Facility which will be leased on a long-term basis to New A. L. Oslo, its food
businesses and its investments in various affiliates. Pursuant to the demerger
agreement (the "Demerger Agreement") between A. L. Oslo and New A. L. Oslo, the
Demerger will be deemed effective for Norwegian tax and accounting purposes as
of January 1, 1994 so that the earnings and operating results of the Related
Norwegian Businesses from that date will be for New A. L. Oslo's benefit.

The "Cash Purchase Price," which shall be paid in Norwegian kroner, will be
NOK 170,000,000 ($24.6 million). Such amount is subject to adjustment if A. L.
Oslo pays certain dividends to its shareholders and if the exchange rate of
Norwegian kroner to United States dollars (the "NOK Exchange Rate") exceeds NOK
7.5 to $1.00 or is less than NOK 6.5 to $1.00 during the 10 business days prior
to the fifth business day prior to the closing of the Transaction. The NOK
Exchange Rate on June 30, 1994 was NOK 6.9219 to $1.00. Since A. L. Oslo paid a
cash dividend of NOK 10,000,000 on June 8, 1994, the Cash Purchase Price
(assuming no adjustment for NOK Exchange Rate fluctuations) has been reduced to
NOK 160,000,000 ($23.1 million).

4
<PAGE>

The Warrants will constitute the right to purchase 3,600,000 shares of Class
A Stock at a specified price per share of Class A Stock (the "Exercise Price")
which will be equal to 140% of the arithmetic average of the daily closing
prices of the Class A Stock on the New York Stock Exchange for the period
beginning on the date this Proxy Statement is first mailed to the Company's
stockholders and ending on the last trading day which is at least five trading
days prior to the date of the Special Meeting (the "Average Closing Price"),
subject to certain adjustments. The Warrants will expire on the later of
December 31, 1998 and the date which is 51 months after the Closing Date (as
defined below). The Warrants generally will not be exercisable and, except for
certain permitted transfers, will not be transferable until the earlier of the
first anniversary of the Closing Date or the date the registration statement
covering the Warrants is declared effective by the Securities and Exchange
Commission (the "Commission"). In addition, Warrants issued to or held by Einar
W. Sissener and Swekk (collectively, the "Sissener Parties"), and their
permitted transferees will not be exercisable and, except for certain permitted
transfers, will not be transferable until the third anniversary of the Closing
Date. The Warrants will be issued to the holders of New A. L. Oslo Shares
pursuant to exemptions from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), in reliance on Regulation S
promulgated thereunder and Section 4(2) thereof. The Company has agreed to
register the Warrants and the shares of Class A Stock to be issued upon
exercise of the Warrants (the "Warrant Shares") under the Securities Act on or
before the first anniversary of the consummation of the Transactions. To
facilitate the trading of the Warrants and the Warrant Shares, the Company has
also agreed to list such securities for trading or quotation on the New York
Stock Exchange (the "NYSE"), or if such listing is in the opinion of the
Company impracticable, on another appropriate national securities exchange or
an over-the-counter quotation system. See "Description of Warrants and Class A
Stock--Warrants."

The Company will not be obligated to accept for payment and exchange New A.
L. Oslo Shares tendered pursuant to the Exchange Offer unless certain
conditions set forth in the Restructuring Agreement are met, including the
condition that holders of more than 90% of the New A. L. Oslo Shares accept the
Exchange Offer (the "Minimum Condition"). If the Minimum Condition is
satisfied, the Company would be permitted under Norwegian law and intends to
compel the non-tendering holders of New A. L. Oslo Shares to sell such shares
to the Company. If the Minimum Condition is not satisfied, the Company with the
approval of A. L. Oslo could waive such condition and make a determination at
that time to consummate the Acquisition anyway. Such a determination on the
part of the Company would be based upon a number of factors, including the
number of New A. L. Oslo Shares tendered in (and not withdrawn from) the
Exchange Offer, the Company's ability to obtain additional New A. L. Oslo
Shares from New A. L. Oslo or non-tendering holders of New A. L. Oslo Shares
and the impact of having minority shareholders of New A. L. Oslo. See
"Description of Certain Agreements--Certain Provisions of the Restructuring
Agreement--Conditions to Consummation of the Transactions."

After the Closing, A. L. Oslo will lease the Skoyen Facility to New A. L.
Oslo for a term of 20 years, which term shall be renewable, at the option of
New A. L. Oslo, for four additional consecutive five year terms. Basic rent
during the initial 20-year term will be $1.00 per year and, during any renewal
term thereafter, basic rent will be the then prevailing fair rental value of
the premises. In addition to basic rent, New A. L. Oslo will pay all documented
expenses of ownership and operation of the Skoyen Facility, such as taxes and
maintenance expenses. New A. L. Oslo will have the right to terminate the
Skoyen Lease at any time during its term upon twelve months written notice to
A. L. Oslo. See "Description of Certain Agreements--Skoyen Lease."

Since A. L. Oslo will not retain any administrative personnel after the
Demerger, New A. L. Oslo will provide on a full cost basis certain
administrative services to A. L. Oslo pursuant to an administrative services
agreement (the "Administrative Services Agreement") to be entered into prior to
the effectiveness of the Demerger. See "Description of Certain Agreements--
Administrative Services Agreement." New A. L. Oslo will also license to A. L.
Oslo the "A. L." name and logo presently being used by A. L. Oslo.

5
<PAGE>

CONDITIONS TO CONSUMMATION OF THE TRANSACTIONS. In addition to the approval
of the stockholders of the Company, the obligations of the parties to
consummate the Transactions are subject to the satisfaction or, where legally
permissible, waiver of certain conditions, including, without limitation, the
acceptance of the Exchange Offer by holders of more than 90% of the New A. L.
Oslo Shares, the receipt of all regulatory approvals, the approval of the
Demerger by holders of at least 66 2/3% of the A. L. Oslo Shares, the absence
of a material adverse change in the Company's business and the Related
Norwegian Businesses and the accuracy of the representations and warranties of
the Company and A. L. Oslo set forth in the Restructuring Agreement. See
"Description of Certain Agreements -- Certain Provisions of the Restructuring
Agreement -- Conditions to Consummation of the Transactions."

The Company has received a letter from Einar W. Sissener expressing his
agreement to vote, or cause to be voted, all 138,232 A. L. Oslo Shares owned by
the Sissener Parties (representing approximately 34.6% of the outstanding A. L.
Oslo Shares), in favor of the Transactions (including the Demerger) and to
tender, or cause to be tendered, to the Company pursuant to the Exchange Offer
all New A. L. Oslo Shares that the Sissener Parties are entitled to receive
upon consummation of the Demerger. In addition, Mr. Sissener has advised the
Company that he anticipates his wife and children will vote in favor of the
Demerger and will tender, or cause to be tendered, to the Company pursuant to
the Exchange Offer all New A. L. Oslo Shares that they are entitled to receive
upon consummation of the Demerger. Mr. Sissener's wife and children own, in the
aggregate, approximately 8.0% of the outstanding A. L. Oslo Shares. A. L. Oslo
has also agreed to use its reasonable efforts to cause Nopal International AG,
a wholly owned subsidiary of A. L. Oslo, to tender to the Company pursuant to
the Exchange Offer all 3,085 New A. L. Oslo Shares (representing approximately
0.8% of the outstanding A. L. Oslo Shares) that it is entitled to receive upon
consummation of the Demerger.

A. L. LABS ACTIONS. At the Closing, the Company will transfer substantially
all of its personnel, and as soon as reasonably practicable after the Closing,
substantially all of its operating assets and liabilities, consisting primarily
of its animal health business and its administrative facilities, to New A. L.
Labs. Upon consummation of such transfer, the Company will operate its current
pharmaceutical, animal health and bulk antibiotics businesses and the Related
Norwegian Businesses through subsidiaries. See "Conduct of the Business and
Management of the Company Following the Closing."

DETERMINATION OF CONSIDERATION AND FINANCING OF THE TRANSACTIONS. In
negotiating the consideration to be paid for the Related Norwegian Businesses,
there was a significant gap between the consideration that A. L. Oslo was
seeking for the Related Norwegian Businesses and the consideration which the
Special Committee of the Company's Board of Directors, which was established to
evaluate the Transactions (the "Special Committee"), could recommend to the
Company's Board of Directors. It was determined that the Company would pay a
portion of the consideration in cash in an amount which was approximately equal
to the shareholders' equity of the Related Norwegian Businesses and would issue
the Warrants to bridge the gap in values. The Warrants would give the A. L.
Oslo shareholders additional value if and only if the future value of the Class
A Stock, which might be affected by the acquisition of the Related Norwegian
Businesses, significantly increased. In addition, the Warrants would increase
the incentive of Mr. Sissener, who (together with his family interests) would
receive a significant portion of the Warrants, to take actions to assure that
the benefits of the Transactions would be maximized, would reduce the
additional borrowings and/or dilution that would result if cash, debt or common
stock were offered in place of Warrants and would provide a source of equity
financing for the Company in the future if the Warrants became "in the money"
and were exercised prior to their expiration. See "The Transactions --
Background of the Transactions."

6
<PAGE>

REASONS FOR THE TRANSACTIONS. There has been interest for some time in
combining the Related Norwegian Businesses with the Company because of their
related and complementary nature. The Transactions will provide opportunities
to utilize the resources of these complementary businesses to put the Company
in a stronger position to compete on a worldwide basis in its specialized
pharmaceuticals and animal health markets, to access new markets for its
products through established distribution channels and to add new products to
its product lines. The overlapping nature of certain of the Company's
businesses and the Related Norwegian Businesses will also create opportunities
to achieve synergies by eliminating duplicative functions and coordinating
efforts in various areas. The Transactions will eliminate conflicts of interest
that have arisen in connection with ongoing transactions between the Company
and A. L. Oslo regarding the Related Norwegian Businesses and are expected to
reduce potential conflicts of interest between the Company and A. L. Oslo
regarding the Related Norwegian Businesses because the same stockholders will
own 100% of all of the businesses. In addition, the Company's Board of
Directors believes that the Acquisition has the potential to add to the
earnings of the Company for 1994 and 1995. See "The Transactions -- Background
of the Transactions" and " -- Recommendations of the Company's Board of
Directors; Reasons for the Transactions."

RECOMMENDATIONS OF THE COMPANY'S BOARD OF DIRECTORS. The Company's Board of
Directors believes that the Transactions are fair to, and in the best interests
of, the Company and fair to the holders of the Class A Stock. On May 16, 1994,
the Company's Board of Directors unanimously approved the Transactions. THE
COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE
FOR THE PROPOSAL TO APPROVE THE RESTRUCTURING AGREEMENT AND THE TRANSACTIONS.
The recommendations of the Company's Board of Directors are based upon a number
of factors discussed in this Proxy Statement, including the recommendation of
the Special Committee and the opinion of Lehman Brothers, the Special
Committee's financial advisor. See "The Transactions -- Background of the
Transactions" and " -- Recommendations of the Company's Board of Directors;
Reasons for the Transactions."

OPINION OF THE SPECIAL COMMITTEE'S FINANCIAL ADVISOR. Lehman Brothers
rendered its opinion on May 16, 1994 to the Special Committee and to the
Company's Board of Directors that the Consideration to be paid by the Company
in the Exchange Offer is fair, from a financial point of view, to the Company
and the holders of the Class A Stock. A copy of the written opinion of Lehman
Brothers, dated May 16, 1994, setting forth the assumptions made, the matters
considered, the scope and limitations on the review undertaken and the
procedures followed by Lehman Brothers in rendering its opinion is attached to
this Proxy Statement as Exhibit D. The Company's stockholders should read
carefully the opinion of Lehman Brothers in its entirety. See "The
Transactions -- Opinion of the Special Committee's Financial Advisor."

CERTAIN CONSEQUENCES TO PUBLIC STOCKHOLDERS OF THE COMPANY. Set forth below
is a summary of certain advantages and disadvantages of the Transactions to
public stockholders of the Company:

. The Transactions are expected to put the Company in a stronger position
to compete on a worldwide basis due to the potential synergies that
might be obtained from eliminating duplicative efforts and the increase
in the international scope of the operations of the Company. See "The

7
<PAGE>

Transactions --Recommendations of the Company's Board of Directors;
Reasons for the Transactions."

. The Transactions are expected to eliminate certain potential conflicts
of interests that arise in connection with ongoing transactions between
the Company and A. L. Oslo regarding the Related Norwegian Businesses.
See "The Transactions -- Recommendations of the Company's Board of
Directors; Reasons for the Transactions."

. The Company's Board of Directors believes that the Acquisition has the
potential to be accretive to the Company's earnings for 1994 and 1995.
See "The Transactions -- Recommendations of the Company's Board of
Directors; Reasons for the Transactions."

. If the Transactions are consummated, the Company would incur additional
indebtedness which might increase the Company's borrowing costs and
could reduce the number and types of acquisitions and other investment
opportunities that might, in the future, become available to the
Company. See "The Transactions -- Financing of the Transactions and
Refinancing of Indebtedness of the Related Norwegian Businesses" and
" -- Recommendations of the Company's Board of Directors; Reasons for
the Transactions."

. The parties to the Transactions are related and, as a result of such
relationship, there was a potential for conflicts of interest when the
Restructuring Agreement and the terms of the Transactions were being
negotiated. See "The Transactions -- The Parties to the Transactions"
and " -- Benefits to be Obtained from the Transactions by Certain
Interested Persons." However, as a consequence of such potential
conflicts of interest, the Company's Board of Directors established the
Special Committee and has required that the Transactions be approved by
the holders of a majority of the outstanding shares of Class A Stock
voting as a separate class. See "The Transactions -- Conflicts of
Interest."

. Although it is not certain that the Warrants will ever be exercised or,
if exercised, who will actually hold the Warrants at such time, the
holders of Warrants as a group will have the right to acquire
approximately 21.2% of the Class A Stock (assuming no other changes in
the number of outstanding shares of Class A Stock). If Einar W.
Sissener, Swekk and his relatives were to retain and exercise all of the
Warrants to be issued to them in the Exchange Offer, such persons as a
group would be able to control approximately 10.8% of the Class A Stock
(assuming no other changes in the number of outstanding shares of Class
A Stock).

CONFLICTS OF INTEREST. The Board of Directors established the Special
Committee consisting solely of the directors elected by the holders of the
Class A Stock, authorized the Special Committee to retain its own legal and
financial advisors and to evaluate and make a recommendation with respect to
any combination transaction with A. L. Oslo and determined that any such
transaction should be subject to approval by holders of a majority of the
outstanding shares of Class A Stock voting separately as a class. These actions
were taken to avoid all conflicts between the interests of the holders of Class
A Stock and the interests of A. L. Oslo, as the owner of the Related Norwegian
Businesses and the controlling stockholder (through ownership of the Class B
Stock) of the Company, that could have been involved in the review, negotiation
and approval of any combination transaction with A. L. Oslo such as the
Transactions. Such conflicts of interest may be deemed to some extent to have
existed in the review, negotiation and approval of the Transactions as a result
of the management of the Company and each of the directors of the Company
(other than the members of the Special Committee) participating in the review,
negotiation or approval of such Transactions being employed by or otherwise
receiving compensation from the Company, which is controlled by A. L. Oslo,
and/or being elected as a director of the Company by A. L. Oslo as a holder of
the Class B Stock. See "The Transactions -- Conflicts of Interest," " --
Background of the Transactions," " -- Recommendations of the Company's Board
of Directors; Reasons for the Transactions" and " -- Opinion of the Special
Committee's Financial Advisor."

ACCOUNTING TREATMENT. The Company intends to account for the acquisition of
all of the outstanding New A. L. Oslo Shares as a transfer and exchange between
companies under common control. Accordingly,

8
<PAGE>

the assets and liabilities of New A. L. Oslo will be combined with the Company
at historical cost in a manner similar to a pooling-of-interests; and the
Company's historical financial statements will be restated to reflect the
combined results of operations, assets, liabilities and net worth of the
Company and the Related Norwegian Businesses. The payment of the purchase price
(cash and warrants) will be reflected as a reduction of combined equity when
the Transactions are consummated. Expenses related to the combination will be
charged to the combined company's income statement at the time of consummation
of the Acquisition. See "The Transactions -- Accounting Treatment."

Because the Transactions have not been completed and transition plans are not
finalized, and the benefits and costs of integrating certain operations cannot
be estimated with reasonable assurance, the pro forma combined income
statements included in this Proxy Statement exclude the financial impact of
benefits expected to be achieved upon combining the resources of the companies
and any special charges or other costs to achieve these benefits. As a result
of the Acquisition, there may be a restructuring charge taken in the fourth
quarter of 1994. Such a charge and its magnitude have yet to be determined. As
more fully described in "The Transactions -- Conduct of the Business and
Management of the Company Following the Closing," the Company expects to
operate as a pharmaceutical and animal health company and will be managed on a
global basis through decentralized strategic business units (or divisions)
("SBU's"). It is anticipated that by the end of August 1994 key executives will
be named by the Chief Executive Officer of the Company to head the various
SBU's. Each SBU head will begin a study of their business to determine what
actions may be taken to realize potential synergies of the Acquisition and to
maximize both the SBU and the Company's global competitive position. Such
actions may include rationalization of the combined businesses. At the
conclusion of the studies, the head of each SBU working with the Chief
Executive Officer of the Company will make appropriate recommendations to the
Company's Board of Directors. It is anticipated that the Company's Board of
Directors will decide on the recommended actions by December 31, 1994. Given
the timing of this plan, the financial impact of the actions that may be taken
as a result of such studies and the related actions of the Company's Board of
Directors are not estimable at this time. See Note 1 to Unaudited Pro Forma
Condensed Combined Financial Statements under "The Transactions --Unaudited Pro
Forma Condensed Combined Financial Statements."

REGULATORY APPROVALS. Consummation of the Transactions is conditioned upon,
among other things, the Company and A. L. Oslo obtaining all authorizations,
consents and approvals of all third parties and governmental authorities which
are necessary to consummate the Transactions, including, without limitation,
all concessions and other approvals required under Norwegian law to effectuate
the Transactions (and in particular, the Demerger and the Exchange Offer),
except that certain authorizations, consents and approvals the failure to
obtain of which would not have a material adverse effect on the financial
condition, properties, business or results of operations of the Company and its
subsidiaries, taken as a whole as conducted on the date of the Restructuring
Agreement (a "Material Adverse Effect"), or a material adverse effect on the
financial condition, properties, business or results of operations of the
Related Norwegian Businesses, taken as a whole as conducted on the date of the
Restructuring Agreement (an "RNB Material Adverse Effect"), will not be
required to be obtained prior to the Closing. See "The Transactions --
Regulatory Approvals" and "Description of Certain Agreements -- Certain
Provisions of the Restructuring Agreement -- Conditions to Consummation of the
Transactions."

CLOSING

The Restructuring Agreement provides that the closing of the Transactions
(the "Closing") will occur on the fifth business day after the date on which
the last to be fulfilled or waived of the conditions set forth in the
Restructuring Agreement shall have been fulfilled or waived, or such other date
as the Company and A. L. Oslo may agree. The time and date on which the Closing
occurs is referred to herein as the "Closing Date." See "Description of Certain
Agreements -- Certain Provisions of the Restructuring Agreement --Conditions to
Consummation of the Transactions" for a description of such conditions.

9
<PAGE>

MARKET PRICE DATA

There is no established public trading market for A. L. Oslo Shares or New A.
L. Oslo Shares. The Class A Stock is listed on the NYSE. The following table
sets forth the high and low sales prices per share of Class A Stock for the
periods indicated.

<TABLE>
<CAPTION>
SALES PRICE
-------------
HIGH LOW
------ ------
<S> <C> <C>
CALENDAR YEAR 1992
1st Quarter.................................................... $26.00 $20.63
2nd Quarter.................................................... 24.50 18.50
3rd Quarter.................................................... 24.00 18.00
4th Quarter.................................................... 28.50 18.63
CALENDAR YEAR 1993
1st Quarter.................................................... $27.25 $20.00
2nd Quarter.................................................... 29.38 20.00
3rd Quarter.................................................... 27.50 13.75
4th Quarter.................................................... 18.75 12.75
CALENDAR YEAR 1994
1st Quarter.................................................... $16.88 $14.00
2nd Quarter.................................................... 16.25 13.00
3rd Quarter (through August 19)................................ 15.00 12.63
</TABLE>

On May 16, 1994, the last full trading day preceding the public announcement
of the execution of the Restructuring Agreement, the high and low sales prices
per share of Class A Stock were $14.125 and $13.875, respectively. On August
19, 1994, the last full trading day preceding the date of this Proxy Statement,
the high and low sales prices per share of Class A Stock were $15.00 and
$14.625, respectively.

ELECTION OF DIRECTORS

Subject to approval of Proposal #1, the Company's Board of Directors intends
to cause the nomination for election to the Company's Board of Directors the
individual identified in this Proxy Statement. IF PROPOSAL #1 IS APPROVED,
PROXIES WILL BE VOTED AT THE SPECIAL MEETING IN FAVOR OF THE ELECTION, AS
DIRECTOR, OF THE NOMINEE FOR CLASS A DIRECTOR SET FORTH UNDER "ELECTION OF
DIRECTOR--NOMINEE FOR CLASS A DIRECTOR," UNLESS AUTHORITY TO DO SO IS
SPECIFICALLY WITHHELD. See "Election of Director."

The affirmative vote of a plurality of the votes cast at the Special Meeting
by the holders of the Class A Stock is necessary to elect the director
nominated as a Class A Director pursuant to Proposal #4.

THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT, IF PROPOSAL #1
IS APPROVED, STOCKHOLDERS VOTE FOR THE ELECTION, AS DIRECTOR, OF THE INDIVIDUAL
LISTED UNDER "ELECTION OF DIRECTOR--NOMINEES FOR CLASS A DIRECTOR."

10
<PAGE>

CERTAIN HISTORICAL AND PRO FORMA FINANCIAL DATA

SELECTED HISTORICAL FINANCIAL DATA

THE COMPANY. The following table sets forth selected historical financial
data of the Company as of and for each of the fiscal years in the five-year
period ended December 31, 1993 and as of and for each of the six-month periods
ended June 30, 1993 and 1994. Such selected historical financial data as of and
for each of the fiscal years in the five-year period ended December 31, 1993
have been derived from the consolidated financial statements of the Company
audited by Coopers & Lybrand, independent public accountants. The selected
financial data as of and for the six-month periods ended June 30, 1993 and 1994
are derived from unaudited consolidated financial statements. In management's
opinion, the Company's unaudited consolidated financial statements as of and
for the six-month periods ended June 30, 1993 and 1994 include all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation.

This information is qualified in its entirety by, and should be read in
conjunction with, the Consolidated Financial Statements and Notes thereto of
the Company which are incorporated herein by reference. See "Incorporation of
Certain Documents by Reference."

11
<PAGE>

COMPANY HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------------------------ ------------------
1989 1990 1991 1992 1993 1993 1994
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA(1):
Total revenue........... $223,185 $241,375 $257,129 $295,112 $338,230 $159,541 $185,370
Cost of sales........... 124,274 131,121 144,283 166,947 207,573 93,091 114,591
Gross profit............ 98,911 110,254 112,846 128,165 130,657 66,450 70,779
Selling, general and
administrative
expenses............... 69,877 78,063 99,156 99,671 109,733 52,560 59,018
Operating income........ 29,034 32,191 13,690 28,494 20,924 13,890 11,761
Interest expense........ (11,217) (11,652) (12,098) (10,134) (6,598) (3,255) (3,666)
Other income (loss),
net.................... 623 709 174 (785) 498 169 (64)
Income from continuing
operations before
taxes.................. 18,440 21,248 1,766 17,575 14,824 10,804 8,031
Provision for taxes..... 7,628 8,025 1,187 6,208 6,203 4,348 3,204
Income from continuing
operations............. 10,812 13,223 579 11,367 8,621 6,456 4,827
Discontinued operations,
net of tax............. 1,029 883 4,502 4,809 -- -- --
Net income.............. 11,841 14,106 5,081 16,176 8,621 6,456 4,827
AVERAGE NUMBER OF SHARES
OUTSTANDING:
Primary................ 16,737 16,788 16,904 18,264 21,510 21,497 21,554
Fully diluted.......... 19,311 21,434 21,611 21,568 21,581 21,622 21,590
EARNINGS PER SHARE:
Primary:
Income from continuing
operations........... $.65 $.79 $.03 $.62 $.40 $.30 $.22
Net income............ .71 .84 .30 .89 .40 .30 .22
Fully diluted:
Income from continuing
operations........... .64 .76 .03 .64 .40 .30 .22
Net income............ .70 .80 .30 .87 .40 .30 .22
Cash dividends declared
per share.............. .087 .107 .16 .18 .18 .09 .09
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
------------------------------------------------ ------------------
1989 1990 1991 1992 1993 1993 1994
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA(2):
Current assets.......... $126,160 $148,396 $159,540 $155,372 $176,305 $152,463 $172,997
Non-current assets...... 163,490 180,099 199,290 216,352 246,897 234,790 259,680
Total assets............ 289,650 328,495 358,830 371,724 423,202 387,253 432,677
Current liabilities..... 78,092 95,747 105,720 87,490 124,857 84,333 129,270
Long-term debt, less
current maturities..... 101,606 101,386 119,394 73,651 81,713 90,475 77,842
Deferred taxes and other
non-current
liabilities............ 16,610 20,347 19,710 26,458 31,801 26,348 33,595
Stockholders' equity.... 93,342 111,015 114,006 184,125 184,831 186,097 191,970
Total liabilities and
equity................. 289,650 328,495 358,830 371,724 423,202 387,253 432,677
</TABLE>
- --------
(1) Income statement data include results of operations from the date of
acquisition of the Lincolnton facility by Barre-National, Inc. ("Barre-
National") in March 1993, Able Laboratories, Inc. ("Able") in October 1992
and NMC Laboratories, Inc. ("NMC") in August 1990. Income statement data
for 1989 through 1992 reflect the human nutrition segment as a discontinued
operation. Income statement data reflect the adoption of Statement of
Financial Accounting Standards No. 109 and No. 106 effective January 1,
1992 and January 1, 1993, respectively.
(2) Balance sheet data reflect the acquisition of the Lincolnton facility by
Barre-National in March 1993, Able in October 1992 and NMC in August 1990
and the conversion of the Company's 7 3/4% Convertible Subordinated
Debentures to shares of Class A Stock in 1992.

12
<PAGE>

THE RELATED NORWEGIAN BUSINESSES. The following table sets forth selected
historical combined financial data of the Related Norwegian Businesses as of
and for each of the fiscal years in the five-year period ended December 31,
1993 and as of and for each of the six-month periods ended June 30, 1993 and
1994. Such data are expressed in Norwegian kroner, except that a convenience
translation into United States dollars has been provided in addition to the
Norwegian kroner presentation for the fiscal year ended December 31, 1993 and
the six months ended June 30, 1994. The balance sheet data as of December 31,
1993 and June 30, 1994 were converted using the exchange rates in effect at the
respective dates. The exchange rates of Norwegian kroner into United States
dollars as of December 31, 1993 and June 30, 1994 were NOK 7.5290 to $1.00 and
NOK 6.9219 to $1.00, respectively. The income statement data for the year ended
December 31, 1993 and for the six-month period ended June 30, 1994 were
converted by first converting the income statement data for each quarter in the
period presented using the average exchange rate for such quarter and then
aggregating the converted income statement data for all of the quarters in such
period. See Note 3 to the Unaudited Pro Forma Condensed Combined Financial
Statements under "The Transactions -- Unaudited Pro Forma Condensed Combined
Financial Statements" for the exchange rates used to convert such income
statement data. Such income statement data for fiscal years ended December 31,
1990, 1991, 1992 and 1993 and such balance sheet data as of December 31, 1991,
1992 and 1993 have been taken or derived from the historical combined financial
statements of the Related Norwegian Businesses and the notes thereto audited by
Coopers & Lybrand AS. This information is qualified in its entirety by, and
should be read in conjunction with, the Combined Financial Statements and Notes
thereto (prepared in accordance with United States generally accepted
accounting principles) of the Related Norwegian Businesses included elsewhere
in this Proxy Statement. See Exhibit E to this Proxy Statement. Income
statement data for the fiscal year ended December 31, 1989 and the six-month
periods ended June 30, 1993 and 1994, and balance sheet data as of December 31,
1989 and 1990 and June 30, 1993 and 1994, are based on unaudited combined
financial statements of the Related Norwegian Businesses. In management's
opinion, the unaudited combined financial statements of the Related Norwegian
Businesses include all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation.

For an explanation of the combination and presentation of the audited
combined financial statements of the Related Norwegian Businesses, see Note 1
of the Notes to the Combined Financial Statements of the Related Norwegian
Businesses included as Exhibit E to this Proxy Statement.

13
<PAGE>

SELECTED HISTORICAL COMBINED FINANCIAL DATA OF THE RELATED NORWEGIAN BUSINESSES
(IN THOUSANDS)
(IN NOK OR $, AS INDICATED)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
--------------------------------------------------------- -----------------------------
1989 1990 1991 1992 1993 1993 1993 1994 1994
----------- ------- -------- ------- ------- -------- -------- -------- ---------
(IN NOK) (IN $) (IN NOK) (IN $)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA(1)(2):
Net sales............... 311,118 343,524 378,935 457,304 528,688 $ 74,578 267,551 290,631 $ 40,005
Other revenue........... 28,275 30,569 34,566 28,803 27,626 3,889 11,948 12,313 1,689
Total revenue........... 339,393 374,093 413,501 486,107 556,314 78,467 279,499 302,944 41,694
Cost of sales........... 162,736 186,561 207,058 248,200 268,575 37,890 135,675 144,090 19,839
Gross profit............ 176,657 187,532 206,443 237,907 287,739 40,577 143,824 158,854 21,855
Selling, general and
administrative
expenses............... 162,607 160,165 179,022 192,910 226,822 31,978 112,181 118,862 16,363
Operating income........ 14,050 27,367 27,421 44,997 60,917 8,599 31,643 39,992 5,492
Interest expense........ (15,835) (10,653) (21,493) (51,846) (59,454) (8,398) (31,259) (23,147) (3,182)
Foreign exchange gains
(losses)(3)............ 2,090 3,295 44,239 20,506 1,770 244 620 (494) (67)
Other income (expense),
net.................... 5,357 5,406 (2,138) 6,113 8,083 1,138 3,604 2,248 309
Equity in net earnings
of affiliated company.. 369 211 723 1,555 -- -- -- -- --
Income before provision
for income taxes, and
cumulative effect of
change in accounting
principle.............. 6,031 25,626 48,752 21,325 11,316 1,583 4,608 18,599 2,552
Provision for income
taxes.................. 320 9,555 16,994 6,400 4,120 575 1,553 5,629 773
Income before cumulative
effect of change in
accounting principle... 5,711 16,071 31,758 14,925 7,196 1,008 3,055 12,970 1,779
Cumulative effect of
change in accounting
principle.............. -- -- -- 16,210 -- -- -- -- --
Net income.............. 5,711 16,071 31,758 31,135 7,196 1,008 3,055 12,970 1,779
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
--------------------------------------------------------- -----------------------------
1989 1990 1991 1992 1993 1993 1993 1994 1994
----------- ------- -------- ------- ------- -------- -------- -------- ---------
(IN NOK) (IN $) (IN NOK) (IN $)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA(4):
Current assets.......... 153,176 188,552 185,339 179,775 215,550 $ 28,630 231,843 217,099 $ 31,364
Non-current assets...... 139,811 306,483 607,782 600,190 588,267 78,133 598,618 584,091 84,382
Total combined assets... 292,987 495,035 793,121 779,965 803,817 106,763 830,461 801,190 115,746
Current liabilities..... 84,807 102,953 133,129 150,809 120,429 15,996 234,352 127,537 18,424
Long-term debt.......... 92,597 241,709 457,759 415,333 471,597 62,637 381,369 451,010 65,157
Deferred taxes and other
non-current
liabilities............ 25,064 34,013 52,148 48,390 62,700 8,328 54,322 70,596 10,199
Equity.................. 90,519 116,360 150,085 165,433 149,091 19,802 160,418 152,047 21,966
Total combined
liabilities and equity. 292,987 495,035 793,121 779,965 803,817 106,763 830,461 801,190 115,746
</TABLE>
- --------
(1) The historical income statement data do not include per share data as the
Demerger and contemporaneous issuance of New A. L. Oslo Shares will not be
accomplished until immediately prior to the consummation of the Exchange
Offer.
(2) Income statement data include results of operations from the date of
acquisition of Norgesplaster A/S ("Norgesplaster") in January 1993 and from
product line purchases in November 1991 and March 1992. Income statement
data reflect the adoption of Statement of Financial Accounting Standards
No. 109 as of January 1, 1992.
(3) In 1991 and 1992, the Related Norwegian Businesses realized unusual foreign
currency gains of NOK 27.2 million and NOK 14.8 million, respectively. See
"The Transactions--Certain Information Regarding the Related Norwegian
Businesses--Management's Discussion and Analysis of Financial Condition and
Results of Operations of the Related Norwegian Businesses--Results of
Operations." Such gains are not expected to recur.
(4) Balance sheet data include the accounts of Norgesplaster acquired in
January 1993, and assets related to product line purchases in November 1991
and March 1992.

14
<PAGE>

SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

The following table sets forth summary unaudited pro forma financial data of
the Company, giving effect to the Acquisition and, in particular, assuming the
acquisition of all of the outstanding New A. L. Oslo Shares and is presented in
accordance with United States generally accepted accounting principles
presented in United States dollars. Such unaudited pro forma data assume that
the Acquisition had occurred as of June 30, 1994 for the balance sheet data
dated as of June 30, 1994. Balance sheet data for prior years and all income
statements are restated to reflect the Acquisition as a transfer and exchange
between companies under common control (i.e., similar to a pooling of
interests). The unaudited pro forma financial data set forth in the following
table have been derived from, and should be read in conjunction with, the
historical consolidated financial statements of the Company and the historical
combined financial statements of the Related Norwegian Businesses, including
the respective notes thereto, which are included elsewhere in this Proxy
Statement or are incorporated herein by reference. See "The Transactions--
Unaudited Pro Forma Condensed Combined Financial Statements" for a description
of the adjustments to the historical financial data required to arrive at the
unaudited pro forma combined financial data of the Company. All financial
information of the Related Norwegian Businesses that is presented in its
historical combined financial statements has been converted from Norwegian
kroner to United States dollars. The balance sheets of the Related Norwegian
Businesses as of December 31, 1991, 1992 and 1993 and as of June 30, 1993 and
1994 were converted using the exchange rate in effect at the respective dates.
The income statements of the Related Norwegian Businesses for each of the
periods presented were converted by first converting the income statements for
each quarter in the period presented using the average exchange rate for such
quarter and then aggregating the converted income statements for all of the
quarters in such period. See Note 3 to the Unaudited Pro Forma Condensed
Combined Financial Statements under "The Transactions--Unaudited Pro Forma
Condensed Combined Financial Statements" for the exchange rates used to convert
such data. The following unaudited pro forma financial data are presented for
informational purposes only, are not necessarily indicative of the results that
actually would have occurred had the Transactions been consummated on the dates
indicated or the results that may occur or be obtained in the future. See Note
1 to the Unaudited Pro Forma Condensed Combined Financial Statements under "The
Transactions--Unaudited Pro Forma Condensed Combined Financial Statements."

15
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------- ------------------
1991 1992 1993 1993 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenue............... $301,814 $358,632 $402,675 $192,290 $218,338
Cost of sales............... 162,523 194,665 233,423 106,443 127,604
Gross profit................ 139,291 163,967 169,252 85,847 90,734
Selling, general and
administrative expenses.... 122,175 128,658 139,038 67,461 73,831
Operating income............ 17,116 35,309 30,214 18,386 16,903
Interest expense............ (15,070) (18,534) (14,996) (7,794) (6,848)
Other income (expense) net.. 5,961 3,937 1,880 783 178
Income from continuing
operations before provision
for taxes.................. 8,007 20,712 17,098 11,375 10,233
Provision for taxes......... 3,389 7,161 6,969 4,546 3,875
Income from continuing
operations................. 4,618 13,551 10,129 6,829 6,358
AVERAGE NUMBER OF SHARES
OUTSTANDING:
Primary.................... 16,904 18,264 21,510 21,497 21,554
Fully diluted.............. 21,611 21,568 21,581 21,622 21,590
INCOME FROM CONTINUING
OPERATIONS PER SHARE:
Primary.................... $ .27 $ .74 $ .47 $ .32 $ .29
Fully diluted.............. .27 .74 .47 .32 .29
BALANCE SHEET DATA (AT END
OF PERIOD):
Current assets.............. $187,416 $178,283 $202,913 $180,768 $201,085
Non-current assets.......... 301,140 302,730 324,704 317,328 342,812
Total assets................ 488,556 481,013 527,617 498,096 543,897
Current liabilities......... 125,697 107,015 139,205 113,858 145,716
Long-term debt, less current
maturities................. 196,103 133,701 144,350 143,314 168,114
Deferred taxes and other
non-current liabilities.... 28,449 33,454 40,129 33,874 43,794
Stockholders' equity........ 138,307 206,843 203,933 207,050 186,273
Total liabilities and
equity..................... 488,556 481,013 527,617 498,096 543,897
</TABLE>

Pro forma income statement data reflect the combined historical operations of
the Company and the Related Norwegian Businesses. The data do not include
interest expense which would have been incurred had the transaction actually
occurred in the periods presented.

Pro forma balance sheet data assume the assets, liabilities and stockholders'
equity of the Related Norwegian Businesses are combined with the Company as of
the earliest period presented and the June 30, 1994 balance sheet reflects the
Acquisition and the concurrent reduction of stockholders' equity and incurrence
of long-term debt to finance the Acquisition.

See "The Transactions--Unaudited Pro Forma Condensed Combined Financial
Statements" for a description of the adjustments to the historical financial
data required to arrive at the unaudited pro forma combined financial data of
the Company.

The data does not include the pro forma effects of a business acquisition
consummated subsequent to June 30, 1994. See Note 7 to the Unaudited Pro Forma
Condensed Combined Financial Statements under "The Transactions--Unaudited Pro
Forma Condensed Combined Financial Statements."

COMPARATIVE UNAUDITED PER SHARE DATA

The following table sets forth certain unaudited historical and pro forma per
share data for the Company as of and for the fiscal years ended December 31,
1991, 1992 and 1993 and as of and for the six-month periods ended June 30, 1993
and 1994. Such pro forma data give effect to the Acquisition and, in
particular, assume the acquisition of all of the outstanding New A. L. Oslo
Shares on June 30, 1994. Book value per share data for the year ended December
31, 1993 and income from continuing operations per share data for all the
periods presented have been restated to reflect the Acquisition as a transfer
and exchange between companies under common control (i.e., similar to a pooling
of interests). The following data are derived from, and should be read in
conjunction with, the historical consolidated financial statements of the

16
<PAGE>

Company and the Unaudited Pro Forma Condensed Combined Financial Statements, in
each case including notes thereto, included elsewhere in this Proxy Statement
or incorporated herein by reference. See "The Transactions--Unaudited Pro Forma
Condensed Combined Financial Statements" and "Incorporation of Certain
Documents by Reference." The following unaudited pro forma financial data are
presented for informational purposes only, and are not necessarily indicative
of the results that actually would have occurred had the Transactions been
consummated during such periods or the results that may occur or be obtained in
the future.

<TABLE>
<CAPTION>
INCOME FROM CONTINUING CASH DIVIDENDS BOOK VALUE
OPERATIONS PER SHARE (1) PER SHARE (1) PER SHARE (1)
---------------------------------- --------------------- ---------------------
THE COMPANY PRO FORMA THE COMPANY PRO FORMA THE COMPANY PRO FORMA
HISTORICAL COMBINED HISTORICAL COMBINED HISTORICAL COMBINED
----------- ---------------------- ----------- --------- ----------- ---------
PRO FORMA SUPPLEMENTAL
(2) (3)
--------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Six months ended
June 30, 1994.......... $.22 $.29 $.27 $.09 $.09 $8.90 $8.66
Six months ended
June 30, 1993.......... $.30 $.32 $.28 $.09 $.09
Year ended December 31,
1993................... $.40 $.47 $.42 $.18 $.18 $8.58 $9.46
Year ended December 31,
1992................... $.64 $.74 $.67 $.18 $.18
Year ended December 31,
1991................... $.03 $.27 $.21 $.16 $.16
</TABLE>
- --------
(1) Since the Related Norwegian Businesses will not have any shares of stock
issued until the Demerger is consummated, per share data for the Related
Norwegian Businesses is not applicable.

(2) The pro forma combined income from continuing operations per share
computation is based on historical average common shares outstanding and
pro forma income from continuing operations. The pro forma per share data
does not include the effects of a business acquisition consummated
subsequent to June 30, 1994. See Note 7 to the Unaudited Pro Forma
Condensed Combined Financial Statements under "The Transactions--Unaudited
Pro Forma Condensed Combined Financial Statements."

(3) The pro forma supplemental combined income from continuing operations per
share computation is based on historical average common shares outstanding,
the warrants as common stock equivalents assuming a $20 exercise price and
a reduction of pro forma earnings for imputed interest expense net of taxes
based on cash consideration of $23,115.

17
<PAGE>

THE SPECIAL MEETING

DATE, TIME AND PLACE

This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Company's Board of Directors for use at the Special Meeting
of Stockholders to be held on September 27, 1994, at The Clinton Inn Hotel, 145
Dean Drive, Tenafly, New Jersey 07670, at 11:00 a.m., local time, and at any
adjournments or postponements thereof.

PURPOSE OF THE SPECIAL MEETING

At the Special Meeting, the Company's stockholders will consider and act upon
the following matters:

1. Approval of the Restructuring Agreement and the Transactions (other
than the Certificate of Incorporation Amendment). (Proposal #1) See "The
Transactions."

2. If Proposal #1 is approved, approval of the Class A Board
Representation Increase Provision. (Proposal #2) See "The Transactions--A.
L. Labs Actions."

3. If Proposal #1 is approved, approval of the Name Change. (Proposal #3)
See "The Transactions--A. L. Labs Actions."

5. Transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.

RECORD DATE

The close of business on August 18, 1994 has been fixed as the Record Date
for determining holders of outstanding shares of Class A Stock and Class B
Stock entitled to notice of, and entitled to vote at, the Special Meeting. As
of the Record Date, 13,349,560 shares of Class A Stock and 8,226,562 shares of
Class B Stock were outstanding and entitled to vote.

QUORUM

For each matter to be voted upon at the Special Meeting, the presence in
person or by proxy, of holders of stock entitled to be voted with respect to
such matter representing a majority of the aggregate voting power of all shares
of stock entitled to be voted with respect to such matter is necessary to
constitute a quorum with respect to such matter and to transact business with
respect to such matter at the Special Meeting. For purposes of determining
whether a quorum exists with respect to Proposal #1, Proposal #2 or Proposal
#3, shares abstaining on such Proposal and all broker non-votes with respect to
such Proposal will be considered present at the Special Meeting. For purposes
of determining whether a quorum exists with respect to Proposal #4, shares as
to which authority to vote on such Proposal has been withheld and broker non-
votes with respect to such Proposal will be considered present at the Special
Meeting.

18
<PAGE>

REQUIRED VOTE

VOTES ENTITLED TO BE CAST BY EACH CLASS OF STOCK. The holders of the Class A
Stock are entitled to cast one vote for each share of Class A Stock held on
each matter on which the holders of the Class A Stock are entitled to vote. The
holders of the Class B Stock are entitled to cast four votes for each share of
Class B Stock held when voting together with the holders of the Class A Stock
as a single class, and one vote for each share of Class B Stock held when
voting as a separate class.

PROPOSAL #1, PROPOSAL #2 AND PROPOSAL #3. The Transactions (other than the
Certificate of Incorporation Amendment) are being submitted to the stockholders
as a single matter as Proposal #1. The two components of the Certificate of
Incorporation Amendment, namely the Class A Board Representation Increase
Provision and the Name Change, are being submitted to the stockholders as two
separate matters as Proposal #2 and Proposal #3, respectively. Applicable
Delaware law requires the stockholders of the Company to approve certain of the
transactions that comprise the Transactions, namely the A. L. Labs Transfer and
the Certificate of Incorporation Amendment. Under the Company's Certificate of
Incorporation as presently in effect, assuming the presence of a quorum, such
approval requires the affirmative vote of a majority of the aggregate number of
votes cast by the holders of the Class A Stock and the Class B Stock, voting
together as a single class, with the holders of the Class A Stock casting one
vote per share of Class A Stock held and the holders of Class B Stock casting
four votes per share of Class B Stock held.

In addition, the Company's Board of Directors has required that the
Transactions (including the Certificate of Incorporation Amendment) be approved
by the holders of a majority of the outstanding shares of Class A Stock voting
as a separate class and has made such approval a condition to the Company's
obligations to consummate the Transactions in the Restructuring Agreement. The
Company's Board of Directors has required the separate vote of the holders of
the Class A Stock because A. L. Oslo, the holder of 100% of the shares of Class
B Stock, is a party to the Transactions and, absent the separate Class A Stock
vote requirement, would be able to approve the Transactions on its own because,
under the Company's Certificate of Incorporation, the holders of the Class B
Stock are entitled to cast more than a majority of the aggregate number of
votes cast when voting together with the holders of the Class A Stock as a
single class.

Applicable Delaware law also requires that the holders of the Class B Stock
voting as a separate class approve Proposal #2 since the Class A Board
Representation Increase Provision would have the effect of decreasing the
voting power of the holders of the Class B Stock when voting for directors.
Such approval requires the affirmative vote of the holders of a majority of the
shares of Class B Stock, voting as a single class. A. L. Oslo, the beneficial
owner of 100% of the outstanding shares of Class B Stock, has agreed to vote
its shares in favor of Proposal #1, Proposal #2 and Proposal #3.

Since approval of Proposal #1, Proposal #2 and Proposal #3 requires, among
other things, the affirmative vote of a majority of the outstanding shares of
Class A Stock, it might be the case that a majority of the outstanding shares
of Class A Stock are present at the Special Meeting to produce a quorum but
that Proposal #1, Proposal #2 or Proposal #3 is not approved because a majority
of the outstanding shares of Class A Stock have not affirmatively voted in
favor of such Proposal. If holders of a majority of the outstanding shares of
Class A Stock voting as a single class do not approve Proposal #1, Proposal #1
will be considered not approved and the Transactions (including the Certificate
of Incorporation Amendment) will not be consummated. In addition, the Company's
bylaws will not be amended to increase the size of the Company's Board of
Directors from eight members to nine members and the holders of Class A Stock
will not elect an additional director.

PROPOSAL #4. If Proposal #1 is approved, one director will be elected by the
holders of Class A Stock. Under the Company's Certificate of Incorporation as
presently in effect, the holders of the Class A Stock are entitled, voting as a
separate class, to elect at least 25% of the Company's Board of Directors (or
if such 25% is not a whole number, the nearest higher whole number of directors
that is at least 25% of such membership), and the holders of the Class B Stock
are entitled, voting separately as a class, to elect the

19
<PAGE>

remaining directors. At the 1994 Annual Meeting, two Class A Directors and six
Class B Directors were elected. Prior to the Special Meeting, the Company's
Board of Directors will adopt a resolution to amend the Company's bylaws,
effective upon consummation of the Acquisition, to increase the size of the
Company's Board of Directors from eight members to nine members if and when
Proposal #1 is approved. Therefore, if Proposal #1 is approved there will be a
newly created directorship which the holders of Class A Stock will be entitled
to fill. The affirmative vote of a plurality of the votes cast at the Special
Meeting by the holders of the Class A Stock, voting as a single class, is
necessary to elect such Class A Director.

PROXIES

The enclosed proxy provides space for stockholders to vote for, against, or
to abstain from voting on, Proposal #1, and subject to approval of Proposal #1,
Proposal #2 and Proposal #3. The proxy also provides space for a stockholder to
vote for, or withhold authority to vote for, the Company's nominee for Class A
Director subject to approval of Proposal #1.

Shares of Class A Stock represented by properly executed proxies received at
or prior to the Special Meeting and which have not been revoked will be voted
in accordance with the instructions indicated therein. If no instructions are
indicated, such proxies will be voted FOR: (i) Proposal #1 and (ii) if Proposal
#1 is approved, Proposal #2, Proposal #3 and the election, as director, of the
nominee for Class A Director nominated by the Company's Board of Directors (see
"Election of Director -- Nominee for Class A Director" below); and, in the
discretion of the proxy holder, as to any other matter which may properly come
before the Special Meeting or any adjournment or postponement thereof,
including, without limitation, any adjournment or postponement thereof and a
motion to adjourn or postpone the Special Meeting to another time and/or place,
for the purpose of soliciting additional proxies or otherwise; provided,
however, that no proxy which is voted against Proposal #1 will be voted in
favor of any such adjournment or postponement.

With respect to Proposal #1, Proposal #2 or Proposal #3, (i) abstentions,
pursuant to Delaware law, will be considered present and entitled to vote and
thus will have the effect of a vote against such Proposal, (ii) for purposes of
the vote of the holders of the Class A Stock and the Class B Stock voting
together as a single class, broker non-votes will be considered not entitled to
vote on such Proposal and thus will not be counted in determining whether such
Proposal has received the requisite votes and (iii) for purposes of the vote of
the holders of the Class A Stock voting separately as a single class, broker
non-votes will be considered not entitled to vote but will have the effect of a
vote against such Proposal since such class vote requires the approval of a
majority of the outstanding shares of Class A Stock as opposed to a majority of
the votes cast by the holders of the Class A Stock. With respect to the
election of a director (Proposal #4), neither shares as to which authority to
vote has been withheld (to the extent withheld) nor broker non-votes will be
considered affirmative votes.

A holder of Class A Stock who has given a proxy may revoke such proxy at any
time prior to its exercise at the Special Meeting by (i) giving written notice
of revocation to the Secretary of the Company, (ii) properly submitting to the
Company a duly executed proxy bearing a later date or (iii) attending the
Special Meeting

20
<PAGE>

and voting in person. Attendance at the Special Meeting will not in and of
itself revoke a proxy. All written notices of revocation and other
communications with respect to revocation of proxies should be sent to the
attention of the Secretary of the Company at the Company's executive offices,
located at One Executive Drive, P.O. Box 1399, Fort Lee, New Jersey 07024.

If a quorum is not obtained, the Special Meeting may be adjourned for the
purpose of obtaining additional proxies or for any other purpose, and, at any
subsequent reconvening of the Special Meeting, all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the meeting (except for any proxies which have theretofore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively
voted on the same or any other matter at a previous meeting.

MANNER OF SOLICITATION

The cost of solicitation of the Company's stockholders will be paid by the
Company. Such cost will include the reimbursement of banks, brokerage firms,
nominees, fiduciaries and other custodians for expenses of forwarding
solicitation materials to beneficial owners of shares. In addition to the
solicitation of proxies by use of mail, the directors, officers and employees
of the Company may solicit proxies personally or by telephone, telegraph or
facsimile transmission. Such directors, officers and employees will not be
additionally compensated for such solicitation but may be reimbursed for out-
of-pocket expenses incurred in connection therewith. In addition, the Company
has retained D. F. King & Co. Inc. for a fee of $5,750 plus out-of-pocket
expenses to assist in soliciting proxies and to provide proxy materials to
banks, brokerage firms, nominees, fiduciaries and other custodians.

NO DISSENTERS' RIGHTS

The stockholders of the Company do not have any rights of appraisal or
similar rights of dissenters, whether they vote for or against the
Transactions.

THE TRANSACTIONS

The following information describes the material aspects of the Restructuring
Agreement and the Transactions. This description does not purport to be
complete and is qualified in its entirety by reference to the Exhibits hereto,
including the Restructuring Agreement, which is attached to this Proxy
Statement as Exhibit A and is incorporated herein by reference. All
stockholders are urged to read such Exhibits in their entirety.

THE PARTIES TO THE TRANSACTIONS

21
<PAGE>

divisions, its subsidiaries, Apolab OY ("Apolab"), Norgesplaster and A.L
Lakemedel AB ("Lakemedel"). A. L. Oslo will retain ownership of the shares of
Class B Stock, the Skoyen Facility which will be leased to New A. L. Oslo on a
long-term basis as more fully described below, its food businesses and its
investments in various affiliates.

A. L. Oslo established the Company in 1975, after acquiring S.B. Penick &
Co.'s bacitracin business. A. L. Oslo, as the beneficial owner of 100% of the
outstanding shares of Class B Stock, is able to control the Company through its
ability to elect more than a majority of the members of the Company's Board of
Directors and to cast in excess of a majority of the votes generally entitled
to be cast on matters presented to the stockholders of the Company. Einar W.
Sissener, a director and the Chairman and Chief Executive Officer of the
Company and the President and Chief Executive Officer of A. L. Oslo, controls a
total of 138,232 A. L. Oslo Shares (representing approximately 34.6% of the
outstanding A. L. Oslo Shares), consisting of 52,462 A. L. Oslo Shares he owns
directly and 85,770 A. L. Oslo Shares owned by Swekk. In addition, Mr. Sissener
has the authority to vote most of the Sissener family's 64,850 A. L. Oslo
Shares, which shares represent approximately 16.2% of the outstanding A. L.
Oslo Shares.

BENEFITS TO BE OBTAINED FROM THE TRANSACTIONS BY CERTAIN INTERESTED PERSONS

In determining to proceed with the Transactions, A. L. Oslo's board of
directors considered several benefits to A. L. Oslo and its shareholders which
could be derived from the Transactions. First, the Transactions would create a
combined company with a unified shareholder base, which would be free from
potential conflicts of interest and would have greater resources and an
improved international presence to compete more effectively worldwide. Second,
there would be a continued commitment of the combined enterprise, in the
context of the Company's global business strategy and perspective, to the
constituencies presently being served by A. L. Oslo. Finally, the Transactions
permit the A. L. Oslo shareholders (including Einar W. Sissener) to realize
liquidity with respect to a minor portion of their investment in A. L. Oslo,
while being able to participate in the potential benefits of the combined
organization through their ownership of Warrants and A. L. Oslo's continued
ownership of the shares of Class B Stock. As a major stockholder of A. L. Oslo,
Mr. Sissener will receive a pro rata portion of the cash and Warrants to be
issued in the Exchange Offer.

TRANSACTIONS BETWEEN THE COMPANY AND A. L. OSLO

During 1993, as in prior years, the Company and A. L. Oslo engaged in a
variety of transactions, including the Company's purchase of products and its
licensing of technology from, and the sale of goods to, A. L. Oslo. The Company
acts as distributor in the United States for pharmaceutical grades of
bacitracin and zinc bacitracin and feed grade zinc bacitracin manufactured by
A. L. Oslo. The Company and A. L. Oslo are continuing to engage in these
transactions during 1994. During 1993 and the six-month period ended June 30,
1994, the Company's animal health and bulk antibiotics group purchased
$5,932,000 and $4,239,000, respectively, of products, principally bacitracin
antibiotics, from A. L. Oslo; A. L. Oslo and its subsidiaries purchased
$975,000 and $346,000, respectively, of pharmaceutical and animal health
products from the Company and its subsidiaries, principally on a contract
manufacturing basis; and the Company and its subsidiaries incurred an aggregate
of $1,874,000 and $1,023,000, respectively, payable to A. L. Oslo as fees
payable under the Technology Agreement (defined below).

22
<PAGE>

Pursuant to an agency agreement, a Danish subsidiary of the Company purchases
and resells pharmaceutical products manufactured by A. L. Oslo and is
reimbursed for its promotion costs in connection with such sales. During 1993
and the six-month period ended June 30, 1994, such subsidiary purchased
$5,241,000 and $3,118,000, respectively, of such products from A. L. Oslo and
received a promotion cost reimbursement of $660,000 and $325,000, respectively.

Under a Technical Support and Technology Agreement dated September 30, 1983
(the "Technology Agreement"), A. L. Oslo provides the Company on an ongoing
basis with fermentation, technical, engineering and managerial advice and
services. This Technology Agreement was renewed in 1993 for an additional ten-
year period. Under the Technology Agreement as presently in effect, the Company
has an exclusive license until December 2003 (followed by one ten-year renewal
option at the election of the Company) to use the manufacturing and technical
know-how of A. L. Oslo with respect to the manufacture and sale of bacitracin
methylene disalicylate ("BMD (R)") antibiotic feed grade and soluble BMD (R)
antibiotic in North America. A. L. Oslo furnishes the Company with technical
and engineering services, and microorganisms necessary for the production of
the Company's BMD (R) antibiotic. The Technology Agreement also provides that
the Company will have access to the services of executive and professional
personnel of A. L. Oslo on an occasional basis which does not interfere with
such personnel's responsibilities to A. L. Oslo. A. L. Oslo has agreed to use
its best efforts to have such personnel available on a short-term basis to meet
the needs of the Company. For its services and license under the Technology
Agreement, the Company pays A. L. Oslo 2 1/2% of the net sales of its
production of BMD (R) antibiotic (excluding soluble BMD (R) antibiotic), 1/3%
of the consolidated net sales value of certain pharmaceutical and antibiotic
products and 10% of the net sales of soluble BMD (R) antibiotic.

During 1993 and the first six months of 1994, unlike previous years, the
Company did not purchase any BMD (R) antibiotic feed grade from A. L. Oslo. As
a result, A. L. Oslo contends that the Company has a contract to purchase
60,000 KgA of BMD (R) antibiotic feed grade per year. The Company denies that
such a contract exists.

If the Transactions are consummated, the Company will acquire the technology
currently licensed from A. L. Oslo and the facilities in Norway for
manufacturing the products previously purchased from A. L. Oslo. Therefore, the
foregoing transactions between the Company and A. L. Oslo will become
intercompany transactions which may be continued on an intercompany basis after
the Closing to the extent such transactions are in the best interests of the
Company. If such transactions are continued on an intercompany basis, they will
be eliminated in the consolidation of the Company's financial results.

All transactions with A. L. Oslo have been subject to review by, and in
certain circumstances prior approval of, the Audit Committee of the Company's
Board of Directors.

THE TRANSACTIONS

THE ACQUISITION. The Company will acquire the Related Norwegian Businesses
for the Cash Purchase Price and the Warrants. The Acquisition will be made by
the Exchange Offer, pursuant to which the Company will pay to each holder of A.
L. Oslo Shares who properly tenders the New A. L. Oslo Shares that it is
entitled to receive upon consummation of the Demerger a pro rata portion (based
upon the number of New A. L. Oslo Shares outstanding on the date the Exchange
Offer is consummated) of the Cash Purchase Price and the Warrants. The Company
will, subject to the receipt of all governmental and regulatory approvals,
commence the Exchange Offer contemporaneously with or as soon as practicable
after the mailing of this Proxy Statement to its stockholders and, if the
Transactions are approved and all conditions to Closing are satisfied or
waived, will consummate the Exchange Offer after the Demerger is consummated.

23
<PAGE>

of the shares of Class B Stock, the Skoyen Facility which will be leased on a
long-term basis to New A. L. Oslo, its food businesses and its investments in
various affiliates. Pursuant to the Demerger Agreement, the Demerger will be
deemed effective for Norwegian tax and accounting purposes as of January 1,
1994 so that the earnings and operating results of the Related Norwegian
Businesses from that date will be for New A. L. Oslo's benefit.

The "Cash Purchase Price," which shall be paid in Norwegian kroner, will be
NOK 170,000,000 ($24.6 million). Such amount is subject to adjustment if the
NOK Exchange Rate exceeds NOK 7.5 to $1.00 or is less than NOK 6.5 to $1.00. If
the arithmetic average of the closing NOK Exchange Rates as published by The
Wall Street Journal in its "Exchange Rates" table for the 10 business days
prior to the fifth business day prior to the Closing (the "Average Closing NOK
Rate") exceeds NOK 7.5 to $1.00, then the Cash Purchase Price will be an amount
equal to NOK 170,000,000 divided by 7.5 and multiplied by the Average Closing
NOK Rate. If the Average Closing NOK Rate is less than NOK 6.5 to $1.00, then
the Cash Purchase Price will be an amount equal to NOK 170,000,000 divided by
6.5 and multiplied by the Average Closing NOK Rate. The NOK Exchange Rate on
June 30, 1994 was NOK 6.9219 to $1.00. In addition, the Cash Purchase Price
will be reduced on a Norwegian kroner for Norwegian kroner basis to the extent,
prior to Closing,A. L. Oslo pays a dividend on the A. L. Oslo Shares which
reduces the equity of New A. L. Oslo or the Related Norwegian Businesses. Since
A. L. Oslo paid a dividend of NOK 10,000,000 on the A. L. Oslo Shares on June
8, 1994, the Cash Purchase Price (assuming no adjustment for NOK Exchange Rate
fluctuations) has been reduced to NOK 160,000,000 ($23.1 million).

The Warrants will constitute the right to purchase 3,600,000 shares of Class
A Stock at a specified Exercise Price which will be calculated prior to the
issuance of the Warrants and will be equal to 140% of the Average Closing
Price, subject to certain adjustments. The Warrants will expire on the later of
December 31, 1998 and the date which is 51 months after the Closing Date. The
Warrants generally will not be exercisable and, except for certain permitted
transfers, will not be transferable until the earlier of the first anniversary
of the Closing Date or the date the registration statement covering the
Warrants is declared effective by the Commission. In addition, Warrants issued
to or held by the Sissener Parties and their permitted transferees will not be
exercisable and, except for certain permitted transfers, will not be
transferable until the third anniversary of the Closing Date. The Warrants will
be issued to the holders of New A. L. Oslo Shares pursuant to exemptions from
the registration requirements of the Securities Act in reliance on Regulation S
promulgated thereunder and Section 4(2) thereof. The Company has agreed to
register the Warrants and the Warrant Shares under the Securities Act on or
before the first anniversary of the consummation of the Transactions. To
facilitate the trading of the Warrants and the Warrant Shares, the Company has
also agreed to list such securities for trading or quotation on the NYSE, or if
such listing is in the opinion of the Company impracticable, on another
appropriate national securities exchange or an over-the-counter quotation
system. See "Description of Warrants and Class A Stock --Warrants."

The Company will not be obligated to accept for payment and exchange New A.
L. Oslo Shares tendered pursuant to the Exchange Offer unless certain
conditions set forth in the Restructuring Agreement are met, including the
Minimum Condition. If the Minimum Condition is satisfied, the Company would be
permitted under Norwegian law and intends to compel the non-tendering holders
of New A. L. Oslo Shares to sell such shares to the Company. If the Minimum
Condition is not satisfied, the Company with the approval of A. L. Oslo could
waive such condition and make a determination at that time to consummate the
Acquisition anyway. Such a determination on the part of the Company would be
based upon a number of factors, including the number of New A. L. Oslo Shares
tendered in (and not withdrawn from) the Exchange Offer, the Company's ability
to obtain additional New A. L. Oslo Shares from New A. L. Oslo or non-tendering
holders of New A. L. Oslo Shares and the impact of having minority shareholders
of New A. L. Oslo. See "Description of Certain Agreements -- Certain Provisions
of the Restructuring Agreement -- Conditions to Consummation of the
Transactions."

The process whereby the Company can compel the holders of New A. L. Oslo
Shares not tendered in the Exchange Offer to sell their shares to the Company
requires a valuation of the New A. L. Oslo Shares,

24
<PAGE>

which valuation ultimately may be higher or lower than the consideration paid
in the Exchange Offer for each New A. L. Oslo Share, by the City Court in Oslo,
Norway (the "City Court"), unless all of the non-tendering holders of New A. L.
Oslo Shares and the Company agree on a purchase price for such New A. L. Oslo
Shares. The determination of a final, non-appealable valuation of such New A.
L. Oslo Shares could take a few years. However, assuming the Company obtains
more than 90% of the outstanding New A. L. Oslo Shares, the voting rights and
all other rights of a shareholder in respect of any New A. L. Oslo Shares not
tendered in the Exchange Offer will cease upon the filing of a petition for
valuation with the City Court.

Within six months after the Closing, the Company will invest NOK 100,000,000
($14.4 million) in equity capital in New A. L. Oslo. See "Description of
Certain Agreements -- Certain Provisions of the Restructuring Agreement--
Covenants." After the Closing, A. L. Oslo will lease the Skoyen Facility to New
A. L. Oslo for a term of 20 years, which term shall be renewable, at the option
of New A. L. Oslo, for four additional consecutive five-year terms. Basic rent
during the initial 20-year term will be $1.00 per year and, during any renewal
term thereafter, basic rent will be the then prevailing fair rental value of
the premises. In addition to basic rent, New A. L. Oslo will pay all documented
expenses of ownership and operation of the Skoyen Facility, such as taxes and
maintenance expenses. New A. L. Oslo will have the right to terminate the
Skoyen Lease at any time during its term upon twelve months' written notice to
A. L. Oslo. See "Description of Certain Agreements -- Skoyen Lease."

Since A. L. Oslo will not retain any administrative personnel after the
Demerger, New A. L. Oslo will provide certain administrative services to A. L.
Oslo pursuant to the Administrative Services Agreement to be entered into prior
to the effectiveness of the Demerger. New A. L. Oslo will provide such
administrative services to A. L. Oslo on a full cost basis, except that A. L.
Oslo will be required to pay New A. L. Oslo a minimum fee for services rendered
during calendar years 1994, 1995 and 1996 equal to NOK 5,650,000 ($816,250),
NOK 4,000,000 ($577,876) and NOK 3,000,000 ($433,407), respectively. The
Administrative Services Agreement will have an initial term of three years and
will be automatically extended for one-year terms thereafter unless terminated
by either of the parties thereto. See "Description of Certain Agreements --
Administrative Services Agreement." New A. L. Oslo will also license to A. L.
Oslo the "A. L." name and logo presently used by A. L. Oslo. Such license will
expire in the event that A. L. Oslo ceases to have the right, directly or
indirectly, to elect a majority of the members of the Company's Board of
Directors. However, A. L. Oslo will not be entitled to use such "A. L." logo to
identify products sold by A. L. Oslo, except for products sold by A. L. Oslo
and its affiliates on the Closing Date for a period of five years after
Closing.

The Company has received a letter from Einar W. Sissener expressing his
agreement to vote, or cause to be voted, all 138,232 A. L. Oslo Shares owned by
the Sissener Parties (representing approximately 34.6% of the outstanding A. L.
Oslo Shares), in favor of the Transactions (including the Demerger) and to
tender, or cause to be tendered, to the Company pursuant to the Exchange Offer
all New A. L. Oslo Shares that the Sissener Parties are entitled to receive
upon consummation of the Demerger. In addition, Mr. Sissener has advised the
Company that he anticipates that his wife and children will vote in favor of
the Demerger and will tender, or cause to be tendered, to the Company pursuant
to the Exchange Offer all New A. L. Oslo Shares that they are entitled to
receive upon consummation of the Demerger. Mr. Sissener's wife and children
own, in the aggregate, approximately 8.0% of the outstanding A. L. Oslo Shares.
A. L. Oslo has also agreed to use its reasonable efforts to cause Nopal
International AG, a wholly owned subsidiary of A. L. Oslo, to tender to the
Company pursuant to the Exchange Offer all 3,085 New A. L. Oslo Shares
(representing approximately 0.8% of the outstanding A. L. Oslo Shares) that it
is entitled to receive upon consummation of the Demerger.

25
<PAGE>

antibiotics businesses and the Related Norwegian Businesses through
subsidiaries. See "Conduct of the Business and Management of the Company
Following the Closing."

Prior to the Closing, the Company will amend its Certificate of Incorporation
to increase the representation of the holders of the Class A Stock on the
Company's Board of Directors from 25% to 33 1/3% of the Company's Board of
Directors (rounded to the nearest whole number, but not less than two members
of the Company's Board of Directors) and to change its name to "A.L. Pharma
Inc." The relative voting rights of the holders of shares of Class A Stock and
Class B Stock are being altered pursuant to the amendment of the Company's
Certificate of Incorporation in part for tax reasons and in part because the
U.S. Directors (as defined below) of the Company believe that a greater
representation of the holders of the Class A Stock on the Company's Board of
Directors is desirable. While these changes will result in a greater
representation of the holders of the Class A Stock on the Company's Board of
Directors, control over election of a majority of the Company's Board of
Directors will remain with the holders of the Class B Stock. The Company's name
is being changed to reflect the increased international scope of its operations
as a result of the Transactions.

Prior to the Special Meeting, the Company's Board of Directors will adopt a
resolution to amend the Company's bylaws, effective upon consummation of the
Acquisition, to increase the size of the Company's Board of Directors from
eight members to nine members if and when Proposal #1 is approved.

FINANCING OF THE TRANSACTIONS AND REFINANCING OF INDEBTEDNESS OF THE RELATED
NORWEGIAN BUSINESSES

As of June 30, 1994 there was outstanding approximately NOK 451,010,000 (or
approximately $65.2 million) of indebtedness attributable to the Related
Norwegian Businesses all of which indebtedness will be assumed by New A. L.
Oslo upon consummation of the Demerger (the "RNB Indebtedness"). Pursuant to
the agreements governing the RNB Indebtedness, (a) consent is required from A.
L. Oslo's creditors in order to transfer such indebtedness to New A. L. Oslo in
the Demerger and (b) certain of such creditors maintain security interests in
A. L. Oslo's assets. The Company has agreed in the Restructuring Agreement to
use commercially reasonable efforts to provide assistance to A. L. Oslo in
obtaining the required consents in connection with the transfer of the RNB
Indebtedness. In agreeing to render such consents certain of A. L. Oslo's
creditors may require the Company to provide credit support in the form of
guarantees or otherwise. In no event will the Company provide credit support
for more than NOK 490,000,000 (or approximately $70.8 million) of indebtedness
since pursuant to the Restructuring Agreement New A. L. Oslo is not permitted
to have indebtedness exceeding NOK 490,000,000 at the closing of the
Transactions. The Restructuring Agreement also provides that A. L. Oslo will
agree to permit the Skoyen property (which will be retained by A. L. Oslo upon
consummation of the Demerger) to be used by New A. L. Oslo as collateral for
New A. L. Oslo's indebtedness for a period of five years following the
acquisition of the Related Norwegian Businesses. The Company and A. L. Oslo are
currently in negotiations with A. L. Oslo's creditors in connection with
obtaining the required consents to transfer the RNB Indebtedness and believe
that such consents will be obtained on terms satisfactory to them.

The Company believes that it will have sufficient liquidity from internally
generated and external sources (including borrowings under existing bank lines)
to consummate the Transactions. In addition, the Company has negotiated the
principal business terms of the new UBN Facility, subject to definitive
documentation. If the UBN Facility is obtained, the proceeds will be utilized
to (a) refinance the Company's current bank facility with a syndicate of banks
led by the Union Bank of Norway, (b) refinance certain other indebtedness of
the Company, (c) pay the Cash Purchase Price, (d) refinance NOK 100 million of
New A. L. Oslo's indebtedness and (e) provide general purpose financing for the
Company and its subsidiaries. The UBN Facility, if obtained, will provide for
borrowings of up to $185 million and will be structured in the form of a seven-
year and a five-year term loan and a 39-month revolving credit facility. It is
the Company's intention to refinance $80 to $100 million of the Company's
indebtedness through a future offering of equity or convertible debt securities
as soon as practicable following consummation of the Transactions, subject to
market conditions. See "The Transactions -- Background of the Transactions" and
" -- Recommendations of the Company's Board of Directors; Reasons for the
Transactions."

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<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following Unaudited Pro Forma Condensed Combined Balance Sheet and
Statements of Income present the combined financial position and results of
operations of the Company as of June 30, 1994 and for the years ended December
31, 1991, 1992 and 1993 and for the six months ended June 30, 1993 and 1994.

Such pro forma financial information is based upon the balance sheets and
statements of income of the Company and the Related Norwegian Businesses for
the years ended December 31, 1991, 1992 and 1993 and as of and for the six-
month periods ended June 30, 1993 and 1994, giving effect to the Acquisition
and, in particular, assuming the acquisition of all of the outstanding New A.
L. Oslo Shares, and is presented in accordance with United States generally
accepted accounting principles presented in United States dollars. Such
unaudited pro forma data assume that the Acquisition had occurred as of June
30, 1994 for the balance sheet data dated as of June 30, 1994 and as of the
beginning of the earliest period presented for the income statement data. All
financial information of the Related Norwegian Businesses that is presented in
its historical combined financial statements has been converted from Norwegian
kroner to United States dollars. The balance sheet of the Related Norwegian
Businesses as of June 30, 1994 was converted using the exchange rate in effect
at June 30, 1994. The income statements of the Related Norwegian Businesses for
each of the periods presented were converted by first converting the income
statements for each quarter in the period presented using the average exchange
rate for such quarter and then aggregating the converted income statements for
all of the quarters in such period. See Note 3 to Unaudited Pro Forma Condensed
Combined Financial Statements below for the exchange rates used to convert such
data. The average of the quarterly exchange rates for each of the years ended
December 31, 1991, 1992 and 1993 and the six-month periods ended June 30, 1993
and 1994 are approximately equal to the average exchange rate for the years
ended December 31, 1991, 1992 and 1993 and the six-month periods ended June 30,
1993 and 1994, respectively. However, since income varies from quarter to
quarter, income for a twelve-month (or six-month) period converted using the
average exchange rate for such period may not be approximately equal to the
aggregate of the four (or two) quarters of income during the same twelve-month
(or six-month) period converted using the average exchange rate for each of
such quarters. The exchange rate of Norwegian kroner into United States dollars
as of June 30, 1994 was NOK 6.9219 to $1.00. The average exchange rates for the
years ended December 31, 1991, 1992 and 1993 and the six-month periods ended
June 30, 1993 and 1994 were NOK 6.4488 to $1.00, NOK 6.2011 to $1.00, NOK
7.1029 to $1.00, NOK 6.8910 to $1.00 and NOK 7.2648 to $1.00, respectively.

27
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF JUNE 30, 1994
(IN THOUSANDS)

<TABLE>
<CAPTION>
RELATED PRO
THE NORWEGIAN PRO FORMA FORMA
COMPANY BUSINESSES ADJUSTMENTS COMBINED
-------- ---------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents. $ 6,676 $ 2,820 -- $ 9,496
Accounts receivable, net.. 77,312 15,698 $ (2,201)(a) 90,809
Inventories............... 82,053 11,528 (1,075)(b) 92,506
Prepaid expenses and other
current assets........... 6,956 1,318 -- 8,274
-------- -------- -------- --------
Total current assets.... 172,997 31,364 (3,276) 201,085
Property, plant and
equipment, net............. 133,707 57,402 (250)(b) 190,859
Intangible assets, net...... 113,731 20,659 -- 134,390
Other assets and deferred
charges.................... 12,242 6,321 (1,000)(c) 17,563
-------- -------- -------- --------
Total assets............ $432,677 $115,746 $ (4,526) $543,897
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-
term debt................ $ 9,560 $ 7,254 -- $ 16,814
Short-term debt........... 61,365 215 -- 61,580
Accounts payable, accrued
expenses and income
taxes.................... 58,345 10,955 $(1,978)(a)(b)(c) 67,322
-------- -------- -------- --------
Total current
liabilities............ 129,270 18,424 (1,978) 145,716
Long-term debt.............. 77,842 65,157 25,115(c) 168,114
Deferred income taxes....... 23,797 6,733 -- 30,530
Other non-current
liabilities................ 9,798 3,466 -- 13,264
Stockholders' equity........ 191,970 21,966 (27,663)(d)(e) 186,273
-------- -------- -------- --------
Total liabilities and
stockholders' equity... $432,677 $115,746 $ (4,526) $543,897
======== ======== ======== ========
</TABLE>

See accompanying notes to unaudited pro forma condensed combined financial
statements.

28
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
RELATED PRO
THE NORWEGIAN PRO FORMA FORMA
COMPANY BUSINESSES ADJUSTMENTS COMBINED
-------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Total revenue............... $185,370 $41,694 $(8,726)(a) $218,338
Cost of sales............. 114,591 19,839 (6,826)(a)(b)(d) 127,604
-------- ------- ------- --------
Gross profit................ 70,779 21,855 (1,900) 90,734
Selling, general and
administrative expenses.. 59,018 16,363 (1,550)(a) 73,831
-------- ------- ------- --------
Operating income............ 11,761 5,492 (350) 16,903
Interest expense.......... (3,666) (3,182) -- (6,848)
Other income (expense),
net...................... (64) 242 -- 178
-------- ------- ------- --------
Income before provision for
income taxes............... 8,031 2,552 (350) 10,233
Provision for income
taxes.................... 3,204 773 (102)(e) 3,875
-------- ------- ------- --------
Net income.................. $ 4,827 $ 1,779 $ (248) $ 6,358
======== ======= ======= ========
Average common shares
outstanding:
Primary................... 21,554 21,554
Fully diluted............. 21,590 21,590
Earnings per share:
Primary................... $0.22 $0.29
Fully diluted............. $0.22 $0.29
</TABLE>

See accompanying notes to unaudited pro forma condensed combined financial
statements.

29
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
RELATED PRO
THE NORWEGIAN PRO FORMA FORMA
COMPANY BUSINESSES ADJUSTMENTS COMBINED
-------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Total revenue.................. $159,541 $40,596 $(7,847)(a) $192,290
Cost of sales................ 93,091 19,707 (6,355)(a)(b) 106,443
-------- ------- ------- --------
Gross profit................... 66,450 20,889 (1,492) 85,847
Selling, general and
administrative expenses..... 52,560 16,293 (1,392)(a) 67,461
-------- ------- ------- --------
Operating income............... 13,890 4,596 (100) 18,386
Interest expense............. (3,255) (4,539) -- (7,794)
Other income (expense), net.. 169 614 -- 783
-------- ------- ------- --------
Income before provision for
income taxes.................. 10,804 671 (100) 11,375
Provision for income taxes... 4,348 226 (28)(e) 4,546
-------- ------- ------- --------
Net income..................... $ 6,456 $ 445 $ (72) $ 6,829
======== ======= ======= ========
Average common shares
outstanding:
Primary...................... 21,497 21,497
Fully diluted................ 21,622 21,622
Earnings per share:
Primary...................... $0.30 $0.32
Fully diluted................ $0.30 $0.32
</TABLE>

See accompanying notes to unaudited pro forma condensed combined financial
statements.

30
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
RELATED PRO
THE NORWEGIAN PRO FORMA FORMA
COMPANY BUSINESSES ADJUSTMENTS COMBINED
-------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Total revenue............... $338,230 $78,467 $(14,022)(a) $402,675
Cost of sales............. 207,573 37,890 (12,040)(a)(b)(d) 233,423
-------- ------- -------- --------
Gross profit................ 130,657 40,577 (1,982) 169,252
Selling, general and
administrative expenses.. 109,733 31,978 (2,673)(a) 139,038
-------- ------- -------- --------
Operating income............ 20,924 8,599 691 30,214
Interest expense.......... (6,598) (8,398) -- (14,996)
Other income (expense),
net...................... 498 1,382 -- 1,880
-------- ------- -------- --------
Income before provision for
income taxes............... 14,824 1,583 691 17,098
Provision for income
taxes.................... 6,203 575 191(e) 6,969
-------- ------- -------- --------
Net income.................. $ 8,621 $ 1,008 $ 500 $ 10,129
======== ======= ======== ========
Average common shares
outstanding:
Primary................... 21,510 21,510
Fully diluted............. 21,581 21,581
Earnings per share:
Primary................... $0.40 $0.47
Fully diluted............. $0.40 $0.47
</TABLE>

See accompanying notes to unaudited pro forma condensed combined financial
statements.

31
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 1992
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
RELATED PRO
THE NORWEGIAN PRO FORMA FORMA
COMPANY BUSINESSES ADJUSTMENTS COMBINED
-------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Total revenue.................. $295,112 $78,724 $(15,204)(a) $358,632
Cost of sales................ 166,947 40,195 (12,477)(a)(b) 194,665
-------- ------- -------- --------
Gross profit................... 128,165 38,529 (2,727) 163,967
Selling, general and
administrative expenses..... 99,671 31,231 (2,244)(a)(c) 128,658
-------- ------- -------- --------
Operating income............... 28,494 7,298 (483) 35,309
Interest expense............. (10,134) (8,400) -- (18,534)
Other income (expense), net.. (785) 4,722 -- 3,937
-------- ------- -------- --------
Income from continuing
operations and before
provision for income taxes and
cumulative effect of a change
in accounting principles...... 17,575 3,620 (483) 20,712
Provision for income taxes... 6,208 1,085 (132)(e) 7,161
-------- ------- -------- --------
Income from continuing
operations.................... $ 11,367 $ 2,535 $ (351) $ 13,551
======== ======= ======== ========
Average common shares
outstanding:
Primary...................... 18,264 18,264
Fully diluted................ 21,568 21,568
Earnings per share:
Primary...................... $0.62 $0.74
Fully diluted................ $0.64 $0.74
</TABLE>

See accompanying notes to unaudited pro forma condensed combined financial
statements.

32
<PAGE>

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 1991
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
RELATED
THE NORWEGIAN PRO FORMA PRO FORMA
COMPANY BUSINESSES ADJUSTMENTS COMBINED
-------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Total revenue.................. $257,129 $58,321 $(13,636)(a) $301,814
Cost of sales................ 144,283 29,211 (10,971)(a)(b) 162,523
-------- ------- -------- --------
Gross profit................... 112,846 29,110 (2,665) 139,291
Selling, general and
administrative expenses..... 99,156 25,260 (2,241)(a) 122,175
-------- ------- -------- --------
Operating income............... 13,690 3,850 (424) 17,116
Interest expense............. (12,098) (2,972) -- (15,070)
Other income (expense), net.. 174 5,787 -- 5,961
-------- ------- -------- --------
Income from continuing
operations and before
provision for income taxes.... 1,766 6,665 (424) 8,007
Provision for income taxes... 1,187 2,324 (122)(e) 3,389
-------- ------- -------- --------
Income from continuing
operations.................... $ 579 $ 4,341 $ (302) $ 4,618
======== ======= ======== ========
Average common shares
outstanding:
Primary...................... 16,904 16,904
Fully diluted................ 21,611 21,611
Earnings per share:
Primary...................... $0.03 $0.27
Fully diluted................ $0.03 $0.27
</TABLE>

See accompanying notes to unaudited pro forma condensed combined financial
statements.

33
<PAGE>

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)

1. BASIS OF PRESENTATION

The unaudited pro forma condensed combined financial statements ("pro forma
financials") are presented for illustrative purposes only, giving effect to the
Acquisition, as described and therefore are not necessarily indicative of the
financial position that might have been achieved had the combination occurred
as of an earlier date, nor are they necessarily indicative of the financial
position which may occur in the future. In accordance with the rules of the
Commission, the Company has been required to present pro forma combined income
statements (and will be required to present the pro forma income statements as
restated historical financial statements when the Acquisition is consummated)
of the companies as if a pooling of interests was consummated at the beginning
of the earliest period presented. The pro forma results of operations presented
are therefore not indicative of the results of the combined companies that
might have been achieved had the combination occurred as of an earlier date nor
are they indicative of results which may occur in the future since to effect
the Acquisition the cash consideration paid would have resulted in interest
expense in each of the periods presented.

The pro forma financials give effect to the Acquisition as a transfer and
exchange between companies under common control. See "The Transactions--
Accounting Treatment." Accordingly, the assets and liabilities of the Related
Norwegian Businesses will be combined with the Company at their historical
costs in a manner similar to a pooling-of-interests. Upon restatement of the
combined consolidated balance sheet the initial period presented will reflect
the addition of the net equity of the Related Norwegian Businesses as of that
date as an increase in consolidated equity and the subsequent payment of
consideration by the Company for the Related Norwegian Businesses as a
reduction in consolidated equity.

The pro forma financials assume that the New A. L. Oslo shareholders will
tender 100% of the New A. L. Oslo Shares in the Exchange Offer. If, however,
less than 100% but more than 90% of the New A. L. Oslo Shares were tendered in
the Exchange Offer, the Company does not believe that the cost of acquiring the
remaining outstanding New A. L. Oslo Shares would significantly affect the pro
forma financials.

Because the Transactions have not been completed and transition plans are not
finalized, and the benefits and costs of integrating certain operations cannot
be estimated with reasonable assurance, the pro forma combined income
statements for the periods exclude the financial impact of benefits expected to
be achieved upon combining the resources of the companies and any special
charges or other costs to achieve these benefits. As a result of the
Acquisition, there may be a restructuring charge taken in the fourth quarter of
1994. Such a charge and its magnitude have yet to be determined. As more fully
described in "The Transactions--Conduct of the Business and Management of the
Company Following the Closing," the Company expects to operate as a
pharmaceutical and animal health company and will be managed on a global basis
through decentralized SBU's. It is anticipated that by the end of August 1994
key executives will be named by the Chief Executive Officer of the Company to
head the SBU's. Each SBU head will begin a study of their business to determine
what actions may be taken to realize potential synergies of the Acquisition and
to maximize both the SBU and the Company's global competitive position. Such
actions may include rationalization of the combined businesses. At the
conclusion of these studies, the head of each SBU working with the Chief
Executive Officer of the Company will make appropriate recommendations to the
Company's Board of Directors. It is anticipated that the Company's Board of
Directors will decide on recommended actions by December 31, 1994. Given the
timing of this plan, the financial impact of the actions that may be taken as a
result of such studies and the related action of the Company's Board of
Directors are not estimable at this time. The pro forma income statements for
the periods also exclude investment banking, legal, accounting and other
transaction expenses, including the expensing of debt issuance costs related to
existing debt expected to be refinanced, and tax effects relating to the
combination to be incurred and recorded by the Company subsequent to the
signing of the Restructuring Agreement in May 1994, estimated to be up to

34
<PAGE>

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)--(CONTINUED)

$3,600 after tax. Tax effects of the combination will include the non-
deductibility for tax purposes of a majority of the expenses previously
incurred or to be incurred to complete the Acquisition.

The pro forma condensed combined balance sheet as of June 30, 1994 includes,
in accordance with the reporting rules of the Commission, the impact of all
transactions, whether of a recurring or non-recurring nature, that can be
reasonably reflected and should be reflected as of that date. Therefore,
current liabilities and long-term debt have been increased by $600 and $2,000,
respectively, and other assets and deferred charges have been reduced by
$1,000. Such adjustments represent an estimate of the investment banking,
legal, accounting and other transaction expenses, including the expensing of
debt issuance costs related to existing debt expected to be refinanced, and tax
effects relating to the combination expected to be incurred and recorded by the
Company subsequent to the signing of the Restructuring Agreement in May 1994
and as a result of the planned refinancing of the existing debt.

2. TRANSACTIONS BETWEEN THE COMPANY AND THE RELATED NORWEGIAN BUSINESSES

The Company and the Related Norwegian Businesses have engaged in and will
continue to engage in a number of transactions including inventory purchased
from the Related Norwegian Businesses, license fees for technology paid to the
Related Norwegian Businesses and sales from the Company to the Related
Norwegian Businesses. See "The Transactions--Transactions Between the Company
and A. L. Oslo."

As a result, current amounts are generally payable from the Company to the
Related Norwegian Businesses for inventory and license fees. When the companies
are combined, the profit related to inventory purchased from either party will
be deferred or recognized depending on the amount on hand and the change in the
amounts from the preceding period.

Upon consummation of the Transactions described in the proxy statement these
transactions will be intercompany in nature and will be eliminated in preparing
the consolidated accounts. Accordingly, in the preparation of the pro forma
financials these transactions are designated as "intercompany" and are
eliminated. For additional information on the transactions between the Company
and the Related Norwegian Businesses, see "The Transactions--Transactions
between the Company and A. L. Oslo."

3. TRANSLATION OF RELATED NORWEGIAN BUSINESSES FINANCIAL INFORMATION

The Related Norwegian Businesses financial information is maintained and
translated where applicable into Norwegian kroner. For purposes of the pro
forma financials, (a) the balance sheet at June 30, 1994 in Norwegian kroner
has been translated into United States dollars at the quarter end rate of NOK
6.9219 to $1.00; and (b) the income statements for each of the years ended
December 31, 1991, 1992 and 1993 and for each of the six-month periods ended
June 30, 1993 and 1994 have been translated by first converting the income
statements for each quarter in the period presented using the average exchange
rate for such quarter and then aggregating the converted income statements for
all of the quarters in such period. The average exchange rates for each of the
quarters in the years ended December 31, 1991, 1992 and 1993 and the six months
ended June 30, 1994 were as follows:

<TABLE>
<CAPTION>
AVERAGE EXCHANGE RATE
---------------------------
1991 1992 1993 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
1st Quarter...................................... 6.0672 6.2991 6.8954 7.4070
2nd Quarter...................................... 6.7845 6.2819 6.8740 7.1239
3rd Quarter...................................... 6.7997 5.7649 7.2716
4th Quarter...................................... 6.3563 6.3475 7.3419
</TABLE>

35
<PAGE>

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS--
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)

4. EARNINGS PER COMMON SHARE -- PRO FORMA

The pro forma earnings per common share computations are based on historical
average common shares outstanding and income from continuing operations as
presented on a pro forma basis.

To reflect the effect of the consideration to be paid, the Company has
presented a supplemental computation of earnings per common share with earnings
being decreased by imputed interest expense net of taxes based on the proposed
cash consideration of $23,115 at a 7% interest rate and has reflected the
3,600,000 Warrants to be issued as part of the Transactions as outstanding
(assuming an exercise price of $20) for all periods presented. It should be
noted that the impact of the Warrants was either antidilutive or not material
for all periods presented.

Supplemental fully diluted earnings per share for the periods presented is as
follows:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
----------------- --------------
1991 1992 1993 1993 1994
----- ----- ----- ------- -------
<S> <C> <C> <C> <C> <C>
Income from continuing operations -- fully
diluted..................................... $ .21 $ .67 $ .42 $ .28 $ .27
</TABLE>

5. PRO FORMA ADJUSTMENTS -- BALANCE SHEET AT JUNE 30, 1994

The unaudited pro forma balance sheet gives effect to the Acquisition as if
it had been consummated on June 30, 1994. The adjustments are as follows:

(a)To eliminate intercompany receivable and payable of $2,201.

(b) To eliminate profit in inventory on intercompany sales of $1,075,
profit on intercompany sale of equipment of $250, and the tax effect
related thereto of $377.

(c) To reflect additional long-term debt expected to be incurred by the
Company as part of a refinancing in order to pay the Cash Purchase
Price pursuant to the Restructuring Agreement, NOK 160,000 ($23,115 at
June 30, 1994 exchange rates), and estimated transaction expenses,
including the expensing of debt issuance costs related to existing debt
expected to be refinanced, of $3,600 after tax. The Company expects to
obtain long-term financing to complete the Transactions by the Closing
Date. See "The Transactions -- Financing of the Transactions and
Refinancing of Indebtedness of the Related Norwegian Businesses." For
purposes of the pro forma financials, $2,000 of the $3,600 transaction
expenses are assumed to be financed at Closing. The $3,600 of
transaction expenses are reflected as a decrease in other assets and
deferred charges of $1,000, an increase in accounts payable, accrued
expenses and income taxes of $600, and an increase in long-term debt of
$2,000.

36
<PAGE>

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS--
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)

(d) To reflect the reduction of stockholders' equity relating to the
consideration paid of $29,667 by the Company to the holders of New A.
L. Oslo Shares to acquire the Related Norwegian Businesses. The
reduction of stockholders' equity is offset by the recording of the
Warrants as an increase to stockholders' equity. The net effect is a
reduction of stockholders' equity of $23,115 (as detailed below).

Calculation of Consideration Paid:

<TABLE>
<CAPTION>
ENTRIES IN STOCKHOLDERS' EQUITY
-----------------------------------
ADDITIONAL
CONSIDERATION RETAINED PAID IN
PAID EARNINGS CAPITAL TOTAL
------------- ---------- ------------ ----------
(REDUCTION) INCREASE
<S> <C> <C> <C> <C>
Cash (NOK 160,000, at
exchange rate of NOK
6.9219 to $1.00)....... $23,115 -- $ (23,115) $ (23,115)
Warrants (3,600,000 @
$1.82)................. 6,552 $ (6,552) 6,552 0
------- --------- ---------- ----------
$29,667 $ (6,552) $ (16,563) $ (23,115)
========= ==========
Net book value of
Related Norwegian
Businesses............. 21,966 21,966
------- ----------
Excess of total Excess of cash paid
consideration paid over over net book value
net book value of the of the Related
Related Norwegian Norwegian
Businesses............. $ 7,701 Businesses.......... $ 1,149
======= ==========
</TABLE>

The actual amount by which the total consideration and cash to be
paid will exceed the net book value of the Related Norwegian Businesses
at the Closing Date will be determined by the exchange rate in effect
on the Closing Date and the actual net book value of the Related
Norwegian Businesses on the Closing Date.

For purposes of the pro forma financials, the Warrants have been
valued at $1.82 each. The $1.82 value is the average of the range
($1.36 to $2.27) determined by the Special Committee's financial
advisor, Lehman Brothers, based on the 26-week observed volatility of
the Company's Class A Stock assuming up to a 40% discount. Based on
different hypothetical assumptions, Lehman Brothers observed additional
Black-Scholes Model ranges for valuation of the Warrants of between
$.90 and $3.41. See "The Transactions -- Opinion of the Special
Committee's Financial Advisor." The Company chose the average of $1.82
because it was based on actual Class A Stock volatility and on
generally recognized variations between Black-Scholes theoretical
values and actual trading values. A wide range of different valuations
is possible depending on the chosen assumptions.

A. L. Oslo's financial advisor, Bear, Stearns & Co. Inc., had
estimated the value of the Warrants to be in a range of $2.93 to $3.30
using the Black-Scholes Model, assuming a $14.00 market price of the
Class A Stock and a 4.5 year exercise period for the Warrants. The
difference in the Warrant valuation is primarily due to varying
assumptions relating to the expected future volatility of the market
price of Class A Stock and discounts attributable to marketability.

Each $.25 change in the value of the Warrants will result in a $900
corresponding change in the consideration to be paid by the Company for
the Related Norwegian Businesses. However, the final value attributed
to the Warrants for accounting purposes will not result in any change
in total stockholders' equity since the difference in the value will be
reflected as a change in the amount of the stockholder's equity
reduction related to the Acquisition offset by the change in the
increase in equity relating to recording the issuance of the Warrants.
The actual value of the Warrants will be determined by the actual
performance of the Class A Stock as traded in the public market over
the period that the Warrants are outstanding.

37
<PAGE>

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS --
(CONCLUDED)
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)

(e) To record the net effect after tax to retained earnings of:

<TABLE>
<S> <C>
Profit in inventory and intercompany
equipment sale elimination............... (948)
Transaction expenses including related
taxes.................................... (3,600)
------
(4,548)
======
</TABLE>

6. PRO FORMA ADJUSTMENTS -- INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31,
1991, 1992 AND 1993 AND SIX MONTHS ENDED JUNE 30, 1993 AND 1994.

The unaudited pro forma income statements give effect to the Acquisition as
if it were a pooling of interests. The adjustments are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
---------------------------- ----------------
1991 1992 1993 1993 1994
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
(a) To eliminate intercompany
transactions:
Sales and other revenues.. $(13,636) $(15,204) $(14,022) $(7,847) $(8,726)
Cost of sales............. (11,395) (12,560) (11,349) (6,455) (7,176)
Selling, general and
administrative........... (2,241) (2,644) (2,673) (1,392) (1,550)
(b) To record rollover of
profit in inventory at
period end
Cost of goods sold --
(reduction) increase..... $ 424 $ 83 $ (617) $ 100 $ 426
(c) To reverse the
intercompany profit
realized on the sale of
certain equipment by
the Related Norwegian
Businesses to the
Company.................. -- $ (400) -- -- --
(d) To reverse depreciation
on the equipment
purchased from the
Related Norwegian
Businesses............... -- -- $ (74) -- $ (76)
(e) Estimated tax effect
related to the cost of
goods sold adjustment
and the profit and
depreciation related to
the equipment sales...... $ 122 $ 132 $ (191) $ 28 $ 102
</TABLE>

As previously disclosed the unaudited pro forma income statements do not
include an adjustment for interest expense related to the cash consideration to
be paid by the Company to the shareholders of New A. L. Oslo. Assuming cash
consideration of $23,115 and an interest rate of 7%, interest expense after tax
would have decreased net income by approximately $1,000 in 1993, 1992 and 1991
and $500 for the six months ended June 30, 1994 and 1993.

The Related Norwegian Businesses experienced unusual foreign exchange
translation gains of NOK 27,200 ($4,200 at the average exchange rate for 1991
of 6.4488) and NOK 14,800 ($2,400 at the average exchange rate for 1992 of
6.2011) in 1991 and 1992, respectively. Such gains are not expected to recur.
See "The Transactions -- Certain Information Regarding the Related Norwegian
Businesses -- Management's Discussion and Analysis of Financial Condition and
Results of Operation of the Related Norwegian Businesses -- Results of
Operations -- Year Ended December 31, 1992 Compared with the Year Ended
December 31, 1991."

38
<PAGE>

7. SUBSEQUENT EVENT--BUSINESS ACQUISITION.

On July 21, 1994, the Company announced the acquisition of the stock of the
Mikjan Corporation (hereinafter referred to as the "Wade Jones Company" or
"Wade Jones") headquartered in Lowell, Arkansas. Wade Jones is a distributor of
poultry animal health products and also manufactures and blends certain animal
health products.

The purchase agreement required a purchase price of approximately $8,200
subject to adjustments based on actual financial position on the closing date.
In addition, the agreement provides for contingent payments based on certain
product approvals. The Company will account for the acquisition in accordance
with the purchase method. The contingent payments, if any, will be included in
intangible assets when earned and amortized over their remaining life. The
excess of purchase price over net assets (approximately $6,300 based on a
preliminary purchase price allocation) will be amortized over 20 years.

The purchase price was financed primarily under an acquisition advance note
which bears interest at prime less 1/4% and is due on October 31, 1994. Such
note is expected to be refinanced as part of the overall refinancing of the
Company.

If the acquisition had occurred as of January 1, 1993 the pro forma condensed
combined statements of income for the year ended December 31, 1993 and the six
months ended June 30, 1994 would have been as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1993 1994
------------ --------
<S> <C> <C>
Total Revenue............................................. $427,014 $230,600
Gross Profit.............................................. 175,792 93,832
Operating Income.......................................... 31,653 17,678
Net Income................................................ $ 10,471 $ 6,573
Earnings per share
Primary................................................. $ 0.49 $ 0.30
Fully Diluted........................................... $ 0.49 $ 0.30
</TABLE>

39
<PAGE>

CONFLICTS OF INTEREST

The Board of Directors established the Special Committee consisting solely of
the directors elected by the holders of the Class A Stock, authorized the
Special Committee to retain its own legal and financial advisors and to
evaluate and make a recommendation with respect to any combination transaction
with A. L. Oslo and determined that any such transaction should be subject to
approval by holders of a majority of the outstanding shares of Class A Stock
voting separately as a class. These actions were taken to avoid all conflicts
between the interests of the holders of Class A Stock and the interests of A.
L. Oslo, as the owner of the Related Norwegian Businesses and the controlling
stockholder (through ownership of the Class B Stock) of the Company, that could
have been involved in the review, negotiation and approval of any combination
transaction with A. L. Oslo such as the Transactions. Such conflicts of
interest may be deemed to some extent to have existed in the review,
negotiation and approval of the Transactions as a result of the management of
the Company and each of the directors of the Company (other than the members of
the Special Committee) participating in the review, negotiation or approval of
such Transactions being employed by or otherwise receiving compensation from
the Company, which is controlled by A. L. Oslo, and/or being elected as a
director of the Company by A. L. Oslo as a holder of the Class B Stock. Mr.
Einar W. Sissener is the President and a principal stockholder of A. L. Oslo
and Chairman and Chief Executive Officer of the Company. Mr. Sivert A. Nielsen,
a director of the Company until the 1994 Annual Meeting who was elected by A.
L. Oslo as holder of the Class B Stock, is a director of A. L. Oslo. Messrs. I.
Roy Cohen, Glen E. Hess, Oscar W. Kaalstad (a director of the Company until the
1994 Annual Meeting) and William S. Leonhardt (a director of the Company until
the 1994 Annual Meeting) were each elected as directors of the Company by A. L.
Oslo as holder of the Class B Stock. In addition to fees received as members of
the Company's Board of Directors, Mr. Cohen receives compensation as consultant
to the Company; Mr. Hess' professional corporation is a partner of a law firm
which provides substantial legal services for the Company (including in
connection with the Transactions) and also represents A. L. Oslo and certain of
its other affiliates on various matters; Mr. Kaalstad, through a wholly-owned
corporation, receives certain consulting fees from the Company; and Mr.
Leonhardt, together with members of his family, owns approximately 3% of the
outstanding capital stock of A. L. Oslo. See "The Transactions -- Background of
the Transactions," " -- Recommendations of the Company's Board of Directors;
Reasons for the Transactions" and " -- Opinion of the Special Committee's
Financial Advisor."

BACKGROUND OF THE TRANSACTIONS

On various occasions since the mid-1980's Mr. Einar W. Sissener, Chairman of
the Company and President of A. L. Oslo, Mr. I. Roy Cohen, President and Chief
Executive Officer (until January 1991) and Chairman of the Executive Committee
of the Company, and other representatives of the Company and A. L. Oslo had
from time to time informally discussed the benefits that might be available to
the stockholders of the Company and A. L. Oslo if the complementary businesses
of both companies were combined in a manner which allowed a better coordination
of the operations of those businesses and which eliminated the conflicts of
interest that arose in connection with ongoing transactions between the
companies and as a result of the companies being potential competitors in
certain markets. These discussions sometimes also referred to the possibility
of transferring certain material assets between the companies, including a
transfer of ownership of the Company's Danish subsidiary, A/S Dumex Ltd.
("Dumex"), to A. L. Oslo, the transfer of certain bacitracin technology and
related assets from A. L. Oslo to the Company and other possible transactions.
Although the Company has acquired certain assets of A. L. Oslo from time to
time, none of these discussions led to any proposal or substantive examination
of the relevant issues involved in a general combination transaction until late
1991.

During 1989 and 1990, A. L. Oslo reviewed various transactions which would
enable it to raise capital and finance expansion of its businesses in Europe.
As a result, A. L. Oslo proposed an offering of its common shares in Europe,
which was planned to occur in the second half of 1990. This planned offering
was eventually postponed, but review of various alternatives continued in 1991.
In September 1991, Mr. Sissener informed the management of the Company that A.
L. Oslo intended to undertake an offering process in late 1991 which would
involve an offering in the United States as well as Europe. Mr. Jeffrey E.
Smith, Executive Vice

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President and formerly a member of the Office of the Chief Executive of the
Company, with the agreement of the Company's Board of Directors suggested in a
letter to Mr. Sissener dated September 24, 1991 that he was convinced that
shareholders of both companies could benefit from some type of combination of
A. L. Oslo and the Company and that, prior to commencing such an offering
process, a feasibility evaluation of combining the complementary businesses of
the Company and A. L. Oslo be undertaken. In response to Mr. Smith's letter,
Mr. Sissener, on behalf of A. L. Oslo, indicated on October 7, 1991 that A. L.
Oslo agreed to a study of combining the companies in a Norwegian corporation
whose shares would be publicly traded and listed on the New York and Oslo Stock
Exchanges.

During late 1991 and early 1992, the Company's Board of Directors and
management discussed the concept of such a combination in general and, in
particular, the advisability of a transaction which would result in the Class A
Stock being exchanged for shares of a Norwegian corporation or related American
Depository Receipts ("Norwegian Corporate Shares"). The directors and
management of the Company (excluding Messrs. Sissener and Sivert Nielsen)
sought the advice of the Company's lawyers and its investment bankers, Paine
Webber & Co., regarding the legal and financial consequences of having the
Company's common stock exchanged for Norwegian Corporate Shares.

From October 1991 through January 1992, management and representatives of the
Company had various discussions with Mr. Sissener, on behalf of A. L. Oslo, and
attorneys and investment bankers for A. L. Oslo concerning the potential
benefits of such a combination transaction, various possible transaction
structures, general accounting and tax issues involved in such a transaction,
the view of the Company's management that the substitution of Norwegian
Corporate Shares for the Company's shares would be less desirable for the
Company's stockholders than shares of a corporation incorporated in Delaware or
another United States jurisdiction, financial issues relating to A. L. Oslo's
debt and the combined balance sheet of the companies, the general procedures
that would be followed if the Company's Board of Directors determined to
proceed with an evaluation of such a combination transaction with A. L. Oslo
and certain other issues. These discussions led to the preliminary conclusion
that from a legal and tax perspective a combination transaction was feasible,
but did not specifically address any relative valuation of the Company, A. L.
Oslo or any businesses of either company, and no specific terms or form of
transaction were proposed. During the same period, management of the Company
outlined the general benefits that might result from a combination with the
related businesses of A. L. Oslo although no study was undertaken to quantify
or to determine the specific feasibility or timing of such potential benefits.

After receiving a report from management regarding the discussions relating
to a possible combination, on January 23, 1992, the Company's Board of
Directors established the Special Committee to evaluate whether it appeared
feasible to agree on terms of a combination of the Company with the related
businesses of A. L. Oslo which would be fair to holders of the Class A Stock
and to report back to the Board of Directors. The members of the Special
Committee were Messrs. James Balog, who served as Chairman, and Charles Specht,
the two directors elected by the holders of the Class A Stock. The Special
Committee retained Lehman Brothers as its financial advisor and Debevoise &
Plimpton as its legal advisor. During the period following its appointment and
the retention of advisors, the Special Committee and its advisors (i) studied
the historical financial statements of the Company and A. L. Oslo and
divisional statements of the Related Norwegian Businesses and various financial
projections prepared by each company, (ii) became familiar with the Related
Norwegian Businesses and visited the principal operating facilities in Norway,
(iii) reviewed various combination structures, particularly those involving an
exchange of the Company's Common Stock for Norwegian Corporate Shares, and the
related legal, tax and accounting considerations, (iv) evaluated the legal and
practical effects on the Company's stockholders of holding Norwegian Corporate
Shares instead of shares of a Delaware corporation, (v) met with members of
senior management of A. L. Oslo to discuss its business plan and prospects and
benefits and detriments of a combination transaction, (vi) reviewed a
preliminary analysis of synergies that could result from a combination
transaction, (vii) analyzed the effect that existing debt of the Related
Norwegian Businesses would have on the combined business, and (viii) on several
occasions met with representatives of A. L. Oslo to discuss possible
alternative structures for a combination transaction.

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In October 1992, the Special Committee reported to the Company's Board of
Directors that the financial advisors to the Special Committee and A. L. Oslo
were continuing to exchange projections and other information and that
operating managers of the Company and A. L. Oslo had met to review potential
benefits of a combination transaction. However, since no financial proposals
had been made and there had been no substantive discussion with A. L. Oslo
representatives as to the respective values of the companies, the Special
Committee could not yet report whether it would be feasible to reach a mutually
acceptable agreement on financial terms which would be fair to the holders of
the Class A Stock. The Chairman of the Special Committee advised
representatives of A. L. Oslo that if meaningful valuation discussions were to
occur, A. L. Oslo should make a proposal for a combination transaction.

In a letter dated December 7, 1992, from Mr. Aage Petersen, the Chairman of
A. L. Oslo's board of directors, to the Special Committee, A. L. Oslo proposed
a transaction in which A. L. Oslo would transfer the Related Norwegian
Businesses to a newly formed Norwegian corporation which would acquire the
Company through a merger with a Delaware subsidiary of such Norwegian
corporation. Under the terms of the proposal, the common stock of the new
Norwegian corporation would be divided into two classes having substantially
the same respective rights (except as modified by Norwegian law) as the
Company's existing Class A and Class B Stocks, and each share of Class A Stock
and Class B Stock would be converted in the merger into a share of the
comparable class of common stock of the new Norwegian corporation. The proposal
would have resulted in the holders of the Company's Class A Stock owning, as a
group, approximately 52.6% of the outstanding stock of the Norwegian
corporation which, in turn, would own all of the Company's businesses and the
Related Norwegian Businesses. The balance of the stock of the new Norwegian
corporation would have been owned by A. L. Oslo or its shareholders, directly
or indirectly. The letter emphasized the importance to any combination
transaction of policies which integrate the resources of both companies, build
upon the increased internationalization of the resulting combined entity and
recognize the Norwegian contributions to the businesses.

The Special Committee on December 10, 1992 reported the proposal to the
directors of the Company, excluding Messrs. Sissener and Nielsen (such group of
directors hereafter being referred to as the "U.S. Directors"), who discussed
the proposal and the potential consequences of a combination transaction.
Although no specific determination was made, Messrs. Sissener and Nielsen
excused themselves from meetings of the directors at which specific proposals
or strategies regarding the Transactions were discussed because of the
conflicts of interest resulting from Mr. Sissener's positions as a director,
officer and principal shareholder of A. L. Oslo and Mr. Nielsen's position as a
director of A. L. Oslo. The U.S. Directors expressed their concerns about the
adequacy of the value which would be received by the holders of the Class A
Stock under the proposal and the effect of converting the Company's shares into
Norwegian Corporate Shares. The U.S. Directors also expressed their desire that
any proposal be subject to approval of the holders of a majority of the shares
of the Class A Stock voting as a separate class. The U.S. Directors authorized
the Special Committee to obtain additional information and review the proposal
and to negotiate with representatives of A. L. Oslo to determine whether a
mutually acceptable proposal could be developed. Following the issuance of a
press release disclosing the A. L. Oslo proposal, a class action lawsuit was
filed in the Court of Chancery of the State of Delaware alleging that the
proposed combination was unfair to the holders of the Class A Stock. The suit
was stayed and eventually dismissed in February 1994.

The Special Committee and its advisors obtained additional information,
reviewed the proposal and met with representatives of A. L. Oslo to discuss the
proposal, noting among other things the need for a discount on the value of the
Related Norwegian Businesses to reflect the fact that under the proposed
structure, shareholders of the Company would become shareholders of a non-U.S.
company. On March 3, 1993, the Special Committee reported to the U.S. Directors
the Special Committee's conclusion that, while a combination transaction on
appropriate terms could be beneficial, the December 7, 1992 proposal from A. L.
Oslo did not provide a framework for a transaction that would be acceptable to
both companies, particularly in view of the negative effects of converting the
shares of the Class A Stock into Norwegian Corporate Shares. The U.S. Directors
supported the Special Committee's conclusion. By letter dated March 4, 1993,
the Special

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Committee advised the Chairman of the Board of A. L. Oslo of its conclusions,
but added that the Special Committee would consider other approaches that A. L.
Oslo might propose to effect a combination.

By letter dated March 15, 1993, Mr. Aage Petersen, Chairman of A. L. Oslo's
board of directors, advised the Special Committee that the A. L. Oslo board
authorized an exploration of alternative structures, including a structure
resulting in a United States holding company. Mr. Petersen stated that in light
of this alternative structure and to insure the support of all relevant
parties, a combination transaction must demonstrate the ongoing commitment to
the development of the Norwegian businesses in the context of a global
organization.

During the period from March 1993 until June 1993, the Special Committee and
its advisors communicated with representatives of A. L. Oslo and evaluated
alternative transaction structures which would result in the holders of the
Company's common stock continuing to hold shares in a Delaware corporation
which would be a holding company for the Related Norwegian Businesses and the
Company's businesses and subsidiaries. As a result of these evaluations, the
Special Committee and its advisors reviewed with representatives of A. L. Oslo
a transaction structure of the type now contemplated by the Restructuring
Agreement and concluded that such a structure was feasible and would meet the
objectives of an international holding company which owned and operated the
Related Norwegian Businesses and the Company's businesses through subsidiaries.

During this period the Special Committee and its representatives also
received additional financial information regarding the Related Norwegian
Businesses and engaged in various discussions of ranges of possible values of
the Related Norwegian Businesses and other financial terms of a combination
with Mr. Sissener, on behalf of A. L. Oslo, and other representatives of A. L.
Oslo. In April 1993, Mr. Thomas G. Gibian replaced Mr. Charles Specht as a
director of the Company, and in May 1993, became a member of the Special
Committee. Mr. Specht had resigned from the Special Committee because of poor
health in December 1992, and died in March 1993.

In May 1993, the Special Committee's financial advisor reviewed a potential
range of values for the Related Norwegian Businesses with the U.S. Directors,
and the Special Committee reported to the U.S. Directors that it remained
uncertain whether it would be feasible to reach agreement on financial terms.
On June 6, 1993, the Special Committee reported to the U.S. Directors that a
significant gap existed between A. L. Oslo's suggested value of the Related
Norwegian Businesses and a value that the Special Committee could recommend.
The U.S. Directors then discussed types of earn-out arrangements that might
bridge the gap and reviewed the background of the combination study, the
potential benefits and other consequences of a combination and requested the
Special Committee to continue its efforts, with participation by the Company's
management, to negotiate acceptable financial terms.

On June 29, 1993, the Special Committee reported at a meeting of U.S.
Directors that further discussions with representatives of A. L. Oslo had
failed to result in any understanding on financially acceptable terms. The
Committee also reported that recent financial information regarding the Related
Norwegian Businesses had been disappointing and did not support A. L. Oslo's
valuations. All U.S. Directors (including Messrs. Balog and Gibian) agreed that
the activities of the Special Committee should be suspended unless and until,
in the judgment of the U.S. Directors, a clear understanding on economic terms
was reached. The U.S. Directors then asked that the Company's management, with
the help of Mr. I. Roy Cohen, continue discussions with Mr. Sissener, on behalf
of A. L. Oslo, regarding whether an agreement could be reached on financial
terms that would be acceptable to A. L. Oslo and to the Special Committee, the
U.S. Directors and the holders of the Class A Stock.

In July 1993, there were various meetings between Mr. Sissener, on behalf of
A. L. Oslo, and one or more of I. Roy Cohen, Jeffrey E. Smith, Glen E. Hess and
others on behalf of the Company. They discussed the historical and projected
financial and operational aspects of the Related Norwegian Businesses, the
potential benefits of a combination transaction, the effect that the debt level
of the Related Norwegian Businesses would have on the Company and other
matters. These discussions also reviewed various possible

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<PAGE>

financial terms, including different forms of consideration (including
contingent payments) that might be offered for the Related Norwegian
Businesses. As a result of these discussions, the concept developed of using
warrants to purchase shares of Class A Stock as part of the consideration that
the Company might pay to acquire the Related Norwegian Businesses. These
discussions led to the concept of paying for the Related Norwegian Businesses
with a combination of cash and warrants, with the cash portion to be based on
the book value of the Related Norwegian Businesses. Management of the Company
believed that use of warrants would have several benefits, including: (i)
permitting A. L. Oslo shareholders to realize value if, but only if, the future
value of the Class A Stock, which might be affected by the Related Norwegian
Businesses, significantly increased; (ii) increasing the incentive of Mr.
Sissener, the indirect controlling stockholder of the Company who (together
with his family interests) would receive a significant portion of any warrants
that might be issued, to take actions to assure that the benefits of a
combination transaction would be maximized; (iii) reducing the additional
borrowings and/or dilution that would result if cash, debt or common stock were
offered in place of warrants; and (v) providing a source of equity financing
for the combined company if the warrants became "in the money" and were
exercised prior to their expiration.

On August 2, 1993 the U.S. Directors received a report from Mr. Cohen on the
discussions with Mr. Sissener. Several days prior to this meeting the Company
had reported that, as a result of various factors adversely affecting its
businesses, earnings would be below previous expectations for the balance of
1993 and that the same adverse factors might continue into 1994. As a result of
this report, the market prices of the Class A Stock had declined from a closing
price of $23.625 the day before the announcement to a range of $15.125 to $16
on the day of the U.S. Directors meeting. Mr. Cohen reported that substantial
progress had been made in reaching an understanding on financial terms that Mr.
Sissener would recommend to the A. L. Oslo board and he described the concept
of offering a combination of cash and warrants, with the cash portion to be
based on the book value of the Related Norwegian Businesses. The U.S. Directors
concluded that this concept, including the use of warrants, merited further
discussions but that, given the then current price of the Class A Stock, the
exercise price of the warrants should be at a very significant premium over the
market price of the Class A Stock.

Following the August 2, 1993 meeting of U.S. Directors, Messrs. I. Roy Cohen,
Jeffrey E. Smith and Glen E. Hess had various discussions and communications
with Mr. Sissener, on behalf of A. L. Oslo, and his legal advisors regarding
the principal financial and other terms on which a combination transaction
could be structured. The Company's management also sought updated financial
estimates for the Related Norwegian Businesses and received advice from Lehman
Brothers regarding the valuation of warrants. These discussions led to the
preparation of an outline of terms as discussed between the managements of the
Company and A. L. Oslo dated August 13, 1993 (the "August outline"). The August
outline provided for the creation of an international holding company structure
with the Company acquiring, subject to various terms and conditions, the
Related Norwegian Businesses for (i) cash in an amount equal to the September
30, 1993 net book value of the Related Norwegian Businesses and (ii) warrants
to acquire 3,000,000 shares of the Class A Stock at an exercise price of
$23.625 per share (subject to certain adjustments), which would be exercisable
for three years.

Mr. Sissener presented the August outline to the A. L. Oslo Finance Committee
which discussed the outline and obtained the advice of its financial advisors.
On August 17, 1993, Mr. Roald Jotun, Chairman of the A. L. Oslo Finance
Committee, advised Mr. Hess, as Secretary of the Company, by telefax that its
financial advisor had reviewed the proposed financial terms and "find it
difficult to render a positive fairness opinion" and that "the total value of
the transaction for the A. L. Oslo's shareholders must be improved." Mr. Jotun
stated that the Finance Committee proposed increasing the number of warrants to
4,000,000 and setting the warrant price at the average of the closing prices of
the Class A Stock for the 20 trading days preceding the closing date. The
telefax asked for a response from the Special Committee prior to a meeting of
the A. L. Oslo board of directors scheduled for August 25, 1993. Mr. Hess
responded to Mr. Jotun advising that the Special Committee had been suspended
and would not be reactivated unless and until there was an outline of terms for
the Committee to review which was acceptable to A. L. Oslo's management and
board of

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directors and to the Company's management and the U.S. Directors. Mr. Hess
further advised that Mr. Cohen and Mr. Smith might want to discuss the
valuation issues with Mr. Sissener.

Mr. Hess sent the foregoing correspondence to the U.S. Directors, and on
August 20, 1993, the U.S. Directors discussed the financial terms in the August
outline and possible modifications to those terms and requested that Mr. Cohen
communicate with Mr. Sissener. Between August 21 and August 25, 1993, Mr. Cohen
and Mr. Sissener had several discussions regarding the financial terms set
forth in the August outline and possible changes in those terms. On August 26,
1993, Mr. Sissener advised the Company by telefax that A. L. Oslo's board of
directors had discussed the combination and the August outline and decided to
recommend to the A. L. Oslo Company Assembly (a governing body elected by the
shareholders which in turn elects the directors) the combination transaction as
proposed with certain modifications. The modifications would provide (i) for a
cash payment based on the September 30, 1993, book value of the Related
Norwegian Businesses and the issuance of warrants to purchase 3,600,000 shares
of Class A Stock at $23.625 per share expiring three years and five months
after closing; (ii) for the payment by the Company of all A. L. Oslo's
transaction costs incurred after January 1, 1993; and (iii) a condition to the
transaction that the market price of the Company's common stock be not less
than $18 per share at closing. On August 25, 1993, the closing price of the
Class A Stock on the NYSE was $18.875.

Mr. Sissener's August 26 telefax was sent to all U.S. Directors who
considered the matters in the telefax during a conference call on August 30,
1993. The U.S. Directors determined that various provisions of the A. L. Oslo
proposals were unacceptable and that further negotiations should continue to
determine the feasibility of reaching an agreement with A. L. Oslo on financial
terms. The U.S. Directors also determined to reactivate the Special Committee
to begin reviewing the fairness of the terms being discussed by the managements
of the Company and A. L. Oslo in order to facilitate the process in the event
that the terms proposed by A. L. Oslo's board of directors could be modified to
result in a transaction which would be fair to the holders of the Class A
Stock. Mr. Hess advised Mr. Sissener of the actions of the U.S. Directors.

Between September 2 and September 15, 1993, Messrs. Cohen, Smith and Hess
received updated financial estimates from A. L. Oslo regarding the Related
Norwegian Businesses and advice regarding warrant valuation and negotiated with
Mr. Sissener, on behalf of A. L. Oslo, and A. L. Oslo's legal advisors
regarding the terms of a combination transaction. These negotiations culminated
in a revised draft of the outline of terms dated September 15, 1993 (the
"September outline") which A. L. Oslo's board of directors presented to the
Company Assembly of A. L. Oslo on September 15, 1993. On September 16, 1993,
Mr. Sissener, on behalf of A. L. Oslo, advised Messrs. Cohen and Smith that the
Company Assembly had authorized A. L. Oslo's board of directors to proceed with
negotiations of a transaction on the basis of the September outline. The
September outline provided for a restructuring of the Company into a holding
company which would acquire the Related Norwegian Businesses, subject to
various terms, conditions and adjustments, for a consideration of (i) cash
equal to the shareholders' equity of the Related Norwegian Businesses at
September 30, 1993, (ii) warrants to purchase 3,500,000 shares of the Class A
Stock at $23.625 per share, which would be exercisable until May 31, 1997 (or
later if closing were delayed after December 31, 1993) and (iii) payment by the
Company of up to NOK 20 million of A. L. Oslo's transaction costs on an after-
tax basis. On September 15, 1993, the closing price of the Class A Stock on the
NYSE was $18.875.

Following the action of A. L. Oslo's Company Assembly, Company personnel and
legal counsel and the Special Committee's financial and legal advisors began
the process of reviewing and negotiating agreements to reflect the terms of the
September outline, reviewing recent financial statements and forecasts,
completing the due diligence review of the Related Norwegian Businesses,
studying various tax and accounting issues, updating and reviewing prior
studies of the synergies that could result from the combination transaction and
taking other actions to confirm whether the September outline could become the
basis for a combination transaction.

As a result of these various reviews and negotiations with representatives of
A. L. Oslo, management of the Company reported to the U.S. Directors at a
meeting on November 1, 1993, that there were a number of

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matters which needed to be resolved before any agreement could be reached with
A. L. Oslo and before the review and due diligence process could be
satisfactorily completed. These unresolved matters included the following:
resolution of certain potential United States withholding tax issues relevant
to the consideration payable to A. L. Oslo shareholders; other United States
tax considerations relating to the Company; responsibility for certain types of
possible pre-closing environmental, regulatory or tax liabilities relating to
the Related Norwegian Businesses; expense reimbursement; the scope of
representations and warranties and other contractual issues; A. L. Oslo's
recent and projected performance; and uncompleted due diligence matters. In
addition, Mr. Sissener, on behalf of A. L. Oslo, had indicated that the
directors and advisors to A. L. Oslo continued to have concern about the value
of the proposed transaction to the A. L. Oslo shareholders in view of the
decline in the market price of the Class A Stock since consideration of the
transaction by A. L. Oslo's Company Assembly in September. On November 1, 1993,
the closing price of the Class A Stock on the NYSE was $16.125. Management of
the Company also expressed concern that the holders of the Class A Stock may be
less willing to approve the transaction as a result of the Company's
disappointing operating results in the second half of 1993. As a consequence of
all these factors, the U.S. Directors determined to advise Mr. Sissener, on
behalf of A. L. Oslo, that despite the potential benefits of a combination
transaction, the continuing number and magnitude of unresolved issues and
general uncertainty about the terms and approvability of the transaction made
it advisable to consider terminating the attempts to agree upon a combination
transaction. Mr. Sissener was so advised by the U.S. Directors on November 2,
1993. At the Company's Board of Directors meeting on November 17, 1993, Mr.
Sissener, on behalf of A. L. Oslo, reviewed the concerns raised by the Company
with respect to the transaction, reviewed the progress that had been made in
determining how and generally on what terms a combination could be effected,
provided the U.S. Directors with a summary quantification of certain potential
synergies of a combination, and expressed the view, on behalf of A. L. Oslo,
that the open issues and other unresolved matters between the Company and A. L.
Oslo may ultimately be resolvable. Mr. Sissener, however, indicated that if the
U.S. Directors believed that the open issues and other unresolved matters were
not resolvable and that the combination study should be terminated, an
appropriate resolution to that effect should be adopted at a meeting of the
Company's Board of Directors the following week.

Following the November 17, 1993 meeting, the U.S. Directors requested further
information from Mr. Sissener, on behalf of A. L. Oslo, regarding the principal
unresolved matters affecting the proposed combination terms. Mr. Sissener
responded by letter dated November 22, 1993 regarding A. L. Oslo's position on
these matters. At a meeting of the U.S. Directors on November 23, 1993, the
Directors reviewed the unresolved matters affecting the proposed transaction
and A. L. Oslo's positions with respect thereto, the terms set forth in the
September outline and developments since the date of that outline and other
factors, and concluded that an attempt should be made, with direct
participation by the U.S. Directors, to resolve all unresolved matters with A.
L. Oslo and reach agreement on a transaction that could be reviewed by the
Special Committee and its advisors.

In a series of meetings between Mr. Sissener and A. L. Oslo's legal advisors
and various groups of the U.S. Directors which took place between December 6
and December 10, 1993, the unresolved issues were discussed and certain terms
of the proposed transaction as set forth in the September outline were
renegotiated. In addition, the Company's management and U.S. Directors
considered the tax and other consequences of changing the structure of the
proposed transaction to a direct purchase of the Related Norwegian Businesses
instead of the demerger structure. Following these meetings, the U.S. Directors
and Mr. Sissener, on behalf of A. L. Oslo, agreed that the terms and conditions
set forth in an outline of terms dated December 14, 1993 (the "December
outline") would form the basis for a proposed transaction based on a demerger
structure to be submitted for review by the Special Committee and its advisors.
During the following week, discussions continued regarding several issues,
including the book value measurement date, protection against certain
liabilities and expenses reimbursement, as to which there was no agreement.
Following a conference of several U.S. Directors with Mr. Sissener, on behalf
of A. L. Oslo, and legal advisors to A. L. Oslo on December 21, 1993, a revised
draft statement of terms dated December 22, 1993 (the "revised December
outline") was prepared. The U.S. Directors also requested that Mr. Sissener
present to the Company's Board of Directors a business and management plan for
the combined businesses. The revised

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December outline provided that the Company would acquire the Related Norwegian
Businesses in a demerger structure, subject to various terms, conditions and
adjustments, for a consideration of (i) cash equal to the shareholders equity
of the Related Norwegian Businesses at December 31, 1993 and (ii) warrants,
which would expire on December 31, 1998, to purchase 3,600,000 shares of the
Class A Stock at an exercise price (with certain exceptions and subject to a
$30 maximum) equal to 140% of the average per share market price during a
period preceding the meeting of the Company's stockholders called to consider
the transaction. The revised December outline also provided that the Company's
Certificate of Incorporation would be amended to increase the percentage of
directors to be elected by the holders of Class A Stock from 25% to 33 1/3%,
that A. L. Oslo would indemnify the Company for certain tax, environmental or
regulatory liabilities and that the Related Norwegian Businesses would not be
charged with more than NOK 15 million of transaction costs incurred by A. L.
Oslo.

On the basis of the revised December outline, representatives of the Company
and A. L. Oslo resumed preparation of transaction documents, Company personnel
continued their due diligence investigation of the Related Norwegian
Businesses, various legal and tax issues were reviewed, and the Special
Committee and its advisors reviewed the proposed transaction and financial and
other information regarding the Related Norwegian Businesses. Mr. Sissener also
prepared and provided the U.S. Directors with a summary of the strategic and
management plan for the operation of the Company following a combination with
the Related Norwegian Businesses. At a meeting of the U.S. Directors on
February 7, 1994, the principal operating officers of the Company reported on
their due diligence review of the Related Norwegian Businesses and Lehman
Brothers presented a preliminary financial analysis of the proposed
transaction. The U.S. Directors determined to continue the attempt to agree
with A. L. Oslo's representatives on definitive agreements reflecting the terms
of the revised December outline. As a result of the negotiation of definitive
agreements and related discussions, the U.S. Directors tentatively approved
certain modifications in the terms set forth in the revised December outline,
subject to continuing review by the Special Committee.

On March 7, 1994, A. L. Oslo's board of directors approved the terms of the
proposed combination as set forth in the then current drafts of the definitive
agreements and authorized Messrs. Sissener and Nielsen, on behalf of A. L.
Oslo, to negotiate the definitive terms of the agreements with respect to the
proposed combination and, if they found the terms satisfactory, to execute and
deliver such definitive agreements. At a meeting on March 16, 1994, the U.S.
Directors heard additional reports from officers of the Company as to the
operations of the related businesses of A. L. Oslo. Following such meeting, the
U.S. Directors advised A. L. Oslo that in their view there remained a number of
issues that needed to be resolved. Such issues included the terms on which New
A. L. Oslo would provide administrative services to A. L. Oslo, the terms on
which A. L. Oslo would indemnify the Company for violations of law, the fact
that certain members of management of the Company had expressed concern about
certain aspects of the Transaction and the fact that several of the U.S.
Directors believed that it would be desirable for the Company to refinance $80
to $100 million of the Company's indebtedness through an offering of
convertible debentures as soon as practicable after the Closing subject to
market conditions. In addition, the U.S. Directors advised A. L. Oslo that the
definitive documents needed to be completed. At subsequent meetings in March
and April 1994, the U.S. Directors (including the members of the Special
Committee) explored with Mr. Sissener A. L. Oslo's views as to the management
of the combined businesses and discussed with Mr. Sissener the open issues and
matters referred to above. In addition, during this period several members of
the Company's Board of Directors met separately with Mr. Sissener and legal
counsel to A. L. Oslo on a number of occasions to discuss such matters. At a
meeting held on April 27, 1994, A. L. Oslo and the Company agreed in principle
on the terms of the administrative services agreement, on the open issues
relating to indemnification for violations of law, and it was agreed that it
was the intention of both companies to undertake a refinancing of the Company's
indebtedness as soon as practicable after the Closing subject to market
conditions. The Board of Directors then advised legal counsel to the Company
and A. L. Oslo to resolve all remaining open issues and to finalize the
definitive documentation.

On May 16, 1994 the Special Committee met with the U.S. Directors with
respect to the status of the Transactions negotiations. At such meeting, the
U.S. Directors reviewed the status of the Transactions with

47
<PAGE>

certain members of management; counsel to the Company reviewed the
Restructuring Agreement and related documents, drafts of which had been
furnished to the U.S. Directors prior to the meeting; and Lehman Brothers
reviewed the financial analysis they were prepared to present to the Company's
full Board of Directors, focusing on changes from earlier analyses that had
been discussed with the U.S. Directors (including the Special Committee). The
Special Committee and the U.S. Directors then questioned the financial and
legal advisors and discussed the information they had received. Following the
meeting of the U.S. Directors, the Special Committee met separately with its
counsel and representatives of Lehman Brothers, its financial advisors, and
concluded that it would recommend that the proposed Transactions were fair to
the Company and the holders of the Class A Stock. The meeting of the U.S.
Directors was reconvened and the Special Committee advised them of its
recommendation. Following this meeting of the U.S. Directors, the Company's
full Board of Directors (including Messrs. Sissener and Nielsen) met to review
the background and reasons for the Transactions and the terms of the
Restructuring Agreement and related documents. The Company's Board of Directors
received advice of legal counsel on certain legal aspects of the Transactions;
a report from the Special Committee concluding that the Transactions were fair
to the Company and the holders of Class A Stock and recommending approval of
the Transactions; a detailed presentation from Lehman Brothers which analyzed
various financial aspects of the Transactions. The Company's Board of Directors
reviewed a copy of the written opinion of Lehman Brothers to the Special
Committee concluding that the Transactions were fair to the Company and the
holders of the Class A Stock. Following such reviews and presentation and after
further discussion, the Company's Board of Directors unanimously determined
that the Transactions are fair to, and in the best interests of, the Company
and fair to the holders of the Class A Stock, unanimously approved the
Restructuring Agreement and the Transactions and resolved to recommend that the
Company's stockholders vote for approval of the Restructuring Agreement and the
Transactions.

RECOMMENDATIONS OF THE COMPANY'S BOARD OF DIRECTORS; REASONS FOR THE
TRANSACTIONS

As described in "The Transactions -- Background of the Transactions" above,
at a special meeting on May 16, 1994, the Company's Board of Directors
unanimously determined that the Transactions are fair to, and in the best
interests of, the Company and fair to the holders of the Class A Stock,
unanimously approved the Restructuring Agreement and the Transactions and
resolved to recommend that the Company's stockholders vote FOR approval of the
Restructuring Agreement and the Transactions. See "The Transactions --
Background of the Transactions."

In evaluating the advisability of a combination transaction and in approving
the Restructuring Agreement and the Transactions, the Company's Board of
Directors considered a number of factors, including the following:

1. Complementary Nature of Businesses and Potential Synergies. The
----------------------------------------------------------
Related Norwegian Businesses are complementary with the Company's
businesses, and the Transactions will provide opportunities to utilize the
resources of these complementary businesses in a manner which will put the
Company in a stronger position to compete on a worldwide basis in its
specialized pharmaceuticals and animal health product markets.

In considering potential synergies which might be obtainable, the
Company's Board of Directors considered the fact that the dosage-form
pharmaceutical business of the Related Norwegian Businesses operates in the
Nordic countries which are also principal markets for the Dumex
pharmaceutical business and the products of both businesses are generally
complementary. Consequently, the Transactions would create opportunities
for more effective marketing and consolidation of sales forces of the
respective businesses. Similarly, the bulk antibiotics business of the
Related Norwegian Businesses is similar to and complements the bulk
antibiotics business of Dumex. The Related Norwegian Businesses manufacture
and/or market worldwide bacitracin, zinc bacitracin, tyrothricin and
gramicidin; Dumex manufactures and markets worldwide polymyxin, vancomycin
and colistin. The Company's Board of Directors believes that the
Transactions provide opportunities to strengthen marketing efforts, broaden
the Company's product line and enable more effective research and

48
<PAGE>

development through coordinated efforts. In the animal health area the
Company's principal animal health product, BMD (R) antibiotic, is
manufactured and marketed in North America under a North American
technology license from A. L. Oslo (1993 license fees were $1,362,000) and
in areas outside the United States by the Related Norwegian Businesses.
Since such technology is an asset that would be acquired as part of the
Related Norwegian Businesses as a result of the Transactions, the Company
would be able to market BMD (R) antibiotics as well as other animal health
products manufactured by the Related Norwegian Businesses outside the
United States. The Company's aquatic animal health business currently
competes against the Related Norwegian Businesses in Norway, the country
which is the largest market for fish vaccines. In the event the
Transactions are completed, the Company would be provided with potential
benefits from coordinated production and marketing strategies in the
aquatic animal health business.

The overlapping nature of certain of the Company's businesses and the
Related Norwegian Businesses will also create opportunities to achieve
synergies by eliminating duplicative functions and coordinating efforts in
various areas. The Transactions would provide opportunities to: eliminate
duplicative research and development and regulatory efforts and provide
coordinated focus on regulatory compliance and the development of new
products or improvements of existing products and production techniques;
develop and realign overall production methods which can realize savings
through utilization of the additional pharmaceutical manufacturing and
antibiotic production plants included in the Related Norwegian Businesses;
and eliminate unnecessary administrative and regulatory overhead.

In evaluating the synergies which potentially could be achieved, the
Company's Board of Directors also recognized that the benefits of the
Transactions were not reasonably quantifiable, that the extent to which
such benefits could be realized and the time required to realize such
benefits was uncertain and that certain consolidation or other costs would
be required to realize certain of the benefits.

2. Reduce Potential Conflicts of Interest. The Transactions will
--------------------------------------
harmonize the economic interests in the complementary businesses of the
Company and the Related Norwegian Businesses in that the same shareholders
will own 100% of all the businesses. Consequently, the Transactions should
eliminate potential conflicts of interest that arise in connection with
ongoing transactions between the Company and A. L. Oslo regarding the
Related Norwegian Businesses and as a result of the companies being
competitors or potential competitors in certain markets. See "The
Transactions -- Transactions Between the Company and A. L. Oslo." However,
the Company's Board of Directors noted that there might be certain
conflicts between A. L. Oslo and New A. L. Oslo arising out of the
Administrative Services Agreement but did not believe that such conflicts
would be significant.

3. Projected Impact on Future Earnings. Based upon the Revised Operating
-----------------------------------
Projections (as defined below) of the Related Norwegian Businesses which
were provided to the Company's Board of Directors and the Lehman Pro Forma
EPS Analysis (as defined below), the Company's Board of Directors believes
that the acquisition of the Related Norwegian Businesses has the potential
to add to the earnings of the Company for 1994 and 1995. In considering the
Transactions, the Company received financial and operating information from
A. L. Oslo with respect to the business, operations and prospects of the
Related Norwegian Businesses for 1994 and 1995 (the "Base Case
Projections") which the principal operating officers of the Company's
international pharmaceutical and animal health businesses analyzed. Based
on such analyses, the management of the Company twice revised downward the
revenues, operating income and net income data received by the Company from
A. L. Oslo and presented such revised forecasts (the first revision being
referred to as the "Median Case Projections," the second revision being
referred to as the "Conservative Case Projections," and the Median Case
Projections and the Conservative Case Projections being collectively
referred to as the "Revised Operating Projections") to the U.S. Directors
and to the Company's Board of Directors for its consideration. The Revised
Operating Projections also provided the basis for a pro forma earnings per
share analysis (the "Lehman Pro Forma EPS Analysis") which was prepared as
part of Lehman Brothers' presentation to the Company's Board of Directors.
See "The Transactions -- Opinion of the

49
<PAGE>

Special Committee's Financial Advisor." The Lehman Pro Forma EPS Analysis
indicated that, after considering additional interest expense related to
financing the Transactions, the anticipated income from the Related
Norwegian Businesses in 1994 and 1995 would be accretive to the net income
of the Company. The Lehman Brothers' presentation also indicated that, even
if income from the Related Norwegian Businesses for 1994 and 1995 were to
be lower than as reflected in the Revised Operating Projections, the
Transactions could nevertheless be accretive to the Company's net income.
See "The Transactions -- Opinion of the Special Committee's Financial
Advisor -- Pro Forma EPS Analysis." The projections and analyses described
above assume the Transactions would be accounted for as described under
"The Transactions -- Accounting Treatment." While there can be no assurance
that such projections will accurately reflect future operations or that
actual future income from the Related Norwegian Businesses will increase
the Company's net income, A. L. Oslo has represented in the Restructuring
Agreement that the projections it provided to the Company were prepared
based upon estimates and assumptions that A. L. Oslo believed in good faith
to be reasonable.

4. Increased Indebtedness of the Company. If the Transactions are
-------------------------------------
consummated, the Company would incur approximately $26.0 million of
indebtedness to finance the cash portion of the consideration and to pay
expenses of the Transactions. The Company also is required to invest NOK
100 million ($14.4 million) in the Related Norwegian Businesses within six
months after the Closing. The Company expects to borrow money to make the
required investment; however, it is presently expected that the Related
Norwegian Businesses will use the investment to repay a portion of its
existing indebtedness. In addition, as indicated in the unaudited pro forma
condensed combined balance sheet as of June 30, 1994, the acquisition and
subsequent consolidation of the Related Norwegian Businesses will increase
the long-term indebtedness of the consolidated company by approximately
$65.2 million. See "The Transactions -- Unaudited Pro Forma Condensed
Combined Financial Statements." Such increased indebtedness would adversely
affect the Company's capacity to incur additional indebtedness, might
increase the Company's borrowing costs and could reduce the number and
types of acquisitions and other investment opportunities that might in the
future become available to the Company. In addition, the increased
indebtedness would increase the risks to the Company associated with higher
leverage, including the risk of default.

Management of the Company advised the Company's Board of Directors that
at the time of the closing of the Transactions the Company will have
sufficient financing resources available to finance the cash portion of the
purchase price and, through guarantees by the Company, to assume the
indebtedness of the Related Norwegian Businesses. In addition, the Company
has negotiated the principal business terms of the UBN Facility which if
obtained would be used to refinance a portion of its indebtedness, pay the
Cash Purchase Price, refinance NOK 100 million of New A. L. Oslo's
indebtedness and provide general purpose financing for the Company and its
subsidiaries. It is the unanimous consensus of the Company's Board of
Directors that as soon as practicable following consummation of the
Transactions, subject to market conditions, the Company should refinance
$80 to $100 million of the Company's indebtedness through the issuance of
subordinated convertible debentures or other equity securities. There can
be no assurance that any such refinancing, including any issuance of
convertible debentures or other equity securities, can be completed. See
"The Transactions -- Financing of the Transactions and Refinancing of
Indebtedness of the Related Norwegian Businesses."

5. Views of Management. The principal operating officers of the Company
-------------------
advised the Company's Board of Directors that they believe that a
transaction combining the Related Norwegian Businesses with the businesses
of the Company can be beneficial to the Company. These officers were also
active in a diligence review of the Related Norwegian Businesses and
commented on the operations, and on A. L. Oslo's projected earnings for,
the Related Norwegian Businesses. Based on these comments, management of
the Company revised the 1994 and 1995 income projections for the Related
Norwegian Businesses forecasted by A. L. Oslo, and the U.S. Directors
considered the projections as so revised in approving the Transactions.
During the period that the Transactions were being considered by the U.S.
Directors and the Special Committee, several members of management
expressed concern about certain aspects of

50
<PAGE>

the Transactions, including the additional leverage referred to above and
the apparent absence of a management plan to realize the potential synergy
benefits available from the Transactions as described in paragraph 1 above.
In response to these concerns the U.S. Directors requested and received
from Mr. Einar W. Sissener a formal plan for the future management of the
Company. The plan was reviewed by the U.S. Directors and discussed with Mr.
Sissener. See "The Transactions--Conduct of the Business and Management of
the Company Following Closing." In addition, as stated in paragraph 4, the
Company's Board of Directors determined to seek the refinancing of a
portion of the Company's indebtedness as soon as practicable following
consummation of the Transactions subject to market conditions.

6. The Transactions Will Result in an Increased International Scope of
-------------------------------------------------------------------
the Company's Operations. The Transactions will increase the international
------------------------
scope of the operations of the Company and provide the Company the
opportunity to access new markets for its products through established
distribution channels and to add new products to its product line. For
example, if the Transactions were consummated in 1993, the percentage of
the Company's revenues from sources outside the United States in 1993 would
have been 39% instead of 27%. The resulting increase in the portion of the
Company's revenues being generated by international businesses which
conduct their operations in currencies other than United States dollars,
however, will increase the impact of currency fluctuations on the Company's
earnings. In addition to currency exchange risks, the Company will increase
its exposure to other risks normally involved in international operations,
including those related to limitations on repatriation of earnings, import
and export regulations, varying standards of protection of proprietary
intellectual property rights and different regulatory schemes.

7. Terms of the Transactions. The Company's Board of Directors believes
-------------------------
that the representations, warranties, covenants, conditions (including, in
particular, the requirement that the holders of Class A Stock, voting as a
separate class, approve the Transactions) and indemnities contained in the
documentation for the Transactions adequately protect the Company's
interests. In addition, the Company's Board of Directors believes that the
Warrants issued in the Exchange Offer, which will have an initial exercise
price that is at a premium over the current market price of the Class A
Stock, have certain benefits over other forms of consideration, including
increasing the incentives of Mr. Sissener to take actions to assure that
the potential benefits of the Transactions are maximized.

8. Special Committee Recommendation. The Special Committee determined
--------------------------------
that the Transactions are fair to the Company and the holders of the Class
A Stock and recommended that the Transactions be approved. Among the
factors noted by the Special Committee as the bases for its determination
and recommendation were the following:

(a) the complementary nature of the businesses of the Company and the
Related Norwegian Businesses and the opportunity through the
Transactions to (i) combine the resources of the two companies
effectively and (ii) strengthen the businesses and extend their
activities on a worldwide basis, particularly in the animal health
area;

(b) the fact that the Transactions will harmonize economic interests in
the Company's businesses and the Related Norwegian Businesses, in
that the same company will own all of the businesses;

(c) the reports from the Company's management as to the operations and
projected earnings of the Related Norwegian Businesses for 1994 and
1995;

(d) the presentation by Lehman Brothers, the data and various analyses
in that presentation, and the opinion of Lehman Brothers that the
Consideration to be paid by the Company in the Exchange Offer is
fair, from a financial point of view, to the Company and the
holders of the Class A Stock; and

(e) the fact that the Transactions are subject to approval by holders
of a majority of the outstanding shares of Class A Stock.

51
<PAGE>

9. Lehman Brothers Opinion. The Company's Board of Directors received a
-----------------------
presentation of financial analyses from Lehman Brothers at its meeting on
May 16, 1994. At such meeting, Lehman Brothers also expressed its opinion
to the effect that, as of May 16, 1994, the Consideration to be paid by the
Company in the Exchange Offer is fair, from a financial point of view, to
the Company and the holders of the Class A Stock. See "The Transactions--
Opinion of the Special Committee's Financial Advisor."

In view of the wide variety of factors considered in connection with its
evaluation of the terms of the Transactions, the Company's Board of Directors
did not find it practicable to, and did not, quantify or otherwise attempt to
assign relative weights to the specific factors considered in reaching its
determinations. Based on the factors described above, the Company's Board of
Directors determined that the Transactions are fair to and in the best
interests of the Company and the holders of the Class A Stock, approved the
Restructuring Agreement and the related agreements and resolved to recommend
that the Company's stockholders vote FOR approval of the Transactions.

OPINION OF THE SPECIAL COMMITTEE'S FINANCIAL ADVISOR

Lehman Brothers has acted as financial advisor to the Special Committee in
connection with the Transactions. As part of its role as financial advisor to
the Special Committee, Lehman Brothers was engaged to render to the Special
Committee and the Board of Directors of the Company an opinion as to the
fairness, from a financial point of view, of the consideration to be paid by
the Company in the Exchange Offer.

On several occasions during the period that a combination transaction was
being studied and negotiated, Lehman Brothers made preliminary financial
presentations to the U.S. Directors (including the Special Committee) regarding
the range of values for a transaction which would be fair to the Company. On
May 16, 1994, Lehman Brothers made a presentation with respect to the
Transactions to the Special Committee and the Board of Directors of the Company
and rendered a written opinion dated May 16, 1994 that, as of the date of such
opinion, and subject to certain assumptions, factors and limitations set forth
in such written opinion as described below, the consideration to be paid by the
Company in the Exchange Offer is fair, from a financial point of view, to the
Company and to the holders of the Class A Stock.

THE FULL TEXT OF THE WRITTEN OPINION OF LEHMAN BROTHERS DATED MAY 16, 1994,
WHICH SETS FORTH ASSUMPTIONS MADE, FACTORS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN BY LEHMAN BROTHERS, IS ATTACHED AS EXHIBIT D TO THIS PROXY
STATEMENT AND IS INCORPORATED BY REFERENCE. THE COMPANY'S STOCKHOLDERS ARE
URGED TO READ SUCH OPINION CAREFULLY IN ITS ENTIRETY.

No limitations were imposed by the Special Committee on the scope of Lehman
Brothers' investigation or the procedures to be followed by Lehman Brothers in
rendering its opinion. Lehman Brothers did not make any recommendation to the
Special Committee or the Board of Directors of the Company as to the form or
amount of consideration to be offered for the Related Norwegian Businesses in
connection with the Transactions. In arriving at its opinion, Lehman Brothers
did not ascribe a specific range of value to the Related Norwegian Businesses,
but made its determination as to the fairness, from a financial point of view,
of the consideration to be paid in connection with the Transactions on the
basis of the financial and comparative analyses described below. Lehman
Brothers' opinion is solely for the use of the Special Committee and the Board
of Directors of the Company and does not constitute a recommendation to any
stockholder of the Company as to how such stockholder should vote with respect
to the Transactions at the Special Meeting. Lehman Brothers was not requested
to opine as to, and its opinion does not in any manner address, the Company's
underlying business decision to proceed with or effect the Transactions. In
addition, Lehman Brothers expressed no opinion as to the impact of the
Transactions on the price of the Class A Stock or the prices at which the Class
A Stock will actually trade at any time.

In arriving at its opinion, Lehman Brothers reviewed and analyzed, among
other things, the following: (i) the Restructuring Agreement, the Warrant
Agreement and the Demerger Agreement; (ii) such other

52
<PAGE>

publicly available and non-public information concerning the Company and A. L.
Oslo which Lehman Brothers believed to be relevant to its inquiry; (iii)
financial and operating information with respect to the business, operations
and prospects of the Related Norwegian Businesses through the end of 1995
furnished to Lehman Brothers by A. L. Oslo; (iv) a comparison of the historical
financial results and present financial condition of the Related Norwegian
Businesses with those of other companies which Lehman Brothers deemed relevant;
and (v) a comparison of the financial terms of the Transactions with the
financial terms of other recent transactions which Lehman Brothers deemed
relevant. In addition, Lehman Brothers had discussions with the management of
the Company and A. L. Oslo concerning the business, operations, assets,
financial condition and prospects for the Related Norwegian Businesses and the
possible strategic benefits of a combination of the businesses of the Company
and the Related Norwegian Businesses, and undertook such other studies,
analyses and investigations as Lehman Brothers deemed appropriate for the
purposes of rendering its opinion.

In connection with its review, Lehman Brothers assumed and relied upon the
accuracy and completeness of the financial and other information used by it in
arriving at its opinion without independent verification and further relied
upon the assurances of management of A. L. Oslo and the Company that they were
not aware of any facts that would make such information materially inaccurate
or misleading. With respect to the financial projections of the Related
Norwegian Businesses for 1994 and 1995, Lehman Brothers has assumed with the
Special Committee's permission that such projections have been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the management of A. L. Oslo as to the future financial
performance of the Related Norwegian Businesses through 1995 and that the
Related Norwegian Businesses will perform substantially in accordance with such
projections. In addition, for purposes of its analysis, Lehman Brothers also
considered the evaluations of the business, operations and prospects of the
Related Norwegian Businesses by the management of the Company. In arriving at
its opinion, Lehman Brothers conducted physical inspections of certain (but not
all) of the properties and facilities of the Related Norwegian Businesses but
did not make or obtain any evaluations or appraisals of the assets or
liabilities of the Related Norwegian Businesses. Lehman Brothers' opinion was
necessarily based upon market, economic and other conditions as they existed
on, and could be evaluated as of, the date of its opinion.

In connection with preparing its presentation to the Special Committee and
the Board of Directors of the Company and its written opinion on May 16, 1994,
Lehman Brothers performed a variety of financial and comparative analyses as
described below. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and application of those methods to the particular circumstances, and
therefore such an opinion is not readily susceptible to summary description.
Furthermore, in arriving at its fairness opinion, Lehman Brothers did not
attribute any particular weight to any analysis or factor considered by it, but
rather made qualitative judgments as to the significance and relevance of each
analysis and factor. Accordingly, Lehman Brothers believes that its analyses
must be considered as a whole and that considering any portions of such
analyses and factors, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying the opinion.
In its analyses, Lehman Brothers made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of the Company and A. L. Oslo.
Any estimates contained in these analyses are not necessarily indicative of
actual values or predictive of future results or values, which may be more or
less favorable than as set forth therein. In addition, analyses relating to the
value of businesses do not purport to be appraisals or to reflect the prices at
which businesses actually may be sold.

In the Transactions, the Company will offer to exchange for the outstanding
New A. L. Oslo Shares held by the shareholders of New A. L. Oslo (i)
170,000,000 Norwegian kroner (approximately $23.5 million at the exchange rate
on May 13, 1994 as reported in the Wall Street Journal), subject to adjustment
as specified in the Restructuring Agreement and (ii) warrants to purchase
3,600,000 shares of Class A Stock through December 31, 1998, subject to the
price and terms as set forth in the Restructuring Agreement and the Warrant
Agreement between the Company and A. L. Oslo.

53
<PAGE>

WARRANT VALUATION; PURCHASE PRICE CALCULATION. Using a Black-Scholes option
pricing model, Lehman Brothers analyzed the value for the warrants to be issued
to the holders of New A. L. Oslo Shares in connection with the Transactions.
Based upon the 26-week observed volatility of the Company's Class A Stock of
27.94%, Lehman Brothers observed that the warrants had a Black-Scholes value of
$1.36 to $2.27 per warrant assuming discounts to the Black-Scholes valuation of
up to 40.0%, which discounts are based on the generally recognized variation
between Black-Scholes theoretical values and actual trading values for
securities of this type and Lehman Brothers' general experience in trading and
selling equity derivative securities of this type. Lehman Brothers further
observed that, depending on assumed volatility levels of 20.0% to 40.0% and
discounts to the Black-Scholes value of up to 40.0%, the Black-Scholes value of
the warrants ranged from $0.90 per warrant to $3.41 per warrant.

ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES. Lehman Brothers does not
believe there are any publicly traded companies which are engaged in businesses
substantially comparable to the Related Norwegian Businesses. Using publicly
available information, Lehman Brothers compared selected financial data of the
Related Norwegian Businesses with similar data of selected publicly traded
companies engaged in businesses which Lehman Brothers deemed relevant.
Specifically, Lehman Brothers included in its review (i) U.S.-based generic
pharmaceutical companies, including the Company, Biocraft Laboratories, Inc.,
Copley Pharmaceuticals, Inc., IVAX Corporation, Marsam Pharmaceuticals Inc.,
Mylan Laboratories Inc., Watson Pharmaceuticals, Inc., and Zenith Laboratories,
Inc.; (ii) medium capitalization European pharmaceutical companies, including
Altana AG, Ares-Serono SA, Hafslund Nycomed AS, Institut Merieux SA, Medeva
plc, Novo-Nordisk A/S, Recordati Industria Chimica e Farmaceutica SpA, Elf
Sanofi SA, Schering AG, and Synthelabo SA; and (iii) small capitalization
European health care companies including Amersham International plc, Fresenius
AG, Paul Hartmann AG, Perlier SpA, Schiapparelli SpA, Scholl plc, and Seton
Healthcare Group plc, (collectively, the "Related Norwegian Businesses
Comparable Universe"). Lehman Brothers calculated, among other things, current
market price per share as a multiple of the latest twelve months ("LTM")
earnings per share ("EPS"), 1994 EPS estimate, 1995 EPS estimate and the latest
reported book value per share. The 1994 and 1995 EPS estimates were based on
the mean of publicly-available earnings estimates made by research analysts as
provided by First Call Corporation for U.S. companies and Institutional
Brokerage Estimate System Inc. for the non-U.S. companies. Lehman Brothers also
calculated total equity value plus net debt as a multiple of each of LTM
revenues, earnings before interest and taxes ("EBIT") and earnings before
interest, taxes, depreciation and amortization ("EBITDA"). Lehman Brothers
observed that the consideration to be offered by the Company in the Exchange
Offer was at a discount to or within the range of current trading multiples for
the Related Norwegian Businesses Comparable Universe.

Because of the inherent differences between the businesses and operations of
the Related Norwegian Businesses and the companies included in the Related
Norwegian Businesses Comparable Universe, Lehman Brothers believed that a
purely quantitative comparable company analysis would not be particularly
meaningful in the context of the Transactions. An appropriate use of a
comparable company analysis in this instance would involve qualitative
judgments concerning differences between the financial and operating
characteristics of the companies included in the Related Norwegian Businesses
Comparable Universe and the Related Norwegian Businesses, which would affect
the public trading values of each.

ANALYSIS OF SELECTED COMPARABLE TRANSACTIONS. Using publicly available
information, Lehman Brothers compared selected financial data (including total
equity market value as a multiple of LTM net income and book value and total
equity market value plus net debt as a multiple of revenues, EBIT and EBITDA)
for the Related Norwegian Businesses with similar data for eighteen selected
transactions in the generic pharmaceutical industry. Specifically, Lehman
Brothers included in its review the following transactions: Bayer AG/Schein
Pharmaceutical, Inc., IVAX Corporation/McGaw, Inc., Hoechst Celanese
Corporation/Copley Pharmaceutical, Inc., Marion Merrell Dow Inc./Rugby Group
Inc. (Rugby-Darby Group Companies, Inc.), Welsh, Carson, Anderson &
Stowe/Solopak Division (Smith & Nephew PLC), IVAX Corporation/Evans-Kerfoot
Division (Medeva PLC), Medeva PLC/Armstrong Pharmaceuticals, Inc., IVAX
Corporation/LuChem Pharmaceuticals, Inc., IVAX Corporation/Smith & Nephew
Solopak

54
<PAGE>

(Smith & Nephew, Inc.), IVAX Corporation/Willen Drug Company, Yamanouchi
Pharmaceutical Co., Ltd./Roberts Pharmaceutical Corporation, IVAX
Corporation/Baker Cummins Dermatologicals, Inc., IVAX Corporation/Goldline
Laboratories, Inc. and Bioline Laboratories, Inc., IVAX Corporation/DVM
Pharmaceuticals, Inc., Mylan Laboratories Inc./Dow B. Hickam, Inc., IVAX
Corporation/Harris Pharmaceuticals Limited, Fujisawa Pharmaceutical Co.,
Ltd./Lyphomed, Inc., and A. L. Laboratories, Inc./Barre-National, Inc. Lehman
Brothers observed that the multiples to be offered by the Company for the
Related Norwegian Businesses were within the range of multiples paid by
companies in comparable transactions.

However, because the reasons for and the circumstances surrounding each of
the transactions analyzed were specific to each transaction and because of the
inherent differences between the businesses, operations and the prospects of
the Related Norwegian Businesses and the businesses, operations and prospects
of the selected acquired companies analyzed, Lehman Brothers believed that it
was inappropriate to, and therefore did not, rely solely on the quantitative
results of the analysis, and accordingly also made qualitative judgments
concerning differences between the characteristics of these transactions and
the Transactions that would affect the acquisition values of the Related
Norwegian Businesses and such acquired companies.

DISCOUNTED CASH FLOW ANALYSIS OF THE RELATED NORWEGIAN BUSINESSES. Lehman
Brothers calculated the present value of the future streams of after-tax cash
flows that the Related Norwegian Businesses could be expected to produce in the
future. The analysis utilized the Base Case Projections (i.e., financial and
operating information relating to the business, operations and prospects of the
Related Norwegian Businesses provided by A. L. Oslo management for 1994 and
1995). After-tax cash flows were calculated as the after-tax earnings plus
amortization and depreciation less net changes in non-cash working capital and
capital expenditures. Lehman Brothers calculated terminal values for the
Related Norwegian Businesses by applying to projected net income a range of
multiples based on the analysis of the trading multiples of the Related
Norwegian Businesses Comparable Universe and on Lehman Brothers' general
experience in mergers and acquisitions. The cash flow streams and terminal
values were then discounted to present values using a range of discount rates,
which were chosen based on several assumptions regarding factors such as the
inflation rate, interest rates, the inherent business risk of the Related
Norwegian Businesses as well as the pharmaceutical industry as a whole, and the
cost of capital of the Related Norwegian Businesses. In addition, using the
Median Case Projections, the Conservative Case Projections and projections of
the Related Norwegian Businesses which were based on the Conservative Case
Projections but discounted further by Lehman Brothers (the "LB Conservative
Case Projections"), Lehman Brothers calculated sensitivities of the discounted
cash flow valuation for the equity of the Related Norwegian Businesses
utilizing the same discount rates and terminal multiples. Lehman Brothers
observed that the consideration to be offered by the Company in the Exchange
Offer was at a discount to or within the range of equity values calculated for
the Base Case Projections, Median Case Projections, Conservative Case
Projections and LB Conservative Case Projections.

PRO FORMA EPS ANALYSIS. Lehman Brothers analyzed the pro forma EPS effects of
the Transactions on the Company on an annual basis for 1994 and 1995, assuming
a $95.0 million financing to fund the cash portion of the Acquisition and to
refinance the A. L. Oslo indebtedness assumed in the Transactions. Assuming an
average financing rate of 8.0%, Lehman Brothers observed that, for the Base
Case, the Transactions would be approximately 25.2% accretive to earnings per
share in 1994 (assuming an acquisition as of January 1, 1994) and 25.3%
accretive to 1995 earnings per share. This pro forma analysis did not give any
consideration to potential operating synergies resulting from the combination
of the businesses of the Company and the Related Norwegian Businesses or to
Transactions expenses to be incurred by either party. Lehman Brothers further
observed that if the refinancing rate were as low as 5.0%, the Transactions
would be 34.3% accretive to 1995 earnings per share, and if the refinancing
rate were as high as 11.0%, the Transactions would be 16.3% accretive to 1995
earnings per share.

Using the Median, Conservative and LB Conservative Case Projections, Lehman
Brothers analyzed the sensitivity of the pro forma EPS effects of the
Transactions to alternative sets of projections for the Related Norwegian
Businesses. For the Median Case Projections at a refinancing rate of 5.0%, the
Transactions

55
<PAGE>

would be 26.5% accretive to 1995 EPS, at 8.0% they would be 17.4% accretive to
1995 EPS, and at 11.0% they would be 8.4% accretive to 1995 EPS. For the
Conservative Case Projections at a refinancing rate of 5.0%, the Transactions
would be 22.5% accretive to 1995 EPS, at 8.0% they would be 13.5% accretive to
1995 EPS, and at 11.0% they would be 4.5% accretive to 1995 EPS. For the LB
Conservative Case Projections, at a refinancing rate of 5.0%, the Transactions
would be 19.0% accretive to 1995 EPS, at 8.0% they would be 9.9% accretive to
1995 EPS, and at 11.0% they would be 4.5% accretive to 1995 EPS. Lehman
Brothers observed that the Transactions were accretive to pro forma 1995 EPS
for all four sets of projections for refinancing rates ranging from 5.0% to
11.0%, which range Lehman Brothers believed to be consistent with financing
alternatives available to the Company as of the date of their analysis.

ENGAGEMENT OF LEHMAN BROTHERS. Lehman Brothers is an internationally
recognized investment banking firm and, as part of its investment banking
activities, is regularly engaged in the evaluation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bids, secondary distributions of listed and unlisted
securities, private placements, and valuations for corporate, estate and other
purposes. The Special Committee selected Lehman Brothers because of its
expertise, reputation and familiarity with the pharmaceutical industry in
general and because its investment banking professionals have substantial
experience in transactions similar to the Transactions.

Pursuant to an engagement letter between the Special Committee, the Company
and Lehman Brothers, the Company has agreed to pay Lehman Brothers a fee of
$1.5 million for acting as financial advisor in connection with the
Transactions, including rendering its opinion. Of such fee, approximately
$775,000 was received through an upfront and monthly retainer from February
1992 through May 31, 1994, $500,000 was payable upon delivery of the written
opinion, and the remainder will be payable at the earlier of the consummation
of the Transactions or a public announcement by the Company that it is
terminating the Transactions. The Company has also agreed to reimburse Lehman
Brothers for reasonable expenses (including, under certain circumstances, up to
$25,000 of legal fees incurred by Lehman Brothers) and to indemnify Lehman
Brothers for certain liabilities that may arise out of the rendering of its
opinion. Lehman Brothers has not provided any investment banking services for
the Company in the past. In the ordinary course of its business, Lehman
Brothers actively trades in the equity securities of the Company for its own
account and for the accounts of its customers and, accordingly, may at any time
hold a long or short position in such securities.

ACCOUNTING TREATMENT OF THE TRANSACTIONS

In accordance with United States generally accepted accounting principles,
the Company intends to account for the acquisition of all of the outstanding
New A. L. Oslo Shares as a transfer and exchange between companies under common
control. Accordingly, the assets and liabilities of New A. L. Oslo will be
combined with the Company at historical cost in a manner similar to a pooling-
of-interests; and the Company's historical financial statements will be
restated to reflect the combined results of operations, assets, liabilities and
net worth of the Company and the Related Norwegian Businesses. The payment of
the purchase price (cash and warrants) will be reflected as a reduction of
combined equity when the Transactions are consummated. Expenses related to the
combination will be charged to the combined company's income statement at
acquisition. Additionally, costs incurred relating to the integration of the
companies' operations will be charged to the combined companies income
statement when accruable.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTIONS

The relative voting rights of the holders of shares of Class A Stock will
increase pursuant to the Certificate of Incorporation Amendment. Kirkland &
Ellis, counsel to the Company, will render an opinion to the Company as of the
Closing Date to the effect that, based on certain facts and assumptions, the
holders of the Class A Stock will recognize no gain or loss for United States
federal income tax purposes as a result of the Certificate of Incorporation
Amendment. An opinion of counsel is not binding on the Internal Revenue Service
or the courts.

56
<PAGE>

THE FEDERAL INCOME TAX DISCUSSION ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. EACH HOLDER OF CLASS A STOCK IS ADVISED TO CONSULT ITS OWN TAX ADVISOR
CONCERNING THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF
THE CERTIFICATE OF INCORPORATION AMENDMENT.

REGULATORY APPROVALS

Consummation of the Transactions is conditioned upon, among other things, the
Company and A. L. Oslo obtaining all authorizations, consents and approvals of
all third parties and governmental authorities necessary to consummate the
Transactions, including all approvals required under Norwegian law, other than
those the failure to obtain of which would not result in a Material Adverse
Effect or an RNB Material Adverse Effect. Approval of the Norwegian Ministry of
Industry and Energy is required for the Company to acquire the New A. L. Oslo
Shares pursuant to the Exchange Offer and for the transfer of the real property
of the Related Norwegian Businesses from A. L. Oslo to New A. L. Oslo in the
Demerger (the "Ministry Approvals"). Acceptance by the Norwegian Health
Commission is required for New A. L. Oslo to use the name "Apothekernes
Laboratorium AS" (such acceptance and the Ministry Approvals being collectively
referred to as the "Norwegian Concessions"). On June 24, 1994, the Company and
A. L. Oslo applied to the Norwegian Ministry of Industry and Energy and the
Norwegian Health Commission for the Norwegian Concessions. On July 8, 1994, the
Norwegian Health Commission accepted New A. L. Oslo's use of the name
"Apothekernes Laboratorium AS."

Based upon an examination of information available to the Company and A. L.
Oslo relating to the businesses in which the Company and its subsidiaries and
the Related Norwegian Businesses are engaged and the fact that the businesses
are currently commonly controlled, the Company and A. L. Oslo believe that the
consummation of the Transactions will not violate the antitrust laws and that
the Transactions are not subject to the notification and waiting period
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

The Company and A. L. Oslo are not aware of any other regulatory requirements
or governmental approvals or actions that may be required to consummate the
Transactions, except as described above. Should any such approval or action be
required, it is presently contemplated that such approval or action would be
sought. There can be no assurance, however, that any such approval or action,
if needed, could be obtained and would not be conditioned in a manner that
would cause the parties to abandon the Transactions.

CONDUCT OF THE BUSINESS AND MANAGEMENT OF THE COMPANY FOLLOWING THE CLOSING

Following the Closing, the Company will be managed on a global basis through
decentralized strategic business units (or divisions) under central financial
control. To reflect this decentralized operating structure, the animal health
and administrative operations of the Company will be transferred to a new
operating subsidiary so that the Company will, from an operating perspective,
be a holding company. On June 20, 1994, the Office of the Chief Executive of
the Company was dissolved and its current members, Messrs. Einar W. Sissener
and Jeffrey E. Smith, assumed new positions with the Company. Einar W.
Sissener, while continuing to serve as Chairman of the Board of Directors,
became Chief Executive Officer of the Company and Jeffrey E. Smith became Chief
Financial Officer of the Company. The Company will maintain headquarters in
both Fort Lee, New Jersey, and Oslo, Norway, following the consummation of the
Transactions.

The Company presently intends to organize the pharmaceuticals business into
four divisions. The North American Pharmaceuticals Division will develop,
manufacture and market dosage-form human pharmaceuticals in North America. The
division will have as its nucleus the Company's specialty generic
pharmaceuticals business which is currently operated by four wholly-owned
subsidiaries of the Company, Barre-National, NMC, Able and ParMed
Pharmaceuticals, Inc. (such subsidiaries are collectively referred to as the
"U.S. Pharmaceutical Group"). The division will also market products
manufactured by the International Pharmaceuticals Division. The International
Pharmaceuticals Division will be comprised of the current branded dosage-form
human pharmaceuticals businesses of A. L. Oslo and Dumex (a subsidiary

57
<PAGE>

presently wholly owned by the Company), and will market internationally dosage-
form human pharmaceuticals including products supplied by the North American
Pharmaceuticals Division. The Oral Health Care Division will develop and market
oral health care products on a worldwide basis including the current
proprietary products manufactured by Dumex. The Fine Chemicals Division will
develop, manufacture and market bulk pharmaceutical grade antibiotics
worldwide, including the specialty bulk antibiotics presently manufactured and
marketed by A. L. Oslo and Dumex.

The Company presently intends to combine the Company's and A. L. Oslo's farm
animal health and aquatic animal health businesses into two divisions. The Farm
Animal Health Division and Aquatic Animal Health Division will develop,
manufacture and market products for the livestock and poultry and for the fish
farming industries, respectively.

In order to efficiently coordinate the strategic business units, the Company
presently intends to form an Operating Committee to oversee the operations and
plan the development of the whole company. The Operating Committee's duties
will include forming global business strategies, financial objectives and
corporate policies, and reviewing and making recommendations regarding the
Company's financial results and financing and acquisition opportunities. The
Operating Committee will consist of the Chief Executive Officer, the Chief
Financial Officer and the presidents of each of the divisions of the Company.

CERTAIN INFORMATION REGARDING THE RELATED NORWEGIAN BUSINESSES

GENERAL. The Related Norwegian Businesses develop, manufacture and market
finished branded generic and specialty pharmaceuticals, animal, aquatic animal
and human health products and bulk antibiotics. The Related Norwegian
Businesses have two business segments. The Related Norwegian Businesses'
Pharmaceuticals segment (the "RNB Pharmaceuticals segment") develops,
manufactures and markets generic and specialty pharmaceuticals under
proprietary brands as well as adhesive bandages and surgical tapes. The Related
Norwegian Businesses' Animal Health and Bulk Antibiotic segment (the "RNB
Animal Health and Bulk Antibiotics segment") develops, manufactures and markets
feed additives primarily for poultry and swine, fish vaccines and
pharmaceuticals for the fish farming industry, and certain bulk antibiotics
sold primarily to the pharmaceutical industry. The most significant active
ingredient in the products of the RNB Animal Health and Bulk Antibiotic segment
is bacitracin, which is marketed both as a feed additive and in pharmaceutical
grade.

During the last several years, the Related Norwegian Businesses' asset base
has grown significantly through capital investments and acquisitions. In 1989,
the Related Norwegian Businesses began construction of an NOK 297 million
highly automated, modern pharmaceutical production facility in Lier just
outside Oslo, Norway. Construction of the Lier facility was completed and
pharmaceutical production initiated in the third quarter of 1991. In the fourth
quarter of 1991, the Related Norwegian Businesses acquired the pharmaceutical
grade bacitracin business and certain other pharmaceutical grade bulk
antibiotic product lines from H. Lundbeck AS, a Danish pharmaceutical company,
for NOK 145.6 million. In 1992, A. L. Oslo acquired the gramicidin and
tyrothricin product lines from a French affiliate of the Dutch company,
Gistbrocades N.V., for approximately NOK 5.5 million. In June 1993, the Related
Norwegian Businesses acquired the remaining 50% of the capital stock of
Norgesplaster, a company which manufactures and markets adhesive bandages and
surgical tapes, for NOK 15.0 million in cash.

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<PAGE>

The following table sets forth certain financial information for the RNB
Pharmaceuticals and the RNB Animal Health and Bulk Antibiotic segments as of
and for the years ended December 31, 1991, 1992 and 1993. See Note 20 of the
Notes to Combined Financial Statements of the Related Norwegian Businesses in
Exhibit E for more detailed information.

<TABLE>
<CAPTION>
1991 1992 1993
------ ------ ------
(IN MILLIONS OF NOK)
<S> <C> <C> <C>
Total Revenue
Pharmaceuticals.................................... 211 241 280
Animal Health and Bulk Antibiotics................. 188 234 270
Operating Income
Pharmaceuticals.................................... 15 20 19
Animal Health and Bulk Antibiotics................. 15 30 48
Identifiable Assets
Pharmaceuticals.................................... 364 369 389
Animal Health and Bulk Antibiotics................. 304 329 334
</TABLE>

The Related Norwegian Businesses derive most of their operating revenue from
non-U.S. operations. The following table sets forth the percentages of the
Related Norwegian Businesses' total revenues by geographic regions as of and
for the years ended December 31, 1991, 1992 and 1993. See Note 20 of the Notes
to Combined Financial Statements of the Related Norwegian Businesses in Exhibit
E for more detailed information.
<TABLE>
<CAPTION>
1991 1992 1993
---- ---- ----
<S> <C> <C> <C>
Norway....................................................... 44% 39% 42%
Europe except Norway......................................... 34 36 32
North America................................................ 10 11 11
Asia......................................................... 8 9 10
South America................................................ 3 4 4
Australia and Africa......................................... 1 1 1
--- --- ---
Total...................................................... 100% 100% 100%
=== === ===
</TABLE>

PHARMACEUTICALS. The RNB Pharmaceuticals segment primarily develops,
manufactures and markets generic and specialty dosage-form pharmaceuticals
under proprietary brands and adhesive bandages and surgical tapes in the Nordic
countries.

Dosage-form Pharmaceuticals. The Related Norwegian Businesses manufacture
and supply a broad range of dosage-form pharmaceuticals (such as tablets,
ointments, creams, liquid pharmaceutical and injectable preparations) for many
different therapies with a concentration on prescription drug antibiotics,
analgesics/antirheumatics and psychotropics and over-the-counter skin care,
oral health care, gastrointestinal and analgesic products. The principal
geographic markets for the Related Norwegian Businesses' dosage-form
pharmaceutical products are Norway (63% of the RNB Pharmaceuticals segment's
dosage-form pharmaceutical sales in 1993), Denmark (19% of the RNB
Pharmaceuticals segment's dosage-form pharmaceutical sales in 1993), Sweden (9%
of the RNB Pharmaceuticals segment's dosage-form pharmaceutical sales in 1993)
and Finland (9% of the RNB Pharmaceuticals segment's dosage-form
pharmaceuticals sales in 1993). The RNB Pharmaceuticals segment's primary
market is Norway, where, according to industry sources, it is one of the
leading suppliers of finished pharmaceuticals. In 1993, the RNB Pharmaceuticals
segment's products represented, according to industry sources, approximately 4%
of the Norwegian market measured by value of pharmaceuticals sold in Norway and
approximately 15% of the Norwegian market measured in defined daily doses sold
in Norway. In 1993, approximately 55% of the RNB Pharmaceuticals segment's
revenues were derived from prescription drugs and the remaining revenues were
derived from over-the-counter preparations (which include non-prescription
pharmaceuticals and medical consumer products).

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<PAGE>

The RNB Pharmaceuticals segment sells an aggregate of 109 different dosage-
forms and strengths of 81 prescription and 28 over-the-counter pharmaceuticals.
In 1993, the RNB Pharmaceuticals segment's ten highest revenue generating
dosage-form pharmaceuticals accounted for approximately 71% of the Related
Norwegian Businesses' aggregate dosage-form pharmaceuticals revenues. The
Related Norwegian Businesses believe that in 1993 each of their ten highest
revenue generating dosage-form pharmaceuticals were ranked first or second in
their respective market segments in Norway. Set forth below is certain revenue
information regarding the Related Norwegian Businesses' ten most significant
dosage-form pharmaceuticals in the Nordic countries (listed by revenue):

<TABLE>
<CAPTION>
PERCENT OF
THE RELATED
1993 NORWEGIAN
WHOLESALE BUSINESSES
SALES DOSAGE-FORM
(IN MILLIONS PHARMACEUTICALS
BRAND NAME PRODUCT GROUP ACTIVE INGREDIENT OF NOK) REVENUES
- ------------------- ------------------------- ---------------------------------------------- ------------ ---------------
<S> <C> <C> <C> <C>
Flux (TM) Oral Health Care Fluorine (as sodium fluoride) 25.3 11%
Link (R) Antacids Alumin. Hydroxyd. magnes. carb. co-precipitate 22.7 10%
Pinex (TM) Analgesics/antirheumatics Paracetamol 21.4 10%
Vival (R) Tranquilizers/sedatives Diazepam 18.5 8%
Apocillin (R) Antibiotics Phenoxymethylpenicillin sodium 17.8 8%
Diural (TM) Cardiovasculars Furosemide 14.8 7%
Doxylin (TM) Antibiotics Doxycycline 10.7 6%
Flunipam Tranquilizers/sedatives Flunitrazepam 10.1 5%
Alopam Tranquilizers/sedatives Oxazepam 9.5 4%
Penicillin A.L (TM) Antibiotics Sodium penicillin G 7.1 3%
</TABLE>

The Related Norwegian Businesses employ a specialized sales force which
markets and promotes products to doctors, hospitals, pharmacies and consumers.
In each of its markets, the Related Norwegian Businesses use wholesalers to
distribute their pharmaceutical products. In Norway, historically all
pharmaceuticals (including those sold by the Related Norwegian Businesses) have
been distributed through Norsk Medisinaldepot ("NMD"), the state controlled
distribution entity, but have been marketed and promoted by pharmaceutical
manufacturers and suppliers to the ultimate customer. However, as a result of
Norway's becoming a member state of the European Economic Agreement NMD is no
longer entitled to be the sole distributor in Norway and A. L. Oslo believes
that other wholesalers may begin to compete with NMD in the near future. In
Finland and Sweden, the Related Norwegian Businesses distribute their dosage-
form pharmaceutical products through wholesalers and market and promote their
dosage-form pharmaceutical products through their wholly-owned subsidiaries,
Apolab and Lakemedel, respectively. In Denmark, the Related Norwegian
Businesses distribute their dosage-form pharmaceutical products through
wholesalers and market and promote their dosage-form pharmaceutical products
through A.L-Pharma A/S, a subsidiary of the Company.

In Nordic countries in recent years, there has been an increase in volume of
sales of generic pharmaceuticals relative to original pharmaceuticals. This
increase in market share is primarily a result of governmental initiatives to
reduce pharmaceutical expenses through new regulations which promote generic
pharmaceuticals in lieu of original formulations. See "The Transactions --
Certain Information Regarding the Related Norwegian Businesses --
Regulations -- Pharmaceuticals" for a discussion on Reference Price Systems
and Generic Substitution.

The Related Norwegian Businesses manufacture substantially all of their
dosage-form pharmaceutical products at the Lier facility. The Related Norwegian
Businesses' investment in this manufacturing facility, completed in the third
quarter of 1991, was an important element of its strategy to meet the
anticipated increased demand for lower cost pharmaceuticals. The Related
Norwegian Businesses believe that production at the Lier facility may be
significantly expanded to accommodate sales growth at a relatively low marginal
cost. The Lier facility has been designed with a view towards meeting the
United States Food and Drug Administration's (the "FDA") Current Good
Manufacturing Practice standard ("CGMP"). However, given

60
<PAGE>

that the facility's current production is not exported to the United States,
the Related Norwegian Businesses have not initiated the process to cause the
facility to be in compliance with the CGMP. See "The Transactions-- Certain
Information Regarding the Related Norwegian Businesses -- Regulation."

Adhesive Bandages and Surgical Tapes. Norgesplaster manufactures adhesive
bandages, surgical tapes and non-medical tapes and is the only manufacturer of
adhesive bandages and surgical tapes in the Nordic countries. Norgesplaster's
most significant market is Norway, where it is the leading supplier in the
industry. In 1993, approximately 28% of Norgesplaster's total revenues of NOK
45.3 million were generated outside Norway. Norgesplaster's products are sold
to consumers and hospitals through pharmacies and other retail outlets.
Norgesplaster's production facility is located at Vennesla, Norway, which is
320 km. southwest of Oslo.

ANIMAL HEALTH AND BULK ANTIBIOTICS. The RNB Animal Health and Bulk Antibiotic
segment develops, manufactures and markets feed additives for animal
production, fish vaccines and pharmaceuticals for the fish farming industry and
pharmaceutical grade bulk antibiotics. The most significant active ingredient
in the products of this segment is the antibiotic, bacitracin, which the
Related Norwegian Businesses have manufactured for forty years. The Related
Norwegian Businesses are a leading supplier of bacitracin to the world market.
The RNB Animal Health and Bulk Antibiotics segment is not dependent on a single
customer or a few customers although the fees received from the Company
pursuant to the Technology Agreement have been important to the profitability
of this segment. See "The Transactions -- Transactions Between the Company and
A. L. Oslo."

Feed Additives. For over 35 years, the Related Norwegian Businesses have
sold health and nutrition products for livestock and poultry worldwide. The
Animal Health segment manufactures several feed additives utilizing the Related
Norwegian Businesses' bacitracin technology and production. The Related
Norwegian Businesses' primary feed additive product is marketed under the brand
name Albac(R). As a feed additive for poultry, swine and calves, Albac(R) is
produced in granulated, powder and lactodispersible forms. The active substance
in Albac(R) is a special grade of the antibiotic, zinc bacitracin. In 1993,
Albac(R) feed additive products were marketed in over 50 countries worldwide.
The Related Norwegian Businesses also manufacture and market BMD(R) in certain
countries outside North America, including Taiwan, Brazil and Indonesia, as
well as receive substantial license revenues from the Company in respect of the
Company's sales of BMD(R) in North America. Albac(R) and BMD(R) feed additive
products are designed to reduce feed costs by enhancing feed efficiency and
preventing or treating various livestock and poultry diseases.

Aquatic Animal Health Products. For approximately ten years, the Related
Norwegian Businesses have been involved in the aquatic animal health industry.
The Related Norwegian Businesses have developed several significant products
for the disease prevention and treatment of farmed fish. The Related Norwegian
Businesses were one of two leading suppliers (with the Company being the other)
of fish vaccines to the Norwegian fish farming industry in 1993. Norway is the
world leader for the farming of salmon and other cold water species of fish. In
1993, approximately 93% of revenues of the Related Norwegian Businesses'
aquatic animal health business were generated from the Norwegian market. The
Related Norwegian Businesses believe that the share of sales from markets
outside Norway will increase in the future as the segment continues to expand
its sales efforts internationally.

Bulk Antibiotics. The Related Norwegian Businesses are suppliers of bulk
antibiotics to the pharmaceutical industry worldwide. The products of the
Related Norwegian Businesses' Bulk Antibiotics business constitute the active
substances in a large number of finished pharmaceuticals, including finished
pharmaceuticals for the treatment of certain skin, throat and intestinal
infections. In 1993, 100% of the revenues of the Related Norwegian Businesses'
Bulk Antibiotics business were from sales of its products to more than 50
countries worldwide outside of Norway (including the United States). Bacitracin
and zinc bacitracin are the most significant products for the Related Norwegian
Businesses' Bulk Antibiotics business. The Related Norwegian Businesses also
market other well-established bulk antibiotics, such as gramicidin

61
<PAGE>

and tyrothricin, which are contract manufactured for the Related Norwegian
Businesses by the Danish company, Chr. Hansen's Lab. Denmark A/S. The Related
Norwegian Businesses' bulk antibiotics business owns the technology and is
currently the world's largest manufacturer and supplier of pharmaceutical
grades of bacitracin and zinc bacitracin and believes it is the only supplier
of gramicidin, tyrothricin and ristocetin.

SUPPLIERS AND MATERIALS. The principal materials used in the Related
Norwegian Businesses are active and inactive pharmaceutical ingredients and
certain packaging materials. Some of these materials may only be available from
a small number of suppliers. Sources for materials for pharmaceutical products
must be approved by the relevant regulatory authority, and in many instances
only a small number of suppliers has been approved for certain materials. In
addition, any change of suppliers for active ingredients requires approval from
the relevant regulatory authority. See "The Transactions--Certain Information
Regarding the Related Norwegian Businesses--Regulation." Arrangements with the
Related Norwegian Businesses' international suppliers are subject to certain
additional risks, including the availability of governmental clearances, export
duties, political instability, currency fluctuations and restrictions on the
transfer of funds.

COMPETITION.

Pharmaceuticals. The pharmaceutical business is highly competitive, and many
of the Related Norwegian Businesses' competitors are substantially larger and
have greater financial, technical and marketing resources than the Related
Norwegian Businesses. Most of the Related Norwegian Businesses' pharmaceutical
products compete with one or more products of other companies containing the
same active ingredient. In the pharmaceutical industry, research and
development can be particularly important as the improvement of products or
discovery of new chemical compounds and treatment techniques can render
existing products obsolete. The Related Norwegian Businesses' research and
development is directed primarily at developing generic products and new
delivery forms, finding new indications for known active pharmaceutical
substances, and improving manufacturing procedures, as opposed to discovery of
new drug molecules or treatment techniques. See "The Transactions--Certain
Information Regarding the Related Norwegian Businesses--Research and
Development."

In Denmark, the Related Norwegian Businesses' pharmaceutical products are
beginning to encounter price pressures from parallel imports (i.e., imports of
competing products from neighboring countries). A. L. Oslo believes that it is
likely that parallel imports may be a developing trend in other markets in
which the Related Norwegian Businesses sell their dosage-form pharmaceuticals.
Such parallel imports could lead to lower volume growth and downward pressure
on prices in certain product and market areas. See "The Transactions--Certain
Information Regarding the Related Norwegian Businesses--Regulation."

The Related Norwegian Businesses believe that governmental price regulation
could increase the utilization of lower-priced pharmaceuticals compared to
their original equivalents. However, the increased focus on the regulation of
pharmaceutical prices may lead to increased competition and price pressure for
suppliers of all types of pharmaceuticals.

Animal Health and Bulk Antibiotics. The animal health and bulk antibiotic
industries are generally highly competitive and include a number of companies
with greater financial, technical and marketing resources than the Related
Norwegian Businesses. Such competitors also offer a wide range of products with
various therapeutic and growth stimulating qualities.

Within the feed additives business, the Related Norwegian Businesses'
products face competition both from other antibiotics commonly used as animal
growth stimulants as well as from generic versions of Albac(R). The Related
Norwegian Businesses believe that, in addition to pricing which is an essential
competitive factor, competition is also substantially based on the relative
effectiveness of the product in preventing or treating disease or promoting
growth and feed efficiency and the ability of the marketing personnel to
demonstrate the products' merits to customers. The Related Norwegian Businesses
believe that

62
<PAGE>

their bacitracin-based products have a competitive advantage over certain of
their competitors' products as certain studies have shown that the use of
bacitracin does not result in detectable antibiotic residues in the edible
portions of livestock and poultry. As a result, Albac (R) and BMD (R) may be
fed to livestock and poultry up until the time of slaughter. Certain tests have
also shown that bacitracin does not tend to produce resistance in bacteria
which is a characteristic of some competitive products.

Competition in the aquatic animal health industry is characterized by
relatively few competitors. However, the industry is subject to rapid
technological change. As a result, new techniques and products developed by
competitors could cause the Related Norwegian Businesses' products to become
obsolete if the Related Norwegian Businesses are not able to match
technological improvements.

The Related Norwegian Businesses have limited competition in the bulk
antibiotics markets. However, such markets may be subject to new entrants in
the future.

RESEARCH AND DEVELOPMENT. Scientific development is important to each of the
segments of the Related Norwegian Businesses. As of June 30, 1994, the Related
Norwegian Businesses had 62 employees engaged in research and development and
product improvement. Research and development expenses for the Related
Norwegian Businesses were approximately NOK 47.7, 39.1 and 37.6 million in
1993, 1992 and 1991, respectively. In 1993, research and development
expenditures were 8.6% of total revenues.

Pharmaceuticals. The research and product development activities in the RNB
Pharmaceuticals segment concentrate on developing generics, new formulations
and methods of drug delivery systems of known pharmaceutical substances. Such
activities also focus on discovering and documenting new indications for the
use of known active substances, including bacitracin. In their research and
development activities, the Related Norwegian Businesses seek to add value to
their products by focusing on user advantages such as bioavailability, improved
therapeutic effect, reduced side effects, user friendly packaging and
educational material. The development activities within the RNB Pharmaceuticals
segment also focus on developing new types of packaging and manufacturing
techniques. In view of the substantial funds which are generally required to
develop new chemical drug molecules, the Related Norwegian Businesses have not
emphasized such research and development activities.

Animal Health and Bulk Antibiotics. The research and development activities
for the RNB Animal Health and Bulk Antibiotics segment involve extensive
product and production process development and testing for the purpose of
establishing clinical support for new products and additional uses for or
variations of existing products and obtaining regulatory approvals. The Related
Norwegian Businesses' Aquatic Animal Health business focuses primarily on the
development of new fish vaccines with improved properties over current
products.

REGULATION. The development, manufacture and marketing of the Related
Norwegian Businesses' products are subject to comprehensive government
regulation both in Norway and in other countries where the products are
marketed. Government regulation includes detailed inspection of and controls
over manufacturing and quality control practices and procedures, requires
approvals to market products and can result in the recall of products and the
suspension of production. Such government regulation substantially increases
the cost of producing pharmaceutical and animal health products. Regulatory
approvals are required before any new prescription or over-the-counter drug or
bulk antibiotic product or any animal health drug can be marketed.

The trend in recent years has been towards more comprehensive regulation and
higher regulatory standards. Continuing studies of the proper utilization,
safety and efficacy of pharmaceutical and other health care products are being
conducted by the industry, government agencies and others. Such studies, which
increasingly employ sophisticated methods and techniques, can call into
question the utilization, safety and efficacy of previously marketed products,
can result in the discontinuance of marketing of such products in the future
and, in certain countries, can give rise to damage claims from customers.

63
<PAGE>

The evolving and complex nature of regulatory requirements, the broad
authority and discretion of applicable regulatory authorities and the generally
increased level of regulatory oversight have resulted in a higher probability
that, from time to time, the Related Norwegian Businesses will be adversely
affected by regulatory actions despite their ongoing efforts and commitment to
achieve and maintain full compliance with all regulatory requirements. The
Related Norwegian Businesses are unable to predict whether, and to what extent,
their business may be affected by new legislative and regulatory requirements.

The Related Norwegian Businesses' manufacturing operations are also subject
to various environmental laws and regulations. The Related Norwegian Businesses
believe that their operations comply in all material respects with applicable
environmental laws and regulations. Although the Related Norwegian Businesses
continue to make capital expenditures for environmental protection, they do not
anticipate being obligated as a result of such laws and regulations to incur
costs which would have a material impact upon the results of operations or
financial condition of the Related Norwegian Businesses.

Pharmaceuticals. The Related Norwegian Businesses may not sell their
pharmaceutical products or make representations in connection with the
merchandising thereof without complying with the requirements of regulatory
agencies in each country in which such products are marketed. Although each
country's requirements differ, the regulatory requirements generally relate to
the manufacturing process for, the quality control and assurance procedures
for, and the stability, safety, and efficacy of, the products involved.
Production of finished pharmaceuticals in Norway is subject to inspections by
Norwegian health authorities at regular intervals. Such inspections generally
receive reciprocal recognition in other countries through the Pharmaceutical
Inspection Convention (the "PIC"). Most western European countries and
Australia are members of the PIC.

The Lier facility has been designed with a view towards meeting the FDA's
CGMP. However, given that the facility's current production is not exported to
the United States, the Related Norwegian Businesses have not initiated the
process to cause the facility to be in compliance with the CGMP. The Related
Norwegian Businesses likely will need to make certain expenditures and take
certain actions in order to comply with the CGMP.

The overall cost of providing health care services has been and will
continue to be subject to review by governmental and regulatory authorities
worldwide. Prices for products are sometimes subject to direct price controls
and drug reimbursement programs which have varying price control mechanisms.
While, as a general matter, government regulated prices are adjusted
periodically, in recent years such permitted increases have not compensated for
cost increases and currency exchange rate fluctuations.

During 1993, in an effort to lower public expenditures on pharmaceuticals,
the health authorities of Sweden, Denmark and Norway adopted regulations
("Reference Price Systems") which require patients to pay the excess of the
cost of a prescription product over a predetermined price for such product
instead of the government reimbursing the cost of such prescription product
after certain deductibles have been paid by the patient. The health authorities
in Finland have not yet imposed similar regulations, however the Related
Norwegian Businesses anticipate that a Reference Price System will be
introduced in Finland in the near future. In addition, the health authorities
of Sweden, Denmark and Finland have adopted regulations ("Generic
Substitution") which require pharmacies to substitute a generic equivalent for
an original product under certain circumstances. The Related Norwegian
Businesses anticipate that Generic Substitution will be introduced in Norway in
1995.

Animal Health and Bulk Antibiotics. The Related Norwegian Businesses' animal
health products are generally subject to the same type of regulatory
manufacturing requirements as human pharmaceuticals. In Europe and elsewhere,
the authorities are imposing increasingly strict process control and production
hygiene standards which call for continuous upgrading of competence, facilities
and control systems. For animal health products, however, the focus tends to be
more on the product than on the process. In addition, within the European
Union, certain standards exist relating to the maximum inclusion level of
additives in animal

64
<PAGE>

feed. The Related Norwegian Businesses' primary feed additive product,
Albac (R), has been approved by authorities in most countries with a
significant livestock or poultry production, except for countries that were
part of the former Soviet Union.

While the Related Norwegian Businesses' production facility in Tromso,
Norway is approved for the manufacture of fish vaccines for the Norwegian
market, it does not comply with the CGMP, and therefore, certain quantities of
fish vaccines sold in certain markets outside of Norway are contract
manufactured for the Related Norwegian Businesses. The Related Norwegian
Businesses intend to upgrade production processes to comply with CGMP.

The Related Norwegian Businesses' Skoyen Facility has been approved as a
manufacturer of sterile and non-sterile bulk antibiotics by the FDA in the
United States and by the health authorities of European countries. The
manufacturing methods, quality control procedures and quality assurance systems
for the production of such antibiotics are subject to periodic inspections
(generally, every two to four years) by regulatory agencies such as the FDA and
the Norwegian health authorities. At the last inspection in January 1993, the
FDA issued a form 483, detailing certain deficiencies on control procedures and
stability test programs for some of the Related Norwegian Businesses' sterile
and non sterile bulk antibiotics and BMD (R). The Related Norwegian Businesses
have initiated and communicated to the FDA an action program to correct the
noted deficiencies. A. L. Oslo believes this program will satisfy the FDA's
requirements. Certain elements of this program are anticipated to be completed
in 1994 consistent with the time schedule provided by the Related Norwegian
Businesses to the FDA, while other elements are of an ongoing nature. The
Related Norwegian Businesses do not expect that the form 483 which was issued
by the FDA will have a material adverse affect on their business.

PROPRIETARY RIGHTS. Due to the primarily generic nature of the products of
the Related Norwegian Businesses, patents are not materially significant to the
RNB Pharmaceuticals or RNB Animal Health and Bulk Antibiotic segments. However,
the Related Norwegian Businesses market a number of products in both segments
under proprietary trademarks which help customers distinguish the Related
Norwegian Businesses' products from those of its competitors.

EMPLOYEES. As of June 30, 1994, the Related Norwegian Businesses had
approximately 439 employees. The following table sets forth the number of the
Related Norwegian Businesses' employees by various classifications:

<TABLE>
<S> <C>
Administration and Finance.................... 66
Research and Development...................... 62
Sales and Marketing........................... 57
Quality Control and Assurance................. 55
Production.................................... 199
---
Total Employees............................. 439
===
</TABLE>

Approximately 130 employees of the Related Norwegian Businesses, principally
engaged directly in production, are covered by industry collective bargaining
agreements. The Related Norwegian Businesses have not experienced any
significant work stoppages in its history and considers its employee relations
to be good.

65
<PAGE>

PROPERTIES. Upon consummation of the Transactions, the Related Norwegian
Businesses' principal executive offices and production facilities will be
located in Norway. The following table sets forth certain information
concerning the properties where the Related Norwegian Businesses' operations
are expected to be conducted at the time the Transactions are consummated:

<TABLE>
<CAPTION>
LAND FACILITY SIZE
LOCATION TITLE (ACRES) (SQ. FT.) USE
-------- ----- ------- ------------- -------------------------------------------
<C> <C> <C> <C> <S>
Lier Owned 14.826 118,403 Production of finished pharmaceuticals,
quality assurance and quality control,
warehousing and offices
Skoyen Leased 4.160 204,406 Fermentation and production of antibiotics,
headquarters for New A. L. Oslo, quality
assurance and quality control
Tromso Leased -- 10,644 Production of fish vaccines, quality
assurance and quality control, warehousing
and offices
Vennesla Owned 3.7 81,300 Production of adhesive bandages and
surgical tapes, quality assurance and
quality control, warehousing and offices
</TABLE>

LEGAL PROCEEDINGS. The development, manufacture and sale of pharmaceutical
and other health-related products entail an inherent risk that product
liability and other claims may be asserted against the manufacturer. The
Related Norwegian Businesses may become involved from time to time in
litigation alleging product liability and related theories. The Related
Norwegian Businesses believe that there are no material legal proceedings
pending or threatened to which the Related Norwegian Businesses are or may be a
party or to which any of their material properties are subject. The Related
Norwegian Businesses are involved with certain legal proceedings incidental to
their businesses. However, the Related Norwegian Businesses do not believe that
the outcome of such litigation will have a material adverse effect upon the
operations or financial condition of the Related Norwegian Businesses.

CURRENCY EXCHANGE RATES. As of June 30, 1994, the exchange rate for the
United States dollar into the Norwegian kroner was approximately 6.92 Norwegian
kroner per United States dollar. Fluctuations in this exchange rate may have a
substantial effect on the profitability of the Related Norwegian Businesses
expressed in Norwegian kroner because the Related Norwegian Businesses generate
a significant amount of their revenues in United States dollars. The following
table sets forth, for the periods indicated, certain currency exchange rates in
Norwegian kroner per United States dollar.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
----------- ------------------------
1994 1993 1993 1992 1991 1990 1989
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Rate at end of period...................... 6.92 7.16 7.53 6.94 5.98 5.92 6.62
Average during period...................... 7.26 6.89 7.10 6.20 6.45 6.27 6.81
High during period......................... 7.60 7.24 7.53 6.95 7.15 6.66 7.33
Low during period.......................... 6.89 6.65 6.00 5.51 5.66 5.76 6.51
</TABLE>

SELECTED HISTORICAL FINANCIAL DATA OF THE RELATED NORWEGIAN BUSINESSES. The
following table sets forth selected historical combined financial data of the
Related Norwegian Businesses as of and for each of the fiscal years in the
five-year period ended December 31, 1993 and as of and for each of the six-
month periods ended June 30, 1993 and 1994. Such data are expressed in
Norwegian kroner, except that a convenience translation into United States
dollars has been provided in addition to the Norwegian kroner presentation for
the fiscal year ended December 31, 1993 and the six months ended June 30, 1994.
The balance sheet data as of December 31, 1993 and June 30, 1994 were converted
using the exchange rates in effect at the respective dates. The exchange rates
of Norwegian kroner into United States dollars as of December 31, 1993 and June
30, 1994 were NOK 7.5290 to $1.00 and NOK 6.9219 to $1.00, respectively. The
income statement data for the year ended December 31, 1993 and for the six-
month period ended June 30, 1994 were converted by first converting the income
statement data for each quarter in the period presented using the average
exchange rate for such quarter and then aggregating the converted income
statement data for all of the quarters in

66
<PAGE>

such period. See Note 3 to the Unaudited Pro Forma Condensed Combined Financial
Statements under "The Transactions--Unaudited Pro Forma Condensed Combined
Financial Statements" for the exchange rates used to convert such income
statement data. Such income statement data for fiscal years ended December 31,
1990, 1991, 1992 and 1993 and such balance sheet data as of December 31, 1991,
1992 and 1993 has been taken or derived from the historical combined financial
statements of the Related Norwegian Businesses and the notes thereto audited by
Coopers & Lybrand A.S. This information is qualified in its entirety by, and
should be read in conjunction with, the Combined Financial Statements and Notes
thereto (prepared in accordance with United States generally accepted
accounting principles) of the Related Norwegian Businesses included elsewhere
in this Proxy Statement. See Exhibit E to this Proxy Statement. Income
statement data for the fiscal year ended December 31, 1989 and the six-month
periods ended June 30, 1993 and 1994, and balance sheet data as of December 31,
1989 and 1990 and June 30, 1993 and 1994, are based on unaudited combined
financial statements of the Related Norwegian Businesses. In management's
opinion, the unaudited combined financial statements of the Related Norwegian
Businesses include all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation.

67
<PAGE>

SELECTED HISTORICAL COMBINED FINANCIAL DATA OF THE RELATED NORWEGIAN BUSINESSES
(in thousands)
(in NOK or $, as indicated)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------------------------------------- -----------------------------
1989 1990 1991 1992 1993 1993 1993 1994 1994
------- ------- ------- ------- ------- -------- -------- -------- ---------
(IN NOK) (IN $) (IN NOK) (IN $)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA(1)(2):
Net sales............... 311,118 343,524 378,935 457,304 528,688 $ 74,578 267,551 290,631 $ 40,005
Other revenue........... 28,275 30,569 34,566 28,803 27,626 3,889 11,948 12,313 1,689
Total revenue........... 339,393 374,093 413,501 486,107 556,314 78,467 279,499 302,944 41,694
Cost of sales........... 162,736 186,561 207,058 248,200 268,575 37,890 135,675 144,090 19,839
Gross profit............ 176,657 187,532 206,443 237,907 287,739 40,577 143,824 158,854 21,855
Selling, general and
administrative
expenses............... 162,607 160,165 179,022 192,910 226,822 31,978 112,181 118,862 16,363
Operating income........ 14,050 27,367 27,421 44,997 60,917 8,599 31,643 39,992 5,492
Interest expense........ (15,835) (10,653) (21,493) (51,846) (59,454) (8,398) (31,259) (23,147) (3,182)
Foreign exchange gains
(losses)(3)............ 2,090 3,295 44,239 20,506 1,770 244 620 (494) (67)
Other income (expense),
net.................... 5,357 5,406 (2,138) 6,113 8,083 1,138 3,604 2,248 309
Equity in net earnings
of affiliated company.. 369 211 723 1,555 -- -- -- -- --
Income before provision
for income taxes, and
cumulative effect of
change in accounting
principle.............. 6,031 25,626 48,752 21,325 11,316 1,583 4,608 18,599 2,552
Provision for income
taxes.................. 320 9,555 16,994 6,400 4,120 575 1,553 5,629 773
Income before cumulative
effect of change in
accounting principle... 5,711 16,071 31,758 14,925 7,196 1,008 3,055 12,970 1,779
Cumulative effect of
change in accounting
principle.............. -- -- -- 16,210 -- -- -- -- --
Net income.............. 5,711 16,071 31,758 31,135 7,196 1,008 3,055 12,970 1,779
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
----------------------------------------------------- -----------------------------
1989 1990 1991 1992 1993 1993 1993 1994 1994
------- ------- ------- ------- ------- -------- -------- -------- ---------
(IN NOK) (IN $) (IN NOK) (IN $)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA(4):
Current assets.......... 153,176 188,552 185,339 179,775 215,550 $ 28,630 231,843 217,099 $ 31,364
Non-current assets...... 139,811 306,483 607,782 600,190 588,267 78,133 598,618 584,091 84,382
Total combined assets... 292,987 495,035 793,121 779,965 803,817 106,763 830,461 801,190 115,746
Current liabilities..... 84,807 102,953 133,129 150,809 120,429 15,996 234,352 127,537 18,424
Long-term debt.......... 92,597 241,709 457,759 415,333 471,597 62,637 381,369 451,010 65,157
Deferred taxes and other
non-current
liabilities............ 25,064 34,013 52,148 48,390 62,700 8,328 54,322 70,596 10,199
Equity.................. 90,519 116,360 150,085 165,433 149,091 19,802 160,418 152,047 21,966
Total combined
liabilities and equity. 292,987 495,035 793,121 779,965 803,817 106,763 830,461 801,190 115,746
</TABLE>
- --------
(1) The historical income statement data do not include per share data as the
Demerger and contemporaneous issuance of New A. L. Oslo Shares will not be
accomplished until immediately prior to the consummation of the Exchange
Offer.
(2) Income statement data include results of operations from the date of
acquisition of Norgesplaster in January 1993 and from product line
purchases in November 1991 and March 1992. Income statement data reflect
the adoption of Statement of Financial Accounting Standards No. 109 as of
January 1, 1992.
(3) In 1991 and 1992, the Related Norwegian Businesses realized unusual foreign
currency gains of NOK 27.2 million and NOK 14.8 million, respectively. See
"The Transactions -- Certain Information Regarding the Related Norwegian
Businesses -- Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Related Norwegian Businesses -- Results of
Operations." Such gains are not expected to recur.
(4) Balance sheet data include the accounts of Norgesplaster acquired in
January 1993, and assets related to product line purchases in November 1991
and March 1992.

68
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE RELATED NORWEGIAN BUSINESSES.

Overview. The Related Norwegian Businesses develop, manufacture and market
finished branded generic and specialty pharmaceuticals and human, animal and
aquatic animal health products and bulk antibiotics. While the Related
Norwegian Businesses' animal health products and bulk antibiotics are sold on a
world-wide basis, its dosage-form pharmaceuticals are marketed almost
exclusively in the Nordic countries. Since the early 1950's, the Related
Norwegian Businesses have manufactured bacitracin at its production facility in
Oslo. Initially, bacitracin was manufactured and marketed as a pharmaceutical
grade bulk antibiotic. In the late 1950's, bacitracin was also manufactured and
marketed as an animal feed additive.

Total revenue of the Related Norwegian Businesses increased from
approximately NOK 339 million in the fiscal year ended December 31, 1989 to NOK
556 million in the fiscal year ended December 31, 1993, resulting in a compound
annual growth rate of 13.1%. Of this compound annual growth, the Related
Norwegian Businesses estimate that approximately 6.7% is attributable to
organic growth and approximately 6.4% resulted from the acquisitions of bulk
antibiotic product lines and Norgesplaster. The Related Norwegian Businesses
have been able to achieve improved manufacturing efficiency during the periods
discussed below through its investment in an NOK 297 million pharmaceutical
production facility in Lier, Norway, which was completed in 1991. During the
last five fiscal years (1989-1993), the aggregate expenditures in the Lier
pharmaceutical production facility, equipment and acquisitions of bulk
antibiotics product lines and businesses approximated NOK 460 million.

In 1993, approximately 58% of the Related Norwegian Businesses' revenues
were derived from markets outside Norway. The Related Norwegian Businesses'
results of operations are most sensitive to the exchange rate fluctuations of
the United States dollar because of license fees from and sales to the Company.
In the past, there has been considerable volatility in the exchange rate
between the Norwegian kroner and the United States dollar. See "The
Transactions -- Currency Exchange Rate Data."

Results of Operations.

Six Months Ended June 30, 1994 Compared With the Six Months Ended June 30,
--------------------------------------------------------------------------
1993. Total revenue, operating income and net income all increased in the first
- ----
six months of 1994 compared to the corresponding period in 1993. Total revenue
was NOK 302.9 million, an increase of NOK 23.4 million (8.4%); operating income
was NOK 40.0 million, an increase of NOK 8.3 million (26.4%); and net income
was NOK 13.0 million, an increase of NOK 9.9 million (324.5%).

Revenues in the RNB Pharmaceuticals segment increased by NOK 18.6 million
(13.6%) in the first half of 1994 compared to the corresponding period in 1993.
The increase in revenues is primarily attributable to increased sales of the
Related Norwegian Businesses' dosage-form pharmaceuticals. Increased revenues
were recorded in all the Nordic markets in all product lines.

Revenue in the RNB Animal Health and Bulk Antibiotics segment increased NOK
5.2 million (3.7%) compared to the first half of 1993. The increase in revenue
resulted primarily from significant increases in sales of the feed additive
product, Albac (R), pharmaceutical grade bacitracin and fish vaccines, while
other bulk antibiotics, Akvaletter (R) and BMD (R) showed a decrease compared
to the corresponding period in 1993. In addition, revenues were favorably
impacted by the higher average United States dollar versus Norwegian kroner
exchange rate in the first half of 1994 compared to the first half of 1993
since a significant portion of the segment's revenues is invoiced in U.S.
dollars.

Gross profit (on a consolidated basis) for the first half of 1994 was NOK
158.9 million, an increase of NOK 15.0 million (10.5%) from the corresponding
period in 1993, while the gross margin increased from 51.5% to 52.4%. The RNB
Pharmaceuticals segment gross profit increased by NOK 12.9 million in the first
half of 1994, and the gross margin improved from 45.7% in the first six months
of 1993 to 48.5% in the first six months of 1994 primarily due to increased
plant utilization. Gross profit increased by NOK 3.3 million in

69
<PAGE>

the RNB Animal Health and Bulk Antibiotic segment, but only increased
marginally as a percentage of total revenue. This is principally due to
increased energy costs and increased costs relating to the production of
pharmaceutical grade bacitracin.

Consolidated operating expenses increased NOK 6.7 million (6.0%) compared
to the first half of 1993. Selling and marketing expenses increased NOK 2.6
million. During the first half of 1994, the Related Norwegian Businesses
recorded a loss provision of NOK 2.5 million for a receivable resulting from
the sale of Animal Health products in Turkey. During August 1994, however, the
Related Norwegian Businesses collected NOK 2.1 million and now expect to
collect the remaining balance. As a result, the Related Norwegian Businesses
will reverse the previously recorded provision and recognize income of NOK 2.5
million during the third quarter of 1994.

Consolidated operating income increased from NOK 31.6 million in the first
six months of 1993 to NOK 40.0 million in the first six months of 1994. This is
primarily due to an increase in the RNB Pharmaceuticals segment's operating
income of NOK 11.0 million, which is primarily attributable to significantly
increased sales.

Interest expense decreased substantially from NOK 31.3 million in the first
half of 1993 to NOK 23.1 million in the first half of 1994. This is primarily
due to sharply lower interest rates in the Related Norwegian Businesses'
Norwegian kroner denominated floating rate indebtedness and lower levels of
average net debt outstanding during the first six months of 1994.

The effective tax rate for the Related Norwegian Businesses for the six
months ended June 30, 1994 was 30.3% compared to 33.7% for the six months ended
June 30, 1993, due primarily to the impact of substantially higher pre-tax
earnings in 1994, which diminishes the negative effect of non-deductible
expenses.

Year Ended December 31, 1993 Compared with the Year Ended December 31,
----------------------------------------------------------------------
1992. Total revenue and operating income both increased substantially in 1993
- ----
compared to 1992, while income before provision for income taxes, income before
the cumulative effect of a change in accounting principle and net income
decreased significantly. Total revenue was NOK 556.3 million, an increase of
NOK 70.2 million (14.4%) and operating income was NOK 60.9 million, an increase
of NOK 15.9 million (35.4%), over the corresponding 1992 amounts. Income before
cumulative effect of change in accounting principles was NOK 7.2 million in
1993 compared with NOK 14.9 million in 1992. Net income was NOK 7.2 million
compared to NOK 31.1 million in 1992.

In 1992, the Related Norwegian Businesses recorded an unusual foreign
currency gain of NOK 14.8 million and income of NOK 16.2 million from a change
in accounting principle, both of which are described in further detail under
the section "Year Ended December 31, 1992 Compared with Year Ended December 31,
1991" below.

The 1993 combined statement of income includes a full year's consolidation
of the results of Norgesplaster's operations, which was 50% owned during 1992,
and, accordingly, accounted for using the equity method. Effective as of
January 1, 1993 the remaining 50% of the capital stock of Norgesplaster was
acquired for NOK 15.0 million in cash. The net effect of the acquisition of the
remaining 50% of the capital stock of Norgesplaster on 1993 net income amounted
to an increase of approximately NOK 0.8 million.

Revenues in the RNB Pharmaceuticals segment increased by NOK 38.2 million
(15.8%) in 1993 compared to 1992 resulting from the inclusion of a full year of
the results of Norgesplaster's operations (NOK 45.3 million). Revenues
generated by the RNB Pharmaceuticals segment, without Norgesplaster, decreased
in 1993 by NOK 6.6 million from 1992. This decrease in revenue was primarily
comprised of a decrease in pharmaceutical sales in the Scandinavian countries
(other than Norway), partially offset by increased sales in Norway. The decline
in revenues in the Scandinavian countries (other than Norway) is mainly
attributable to the devaluation of the Swedish kronor and the Finnish mark in
1993 and aggressive price competition by the

70
<PAGE>

Related Norwegian Businesses' competitors. While finished pharmaceutical sales
increased in 1993 in the Norwegian market, sales growth was adversely affected
by inventory reductions in Norwegian distribution channels as a result of
changes in inventory practices by Norsk Medisinaldepot, the national
distributor of pharmaceutical products in Norway.

Revenue in the RNB Animal Health and Bulk Antibiotics segment in 1993
increased NOK 36.1 million from 1992. Increased revenue resulted from both
price and volume increases for pharmaceutical grade bacitracin and other bulk
antibiotics, the growth promotant and disease preventative products, Albac (R)
and BMD (R), and fish vaccines. Also positively impacting the RNB Animal Health
and Bulk Antibiotic revenues was a strengthening of the United States dollar in
1993 against the Norwegian kroner.

On a consolidated basis, gross profit was up NOK 49.8 million from 1992
while the consolidated gross margin improved significantly from 48.9% in 1992
to 51.7% in 1993. The RNB Pharmaceuticals segment gross profits increased by
NOK 18.5 million, consisting primarily of the inclusion of the results of
Norgesplaster's operations, which accounted for NOK 17.8 million of the
increase. Principally as a result of enhanced manufacturing efficiency relating
to the streamlining of manufacturing operations at the Lier facility, the gross
margin for the RNB Pharmaceuticals segment, excluding Norgesplaster, advanced
from 47.0% to 48.8% in 1993. The RNB Animal Health and Bulk Antibiotics segment
accounted for most of the increase in consolidated gross profit due to sales
volume growth and a favorable change in product mix towards a higher percentage
of sales generated by higher margin products, such as bulk antibiotics and fish
vaccines. The gross margin for RNB Animal Health and Bulk Antibiotics increased
from 47.9% in 1992 to 54.0% in 1993.

Consolidated operating expenses in 1993 increased NOK 33.9 million compared
to 1992. Of this amount, selling and marketing expenses increased NOK 16.1
million due mainly to the consolidation of Norgesplaster sales and marketing
expenses (NOK 6.4 million), increased sales and other marketing expenses
(particularly relating to the RNB Animal Health and Bulk Antibiotics segment)
and increased advertising expenses in the RNB Pharmaceuticals segment. Research
and development expenses increased NOK 8.6 million in 1993 due to higher
development expenditures in each of the Related Norwegian Businesses' operating
units, but particularly in the aquatic animal health business. Of the increase
in general and administrative expenses of NOK 5.0 million in 1993,
Norgesplaster accounted for NOK 2.7 million, and the remaining increase is
primarily due to increased sales in 1993.

Consolidated operating income increased NOK 15.9 million compared to 1992.
This is primarily due to a sharp increase in the RNB Animal Health and Bulk
Antibiotics segment's operating income of NOK 17.4 million. The consolidation
of Norgesplaster accounted for NOK 4.9 million, while the rest of the RNB
Pharmaceuticals business showed a decline in operating income as a result of
lower sales (for the reasons enumerated above).

Interest expense increased in 1993 by NOK 7.6 million compared to 1992.
Increased interest expense in 1993 resulted from a higher average interest rate
on net indebtedness, partially offset by lower levels of average net debt. The
increase in average interest rate was primarily a result of the Related
Norwegian Businesses' indebtedness being substantially denominated in United
States dollars (rather than Norwegian kroner) at lower interest rates during
the majority of 1992, as opposed to the Related Norwegian Businesses'
indebtedness during 1993, which was solely denominated in Norwegian kroner.
Increased interest expense resulting from the acquisition of the remaining 50%
of the capital stock of Norgesplaster and the resulting consolidation of
Norgesplaster amounted to approximately NOK 1.9 million. Lower average levels
of net indebtedness and falling interest rates for indebtedness denominated in
Norwegian kroner during 1993 partially offset the higher interest expense.

The Related Norwegian Businesses' effective tax rate in 1993 was 36.4%
compared to 30.0% in 1992 due primarily to the impact of substantially lower
pre-tax earnings in 1993, which magnifies the effect of non-deductible
expenses.

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Year Ended December 31, 1992 Compared with the Year Ended December 31,
----------------------------------------------------------------------
1991. Total revenue and operating income each increased considerably in 1992
- ----
compared to 1991. Income before provision for income taxes decreased
substantially, while net income decreased marginally compared to 1992. Total
revenue was NOK 486.1 million, an increase of NOK 72.6 million (17.6%) and
operating income was NOK 45.0 million, an increase of NOK 17.6 million
(64.1%). Income before cumulative effect of change in accounting principles
was NOK 14.9 million compared with NOK 31.8 million in 1991. Net income was
NOK 31.1 million compared to NOK 31.8 million in 1992.

The following factors should be taken into account when comparing 1992 and
1991 results:

(i) In 1992, A. L. Oslo changed its method of calculating taxes by
adopting SFAS 109 "Accounting for Income Taxes". As a result of the
adoption of SFAS 109, a cumulative effect for periods ended prior
to the effective date, January 1, 1992, of NOK 16.2 million was
recorded;

(ii) Other expenses in 1991 included NOK 6.9 million of professional
fees incurred in connection with a possible initial public
offering of A. L. Oslo Shares on the Oslo Stock Exchange and a
possible combination of A. L. Oslo and the Company; and

(iii) In July 1991, prior to initiating discussions as to a possible
combination of the Company and A. L. Oslo, A. L. Oslo entered
into United States dollar swap contracts, United States dollar
loans and forward contracts, which combined totalled $45.0
million. These foreign currency transactions were designated as,
and were effective as, economic hedges of A. L. Oslo's United
States dollar based equity investment in the Company. In
conjunction with the anticipated progress of discussions relating
to the combination of related businesses of the Company and A. L.
Oslo, the transactions were eliminated in the third quarter of
1992. It is not expected that such transactions will occur in the
future. In the separate combined financial statements of the
Related Norwegian Businesses the related gains on these foreign
currency transactions have been included in net income currently.
Since A. L. Oslo's investment in the Company is not included in
the combined financial statements of the Related Norwegian
Businesses, the hedging effect is negated. In 1992 and 1991, A.
L. Oslo recorded net foreign currency gains of NOK 20.5 and NOK
44.2 million, respectively. Of those gains, NOK 5.7 million and
NOK 17.0 million, respectively, were gains realized and
unrealized in the normal course of business, whereas NOK 14.8
million and 27.2 million, respectively, were unusual gains which
resulted from the foregoing transactions.

Revenue in the RNB Pharmaceuticals segment increased NOK 30.7 million
compared to 1991 due primarily to volume growth, particularly in the Norwegian
and Danish markets. Significant revenue increases were realized in analgesics,
treatments for rheumatism and oral health products.

Revenue in the RNB Animal Health and Bulk Antibiotics segment increased
NOK 45.5 million in 1992. This was principally attributable to the
consolidation of a full year's sales for the bulk antibiotics lines acquired
in the fourth quarter of 1991. In addition, price and volume increases were
recorded for Albac (R) and BMD (R), the growth promotant and disease
preventative products.

On a consolidated basis, gross profit was up NOK 31.5 million, while the
consolidated gross margin declined marginally from 49.9% to 48.9% in 1992. The
RNB Pharmaceuticals segment's gross profits increased by NOK 6.9 million, but
declined as a percentage of revenue. Margins were negatively impacted by
substantial startup costs incurred in the newly constructed NOK 297 million
finished pharmaceutical production facility in Lier, Norway (outside of the
City of Oslo). Production of finished pharmaceuticals was initiated at the
facility in the third quarter of 1991. Depreciation expenses for the Lier
facility were NOK 18.7 million in 1992 compared to NOK 7.0 million in 1991.
Improved operating efficiencies relating to the streamlining of pharmaceutical
manufacturing operations at the Lier facility were achieved towards the end of
the year. RNB Animal Health and Bulk Antibiotics accounted for most of the
increase in consolidated gross profit. Significantly higher gross profit and
gross profit as a percentage of revenue resulted primarily

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from full year sales of certain bulk antibiotics product lines acquired in the
fourth quarter of 1991, which have relatively higher gross margins than the
average gross margins of other products in this segment.

Consolidated operating expenses increased NOK 13.9 million in 1992 compared
to 1991. Of this amount, NOK 8.2 million was directly related to increased
amortization expenses of intangible assets arising from the acquisition of bulk
antibiotics product lines in the fourth quarter of 1991. A general
strengthening of administrative support functions in both business segments at
the division level increased general and administrative expenses by NOK 4.2
million. Other operating expenses increased marginally compared to 1991.

Consolidated operating income increased NOK 17.6 million compared to 1991.
Operating margins were up both for RNB Pharmaceuticals and RNB Animal Health
and Bulk Antibiotics. The majority of the increase in operating income came
from the RNB Animal Health and Bulk Antibiotics segment due to higher sales
volume and the inclusion for the full year of the results of the bulk
antibiotics product line acquisition consummated in the fourth quarter of 1991.

Interest expense increased substantially, from NOK 21.5 million in 1991 to
NOK 51.8 million in 1992. The increase is primarily due to interest expense
from borrowings relating to the construction of the Lier pharmaceutical
production facility of approximately NOK 300 million and the acquisition of
bulk antibiotics product lines for NOK 145.6 million in November 1991 which was
capitalized in 1991. Partially offsetting the increase in interest expense was
lower levels of short-term borrowings.

The Related Norwegian Businesses' effective tax rate was 30.0% in 1992
compared to 34.9% in 1991 due primarily to the impact of a tax reform in
Norway, which was effective as of January 1, 1992. The Norwegian tax reform,
among other things, lowered the statutory tax rate from 50.8% (or 39.1%
adjusted for allowable exclusions from taxable income) to 28.0%.

Inflation. The inflation rate in Norway, measured by the Norwegian consumer
price index was 3.4%, 2.3% and 2.3% in 1991, 1992 and 1993, respectively. The
effect of inflation on the Related Norwegian Businesses' operations during the
reported periods was not significant.

Liquidity and Capital Resources. The Related Norwegian Businesses have
historically financed their operations, capital expenditures and acquisitions
with internally generated funds and borrowings from financial institutions.
From January 1, 1991 through June 30, 1994, net cash provided by operating
activities totalled NOK 185.1 million. During the same period, net cash used in
investing activities amounted to NOK 255.9 million.

Total long-term debt at June 30, 1994 was NOK 451.0 million, compared with
NOK 471.6 million and NOK 415.3 million at December 31, 1993 and 1992,
respectively. As of June 30, 1994, all outstanding indebtedness was denominated
in Norwegian kroner. The reduction in long-term debt of NOK 20.6 million in the
first six months of 1994 was principally due to payments on outstanding long-
term debt. The increase in long-term debt of NOK 56.3 million in 1993 from 1992
was primarily attributable to the Related Norwegian Businesses securing a NOK
120.0 million three-year credit facility during 1993. As a result of the
additional capacity under the new NOK 120.0 million long-term facility,
existing balances of NOK 95.0 million were classified as long-term debt rather
than short-term debt. In addition, long-term debt assumed in connection with
the acquisition of Norgesplaster in the second quarter of 1993 accounted for
NOK 22.0 million of the total increase. The ratio of long-term debt to equity
was 2.51:1 at December 31, 1992, 3.16:1 at December 31, 1993, and 2.97:1 at
June 30, 1994.

At June 30, 1994 NOK 50.2 million of the long-term debt outstanding had a
maturity of less than one year compared with NOK 45.7 million and NOK 41.6
million at December 31, 1993 and 1992, respectively.

Working capital at June 30, 1994 was NOK 89.6 million compared to NOK 95.1
million and NOK 29.0 million at December 31, 1993 and 1992, respectively. The
significant increase in working capital in 1993

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resulted from an increase in accounts receivable due to higher sales by the RNB
Animal Health and Bulk Antibiotics segment, increased levels of cash and the
aforementioned classification of short-term debt to long-term debt. Partially
offsetting these increases were reduced levels of inventory in the RNB
Pharmaceuticals segment. The current ratio, measured as current assets over
current liabilities, was 1.70:1 at June 30, 1994 compared to 1.79:1 and 1.19:1
at December 31, 1993 and 1992, respectively.

At June 30, 1994, the Related Norwegian Businesses had approximately NOK
75.0 million available under existing short-term and long-term unused bank
lines of credit and NOK 19.5 million in cash.

In 1993, the Related Norwegian Businesses' capital expenditures amounted to
approximately NOK 24.5 million. The Related Norwegian Businesses budgeted
approximately NOK 38.9 million for capital expenditures in 1994, of which NOK
18.3 was accrued as of June 30, 1994. Capital expenditure plans for 1994
primarily relate to planned capacity expansions in the RNB Animal Health and
Bulk Antibiotics segment. The Related Norwegian Businesses anticipate decreased
working capital requirements in 1994 compared to 1993, due partially to a
planned reduction of levels of cash, reduced inventories and increased accruals
of income taxes.

The Related Norwegian Businesses believe that the resources available under
its bank credit lines and from internally generated funds will be sufficient to
meet future planned capital expenditures and working capital requirements
through at least 1995.

DESCRIPTION OF WARRANTS AND CLASS A STOCK

WARRANTS

GENERAL. The Warrants are to be issued under a warrant agreement (the
"Warrant Agreement") between the Company and The First National Bank of Boston,
as the warrant agent (the "Warrant Agent"), a copy of the form of which is
attached hereto as Exhibit B and is incorporated herein by reference. The
statements herein relating to the Warrants and the Warrant Agreement are
summaries and are subject to the detailed provisions of the Warrant Agreement,
to which reference is hereby made for a complete statement of those provisions.
Whenever particular provisions of the Warrant Agreement or terms defined
therein are referred to herein, those provisions or definitions are
incorporated by reference as part of the statements made, and the statements
are qualified in their entirety by that reference.

Warrants to purchase no more than 3,600,000 shares of Class A Stock may be
issued and delivered by the Company pursuant to the Warrant Agreement and the
Exchange Offer. Each Warrant entitles the registered holder thereof to purchase
one share of Class A Stock at the initial Exercise Price described below under
"-- Exercise Price of Warrants," subject to certain adjustments. The Exercise
Price will be payable in cash only.

EXERCISE OF WARRANTS. The Warrants will be exercisable, at the holder's
option, as a whole or from time to time in part, on or after the Restricted
Period Termination Date (as defined below) and prior to 5:00 p.m., New York
City time, on the later of December 31, 1998 and the date which is 51 months
after the Closing Date (the "Expiration Date"), in accordance with the terms of
the Warrants and the Warrant Agreement. The "Restricted Period Termination
Date" is the earlier of (i) the first anniversary of the Closing or (ii) the
date on which the Registration Statement (as defined below) is declared
effective by the Commission and such other actions required by United States
Federal or State law relating to the issuance and distribution of the Warrants
and the Warrant Shares shall have been taken, except that the Restricted Period
Termination Date for the Warrants issued to or held by the Sissener Parties and
holders who acquire such Warrants from the Sissener Parties in a Permitted
Transfer (as defined below) shall be the third anniversary of the Closing. The
Company will not be required to issue any fractional shares of Class A Stock
or, under certain circumstances, any fractional Warrants. Holders of Warrants
will receive cash in lieu of any such fractional shares or Warrants. The
Company may at its option extend the Expiration Date of the Warrants for such
period as it may determine. However, any such change in the terms of the
Warrants is subject to certain

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restrictions on transactions with interested parties pursuant to the General
Corporation Law of the State of Delaware. Notice of such change in the
Expiration Date will be given to the Warrant Agent and the holders of the
Warrants.

EXERCISE PRICE OF WARRANTS. The initial Exercise Price will equal the Average
Closing Price multiplied by 1.4, except that (a) if the Average Closing Price
is greater than or equal to $23.00 or is less than $13.00, then the initial
Exercise Price will equal the Average Closing Price plus $7.00, (b) if the
Average Closing Price is less than $23.00 and greater than $21.4286, then the
initial Exercise Price will equal $30.00 and (c) if the Average Closing Price
is less than $14.2857 and greater than or equal to $13.00, then the initial
Exercise Price will equal $20.00.

CERTAIN ADJUSTMENTS. No adjustment in the Exercise Price or the number of
Warrant Shares purchasable upon exercise of the Warrants will be made for any
cash dividends or distributions payable out of consolidated earnings or earned
surplus. The Exercise Price and the number of Warrant Shares purchasable upon
exercise of each Warrant are subject to adjustment upon (1) the payment of a
dividend by the Company on its shares of Class A Stock in shares of Class A
Stock or Class B Stock, (2) any subdivision, combination, or reclassification
of the Class A Stock, (3) any distribution by the Company generally to the
holders of the Class A Stock of certain rights, options, or warrants to
subscribe for or purchase shares of Class A Stock at a price per share lower
than the then current market price per share, or (4) any distribution by the
Company generally to the holders of the Class A Stock of evidences of
indebtedness or assets (excluding certain cash dividends or distributions), or
other rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase Class A Stock. No adjustment
in the Exercise Price or the number of Warrant Shares purchasable upon exercise
of the Warrants will be required until cumulative adjustments would require a
change of at least 1% in the number of Warrant Shares purchasable upon exercise
of the Warrants. In lieu of adjusting the number of shares of Class A Stock
issuable upon exercise of each Warrant, the Company may elect to adjust the
number of outstanding Warrants.

Notwithstanding the foregoing, in case of a consolidation, merger, sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety, the holder of each outstanding Warrant shall continue to have the
right to exercise the Warrant for the kind and amount of shares and other
securities and property receivable by a holder of the number of shares of Class
A Stock for which such Warrants were exercisable immediately prior thereto.

FORM AND DENOMINATIONS; TRANSFERABILITY. The certificates representing the
Warrants will be in registered form. No Warrant may be transferred prior to the
Restricted Period Termination Date for such Warrant, except in a Permitted
Transfer (generally defined as a transfer by operation of law, a transfer
pursuant to applicable laws of descent and distribution and a transfer to
owners of an entity holder upon liquidation of such entity holder). Thereafter,
any Warrant may be transferred, split up, combined or exchanged for another
Warrant or Warrants entitling the registered holder thereof to purchase a like
number of shares of Class A Stock as the Warrant certificate or certificates
surrendered. Certificates may be exchanged for other certificates in different
denominations representing Warrants to purchase the same aggregate number of
shares at any time.

NO RIGHTS AS HOLDER OF CLASS A STOCK. No holder of Warrants shall be entitled
to vote or consent or receive dividends or be deemed for any other purpose the
holder of Class A Stock or of any other securities of the Company that may at
any time be issuable upon the exercise of the Warrants until the Warrants are
properly exercised as provided in the Warrant Agreement.

CERTAIN REGISTRATION RIGHTS. The Warrants will be issued pursuant to
exemptions from the registration requirements of the Securities Act, in
reliance on Regulation S promulgated under, and Section 4(2) of, the Securities
Act. Pursuant to the Warrant Agreement, the Company will agree to file with the
Commission and use its best efforts to cause to become effective by the first
anniversary of the Closing a registration statement (the "Registration
Statement") with respect to the Warrants and the Warrant Shares. The

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Company also will agree to use its best efforts to keep the Registration
Statement continuously effective from the date on which it is declared
effective by the Commission through the tenth business day following the
Expiration Date or in the case of any affiliate of the Company, until the
earlier of (x) such time as may be necessary to permit sales of such
affiliate's Warrant Shares or (y) the second anniversary of the Expiration
Date. Pursuant to the Warrant Agreement, the Company will agree to take all
action necessary to list the Warrants and the Warrant Shares for trading or
quotation on the NYSE or, if such listing is in the opinion of the Company
impracticable, on another national securities exchange or an over-the-counter
quotation system as the Company's Board of Directors deems appropriate to
facilitate the trading of the Warrants and the Warrant Shares.

CLASS A STOCK

The Company's authorized capital stock currently consists of: (i) 40,000,000
shares of Class A Stock, of which, as of August 18, 1994, 13,349,560 shares
were issued and outstanding, (ii) 15,000,000 shares of Class B Stock (the Class
A Stock and the Class B Stock are collectively referred to as the "Common
Stock"), of which, as of August 18, 1994, 8,226,562 shares were issued and
outstanding, and (iii) 500,000 shares of Preferred Stock, par value $1.00 per
share, of which, as of August 18, 1994, none are outstanding.

The Class A Stock and the Class B Stock are identical in all respects,
including with respect to the right to receive dividends, except as follows:
(i) the holders of the Class A Stock are currently entitled as a class to elect
not less than 25% of the Board of Directors, and assuming the Transactions are
consummated, will be entitled as a class to elect 33 1/3% of the Board of
Directors (rounded to the nearest whole number, but not less than two members
of the Company's Board of Directors), and the holders of the Class B Stock are
entitled as a class to elect the remaining directors; (ii) on all other matters
submitted to a vote of stockholders, the holders of the Class A Stock are
entitled to one vote per share of Class A Stock held, and the holders of the
Class B Stock are entitled to four votes per share of Class B Stock held; (iii)
the holders of the Class B Stock have the right at any time and from time to
time to convert each share of Class B Stock into one share of Class A Stock;
and (iv) shares of Class A Stock may be declared and paid as dividends on
shares of both Class A Stock and Class B Stock, shares of Class B Stock may be
declared and paid as dividends on shares of both Class A Stock and Class B
Stock, or shares of Class A Stock may be declared and paid as dividends on
shares of Class A Stock and shares of Class B Stock may be declared and paid as
dividends on shares of Class B Stock, and in any such case the same number of
shares must be declared and paid as dividends in respect of each outstanding
share of Class A Stock and each outstanding share of Class B Stock. The special
voting rights of the holders of the Class A Stock as reflected in (i) above
terminate if the number of outstanding shares of Class A Stock is less than 10%
of the aggregate number of outstanding shares of Class A Stock and Class B
Stock, and the special voting rights of the holders of the Class B Stock as
reflected in (i) and (ii) above terminate if the number of outstanding shares
of Class B Stock is less than 12 1/2% of such aggregate number, in each case as
determined on the record date for the stockholder vote.

The Company may not subdivide or combine either class of Common Stock without
at the same time combining or subdividing shares of the other class of Common
Stock in the same proportion. Upon liquidation of the Company, holders of the
Class A Stock and the Class B Stock are entitled to share ratably in any assets
available for distribution to stockholders after payment of all obligations of
the Company, and payments due in respect of any other senior securities of the
Company, including any shares of Preferred Stock. Holders of Common Stock do
not have cumulative voting rights or preemptive, subscription or, except as set
forth above with respect to the Class B Stock, conversion rights.

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DESCRIPTION OF CERTAIN AGREEMENTS

CERTAIN PROVISIONS OF THE RESTRUCTURING AGREEMENT

The following is a summary of the material provisions of the Restructuring
Agreement, a copy of which is attached as Exhibit A to this Proxy Statement and
is incorporated herein by reference. The following summary does not purport to
be complete and is qualified in its entirety by reference to the Restructuring
Agreement.

CERTAIN REPRESENTATIONS AND WARRANTIES. The Restructuring Agreement contains
various representations and warranties of the Company and A. L. Oslo.

A. L. Oslo made representations and warranties to the Company relating to,
among other things, the following matters (which representations and warranties
are subject, in certain cases, to specified exceptions): (i) the due
organization and authorized capital stock of A. L. Oslo, New A. L. Oslo,
Norgesplaster, Apolab and Lakemedel; (ii) the authorization, execution,
delivery and performance by A. L. Oslo, and the enforceability against A. L.
Oslo, of the Restructuring Agreement and the Skoyen Lease; (iii) the absence of
any materially misleading statements or omissions in (a) material furnished to
the Company for use in this Proxy Statement and the Exchange Offer materials
with respect to A. L. Oslo and its subsidiaries and affiliates (including any
principal stockholders of A. L. Oslo and New A. L. Oslo while acting solely in
such capacity) and the Related Norwegian Businesses (such material being
referred to as the "A. L. Oslo Information") and (b) materials provided to the
holders of A. L. Oslo Shares in connection with the Demerger; (iv) the absence
of any governmental or regulatory authorization, consent or approval required
to consummate the Transactions; (v) the absence of breaches or violations of
the Articles of Association (or similar organization documents) of A. L. Oslo,
New A. L. Oslo or their subsidiaries, applicable law or certain contracts of A.
L. Oslo, New A. L. Oslo and their subsidiaries arising out of the Restructuring
Agreement or the Transactions; (vi) compliance with applicable laws relating to
the Related Norwegian Businesses; (vii) the possession of all necessary
licenses and permits by New A. L. Oslo after consummation of the Demerger;
(viii) the possession by the Related Norwegian Businesses of necessary
environmental permits and the absence of potential environmental claims against
the Related Norwegian Businesses; (ix) the Related Norwegian Businesses' drug
applications; (x) the accuracy and completeness of the financial statements of
the Related Norwegian Businesses, including the balance sheet of the Related
Norwegian Businesses as of December 31, 1993 (the "Opening Related Norwegian
Businesses Balance Sheet"); (xi) the preparation in good faith of certain
financial projections for the Related Norwegian Businesses; (xii) the conduct
of the Related Norwegian Businesses in the ordinary course consistent with past
practice; (xiii) the absence of certain changes or events having an RNB
Material Adverse Effect and certain other changes; (xiv) the absence of pending
or threatened litigation or obligations or liabilities which are reasonably
likely to have an RNB Material Adverse Effect; (xv) the sufficiency of New A.
L. Oslo' assets after the Demerger to conduct the Related Norwegian Businesses;
(xvi) the indebtedness to be transferred to New A. L. Oslo in the Demerger;
(xvii) employee benefit plans of A. L. Oslo; (xviii) intellectual property of
the Related Norwegian Businesses; (xix) tax matters of A. L. Oslo and its
subsidiaries as they relate to the Related Norwegian Businesses; (xx) the
absence of any brokerage, finder's or other fees due in connection with the
Transactions (except such fees payable to Bear, Stearns & Co. Inc., financial
advisor to A. L. Oslo); (xxi) opinions of A. L. Oslo's board of directors and
Bear, Stearns & Co. Inc.; (xxii) insurance for the Related Norwegian
Businesses; and (xxiii) material contracts of A. L. Oslo.

The Company made certain representations and warranties to A. L. Oslo
relating to, among other things, the following matters (which representations
and warranties are subject, in certain cases, to specified exceptions): (i) the
due organization and the authorized capital stock of the Company and its
subsidiaries; (ii) the authorization, execution, delivery and performance by
the Company and the enforceability against the Company, of the Restructuring
Agreement and the Warrant Agreement; (iii) the absence of any materially
misleading statements or omissions in the Proxy Statement (excluding the A. L.
Oslo Information) or the written materials furnished by the Company to the
holders of A. L. Oslo Shares in connection with the Exchange Offer (excluding
the A. L. Oslo Information); (iv) the absence of any governmental or

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regulatory authorization, consent or approval required to consummate the
Transactions; (v) the absence of any breaches or violations of the certificates
of incorporation or bylaws of the Company or its subsidiaries, applicable law
or certain contracts of the Company and its subsidiaries arising out of the
Restructuring Agreement or the Transactions; (vi) compliance with applicable
laws; (vii) the possession of all necessary licenses and permits; (viii)
reports and other documents filed with the Commission and the accuracy of the
information contained therein; (ix) the conduct of the Company's business in
the ordinary and usual course; (x) the absence of certain changes or events
having a Material Adverse Effect; (xi) the absence of obligations or
liabilities which are reasonably likely to have a Material Adverse Effect;
(xii) opinions of the Company's Board of Directors, the Special Committee and
Lehman Brothers; (xiii) tax matters of the Company and its subsidiaries; and
(xiv) the absence of any brokerage, finder's or other fees due in connection
with the Transactions (except such fees payable to Lehman Brothers, financial
advisor to the Special Committee).

The representations and warranties of the Company and A. L. Oslo survive
Closing and expire on the first anniversary of the Closing, except that (i) the
Company's representations and warranties relating to tax matters will expire on
the Closing Date, (ii) the Company's representations and warranties relating to
the Warrants will survive indefinitely, and (iii) A. L. Oslo's representations
and warranties relating to tax matters will expire when the applicable statute
of limitation expires.

INDEMNIFICATION. From and after the Closing Date, subject to certain
limitations (including those described below) and specified exceptions, A. L.
Oslo will indemnify the Company and its affiliates against any and all losses,
costs, liabilities, obligations, damages, claims, demands and expenses
(collectively, "Damages") incurred in connection with, arising out of or
resulting from: (i) the breach of any covenant, representation or warranty made
by A. L. Oslo in the Restructuring Agreement, any schedule thereto or any
certificate required to be delivered thereunder; (ii) liabilities for taxes
imposed by the United States of America upon or with respect to any payment of
the Cash Purchase Price or Warrants made by the Company to the holders of New
A. L. Oslo Shares pursuant to the Restructuring Agreement or the Exchange Offer
as a result of the Company's failure to withhold taxes thereon; (iii) the
operation of the Related Norwegian Businesses prior to Closing other than in
compliance with applicable judgments, laws, regulations, orders and decrees in
effect prior to Closing that relate to the Related Norwegian Businesses; (iv)
liabilities arising in connection with the operation of A. L. Oslo (a) prior to
Closing that do not relate to the Related Norwegian Businesses or liabilities
of A. L. Oslo not specifically contemplated as being transferred to New A. L.
Oslo pursuant to the Demerger Agreement and (b) subsequent to the Closing; (v)
liabilities arising under environmental laws in effect on or prior to the
Closing (or pending as a proposal on the Closing Date) in connection with the
operation of the Related Norwegian Businesses prior to the Closing Date; (vi)
liabilities for taxes arising in connection with the operation of the Related
Norwegian Businesses on or prior to the Closing Date (or otherwise attributable
to A. L. Oslo with respect to any period ending on or before the Closing Date),
except for taxes that are reflected as a reserve for tax liability on the face
of the Opening Related Norwegian Businesses Balance Sheet or that are incurred
prior to Closing in the ordinary course of business consistent with past
practice of the Related Norwegian Businesses; and (vii) liabilities for
expenses incurred by A. L. Oslo and New A. L. Oslo in connection with the
execution of the Restructuring Agreement and the consummation of the
transactions contemplated thereby, except for certain expenses agreed to be
paid by New A. L. Oslo pursuant to the Restructuring Agreement (see
"Description of Certain Agreements -- Certain Provisions of the Restructuring
Agreement -- Fees and Expenses").

No indemnification is required by A. L. Oslo for breaches of A. L. Oslo's
representations and warranties relating to compliance with laws (including
environmental laws) or for the liabilities described in items (iii) or (v) of
the immediately preceding paragraph until Damages aggregate to more than
$500,000, at which time only Damages exceeding $500,000 shall be payable to the
Company unless a senior official of A. L. Oslo had knowledge of the conditions
giving rise to the claim in which event all Damages shall be payable to the
Company. In addition, the Company is only entitled to make a claim against A.
L. Oslo for Damages resulting from a liability described in item (iii) of the
immediately preceding paragraph if it notifies A. L. Oslo of such claim prior
to the fifth anniversary of the Closing Date.

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From and after the Closing Date, the Company will indemnify A. L. Oslo and
its subsidiaries and affiliates against any and all Damages incurred in
connection with, arising out of or resulting from: (i) the breach of any
covenant, representation or warranty made by the Company in the Restructuring
Agreement, any schedule thereto or any certificate required to be delivered
thereunder; (ii) any failure by New A. L. Oslo to meet any obligation secured
by the Skoyen Facility as credit support for obligations of New A. L. Oslo or
the Company or the failure of New A. L. Oslo or the Company to release the
Skoyen Facility as collateral upon the fifth anniversary of the Closing Date as
contemplated by the Restructuring Agreement; (iii) except as specifically
provided to the contrary in the Restructuring Agreement, liabilities
specifically contemplated as being assumed by New A. L. Oslo pursuant to the
Demerger Agreement or the Restructuring Agreement; (iv) liabilities arising in
connection with the operation of New A. L. Oslo subsequent to the Closing; and
(v) liabilities for expenses incurred by the Company in connection with the
execution of the Restructuring Agreement and the consummation of the
transactions contemplated thereby.

CONDUCT OF THE RELATED NORWEGIAN BUSINESSES PENDING THE CLOSING. A. L. Oslo
has agreed that, prior to the Closing, it would cause the Related Norwegian
Businesses to be conducted only in the ordinary and usual course of business
consistent with past practice, except as otherwise contemplated by the
Restructuring Agreement. A. L. Oslo also agreed, among other things, to, except
as contemplated by the Restructuring Agreement and for certain specified
exceptions, (i) use reasonable efforts to preserve, and use reasonable efforts
to cause its subsidiaries to preserve, the Related Norwegian Businesses and to
maintain existing relations with customers, suppliers, employees and business
associates; (ii) not, nor permit any of Apolab, Lakemedel or Norgesplaster to,
sell or pledge or agree to sell or pledge any stock owned by it; (iii) not, nor
permit any of Apolab, Lakemedel or Norgesplaster to split, combine or
reclassify its outstanding capital stock; (iv) not, nor permit any of Apolab,
Lakemedel or Norgesplaster to, amend its organizational documents; (v) not, nor
permit any of Apolab, Lakemedel or Norgesplaster to, declare, set aside or pay
any dividends, except for annual cash dividends not in excess of NOK 10,000,000
in the aggregate; (vi) not, nor permit any of Apolab, Lakemedel or
Norgesplaster to, incur or modify any indebtedness or other liability relating
to the Related Norwegian Businesses; (vii) not, nor permit any of Apolab,
Lakemedel or Norgesplaster to, report as deductible amortization or
depreciation in connection with its Norwegian income tax returns for 1993
amounts in excess of certain specified limitations; (viii) not, nor permit any
of its subsidiaries to, issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for, or
options, warrants or other rights to acquire, any capital stock of A. L. Oslo
or of any corporation included in the Related Norwegian Businesses (including,
Apolab, Lakemedel and Norgesplaster); (ix) not, nor permit any of its
subsidiaries to, transfer, lease, license, sell, mortgage, pledge, dispose of
or encumber any assets material to the Related Norwegian Businesses, or, other
than in the ordinary course of business, any other assets of the Related
Norwegian Businesses; (x) not, nor permit any of its subsidiaries to, cause or
permit A. L. Oslo or the Related Norwegian Businesses to make any significant
investment in, or acquisition of, any business; (xi) not, nor permit any of its
subsidiaries to, grant any severance or termination pay or enter into any
employment or severance agreement with any director, officer or other key
employee of any entity included in the Related Norwegian Businesses or
materially increase any compensation payable or which could become payable by
New A. L. Oslo or its subsidiaries or make any material amendment to any
employee benefit plan to be transferred to New A. L. Oslo in the Demerger;
(xii) keep A. L. Oslo's and its subsidiaries' books and records in accordance
with applicable law; (xiii) not, nor permit any of its subsidiaries to, make
any capital expenditures in excess of NOK 50,000,000 in the aggregate; (xiv)
not, nor permit Apolab, Lakemedel or Norgesplaster to, enter into any
transactions (including, the transfer of assets) with affiliates (including
businesses of A. L. Oslo which are not to be transferred to New A. L. Oslo in
the Demerger); (xv) cause New A. L. Oslo to receive certain amounts of cash;
and (xvi) not, and to cause Apolab, Lakemedel and Norgesplaster to not, engage
or agree to engage in any action nor permit anything to be done in the conduct
of any of the Related Norwegian Businesses, or otherwise, which, in any
material respect, would be contrary to or in breach of any provision of the
Restructuring Agreement or would cause any of the representations of A. L. Oslo
to become untrue in any material respect.

CONDUCT OF THE BUSINESS OF THE COMPANY PENDING THE CLOSING. The Company
agreed that, prior to the Closing, it would conduct its business only in the
ordinary and usual course consistent with past practice,

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except as otherwise contemplated by the Restructuring Agreement. The Company
also agreed, among other things, to, except as contemplated by the
Restructuring Agreement and for certain specified exceptions, (i) use, and
cause each of its subsidiaries to, use reasonable efforts to preserve their
respective business organizations intact and to maintain existing relations
with customers, suppliers, employees and business associates; (ii) not amend
its Certificate of Incorporation or bylaws; (iii) not split, combine or
reclassify its capital stock; (iv) not declare, set aside or pay any dividends,
except for regular quarterly cash dividends not in excess of $.045 per share;
(v) not, and to cause its subsidiaries to not, issue, sell, pledge, dispose or
encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants or other rights to acquire, any capital
stock; and (vi) not, and to cause its subsidiaries to not, engage or agree to
engage in any action nor permit anything to be done in the conduct of its
business, or otherwise, which, in any material respect, would be contrary to or
in breach of any provision of the Restructuring Agreement or would cause any of
the representations of the Company to become untrue in any material respect.

COVENANTS. The Company, A. L. Oslo and New A. L. Oslo made certain additional
covenants and agreements in the Restructuring Agreement, including the
following (which covenants and agreements are subject, in certain cases, to
specified exceptions): (i) the Company agreed to convene a meeting of its
stockholders to consider and vote on the Transactions; (ii) A. L. Oslo agreed
to convene a meeting of its stockholders to consider and vote on the Demerger;
(iii) A. L. Oslo agreed to use its reasonable best efforts to obtain approval
to permit New A. L. Oslo to use the name, "Apothekernes Laboratorium A.S" and
if such approval is obtained, to change New A. L. Oslo's name to "Apothekernes
Laboratorium A.S" and to change A. L. Oslo's name to "A.L. Industrier A.S";
(iv) the Company and A. L. Oslo each agreed to make required filings and use
their best efforts to take all other required actions to consummate the
Transactions; (v) the Company and A. L. Oslo agreed to afford each other's
representatives complete access to their respective properties, books and
records; (vi) the Company and A. L. Oslo each agreed to keep confidential all
non-public information relating to the other's business; (vii) the Company and
A. L. Oslo each agreed to promptly notify the other of any inaccuracies in
their respective representations and warranties or any failures to comply or
satisfy any of their respective covenants; (viii) the Company and A. L. Oslo
each agreed to consult with the other regarding all publicity and governmental
filings relating to the Transactions; (ix) New A. L. Oslo agreed to enter into
certain interim agreements with A. L. Oslo whereby New A. L. Oslo would provide
certain administrative services to A. L. Oslo (see "Description of Certain
Agreements -- Administrative Services Agreement" for a more detailed
description of such agreement) and would license the use of the "A. L." name
and logo presently used by A. L. Oslo to A. L. Oslo; (x) the Company and A. L.
Oslo agreed to reexamine their material capital expenditure commitments; (xi)
the Company agreed to invest NOK 100,000,000 ($14.4 million) in equity capital
in New A. L. Oslo within six months after Closing; (xii) A. L. Oslo agreed to
use its reasonable efforts to refinance a portion of its indebtedness related
to the Related Norwegian Businesses on a basis reasonably acceptable to the
Company if requested by the Company; (xiii) the Company and A. L. Oslo agreed
to cooperate to obtain any necessary modifications or waivers under A. L.
Oslo's existing indebtedness and to cause the release of certain collateral
(other than the Skoyen Facility) which will be retained by A. L. Oslo in the
Demerger that is presently securing such indebtedness and the Company agreed to
use its commercially reasonable efforts to assist A. L. Oslo, if necessary, in
obtaining certain required consents of A. L. Oslo's creditors; (xiv) A. L. Oslo
agreed to permit the Skoyen Facility to be used as credit support for up to
five years after Closing for certain of A. L. Oslo's indebtedness which would
be transferred to New A. L. Oslo in the Demerger; (xv) A. L. Oslo agreed to
enter into the Skoyen Lease with New A. L. Oslo; (xvi) A. L. Oslo agreed to
cause any and all intercompany indebtedness owed from A/S Wangs Fabrik, a
wholly owned Norwegian subsidiary of A. L. Oslo ("Wangs Fabrik"), and Nopal
International AG to A. L. Oslo to be repaid prior to Closing (with the proceeds
of such repayments being treated as assets of New A. L. Oslo for purposes of
the Demerger); (xvii) the Company and A. L. Oslo agreed that the size of the
Company's Board of Directors would be at least eight (and not more than nine)
members at the time of Closing and would not be reduced below eight members or
increased above nine members for at least two years after the Closing Date and
that, at Closing, Einar W. Sissener would be Chief Executive Officer of the
Company; (xviii) the Company and A. L. Oslo agreed that the directors, members
of the Company Assembly (or any other committees required under applicable law
or applicable agreements)

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and management of A. L. Oslo immediately prior to the Closing will be the
directors, members of the Company Assembly (or any other committees required
under applicable law or applicable agreements) and management of New A. L.
Oslo; (xix) the Company and A. L. Oslo agreed that, immediately following the
consummation of the Demerger, all employees of A. L. Oslo will become employees
of New A. L. Oslo upon the same terms as applicable immediately prior to the
Demerger; (xx) the Company agreed to transfer, unless it concluded that such
transfer would have materially adverse tax consequences to A.L-Pharma A/S and
its affiliates, the ownership of A.L-Pharma A/S, the parent holding company of
Dumex, and its related assets and subsidiaries, to New A. L. Oslo after the
Closing; and (xxi) A. L. Oslo agreed that, for a period of ten years following
Closing, neither it, its subsidiaries, nor any of its controlling shareholders
as of the date of the Restructuring Agreement would own or operate any business
that competes with the Related Norwegian Businesses anywhere in the world.

CONDITIONS TO CONSUMMATION OF THE TRANSACTIONS. Each party's respective
obligations to consummate the Transactions contemplated by the Restructuring
Agreement are subject to various conditions that include the following (any or
all of which may be waived to the extent permitted by applicable law): (i)
approval of the Restructuring Agreement by (a) the majority of the vote of the
shares of Class A Stock and shares of Class B Stock voting as a single class
and (b) the holders of a majority of the outstanding shares of Class A Stock
voting as a single class and the holders of a majority of the outstanding
shares of Class B Stock voting as a single class; (ii) approval of the Demerger
by 66 2/3% of the outstanding A. L. Oslo Shares represented at a meeting of
holders of A. L. Oslo Shares called to vote on such matter; (iii) the absence
of any statute, rule, judgment or other order of any court or governmental or
regulatory authority prohibiting or making illegal the consummation of the
transactions contemplated by the Restructuring Agreement or imposing material
restrictions on the Company or A. L. Oslo in connection with consummation of
the Transactions or the operations of the Related Norwegian Businesses
following consummation of the Transactions; (iv) the acceptance of the Exchange
Offer by holders of more than 90% of the New A. L. Oslo Shares outstanding on a
fully diluted basis; (v) the receipt of all concessions required under
Norwegian law in order to effectuate the transactions contemplated by the
Restructuring Agreement (including, without limitation, the Demerger and the
Exchange Offer); (vi) the existence of an exemption or exemptions from the
registration requirements of the Securities Act in respect of the issuance of
the Warrants or the registration under the Securities Act of the Warrants; and
(vii) the execution of an amendment to the Control Agreement dated February 7,
1986 between A. L. Oslo and the Company which shall extend the termination date
of such agreement to November 1, 1997 and shall permit bona fide pledges of up
to 2,000,000 shares of the Class B Stock owned by A. L. Oslo.

The obligation of the Company to consummate the New A. L. Labs Transfer, the
Exchange Offer and the Certificate of Incorporation Amendment is also subject
to, among other things, the following conditions: (i) the accuracy in all
material respects when made, and except to the extent such representations and
warranties speak specifically as of an earlier date, as of the Closing Date as
though made on and as of the Closing Date, of the representations and
warranties of A. L. Oslo contained in the Restructuring Agreement and A. L.
Oslo's performance, in all material respects, of all obligations required to be
performed by it at or prior to the Closing Date; (ii) the receipt of all
required consents and approvals in connection with the transactions
contemplated by the Restructuring Agreement, other than those which if not made
or obtained would not have a Material Adverse Effect or an RNB Material Adverse
Effect; (iii) the absence of a material adverse change in the assets,
liabilities, operations or prospects of the Related Norwegian Businesses from
December 31, 1993 through the Closing Date (including, without limitation, any
material adverse change in the prospects for the Related Norwegian Businesses
as set forth in the forecasts and projections for the Related Norwegian
Businesses attached to the Restructuring Agreement); (iv) the execution and
delivery by A. L. Oslo and New A. L. Oslo of the Skoyen Lease; (v) the
consummation of the Demerger; (vi) the receipt by the Company of certain legal
opinions; and (vii) the absence of any materially adverse modification to, or
any withdrawal of, the opinion of Lehman Brothers that the Consideration to be
paid by the Company in the Exchange Offer is fair, from a financial point of
view, to the Company and the holders of the Class A Stock.

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The obligation of A. L. Oslo to consummate the Demerger is also subject to,
among other things, the following conditions: (i) the accuracy in all material
respects when made, and except to the extent such representations and warrants
speak specifically as of an earlier date, as of the Closing Date as though made
on and as of the Closing Date, of the representations and warranties of the
Company and the Company's performance, in all material respects, of all
obligations required to be performed by it at or prior to the Closing Date;
(ii) the receipt of all required consents and approvals in connection with the
transactions contemplated by the Restructuring Agreement, other than those
which if not made or obtained would not have a Material Adverse Effect or a RNB
Material Adverse Effect; (iii) the absence of a material adverse change in the
assets, liabilities, operations or prospects of the Company from December 31,
1993 through the Closing Date; (iv) the execution and delivery by the Company
and the Warrant Agent of the Warrant Agreement; (v) the satisfaction or waiver
of the conditions to the Company performing its obligations under the
Restructuring Agreement (other than those conditions which relate to the
Demerger) and the absence of a reasonable expectation on A. L. Oslo's part that
such conditions shall not be satisfied as of the Closing Date; (vi) the receipt
by A. L. Oslo of certain legal opinions; and (vii) the absence of any
materially adverse modification to, or any withdrawal of, the opinion of Bear,
Stearns & Co. Inc. that the consideration received in the Exchange Offer is
fair, from a financial point of view, to the holders of the A. L. Oslo Shares.

CLOSING. The Restructuring Agreement provides that the Closing will occur on
the fifth business day after the date on which the last to be fulfilled or
waived of the conditions set forth in the Restructuring Agreement shall have
been fulfilled or waived, or such other date as the Company and A. L. Oslo may
agree.

TERMINATION. The Restructuring Agreement may be terminated at any time prior
to the Closing, whether before or after approval of the Transactions by the
holders of the Class A Stock: (i) by mutual consent of the Company and A. L.
Oslo; (ii) by the Company, if (a) there has been a material breach by A. L.
Oslo of any covenant contained in the Restructuring Agreement or a breach of
any representation or warranty of A. L. Oslo contained in the Restructuring
Agreement which is reasonably likely to have an RNB Material Adverse Effect
(and, in each case, such breach has not been cured within 20 business days
after written notice thereof) or (b) A. L. Oslo's board of directors shall have
withdrawn or modified, in a manner adverse to the Company, its approval of the
Restructuring Agreement or any of the transactions contemplated thereby; (iii)
by A. L. Oslo, if (a) there has been a material breach by the Company of any
covenant contained in the Restructuring Agreement or a breach of any
representation or warranty of the Company contained in the Restructuring
Agreement which is reasonably likely to have a Material Adverse Effect (and, in
each case, such breach has not been cured within 20 business days after written
notice thereof) or (b) the Company's Board of Directors or the Special
Committee shall have withdrawn or modified, in a manner adverse to A. L. Oslo,
its approval of the Restructuring Agreement or any of the transactions
contemplated thereby; and (iv) by either the Company or A. L. Oslo, if the
Transactions shall not have been consummated by December 31, 1994 or if the
stockholders of either the Company or A. L. Oslo have voted and failed to
approve the Transactions, except that such right to terminate the Restructuring
Agreement shall not be available to any party whose failure to perform its
obligations under the Restructuring Agreement shall have been the cause of the
failure of the Closing to occur on or prior to such date.

In the event of termination of the Restructuring Agreement by either the
Company or A. L. Oslo, the Restructuring Agreement will become void and there
will be no liability or obligation on the part of the Company or A. L. Oslo,
other than under certain provisions of the Restructuring Agreement relating to
confidential treatment of non-public information and the payment of fees and
expenses (as described under "Description of Certain Agreements -- Certain
Provisions of the Restructuring Agreement -- Fees and Expenses").

AMENDMENT AND WAIVER. The Restructuring Agreement may be amended or modified
in writing by the Company and A. L. Oslo. At any time prior to the Closing,
either the Company or A. L. Oslo may waive any of the conditions to its
obligations to consummate the Transactions or amend, modify or supplement any
schedule of exceptions to any of its respective representations or warranties
to the extent such amendment,

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supplement or modification relates to facts or events that occur after the
execution of the Restructuring Agreement. However, no such amendment,
supplement or modification to the schedules will be effective for purposes of
determining whether the conditions to the parties' obligations to consummate
the Transactions are satisfied.

FEES AND EXPENSES. Under the Restructuring Agreement, if the Closing occurs,
the Company shall pay the expenses incurred by the Company in connection with
the Restructuring Agreement and the transactions contemplated thereby. The
Company has already paid the investment banking, legal, accounting and other
direct transaction expenses it incurred prior to March 31, 1994 and expects to
incur additional expenses of approximately $2.0 million after March 31, 1994.
In addition, if the Closing occurs, except for Transfer Expenses (as defined
below) which shall be borne by A. L. Oslo and New A. L. Oslo as described
below, A. L. Oslo shall be liable for the payment of expenses incurred by A. L.
Oslo and New A. L. Oslo in connection with the Restructuring Agreement and the
transactions contemplated thereby. If the Closing occurs, each of A. L. Oslo
and New A. L. Oslo will pay one-half of the expenses (such as registration
fees, stamp taxes and transfer taxes), excluding legal expenses directly
related to the transfer of specific assets in the Demerger, incurred by A. L.
Oslo or New A. L. Oslo in connection with the transfer of the Related Norwegian
Businesses to New A. L. Oslo in the Demerger (collectively, the "Transfer
Expenses") in excess of NOK 2,075,000 ($ .30 million), which amount shall be
paid exclusively by A. L. Oslo. The total amount of Transfer Expenses is
expected to be NOK 10,000,000 ($1.4 million). If the Closing does not occur,
all expenses incurred in connection with the Restructuring Agreement and the
transactions contemplated thereby shall be paid by the party incurring such
expenses.

ARBITRATION. The Company and A. L. Oslo or any of the other persons
indemnified under the Restructuring Agreement shall attempt to resolve any
dispute under the Restructuring Agreement amicably by mutual agreement. Any
such dispute which cannot be so resolved within 60 days shall be finally
resolved by arbitration in London in accordance with the Rules of Conciliation
and Arbitration of the International Chamber of Commerce. Any such arbitration
may be initiated by either the Company or A. L. Oslo by written notice to the
other party following the 60-day period.

THE DEMERGER AGREEMENT

The Demerger Agreement sets forth the terms and conditions of the Demerger. A
copy of the English translation of the form of the Demerger Agreement is
attached to this Proxy Statement as Exhibit C and is incorporated herein by
reference. The definitive Demerger Agreement was executed as of May 16, 1994.
Pursuant to the Demerger Agreement, A. L. Oslo will incorporate New A. L. Oslo
under the laws of the Kingdom of Norway and will transfer all of the assets and
liabilities of the Related Norwegian Businesses (except the Skoyen Facility),
including the stock of Apolab, Norgesplaster and Lakemedel, to New A. L. Oslo.
Pursuant to the Demerger Agreement, consummation of the Demerger is subject to
the approval of the holders of A. L. Oslo Shares, and the satisfaction or
waiver of the conditions to A. L. Oslo's obligations to consummate the Demerger
that are set forth in the Restructuring Agreement. See "Descriptions of Certain
Agreements -- Certain Provisions of the Restructuring Agreement -- Conditions
to Consummation of the Transactions." Upon the effectiveness of the Demerger,
the holders of A. L. Oslo Shares (other than Wangs Fabrik) shall receive one
New A. L. Oslo Share for each A. L. Oslo Share. A. L. Oslo will be renamed,
"A.L. Industrier A.S" and will use its best efforts to permit New A. L. Oslo to
use the name, "Apothekernes Laboratorium A.S" upon consummation of the
Demerger. The Demerger Agreement also provides that, immediately following the
consummation of the Demerger, all of A. L. Oslo's employees will become
employees of New A. L. Oslo upon the same terms as applicable immediately prior
to the Demerger. For tax and accounting purposes, the Demerger will be deemed
effective as of January 1, 1994 notwithstanding the actual Closing Date.

SKOYEN LEASE

An additional condition to the consummation of the Transactions is the
execution and delivery of the Skoyen Lease by A. L. Oslo and New A. L. Oslo.
After the Closing, A. L. Oslo will retain ownership of the

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Skoyen Facility and will lease the Skoyen Facility to New A. L. Oslo for a term
of 20 years, which term shall be renewable, at the option of New A. L. Oslo,
for four additional consecutive five year terms. New A. L. Oslo will have the
right to terminate the Skoyen Lease at any time during its term upon twelve
months written notice to A. L. Oslo.

Basic rent will be $1.00 per year for the initial 20 year term and the then
prevailing fair rental value of the leased premises for each renewal term
thereafter. In addition to basic rent, New A. L. Oslo will pay all documented
expenses of ownership and operation of the Skoyen Facility, other than expenses
that would not be incurred if New A. L. Oslo owned the Skoyen Facility,
together with all other amounts and obligations which New A. L. Oslo assumes or
agrees to pay or discharge pursuant to its use of such premises. During the
term of the Skoyen Lease, New A. L. Oslo will be responsible for the
maintenance and repair of the Skoyen Facility and, so long as it is not in
default under the Lease, will have the right to make alterations to the leased
premises, including demolishing and removing existing improvements and
constructing new improvements, without A. L. Oslo's consent.

New A. L. Oslo will be responsible for maintaining customary amounts of
property and liability insurance for the Skoyen Facility. If the Skoyen
Facility is damaged or destroyed by fire or other casualty, New A. L. Oslo will
have the option (i) to terminate the Skoyen Lease, in which event, it will be
entitled to retain insurance proceeds attributable to alterations and other
property or equipment owned by it and the balance will be paid to A. L. Oslo,
or (ii) to restore the Skoyen Facility, in which event, it will be entitled to
retain all of the insurance proceeds necessary to restore the property and any
remaining balance will be paid to A. L. Oslo. If a material portion of the
Skoyen Facility is condemned, New A. L. Oslo will have the option (i) to
terminate the Skoyen Lease, in which event, it will be entitled to the portion
of any condemnation award in respect of any alterations constructed by it on
the premises and any remaining balance will be paid to A. L. Oslo or (ii) to
restore the remaining property to a useable condition, in which event, it will
be entitled to all condemnation awards necessary to restore the property and
any remaining balance will be paid to A. L. Oslo.

During the initial 20 year term of the Skoyen Lease, so long as it is not in
default under the Lease, New A. L. Oslo will be permitted to assign the Lease
or sublet all or part of the Skoyen Facility without A. L. Oslo's consent.
However, during any renewal term, A. L. Oslo's consent will be required for New
A. L. Oslo to assign the Skoyen Lease or to sublet all or a portion of the
Skoyen Facility, except that A. L. Oslo's consent will not be required (x) for
New A. L. Oslo to assign the Skoyen Lease or sublet the Skoyen Facility in
connection with a sale of the portion of New A. L. Oslo's business conducted at
the Skoyen Facility or (y) for New A. L. Oslo to sublet up to 25% of the leased
premises where New A. L. Oslo continues to occupy the remaining 75% of the
leased premises for uses permitted by the Skoyen Lease.

Upon termination of the Skoyen Lease, New A. L. Oslo will be required to
surrender the premises to A. L. Oslo in substantially the same condition as it
existed at the commencement of the Lease, except as repaired, rebuilt,
restored, altered, replaced or added to as permitted by the Lease, except for
ordinary wear and tear and for any damage by fire or other casualty which New
A. L. Oslo is not required by the Lease to repair or restore, and except for
the removal of trade equipment and other property owned by New A. L. Oslo. New
A. L. Oslo will not be required to remove any alterations constructed during
the term of the Lease. However, it will be required to remove all trade
equipment and other machinery it owns on or prior to such termination and
repair any damage caused by the removal of such items. Subject to certain
exceptions, A. L. Oslo will be required to reimburse New A. L. Oslo at the then
existing book value for certain alterations constructed by New A. L. Oslo
during the term of the Skoyen Lease.

Upon a default by New A. L. Oslo under the Skoyen Lease, A. L. Oslo will have
usual and customary remedies, including the right to remove New A. L. Oslo from
possession, with or without terminating the Lease, and the right, in either
case, to seek to relet the premises.

All disputes between A. L. Oslo and New A. L. Oslo concerning the terms of
the Skoyen Lease shall be settled by arbitration in Oslo, Norway.

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ADMINISTRATIVE SERVICES AGREEMENT

Pursuant to the Restructuring Agreement, prior to the effectiveness of the
Demerger, A. L. Oslo and New A. L. Oslo will enter into the Administrative
Services Agreement with respect to the provision of administrative services by
New A. L. Oslo to A. L. Oslo after the Closing. The administrative services
include assisting in the preparation and control of annual budgets, cash
management, the collection of payables, the preparation of A. L. Oslo's
accounts, annual reports and tax returns, maintaining corporate records such as
the shareholders' register, preparing and issuing notices and agendas for board
and shareholders meetings, assisting in the implementation of and maintenance
of insurance, certain payroll and in-house medical and health services and
assisting in personnel matters. New A. L. Oslo will not be obligated to provide
any administrative services to A. L. Oslo to the extent that such services
would have a material adverse effect on New A. L. Oslo. A. L. Oslo will pay New
A. L. Oslo a fee for such services equal to New A. L. Oslo's direct and
indirect costs (including overhead and out-of-pocket costs and expenses) of
providing such services, except that the fee for services rendered during
calendar years 1994, 1995 and 1996 will be at least NOK 5,650,000, NOK
4,000,000 and NOK 3,000,000, respectively.

The initial term of the Administrative Services Agreement will be the three-
year period beginning on January 1, 1994 (regardless of the date of the
Administrative Services Agreement). Thereafter, such term will be automatically
extended each year for one-year periods unless terminated by New A. L. Oslo or
A. L. Oslo on six months prior written notice to the other party.

Pursuant to the Administrative Services Agreement, New A. L. Oslo warrants to
A. L. Oslo that, in rendering services under such agreement, its and its
personnel will act with diligence, honesty and competence in accordance with
the same standard as it applies to its own affairs. A. L. Oslo has agreed that
New A. L. Oslo will only be liable to A. L. Oslo under the Administrative
Services Agreement for all claims, damages, causes of action, losses,
penalties, fines, expenses, insurance or judgments (including attorneys' fees)
(collectively, "Claims") arising out of material breaches by New A. L. Oslo of
such agreement and the willful misconduct and gross negligence of New A. L.
Oslo. Pursuant to the Administrative Services Agreement, A. L. Oslo has agreed
to indemnify New A. L. Oslo against all Claims of third parties arising out of
the Administrative Services Agreement except for such Claims which arise out of
a material breach by New A. L. Oslo of the Administrative Services Agreement or
the willful misconduct or gross negligence of New A. L. Oslo. New A. L. Oslo
will indemnify A. L. Oslo against all Claims of third parties arising out of a
material breach by New A. L. Oslo of the Administrative Services Agreement or
the willful misconduct or gross negligence of New A. L. Oslo.

ELECTION OF DIRECTOR

Prior to the Special Meeting, the Company's Board of Directors will adopt a
resolution to amend the Company's bylaws to increase the size of the Company's
Board of Directors from eight members to nine members if and when Proposal #1
is approved. Eight directors were elected at the 1994 Annual Meeting. See "--
Members of the Company's Board of Directors." At the Special Meeting, if
Proposal #1 is approved, the holders of Class A Stock will elect one additional
director to fill the directorship created by the amendment to the Company's
bylaws. If Proposal #1 is approved, the Company's Board of Directors intends to
cause the nomination of the nominee listed below under "--Nominee for Class A
Director" and all proxies received from holders of the Class A Stock will be
voted FOR the election of such nominee as Class A Director, except to the
extent that persons giving such proxies withhold authority to vote for such
nominees.

NOMINEE FOR CLASS A DIRECTOR

Subject to approval of Proposal #1, the Class A Director is to be elected to
hold office effective upon the consummation of the Acquisition until the next
Annual Meeting of Stockholders and until such person's

85
<PAGE>

successor is chosen and qualified. The Company believes that such nominee for
director will be able to serve. If such nominee would be unable to serve, the
enclosed proxy confers authority to vote in favor of such other person or
persons as the Company's Board of Directors at the time recommends to serve in
place of the person or persons unable to serve.

The name, age, principal business experience during the last five years, and
certain other information regarding the person proposed to be nominated for
election as a Class A Director if Proposal #1 is approved is listed below.

Peter G. Tombros............... Age 52. President and Chief Executive Officer
of Enzon, Inc., a developer and marketer of
pharmaceutical products, since April, 1994.
Vice President Corporate Strategic Planning
of Pfizer Inc. from 1990-1994; Executive Vice
President of Pfizer Pharmaceuticals, Pfizer
Inc. from 1986-1990 and various other
positions with Pfizer Inc. from 1968-1986.

MEMBERS OF THE COMPANY'S BOARD OF DIRECTORS

At the 1994 Annual Meeting, two Class A Directors and six Class B directors
were elected to hold office until the next Annual Meeting of Stockholders and
until such person's successor is chosen and qualified.

CLASS A DIRECTORS. The name, age, principal business experience during the
last five years, and certain other information regarding each of the persons
elected as a Class A Director at the 1994 Annual Meeting are listed below.

James Balog.................... Age 65. Director of the Company since
September 1983. Chairman of 1838 Investment
Advisors, Chairman of Lambert Brussels
Capital Corporation from February, 1988 to
December 31, 1992.

Thomas G. Gibian............... Age 72. Director of the Company since March
1993. President and Chief Executive Officer
of Henkel Corporation, a specialty chemicals
manufacturer and United States subsidiary of
Henkel KGaA, from 1980 to 1986.

CLASS B DIRECTORS. The name, age, principal business experience during the
last five years, and certain other information regarding each of the persons
elected as a Class B Director at the 1994 Annual Meeting are listed below.

I. Roy Cohen................... Age 71. Director of the Company since 1975.
Consultant to the Company and Chairman of the
Executive Committee; Chairman of the Office
of the Chief Executive of the Company from
July, 1991 to December, 1992; Vice Chairman
of the Board of Directors of the Company from
January, 1991 to December 31, 1992; President
and Chief Executive Officer of the Company
from 1976 to January, 1991.

Glen E. Hess...................
Age 52. Director of the Company since
September 1983. Partner in the law firm of
Kirkland & Ellis since 1973.

86
<PAGE>

Gert W. Munthe.................
Age 37. Director of the Company since June
20, 1994. President and Chief Executive
Officer of NetCom GSM A.S., a Norwegian
mobile cellular company, since 1993.
President of Nycomed (Imaging) A.S, a wholly
owned subsidiary of Hafslund Nycomed A.S,
from 1991 to 1993. Executive Vice President
in charge of the energy business of Hafslund
Nycomed A.S, an industrial group engaged in
the energy and pharmaceutical businesses,
from 1988 to 1991.

Einar W. Sissener.............. Age 65. Director of the Company since 1975.
Chief Executive Officer of the Company since
June 20, 1994; member of the Office of the
Chief Executive of the Company from July,
1991 to June 20, 1994; Chairman of the
Company since 1975; Chief Executive Officer
and President of A. L. Oslo since 1972.

Georg W. Sverdrup.............. Age 66. Director of the Company since June
20, 1994. Executive Vice President of
Frydenland Ringnes Breweries A.S, a brewery
in Oslo, Norway, from 1970 to 1993. Vice
Chairman of the Board of A/S Elje Oslo, an
investment company, since 1977. Chairman of
Unger-Vetlesen Medical Fund, a beneficiary
trust in Jersey Channel Islands, since 1983.
Member of the Company Assembly of A. L. Oslo
since 1973 and Vice Chairman of the Company
Assembly of A. L. Oslo since 1986.

Erik G. Tandberg...............
Age 64. Director of the Company since June
20, 1994. Partner in Corporate Development
International, a consulting partnership
specializing in international searches for
companies, since 1986. President of Arco
Chemical Europe Inc., a chemical company,
from 1982 to 1986.

CERTAIN RELATIONSHIPS

Mr. Glen E. Hess's professional corporation is a partner of Kirkland & Ellis,
a law firm which since 1978 has performed and continues to perform significant
legal services for the Company and has performed and continues to perform
certain legal services for A. L. Oslo and its subsidiaries.

Mr. David E. Cohen, the President of the Company's Animal Health Division, is
the nephew of Mr. I. Roy Cohen, a Class B Director.

Mr. Gert W. Munthe, a Class B Director, is the son-in-law of Mr. Einar W.
Sissener.

87
<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth as of August 1, 1994 (unless otherwise noted)
certain information regarding the beneficial ownership of the Class A Stock and
the Class B Stock by (a) each person who is known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of either of such
classes, (b) each director, each nominee for director and the six named
executive officers (as defined below) of the Company and (c) all directors and
executive officers of the Company as a group. Unless otherwise indicated, each
beneficial owner possesses sole voting and dispositive power with respect to
the shares listed in this table.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE PERCENT PERCENT OF
TITLE OF CLASS OF BENEFICIAL OF COMMON STOCK
OF STOCK NAME OF BENEFICIAL OWNER OWNERSHIP CLASS (BOTH CLASSES)
-------------------- ------------------------ ------------- ------- --------------
<C> <S> <C> <C> <C>
Class B Common Stock A. L. Oslo(1) 8,226,562(2) 100.00% 38.13%
Class A Common Stock A. L. Oslo(1) 0(3) *(3) *
Class A Common Stock Wellington Management
Company(4) 1,991,450 14.92 9.23
Class A Common Stock Government of Singapore
Investment
Corporation Pte Ltd.
(5)
Government of Singapore
(5)
Monetary Authority of
Singapore (5) 1,303,800 9.77 6.04
Class A Common Stock State of Wisconsin
Investment Board (6) 1,171,400 8.77 5.43
Class A Common Stock INVESCO PLC (7 )
INVESCO North American
Group, Ltd.(7)
INVESCO, Inc. (7)
INVESCO North American
Holdings, Inc. (7)
INVESCO Funds Group,
Inc. (7) 1,022,800 7.66 4.74
Class A Common Stock Vanguard Specialized
Portfolios, Inc. --
Health
Care Portfolio (8) 847,700 6.35 3.93
Class A Common Stock Einar W. Sissener (9) 0 * *
Class A Common Stock James Balog 11,000 * *
Class A Common Stock I. Roy Cohen 26,844 * *
Class A Common Stock Thomas G. Gibian 450 * *
Class A Common Stock Glen E. Hess 4,525 * *
Class A Common Stock Gert W. Munthe (10) 0 * *
Class A Common Stock Georg W. Sverdrup (11) 3,000 * *
Class A Common Stock Erik G. Tandberg (12) 0 * *
Class A Common Stock Peter G. Tombros 0 * *
Class A Common Stock Jeffrey E. Smith (13) 58,609 * *
Class A Common Stock David E. Cohen(14) 39,096 * *
Class A Common Stock Niels L. Graugaard (15) 13,125
Class A Common Stock George S. Barrett (16) 9,329 * *
Class A Common Stock All directors and
executive officers as a
group (13 persons) (17) 174,625 1.31 *
</TABLE>
- --------
* Indicates ownership of less than one percent.

(1) The address of A. L. Oslo is Postboks 158 Skoyen, N-0212 Oslo 2, Norway.

(2) These shares of Class B Stock are held of record by Wangs Fabrik, a wholly
owned subsidiary of A. L. Oslo, although A. L. Oslo retains full
beneficial ownership of these shares. Of such amount 1,828,125 shares have
been pledged to two Norwegian banks as collateral for outstanding debt and
unused drawing facilities. A. L. Oslo has agreed with the Company that it
will not sell or otherwise dispose of any of its Class B Stock or convert
any such shares into Class A Stock at any time prior to November 1, 1994.
Pursuant to the Restructuring Agreement, A. L. Oslo and the Company will
amend such agreement to provide that, other than pledges of up to
2,000,000 shares (including the pledges of shares referred to above), A.
L. Oslo will not sell or otherwise dispose of any of its Class B Stock or
convert any such shares into Class A Stock at any time prior to November
1, 1997. Wangs Fabrik also owns 14,335 A. L. Oslo Shares (approximately
3.58% of the outstanding A. L. Oslo Shares).

(3) Shares of Class B Stock are convertible into an equal number of shares of
Class A Stock. If all shares of Class B Stock beneficially owned by A. L.
Oslo were converted as of August 1, 1994, A. L. Oslo would own
approximately 38.13% of the then outstanding shares of Class A Stock.

88
<PAGE>

(4) The source of this information is the Amendment No. 3 to Schedule 13G
dated February 10, 1994 and filed with the Commission by Wellington
Management Company ("WMC"). Such Amendment No. 3 to Schedule 13G reported
that WMC has shared voting power and shared dispositive power with respect
to 766,250 shares and 1,991,450 shares, respectively, and does not have
sole voting power or sole dispositive power with respect to any shares.
WMC also reported that, other than Vanguard Specialized Portfolios, Inc.--
Health Care Portfolio ("Vanguard"), none of its clients is known to have
more than 5% beneficial ownership. See footnote (8) below for information
regarding Vanguard's ownership of shares of Class A Stock. The address of
WMC is 75 State Street, Boston, Massachusetts 02109.

(5) The source of this information is the Amendment No. 1 to Schedule 13D
dated May 24, 1994 and filed with the Commission by Government of
Singapore Investment Corporation Pte Ltd. (the "Singapore Corporation"),
Government of Singapore ("Singapore") and Monetary Authority of Singapore
(the "Singapore Authority"). Such Amendment No. 1 to Schedule 13D reports
that (a) the Singapore Corporation beneficially owns an aggregate of
1,303,800 shares which were bought by Singapore and the Singapore
Authority and has shared voting power and shared dispositive power with
respect to such shares, (b) Singapore beneficially owns 973,400 shares and
has shared voting power and shared dispositive power with respect to such
shares and (c) the Singapore Authority beneficially owns 330,400 shares
and has shared voting power and shared dispositive power with respect to
such shares. The address of the Singapore Corporation, Singapore and the
Singapore Authority is 250 North Bridge Road, #33-00 Raffles City Tower,
Singapore 0617.

(6) The source of this information is the Schedule 13G dated February 8, 1994
and filed with the Commission by State of Wisconsin Investment Board (the
"Wisconsin Board"), a government agency which manages public pension
funds. The address of the Wisconsin Board is P.O. Box 7842, Madison,
Wisconsin 53707.

(7) The source of this information is the Amendment No. 1 to Schedule 13G
dated February 8, 1994 and filed with the Commission by INVESCO PLC, a
parent holding company. Such Amendment No. 1 to Schedule 13G reported that
each of INVESCO PLC, INVESCO North American Group, Ltd., a holding
company, INVESCO, Inc., a holding company, INVESCO North American
Holdings, Inc., a holding company, and INVESCO Funds Group, Inc., an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940, have shared voting power and shared dispositive power with
respect to 1,022,800 shares and such persons hold the shares on behalf of
other persons (none of whom has more than 5% beneficial ownership) who
have the right to receive or the power to direct the receipt of dividends
from, or the proceeds from the sale of, such shares. The address of
INVESCO PLC, INVESCO North American Group, Ltd., INVESCO, Inc., INVESCO
North American Holdings, Inc. and INVESCO Funds Group, Inc. is 11
Devonshire Square, London EC2M 4YR, England.

(8) The source of this information is the Amendment No. 2 to Schedule 13G
dated February 10, 1994 and filed with the Commission by Vanguard. Such
Amendment No. 2 to Schedule 13G reported that Vanguard had sole voting
power and shared dispositive power with respect to the 847,700 shares. The
address of Vanguard is P.O. Box 2600, Valley Forge, Pennsylvania 19482.

(9) Mr. Sissener is President and Chief Executive Officer of A. L. Oslo and
together with Swekk (Mr. Sissener's family-controlled private holding
company) and certain of his relatives beneficially owns approximately
50.8% of the outstanding A. L. Oslo Shares.

(10) Mr. Munthe beneficially owns 11,800 A. L. Oslo Shares (approximately 3% of
the outstanding A. L. Oslo Shares). The Company has been advised by Mr.
Munthe that such A. L. Oslo Shares are owned by members of his immediate
family and are included in the number of shares beneficially owned by Mr.
Sissener (see footnote (9) above) and he does not have any voting or
dispositive power over such shares.

(11) These shares of Class A Stock are owned by Unger-Vetlesen Medical Fund.
Mr. Sverdrup has advised the Company that, as Chairman of the Board of
Unger-Vetlesen Medical Fund, he has sole voting power with respect to, and
may be deemed to be the beneficial owner of, such shares. Mr. Sverdrup is

89
<PAGE>

also the Vice Chairman of A. L. Oslo's Company Assembly and owns 2,000 A.
L. Oslo Shares (approximately 0.5% of the outstanding A. L. Oslo Shares).

(12) Mr. Tandberg is a director of A. L. Oslo and owns eight A. L. Oslo Shares.

(13) Includes 47,625 shares that may be obtained upon exercise of stock options
granted under the Company's 1983 Incentive Stock Option Plan, as amended,
and exercisable as of August 1, 1994 or within sixty days thereof. The
Company has been advised by Mr. Smith that his children own 2,000 of these
shares but that he has voting power over such shares.

(14) Includes 30,375 shares that may be obtained upon exercise of stock options
granted under the Company's 1983 Incentive Stock Option Plan, as amended,
and exercisable as of August 1, 1994 or within sixty days thereof.

(15) Comprised of shares that may be obtained upon exercise of stock options
granted under the Company's 1983 Incentive Stock Option Plan, as amended,
and exercisable as of August 1, 1994 or within sixty days thereof.

(16) Includes 7,500 shares that may be obtained upon exercise of stock options
granted under the Company's 1983 Incentive Stock Option Plan, as amended,
and exercisable as of August 1, 1994 or within sixty days thereof.

(17) Includes 99,500 shares that the executive officers of the Company as a
group may obtain upon exercise of stock options granted under the
Company's 1983 Incentive Stock Option Plan, as amended, and exercisable as
of August 1, 1994 or within sixty days thereof.

INDEPENDENT AUDITORS

Coopers & Lybrand L.L.P. has been selected to serve as the Company's
independent certified public accountants for the fiscal year ending December
31, 1994. A representative of that firm will be present at the Special Meeting
with the opportunity to make a statement if he desires to do so and to respond
to questions of stockholders. The appointment of the auditors has been approved
by the Company's Board of Directors based upon the recommendation of the Audit
Committee.

STOCKHOLDERS' PROPOSALS FOR THE 1995 ANNUAL MEETING

In order to be considered for inclusion in the proxy statement for the 1995
Annual Meeting of Stockholders, stockholder proposals must be submitted to the
Company on or before December 30, 1994.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission by the Company (File No. 1-
8593) are incorporated by reference in this Proxy Statement:

1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; and

2. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1994 and June 30, 1994;

3. The Company's Current Report on Form 8-K dated August 4, 1994,
relating to a business acquisition consummated subsequent to June 30, 1994,
as amended by the Company's Current Report on Form 8-KA dated August 22,
1994; and

4. The description of the Class A Stock contained in the Company's Form
8-A Registration Statement filed with the Commission on July 3, 1989.

All documents and reports filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date of this Proxy Statement

90
<PAGE>

and prior to the date of the Special Meeting shall be deemed incorporated by
reference in this Proxy Statement and to be a part hereof from the dates of
filing of such documents or reports. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Proxy Statement to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Proxy Statement.

THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT IS DELIVERED, ON WRITTEN OR ORAL
REQUEST TO A. L. LABORATORIES, INC., ONE EXECUTIVE DRIVE, P.O. BOX 1399, FORT
LEE, NEW JERSEY 07024 (TELEPHONE NUMBER: (201) 947-7774), ATTENTION: IRIS D.
DANIELS. IN ORDER TO ENSURE DELIVERY OF THE DOCUMENTS PRIOR TO THE SPECIAL
MEETING, REQUESTS MUST BE RECEIVED BY SEPTEMBER 20, 1994.

OTHER BUSINESS

As of the date hereof, the foregoing is the only business which management
intends to present, or is aware that others will present, at the Special
Meeting. If any other proper business should be presented at the Special
Meeting, the proxies will be voted in respect thereof in accordance with the
discretion and judgment of the person or persons voting the proxies.

By order of the Board of Directors

Beth P. Hecht
Secretary
A. L. Laboratories, Inc.

YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY COMPLETE AND SIGN THE ENCLOSED
FORM OF PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE

91
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE NO.
- ------- ----------- --------
<S> <C> <C>
A Restructuring Agreement, dated as of May 16, 1994, between A. L.
Laboratories, Inc. and Apothekernes Laboratorium A.S.
B Form of Warrant Agreement between A.L. Pharma Inc. (formerly known
as A. L. Laboratories, Inc.) and The First National Bank of
Boston, as warrant agent
C Form of Demerger Agreement between Apothekernes Laboratorium A.S
(to be renamed A.L. Industrier A.S) and Apothekernes Laboratorium
AS (under incorporation)
D Opinion of Lehman Brothers
E Combined Financial Statements of the Related Norwegian Business
99.1 Proxy Card for A.L. Laboratories Inc. Special Meeting of
Stockholders to be held on September 27, 1994.
99.2 Follow-up letter to be sent to stockholders who have not submitted
proxy card.
99.3 Letter to institutional beneficial owners to be sent
contemporaneously with the initial mailing of the Proxy Statement.
</TABLE>
<PAGE>

CONFORMED COPY
--------------

EXHIBIT A

RESTRUCTURING AGREEMENT

BY AND BETWEEN

APOTHEKERNES LABORATORIUM A.S

AND

A. L. LABORATORIES, INC.

DATED AS OF MAY 16, 1994

A-1
<PAGE>

TABLE OF CONTENTS

ARTICLE I

THE RESTRUCTURING.......................................................... A-7
Section 1.1 International Holding Company.......................... A-7
Section 1.2 The Demerger........................................... A-8
Section 1.3 Exchange Offer......................................... A-8
Section 1.4 Reasonable Efforts..................................... A-10
Section 1.5 The Closing............................................ A-10

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................. A-10
Section 2.1 Corporate Organization and Qualification............... A-10
Section 2.2 Authorized Capital..................................... A-11
Section 2.3 Corporate Authority.................................... A-11
Section 2.4 Proxy Statement........................................ A-11
Section 2.5 Governmental Filings; No Violations; Permits........... A-12
Section 2.6 Company Reports; Financial Statements.................. A-13
Section 2.7 Absence of Certain Changes............................. A-13
Section 2.8 Liabilities............................................ A-13
Section 2.9 Opinion of Financial Advisor........................... A-13
Section 2.10 Taxes.................................................. A-14
Section 2.11 Brokers and Finders.................................... A-14
Section 2.12 Warrants............................................... A-14

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF A.L. OSLO................................ A-14
Section 3.1 Corporate Organization and Qualification............... A-14
Section 3.2 Authorized Capital..................................... A-14
Section 3.3 Corporate Authority.................................... A-15
Section 3.4 Proxy Statement; Norwegian Materials................... A-15
Section 3.5 Governmental Filings; No Violations; Permits........... A-15
Section 3.6 Financial Statements; Projections...................... A-17
Section 3.7 Absence of Certain Changes............................. A-18
Section 3.8 Litigation and Liabilities............................. A-18
Section 3.9 Business of New A.L. Oslo; Indebtedness................ A-19
Section 3.10 Employee Plans......................................... A-19
Section 3.11 Intellectual Property.................................. A-20
Section 3.12 Taxes.................................................. A-20
Section 3.13 Brokers and Finders.................................... A-21
Section 3.14 Opinion of Financial Advisor........................... A-21
Section 3.15 Insurance.............................................. A-21
Section 3.16 Material Contracts. ................................... A-21

A-2
<PAGE>

ARTICLE IV

COVENANTS.................................................................. A-21
Section 4.1 Interim Operations of the Company...................... A-21
Section 4.2 Interim Operations of the Related Norwegian Businesses. A-22
Section 4.3 Additional Agreements.................................. A-23
Section 4.4 Meeting of Stockholders................................ A-24
Section 4.5 Filings; Other Action.................................. A-24
Section 4.6 Access................................................. A-24
Section 4.7 Notification of Certain Matters........................ A-25
Section 4.8 Publicity.............................................. A-25
Section 4.9 Governance; Corporate Headquarters..................... A-25
Section 4.10 Reasonable Efforts..................................... A-26
Section 4.11 Capital Expenditures................................... A-26
Section 4.12 A.L. Oslo Finances..................................... A-26
Section 4.13 Skoyen Lease........................................... A-27
Section 4.14 A.L. Pharma............................................ A-27
Section 4.15 [Reserved]............................................. A-27
Section 4.16 Non-compete............................................ A-27

ARTICLE V

CONDITIONS................................................................. A-28
Section 5.1 Conditions to Obligations of Each Party................ A-28
Section 5.2 Additional Conditions to Obligations of the Company.... A-28
Section 5.3 Additional Conditions to Obligations of A.L. Oslo...... A-29

ARTICLE VI

TERMINATION................................................................ A-30
Section 6.1 Termination by Mutual Consent.......................... A-30
Section 6.2 Termination by the Company or A.L. Oslo................ A-30
Section 6.3 Termination by A.L. Oslo............................... A-30
Section 6.4 Termination by the Company............................. A-30
Section 6.5 Effect of Termination and Abandonment.................. A-31

ARTICLE VII

INDEMNIFICATION............................................................ A-31
Section 7.1 General................................................ A-31
Section 7.2 Indemnification........................................ A-31
Section 7.3 Third Party Claims..................................... A-33

ARTICLE VIII

MISCELLANEOUS AND GENERAL.................................................. A-33
Section 8.1 Payment of Expenses.................................... A-33
Section 8.2 Survival............................................... A-33
Section 8.3 Other Definitional Provisions.......................... A-34
Section 8.4 Modification or Amendment.............................. A-34

A-3
<PAGE>

Section 8.5 Waiver of Conditions................................... A-35
Section 8.6 Counterparts........................................... A-35
Section 8.7 Governing Law.......................................... A-35
Section 8.8 Notices................................................ A-35
Section 8.9 Entire Agreement, etc.................................. A-36
Section 8.10 Captions............................................... A-36
Section 8.11 Dispute Resolution..................................... A-37

EXHIBITS

1. Form of Demerger Agreement
2. Form of Charter Amendments to the Company's Restated Certificate
of Incorporation
3. Form of Warrant Agreement
4. Selected Combined Financial Data of A.L. Oslo
5. Form of Shareholder Affidavit
6. Form of Administrative Services Agreement
7. Form of Letter from Managing Director of A.L. Oslo
8. Form of Skoyen Lease
9. Form of Opinion of counsel to A.L. Oslo
10. Form of Opinion of counsel to the Company

A-4
<PAGE>

INDEX
OF DEFINED TERMS

483 Matters...............................................................A-32
1983 Stock Option Plan....................................................A-11
1994 Budget for Related Norwegian Businesses..............................A-22
A.L. Industrier A.S........................................................A-8
A.L. Laboratories, Inc.....................................................A-7
A.L. Labs Transfer.........................................................A-7
A.L. Oslo..................................................................A-7
A.L. Oslo Benefit Plans...................................................A-19
A.L. Oslo Indemnified Parties.............................................A-31
A.L. Oslo Information.....................................................A-11
A.L. Oslo Regulatory Approvals............................................A-15
A.L. Oslo Shares...........................................................A-7
A.L. Pharma Transfer......................................................A-27
Affiliate.................................................................A-34
Agreement..................................................................A-7
Apothekernes Laboratorium A.S..............................................A-7
Average Closing NOK Rate...................................................A-9
Average Closing Price......................................................A-9
Business Day..............................................................A-34
Cash Purchase Price........................................................A-8
Charter Amendments.........................................................A-7
Class A Stock..............................................................A-7
Class B Stock.............................................................A-11
Closing...................................................................A-10
Closing Date..............................................................A-10
Code.......................................................................A-9
Company....................................................................A-7
Company Indemnified Parties...............................................A-32
Company Permits...........................................................A-12
Company Regulatory Approvals..............................................A-12
Company Reports...........................................................A-13
Contracts.................................................................A-12
Damages...................................................................A-31
Demerger...................................................................A-8
DGCL.......................................................................A-7
Employee Stock Purchase Plan..............................................A-11
Encumbrances..............................................................A-15
Environmental Laws........................................................A-17
Exchange Act..............................................................A-11
Exchange Offer............................................................ A-7
Exchange Offer Documents..................................................A-12
Exercise Price.............................................................A-9
FDA.......................................................................A-17
ICC.......................................................................A-37
Indebtedness..............................................................A-19
Intellectual Property Rights..............................................A-20

A-5
<PAGE>

Investigatory New Animal Drug Application.................................A-17
Investigatory New Drug Application........................................A-17
Management Committee......................................................A-26
Material Adverse Effect...................................................A-10
Minimum Condition.........................................................A-28
NCA........................................................................A-8
New A.L. Labs..............................................................A-7
New A.L. Oslo..............................................................A-7
New A.L. Oslo Permits.....................................................A-16
New A.L. Oslo Shares...................................................... A-7
New Animal Drug Application...............................................A-17
New Drug Application......................................................A-17
NOK.......................................................................A-34
Norwegian Transactions....................................................A-10
Opening Related Norwegian Businesses Balance Sheet.........................A-9
Order.....................................................................A-28
Person....................................................................A-34
Proxy Statement...........................................................A-12
Related Norwegian Businesses...............................................A-8
Related Norwegian Businesses Financial Statements.........................A-17
Related Norwegian Businesses Insurance Policies...........................A-21
Related Norwegian Businesses Intellectual Property Rights.................A-20
Representatives...........................................................A-24
Restructuring.............................................................A-10
RNB Material Adverse Effect...............................................A-16
SEC.......................................................................A-11
Securities Act............................................................A-12
Shareholder Affidavit......................................................A-9
Skoyen Amount.............................................................A-33
Special Committee.........................................................A-13
Stockholders Meeting......................................................A-11
Subsidiary................................................................A-34
Tax Return................................................................A-34
Taxes.....................................................................A-34
Transfer Expenses.........................................................A-33
Warrant Agreement..........................................................A-9
Warrants...................................................................A-8

A-6
<PAGE>

RESTRUCTURING AGREEMENT (hereinafter the "Agreement"), dated as of May 16, 1994,
by and among Apothekernes Laboratorium A.S, a corporation organized and existing
under the laws of the Kingdom of Norway ("A.L. Oslo") and A. L. Laboratories,
Inc., a Delaware corporation (the "Company").

WHEREAS, the Boards of Directors of A.L. Oslo and the Company have
each unanimously determined that it is in the best interests of their respective
stockholders to engage in the transactions contemplated hereby to restructure
and integrate their respective related businesses;

WHEREAS, the Company shall become a holding company by transferring
substantially all of its assets and liabilities (except for the capital stock of
its Subsidiaries or as otherwise agreed by the parties) to a newly organized
wholly owned subsidiary incorporated under Delaware law to be named "A. L.
Laboratories, Inc." and by changing its name to reflect the increased
international scope of the Company's business, upon the terms and subject to the
conditions of this Agreement;

WHEREAS, pursuant to the terms and conditions of the form of Demerger
Agreement attached hereto as Exhibit 1, (i) the assets and liabilities of A.L.
Oslo that comprise its related businesses including its Pharmaceutical
(including, bulk antibiotics), Animal Health and Aquatic Animal Health Divisions
and its subsidiaries Apolab OY, Norgesplaster A/S and A.L. Lakemedel AB shall be
demerged into a new corporation to be organized under the laws of the Kingdom of
Norway ("New A.L. Oslo") and (ii) each holder of the outstanding ordinary shares
of A.L. Oslo (the "A.L. Oslo Shares") shall receive one ordinary share of New
A.L. Oslo for each A.L. Oslo Share held by such holder;

WHEREAS, the Company shall commence an offer to the prospective
shareholders of New A.L. Oslo to exchange (the "Exchange Offer") for each of the
New A.L. Oslo ordinary shares to be issued upon consummation of the demerger
(the "New A.L. Oslo Shares") a pro rata portion of certain cash consideration
and warrants to purchase 3,600,000 shares of the Company's Class A Common Stock,
par value $0.20 per share (the "Class A Stock"), upon the terms and subject to
the conditions of this Agreement; and

WHEREAS, A.L. Oslo and the Company desire to make certain
representations, warranties and agreements in connection with the transactions
contemplated hereby.

NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

ARTICLE I

THE RESTRUCTURING

Section 1.1 International Holding Company. Prior to the Closing (as
-----------------------------
defined below), the Company shall form a new wholly owned subsidiary under the
Delaware General Corporation Law (the "DGCL") to be named "A.L. Laboratories,
Inc." ("New A.L. Labs"). Subject to the terms and conditions of this Agreement,
at the Closing the Company shall transfer its officers and other employees to
New A.L. Labs and as soon as reasonably practicable after the Closing the
Company shall contribute substantially all of its assets and liabilities,
including its animal health business (including related assets and liabilities),
to New A.L. Labs (together, the "A.L. Labs Transfer"), except for the capital
stock of its Subsidiaries or as may be agreed to by A.L. Oslo and the Company.
At the Stockholders Meeting of the Company at which this Agreement (and the
transactions contemplated hereby) shall be submitted for approval, the Company
shall also present to its shareholders a resolution to amend the Company's
Restated Certificate of Incorporation (the "Charter Amendments") to (a) increase
the representation of the holders of Class A Stock on the Board of Directors
from 25% to 33 1/3% of the Board of Directors (rounded

A-7
<PAGE>

to the nearest whole number, but not less than 2 members of the Board of
Directors) and (b) change the name of the Company to reflect the increased
international scope of the Company's business. The form of Charter Amendments
to the Company's Restated Certificate of Incorporation is attached hereto as
Exhibit 2.

Section 1.2 The Demerger. As soon as practicable after the execution
------------
of this Agreement, A.L. Oslo and New A.L. Oslo shall execute and deliver the
form of Demerger Agreement attached hereto as Exhibit 1 (or a Norwegian
translation thereof) and shall submit to the stockholders of A.L. Oslo (in the
written materials provided to such stockholders in connection with the Demerger)
a resolution for the Demerger for adoption and approval by such stockholders as
required under the Norwegian Joint Stock Act of 1976, as amended ("NCA"). A.L.
Oslo and New A.L. Oslo shall not modify or amend the Demerger Agreement without
the express consent of the Company, which consent shall not be unreasonably
withheld. Pursuant to the terms and conditions of the Demerger Agreement and
the conditions set forth in Sections 5.1 and 5.3, immediately prior to the
consummation of the Exchange Offer the assets and liabilities of A.L. Oslo that
comprise its Pharmaceutical (including, bulk antibiotics), Animal Health and
Aquatic Animal Health Divisions, and its subsidiaries Apolab OY, Norgesplaster
A/S and A.L. Lakemedel AB and any other businesses whose results of operations
are included in the Related Norwegian Businesses Financial Statements (as
defined herein) (the "Related Norwegian Businesses") shall be demerged into New
A.L. Oslo (the "Demerger"). Upon the consummation of the Demerger, New A.L.
Oslo shall issue to each holder of A.L. Oslo Shares (other than ordinary shares
of A.L. Oslo held by A/S Wangs Fabrik) one New A.L. Oslo Share for each A.L.
Oslo Share held by such holder. A.L. Oslo will use its reasonable best efforts
to obtain approval to permit New A.L. Oslo to use the name "Apothekernes
Laboratorium A.S" and in the event that such approvals are obtained, New A.L.
Oslo shall be renamed "Apothekernes Laboratorium A.S" and A.L. Oslo shall be
renamed "A.L. Industrier A.S."

Section 1.3 Exchange Offer.
--------------

(a) At or about the time of the mailing of the proxy materials
relating to the Demerger to the holders of A.L. Oslo Shares and the mailing of
the Proxy Statement (as defined in Section 2.4) to the holders of Class A Stock
and subject to the receipt of all governmental and regulatory approvals
necessary to its commencement, the Company shall commence the Exchange Offer.
The obligations of the Company to accept for payment and exchange the New A.L.
Oslo Shares tendered pursuant to the Exchange Offer at the Closing shall be
subject only to the conditions set forth in Sections 5.1 and 5.2 (and other
customary procedural conditions), and without the written consent of A.L. Oslo,
the Company shall not decrease the number of New A.L. Oslo Shares being sought,
change the form of consideration payable in the Exchange Offer, add additional
material conditions to the Exchange Offer or waive the Minimum Condition (as
defined in Section 5.1(d)). The Company shall not consummate the Exchange Offer
unless and until the Demerger shall have been consummated. The Exchange Offer
shall be made by means of a written offer to exchange and related letter of
transmittal and shall be made in accordance with applicable Norwegian law and
regulations. The written Exchange Offer materials shall contain a statement
indicating that tendering shareholders shall be obligated to reimburse A.L. Oslo
for any amounts paid on their behalf by A.L. Oslo pursuant to Section 7.2(b)(ii)
of this Agreement.

(b) Pursuant to the Exchange Offer, each holder of New A.L. Oslo
Shares whose shares are accepted for payment pursuant to the Exchange Offer
shall receive a pro rata portion (based upon the number of New A.L. Oslo Shares
validly tendered (and not withdrawn) by such holder and the number of New A.L.
Oslo Shares outstanding on the date the Exchange Offer is consummated) of the
Cash Purchase Price (as defined below) and warrants to purchase 3,600,000 shares
of Class A Stock (the "Warrants"). The Managing Director of A.L. Oslo shall
certify to A.L. Labs the number of New A.L. Oslo Shares outstanding on the date
of the consummation of the Exchange Offer and eligible to be tendered in the
Exchange Offer.

(i) The "Cash Purchase Price," which shall be paid in Norwegian
Kroner, shall be NOK 170,000,000; provided, however, that if the arithmetic
average of the closing U.S. dollar exchange rate

A-8
<PAGE>

of the Norwegian Krone as published by The Wall Street Journal in its
-----------------------
"Exchange Rates" table for the 10 Business Days prior to the fifth Business
Day prior to Closing (the "Average Closing NOK Rate") (x) exceeds NOK 7.5
to U.S. $1.00 then the Cash Purchase Price shall be an amount equal to NOK
170,000,000 divided by 7.5 and multiplied by the Average Closing NOK Rate
and (y) is less than NOK 6.5 to U.S. $1.00 then the Cash Purchase Price
shall be an amount equal to NOK 170,000,000 divided by 6.5 and multiplied
by the Average Closing NOK Rate; provided, further, that the Cash Purchase
Price shall be reduced on a Krone for Krone basis to the extent that A.L.
Oslo shall pay a dividend on the A.L. Oslo Shares that would have the
effect of reducing the equity of New A.L. Oslo or the Related Norwegian
Businesses. The Managing Director of A.L. Oslo shall certify to A.L. Labs
the amount of any such reduction on the date of the consummation of the
Exchange Offer.

(ii) The Warrants shall have the terms and conditions set forth in
the form of Warrant Agreement attached hereto as Exhibit 3 (the "Warrant
Agreement"), except that the exercise price for the Warrants (the "Exercise
Price") shall initially be determined pursuant to this Section 1.3(b)(ii).
The initial Exercise Price for the Warrants shall be equal to the
arithmetic average of the daily closing price of the Class A Stock on the
New York Stock Exchange (the "Average Closing Price") for the period
beginning on the date the Proxy Statement (as defined in Section 2.4) is
first mailed to stockholders of the Company and ending on the last trading
day that is at least five trading days prior to the date of the
Stockholders Meeting (as defined in Section 2.4) multiplied by 1.4;
provided, however, (w) if the Average Closing Price is greater than or
equal to $23.00 then the Exercise Price shall equal the Average Closing
Price plus $7.00, (x) if the Average Closing Price is greater than $21.4286
and less than $23.00 then the Exercise Price shall equal $30.00, (y) if the
Average Closing Price is less than $14.2857 and greater than or equal to
$13.00, then the Exercise Price shall equal $20.00 and (z) if the Average
Closing Price is less than $13.00 then the Exercise Price shall equal the
Average Closing Price plus $7.00. The Warrants shall expire on December
31, 1998; provided, however, if the Closing Date shall occur after
September 30, 1994 then the Warrants shall expire on the date that is
fifty-one (51) months from the Closing Date.

(c) The Company agrees to extend the Exchange Offer from time to time
until the conditions of the Exchange Offer are satisfied or this Agreement shall
have been terminated in accordance with its terms. The Company and, if
applicable, A.L. Oslo agree to make all filings and to obtain all consents with
respect to the Exchange Offer required by applicable Norwegian law. Upon the
terms and subject to the conditions of the Exchange Offer, on the Closing Date
the Company shall exchange, for the consideration set forth in Section 1.3(b)
above, all the New A.L. Oslo Shares which are validly tendered and not withdrawn
on or prior to the expiration of the Exchange Offer.

(d) A.L. Oslo has delivered to the Company an audited combined
balance sheet for the Related Norwegian Businesses as of December 31, 1993 (the
"Opening Related Norwegian Businesses Balance Sheet"), a copy of which is
included in Exhibit 4 hereto.

(e) The Exchange Offer materials shall require each accepting holder
of New A.L. Oslo Shares to certify to the information necessary to enable the
Company to determine the extent of any U.S. tax withholding obligations. The
payment of the Cash Purchase Price and Warrants to each holder of New A.L. Oslo
Shares by the Company shall be made free and clear of, and without deduction
for, any and all U.S. withholding Taxes (as defined in Section 8.3(g); unless
(i) the Company shall not have received from such holder a duly completed and
executed affidavit in the form attached as Exhibit 5 hereto (the "Shareholder
Affidavit") (which shall be provided to the holders of A.L. Oslo Shares together
with the materials referenced in Section 1.3), or (ii) the Company shall have
received the Shareholder Affidavit, but shall have made a good faith
determination that as a result of the Restructuring (as defined in Section 1.4),
such holder may not have experienced a "substantially disproportionate
redemption" within the meaning of Section 302(b)(2) of the Internal Revenue Code
of 1986, as amended (the "Code"), as such section is applied pursuant to Section
304 of the Code; provided, that the Company

A-9
<PAGE>

may, in its sole discretion, waive application of the preceding clause (ii) in
the case of any holder who, immediately before the Closing, owns directly,
indirectly or constructively (taking into account the rules of Section 318 of
the Code, applied without regard to the 50% limitation contained in Sections
318(a)(2)(C) and 318(a)(3)(C) of the Code) less than 100 New A.L. Oslo Shares.
If the Company does not intend to waive application of clause (ii) in the
preceding sentence with respect to any holder of New A.L. Oslo Shares, it shall
prior to making any final determinations thereof consult in good faith with
counsel to A.L. Oslo. In the event that the Company determines that it is
required by law to withhold any Taxes, the Company shall, to the extent
allowable by law, reduce the amount of any Taxes otherwise imposed upon such
payment pursuant to the terms of any applicable income tax convention between
the United States of America and the country in which such holder is resident.

Section 1.4 Reasonable Efforts. A.L. Oslo and the Company shall each
------------------
use all reasonable efforts to cause (i) the A.L. Labs Transfer and the Charter
Amendments to be consummated in accordance with this Agreement, (ii) the
Demerger to be consummated in accordance with the Demerger Agreement and this
Agreement and (iii) the Exchange Offer to be consummated in accordance with this
Agreement. The Demerger and the Exchange Offer are sometimes referred to herein
as the "Norwegian Transactions." The Norwegian Transactions, the A.L. Labs
Transfer and the Charter Amendments are sometimes referred to herein as the
"Restructuring." Contemporaneously herewith, the Company has received a letter
from A.L. Oslo's Managing Director, in the form set forth in Exhibit 7 hereto,
expressing his agreement (i) to vote, or cause to be voted, all A.L. Oslo Shares
owned of record by him or by A/S Swekk, in favor of the transactions
contemplated hereby and to tender, or cause to be tendered, all New A.L. Oslo
Shares to be issued to him or A/S Swekk pursuant to the Exchange Offer and (ii)
to use his reasonable efforts to obtain similar assurances from his wife and
children. In addition, A.L. Oslo shall use its reasonable efforts to cause
Nopal International AG to tender all New A.L. Oslo Shares owned of record by it,
pursuant to the Exchange Offer.

Section 1.5 The Closing. The closing of the Restructuring (the
-----------
"Closing") shall take place (a) at the offices of A.L. Oslo, at 3:00 p.m., Oslo,
Norway time, on the fifth business day after the date on which the last to be
fulfilled or waived of the conditions set forth in Article V hereof shall be
fulfilled or waived in accordance herewith, or (b) at such other time and place
and/or on such other date as A.L. Oslo and the Company may agree. The date on
which the Closing occurs is referred to herein as the "Closing Date."

ARTICLE II

REPRESENTATIONS AND WARRANTIES
OF THE COMPANY

The Company hereby represents and warrants to A.L. Oslo that:

Section 2.1 Corporate Organization and Qualification. Each of the
----------------------------------------
Company and its Subsidiaries (as defined in Section 8.3) is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and is in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated,
or the business conducted, by it require such qualification, except for such
failure to so qualify or be in such good standing, which, when taken together
with all other such failures, is not reasonably likely to have a material
adverse effect on the financial condition, properties, business or results of
operations of the Company and its Subsidiaries, taken as a whole as currently
conducted (a "Material Adverse Effect"). Each of the Company and its
Subsidiaries has the requisite corporate power and authority to carry on its
respective businesses as they are now being conducted. The Company has provided
to A.L. Oslo a complete and correct copy of the Company's Certificate of
Incorporation and By-Laws, each as amended to date. The Company's Certificate
of Incorporation and By-Laws so delivered are in full force and effect.

A-10
<PAGE>

Section 2.2 Authorized Capital. The authorized capital stock of the
------------------
Company consists of: (i) 40,000,000 shares of Class A Stock of which, as of
December 31, 1993, 13,320,473 shares (not including treasury shares) were issued
and outstanding, (ii) 15,000,000 shares of Class B Common Stock, par value $.20
per share (the "Class B Stock") of which, as of December 31, 1993, 8,226,562
shares were issued and outstanding and (iii) 500,000 shares of Preferred Stock,
par value $1.00 per share, of which, as of the date hereof, none are
outstanding. All of the outstanding shares of Class A Stock and shares of Class
B Stock have been duly authorized and are validly issued, fully paid and
nonassessable. The Company has no shares of its capital stock reserved for
issuance, except that, as of December 31, 1993, there were 972,648 shares of
Class A Stock reserved for issuance under the Company's benefit plans including
options to purchase 489,900 shares of Class A Stock outstanding pursuant to the
1983 Incentive Stock Option Plan, as amended (the "1983 Stock Option Plan") and
there are no shares of Class A Stock reserved for issuance pursuant to the
Company's Employee Stock Purchase Plan (the "Employee Stock Purchase Plan").
Each of the outstanding shares of capital stock of each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and all such shares owned, either directly or indirectly, by the Company are
owned free and clear of all liens, pledges, security interests, claims or other
encumbrances. Except as set forth above, there are no, and on the Closing Date
there will be no, shares of capital stock of the Company authorized, issued or
outstanding and, except as set forth above or as contemplated by this Agreement,
there are no, and on the Closing Date there will be no, preemptive rights nor
any outstanding subscriptions, options, warrants, rights, convertible securities
or other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of the Company or any of its
Subsidiaries.

Section 2.3 Corporate Authority. The Company has the requisite
-------------------
corporate power and authority to execute and deliver this Agreement. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized and approved by
its Board of Directors and no other action on the part of the Company is
necessary to authorize the execution, delivery and performance of this Agreement
by the Company (other than the approval of the stockholders of the Company).
This Agreement has been duly executed and delivered by the Company and is a
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms.

Section 2.4 Proxy Statement.
---------------

(a) The Proxy Statement (as defined below) to be used by the Company
in soliciting proxies with respect to the meeting of the Company's stockholders
to be held in connection with the Agreement (the "Stockholders Meeting") will
not, on the date the Proxy Statement is mailed to stockholders and on the date
of such Stockholders Meeting, contain any statement which, at the time and in
light of the circumstances under which it is made, is false or misleading with
respect to any material fact or omit to state any material fact necessary in
order to make the statements therein (at the time and in the light of the
circumstances under which they were made) not false or misleading or necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for such Stockholders Meeting that has become false or
misleading at that time; provided, however, the Company makes no representations
as to the information contained in or omitted from the Proxy Statement in
reliance upon and in conformance with information furnished to the Company by
A.L. Oslo, New A.L. Oslo or any Subsidiaries or Affiliates thereof (excluding
the Company and its Subsidiaries, but including any principal stockholders of
A.L. Oslo and New A.L. Oslo while acting solely in such capacity) with respect
to A.L. Oslo and its Subsidiaries and Affiliates (excluding the Company and its
Subsidiaries, but including any principal stockholders of A.L. Oslo and New A.L.
Oslo while acting solely in such capacity) or the Related Norwegian Businesses
(the "A.L. Oslo Information"). The Proxy Statement will comply as to form and
otherwise in all material respects, with the applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
and regulations of the Securities and Exchange Commission (the "SEC"). The
letters and notices of meeting to the stockholders of the Company, the proxy
statement (and any amendments or supplements thereto), the form of proxy to be
distributed to the stockholders of the Company in connection with

A-11
<PAGE>

the Restructuring and any schedules required to be filed with the SEC in
connection therewith, are collectively referred to herein as the "Proxy
Statement."

(b) The written materials furnished by the Company to the holders of
A.L. Oslo Shares (or New A.L. Oslo Shares, as the case may be) in connection
with the Exchange Offer (the "Exchange Offer Documents") and the information
relating to the Company and its Subsidiaries furnished by the Company for use in
the written materials provided to the holders of A.L. Oslo Shares in the
Demerger (i) shall be accurate and complete in all material respects, (ii) shall
be prepared in accordance with applicable law and (iii) shall not contain any
statement which, at the time and in light of the circumstances under which it is
made, is false or misleading with respect to any material fact or omit to state
any material fact necessary in order to make the statements therein (at the time
and in the light of the circumstances under which they were made) not false or
misleading; provided, that the Company makes no representation or warranty as to
the A.L. Oslo Information contained in or omitted from such written materials.

Section 2.5 Governmental Filings; No Violations; Permits.
--------------------------------------------

(a) Other than filings, notices, consents, registrations, approvals,
permits or authorizations set forth on Schedule 2.5 (the "Company Regulatory
Approvals") or those required under the DGCL, the Exchange Act, the Securities
Act of 1933, as amended (the "Securities Act"), or Norwegian law, no notices,
reports or other filings are required to be made by the Company or any of its
Subsidiaries, with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company or any of its
Subsidiaries, from, any governmental or regulatory authority of the United
States, the several states or any foreign jurisdiction in connection with the
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby, the failure to make or
obtain any or all of which is reasonably likely to have a Material Adverse
Effect or prevent, materially delay or materially burden the transactions
contemplated by this Agreement.

(b) The execution and delivery of this Agreement by the Company does
not, and the consummation by the Company of the transactions contemplated by
this Agreement will not, constitute or result in (A) a breach or violation of,
or a default under, the Certificate of Incorporation or By-Laws of the Company
or the respective governing instruments of any of its Subsidiaries, (B) a
material breach or violation of, a default under or the triggering of any
material payment or other obligations pursuant to, any of the existing Company
employee benefit plans or any grant or award made under any of the foregoing,
(C) a breach or violation of, or a default under, the acceleration of or the
creation of a lien, pledge, security interest or other encumbrance on assets
(with or without the giving of notice or the lapse of time) pursuant to, (x)
except as set forth in Schedule 2.5(b), any provision of any agreement, lease,
contract, note, mortgage, indenture, arrangement, guarantee or other obligation
("Contracts") of the Company or any of its Subsidiaries or (y) any law, rule,
ordinance or regulation or judgment, decree, order, injunction, award or
governmental or non-governmental permit or license to which the Company or any
of its Subsidiaries is subject or (D) any change in the rights or obligations of
any party under any of the Contracts; except, in the case of clauses (B), (C) or
(D) above, for such breaches, violations, defaults, triggering, accelerations or
changes that, alone or in the aggregate, are not reasonably likely to have a
Material Adverse Effect or to prevent, materially delay or materially burden the
transactions contemplated by this Agreement.

(c) The Company and its Subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to the operation of the business of the Company and its
Subsidiaries taken as a whole (collectively, the "Company Permits") and the
Company Permits are in full force and effect.

A-12
<PAGE>

(d) The Company and its Subsidiaries are being, and have been
operated, in compliance with all applicable laws, regulations, orders, judgments
and decrees except where the failure to do so would not have a Material Adverse
Effect.

Section 2.6 Company Reports; Financial Statements. The Company has
-------------------------------------
filed with the SEC all registration statements, quarterly and annual reports,
proxy statements, forms, schedules and other material documents required to be
filed by it since January 1, 1991 under the Exchange Act or the Securities Act
(including exhibits and any amendments thereto) (collectively, the "Company
Reports"). At the time filed, the Company Reports (A) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading, and (B) complied in
all material respects with the applicable requirements of the Exchange Act and
the Securities Act and the applicable rules and regulations of the SEC
thereunder. Each of the consolidated balance sheets included in or incorporated
by reference into the Company Reports (including the related notes and
schedules) fairly presents in all material respects the consolidated financial
position of the Company and its Subsidiaries as of its date and each of the
consolidated statements of income and cash flow included in or incorporated by
reference into the Company Reports (including any related notes and schedules)
fairly presents in all material respects the results of operations, retained
earnings and cash flows, as the case may be, of the Company and its Subsidiaries
for the periods set forth therein (subject, in the case of unaudited statements,
to normal year-end audit adjustments which were not or will not be material in
amount or effect), in each case in accordance with United States generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein.

Section 2.7 Absence of Certain Changes. Except as disclosed in the
--------------------------
Company Reports or in Schedule 2.7, since December 31, 1993, (i) the Company and
its Subsidiaries have conducted their respective businesses only in the ordinary
and usual course of such businesses and (ii) there has not been (A) any change,
or any development or combination of developments involving a prospective change
of which management of the Company has knowledge, which has had or is reasonably
likely to have a Material Adverse Effect (other than changes or developments
that generally affect the businesses in which the Company competes); or (B) any
material change by the Company in accounting principles, practices or methods
(except to the extent required by U.S. generally accepted accounting
principles). Since December 31, 1993, and prior to the date hereof, the Company
has not taken any action which, if taken after the date hereof, would be
prohibited by Section 4.1 hereof.

Section 2.8 Liabilities. Except as disclosed in the Company Reports
-----------
or as disclosed on Schedule 2.8, there are no obligations or liabilities (other
than those incurred in the ordinary course of business), whether or not accrued,
contingent or otherwise, including, without limitation, those relating to
environmental and occupational safety and health matters, that may reasonably be
expected to result in any claims against or obligations or liabilities of the
Company or any of its Subsidiaries that, alone or in the aggregate, are
reasonably likely to have a Material Adverse Effect.

Section 2.9 Opinion of Financial Advisor. The Special Committee of
----------------------------
the Board of Directors of the Company established with respect to the
transactions contemplated hereunder (the "Special Committee") has determined (at
meetings duly called and held) that the transactions contemplated hereby are
fair to the Company and the holders of Class A Stock and the Board of Directors
of the Company has determined (at meetings duly called and held) that the
transactions contemplated hereby are fair to and in the best interest of the
Company and fair to the holders of Class A Stock. The Board of Directors and
the Special Committee of the Company has received the opinion of Lehman Brothers
dated as of the date hereof to the effect that the consideration to be paid by
the Company in the Exchange Offer is fair from a financial point of view to the
Company and the holders of Class A Stock, a copy of which opinion has been
delivered to A.L. Oslo.

A-13
<PAGE>

Section 2.10 Taxes.
-----

(a) Each of the Company and its Subsidiaries has duly and timely
filed all U.S. federal, state, local and foreign Tax Returns required to be
filed by it and such Tax Returns were true, correct and complete in all material
respects, and has duly paid, caused to be paid or made adequate provision for
the payment of all Taxes required to be paid in respect of the periods covered
by such returns. There are no tax liens upon the assets of the Company or any
of the Subsidiaries other than liens for Taxes not yet due.

(b) The Company and the Subsidiaries have not filed any consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset owned by the Company
or any of its Subsidiaries.

Section 2.11 Brokers and Finders. Other than (i) Lehman Brothers,
-------------------
who was retained by the Special Committee in connection with the transactions
contemplated by this Agreement, and (ii) a Norwegian stockbroker to be retained
in connection with the Exchange Offer, the Company has not engaged any broker,
finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement who would be entitled to a broker's, finder's or
similar fee or commission in connection therewith or upon the consummation
thereof.

Section 2.12 Warrants. The Company has the requisite corporate power
--------
and authority to execute and deliver the Warrant Agreement. The execution,
delivery and performance of the Warrant Agreement has been duly authorized and
approved by the Board of Directors and no other action on the part of the
Company (except for approval of the stockholders of the Company) is necessary to
authorize the execution, delivery, or performance of the Warrant Agreement. The
Warrant Agreement, when properly executed and delivered by the Company, will be
a valid and binding agreement of the Company enforceable against the Company in
accordance with its terms. The Warrants, upon issuance pursuant to the
provisions of the Warrant Agreement, will be duly authorized and validly issued.
The underlying shares of Class A Stock to be issued upon exercise of the
Warrants shall be duly authorized and upon the exercise as provided in the
Warrant Agreement, will be validly issued, fully paid and nonassessable.

ARTICLE III

REPRESENTATIONS AND WARRANTIES
OF A.L. OSLO

A.L. Oslo represents and warrants to the Company that:

Section 3.1 Corporate Organization and Qualification. Each of A.L.
----------------------------------------
Oslo, Norgesplaster A/S, Apolab OY and A.L. Lakemedel AB is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation. Each of A.L. Oslo and its Subsidiaries has (and, on the Closing
Date, New A.L. Oslo and its Subsidiaries will have) the requisite corporate
power and authority to carry on the businesses of the Related Norwegian
Businesses as they are now being conducted. New A.L. Oslo will be duly
organized and validly existing under the laws of the Kingdom of Norway on the
Closing Date. Prior to the Closing, A.L. Oslo shall provide to the Company a
complete and correct copy of New A.L. Oslo's organizational documents, as
amended to date, and such organizational documents shall be in full force and
effect.

Section 3.2 Authorized Capital. As of the date hereof, the
------------------
authorized share capital of A.L. Oslo is NOK 40,000,000 divided into 400,000
issued and outstanding ordinary shares, NOK 100 per share (including 17,420
shares held by A/S Wangs Fabrik and Nopal International AG) and A.L. Oslo has no
shares of capital stock reserved for issuance. The certificate referenced in
Section 1.3(b) shall be true and correct as of its date. Except as set forth in
such certificate, at the Closing, there will be no shares of capital stock of
New A.L. Oslo authorized,

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<PAGE>

issued or outstanding, and except as set forth under the NCA, there will be no
preemptive rights nor any outstanding subscriptions, options, warrants, rights,
convertible securities or other agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of New A.L.
Oslo. Except as set forth on Schedule 3.2, the outstanding shares that
constitute all the share capital of Norgesplaster A/S, Apolab OY and A.L.
Lakemedel A.B have been fully paid; and, all of such shares are owned, directly
or indirectly, by A.L. Oslo (and will be owned, directly or indirectly,
immediately after the Closing by New A.L. Oslo) free and clear of all liens,
pledges, security interests, claims or other encumbrances ("Encumbrances"),
other than Encumbrances reflected on the Related Norwegian Businesses Financial
Statements or the Opening Related Norwegian Businesses Balance Sheet or
Encumbrances relating to indebtedness that may be refinanced or modified as
contemplated by Section 4.12(c) hereof.

Section 3.3 Corporate Authority. A.L. Oslo has the requisite
-------------------
corporate power and authority to execute and deliver this Agreement. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized and approved by
the Board of Directors of A.L. Oslo, and no other action on the part of A.L.
Oslo is necessary to authorize the execution, delivery and performance of this
Agreement by A.L. Oslo (other than (i) the approval of the stockholders of A.L.
Oslo to the extent required by applicable law, and (ii) the certifications of
the Board of Directors of A.L. Oslo with respect to the Demerger and the
Exchange Offer required under the NCA). This Agreement has been duly executed
and delivered by A.L. Oslo and is a valid and binding agreement of A.L. Oslo
enforceable against A.L. Oslo in accordance with its terms. The lease
referenced in Section 4.13 hereof relating to the Skoyen facility, will be a
valid and binding agreement of A.L. Oslo enforceable against A.L. Oslo in
accordance with its terms.

Section 3.4 Proxy Statement; Norwegian Materials.
------------------------------------

(a) The A.L. Oslo Information contained in the Proxy Statement will
not on the date the Proxy Statement is first mailed to stockholders, nor on the
date of the Stockholders Meeting, contain any statement which, at the time and
in light of the circumstances under which it is made, is false or misleading
with respect to any material fact or omit to state any material fact necessary
in order to make the statements therein (at the time and in the light of the
circumstances under which they were made) not false or misleading or necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for such Stockholders Meeting that has become false or
misleading at the time.

(b) The A.L. Oslo Information contained in the Exchange Offer
Documents (i) shall be accurate and complete in all material respects, (ii)
shall be prepared in accordance with applicable law and (iii) shall not contain
any statement which, at the time and in light of the circumstances under which
it is made, is false or misleading with respect to any material fact or omit to
state any material fact necessary in order to make the statements therein (at
the time and in the light of the circumstances under which they were made) not
false or misleading. The written materials provided to the holders of A.L. Oslo
Shares in connection with the Demerger shall be accurate and complete in all
material respects and shall be prepared in accordance with applicable law;
provided, that A.L. Oslo makes no representations as to information contained in
or omitted from such materials relating to the Company and its Subsidiaries.

Section 3.5 Governmental Filings; No Violations; Permits.
--------------------------------------------

(a) Other than filings, notices, consents, registrations, approvals,
permits or authorizations set forth on Schedule 3.5 hereto (the "A.L. Oslo
Regulatory Approvals") or required under the NCA, the Exchange Act and the
Securities Act, no notices, reports or other filings are required to be made by
A.L. Oslo or New A.L. Oslo with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by A.L. Oslo or New A.L. Oslo
from, any governmental or regulatory authority of the United States, the several
states or any foreign jurisdictions (including, without limitation, Norway) in
connection with the execution

A-15
<PAGE>

and delivery of this Agreement by A.L. Oslo, and the consummation of the
transactions contemplated hereby by A.L. Oslo and New A.L. Oslo, the failure to
make or obtain any or all of which is reasonably likely to (A) have a material
adverse effect on the financial condition, properties, business, or results of
operations of the Related Norwegian Businesses, taken as a whole as currently
conducted (a "RNB Material Adverse Effect") or (B) prevent, materially delay or
materially burden the transactions contemplated by this Agreement.

(b) The execution and delivery of this Agreement by A.L. Oslo does
not, and the consummation of the transactions contemplated hereby by A.L. Oslo
and New A.L. Oslo will not, constitute or result in (A) a breach or violation
of, or a default under, the Articles of Association, of A.L. Oslo, New A.L. Oslo
or any of their respective Subsidiaries, (B) a material breach or violation of,
a default under or the triggering of any material payment or other material
obligations pursuant to, any of the existing A.L. Oslo Benefit Plans (as defined
in Section 3.10) or any grant or award made under any of the foregoing, (C)
except to the extent the transactions contemplated hereby may require the
consents set forth on Schedule 3.5, a breach or violation of, a default under,
the acceleration of or the creation of a lien, pledge, security interest or
other encumbrances on assets (with or without the giving of notice or the lapse
of time) pursuant to, any provision of any Contract of A.L. Oslo, New A.L. Oslo
or any of their respective Subsidiaries or any law, ordinance, rule or
regulation or judgment, injunctions, decree, order, award or governmental or
nongovernmental permit or license to which A.L. Oslo, New A.L. Oslo or any of
their respective Subsidiaries is subject or (D) any change in any of the rights
or obligations of any party under such Contracts, except, in the case of clauses
(B), (C) or (D) above, for such breaches, violations, defaults, accelerations or
changes that, alone or in the aggregate, are not reasonably likely to (x) have
an RNB Material Adverse Effect or (y) prevent or materially delay or materially
burden the transactions contemplated by this Agreement.

(c) Except as set forth in Schedule 3.5(c), upon the consummation of
the Demerger, New A.L. Oslo (A) will hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities which are
necessary for the operation of the Related Norwegian Businesses as currently
conducted (collectively, the "New A.L. Oslo Permits"), (B) will be in compliance
with the terms of the New A.L. Oslo Permits and with all representations (such
as master file descriptions) that have been made to governmental regulatory
officials (foreign and domestic including, without limitation, Norwegian) and
upon which the compliance status of products made from A.L. Oslo's materials are
based, and (C) except for the Skoyen facility (in which New A.L. Oslo will hold
a valid leasehold interest in accordance with the terms of the form of lease
referenced in Section 4.13), will hold good, valid and marketable title to all
real properties reflected as owned on the Opening Related Norwegian Businesses
Balance Sheet, except where the failure to so hold or so comply would not have a
RNB Material Adverse Effect. Except as set forth on Schedule 3.5, all such real
property referred to in clause (C) of the preceding sentence is in good
operating condition and, subject to normal maintenance, is available for
continuing use by the Related Norwegian Businesses in the manner in which it has
previously been used.

(d) Except as set forth in Schedule 3.5(d), A.L. Oslo and its
Subsidiaries are being, and have been operated, in compliance with all
applicable A.L. Oslo Permits, judgments, laws, regulations, orders and decrees
that relate to the Related Norwegian Businesses except where the failure to do
so would not have an RNB Material Adverse Effect. To the knowledge of A.L. Oslo
and except as set forth in Schedule 3.5(d), the Related Norwegian Businesses
hold and are in substantial compliance with, all material permits, licenses and
governmental authorizations required for A.L. Oslo to conduct the Related
Norwegian Businesses under applicable Environmental Laws (as defined below), and
are otherwise in compliance with such laws, except where the failure to be in
compliance would not have an RNB Material Adverse Effect. To the knowledge of
A.L. Oslo and except as set forth in Schedule 3.5(d), A.L. Oslo has not received
any request for information from a governmental entity or third person with
respect to the potential liability of the Related Norwegian Businesses for
environmental pollution, and has not received any written notification from a
governmental entity or a third person alleging that the Related Norwegian
Businesses are or may be liable for the cost of remediating environmental
pollution, under any applicable Environmental Laws. To the knowledge of A.L.
Oslo, there are no facts, events or circumstances that would

A-16
<PAGE>

reasonably be expected to cause liability for remediating environmental
pollution under existing Environmental Laws. For purposes of this Section
3.5(d), the term "Environmental Laws" means all legal requirements (including
laws, codes, rules, regulations, orders, decrees, permits, licenses and other
governmental authorizations) applicable to the Related Norwegian Businesses
relating to pollution, the preservation of the environment or the discharge,
emission, disposal or escape of materials into the environment.

(e) Except as set forth in Schedule 3.5(e), A.L. Oslo is not aware of
any facts (i) which could furnish a basis for the recall, withdrawal or
suspension of any approved new drug application (a "New Drug Application" or
"New Animal Drug Application") or other pre-market product notification or
approval, or any investigatory new drug application (an "Investigatory New Drug
Application" or "Investigatory New Animal Drug Application") or other
application for exemption from pre-market approval for the purpose of conducting
investigations on the product by the U.S. Food and Drug Administration (the
"FDA") or any other governmental regulatory agency (foreign or domestic
including, without limitation, Norwegian) insofar as the status of the requested
product is affected by any product being sold (as of the date hereof) or
proposed to be sold by any of the Related Norwegian Businesses (including, any
product proposed to be sold by the Biotechnical division) being in compliance
with representations or filings of any type (including Master File or similar
submissions which are not approved, per se) made to any governmental regulatory
agency) or (ii) which could otherwise cause A.L. Oslo or its Subsidiaries (or
New A.L. Oslo or any of its Subsidiaries after the Closing Date) to withdraw any
product sold by any of them as of the date hereof (including any product sold by
the Biotechnical division) from the market or to change the marketing
classification of any such product or to terminate or suspend clinical testing
of any such product (including, without limitation, with respect to each of the
foregoing clauses (i) and (ii), any pending or threatened safety or efficacy
hearing with respect to a product not required to have obtained any such pre-
market approval); except for such recalls, withdrawals, suspensions, changes in
marketing, terminations, suspensions or pending or threatened efficacy hearings
which would not have a RNB Material Adverse Effect.

Section 3.6 Financial Statements; Projections.
---------------------------------

(a) Set forth as Exhibit 4 hereto are (x) the audited Combined
Balance Sheets of the Related Norwegian Businesses for the years ended December
31, 1992, and December 31, 1993, and the unaudited Interim Combined Balance
Sheet of the Related Norweigan Businesses for the three months ended March 31,
1994; (y) the audited Combined Statements of Income for the years ended December
31, 1991, December 31, 1992, and December 31, 1993, the unaudited Interim
Combined Statement of Income for the three months ended March 31, 1994, and the
unaudited Interim Combined Statement of Cash Flows for the three months ended
March 31, 1994; and (z) the Combined Statements of Cash Flows for the years
ended December 31, 1991, December 31, 1992, and December 31, 1993 (including any
related notes and schedules) (together, the "Related Norwegian Businesses
Financial Statements"). Each such combined balance sheet set forth in the
Related Norwegian Businesses Financial Statements has been prepared in
accordance with the books and records of A.L. Oslo kept in the normal course of
business and fairly presents in all material respects the combined financial
position of the Related Norwegian Businesses as of its date, in each case in
accordance with U.S. generally accepted accounting principles consistently
applied during the periods involved (except as may be noted therein and, in the
case of the unaudited Interim Combined Balance Sheet, for normal year-end audit
adjustments and for the absence of footnotes that may be required by U.S.
generally accepted accounting principles). Each of the combined statements of
income and combined statements of cash flow included in the Related Norwegian
Businesses Financial Statements (including any related notes and schedules) has
been prepared in accordance with the books and records of A.L. Oslo, which books
and records are accurate and complete and kept in the normal course of business,
and fairly presents in all material respects the results of operations and
changes in cash flow, respectively, of the Related Norwegian Businesses for the
periods set forth therein, in each case in accordance with U.S. generally
accepted accounting principles consistently applied (including, without
limitation, principles relating to the reflection of assets (including accounts
receivable, inventory and prepaid expenses) and liabilities) during the periods
involved (except as may be noted therein and, in the case of the unaudited
Interim Combined Statement of Income and the unaudited Interim

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<PAGE>

Combined Statement of Cash Flows, for normal year-end audit adjustments and for
the absence of footnotes that may be required by U.S. generally accepted
accounting principles).

(b) Except as set forth in the Related Norwegian Businesses Financial
Statements, Schedule 4.2(g), or as otherwise contemplated hereunder, as of the
date hereof none of A.L. Oslo, Apolab OY, Norgesplaster A/S nor A.L. Lakemedel
AB is a party to transactions with Affiliates.

(c) The financial projections for the Related Norwegian Businesses
attached as Schedule 3.6(c) hereto were prepared by A.L. Oslo in good faith
based upon certain estimates and assumptions that A.L. Oslo in good faith
believed to be reasonable both on the date such financial projections were
prepared and, except as modified by the 1994 Budget for the Related Norwegian
Businesses (as hereinafter defined), as of the date of this Agreement. The
Company acknowledges and agrees that such financial projections were not
prepared with a view toward compliance with published guidelines of the SEC or
the American Institute of Certified Public Accountants regarding forecasts or
Norwegian or U.S. generally accepted accounting principles, and that such
financial projections necessarily make numerous estimates and assumptions with
respect to industry performance, general business and economic conditions, taxes
and other matters, which are beyond the control of A.L. Oslo. The Company also
acknowledges and agrees that such financial projections are not necessarily
indicative of current values or the future performance of the Related Norwegian
Businesses, which may be significantly different as compared to such financial
projections, and that A.L. Oslo makes no representation or warranty that the
results set forth in such financial projections will be achieved.

Section 3.7 Absence of Certain Changes. Except as set forth in
--------------------------
Schedule 3.7(a) or as contemplated by this Agreement or the Demerger Agreement,
since December 31, 1993 (i) the Related Norwegian Businesses have been operated
only in the ordinary course of business, consistent with past practice; and (ii)
there has not been (A) any change, or any development or combination of
developments involving a prospective change which has had or is reasonably
likely to have an RNB Material Adverse Effect (other than changes or
developments that generally affect the businesses in which A.L. Oslo competes);
(B) any declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of A.L. Oslo other than regular
annual cash dividends on its ordinary shares not in excess of NOK 10,000,000;
(C) extraordinary increases in indebtedness; or (D) any material change by A.L.
Oslo in accounting principles, practices or methods (except as required by U.S.
or Norwegian generally accepted accounting principles). Since December 31,
1993, other than in the ordinary course of business, there has not been any
material increase in the compensation payable or which could become payable by
A.L. Oslo and its Subsidiaries to their key employees, or any material amendment
of any A.L. Oslo Benefit Plan (as defined in Section 3.10(a)). Except as set
forth on Schedule 3.7(b) since December 31, 1993, and prior to the date hereof,
A.L. Oslo has not taken any action which, if taken after the date hereof, would
have been prohibited by Section 4.2 hereof.

Section 3.8 Litigation and Liabilities. Except as disclosed in the
--------------------------
Related Norwegian Businesses Financial Statements, in the Opening Related
Norwegian Businesses Balance Sheet or in Schedule 3.8, there are no (i) actions,
suits or proceedings or investigations pending or, to the knowledge of the
management of A.L. Oslo, threatened against or affecting New A.L. Oslo or its
Subsidiaries (at the time of the Closing) or the Related Norwegian Businesses or
(ii) obligations or liabilities (other than those incurred in the ordinary
course of business consistent with past practice), whether or not accrued,
contingent or otherwise, relating to the Related Norwegian Businesses, or for
which New A.L. Oslo or its Subsidiaries shall be liable following the Demerger
including, without limitation, those relating to environmental and occupational
safety and health matters, that may reasonably be expected to result in any
claims against or obligations or liabilities of New A.L. Oslo or any of its
Subsidiaries or the Related Norwegian Businesses that, alone or in the
aggregate, are reasonably likely to have an RNB Material Adverse Effect.

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<PAGE>

Section 3.9 Business of New A.L. Oslo; Indebtedness. Upon
---------------------------------------
consummation of the Demerger, New A.L. Oslo shall hold or have appropriate
rights to use all the assets (including contracts), property, real and personal,
tangible and intangible (including, without limitation, technology), used or
held for use by the Related Norwegian Businesses immediately prior to the
Demerger or otherwise necessary for the conduct of the Related Norwegian
Businesses as they are being conducted by A.L. Oslo on the date hereof (except
as otherwise contemplated under Section 4.13), including the assets which are
reflected on the Opening Related Norwegian Businesses Balance Sheet (except for
assets thereafter disposed of in the ordinary course of business consistent with
past practice). As of the Closing Date, the total indebtedness associated with
the Related Norwegian Businesses shall not be in excess of NOK 490,000,000.
Upon consummation of the Demerger, all of the assets of New A.L. Oslo will be
owned free and clear of all Encumbrances except for Encumbrances evidenced by
indebtedness reflected on the Opening Related Norwegian Businesses Balance Sheet
(or the refinancing or modification of such indebtedness) or Encumbrances which
do not materially interfere with the use and enjoyment of such assets. Except
as contemplated hereunder or under the Demerger Agreement, prior to the Closing
Date New A.L. Oslo shall not have engaged in any businesses. Upon the
consummation of the Demerger, New A.L. Oslo shall not have assumed or otherwise
be liable for any liabilities other than contemplated herein or under the
Demerger Agreement. Except as set forth in Schedule 3.9 and Schedule 4.16, upon
the consummation of the Demerger A.L. Oslo shall not have retained any
pharmaceutical-related (including, bulk antibiotics), animal health, aquatic
animal health businesses or any other business similar to those whose results of
operations are included in the Related Norwegian Businesses Financial
Statements. For purposes of this Section 3.9, the term "indebtedness" shall
include indebtedness for money borrowed (including, current portion of long term
debt, long term debt and short term debt), capitalized leases, guarantees of the
indebtedness of third parties and amounts not drawn on open letters of credit
for the benefit of A.L. Oslo; and shall not include accounts payable, accrued
expenses, accrued and deferred income taxes, other current liabilities or other
non-current liabilities.

Section 3.10 Employee Plans.
--------------

(a) A.L. Oslo has made available to the Company a true and complete
copy of each material deferred compensation, incentive compensation, stock
purchase, stock option, employment, severance, health, life or other insurance,
supplemental unemployment benefits, profit-sharing, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by A.L. Oslo or any of its Subsidiaries for the benefit of any
employee or former employee of A.L. Oslo or any of its Subsidiaries (the "A.L.
Oslo Benefit Plans").

(b) Except as set forth on Schedule 3.10, after the consummation of
the Demerger, neither New A.L. Oslo nor any of its Subsidiaries will have any
material unfunded liabilities (not otherwise set forth on the Opening Related
Norwegian Businesses Balance Sheet) with respect to any A.L. Oslo Benefit Plan.

(c) Neither A.L. Oslo nor any of its Subsidiaries has engaged in a
transaction with respect to any A.L. Oslo Benefit Plan in connection with which
A.L. Oslo or any of its Subsidiaries could be subject to either a civil penalty
assessed pursuant to or a tax imposed pursuant to applicable law.

(d) Each A.L. Oslo Benefit Plan has been operated and administered in
all material respects in accordance with its terms and applicable law. There
are no material pending or, to the best knowledge of the A.L. Oslo, threatened
claims involving any A.L. Oslo Benefit Plan.

(e) Except as provided pursuant to applicable law or in Schedule
3.10(e), no A.L. Oslo Benefit Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees of A.L. Oslo or any of its Subsidiaries beyond their
retirement or other termination of service.

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<PAGE>

(f) Except as provided in Schedule 3.10(f), the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee or officer of A.L. Oslo or any of its Subsidiaries to severance
pay, unemployment compensation or any other payment or (ii) accelerate the time
of payment or vesting, or increase the amount of compensation due any such
employee or officer.

Section 3.11 Intellectual Property.
---------------------

(a) Except as set forth in Schedule 3.11: (i) A.L. Oslo owns and
possesses all right, title and interest in and to, or has a valid and
enforceable license to use, the Intellectual Property Rights (as defined below)
necessary for the operation of the Related Norwegian Businesses as currently
conducted (the "Related Norwegian Businesses Intellectual Property Rights");
(ii) no claim by any third party contesting the validity, enforceability, use or
ownership of any of the Related Norwegian Businesses Intellectual Property
Rights has been made, is currently outstanding or is threatened; (iii) A.L. Oslo
has not received any notices, and is not aware of any facts which indicate a
likelihood of, any infringement or misappropriation by, or conflict with, any
third party with respect to the Related Norwegian Businesses Intellectual
Property Rights (including, without limitation, any demand or request that A.L.
Oslo license any rights from a third party); and (iv) A.L. Oslo has not
infringed, misappropriated or otherwise conflicted with any intellectual
property rights of any third parties and A.L. Oslo is not aware of any
infringement, misappropriation or conflict which will occur as a result of the
continued operation of the Related Norwegian Businesses as currently conducted,
except, with respect to clauses (ii), (iii) and (iv) of this Section 3.11, for
claims, infringements, misappropriations, conflicts or other actions which are
not likely to have a RNB Material Adverse Effect.

(b) All of the Related Norwegian Businesses Intellectual Property
Rights are or will be owned by, or properly assigned or licensed to, New A.L.
Oslo at the time of the Closing, except as set forth in Schedule 3.11. Except
as set forth in Schedule 3.11, the transactions contemplated by this Agreement
will have no material adverse effect on the right, title and interest in and to
the Related Norwegian Businesses Intellectual Property Rights. A.L. Oslo has
taken all necessary action to maintain and protect the Related Norwegian
Businesses Intellectual Property Rights and will continue to maintain and
protect the Related Norwegian Businesses Intellectual Property Rights prior to
the Closing Date so as to not materially adversely affect the validity of
enforceability of the Related Norwegian Businesses Intellectual Property Rights.

(d) For purposes of this Agreement, the term "Intellectual Property
Rights" shall mean all patents, patent applications, patent disclosures and
inventions (whether or not patentable and whether or not reduced to practice)
and any reissues, continuations, continuations-in-part, revisions, extensions or
reexaminations thereof; trademarks, service marks, trade dress, logos, trade
names and corporate names (and all translations, adaptations, derivations and
combinations of the foregoing); copyrights and copyrightable works; mask works;
and registrations, applications and renewals for any of the foregoing; and trade
secrets.

Section 3.12 Taxes. Except as set forth in Schedule 3.12, each of
-----
A.L. Oslo and its Subsidiaries has duly and timely filed all Tax Returns
relating to the Related Norwegian Businesses (in whole or in part) required to
be filed by it and such Tax Returns were true, correct and complete in all
material respects, and has duly paid, caused to be paid or made adequate
provision for the payment of all Taxes required to be paid in respect of the
periods covered by such returns. Except as set forth in Schedule 3.12 hereto,
with respect to the Related Norwegian Businesses (A) no claims for applicable
Taxes have been asserted against A.L. Oslo or any of its Subsidiaries, and no
deficiency for any applicable Taxes has been proposed, asserted or assessed
which has not been resolved or paid in full or which is not being contested in
good faith through appropriate proceedings, (B) no Tax Return or taxable period
of A.L. Oslo or any of its Subsidiaries is under audit, investigation or
examination and none of A.L. Oslo

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<PAGE>

or any of its Subsidiaries has received notice of any pending audit,
investigation or examination, (C) there are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any Tax Return for
any period of A.L. Oslo or the Subsidiaries, (D) there are no tax liens upon the
Related Norwegian Businesses other than tax liens for Taxes not yet due, and (E)
no power of attorney has been granted by A.L. Oslo or its Subsidiaries with
respect to any matter relating to Taxes which is currently in force.

Section 3.13 Brokers and Finders. Other than Bear, Stearns & Co.
-------------------
Inc., who was retained by A.L. Oslo in connection with the transactions
contemplated by this Agreement, A.L. Oslo has not engaged any broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement who would be entitled to a broker's, finder's or similar fee or
commission in connection therewith or upon consummation thereof.

Section 3.14 Opinion of Financial Advisor. The Board of Directors
----------------------------
of A.L. Oslo (at meetings duly called and held) has determined that the
transactions contemplated hereby are fair to and in the best interest of the
stockholders of A.L. Oslo and has determined to recommend the transactions
contemplated hereby to the holders of A.L. Oslo ordinary shares. A.L. Oslo has
received the opinion of Bear, Stearns & Co. Inc. dated as of the date hereof to
the effect that the consideration received in the Exchange Offer is fair from a
financial point of view to the shareholders of A.L. Oslo. A copy of such
opinion has been provided to the Company.

Section 3.15 Insurance. A.L. Oslo holds insurance policies covering
---------
the Related Norwegian Businesses sufficient for compliance with all requirements
of applicable law and of all agreements to which A.L. Oslo is a party (the
"Related Norwegian Businesses Insurance Policies"). The Related Norwegian
Businesses Insurance Policies are valid, outstanding and enforceable policies;
provide insurance coverage for the assets and operations of the Related
Norwegian Businesses at levels that are customary in the Related Norwegian
Businesses' industry; will remain in full force and effect through the Closing
Date; and, except as set forth in Schedule 3.15, will not be materially affected
by, or terminate or lapse by reason of, the transactions contemplated by this
Agreement.

Section 3.16 Material Contracts. Except as set forth in Schedule
------------------
3.16, neither A.L. Oslo nor, to the best knowledge of A.L. Oslo, any other party
(except for the Company) to any material contract to which A.L. Oslo is a party
is in material violation thereof or in material default with respect thereto.
All of the material agreements, contracts and arrangements to which A.L. Oslo is
a party are listed in the attachments to the Schedules to this Agreement.

ARTICLE IV

COVENANTS

Section 4.1 Interim Operations of the Company. The Company covenants
---------------------------------
and agrees that, prior to the Closing (unless A.L. Oslo shall otherwise agree in
writing or except as otherwise contemplated by this Agreement, including the
agreements contemplated hereby):

(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course consistent with past practice
and, to the extent consistent therewith, the Company and its Subsidiaries shall
use their reasonable efforts to preserve their business organization intact and
maintain their existing relations with customers, suppliers, employees and
business associates;

(b) the Company shall not (i) amend its Certificate of Incorporation
or By-Laws; (ii) split, combine or reclassify the outstanding shares of Class A
Stock or Class B Stock; or (iii) declare, set aside or pay

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<PAGE>

any dividend payable in cash, stock or property with respect to the shares of
Class A Stock or the Class B Stock, except for regular quarterly cash dividends
not in excess of $.045 per share;

(c) neither the Company nor any of its Subsidiaries shall issue or
sell any additional shares of, or securities convertible into or exchangeable
for, or options, warrants, calls, commitments or rights of any kind to acquire,
any shares of its capital stock of any class of the Company or its Subsidiaries
other than, in the case of the Company, shares of Class A Stock issuable
pursuant to options issued in the ordinary course of business under the 1983
Stock Option Plan or the Employee Stock Purchase Plan;

(d) neither the Company nor any of its Subsidiaries will take, agree
to take, or knowingly permit to be taken any action or do or knowingly permit to
be done anything in the conduct of the business of the Company and its
Subsidiaries, or otherwise, which would in any material respect be contrary to
or in breach of any of the terms or provisions of this Agreement, or which would
cause any of the representations of the Company contained herein to be or become
untrue in any material respect; and

(e) neither the Company nor any of its Subsidiaries will enter into an
agreement to do any of the foregoing.

Section 4.2 Interim Operations of the Related Norwegian Businesses.
------------------------------------------------------
A.L. Oslo covenants and agrees that, prior to the Closing (unless the Company
shall otherwise agree in writing or except as otherwise contemplated by this
Agreement, including the agreements contemplated hereby):

(a) A.L. Oslo shall cause the Related Norwegian Businesses to be
conducted only in the ordinary and usual course consistent with past practice
and, to the extent consistent therewith, A.L. Oslo shall use all reasonable
efforts to preserve, and use all reasonable efforts to cause its Subsidiaries to
preserve, the Related Norwegian Businesses and maintain existing relations with
customers, suppliers, employees and business associates;

(b) Neither A.L. Oslo, Apolab OY, A.L. Lakemedel AB nor Norgesplaster
A/S shall (i) sell or pledge or agree to sell or pledge any stock owned by it;
(ii) amend its organizational documents; (iii) split, combine or reclassify its
outstanding capital stock; or (iv) declare, set aside or pay any dividend
payable in cash, stock or property with respect to its capital stock other than
annual cash dividends on its capital stock not in excess of NOK 10,000,000; (v)
incur indebtedness (as defined in Section 3.9), except indebtedness relating to
working capital requirements, capital expenditures contemplated by Section
4.2(f), A.L. Oslo's 1994 Budget previously provided to the Company on January 7,
1994 and February 25, 1994 (the "1994 Budget for Related Norwegian Businesses"),
as set forth on Schedule 4.2(b), or for expenditures contemplated hereby or (vi)
report as deductible amortization or depreciation in connection with its
Norwegian income tax returns for the year ended December 31, 1993 in excess of
the higher of the (x) minimum amount required by law or (y) the amount necessary
to reduce applicable Norwegian income tax for the year ended December 31, 1993
to zero (so as to preserve such depreciation and amortization expense for
deductions during the periods after the Closing);

(c) except as set forth in Schedule 4.2(c), A.L. Oslo shall not nor
shall it permit any of its Subsidiaries to: (i) issue, sell, pledge, dispose of
or encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of the capital stock of A.L. Oslo or any corporation
included in the Related Norwegian Businesses (including, Apolab OY, Lakemedel AB
and Norgesplaster A/S); (ii) transfer, lease, license, sell, mortgage, pledge,
dispose of or encumber any assets material to the Related Norwegian Businesses
as conducted on the date hereof (except as contemplated in Section 4.12) or
transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any
other assets of the Related Norwegian Businesses, other than in the ordinary
course of business or as contemplated in Section 4.12; (iii) incur or modify any
indebtedness or other liability relating to the Related Norwegian Businesses
other than in the ordinary and usual course of business consistent with past
practice (except as contemplated by

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<PAGE>

Section 4.12 or Section 4.2(b)); or (iv) cause or permit A.L. Oslo or the
Related Norwegian Businesses to make any significant investment in, or
acquisition of, any business;

(d) neither A.L. Oslo nor its Subsidiaries shall grant any severance
or termination pay to, or enter into any employment or severance agreement with
any director, officer or other key employee of any entity included in the
Related Norwegian Businesses, other than pursuant to any A.L. Oslo Benefit Plan
in existence as of the date of this Agreement and in the ordinary course of
business consistent with past practice, or materially increase any compensation
payable or which could become payable by A.L. Oslo or its Subsidiaries to their
key employees or make any material amendment to an A.L. Oslo Benefit Plan;

(e) neither A.L. Oslo nor its Subsidiaries shall keep their books and
records other than in accordance with applicable law (including the provisions
governing demergers);

(f) neither A.L. Oslo nor its Subsidiaries will make capital
expenditures in excess of NOK 50,000,000 in the aggregate;

(g) except as contemplated by this Agreement or the Demerger
Agreement, none of A.L. Oslo, Apolab OY, Norgesplaster A/S nor A.L. Lakemedel AB
shall enter into transactions (including, the transfer of assets) with
Affiliates (including businesses which are not to be transferred to New A.L.
Oslo in the Demerger) other than transactions contemplated by Section 4.2(h) or
resulting from arrangements set forth on Schedule 4.2(g) or Schedule 4.3;

(h) except as otherwise contemplated by this Agreement, the Demerger
Agreement or the Opening Related Norwegian Businesses Balance Sheet, upon the
consummation of the Demerger A.L. Oslo shall cause New A.L. Oslo to receive the
amount of cash set forth on the Opening Related Norwegian Businesses Balance
Sheet, plus any cash generated (only to the extent generated) in the operation
----
of the Related Norwegian Businesses from the date of the Opening Related
Norwegian Businesses Balance Sheet until the Closing Date, plus cash resulting
----
from the repayment of indebtedness owed by A/S Wangs Fabrik and Nopal to A.L.
Oslo, less cash used (only to the extent used) in the operation of the Related
----
Norwegian Businesses (including, without limitation, to repay indebtedness of
the Related Norwegian Businesses, which would otherwise be assumed (pursuant to
the terms of the Demerger Agreement) or refinanced by New A.L. Oslo upon the
consummation of the Demerger) since such date until the Closing Date, less cash
----
used to pay any dividend on A.L. Oslo ordinary shares to the extent that such
dividend would reduce the Cash Purchase Price;

(i) A.L. Oslo shall not, and shall cause any of Apolab OY,
Norgesplaster A/S, or A.L. Lakemedel AB not to, take, agree to take, or
knowingly permit to be taken any action to do or knowingly permit to be done
anything in the conduct of any of the Related Norwegian Businesses, or
otherwise, which would in any material respect be contrary to or in breach of
any of the terms or provisions of this Agreement, or which would cause any of
the representations of A.L. Oslo contained herein to be or become untrue in any
material respect; and

(j) A.L. Oslo shall not and shall not cause or permit any of the
entities included in the Related Norwegian Businesses to enter into an agreement
to do any of the foregoing.

Section 4.3 Additional Agreements. Prior to the effectiveness of the
---------------------
Demerger, A.L. Oslo and New A.L. Oslo shall enter into: (i) an Administrative
Services Agreement with respect to the provision of administrative services by
New A.L. Oslo to A.L. Oslo in the form attached hereto as Exhibit 6 and (ii) a
license agreement to allow A.L. Oslo to use the "A.L." name and logo (presently
used by A.L. Oslo) for so long as A.L. Oslo, directly or indirectly has the
right to elect a majority of directors of the Company (it being understood by
the parties that following the Closing Date A.L. Oslo shall not be entitled to
use the "A.L." logo to identify products sold by A.L. Oslo and its Affiliates,
except that for a period of five years after the Closing Date with respect to

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<PAGE>

products being sold by A.L. Oslo or its Affiliates on the Closing Date). In
addition, should other agreements be necessary for A.L. Oslo to operate
independently, the parties will discuss such agreements in good faith. It is
the understanding of the parties that the supply, distribution and other
arrangements set forth on Schedule 4.3 shall continue in place following the
Closing Date upon the same terms as in effect immediately prior to the Closing
Date, and shall be formalized in a written agreement (if not formalized in
writing as of the date hereof), upon the consent of the Company (which consent
shall not be unreasonably withheld) prior to the Closing Date.

Section 4.4 Meeting of Stockholders.
-----------------------

(a) The Company will take all action reasonably necessary in
accordance with applicable law and its Certificate of Incorporation and By-Laws
to convene the Stockholders Meeting as promptly as practicable to consider and
vote upon the approval of this Agreement and the transactions contemplated
hereunder. Subject to fiduciary requirements of applicable law, the Board of
Directors of the Company shall recommend such approval. At any such meeting of
the Company, A.L. Oslo agrees to cause all of the shares of Class B Stock then
owned, directly or indirectly, by A.L. Oslo and its Affiliates to be voted in
favor of this Agreement and the transactions contemplated hereunder. As soon as
practicable after the date hereof, the Company shall (i) file the Proxy
Statement with the SEC, (ii) obtain and furnish the information required to be
included therein, (iii) after consultation with A.L. Oslo, respond promptly to
any comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof and (iv) use all reasonable efforts to cause the
Proxy Statement to be mailed to the Company's stockholders at the earliest
practicable date.

(b) A.L. Oslo will take all action reasonably necessary in accordance
with applicable law and its organizational documents to convene a stockholders
meeting as promptly as practicable to consider and vote upon the approval of the
Demerger. Subject to fiduciary requirements of applicable law, the Board of
Directors of A.L. Oslo shall (i) recommend such approval to its stockholders,
and (ii) recommend that its stockholders tender their New A.L. Oslo Shares
pursuant to the Exchange Offer. A.L. Oslo shall cooperate with, and provide
reasonable assistance to, the Company in order to facilitate consummation of the
Exchange Offer by the Company, including providing a list of the names and
addresses of its stockholders. A.L. Oslo shall provide assistance to the
Company in connection with the preparation of the Proxy Statement (to the extent
requested by the Company), including by promptly providing the A.L. Oslo
Information.

Section 4.5 Filings; Other Action. Subject to the terms and
---------------------
conditions herein provided, the Company and A.L. Oslo shall: (a) promptly make
any filings or required submissions with respect to the Restructuring and (b)
use their best efforts to promptly take, or cause to be taken, all other action
and do, or cause to be done, all other things necessary, proper or appropriate
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable.

Section 4.6 Access.
------

(a) Upon reasonable notice, unless this Agreement is terminated
pursuant to Article VI hereof, each of A.L. Oslo and the Company shall (and
shall cause each of its Subsidiaries to) afford the other and the other's
officers, employees, counsel, accountants and other authorized representatives
("Representatives") access, during normal business hours throughout the period
prior to the Closing Date, to its properties, books and records and any copies
thereof that the other may reasonably request and, during such period, each of
A.L. Oslo and the Company shall (and shall each cause each of its Subsidiaries
to) furnish promptly to the other copies of and/or reasonable access to all
information concerning its business, properties and personnel as each may
reasonably request; provided, however, that no investigation pursuant to this
Section 4.6 shall affect or be deemed to modify any representation or warranty
contained herein.

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<PAGE>

(b) Except as required by applicable law, pending consummation or
termination of the transactions herein contemplated, each party will keep
confidential, and will cause its Representatives to keep confidential, all
information and documents obtained pursuant to this Section 4.6 unless such
information (i) was already known to such party or its Representatives, (ii)
becomes available to such party or its Representatives from other sources not
known by such party or its Representatives to be bound by a confidentially
obligation, (iii) is independently acquired by such party or its Representatives
as a result of work carried out by any employee or representative of such party
or its Representatives to whom no disclosure of such information has been made,
(iv) is disclosed with the prior written approval of such party or (v) is or
becomes readily ascertainable from published information or trade sources. To
the extent permitted by applicable law, A.L. Oslo and the Company agree to give
the other notice a reasonable time prior to any disclosure of confidential
information by such party or its Representatives required by applicable law.
Upon any termination of this Agreement, A.L. Oslo and the Company will either
(i) collect and deliver to the other all documents obtained or examined by (or
derived from documents obtained or examined by) its Representatives who are not
employees of such party then in their possession and any copies thereof or (ii)
cause such Representatives to destroy such documents and copies and deliver to
the other certificates of destruction with respect to such documents and copies.

(c) From and after the Closing Date, the Company, A.L. Oslo and New
A.L. Oslo shall cooperate and shall deliver to the other such information and
data concerning the Related Norwegian Businesses and make available such
knowledgeable employees of the Company, A.L. Oslo and New A.L. Oslo as the other
may reasonably request in order to enable the Company, A.L. Oslo and New A.L.
Oslo to complete and file all Tax Returns which they may be required to file
with respect to the Related Norwegian Businesses.

Section 4.7 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to A.L. Oslo and A.L. Oslo shall give prompt notice to the
Company, of (i) any representation or warranty contained in this Agreement which
shall have been incorrect in any material respect when made or shall have since
ceased to be true and correct in all material respects, and (ii) any failure of
the Company or A.L. Oslo, as the case may be, to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder. Each of the Company and A.L. Oslo shall give prompt
notice to the other party of any notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement. Prior to the
Closing, each of the Company and A.L. Oslo may amend, modify or supplement any
Schedule to any representation or warranty hereunder (or add a Schedule to any
representation or warranty hereunder) to the extent such amendment, modification
or supplement relates to facts or events that occur after the execution of this
Agreement by written notice to the other party hereto; provided, however that
any such amendment, modification or supplement shall not be deemed effective for
purposes of Article V.

Section 4.8 Publicity. The Company and A.L. Oslo shall consult with
---------
each other in issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and in making any filings
with any federal or state governmental or regulatory agency or with any national
securities exchange with respect thereto.

Section 4.9 Governance; Corporate Headquarters.
----------------------------------

(a) It is the intention of A.L. Oslo and the Company that after the
Closing Date the Company shall be managed on the basis of a global business
strategy and perspective. In furtherance thereof, as of Closing, (A) it is the
intention of the parties that the Board of Directors of the Company shall be
reconstituted to reflect the increased international scope of the Company's
business and to comply with the provisions of the Charter Amendment, (B) the
Company shall have headquarters in both Oslo, Norway and the New York
metropolitan area (or another convenient location in the United States) with
each of the Chief Executive Officer and the Chief Financial Officer of the
Company maintaining a presence in each of the Company's headquarters and (C)

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<PAGE>

consideration shall be given by the Chief Executive Officer to the establishment
of a management committee (the "Management Committee") to include the operating
managers of the Company's key strategic business units.

(b) It is the intention of the parties for the Board of Directors of
the Company to meet in the United States and Norway with at least one meeting a
year in each of the United States and Norway.

(c) Following the Closing Date, the Company intends to cause New A.L.
Labs to maintain its headquarters in its current location (or, if appropriate,
in another convenient location within the United States) and to cause New A.L.
Oslo to continue to maintain its headquarters in Norway.

(d) At the time of the Closing, (i) the size of the Board of
Directors of the Company shall be at least eight members (and not more than
nine) and the size of the Board of Directors shall not be reduced below eight
members or increased above nine members for at least two years after the Closing
Date and (ii) Einar W. Sissener shall be the Chief Executive Officer of the
Company.

(e) At the time of the Closing, the Directors, members of the
Corporate Assembly (or any other committees required under applicable law or
applicable agreements) and management of New A.L. Oslo will be the Directors,
members of the Corporate Assembly (or any other committees required under
applicable law or applicable agreements) and management of A.L. Oslo immediately
prior to the Closing.

(f) As contemplated by the Demerger Agreement, immediately following
the consummation of the Demerger, all the employees of A.L. Oslo shall become
employees of New A.L. Oslo, upon the same terms as applicable immediately prior
to the Demerger.

Section 4.10 Reasonable Efforts. Subject to the terms and conditions
------------------
herein provided, each of the parties hereto agrees to use all reasonable efforts
promptly to take, or cause to be taken, all actions and do or cause to be done,
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this Agreement
including the satisfaction of all conditions thereto, and shall use their
reasonable efforts to obtain consents of all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement.

Section 4.11 Capital Expenditures. During the period between the
--------------------
execution of this Agreement and the Closing, each of the Company and A.L. Oslo
shall reexamine their respective material commitments for capital expenditures
in light of the anticipated Restructuring.

Section 4.12 A.L. Oslo Finances.
------------------

(a) A.L. Oslo and the Company agree that it is their intention to be
committed to the continued growth and development of the Related Norwegian
Businesses in the context of the Company's global business strategy and
perspective. In furtherance thereof, within six months of the Closing, the
Company shall provide additional equity capital to New A.L. Oslo in an amount
equal to NOK 100,000,000. Such additional equity shall be used by New A.L. Oslo
(in view of the best interests of all shareholders of the Company) to fund any
future capital expenditures and for working capital purposes.

(b) Prior to the Closing Date, and only upon the request of the
Company, A.L. Oslo shall use all reasonable efforts to refinance a portion of
its indebtedness related to the Related Norwegian Businesses on a basis
reasonably acceptable to the Company. The Company and A.L. Oslo shall cooperate
with each other in seeking any modifications or waivers which may be required
under the terms of A.L. Oslo's existing indebtedness on terms reasonably
acceptable to the Company and A.L. Oslo and causing the release of any existing
collateral (other than as specifically contemplated herein or assets that will
be transferred to New A.L. Oslo in the Demerger)

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<PAGE>

relating to existing indebtedness of A.L. Oslo. In addition, any and all the
indebtedness of A/S Wangs Fabrik and Nopal owed to A.L. Oslo shall be repaid on
or prior to Closing, with the proceeds of any such repayment being treated as
assets of New A.L. Oslo for purposes of the Demerger.

(c) The Company recognizes that as a result of the Demerger, certain
creditors of New A.L. Oslo for indebtedness for borrowed money may require
credit support from the Company for existing or refinanced indebtedness of New
A.L. Oslo in order to secure their consents for the transactions contemplated
hereby. The Company shall use its commercially reasonable efforts, as
determined in good faith by the Company, to provide assistance, if necessary, to
A.L. Oslo in obtaining any such consents on or prior to the Closing Date. In
connection with obtaining such consents, A.L. Oslo shall permit the Skoyen
facility (but no other asset which is to be retained by A.L. Oslo in the
Demerger) to be used as credit support for debt obligations of New A.L. Oslo and
A.L. Oslo will agree to permit the continued use of the Skoyen facility as
credit support following the Closing Date; provided, that (i) the Skoyen
facility shall be used as credit support only until the fifth anniversary of the
Closing, and (ii) the Company shall take all necessary action to cause the
Skoyen facility to be released from any such encumbrance no later than such
fifth anniversary, (including, without limitation, if necessary, the repayment
of any indebtedness with respect to which the Skoyen facility serves as
collateral.)

Section 4.13 Skoyen Lease. Contemporaneously with the Demerger, A.L.
------------
Oslo and New A.L. Oslo shall enter into a lease relating to the Skoyen facility
substantially in the form attached hereto as Exhibit 8.

Section 4.14 A.L. Pharma. As soon as practicable after the Closing
-----------
Date, the Company shall transfer the ownership of A.L. Pharma A.S. and its
related assets and subsidiaries to New A.L. Oslo (the "A.L. Pharma Transfer") to
facilitate the operation of the Company's European pharmaceutical businesses;
provided, however, if the Company concludes (based upon applicable law then in
effect) in good faith that such transfer would have adverse tax consequences
based upon the tax characteristics relevant to A.L. Pharma A.S. and its
Affiliates, then the A.L. Pharma Transfer may be postponed until the law or
other relevant circumstance changes so that the A.L. Pharma Transfer would not
have adverse tax consequences.

Section 4.15 [Reserved]

Section 4.16 Non-compete. For a period of ten years from the Closing
-----------
Date, neither A.L. Oslo, its Subsidiaries nor any controlling shareholder of
A.L. Oslo as of the date hereof shall own or operate any business that competes
anywhere in the world, (excluding any business being conducted by A.L. Oslo or
its Subsidiaries upon the consummation of the Demerger as set forth in Schedule
4.16) directly or indirectly, with the Related Norwegian Businesses as the same
may be conducted on the Closing Date. Notwithstanding the foregoing, A.L. Oslo,
its Subsidiaries and any controlling shareholder of A.L. Oslo, as of the date
hereof, may (x) own or operate any entity not more than 15% of the gross
revenues of which are derived from any business that competes, directly or
indirectly, with the Related Norwegian Businesses or (y) invest in the capital
stock of any entity that competes, directly or indirectly, with the Related
Norwegian Businesses, provided, that, such investment shall not be in excess of
5% of the capital stock of such entity on a fully diluted basis.
Notwithstanding the foregoing, neither A.L. Oslo, its Subsidiaries nor any
controlling shareholder of A.L. Oslo as of the date hereof shall be precluded
from selling or disposing of A.L. Oslo or any portion or interest of A.L. Oslo
to any person or entity (irrespective of the business of such person or entity);
provided, that the controlling shareholders of A.L. Oslo as of the date hereof
shall receive no more than 25% of the capital stock of such entity; and
provided, further, that any controlling shareholder of A.L. Oslo as of the date
hereof may not be an executive officer of such person or entity, but may serve
as a director of such person or entity. To the extent that any term of this
Section 4.16 is deemed to be unenforceable because of its scope or term, the
parties agree that the scope or term of this Section 4.16 may be limited so as
to be enforceable and shall not affect the validity or enforceability of any
other term of this Section 4.16, which shall remain in full force and effect.

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<PAGE>

ARTICLE V

CONDITIONS

Section 5.1 Conditions to Obligations of Each Party. The respective
---------------------------------------
obligations of each party to consummate the Restructuring are subject to the
fulfillment of each of the following conditions, any or all of which may be
waived in whole or in part by A.L. Oslo or the Company, as the case may be, to
the extent permitted by applicable law:

(a) U.S. Stockholder Approval. This Agreement shall have been duly
-------------------------
approved in accordance with applicable law and the Certificate of Incorporation
and By-Laws of the Company (i) by the majority of the vote of the outstanding
shares of Class A Stock and shares of Class B Stock voting as a single class and
(ii) by the holders of a majority of the outstanding shares of Class A Stock
voting as a single class and by the holders of a majority of the outstanding
shares of Class B Stock voting as a single class;

(b) Norwegian Stockholder Approval. The Demerger (including the
------------------------------
waiver of any preemptive rights that may be exercisable pursuant to Section
5.1(g)) shall have been duly approved in accordance with applicable law by the
stockholders of A.L. Oslo (i.e., by the approval of 66 2/3% of the outstanding
----
shares of A.L. Oslo represented at the meeting);

(c) Litigation. No court or governmental or regulatory authority of
----------
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) which is in effect and
prohibits or makes illegal consummation of the transactions contemplated by this
Agreement or imposes material restrictions on A.L. Oslo or the Company in
connection with consummation of the Restructuring or the operation of the
Related Norwegian Businesses following consummation of the Restructuring
(collectively, an "Order");

(d) Minimum Participation in Exchange Offer. There shall have been
---------------------------------------
validly tendered and not properly withdrawn pursuant to the Exchange Offer a
number of New A.L. Oslo Shares representing more than 90% of the New A.L. Oslo
Shares outstanding on a fully diluted basis (the "Minimum Condition");

(e) Norwegian Concessions. The Company and, if applicable, New A.L.
---------------------
Oslo shall have received all concessions required under Norwegian law (upon
customary terms) in order to effectuate the transactions contemplated by this
Agreement, including the Demerger and the Exchange Offer;

(f) Warrants. The issuance of the Warrants by the Company shall be
--------
exempt from the registration requirements of the Securities Act, or the Warrants
shall have been duly registered under the Securities Act; and

(g) Control Agreement. The Control Agreement dated February 7, 1986
-----------------
between A.L. Oslo and the Company shall be amended to extend the Termination
Date to November 1, 1997 and to permit bona fide pledges of up to 2,000,000
shares of the Class B Stock.

Section 5.2 Additional Conditions to Obligations of the Company. The
---------------------------------------------------
obligations of the Company to consummate the A.L. Labs Transfer, the Exchange
Offer and the Charter Amendments are also subject to the fulfillment of each of
the following additional conditions, any or all of which may be waived in whole
or in part by the Company to the extent permitted by applicable law:

(a) Representations and Warranties; Covenants. The representations
-----------------------------------------
and warranties of A.L. Oslo set forth in this Agreement shall be true and
correct in all material respects as of the date of this

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<PAGE>

Agreement and (except to the extent such representations and warranties speak
specifically as of an earlier date) as of the Closing Date as though made on and
as of the Closing Date, except as otherwise contemplated by this Agreement, and
A.L. Oslo shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing Date,
and the Company shall have received certificates signed on behalf of A.L. Oslo
by the Managing Director of A.L. Oslo to such effect;

(b) Consents and Approvals. All consents and approvals of third
----------------------
parties and governmental bodies and authorities required to be made or obtained
prior to the Closing Date in connection with the transactions contemplated
hereby shall have been made or obtained (as the case may be) other than those
which if not made or obtained, would not have a RNB Material Adverse Effect or a
Material Adverse Effect;

(c) No Material Adverse Change. There shall have been no material
--------------------------
adverse change in the assets, liabilities, operations or prospects of the
Related Norwegian Businesses from December 31, 1993 through the Closing Date
(including, without limitation, any material adverse change in the prospects for
the Related Norwegian Businesses as set forth in the financial projections for
the Related Norwegian Businesses attached hereto as Schedule 3.6(c) and the
Company shall have received the certificate of the Managing Director of A.L.
Oslo on behalf of A.L. Oslo dated as of the Closing Date to such effect;

(d) Execution of Other Agreements. A.L. Oslo shall have entered into
-----------------------------
the form of lease attached hereto as Exhibit 8;

(e) Consummation of Demerger. The Demerger shall have become effective
------------------------
in accordance with applicable Norwegian law;

(f) Legal Opinions. The Company shall have received (i) an opinion
--------------
of counsel to A.L. Oslo substantially in the form set forth in Exhibit 9 and
(ii) an opinion of counsel to the Company that the Charter Amendments will not
result in U.S. federal income tax to the holders of Class A Stock; and

(g) Opinion of Financial Advisor. The opinion of Lehman Brothers
----------------------------
referenced in Section 2.9 shall not have been modified, in a materially adverse
manner, or withdrawn.

Section 5.3 Additional Conditions to Obligations of A.L. Oslo. The
-------------------------------------------------
obligations of A.L. Oslo to consummate the Demerger are also subject to the
fulfillment of each of the following additional conditions any or all of which
may be waived in whole or in part by A.L. Oslo, to the extent permitted by law:

(a) Representations and Warranties; Covenants. The representations
-----------------------------------------
and warranties of the Company set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and (except to
the extent such representations and warranties speak specifically as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date, except as otherwise contemplated by this Agreement, and the Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and A.L. Oslo shall
have received a certificate signed on behalf of the Company by a senior
executive officer of the Company to such effect;

(b) Norwegian Consents and Approvals. All consents and approvals of
--------------------------------
third parties and governmental bodies and authorities required to be made or
obtained prior to consummation of the transactions contemplated by this
Agreement shall have been made or obtained (as the case may be) other than those
which if not made or obtained, will not have a Material Adverse Effect or a RNB
Material Adverse Effect;

(c) No Material Adverse Change. There shall have been no material
--------------------------
adverse change in the assets, liabilities, operations or prospects of the
Company from December 31, 1993 through the Closing Date

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<PAGE>

and A.L. Oslo shall have received the certificate of a senior executive officer
of the Company on behalf of the Company dated as of the Closing Date to such
effect;

(d) Execution of Other Agreements. The Company and the warrant agent
-----------------------------
shall have executed the Warrant Agreement attached hereto as Exhibit 3;

(e) Satisfaction of other Conditions. The conditions to the Company
--------------------------------
performing its obligations set forth in Sections 5.1 and 5.2 (other than as they
relate to the Demerger) shall have been satisfied or waived or A.L. Oslo shall
have no reasonable expectation that they will not be satisfied as of the Closing
Date (or with respect to the transfer of assets and liabilities pursuant to the
A.L. Labs Transfer, as soon as reasonably practicable thereafter). A.L. Oslo
shall also have received an undertaking by the Company dated as of the Closing
Date that the Company will consummate the Exchange Offer in accordance with its
terms promptly following the consummation of the Demerger;

(f) Legal Opinions. A.L. Oslo shall have received an opinion of
--------------
counsel to the Company substantially in the form set forth in Exhibit 10; and

(g) Opinion of Financial Advisor. The opinion of Bear, Stearns & Co.
----------------------------
Inc. referenced in Section 3.14 shall not have been modified, in a materially
adverse manner, or withdrawn.

ARTICLE VI

TERMINATION

Section 6.1 Termination by Mutual Consent. This Agreement may be
-----------------------------
terminated and the Restructuring may be abandoned at any time prior to the
Closing Date, before or after the approval by holders of Class A Stock, by the
mutual consent of A.L. Oslo and the Company, by action of their respective
Boards of Directors.

Section 6.2 Termination by the Company or A.L. Oslo. This Agreement
---------------------------------------
may be terminated and the Restructuring may be abandoned by action of the Board
of Directors of the Company or A.L. Oslo if the Restructuring shall not have
been consummated by December 31, 1994 or if the shareholders of the respective
parties have voted and failed to approve the Restructuring; provided, that the
right to terminate this Agreement under this Section 6.2 shall not be available
to any party whose breach of its representations and warranties in this
Agreement or whose failure to perform any of its covenants and agreements under
this Agreement has been the cause of or resulted in the failure of the
Restructuring to occur on or before such date.

Section 6.3 Termination by A.L. Oslo. This Agreement may be
------------------------
terminated and the Restructuring may be abandoned at any time prior to the
Closing Date, before or after the approval by holders of Class A Stock, by
action of the Board of Directors of A.L. Oslo, if (x) there has been a material
breach of any covenant or a breach of any representation or warranty by the
Company which breach of representation or warranty individually or, together
with all other such breaches, is reasonably likely to have a Material Adverse
Effect, provided that any such breach of a covenant, representation or warranty
has not been cured within 20 Business Days following receipt by the Company of
written notice of such breach or (y) the Board of Directors of the Company or
the Special Committee shall have withdrawn or modified in a manner adverse to
A.L. Oslo its approval or recommendation of this Agreement, or any of the
transactions contemplated hereby.

Section 6.4 Termination by the Company. This Agreement may be
--------------------------
terminated and the Restructuring may be abandoned at any time prior to the
Closing Date, before or after the approval by holders of Class A Stock, by
action of the Board of Directors of the Company, if (x) there has been a
material breach of any

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<PAGE>

covenant or a breach of any representation or warranty by A.L. Oslo which
breach of representation or warranty individually or, together with all other
such breaches is reasonably likely to have an RNB Material Adverse Effect,
provided that any such breach of a covenant, representation or warranty has not
been cured within 20 Business Days following receipt by A.L. Oslo of written
notice of such breach or (y) the Board of Directors of A.L. Oslo shall have
withdrawn or modified in a manner adverse to the Company its approval of this
Agreement or any of the transactions contemplated hereby.

Section 6.5 Effect of Termination and Abandonment. In the event of
-------------------------------------
termination of this Agreement and abandonment of the Restructuring pursuant to
this Article VI, written notice thereof shall forthwith be given to the other
party specifying the provision hereof pursuant to which such termination is
made, and this Agreement and the transactions contemplated by this Agreement
shall be abandoned and no party hereto (or any of its directors, officers or
stockholders) shall have any liability or further obligation to any other party
to this Agreement, except as provided in this Section 6.5 and Section 8.2 and
except that nothing herein will relieve any party from liability for any breach
of any of its representations, warranties, covenants or agreements set forth in
this Agreement.

ARTICLE VII

INDEMNIFICATION
---------------

Section 7.1 General. No action or proceeding may be brought for
-------
indemnification pursuant to Section 7.2(a)(i) or 7.2(b)(i) with respect to any
of the representations and warranties which survive pursuant to Section 8.2
unless written notice thereof, setting forth in reasonable detail the claimed
misrepresentation or breach of warranty, shall have been delivered to the party
alleged to have breached such representation or warranty prior to expiration of
the applicable period of survival for such representation or warranty. No
action or proceeding may be brought for indemnification pursuant to Section 7.2
with respect to items contained in any Schedule attached hereto if such item was
part of such Schedule as amended, modified or supplemented pursuant to Section
4.7 on or prior to the Closing Date. After the Closing Date, the Company's
exclusive remedy for any breach of any representation or warranty by A.L. Oslo
that shall survive hereunder shall be to proceed against A.L. Oslo pursuant to
the provisions of this Article VII. After the Closing Date, A.L. Oslo's
exclusive remedy for any breach of any representation or warranty by the Company
that shall survive hereunder shall be to proceed against the Company pursuant to
the provisions of this Article VII. Any amounts paid under this Article VII
shall be treated by the parties as adjustments to the Cash Purchase Price. Any
payment of Damages (as defined below) under this Article VII shall be made net
of any Tax benefit and increased by the amount of any Tax detriment, to the
recipient of such payment for Damages.

Section 7.2 Indemnification.
---------------

(a) From and after the Closing Date, the Company shall indemnify and
hold harmless A.L. Oslo, its Subsidiaries and Affiliates, each of their
respective directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"A.L. Oslo Indemnified Parties") from and against all losses, costs,
liabilities, obligations, damages, claims, demands and expenses including
reasonable attorney's fees (herein, "Damages") incurred in connection with,
arising out of, resulting from or incident to (i) any breach of any covenant,
representation or warranty made by or on behalf of the Company under this
Agreement or in any Schedule hereto (or in any certificate required to be
delivered hereunder), (ii) any failure by New A.L. Oslo to meet any obligation
secured by the Skoyen facility as credit support for obligations of New A.L.
Oslo or the Company or the failure of New A.L. Oslo or the Company to release
the Skoyen facility upon the fifth anniversary of the Closing Date as
contemplated hereby, (iii) except as specifically provided to the contrary
herein, liabilities specifically contemplated as being transferred to New A.L.

A-31
<PAGE>

Oslo pursuant to the Demerger Agreement or this Agreement, (iv) liabilities
arising in connection with the operation of New A.L. Oslo subsequent to the
Closing and (v) liabilities for expenses incurred by the Company in connection
with the execution of this Agreement and the consummation of the transactions
contemplated hereby.

(b) From and after the Closing Date, A.L. Oslo shall indemnify and
hold harmless the Company, its Subsidiaries and Affiliates, each of their
respective directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Company Indemnified Parties") from and against all Damages incurred in
connection with, arising out of, resulting from or incident to (i) any breach of
any covenant, representation or warranty made by or on behalf of A.L. Oslo under
this Agreement or in any Schedule hereto (or in any certificate required to be
delivered hereunder), (ii) liabilities for Taxes imposed by the United States of
America upon or with respect to any payment of the Cash Purchase Price or
Warrants made by the Company to a holder of New A.L. Oslo Shares pursuant to the
terms of this Agreement or the Exchange Offer (including penalties, additions to
tax, interest and any costs directly associated therewith) as a result of the
Company's failure to withhold Taxes thereon, (iii) the operation of the Related
Norwegian Businesses prior to the Closing other than in compliance with all
applicable judgements, laws, regulations, orders and decrees in effect on or
prior to the Closing that relate to the Related Norwegian Businesses, (iv)
liabilities arising in connection with the operation of A.L. Oslo prior to the
Closing, which do not relate to the Related Norwegian Businesses or liabilities
of A.L. Oslo not specifically contemplated as being transferred to New A.L. Oslo
pursuant to the Demerger Agreement (including Schedule I attached thereto),
except for such liabilities which are reflected on the Opening Related Norwegian
Businesses Balance Sheet, (v) liabilities arising under Environmental Laws in
effect on or prior to the Closing (or pending as a proposal on the Closing Date)
in connection with the operation of the Related Norwegian Businesses prior to
the Closing Date, (vi) liabilities for Taxes arising in connection with the
operation of A.L. Oslo on or prior to the Closing Date (or otherwise
attributable to A.L. Oslo with respect to any period ending on or before the
Closing Date), except for Taxes that are reflected as a reserve for Tax
liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) shown on the face (rather than
in any notes thereto) on the Opening Related Norwegian Businesses Balance Sheet
or that are incurred in connection with the Related Norwegian Businesses in the
ordinary course of business consistent with past practice with respect to the
period from the date of the Opening Related Norwegian Businesses Balance Sheet
through the Closing Date, (vii) liabilities for expenses incurred by A.L. Oslo
and New A.L. Oslo in connection with the execution of this Agreement and the
consummation of the transactions contemplated hereby, except as contemplated by
Section 8.1, and (viii) liabilities arising in connection with the operations of
A.L. Oslo subsequent to the Closing; except, with respect to clauses (iii) and
(v) of this Section 7.2(b), for such liabilities which are reflected or reserved
against in the Opening Related Norwegian Businesses Balance Sheet or which are
incurred in the ordinary course of business consistent with past practice from
the date of the Opening Related Norwegian Businesses Balance Sheet through the
Closing Date and except, with respect to any claims for Damages relating to
Section 483 matters set forth on Schedule 3.5(c) ("483 Matters"), Damages shall
not include employee costs or expenses (other than (x) the cost of additional
employees hired specifically for the purpose of remediating 483 Matters in
excess of one man-year and (y) overtime expenses of employees for remediating
483 Matters). For five years following the Closing, A.L. Oslo shall not be
liquidated or take any other action which would be reasonably likely to impair
A.L. Oslo's ability to meet any obligation for indemnification hereunder.
Notwithstanding any provision to the contrary contained in this Agreement, the
Company or any Company Indemnified Party shall only be entitled (x) to make a
claim for indemnification against A.L. Oslo for breaches of the representations
and warranties contained in Section 3.5(d) or pursuant to clause (iii) or (v) of
this Section 7.2(b) of this Agreement after the amount of all Damages in the
aggregate resulting from the foregoing shall exceed $500,000 and then the
Company shall only be entitled to recover any amount of loss in excess of such
$500,000 threshold; provided, however, that such threshold shall not apply if
any senior official of A.L. Oslo had knowledge of the conditions giving rise to
any such claim (it being expressly understood that senior officials at A.L. Oslo
shall be deemed to have knowledge of all items and conditions included on the
Schedules to this Agreement) or (y) to make a claim pursuant to clause (iii) of
this Section 7.2(b) of this Agreement if the Company shall provide notice to
A.L. Oslo of such claim prior to the fifth anniversary of the Closing. The
parties acknowledge that the

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<PAGE>

scheduling of any item pursuant to Article III hereof shall not exclude such
items from the provisions of clauses (iii), (v) and (vi) of this Section 7.2(b).

Section 7.3 Third Party Claims. From and after the Closing Date, if
------------------
a claim by a third party is made against an indemnified party and if such party
intends to seek indemnity with respect thereto under this Article VII such
indemnified party shall promptly notify the indemnifying party in writing of
such claims setting forth such claims in reasonable detail. The indemnifying
party shall have 30 days after receipt of such notice to undertake, conduct and
control, through counsel of its own choosing (reasonably acceptable to the
indemnified party) and at its own expense, the settlement or defense thereof,
and the indemnified party shall cooperate with it in connection therewith;
provided that the indemnified party may participate in such settlement or
- -------- ----
defense through counsel chosen by such indemnified party, provided that the fees
and expenses of such counsel shall be borne by such indemnified party. So long
as the indemnifying party is reasonably contesting any such claim in good faith,
the indemnified party shall have the right to pay or settle any such claim,
provided that in such event it shall waive any right to indemnity therefor by
the indemnifying party unless the indemnifying party shall have consented to
such settlement, which consent shall, upon request, not be unreasonably
withheld. If the indemnifying party does not notify the indemnified party
within 30 days after the receipt of the indemnified party's notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
indemnified party shall have the right to contest, settle or compromise the
claim but shall not thereby waive any right to indemnity therefor pursuant to
this Agreement. The indemnifying party shall not, except with the consent of
the indemnified party, enter into any settlement that does not include as an
unconditional term thereof the giving by the person or persons asserting such
claim to all indemnified parties (i.e. the A.L. Oslo Indemnified Party or the
----
Company Indemnified Party, as the case may be) of unconditional release from all
liability with respect to such claim or consent to entry of any judgment.

ARTICLE VIII

MISCELLANEOUS AND GENERAL

Section 8.1 Payment of Expenses. In the event the Restructuring is
-------------------
consummated, the Company shall pay the expenses incurred by the Company in
connection with the transactions contemplated hereunder and the execution of
this Agreement, and A.L. Oslo shall pay the expenses incurred by A.L. Oslo and
New A.L. Oslo in connection with the transactions contemplated hereunder and the
execution of this Agreement; provided, that any transaction expenses incurred by
A.L. Oslo or New A.L. Oslo relating to the transfer of the Related Norwegian
Businesses to New A.L. Oslo in the Demerger (the "Transfer Expenses") (such as
registration fees, stamp taxes and transfer taxes) shall be divided in
accordance with the next sentence; provided, however, that Transfer Expenses
shall specifically not include legal expenses directly related to the transfer
of specific assets in the Demerger. In the event the Restructuring Agreement is
consummated, each of A.L. Oslo and New A.L. Oslo (with funds supplied by the
Company, if necessary) shall pay one-half of the Transfer Expenses in excess of
NOK 2,075,000 (the "Skoyen Amount") which Skoyen Amount shall be paid
exclusively by A.L. Oslo. In the event of any termination of this Agreement,
the Company and A.L. Oslo shall each pay expenses incurred by them in connection
with the transactions contemplated hereunder or the execution of this Agreement.

Section 8.2 Survival. The agreements of the Company and A.L. Oslo
--------
contained in Sections 4.6(b), 6.5 and 8.1 shall survive any Article VI
termination of this Agreement indefinitely. The agreements and representations
and warranties of the Company and A.L. Oslo contained in Sections 1.1, 1.4,
4.6(c), 4.8, 4.9, 4.11, 4.12, 4.13, 4.14 and 4.16, Article VII, Sections 8.1,
8.2, 8.3, 8.4, 8.6, 8.7, 8.8, 8.9, 8.10 and 8.11 shall survive the Closing. All
of the representations and warranties of the Company and A.L. Oslo contained in
Article II and Article III (and the related Sections 4.1 and 4.2) shall survive
the Closing and shall expire on the first anniversary of the Closing (except
that the representations and warranties contained in Section 2.10 shall expire
on the Closing Date and the representations and warranties contained in Section
2.12 shall survive indefinitely and the representations and warranties contained
in Section 3.12 shall survive until the expiration of the applicable statute

A-33
<PAGE>

of limitations). All other representations, warranties, agreements and
covenants in this Agreement shall not survive the consummation of the
transactions contemplated by this Agreement or any Article VI termination of
this Agreement.

Section 8.3 Other Definitional Provisions.
-----------------------------

(a) The words "hereof", "herein", and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.

(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.

(c) The term "Affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person. "Control" (including
the terms "controlled by" and "under common control with") means the possession,
directly or indirectly or as trustee or executor, of the power to direct or
cause the direction of the management policies of a person, whether through the
ownership of stock, as trustee or executor, by contract or credit arrangement or
otherwise.

(d) The term "Business Day" shall mean a day other than a Saturday,
Sunday or day on which commercial banks are authorized or permitted to close in
the State of New York or Oslo, Norway.

(e) The term "Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, a group and a government or other department or agency thereof.

(f) The term "Subsidiary" with respect to any party shall mean any
corporation or other organization whether incorporated or unincorporated of
which at least 50% of the securities or interests having by the terms thereof
ordinary voting power to elect at least 50% of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its subsidiaries, or by such party and one or more of its
subsidiaries and shall expressly not include, in the case of A.L. Oslo, the
Company and its subsidiaries (other than A.L. Oslo and its subsidiaries) and in
the case of the Company, A.L. Oslo and its subsidiaries.

(g) The term "Taxes" shall mean all taxes, fees, levies, duties,
charges or other like assessments including, without limitation, income,
withholding, gross receipts, excise, real or personal property, asset, sales,
use, license, payroll, transaction, capital, net worth, value added and
franchise taxes imposed by or payable to any federal, state, county, local or
foreign government, taxing authority, subdivision or agency thereof, including
interest, penalties, additions to tax or additional amounts thereto, whether
disputed or not.

(h) The term "Tax Return" shall mean any report, return, declaration,
schedule or other information required to be supplied to a taxing authority in
connection with Taxes.

(i) "NOK" shall mean Norwegian Kroner.

Section 8.4 Modification or Amendment. Except as otherwise provided
-------------------------
in Section 4.7, the parties hereto (acting, in the case of the Company, pursuant
to authority of its Board of Directors) may modify or amend this Agreement, by
written agreement, executed and delivered by duly authorized officers of the
respective parties.

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<PAGE>

Section 8.5 Waiver of Conditions. The conditions to each of the
--------------------
parties' obligations to consummate the Restructuring (or parts thereof) are for
the sole benefit of such party and may be waived by such party in whole or in
part to the extent permitted by applicable law.

Section 8.6 Counterparts. For the convenience of the parties hereto,
------------
this Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.

Section 8.7 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York without regard to
any applicable principles of conflicts of law; provided, that, clause (ii) of
Section 7.2(b) shall be governed by and construed in accordance with the laws of
the Kingdom of Norway without regard to any applicable principles of conflicts
of law.

Section 8.8 Notices. Any notice, request, instruction or other
-------
document to be given hereunder by any party to the others shall be in writing
and shall be deemed given if delivered personally, sent by reputable overnight
courier or by registered or certified mail (return receipt requested), postage
prepaid, or telecopied (which is confirmed) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):

(a) if to A.L. Oslo, to

APOTHEKERNES LABORATORIUM A.S.
Postboks 158 Skoyen
N-0212 Oslo 2
Norway

Attention: Einar W. Sissener
Managing Director

with copies to

SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 Third Avenue
New York, New York 10022

Attention: David J. Friedman

and

WIERSHOLM MELLBYE & BECH
Kirkegaten 15
Postboks 400 Sentrum
0103 Oslo
Norway

Attention: Per Raustol

A-35
<PAGE>

(b) if to the Company at any time, to

A.L. LABORATORIES, INC.
One Executive Drive
Fort Lee, NJ 07024

Attention: Jeffrey Smith,
Executive Vice President and
Beth P. Hecht
Corporate Counsel

with copies to

KIRKLAND & ELLIS
Citicorp Center
153 East 53rd Street
New York, New York 10022

Attention: Frederick Tanne

and

DEBEVOISE & PLIMPTON
875 Third Avenue
New York, New York 10022

Attention: Meredith M. Brown

and

ADVOKATFIRMAET FOYEN & CO ANS.
Oscarsgate 52
N-0258 Oslo
Norway

Attention: Heikki Giverholt

Section 8.9 Entire Agreement, etc. This Agreement (including any
----------------------
exhibits, schedules or annexes hereto) (a) constitutes the entire agreement, and
supersedes all other prior agreements, understandings, representations and
warranties both written and oral, among the parties, with respect to the subject
matter hereof, and (b) shall not be assignable by operation of law and is not
intended to create any obligations to, or rights in respect of, any persons
other than the parties hereto except as specifically provided herein; provided,
that it is expressly agreed that the provisions of Section 4.9(f) shall not
create any rights and obligations in respect of any third parties.

Section 8.10 Captions. The Article, Section and paragraph captions
--------
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.

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<PAGE>

Section 8.11 Dispute Resolution. The parties hereto, any Company
------------------
Indemnified Party and any A.L. Oslo Indemnified Party shall attempt to resolve
any dispute under this Agreement amicably by mutual agreement. Any such dispute
which cannot be resolved by agreement within a period of sixty (60) days shall
be finally resolved by arbitration in accordance with the Rules of Conciliation
and Arbitration of the International Chamber of Commerce ("ICC"). Any such
arbitration may be initiated by the delivery of a notice in writing by either
party hereto to the other party following any such sixty (60) day period. The
arbitration panel shall comprise three (3) arbitrators, one (1) to be appointed
by the Company, one (1) to be appointed by A.L. Oslo, and the third by the first
two (2) arbitrators. If either of the first two (2) arbitrators are not
appointed within the time provided by said rules, or the two (2) arbitrators
fail to agree on the choice of the third within thirty (30) days after their
respective appointments become effective, such arbitrator(s) shall be appointed
by the International Court of Arbitration of the ICC. The place of arbitration
shall be London, England. The language to be used in the arbitral proceeding
shall be English. The decision and award of the arbitration panel shall be
final, non-appealable and binding on both parties and their successors and
assigns hereunder, shall include a decision regarding the allocation of costs
relating to any such arbitration and all matters related thereto, and shall be
enforceable in any court of competent jurisdiction in accordance with the United
Nations Convention on the Recognition and Enforcement of Foreign Arbitral
Awards.

IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.

APOTHEKERNES LABORATORIUM A.S

By: /s/ Einar W. Sissener
---------------------------
Name: Einar W. Sissener
Title: Managing Director

A. L. LABORATORIES, INC.

By: /s/ I. Roy Cohen
---------------------------
Name: I. Roy Cohen
Title: Chairman of the Executive Committee

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EXHIBIT B

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FORM OF WARRANT AGREEMENT

BETWEEN

A.L. PHARMA INC.

AND

THE FIRST NATIONAL BANK OF BOSTON,
WARRANT AGENT

WARRANTS TO PURCHASE CLASS A COMMON STOCK

, 1994

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This WARRANT AGREEMENT (the "Agreement") is dated as of , 1994, between
A.L. PHARMA INC., a Delaware corporation (the "Company"), and THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, as warrant agent (the
"Warrant Agent").

WHEREAS, the Company proposes to issue Warrants (the "Warrants") entitling
the holders to purchase an aggregate of up to three million, six hundred
thousand (3,600,000) shares ("Shares") of the Company's Class A Common Stock,
$.20 par value (the "Class A Common Stock"); and

WHEREAS, the Warrant Agent, at the request of the Company, has agreed to act
as the agent of the Company in connection with the issuance, registration,
transfer, exchange and exercise of Warrants;

NOW, THEREFORE, in consideration of the premises and mutual agreements herein
set forth, the parties hereto agree as follows:

Section 1. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the
instructions hereinafter set forth; and the Warrant Agent hereby accepts such
appointment, upon the terms and conditions hereinafter set forth.

Section 2. Amount Issued. Subject to the provisions of this Agreement,
Warrants to purchase no more than three million, six hundred thousand
(3,600,000) Shares may be issued and delivered by the Company hereunder.

Section 3. Form of Warrant Certificates. The certificates evidencing the
Warrants (the "Warrant Certificates") to be delivered pursuant to this
Agreement shall be in registered form only. The Warrant Certificates and the
forms of election to purchase Shares and of assignment to be printed on the
reverse thereof shall be in substantially the form set forth in Exhibit A
hereto together with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or with
any rules made pursuant thereto or with any rules of any securities exchange,
any agreement between the Company and any Warrantholder, or as may,
consistently herewith, be determined by the officers executing such Warrants,
as evidenced by their execution of the Warrants.

Section 4. Execution of Warrant Certificates. Warrant Certificates shall be
signed on behalf of the Company by its Chairman of the Board of Directors, its
President, a Vice President or its Treasurer and attested by its Secretary or
Assistant Secretary, under its corporate seal. Each such signature upon the
Warrant Certificates may be in the form of a facsimile signature of the current
or any future Chairman of the Board, President, Vice President, Treasurer,
Secretary or Assistant Secretary and may be imprinted or otherwise reproduced
on the Warrant Certificates and for that purpose the Company may adopt and use
the facsimile signature of any person who shall have been Chairman of the
Board, President, Vice President, Treasurer, Secretary or Assistant Secretary,
notwithstanding the fact that at the time the Warrant Certificates shall be
countersigned and delivered or disposed of such person shall have ceased to
hold such office. The seal of the Company may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise reproduced on the
Warrant Certificates.

If any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer before the Warrant Certificates so
signed shall have been countersigned by the Warrant Agent or disposed of by the
Company, such Warrant Certificates nevertheless may be countersigned and
delivered or disposed of as though such person had not ceased to be such
officer of the Company; and any Warrant Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Agreement
any such person was not such officer.

Section 5. Registration and Countersignature. Warrant Certificates shall be
manually countersigned and dated the date of countersignature by the Warrant
Agent and shall not be valid for any purpose unless

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so countersigned. The Warrants shall be numbered and shall be registered in a
register (the "Warrant Register") to be maintained by the Warrant Agent.

The Warrant Agent's countersignature on all Warrants shall be in
substantially the form set forth in Exhibit A hereto.

The Company and the Warrant Agent may deem and treat the registered holder of
a Warrant Certificate as the absolute owner thereof (notwithstanding any
notation of ownership or other writing thereon made by anyone), for the purpose
of any exercise thereof or any distribution to the holder thereof and for all
other purposes, and neither the Company nor the Warrant Agent shall be affected
by any notice to the contrary.

Section 6. Registration of Transfers and Exchanges. No Warrant may be
transferred prior to the Restricted Period Termination Date except in a
Permitted Transfer. Prior to the Restricted Period Termination Date, the
Warrant Agent shall not register the transfer of any outstanding Warrant
Certificate except a Permitted Transfer. Following the Restricted Period
Termination Date until the Close of Business on the Expiration Date (as
hereinafter defined), the Warrant Agent shall from time to time register the
transfer of any outstanding Warrant Certificates in the Warrant Register, upon
surrender of such Warrant Certificates, duly endorsed, and, if not surrendered
by or on behalf of an original holder of Warrants or a Permitted Transferee
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly signed by the registered holder or
holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney, such signature to be guaranteed by (a) a bank or
trust company, (b) a broker or dealer that is a member of the National
Association of Securities Dealers, Inc. (the "NASD") or (c) a member of a
national securities exchange. Upon any such registration of transfer, a new
Warrant Certificate shall be issued to the transferee. For purposes of this
Agreement the "Restricted Period Termination Date" shall be the earlier of
, 1995(1) or the date on which a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), covering the
Warrants and Shares shall have been declared effective by the Securities and
Exchange Commission (the "SEC"), and such other action as may be required by
federal or state law relating to the issuance or distribution of securities
shall have been taken, except that with respect to Warrants issued to or held
by Einar W. Sissener or A/S Swekk or holders who acquire such warrants from
Einar W. Sissener or A/S Swekk in a Permitted Transfer, the Restricted Period
Termination Date shall be [THE DATE OF THE THIRD ANNIVERSARY OF THE DATE OF
THIS AGREEMENT]. For purposes of this Agreement a "Permitted Transfer" shall be
any of the following: (i) a transfer by operation of law, (ii) a transfer
pursuant to applicable laws of descent and distribution, and (iii) a transfer
to the owners of an entity holder upon the liquidation of such entity;
provided, however, that the restrictions contained in this Section 6 and
elsewhere in this Agreement shall continue in effect with respect to any
Warrant in the hands of the transferee of a Permitted Transfer. For purposes of
this Agreement, the term "Permitted Transferee" shall mean any holder who
acquired Warrants in a Permitted Transfer.

Warrant Certificates may be exchanged at the option of the holder or holders
thereof, when surrendered to the Warrant Agent at its offices or agency
maintained in New York, New York (or at such other offices or agencies as may
be designated by the Agent) for the purpose of exchanging, transferring and
exercising the Warrants (a "Warrant Agent Office,") or at the offices of any
successor Warrant Agent as provided in Section 18 hereof, for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants.

The Warrant Agent is hereby authorized to countersign, in accordance with the
provisions of Section 5 and of this Section 6, and deliver the new Warrant
Certificates required pursuant to the provisions of this Section, and for the
purpose of any distribution of Warrant Certificates contemplated by Section 13.
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(1) 1st Anniversary of date of this Agreement.

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For purposes of this Agreement, "AFFILIATE" or "AFFILIATE" means, with
respect to any person, (i) any other person or entity controlling, controlled
by or under common control with such person, and (ii) any officer, director,
partner, trustee, beneficiary or employee of any person referred to in clause
(i) above.

Section 7 Duration and Exercise of Warrants. The Warrants shall expire at (a)
5:00 p.m. New York City Time (the "Close of Business") on [DECEMBER 31,
1998](2) or (b) the Close of Business on such later date as shall be determined
in the sole discretion of the Company in a written statement to the Warrant
Agent and with notice to registered holders of Warrants in the manner provided
for in Section 15 (such date of expiration being hereinafter referred to as the
"Expiration Date"). The Warrants shall not be exercisable prior to the
Restricted Period Termination Date. At such time as the Warrants become
exercisable, and thereafter until the Close of Business on the Expiration Date,
the Warrants may be exercised on any business day. After the Close of Business
on the Expiration Date, the Warrants will become void and of no value.

Subject to the provisions of this Agreement, including Section 13, each
Warrant shall entitle the holder thereof to purchase from the Company (and the
Company shall issue and sell to such holder of a Warrant) one fully paid and
nonassessable Share at the price of $ (U.S.)(3) (such price, as may be
adjusted from time to time as provided in Section 13, being the "Exercise
Price"). The holder of a Warrant shall exercise such holder's right to purchase
Shares by depositing with the Warrant Agent at a Warrant Agent Office the
Warrant Certificate evidencing such Warrant, with the form of election to
purchase on the reverse thereof duly completed and signed by the registered
holder or holders thereof or by the duly appointed legal representative thereof
or by a duly authorized attorney, such signature (if not signed by or on behalf
of an original holder of Warrants or a Permitted Transferee) to be guaranteed
by a bank or trust company, by a broker or dealer which is a member of the NASD
or by a member of a national securities exchange, and paying to the Warrant
Agent in lawful money of the United States of America an amount equal to the
Exercise Price multiplied by the number of Shares in respect of which such
Warrants are being exercised.

Subject to Section 9, upon such surrender of a Warrant Certificate and
payment of the Exercise Price, the Warrant Agent shall requisition from the
Company's Class A Common Stock transfer agent (the "Transfer Agent") for
issuance and delivery to or upon the written order of the registered holder of
such Warrant Certificate and in such name or names as such registered holder
may designate, a certificate or certificates for the Share or Shares issuable
upon the exercise of the Warrant or Warrants evidenced by such Warrant
Certificate. Such certificate or certificates shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become the holder of record of such Share or Shares as of the date of the
surrender of such Warrant Certificate duly executed and payment of the
aggregate Exercise Price. The Warrants evidenced by a Warrant Certificate shall
be exercisable, at the election of the registered holder thereof, either as an
entirety or from time to time for a portion of the number of Warrants specified
in the Warrant Certificate. If less than all of the Warrants evidenced by a
Warrant Certificate surrendered upon the exercise of Warrants are exercised at
any time prior to the Expiration Date, a new Warrant Certificate or
Certificates shall be issued for the number of Warrants evidenced by the
Warrant Certificate so surrendered that have not been exercised, and the
Warrant Agent is hereby authorized to countersign such new Warrant Certificate
or Certificates pursuant to the provisions of Section 6 and this Section 7.

The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay or deliver to the Company all moneys
and other consideration received by it upon the purchase of Shares through the
exercise of Warrants.
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(2) In the event the closing contemplated by the Restructuring Agreement occurs
after September 30, 1994 this date will be the date which is 4 years and
three months after the issuance date.
(3) Exercise price to be determined pursuant to the Restructuring Agreement by
and between Apothekernes Laboratorium A.S and A.L. Laboratories, Inc. dated
as of May 16, 1994.

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Section 8. Cancellation of Warrants. If the Company shall purchase or
otherwise acquire Warrants, the Warrant Certificates representing such Warrants
shall thereupon be delivered to the Warrant Agent and be cancelled by it and
retired. The Warrant Agent shall cancel all Warrant Certificates surrendered
for exchange, substitution, transfer or exercise in whole or in part. Warrant
Certificates so cancelled shall be delivered by the Warrant Agent to the
Company from time to time upon request.

Section 9. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the initial issuance of Warrants and of Shares upon the
exercise of Warrants; provided, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in
the issue of any Warrant Certificates or any certificates for Shares in a name
other than the registered holder of a Warrant Certificate surrendered upon the
exercise of a Warrant, and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid
or adequate provision has been made for the payment thereof.

Section 10. Mutilated or Missing Warrant Certificates. If any of the Warrant
Certificates shall be mutilated, lost, stolen or destroyed, the Company may in
its discretion issue, and the Warrant Agent shall countersign and deliver, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing
an equivalent number of Warrants, but only upon receipt of evidence
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and indemnity or bond, if requested,
also satisfactory to them. Applicants for such substitute Warrant Certificates
shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent may prescribe.

Section 11. Reservation of Shares. For the purpose of enabling it to satisfy
any obligation to issue Shares upon exercise of Warrants, the Company will at
all times through the Close of Business on the Expiration Date, reserve and
keep available, free from preemptive rights and out of its aggregate authorized
but unissued or treasury shares of Class A Common Stock, the number of Shares
deliverable upon the exercise of all outstanding Warrants, and the Transfer
Agent is hereby irrevocably authorized and directed at all times to reserve
such number of authorized and unissued or treasury shares of Class A Common
Stock as shall be required for such purpose. The Company will keep a copy of
this Agreement on file with such Transfer Agent and with every transfer agent
for any shares of the Company's capital stock issuable upon the exercise of
Warrants pursuant to Section 12. The Warrant Agent is hereby irrevocably
authorized to requisition from time to time from such Transfer Agent stock
certificates issuable upon exercise of outstanding Warrants, and the Company
will supply such Transfer Agent with duly executed stock certificates for such
purpose.

Before taking any action that would cause an adjustment pursuant to Section
13 reducing the Exercise Price below the then par value (if any) of the Shares
issuable upon exercise of the Warrants, the Company will take any corporate
action that may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Shares at
the Exercise Price as so adjusted.

The Company covenants that all Shares issued upon exercise of the Warrants
will, upon issuance in accordance with the terms of this Agreement, be fully
paid and nonassessable and free from all liens, charges and security interests
created by or imposed upon the Company with respect to the issuance thereof.

Section 12. Registration of Warrants and Shares and Stock Exchange Listings;
Prospectus Delivery. (a) The Company will file with the SEC and use its best
efforts to have declared effective by the first anniversary of the issuance of
the Warrants a registration statement, on Form S-3 or such other form as is
then available for such use by the Company, covering all Warrants and the
Shares. The Company will use it best efforts to keep such registration
statement continuously effective from the date on which it is first declared
effective by the SEC through the Close of Business ten (10) business days
following the Expiration Date; provided however, that if the Company has
received a written request from any person who in the judgment of the

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Company may be deemed to be an affiliate of the Company, (as that term is
defined in Rule 144 promulgated under the Securities Act) prior to the
Expiration Date that any Shares acquired as the result of the exercise of a
Warrant are owned or deemed to be owned by such affiliate and that such Shares
will be owned or will be deemed to be owned by such affiliate on and after the
Expiration Date, then the Company shall use its best efforts to keep the
registration statement provided for by this Section 12 effective for so long as
necessary to permit sales of such Shares to be made by such affiliate but in no
event longer than the second anniversary of the Expiration Date. So long as any
unexpired Warrants remain outstanding and if required in order to comply with
the Securities Act, the Company agrees that it will file such post-effective
amendments to the registration statement provided for in this Section 12. So
long as any Warrants remain outstanding (and so long as necessary to permit
affiliates to sell Shares in the circumstances and subject to the limitations
described in the second preceding sentence), the Company will take all
necessary action (a) to obtain and keep effective any and all permits, consents
and approvals of government agencies and authorities and to make filings under
federal and state securities acts and laws, which may be or become necessary in
connection with the issuance, sale, transfer and delivery of the Warrant
Certificates, the exercise of the Warrants and the issuance, sale, transfer and
delivery of the Shares issued upon exercise of Warrants, and (b) to have the
Warrants (no later than the first anniversary of the issuance of the Warrants)
and the Shares (immediately upon their issuance upon exercise of Warrants)
listed for trading or quotation on the New York Stock Exchange or, if such
listing is in the opinion of the Company impracticable, on one of the following
securities exchanges or securities markets, as the board of directors of the
Company deems appropriate to facilitate the trading of the Warrants: (i)
another national securities exchange; (ii) quotation on the National
Association of Security Dealers Automated Quotations system ("NASDAQ") or the
National Association of Security Dealers Automated Quotation/National Market
System ("NASDAQ/NMS"); or (iii) such other over-the-counter quotation system.

(b) On the date of its effectiveness and on the date of any Warrant sale or
exercise, the Registration Statement will comply in all material respects with
the applicable requirements of the Securities Act and the rules and regulations
thereunder; on the date of its effectiveness, the Registration Statement will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, the final prospectus contained in the
Registration Statement, if not filed pursuant to rule 424(b), will not, and on
the date of any filing pursuant to rule 424(b) and upon the date of any Warrant
sale or exercise or any resale by an affiliate, such final prospectus (together
with any supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

(c) The Company will indemnify and hold harmless, to the fullest extent
permitted by law, the holders of Warrants and Shares and each person, if any,
who controls each such holder within the meaning of the Securities Act, from
and against any and all losses, damages, claims, liabilities, joint or several,
costs and expenses (including any amounts paid in any settlement effected with
the Company's consent) to which the holders or any such controlling person may
become subject under the Securities Act, state securities or blue sky laws,
common law or otherwise, insofar as such losses, damages, claims, liabilities
(or actions or proceedings in respect thereof), costs or expenses arise out of
or are based upon (x) any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or included prospectus,
as amended or supplemented, or (y) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading, and the Company will reimburse the holders and each such
controlling person of the holders promptly upon demand for any reasonable legal
or any other expenses incurred by them in connection with investigating,
preparing to defend or defending against or appearing as a third-party witness
in connection with such loss, claim, damage, liability, action or proceeding;
provided, however, that the Company will not be liable to any holder in any
such case to the extent, but only to the extent, that any such loss, damage,
liability, cost or expenses arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission so made in
conformity with information about such holder

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furnished by such holder or such controlling persons for use in the preparation
thereof, provided further, that the Company shall not be liable to any person
who participates as an underwriter, in the offering or sale of Registrable
Securities or to any other person, if any, who controls such underwriter,
within the meaning of the Securities Act, in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of such person's failure to send or give a copy
of the final prospectus prepared by the Company and made available to such
persons, as the same may be then supplemented or amended, to the person
asserting an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of
Registrable Securities to such person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of any holder
or any controlling person of the holder, and shall survive the transfer of such
securities by the holder. In the event that indemnity is not available, the
Company agrees to contribute to any and all losses based on the relative faults
of the parties involved as well as other equitable factors which may be
appropriate.

(d) Each holder of Warrants or Shares covered by any registration statement
contemplated by this Section 12 will severally indemnify and hold harmless to
the fullest extent permitted by law, the Company and each person, if any, who
controls the Company within the meaning of the Securities Act, from and against
any and all losses, damages, claims, liabilities, joint or several, costs and
expenses (including any amounts paid in any settlement effected with such
holder's consent) to which the Company or any such controlling person may
become subject under the Securities Act, state securities or blue sky laws,
common law or otherwise, insofar as such losses, damages, claims, liabilities
(or actions or proceedings in respect thereof), costs or expenses arise out of
or are based upon (x) any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or included prospectus,
as amended or supplemented, or (y) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading, or (z) the failure of such holder to send or give a copy of the
final prospectus prepared by the Company and made available to such holder to
any person, and such holder will reimburse the Company and each such
controlling person of the Company promptly upon demand for any reasonable legal
or any other expenses incurred by them in connection with investigating,
preparing to defend or defending against or appearing as a third-party witness
in connection with such loss, claim, damage, liability, action or proceeding to
the extent, but only to the extent, that any such loss, damage, liability, cost
or expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with
information about such holder furnished by such holder or such controlling
persons for use in the preparation of such registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto. Each
holder, by accepting delivery of any Warrant, agrees to be bound by the
provisions of this Section 12(d). Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company or
any controlling person of the Company. In the event that indemnity is not
available, each such holder severally agrees to contribute to any and all
losses based on the relative faults of the parties involved as well as any
other equitable factors which may be appropriate.

(e) If requested by the original holders of not less than 25% of the
outstanding Warrants, the Company and such holders shall enter into an
underwriting agreement with an investment banking firm containing customary
representations, warranties and provisions relating to indemnification and
contribution. In addition, the Company shall use its reasonable efforts to
cooperate with such investment banking firm to facilitate any such offering.

(f) The Company shall make available to the holders of Warrants copies of the
prospectus so that such holders may comply with their prospectus delivery
requirements.

(g) The Company shall pay all out-of-pocket expenses incurred in connection
with the Registration Statement including, without limitation, all SEC and blue
sky registration and filing fees, printing expenses, transfer agents' and
registrars' fees, fees and disbursements of the Company's and the Warrant
holders' counsel (provided however that the Warrant holders are only entitled
to one counsel as a group selected by

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the holders of a majority of the Shares) and accountants and fees and
disbursements of experts used by the Company in connection with such
registration, provided, that the Company shall not be required to pay any
underwriting discounts or commissions.

(h) The provisions of this Section 13 are for the benefit of the holders of
Warrants and persons who may be deemed to be affiliates of the Company
acquiring Shares upon the exercise of Warrants and shall survive the expiration
and/or exercise of the Warrants.

Section 13. Adjustment of Exercise Price and Number of Shares Purchasable or
Number of Warrants. The Exercise Price, the number of Shares purchasable upon
the exercise of each Warrant and the number of Warrants outstanding are subject
to adjustment from time to time upon the occurrence of the events enumerated in
this Section 13.

(a) If the Company shall (i) pay a dividend on its shares of Class A Common
Stock in shares of either Class A Common Stock or shares of the Company's Class
B Common Stock, $.20 par value, (ii) subdivide its outstanding shares of Class
A Common Stock, (iii) combine its outstanding shares of Class A Common Stock
into a smaller number of shares of Class A Common Stock or (iv) reclassify the
Class A Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
the number of Shares purchasable upon exercise of each Warrant immediately
prior thereto shall be adjusted so that the holder of each Warrant shall be
entitled upon exercise to receive the kind and number of Shares or other
securities of the Company which such holder would have owned or have been
entitled to receive after the happening of any of the events described above,
had such Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made pursuant to
this paragraph (a) shall become effective immediately after the effective date
of such event retroactive to the record date, if any, for such event. In
addition, in the event of any reclassification of the Class A Common Stock,
references in this Agreement to Class A Common Stock shall thereafter be deemed
to refer to the securities into which the Class A Common Stock shall have been
reclassified.

(b) If the Company shall issue rights, options or warrants to all holders of
its outstanding Class A Common Stock entitling them for a period of 45 days or
less to subscribe for or purchase shares of Class A Common Stock at a price per
share that is lower than the market price per share of Class A Common Stock (as
defined in paragraph (f) below) as of the record date mentioned below, the
number of Shares thereafter purchasable upon the exercise of each Warrant shall
be determined by multiplying the number of Shares theretofore purchasable upon
exercise of each Warrant by a fraction, (i) the numerator of which shall be the
number of shares of Class A Common Stock outstanding on the date of issuance of
such rights, options or warrants plus the number of additional shares of Class
A Common Stock offered for subscription or purchase, and (ii) the denominator
of which shall be the number of shares of Class A Common Stock outstanding on
the date of issuance of such rights, options or warrants plus the number of
shares which the aggregate offering price of the total number of shares of
Class A Common Stock so offered would purchase at the market price per share of
Class A Common Stock at such record date (the date of computation referenced in
paragraph (f) below). Such adjustment shall be made whenever such rights,
options or warrants are issued, and shall become effective immediately on the
date of issuance retroactive to the record date for the determination of
stockholders entitled to receive such rights, options or warrants.

For the purposes of adjustments required by paragraph (b) of this Section 13,
the shares of Class A Common Stock that the holder of any outstanding rights,
options or warrants shall be entitled to subscribe for or purchase shall be
deemed to be issued and outstanding as of the date of sale, issuance or
distribution of such securities to the extent that an adjustment has been made
for such issuance pursuant to such paragraph (b), and the consideration, if
any, received by the Company therefor shall be deemed to be the consideration
received by the Company for such securities, plus the consideration or premiums
stated in such securities to be paid for the shares of Class A Common Stock
covered thereby.

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(c) If the Company shall distribute to all holders of its shares of Class A
Common Stock evidences of its indebtedness or assets (excluding cash dividends
or distributions payable out of consolidated earnings or earned surplus and
dividends or distributions referred to in paragraph (a) above) or rights,
options or warrants or convertible or exchangeable securities containing the
right to subscribe for or purchase shares of Class A Common Stock (excluding
those referred to in paragraph (b) above), then in each case the number of
Shares thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of Shares theretofore purchasable upon the
exercise of each Warrant, by a fraction, (i) the numerator of which shall be
the then current market price per share of Class A Common Stock (as defined in
paragraph (f) below) on the date of such distribution (the date of computation
referenced in paragraph (f) below), and (ii) the denominator of which shall be
the then current market price per share of Class A Common Stock (as defined in
paragraph (f) below) on the date of such distribution (the date of computation
referenced in paragraph (f) below), less the then fair value (as determined in
good faith by the Board of Directors of the Company, whose determination shall
be conclusive and shall be evidenced by a resolution filed with the Warrant
Agent) of the portion of the assets or evidences of indebtedness so distributed
or of subscription rights, options or warrants or convertible or exchangeable
securities, in each instance applicable to one share of Class A Common Stock.
Such adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of distribution retroactive to the record date for
the determination of stockholders entitled to receive such distribution.

(d) For the purpose of any computation under paragraph (b) of this Section
13, the current or closing market price per share of Class A Common Stock at
any date shall be deemed to be the average of the daily closing prices
(determined as provided in Section 14(c)) for the 15 consecutive trading days
commencing 20 trading days before the date of such computation.

(e) Except for adjustments required by paragraph (k) hereof, no adjustment in
the number of Shares purchasable hereunder shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%)
in the number of Shares purchasable upon the exercise of each Warrant;
provided, however, that any adjustments which by reason of this paragraph (e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations shall be made to the nearest cent
and to the nearest one-hundredth of a share, as the case may be.

(f) Whenever the number of Shares purchasable upon the exercise of each
Warrant is adjusted as herein provided (whether or not the Company then or
thereafter elects to issue additional Warrants in substitution for an
adjustment in the number of Shares as provided in paragraph (k) hereof), the
Exercise Price payable upon exercise of each Warrant shall be adjusted by
multiplying such Exercise Price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of Shares purchasable upon
the exercise of each Warrant immediately prior to such adjustment and the
denominator of which shall be the number of Shares so purchasable immediately
thereafter.

(g) For the purpose of this Section 13, the term "shares of Class A Common
Stock" shall mean (i) the class of stock designated as the Class A Common Stock
of the Company at the date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassification of such shares consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value. If at any time, as a result of an adjustment made
pursuant to paragraph (a) or (c) above, the holders of Warrants shall become
entitled to purchase any shares of the Company other than shares of Class A
Common Stock, thereafter the provisions of this Agreement with respect to
Shares, including, without limitation, the provisions regarding adjustments to
be made from time to time to the number of such other shares so purchasable
upon exercise of each Warrant and the Exercise Price of such shares, shall
apply as nearly as practicable in an equivalent manner to such other shares.

(h) Upon the expiration of any rights, options, warrants or conversion or
exchange privileges, if any thereof shall not have been exercised, the Exercise
Price and the number of shares of Class A Common Stock purchasable upon the
exercise of each Warrant shall, upon such expiration, be readjusted and shall
thereafter

B-9
<PAGE>

be such as it would have been had it been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (i) the only
shares of Class A Common Stock so issued were the shares of Class A Common
Stock, if any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion or exchange rights and (ii) such shares of
Class A Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for the issuance, sale
or grant of all of such rights, options, warrants or conversion or exchange
rights whether or not exercised; provided, that no such readjustment shall have
the effect of increasing the Exercise Price or decreasing the number of shares
by an amount in excess of the amount of the adjustment initially made in
respect to the issuance, sale or grant of such rights, options, warrants or
conversion or exchange rights.

(i) The Company in its discretion may elect, on or after the date of any
adjustment required by paragraphs (a) and (b) of this Section 13, to adjust the
number of Warrants in substitution for an adjustment in the number of Shares
purchasable upon the exercise of a Warrant. Each of the Warrants outstanding
after such adjustment of the number of Warrants shall be exercisable for the
same number of Shares as immediately prior to such adjustment. Each Warrant
held of record prior to such adjustment of the number of Warrants shall become
that number of Warrants (calculated to the nearest hundredth) obtained by
dividing the Exercise Price in effect prior to adjustment of the Exercise Price
by the Exercise Price in effect after adjustment of the Exercise Price. The
Company shall notify the holders of Warrants in the same manner as provided in
the first paragraph of Section 14, of its election to adjust the number of
Warrants, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Exercise Price is adjusted or any day thereafter. Upon each
adjustment of the number of Warrants pursuant to this paragraph (i) the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Warrants on such record date Warrant Certificates evidencing, subject to
Section 14, the additional Warrants to which such holders shall be entitled as
a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for
the Warrant Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Warrant
Certificates evidencing all the Warrants to be issued, executed and registered
in the manner specified in Sections 4, 5 and 6 (and which may bear, at the
option of the Company, the adjusted Exercise Price) and shall be, registered in
the names of the holders of record of Warrant Certificates on the record date
specified in the notice.

(j) Except as provided in paragraphs (a) and (b) of this Section 13, no
adjustment to the number of Shares which may be purchased upon exercise of any
Warrant in respect of any dividend shall be made during the term of a Warrant
or upon the exercise of a Warrant.

(k) In case of any consolidation of the Company with or merger of the Company
into another corporation or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as
an entirety or the Company is a party to a merger or binding share exchange
which reclassifies or changes its outstanding Class A Common Stock, the Company
or such successor or purchasing corporation, as the case may be, shall execute
with the Warrant Agent an agreement, in form and substance substantially
equivalent to this Agreement, that each holder of a Warrant shall have the
right thereafter, subject to terms and conditions substantially equivalent to
those contained in this Agreement, upon payment of the Exercise Price in effect
immediately prior to such action to purchase upon exercise of each Warrant the
kind and amount of shares and other securities and property which such holder
would have owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Warrant been exercised
immediately prior to such action. The Company shall mail by first-class mail,
postage prepaid, to each registered holder of a Warrant, notice of the
execution of any such agreement. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 13. The provisions of this paragraph (k) shall
similarly apply to successive consolidations, mergers, sales or conveyances.
The Warrant Agent shall be under no duty or responsibility to determine the
correctness of any provisions contained in any such agreement relating either

B-10
<PAGE>

to the kind or amount of shares of stock or other securities or property
receivable upon exercise of Warrants or with respect to the method employed and
provided therein for any adjustments and shall be entitled to rely upon the
provisions contained in any such agreement

(l) Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.

Section 14. Fractional Warrants and Fractional Shares.

(a) The Company shall not be required to issue fractions of Warrants on any
distribution of Warrants to holders of Warrant Certificates pursuant to Section
13(k) or to distribute Warrant Certificates that evidence fractional Warrants.
In lieu of such fractional Warrants there shall be paid to the registered
holders of the Warrant Certificates with regard to which such fractional
Warrants would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a full Warrant. For purposes of this
Section 14(a), the current market value of a Warrant shall be the closing price
of one Warrant (as determined pursuant to paragraph (c) below) for the trading
day immediately prior to the date on which such fractional Warrant would have
been otherwise issuable.

(b) Notwithstanding any adjustment pursuant to Section 13 in the number of
Shares purchasable upon the exercise of a Warrant, the Company shall not be
required to issue fractions of Shares upon exercise of the Warrants or to
distribute certificates which evidence fractional Shares. In lieu of fractional
Shares, there shall be paid to the registered holders of Warrant Certificates
at the time such Warrant Certificates are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of a
share of Class A Common Stock minus the equivalent fraction of the exercise
price. For purposes of this Section 14(b), the current market value of a share
of Class A Common Stock shall be the closing price of a share of Class A Common
Stock (as determined pursuant to paragraph (c) below) for the trading day
immediately prior to the date of such exercise.

(c) The closing price for each day shall be the last sale price, regular way,
or, if no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, for such day, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
Warrants or Class A Common Stock, as the case may be, are not listed or
admitted to trading on such exchange, as reported on the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Warrants or Class A Common Stock,
respectively, is listed or admitted to trading, or if the Warrants or Class A
Common Stock, as the case may be, is not listed or admitted to trading on any
national securities exchange, as reported on NASDAQ/NMS or, if the Warrants or
Class A Common Stock, as the case may be, is not listed or admitted to trading
on NASDAQ/NMS, as reported on NASDAQ.

Section 15. Notices to Warrantholders. Upon any adjustment of the number of
Shares purchasable upon exercise of each Warrant, the Exercise Price or the
number of Warrants outstanding pursuant to Section 13, the Company within 20
calendar days thereafter shall (i) cause to be filed with the Warrant Agent a
certificate of a firm of independent public accountants of recognized standing
selected by the Company (who may be the regular auditors of the Company)
setting forth the Exercise Price and either the number of Shares purchasable
upon exercise of each Warrant or the additional number of Warrants to be issued
for each previously outstanding Warrant, as the case may be, after such
adjustment and setting forth in reasonable detail the method of calculation and
the facts upon which such adjustment was made, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein, and
(ii) cause the Warrant Agent to give to each of the registered holders of the
Warrant Certificates at such holder's address appearing on the Warrant Register
written notice of such adjustments by first-class mail, postage prepaid. Where
appropriate,

B-11
<PAGE>

such notice may be given in advance and included as a part of the notice
required to be mailed under the other provisions of this Section 15.

If:

(a) the Company shall declare any dividend payable in any securities upon
its shares of Class A Common Stock or make any distribution (other than a
cash dividend declared in the ordinary course) to the holders of its shares
of Class A Common Stock, or

(b) the Company shall offer to the holders of its shares of Class A
Common Stock any additional shares of Class A Common Stock or securities
convertible or exchangeable into shares of Class A Common Stock or any
right to subscribe for or purchase Class A Common Stock, or

(c) there shall be a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger or sale of
all or substantially all of its property, assets and business as an
entirety),

then the Company shall (i) cause written notice of such event to be filed
with the Warrant Agent and shall cause written notice of such event to be given
to each of the registered holders of the Warrant Certificates at such holder's
address appearing on the Warrant Register, by first-class mail, postage
prepaid, and (ii) make a public announcement in a daily morning English
language newspaper of general circulation in New York City, New York, and in a
daily morning Norwegian language newspaper of general circulation in Oslo,
Norway, of such event, such giving of notice and publication to be completed at
least 10 calendar days (or 20 calendar days in any case specified in clause (c)
above) prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to such
dividend, distribution or subscription rights, or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. The failure to give the notice required
by this Section 15 or any defect therein shall not affect the legality or
validity of any dividend, distribution, right, option, warrant, dissolution,
liquidation or winding up or the vote upon or any other action taken in
connection therewith.

Section 16. Merger, Consolidation or Change of Name of Warrant Agent. Any
corporation into which the Warrant Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the shareholder services business of the Warrant
Agent, shall be the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for
appointment as a successor Warrant Agent under the provisions of Section 18. If
at the time such successor to the Warrant Agent shall succeed under this
Agreement, any of the Warrant Certificates shall have been countersigned but
not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent; and if at that time any of the
Warrant Certificates shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrant Certificates either in the name of
the predecessor Warrant Agent or in the name of the successor Warrant Agent; in
all such cases such Warrant Certificates shall have the full force provided in
the Warrant Certificates and in this Agreement.

If at any time the name of the Warrant Agent shall be changed and at such
time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent whose name has changed may adopt the
countersignature under its prior name; and if at that time any of the Warrant
Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its
changed name; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.

Section 17. Warrant Agent. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Warrants, by their acceptance
thereof, shall be bound:

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<PAGE>

(a) The statements contained herein and in the Warrant Certificates shall
be taken as statements of the Company, and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. Except as
herein otherwise provided, the Warrant Agent assumes no responsibility with
respect to the execution, delivery or distribution of the Warrant
Certificates.

(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or
in the Warrant Certificates to be complied with by the Company nor shall it
at any time be under any duty or responsibility to any holder of a Warrant
to make or cause to be made any adjustment in the Exercise Price or in the
number of Shares issuable upon exercise of any Warrant (except as
instructed by the Company), or to determine whether any facts exist which
may require any such adjustments, or with respect to the nature or extent
of or method employed in making any such adjustments when made.

(c) The Warrant Agent may consult at any time with counsel satisfactory
to it (who may be counsel for the Company) and the Warrant Agent shall
incur no liability or responsibility to the Company or any holder of any
Warrant Certificate in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice
of such counsel.

(d) The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant Certificate for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate or
other paper, document or instrument believed in good faith by it to be
genuine and to have been signed, sent or presented by the proper party or
parties.

(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent under this
Agreement, to reimburse the Warrant Agent upon demand for all expenses,
taxes and governmental charges and other charges of any kind and nature
incurred by the Warrant Agent in the performance of its duties, under this
Agreement and to indemnify the Warrant Agent and save it harmless against
any and all losses, liabilities and expenses, including judgments, costs
and reasonable counsel fees and expenses, for anything done or omitted by
the Warrant Agent arising out of or in connection with this Agreement
except as a result of its negligence or bad faith.

(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more registered holders of
Warrant Certificates shall furnish the Warrant Agent with reasonable
security and indemnity for any costs or expenses which may be incurred. All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other proceeding
related thereto, and any such action, suit or proceeding instituted by the
Warrant Agent shall be brought in its name as Warrant Agent, and any
recovery or judgment shall be for the ratable benefit of the registered
holders of the Warrants, as their respective rights or interests may
appear.

(g) The Warrant Agent, and any stockholder, director, officer or employee
thereof, may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any transaction in which
the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though they were not the
Warrant Agent under this Agreement, or a stockholder, director, officer or
employee of the Warrant Agent, as the case may be. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.

(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions
hereof. The Warrant Agent shall not be liable for anything which it may do
or refrain from doing in connection with this Agreement except for its own
negligence or bad faith.

(i) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and

B-13
<PAGE>

assurances as may reasonably be required by the Warrant Agent for the
carrying out or performing the provisions of this Agreement.

(j) The Warrant Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant Certificate (except its
countersignature thereof), nor shall the Warrant Agent by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of the Shares to be issued pursuant to this Agreement or any
Warrant Certificate or as to whether the Shares will when issued be validly
issued, fully paid and nonassessable or as to the Exercise Price or the
number of Shares issuable upon exercise of any Warrant.

(k) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President, the
Treasurer, the Secretary or an Assistant Secretary of the Company, and to
apply to such officers for advice or instructions in connection with its
duties, and shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such
officer or in good faith reliance upon any statement signed by any one of
such officers of the Company with respect to any fact or matter (unless
other evidence in respect thereof is herein specifically prescribed) which
may be deemed to be conclusively proved and established by such signed
statement.

Section 18. Change of Warrant Agent. If the Warrant Agent shall resign (such
resignation to become effective not earlier than 60 days after the giving of
written notice thereof to the Company and the registered holders of Warrant
Certificates) or shall become incapable of acting as Warrant Agent or if the
Board of Directors of the Company shall by resolution remove the Warrant Agent
(such removal to become effective not earlier than 30 days after the filing of
a certified copy of such resolution with the Warrant Agent and the giving of
written notice of such removal to the registered holders of Warrant
Certificates), the Company shall appoint a successor to the Warrant Agent. If
the Company shall fail to make such appointment within a period of 30 days
after such removal or after it has been so notified in writing of such
resignation or incapacity by the Warrant Agent or by the registered holder of a
Warrant Certificate (in the case of incapacity), then the registered holder of
any Warrant Certificate may apply to any court of competent jurisdiction for
the appointment of a successor to the Warrant Agent. Pending appointment of a
successor to the Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company. Any successor
Warrant Agent, whether appointed by the Company or by such a court, shall be a
bank or trust company, in good standing, incorporated under the laws of any
state or of the United States of America. As soon as practicable after
appointment of the successor Warrant Agent, the Company shall cause written
notice of the change in the Warrant Agent to be given to each of the registered
holders of the Warrant Certificates at such holder's address appearing on the
Warrant Register. After appointment, the successor Warrant Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed. The former
Warrant Agent shall deliver and transfer to the successor Warrant Agent any
property at the time held by it hereunder and execute and deliver, at the
expense of the Company, any further assurance, conveyance, act or deed
necessary for the purpose. Failure to give any notice provided for in this
Section 18 or any defect therein, shall not affect the legality or validity of
the removal of the Warrant Agent or the appointment of a successor Warrant
Agent, as the case may be.

Section 19. Warrantholder Not Deemed a Stockholder. Nothing contained in this
Agreement or in any of the Warrant Certificates shall be construed as
conferring upon the holders thereof the right to vote or to receive dividends
or to consent or to receive notice as stockholders in respect of the meetings
of stockholders or for the election of directors of the Company or any other
matter, or any rights whatsoever as stockholders of the Company.

Section 20. Delivery of Prospectus. If the Company is required under
applicable federal or state securities laws to deliver a prospectus upon
exercise of Warrants, the Company will furnish to the Warrant Agent sufficient
copies of a prospectus, and the Warrant Agent agrees that upon the exercise of
any Warrant

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<PAGE>

Certificate by the holder thereof, the Warrant Agent will deliver to such
holder, prior to or concurrently with the delivery of the certificate or
certificates for the Shares issued upon such exercise, a copy of the
prospectus.

Section 21. Notices to Company and Warrant Agent. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by any
registered holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made if sent by mail, first-class or registered, postage
prepaid, addressed (until another address is filed in writing by the Company
with the Warrant Agent), as follows:

A.L. Pharma Inc.
One Executive Drive
Fort Lee, New Jersey 07024

If the Company shall fail to maintain such office or agency or shall fail to
give such notice of any change in the location thereof, presentation may be
made and notices and demands may be served at the principal office of the
Warrant Agent.

Any notice pursuant to this Agreement to be given by the Company or by any
registered holder of any Warrant Certificate to the Warrant Agent shall be
sufficiently given if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing by the Warrant Agent with the
Company), as follows:

The First National Bank of
Boston
_____________________________
_____________________________
_____________________________

The Warrant Agent maintains a Warrant Agent Office at_____________________.

Section 22. Supplements and Amendments. The Company and the Warrant Agent may
from time to time supplement or amend this Agreement without the approval of
any holders of Warrant Certificates in order to cure any ambiguity, manifest
error or other mistake in this Agreement, or to correct or supplement any
provision contained herein that may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder that the Company and the Warrant Agent may deem
necessary or desirable and that shall not adversely affect, alter or change the
interests of the holders of the Warrants in any material respect.

Any supplement or amendment of this Agreement which may not be made by the
Company and the Warrant Agent without the approval of holders of Warrant
Certificates pursuant to the preceding paragraph shall require the approval of
the holders of Warrant Certificates entitled to purchase upon exercise thereof
a majority of the Shares which may be purchased upon the exercise of all
outstanding Warrant Certificates at the time that such amendment or supplement
is to be made. Notwithstanding the foregoing, any amendment or supplement to
this Agreement which would change the Expiration Date to a date prior to
December 31, 1998 or which would provide for an adjustment to either (i) the
number of Shares purchasable upon exercise of a Warrant or (ii) the exercise
price for which Shares are purchasable upon exercise of a Warrant, in either
case, in a manner not provided for in this agreement and in a manner that would
have a substantial negative impact on the holders of Warrant Certificates, then
such amendment or supplement shall require the consent of the holders of all
Warrant Certificates.

Section 23. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Warrant Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.

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<PAGE>

Section 24. Termination. This Agreement shall terminate at the Close of
Business on the Expiration Date. Notwithstanding the foregoing, this Agreement
will terminate on any earlier date when all Warrants have been exercised. The
provisions of Section 18 shall survive such termination.

Section 25. Governing Law. This Agreement and each Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and for all purposes shall be construed in accordance with the
internal laws of the State of New York without regard to principles of conflict
of law or choice of laws of the State of New York or any other jurisdiction
which would cause the application of any laws other than of the State of New
York.

Section 26. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrant Certificates any legal
or equitable right, remedy or claim under this Agreement, and this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant Agent
and the registered holders of the Warrant Certificates.

Section 27. Counterparts. This Agreement may be executed in a number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.

Section 28. Headings. The headings of sections of this Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.

* * * * *

In Witness Whereof the parties hereto have caused this Warrant Agreement to
be executed and delivered as of the day and year first above written.

A.L. Pharma Inc.

By___________________________________
[TITLE]

Attest:

_____________________________________

The First National Bank of Boston

By___________________________________
[TITLE]

Attest:

_____________________________________

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<PAGE>

Exhibit A

[FORM OF FACE OF WARRANT CERTIFICATE]

THIS WARRANT WAS ORIGINALLY ISSUED ON , 1994 AND SUCH ISSUANCE
WAS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAW. NEITHER THIS
WARRANT NOR THE CLASS A COMMON STOCK OBTAINABLE UPON EXERCISE HEREOF
MAY BE OFFERED OR SOLD, PLEDGED OR OTHERWISE DISPOSED OF, EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE OR OTHER SECURITIES LAW COVERING SUCH
SECURITY OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENT. THE TRANSFER AND EXERCISE OF THIS WARRANT ARE ALSO
SUBJECT TO THE CONDITIONS ON TRANSFER AND EXERCISE SPECIFIED IN THE
WARRANT AGREEMENT, DATED AS OF , 1994 (AS AMENDED AND MODIFIED
FROM TIME TO TIME), BETWEEN THE ISSUER HEREOF (THE "COMPANY") AND THE
FIRST NATIONAL BANK OF BOSTON, AS WARRANT AGENT; THE COMPANY AND THE
WARRANT AGENT EACH RESERVE THE RIGHT TO REFUSE THE TRANSFER OF THIS
WARRANT UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER. UPON WRITTEN REQUEST, A COPY OF SUCH CONDITIONS SHALL BE
FURNISHED BY THE COMPANY TO THE HOLDER HEREOF WITHOUT CHARGE.

Void After December 31, 1998

No. C- WARRANT TO PURCHASE
SHARES OF CLASS A COMMON STOCK

A.L. PHARMA INC.

Warrant to Purchase Class A Common Stock

This Warrant Certificate certifies that or registered assigns, is the
registered holder of a Warrant (the "Warrant") of A.L. Pharma Inc., a Delaware
corporation (the "Company"), to purchase the number of shares (the "Shares") of
Class A Common Stock, $.20 par value (the "Class A Common Stock"), of the
Company set forth above. This Warrant expires at the close of business on
December 31, 1998 (the "Expiration Date"), unless such date is extended at the
option of the Company, and entitles the holder to purchase from the Company the
number of fully paid and nonassessable Shares set forth above at the initial
exercise price of [$ ]* (the "Exercise Price"), payable in lawful money of the
United States of America.

Subject to the terms and conditions set forth herein and in the Warrant
Agreement referred to on the reverse hereof, this Warrant may be exercised upon
surrender of this Warrant Certificate and payment of an amount equal to the
Exercise Price multiplied by the number of Shares to be purchased upon
exercise hereof at the office or agency of the Warrant Agent in (the
"Warrant Agent Office").

The Exercise Price and the number of Shares purchasable upon exercise of this
Warrant are subject to adjustment upon the occurrence of certain events as set
forth in the Warrant Agreement. The holder hereof by accepting this Warrant
Certificate hereby acknowledges and consents to the restrictions regarding
transfer and exercise of this Warrant contained in the Warrant Agreement.
- --------
* Exercise price to be determined pursuant to the Restructuring Agreement by
and between Apothekernes Laboratorium A.S and A. L. Laboratories, Inc. dated
as of May 16, 1994

B-17
<PAGE>

No Warrant may be exercised prior to the earlier of , 1995 or the date on
which a registration statement under the Securities Act covering the Warrants
and the Shares shall have been declared effective by the SEC, and such other
action as may be required by federal or state law relating to the issuance or
distribution of securities shall have been taken (the "Restricted Period
Termination Date"), or after the Close of Business on the Expiration Date,
unless the Company exercises its option to extend such date. After the Close of
Business on the Expiration Date, the Warrants will become void and of no value.

Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof. Such further provisions shall for
all purposes have the same effect as though fully set forth at this place.

This Warrant Certificate shall not be valid unless manually countersigned by
the Warrant Agent.

In Witness Whereof, the Company has caused this Certificate to be executed by
its duly authorized officers, and the corporate seal hereunto affixed.

Dated: .

A.L. Pharma Inc.

By___________________________________
[TITLE]

[Corporate Seal of A.L. Pharma Inc.]

Attest:

By___________________________________
[TITLE]

Countersigned: The First National
Bank of Boston, as Warrant Agent

By___________________________________

B-18
<PAGE>

[FORM OF REVERSE OF WARRANT CERTIFICATE]

A.L. PHARMA INC.

The warrant evidenced by this warrant certificate is part of a duly
authorized issue of Warrants to purchase a maximum of three million, six
hundred thousand (3,600,000) Shares of Class A Common Stock issued pursuant to
a Warrant Agreement, dated as of , 1994 (the "Warrant Agreement"), duly
executed and delivered by the Company and The First National Bank of Boston, as
Warrant Agent (the "Warrant Agent"). The Warrant Agreement hereby is
incorporated by reference in and made a part of this instrument and it should
be referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the Company
and the holders (the words "holders" or "holder" meaning the registered holders
or registered holder) of the Warrants. A copy of the Warrant Agreement may be
inspected at the Warrant Agent Office and is available upon written request
addressed to the Company. All terms used herein that are defined in the Warrant
Agreement have the meanings assigned to them therein.

Warrants may be exercised to purchase Shares from the Company before the
Close of Business on the Expiration Date, at the Exercise Price set forth on
the face hereof, subject to adjustment as described in the Warrant Agreement.
The holder of the Warrant evidenced by this Warrant Certificate may exercise
such Warrant by surrendering the Warrant Certificate, with the form of election
to purchase set forth hereon properly completed and executed, together with
payment of the aggregate Exercise Price, in lawful money of the United States
of America, and any applicable transfer taxes, at the Warrant Agent Office.

In the event that upon any exercise of the Warrant evidenced hereby the
number of Shares actually purchased shall be less than the total number of
Shares purchasable upon exercise of the Warrant evidenced hereby, there shall
be issued to the holder hereof, or such holder's assignee, a new Warrant
Certificate evidencing a Warrant to purchase the Shares not so purchased. No
adjustment shall be made for any cash dividends on any Shares issuable upon
exercise of this Warrant. After the Close of Business on the Expiration Date,
unexercised Warrants shall become void and of no value.

The Company shall not be required to issue fractions of Shares or any
certificates that evidence fractional Shares. In lieu of such fractional
Shares, there shall be paid to holders of the Warrant Certificates with regard
to which such fractional Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value (as determined pursuant
to the Warrant Agreement) of a full Share minus the same fraction of the
exercise price.

Warrant Certificates, when surrendered at the Warrant Agent Office by the
registered holder thereof in person or by a legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing a Warrant to purchase in the aggregate a like number of
Shares.

Upon due presentment for registration of transfer of this Warrant Certificate
at the Warrant Agent Office, a new Warrant Certificate or Warrant Certificates
of like tenor and evidencing a Warrant or Warrants to purchase in the aggregate
a like number of Shares shall be issued to the transferee in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge, except for any tax or other governmental charge
imposed in connection therewith.

The Company and Warrant Agent may deem and treat the registered holder hereof
as the absolute owner of this Warrant Certificate (notwithstanding any notation
of ownership or other writing hereon made by anyone) for the purpose of any
exercise hereof and for any other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.

B-19
<PAGE>

ELECTION TO EXERCISE

(TO BE EXECUTED UPON EXERCISE OF THE WARRANT)

The undersigned hereby irrevocably elects to exercise the right, represented
by this Warrant Certificate to purchase Shares and herewith tenders in
payment for such Shares $ in lawful money of the United States of America,
in accordance with the terms hereof. The undersigned requests that a
certificate representing such Shares be registered and delivered as follows:

_______________________________________________________________
Name

_______________________________________________________________
Address

_______________________________________________________________
Delivery Address (if different)

If such number of Shares is less than the aggregate number of Shares
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the balance of such Shares be registered and delivered as
follows:

_______________________________________________________________
Name

_______________________________________________________________
Address

_______________________________________________________________
Delivery Address (if different)

_________________________ ____________________________________________________
SOCIAL SECURITY OR OTHER SIGNATURE
TAXPAYER IDENTIFICATION
NUMBER OF HOLDER

NOTE: THE ABOVE SIGNATURE MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. IN
ADDITION, THE SIGNATURE OF THE HOLDER HEREOF MUST
BE GUARANTEED.

Signature Guaranteed:
_________________________

B-20
<PAGE>

ASSIGNMENT

(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH
HOLDER DESIRES TO TRANSFER THE WARRANT CERTIFICATE)

For Value Received, the undersigned registered holder hereby sells, assigns
and transfers unto

_______________________________________________________________
Name of Assignee

_______________________________________________________________
Address of Assignee

this Warrant Certificate, together with all right, title and interest therein,
and does irrevocably constitute and appoint attorney, to transfer the
within Warrant Certificate on the books of the Warrant Agent, with full power
of substitution.

_________________________ ____________________________________________________
DATED SIGNATURE

_________________________
SOCIAL SECURITY OR OTHER
TAXPAYER IDENTIFICATION
NUMBER OF HOLDER

Signature Guaranteed:
_________________________

B-21
<PAGE>

EXHIBIT C

(Office translation into English)

FORM OF
DEMERGER AGREEMENT
between
Apothekernes Laboratorium A.S
(to be renamed A.L. Industrier A.S)
and
Apothekernes Laboratorium A.S (under incorporation)

This agreement is entered into on this May __, 1994 between
Apothekernes Laboratorium A.S (to be renamed A.L. Industrier A.S) ("Parent") and
Apothekernes Laboratorium A.S (under incorporation) ("New A.L. Oslo").

Whereas, Parent and A. L. Laboratories, Inc. ("A.L. Labs") have
entered into a Restructuring Agreement, dated May 16, 1994 (the "Restructuring
Agreement"), pursuant to which Parent and A.L. Labs have agreed to combine their
respective related businesses; and

Whereas, in furtherance thereof and pursuant to this Demerger
Agreement (i) the assets and liabilities of Parent relating to Parent's
Pharmaceutical (including bulk antibiotics), Animal Health and Aquatic Animal
Health Divisions and its subsidiaries Apolab OY, Norgesplaster A/S and A.L.
Lakemedel AB shall be and certain other assets shall be demerged (the
"Demerger") into New A.L. Oslo and (ii) each holder of ordinary shares of Parent
shall receive one ordinary share of New A.L. Oslo for each ordinary share of
Parent held by such holder (other than ordinary shares of Parent held by A/S
Wangs Fabrik).

NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

ARTICLE I - THE DEMERGER

Section 1.1 - Incorporation. New A.L. Oslo shall be incorporated by
-------------
Parent under laws of the Kingdom of Norway.

Section 1.2 - Demerger. Subject to the terms and conditions hereof
--------
and in Sections 5.1 and 5.3 of the Restructuring Agreement:

(a) Parent shall reduce its share capital by NOK 20,000,000 from NOK
40,000,000 to NOK 20,000,000 by reducing the nominal value of each share of its
capital stock from NOK 100 to NOK 50 and an amount equal to the reduced share
capital shall be allocated to a fund to be disposed of by the General Meeting of
shareholders of Parent in accordance with Schedule II;

(b) Immediately after the reduction in share capital referenced in (a)
above, Parent shall reduce its share capital further by NOK 2,600,000 from NOK
20,000,000 to NOK 17,400,000 by reducing the nominal value of each share of its
capital stock from NOK 50 to NOK 43.50. NOK 2,506,822.50 of the reduced share
capital shall be transferred to New. A.L. Oslo as provided in Schedule III as
payment of the share capital of New A.L. Oslo as issued pursuant to Section 1.3
below;

C-1
<PAGE>

(c) At the General Meeting of the shareholders of Parent approving the
reduction of the share capital, (i) Den norske Bank, or a substitute Norwegian
entity (the "Investor"), shall subscribe for 520,000 ordinary shares of Parent,
nominal value NOK 43.50 per share, at a price of NOK 43.50 per share (the
"Investor Subscription") and (ii) the shareholders of Parent shall vote on a
resolution to waive any applicable preemptive rights in connection with the
Investor Subscription;

(d) Attached as Schedule II are pro forma balance sheets of New A.L.
Oslo and Parent, as of December 31, 1993. Subject to the assumption of certain
liabilities as set forth in Section 1.2(e), Parent shall convey, transfer and
assign all of Parent's interest to the assets described in Schedule I (the
"Transferred Assets") to New A.L. Oslo; and

(e) In consideration of the conveyance, transfer and assignment of all
of Parent's interest in the Transferred Assets, New A.L. Oslo shall assume and
agree to pay and discharge the liabilities described in Schedule I (the
"Transferred Liabilities").

Section 1.3 - New A.L. Oslo Shares. Upon the effectiveness of the
--------------------
Demerger with the Registry, the holders of ordinary shares of Parent (other than
A/S Wangs Fabrik) shall be entitled to receive one ordinary share of New A.L.
Oslo, of NOK 6.50 each, for each share of Parent held by such holder. No other
compensation shall be payable to the shareholders of Parent with respect to the
Demerger.

Section 1.4 - Transfer Documentation. From time to time, whether
----------------------
before or after the effectiveness of the Demerger, (i) Parent shall execute and
deliver such documents to New A.L. Oslo as New A.L. Oslo may reasonably request
in order to consummate the conveyance, transfer and assignment of all of
Parent's interest in the Transferred Assets and (ii) New A.L. Oslo shall deliver
to Parent such documents as Parent may reasonably request to make effective or
otherwise evidence New A.L. Oslo's assumption and agreement to pay and discharge
the Transferred Liabilities.

Section 1.5 - Name Change. Upon the consummation of the Demerger,
-----------
Parent shall be renamed "A.L. Industrier A.S" and Parent shall use its
reasonable best efforts to permit New A.L. Oslo to use the name Apothekernes
Laboratorium A.S.

ARTICLE II - REPRESENTATION AND WARRANTIES

Parent represents and warrants to New A.L. Oslo that:

Section 2.1 - No Conflict. Except as set forth in the Restructuring
-----------
Agreement, the transfer of the Transferred Assets and the assumption of the
Transferred Liabilities will not (A) result in a violation or breach of, or
constitute a default under the provisions of any instrument of indebtedness,
agreement, license or other instrument or obligation to which Parent is a party,
(B) violate any applicable law, rule or regulation or (C) violate Parent's
Articles of Association; excluding from the foregoing clauses violations,
breaches or defaults which would not have a material adverse effect on the
Transferred Assets.

Section 2.2 - Consents and Approvals. Except for the applicable
----------------------
requirements under the Norwegian Joint Stock Companies Act (the "NCA") and the
consents and approvals set forth on Schedule 3.5 to the Restructuring Agreement,
no consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory agency is required to be obtained by Parent
in connection with the execution, delivery and performance of this Demerger
Agreement.

C-2
<PAGE>

ARTICLE III - CONDITIONS; EFFECTIVENESS

Section 3.1 - Conditions. This Demerger Agreement shall be subject to
----------
the adoption and approval of the shareholders of Parent. The effectiveness of
the Demerger shall be subject to the satisfaction or waiver by Parent of the
conditions set forth in Sections 5.1 and 5.3 of the Restructuring Agreement. As
soon as practicable after the satisfaction or waiver of the conditions set forth
in Section 5.1 and 5.3 of the Restructuring Agreement and prior to the Closing
(as such term is defined in the Restructuring Agreement), Parent shall cause the
final Certificate of Demerger to be duly registered with the Registry. The
Demerger shall become effective upon the time that such final Certificate of
Demerger shall have been duly filed with the Registry.

Section 3.2 - Tax and Accounting. Notwithstanding the provisions of
------------------
Section 3.1, the Demerger shall be effective for tax and accounting purposes as
of January 1, 1994.

Section 3.3 - Termination. This Agreement may be terminated and the
-----------
Demerger may be abandoned at any time by action of the Board of Directors of
Parent upon termination of the Restructuring Agreement.

Section 3.4 - Employees. Immediately following the consummation of
---------
the Demerger, all employees of Parent shall become employees of New A.L. Oslo
upon the same terms as applicable immediately prior to the Demerger.

Section 3.5 - Arbitration. The parties hereto shall attempt to
-----------
resolve any dispute under this Agreement amicably by mutual agreement. Any such
dispute which cannot be resolved by agreement within a period of sixty (60) days
shall be finally resolved by arbitration in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of Commerce ("ICC").
Any such arbitration may be initiated by the delivery of a notice in writing by
either party hereto to the other party following any such sixty (60) day period.
The arbitration panel shall comprise three (3) arbitrators, one (1) to be
appointed by Parent, one (1) to be appointed by New A.L. Oslo, and the third by
the first two (2) arbitrators. If either of the first two (2) arbitrators are
not appointed within the time provided by said rules, or the two (2) arbitrators
fail to agree on the choice of the third within thirty (30) days after their
respective appointments become effective, such arbitrator(s) shall be appointed
by the International Court of Arbitration of the ICC. The place of arbitration
shall be London, England. The language to be used in the arbitral proceeding
shall be English. The decision and award of the arbitration panel shall be
final, non-appealable and binding on both parties and their successors and
assigns hereunder, shall include a decision regarding the allocation of costs
relating to any such arbitration and all matters related thereto, and shall be
enforceable in any court of competent jurisdiction in accordance with the United
Nations Convention on the Recognition and Enforcement of Foreign Arbitral
Awards.

Section 3.6 - Entire Agreement, etc. This Agreement (including any
---------------------
schedules hereto) (a) constitutes the entire agreement, and supersedes all other
prior agreements, understandings, representations and warranties both written
and oral, among the parties, with respect to the subject matter hereof, and (b)
shall not be assignable by operation of law and is not intended to create any
obligations to, or rights in respect of, any persons other than the parties
hereto except as specifically provided herein; provided, that it is expressly
agreed that the provisions of Section 3.4 shall not create any rights and
obligations in respect of any third parties.

Section 3.7 - Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the Kingdom of Norway without regard to
any applicable principles of conflicts of law.

C-3
<PAGE>

IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.

Oslo, __________, 1994

Apothekernes Laboratorium A.S Apothekernes Laboratorium A.S
(to be renamed A.L. Industrier A.S) (under incorporation)

___________________________________ ____________________________
By: By:
Title: Title:

C-4
<PAGE>

CONFORMED COPY
EXHIBIT D

LEHMAN BROTHERS

May 16, 1994

The Special Committee of the Board of Directors
A. L. Laboratories, Inc.
One Executive Drive
Fort Lee, New Jersey 07024

Members of the Special Committee:

We understand that A. L. Laboratories, Inc. (the "Company") and Apothekernes
Laboratorium A.S ("A. L. Oslo") propose to enter into a Restructuring Agreement
to be dated May 16, 1994 (the "Restructuring Agreement"). Under the terms of
the Restructuring Agreement, the Company will commence an offer to the
shareholders of New A. L. Oslo (as hereinafter defined) to exchange (the
"Exchange Offer") for the outstanding New A. L. Oslo ordinary shares held by
the holders of such shares (i) 170.0 million Norwegian Kroner (approximately
$23.5 million, at the exchange rate on May 13, 1994), subject to adjustment as
specified in the Restructuring Agreement and (ii) warrants (the "Warrants") to
purchase 3,600,000 shares of the Company's Class A common stock, par value
$0.20 per share, through December 31, 1998, subject to the price and terms as
set forth in the Restructuring Agreement and in a Warrant Agreement between the
Company and a warrant agent (the "Warrant Agreement") (the "Proposed
Transaction"). Immediately prior to the commencement of the Exchange Offer,
pursuant to the terms and conditions of a Demerger Agreement between A. L. Oslo
and New A. L. Oslo, a wholly owned subsidiary of A. L. Oslo to be 100% spun-off
to shareholders of A. L. Oslo ("New A. L. Oslo"), certain assets and
liabilities of A. L. Oslo shall have been transferred to New A. L. Oslo (the
"Demerger") and New A. L. Oslo will consist of the Pharmaceutical (including
Bulk Antibiotics), Animal Health and Aquatic Animal Health Divisions of A. L.
Oslo and the Apolab OY, Norgesplaster A/S and A. L. Lakemedel AB subsidiaries
of A. L. Oslo (collectively, the "Related Norwegian Businesses"). The terms and
conditions of the Proposed Transaction are set forth in more detail in the
Restructuring Agreement.

We have been requested by the Special Committee of the Board of Directors of
the Company (the "Special Committee") to render our opinion with respect to the
fairness, from a financial point of view, to the Company and, accordingly, to
the holders of the Class A common stock, of the consideration to be paid by the
Company in the Proposed Transaction.

In arriving at our opinion, we reviewed and analyzed: (1) the Restructuring
Agreement, the Warrant Agreement and the Demerger Agreement, (2) such other
publicly available and non-public information concerning the Company and A.
L.Oslo which we believe to be relevant to our inquiry, (3) financial and
operating information with respect to the business, operations and prospects of
the Related Norwegian Businesses through the end of 1995 furnished to us by A.
L. Oslo, (4) a comparison of the historical financial results and present
financial condition of the Related Norwegian Businesses of A. L. Oslo with
those of other companies which we deemed relevant, and (5) a comparison of the
financial terms of the Proposed Transaction with the financial terms of certain
other recent transactions which we deemed relevant. In addition, we have had
discussions with the managements of A. L. Oslo and the Company concerning the
business, operations, assets, financial condition and prospects for the Related
Norwegian Businesses and the possible strategic benefits of a combination of
the businesses of the Company and the Related Norwegian Businesses and
undertook such other studies, analyses and investigations as we deemed
appropriate.

D-1
<PAGE>

We have assumed and relied upon the accuracy and completeness of the
financial and other information used by us in arriving at our opinion without
independent verification and have further relied upon the assurances of
management of A. L. Oslo and the Company that they are not aware of any facts
that would make such information inaccurate or misleading. With respect to the
financial projections of the Related Norwegian Businesses for 1994 and 1995, we
have assumed with the Special Committee's permission that such projections have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of A. L. Oslo as to the future
financial performance of the Related Norwegian Businesses and that the Related
Norwegian Businesses will perform substantially in accordance with such
projections. In addition, for purposes of our analysis, we also have considered
the evaluations of the business, operations and prospects of the Related
Norwegian Businesses by the management of the Company. In arriving at our
opinion, we have conducted physical inspections of certain (but not all) of the
properties and facilities of the Related Norwegian Businesses but have not made
or obtained any evaluations or appraisals of the assets or liabilities of the
Related Norwegian Businesses. Our opinion is necessarily based upon market,
economic, legislative and other conditions as they exist on, and can be
evaluated as of, the date of this letter. We have not been requested to opine
as to, and our opinion does not in any manner address, the Company's underlying
business decision to proceed with or effect the Proposed Transaction. In
addition, we express no opinion as to the impact of the Proposed Transaction on
the price of the Class A common stock of the Company or the prices at which the
Class A common stock will actually trade at any time.

We have acted as financial advisor to the Special Committee in connection
with the Proposed Transaction and will receive a fee for our services. In
addition, the Company has agreed to indemnify us for certain liabilities
arising out of the rendering of this opinion. In the ordinary course of our
business, we actively trade in the equity securities of the Company for our own
account and for the accounts of our customers and, accordingly, may at any time
hold a long or short position in such securities.

Based upon and subject to the foregoing, we are of the opinion as of the date
hereof that, from a financial point of view, the consideration to be paid by
the Company in the Proposed Transaction is fair to the Company and to the
holders of the Class A common stock.

This opinion is solely for the use and benefit of the Special Committee and
the Board of Directors of the Company. This opinion is not intended to be and
does not constitute a recommendation to any stockholder of the Company as to
how such stockholder should vote with respect to the Proposed Transaction.

Very truly yours,

Lehman Brothers

/s/ Peter J. Mixter
By: _________________________________
Managing Director

D-2
<PAGE>

EXHIBIT E

INDEX TO COMBINED FINANCIAL STATEMENTS
OF THE RELATED NORWEGIAN BUSINESSES

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Unaudited Interim Financial Statements:
Combined Balance Sheet as of June 30, 1994.............................. E-2
Combined Statements of Income for the three months ended June 30, 1994
and 1993 and the six months ended June 30, 1994 and 1993............... E-3
Combined Statements of Cash Flows for the six months ended June 30, 1994
and 1993............................................................... E-4
Notes to Combined Financial Statements.................................. E-5
Audited Year End Financial Statements:
Independent Accountant's Report......................................... E-6
Combined Balance Sheets as of December 31, 1993 and 1992................ E-7
Combined Statements of Income for the years ended December 31, 1993,
1992 and 1991.......................................................... E-8
Combined Statements of Cash Flows for the years ended December 31, 1993,
1992 and 1991.......................................................... E-9
Notes to Combined Financial Statements.................................. E-10
Financial Statement Schedules:
Independent Accountant's Report......................................... E-27
Schedule V -- Property, Plant and Equipment............................. E-28
Schedule VI -- Accumulated Depreciation and Amortization of Property,
Plant and Equipment.................................................... E-29
Schedule VIII -- Valuation and Qualifying Accounts...................... E-30
Schedule IX -- Short Term Borrowings.................................... E-31
Schedule X -- Supplementary Income Statement Information................ E-32
</TABLE>

E-1
<PAGE>

THE RELATED NORWEGIAN BUSINESSES

COMBINED BALANCE SHEETS
(in thousands of Norwegian Kroner)

<TABLE>
<CAPTION>
JUNE 30, 1994 DECEMBER 31,
(UNAUDITED) 1993
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................... 19,522 24,295
Accounts receivable, net........................... 79,150 76,122
Receivables from related parties................... 29,511 27,001
Inventories........................................ 79,795 82,457
Prepaid expenses and other current assets.......... 9,121 5,675
------- -------
Total current assets............................. 217,099 215,550
Long-term receivables from related parties......... 43,700 43,700
Property plant and equipment, net.................. 397,340 396,552
Intangible assets, net............................. 143,001 147,966
Other assets and deferred charges.................. 50 49
------- -------
TOTAL COMBINED ASSETS................................ 801,190 803,817
======= =======
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt.................. 50,214 45,726
Short-term debt.................................... 1,487 116
Payable to related party........................... 9,000
Accounts payable................................... 23,063 30,431
Accrued expenses................................... 41,770 41,893
Accrued and deferred income taxes.................. 2,003 2,263
------- -------
Total current liabilities........................ 127,537 120,429
------- -------
Long-term debt..................................... 451,010 471,597
Deferred income tax................................ 46,605 41,306
Other non-current liabilities...................... 23,991 21,394
Contingencies and Commitments
EQUITY:
Net investment..................................... 152,182 149,212
Foreign currency translation adjustment............ (135) (121)
------- -------
Total equity..................................... 152,047 149,091
------- -------
TOTAL COMBINED LIABILITIES AND EQUITY................ 801,190 803,817
======= =======
</TABLE>

E-2
<PAGE>

THE RELATED NORWEGIAN BUSINESSES

COMBINED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands of Norwegian Kroner)

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- ------------------
1994 1993 1994 1993
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Net Sales............................ 141,782 130,556 290,631 267,551
Other Revenue........................ 6,215 6,190 12,313 11,948
--------- --------- -------- --------
Total revenue...................... 147,997 136,746 302,944 279,499
Cost of sales........................ 71,922 69,676 144,090 135,675
--------- --------- -------- --------
Gross profit....................... 76,075 67,070 158,854 143,824
Selling, general and administrative
expenses............................ 58,837 54,408 118,862 112,181
--------- --------- -------- --------
Operating income................... 17,238 12,662 39,992 31,643
Interest expense..................... (10,674) (14,466) (23,147) (31,259)
Foreign exchange gains (losses)...... (138) 1,641 (494) 620
Other income, net.................... 1,083 1,868 2,248 3,604
--------- --------- -------- --------
Income before provision for income
taxes............................. 7,509 1,705 18,599 4,608
Provision for income taxes........... 2,277 658 5,629 1,553
--------- --------- -------- --------
Net income......................... 5,232 1,047 12,970 3,055
========= ========= ======== ========
</TABLE>

E-3
<PAGE>

THE RELATED NORWEGIAN BUSINESSES

COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands of Norwegian Kroner)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------
1994 1993
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income................................................ 12,970 3,055
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization............................ 22,433 21,561
Deferred income taxes.................................... 5,629 1,553
Unrealized exchange differences.......................... 597 1,287
Changed in assets and liabilities, net of effect from
business acquisitions:
(Increase) decrease in accounts receivable............... (5,573) (13,059)
(Increase) decrease in receivables from related parties.. (2,505) (7,007)
(Increase) decrease in inventory......................... 2,661 1,865
(Increase) decrease in prepaid expenses and other current
assets.................................................. (3,380) (10,022)
(Increase) decrease in accounts payable and accrued ex-
penses.................................................. (8,396) (6,099)
(Increase) decrease in accrued and deferred income taxes. (582) (2,392)
Increase in pension liabilities.......................... 2,597 3,683
Other, net............................................... 2,548
-------- --------
Net cash provided by operating activities.............. 28,999 (5,575)
-------- --------
INVESTING ACTIVITIES:
Capital expenditures...................................... (18,251) (10,327)
Acquisition of Norgesplaster A/S, net of cash acquired.... (5,780)
(Increase) decrease in interest bearing receivables....... (4,500)
-------- --------
Net cash used in investing activities.................. (18,251) (20,607)
-------- --------
FINANCING ACTIVITIES:
Net borrowing under lines of credit....................... 1,368 79,576
Proceeds from long-term debt.............................. 25,000
Reduction of long-term debt............................... (40,882) (37,702)
Payable to related party.................................. 9,000
Dividends paid............................................ (10,000) (8,000)
-------- --------
Net cash (used in) provided by financing activities.... (15,514) 33,874
-------- --------
Effect of exchange rate changes on cash.................... (7) (33)
-------- --------
Increase (decrease) in cash and cash equivalents........... (4,773) 7,659
Cash and cash equivalents at beginning of year............. 24,295 6,611
-------- --------
Cash and cash equivalents at end of period................. 19,522 14,270
======== ========
</TABLE>

E-4
<PAGE>

NOTES TO COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands of Norwegian Kroner)

1. GENERAL

These combined financial statements include all adjustments (consisting only
of normal recurring accruals) which are, in the opinion of management,
considered necessary for a fair presentation of the results for the periods
presented. The reported results for the six-month period ended June 30, 1994
are not necessarily indicative of the results to be expected for the full year.
These financial statements should be read in conjunction with the combined
financial statements of the Related Norwegian Businesses (as described in Note
1 to the combined financial statements) as of December 31, 1993 and 1992 and
for each of the three years in the period ended December 31, 1993 which
financial statements are included as an exhibit to the proxy statement.

2. INVENTORIES

Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30, 1994 DECEMBER 31, 1993
------------- -----------------
<S> <C> <C>
Finished goods.............................. 42,969 50,420
Work in process............................. 18,650 15,759
Raw materials............................... 18,176 16,278
------ ------
79,795 82,457
====== ======

3. SUPPLEMENTAL DATA

<CAPTION>
JUNE 30, 1994 JUNE 30, 1993
------------- -----------------
<S> <C> <C>
Cash paid for interest...................... 27,396 33,549
Cash paid for taxes......................... 582 2,392

4. RELATED PARTY TRANSACTIONS

Transactions with A. L. Laboratories Inc. and subsidiaries (A. L. Labs):

<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------
1994 1993
------------- -----------------
<S> <C> <C>
Inventory purchased from A. L. Labs......... 2,395 4,276
License fees received from A. L. Labs....... 7,432 6,670
Sales to and commissions received from A. L.
Labs....................................... 53,447 45,032
</TABLE>

As of June 30, 1994 there was a net current receivable of NOK 15,235 from A.
L. Labs.

5. NET INVESTMENT

The following is a reconciliation of the net investment in the Related
Norwegian Businesses:

Balance December 31, 1993.......................................... 149,212
Net income......................................................... 12,970
Dividends paid..................................................... (10,000)
-------
Balance June 30, 1994.............................................. 152,182
=======

E-5
<PAGE>

FINISHED PHARMACEUTICAL, ANIMAL HEALTH, BULK ANTIBIOTICS
AND AQUATIC ANIMAL HEALTH BUSINESSES OF
APOTHEKERNES LABORATORIUM A.S (THE "RELATED NORWEGIAN BUSINESSES")

INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors and the Shareholders of Apothekernes Laboratorium A.S

We have audited the combined balance sheets of the finished pharmaceutical,
animal health, bulk antibiotics and aquatic animal health businesses of
Apothekernes Laboratorium A.S, herein referred to as the Related Norwegian
Businesses (as described in Note 1), as of December 31, 1993 and 1992, and the
related combined statements of income and cash flows for each of the three
years in the period ended December 31, 1993. These combined financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

The accompanying combined financial statements were prepared to present the
financial position, results of operations and cash flows of the finished
pharmaceutical, animal health, bulk antibiotics and aquatic animal health
businesses of Apothekernes Laboratorium A.S on the basis described in Note 1
and are not intended to be a complete presentation of the consolidated
financial position, results of operations and cash flows of the finished
pharmaceutical, animal health, bulk antibiotics and aquatic animal health
businesses of Apothekernes Laboratorium A.S.

In our opinion, the aforementioned combined financial statements (Pages E-7 to
E-26) present fairly, in all material respects, the combined financial position
of the Related Norwegian Businesses (as described in Note 1) as of December 31,
1993 and 1992 and the combined results of operations and cash flows for each of
the three years in the period ended December 31, 1993, in conformity with
United States generally accepted accounting principles.

As discussed in Note 1 to the combined financial statements, the Related
Norwegian Businesses changed their method of accounting for income taxes in
1992.

COOPERS & LYBRAND AS
/s/COOPERS & LYBRAND
Oslo, Norway
May 11, 1994, except for Note 2 and Note 3 which are as of May 16, 1994.

E-6
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

COMBINED BALANCE SHEETS
(in thousands of Norwegian Kroner)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1993 1992
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... 24,295 6,611
Accounts receivable, net.......................... 76,122 60,332
Receivables from related parties.................. 27,001 27,585
Inventories....................................... 82,457 78,849
Prepaid expenses and other current assets......... 5,675 6,398
------------ ------------
Total current assets............................ 215,550 179,775
Investment in company under equity method......... 8,192
Long-term receivables from related parties........ 43,700 43,700
Property, plant and equipment, net................ 396,552 395,703
Intangible assets, net............................ 147,966 152,571
Other assets and deferred charges................. 49 24
------------ ------------
TOTAL COMBINED ASSETS............................... 803,817 779,965
============ ============
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt................. 45,726 41,586
Short-term debt................................... 116 36,702
Accounts payable.................................. 30,431 26,379
Accrued expenses.................................. 41,893 42,797
Accrued and deferred income taxes................. 2,263 3,345
------------ ------------
Total current liabilities....................... 120,429 150,809
------------ ------------
Long-term debt.................................... 471,597 415,333
Deferred income taxes............................. 41,306 33,490
Other non-current liabilities..................... 21,394 14,900
Contingencies and Commitments
EQUITY:
Net investment.................................... 149,212 165,474
Foreign currency translation adjustment........... (121) (41)
------------ ------------
Total equity.................................... 149,091 165,433
------------ ------------
TOTAL COMBINED LIABILITIES AND EQUITY............... 803,817 779,965
============ ============
</TABLE>

The notes on pages E-10 to E-26 are an integral part of the combined financial
statements.

E-7
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

COMBINED STATEMENTS OF INCOME
(in thousands of Norwegian Kroner)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Net sales........................................ 528,688 457,304 378,935
Other revenue.................................... 27,626 28,803 34,566
-------- -------- --------
Total revenue.................................. 556,314 486,107 413,501
Cost of sales.................................... 268,575 248,200 207,058
-------- -------- --------
Gross profit................................... 287,739 237,907 206,443
Selling, general and administrative expenses..... 226,822 192,910 179,022
-------- -------- --------
Operating income............................... 60,917 44,997 27,421
Interest expense................................. (59,454) (51,846) (21,493)
Foreign exchange gains........................... 1,770 20,506 44,239
Other income (expense), net...................... 8,083 6,113 (2,138)
Equity in net earnings of affiliated company..... 1,555 723
-------- -------- --------
Income before provision for income taxes, and
cumulative effect of change in accounting
principle..................................... 11,316 21,325 48,752
Provision for income taxes....................... 4,120 6,400 16,994
-------- -------- --------
Income before cumulative effect of change in ac-
counting principle.............................. 7,196 14,925 31,758
Cumulative effect of change in accounting princi-
ple............................................. 16,210
-------- -------- --------
Net income..................................... 7,196 31,135 31,758
======== ======== ========
</TABLE>

The notes on pages E-10 to E-26 are an integral part of the combined financial
statements.

E-8
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

COMBINED STATEMENTS OF CASH FLOWS
(in thousands of Norwegian Kroner)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1993 1992 1991
------- ------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income...................................... 7,196 31,135 31,758
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 42,879 39,041 17,882
Deferred income taxes........................... 6,945 3,355 14,552
(Gain) loss on disposals property, plant and
equipment...................................... (293) (1,828) 4,395
Loss from sale of shares........................ 287
Equity in net income of affiliated company, net
of dividends received.......................... (1,355) (573)
Unrealized exchange differences................. 1,362 30,453 (30,313)
Cumulative effect of change in accounting prin-
ciple.......................................... (16,210)
Change in assets and liabilities, net of effect
from business acquisitions:
(Increase) decrease in accounts receivable...... (11,050) (10,407) 205
Decrease (increase) in receivables from related
parties........................................ 3,608 3,489 (12,822)
Decrease (increase) in inventory................ 4,701 (11,526) (257)
(Increase) decrease in prepaid expense and other
current assets................................. (741) 4,101 (573)
(Decrease) increase in accounts payable and ac-
crued expenses................................. (3,468) 3,506 (789)
(Decrease) in accrued and deferred income taxes. (2,837) (3,299) (1,075)
Increase in pension liabilities................. 7,147 5,177 2,154
Other, net...................................... 56 85
------- ------- --------
Net cash provided by operating activities..... 55,449 75,975 24,629
------- ------- --------
INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equip-
ment........................................... 1,905 3,521 1,338
Proceeds from sale of shares.................... 4,495
Capital expenditures............................ (24,466) (41,107) (148,431)
Acquisition of Norgesplaster A/S, net of cash
acquired....................................... (5,780)
Acquisition of product lines.................... (5,463) (5,677)
(Increase) decrease in interest bearing receiv-
ables.......................................... (3,000) (17,500) 2,500
------- ------- --------
Net cash used in investing activities......... (31,341) (56,054) (150,270)
------- ------- --------
FINANCING ACTIVITIES:
Net borrowing under lines of credit............. (36,585) 15,359 2,015
Proceeds from long-term debt.................... 95,000 105,911
Reduction of long-term debt..................... (41,364) (37,435) (4,825)
Dividends paid.................................. (8,000) (6,000) (4,800)
Change in net investment........................ (15,458) (9,732) 6,781
------- ------- --------
Net cash (used in) provided by financing ac-
tivities..................................... (6,407) (37,808) 105,082
------- ------- --------
Effect of exchange rate changes on cash......... (17) (67) (83)
------- ------- --------
(Decrease) increase in cash and cash equiva-
lents.......................................... 17,684 (17,954) (20,642)
Cash and cash equivalents at beginning of year.. 6,611 24,565 45,207
------- ------- --------
Cash and cash equivalents at end of year........ 24,295 6,611 24,565
======= ======= ========
</TABLE>

The notes on pages E-10 to E-26 are an integral part of the combined financial
statements.

E-9
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS

1.ACCOUNTING POLICIES

(a) Reorganization:

These combined financial statements have been prepared in connection with the
proposed combination of the assets and liabilities of the finished
pharmaceutical, animal health, bulk antibiotics and aquatic animal health
businesses of Apothekernes Laboratorium A.S with A. L. Laboratories, Inc. ("A.
L. Labs"). A. L. Labs is a specialized international pharmaceutical company
engaged in developing, manufacturing and marketing branded, value-added generic
pharmaceuticals, animal health micronutrients and bulk antibiotics. Thus, these
statements combine the various subsidiaries, businesses, and assets (such as
licenses, patents and trademarks) and liabilities of Apothekernes Laboratorium
A.S ("A. L. Oslo") which are proposed to be combined with A. L. Labs. The
above-described finished pharmaceutical, animal health, bulk antibiotics and
aquatic animal health businesses of A. L. Oslo consist principally of certain
of the accounts of A. L. Oslo and its Swedish, Finnish and Norwegian
subsidiaries, A. L. Lakemedel AB, Apolab OY and Norgesplaster A/S, respectively
(exclusive of the Skoyen real estate and certain leasehold improvements), and
are herein referred to as the Related Norwegian Businesses. Refer also to Notes
2 and 3 on Pages E-12 and E-13.

(b) Basis of presentation:

The financial statements of the various entities comprising the Related
Norwegian Businesses follow the generally accepted accounting principles of
their respective countries. The individual statements have then been restated
to reflect accounting principles generally accepted in the United States.

These statements reflect certain combined subsidiaries, businesses or assets
at their historical cost to A. L. Oslo. The results of operations and cash
flows of the combined entities are reflected at their historical bases. The
combined financial statements of the Related Norwegian Businesses also include
certain allocations from A. L. Oslo of costs attributable to operating assets
(the Skoyen real estate and certain leasehold improvements) not included in
these financial statements. The methods by which such amounts are allocated are
deemed reasonable by management.

The financial statements of the Related Norwegian Businesses may not
necessarily be indicative of the results that would have been attained had the
Related Norwegian Businesses operated independently of A. L. Oslo.

All significant transactions between the combined entities have been
eliminated.

All amounts included herein are in thousands (000's), except where otherwise
noted.

Cash equivalents include all highly liquid investments that have an original
maturity of three months or less. Cash equivalents that are restricted total
NOK 6,162 and NOK 5,154 in 1993 and 1992, respectively, and relate to employee
payroll withholding taxes.

(d) Inventories:

Inventories are valued at the lower of cost or market and are stated on the
first-in, first-out (FIFO) and average cost methods.

E-10
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(e) Property, plant and equipment:

Property, plant and equipment are recorded at cost. Expenditures for
additions, major renewals and betterments are capitalized whereas expenditures
for maintenance and repairs are charged to income as incurred. When assets are
sold or retired, their cost and related accumulated depreciation are removed
from the accounts and any gain or loss is included in net income.

Interest is capitalized as part of the acquisition cost of major construction
projects. In 1991, NOK 19,139 of interest costs were capitalized.

Depreciation is computed on a straight-line basis over estimated useful lives
which are as follows:

<TABLE>
<S> <C>
Buildings........................................................ 30 years
Building improvements............................................ 10-15 years
Machinery and equipment.......................................... 5-15 years
</TABLE>

(f) Intangible assets:

Intangible assets represent the excess cost of acquired businesses over the
underlying fair value of the tangible net assets acquired and the cost of
technology, trademarks, and other non-tangible assets acquired in product line
acquisitions. Intangible assets are amortized on a straight-line basis over
their estimated period of benefit. The following table is net of accumulated
amortization at December 31, 1993 and 1992 of NOK 24,884 and NOK 14,953,
respectively.

<TABLE>
<CAPTION>
DECEMBER 31, ESTIMATED LIFE
--------------- --------------
1993 1992
------- -------
<S> <C> <C> <C>
Excess cost of acquired businesses over fair
value of the net assets acquired............... 132,385 133,083 20 years
Technology, non-competition agreements and pen-
sion adjustment related to unfunded accumulated
benefit obligations............................ 15,581 19,488 6-20 years
------- -------
Total......................................... 147,966 152,571
======= =======
</TABLE>

(g) Foreign currency translation:

The assets and liabilities of the Related Norwegian Businesses' foreign
subsidiaries are translated, where appropriate, from their respective
functional currencies into Norwegian Kroner at rates in effect at the balance
sheet date. Results of operations are translated using average rates in effect
during the year. Foreign currency transaction gains and losses are included in
income. Foreign currency translation adjustments are accumulated in a separate
component of equity.

(h) Interest rate hedging transactions:

The Related Norwegian Businesses from time to time enter into interest rate
hedge agreements which fix the interest rate to be paid for specified periods
on variable rate long-term debt. The differential to be paid or received is
recorded as of the value date and recognized over the life of the agreements as
an adjustment to interest expense.

E-11
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(i) Taxes:

The provision for income taxes includes Norwegian and other foreign income
taxes currently payable and those deferred because of temporary differences
between income for financial statement purposes and tax purposes.

In 1992, the Related Norwegian Businesses adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109). SFAS 109
involves the utilization of the liability method of accounting for deferred
taxes based on enacted tax rates.

(j) Foreign exchange contracts:

The Related Norwegian Businesses enter into foreign exchange contracts as a
hedge against foreign debt payable. Market value gains and losses are
recognized, and the resulting credit or debit offsets foreign exchange gains or
losses on the foreign debt. Results of foreign exchange contracts that are not
recognized as hedges are taken to income currently.

2. PROPOSED COMBINATION

A.S Wangs Fabrik, a wholly owned subsidiary of A. L. Oslo, is a holding
company whose principal asset is its investment in A. L. Labs. The common stock
of A. L. Labs is comprised of two different classes, Class A and Class B Common
Stock. A.S Wangs Fabrik owns all of the Class B Common Stock which, as of
December 31, 1993, represents 38.2% of A. L. Labs' outstanding stock. The Class
B Common Stock enables A. L. Oslo (through A.S Wangs Fabrik) to elect 75% of
the Board of Directors of A. L. Labs as long as the Class B Common Stock
constitutes 12.5% or more of the total share capital of A. L. Labs.

Pursuant to the Restructuring Agreement dated May 16, 1994 between A. L. Oslo
and A. L. Labs (the "Restructuring Agreement"), A. L. Oslo and A. L. Labs have
agreed to the combination of the Related Norwegian Businesses of A. L. Oslo
with A. L. Labs. The consummation of the Restructuring Agreement is subject to
a number of conditions including the approval of the shareholders of A. L. Oslo
and A. L. Labs.

3. DEMERGER AND REORGANIZATION

As part of the reorganization, A. L. Oslo will enter into a Demerger
Agreement. Pursuant to the Demerger Agreement, the Related Norwegian Businesses
will be transferred to a newly incorporated Norwegian company ("New A. L.
Oslo") as follows:

--A. L. Oslo will form New A. L. Oslo, and will cause all shares of capital
stock of New A. L. Oslo to be distributed to the shareholders of A. L.
Oslo in proportion to their share ownership of A. L. Oslo;

--A. L. Oslo would transfer substantially all of the assets and liabilities
of the Related Norwegian Businesses (except the Skoyen real estate and
leasehold improvements used in the Related Norwegian Businesses which
will be leased to New A. L. Oslo on a long term basis) to New A. L. Oslo
in a demerger under applicable Norwegian laws, and A. L. Oslo (which will
be renamed A.L. Industrier A.S following the demerger), will retain its
shares of Class B Common Stock of A. L. Labs, its interests in Dynal A/S,
its various subsidiaries engaged in the food business and certain other
assets not used in the Related Norwegian Businesses. Following the
demerger, New A. L. Oslo will provide administrative services to A. L.
Oslo on a full cost reimbursement basis;

--In the demerger, A. L. Oslo would retain all liabilities and obligations
not arising out of the Related Norwegian Businesses and would indemnify
New A. L. Oslo against such liabilities as well as certain

E-12
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
pre-transaction liabilities and obligations of the Related Norwegian
Businesses relating to taxes, environmental law compliance and regulatory
matters;

--A. L. Oslo would retain its interest in the Skoyen real estate and
leasehold improvements used in the Related Norwegian Businesses and A. L.
Oslo's administrative offices subject to lease of such property to New A.
L. Oslo for a term of 20 years (plus certain options) for a nominal rent
plus New A. L. Oslo's agreement to pay taxes, insurance and normal
maintenance costs during the lease term;

--A. L. Labs would offer to acquire from the shareholders of A. L. Oslo,
all of their shares of New A. L. Oslo's capital stock in exchange for a
proportionate interest in a) a cash payment equal to NOK 170 million,
less any dividends paid on the A. L. Oslo ordinary shares after January
1, 1994 that would have the effect of reducing the equity of the Related
Norwegian Businesses and subject to adjustment for significant changes in
the exchange rate between the Norwegian Kroner and the U.S. dollar, and
(b) certain warrants to purchase 3,600,000 of Class A Common Stock of A.
L. Labs at a price to be determined based on the market price of the
Class A Common Stock of A. L. Labs during a specified period prior to the
meeting of A. L. Labs' shareholders called to vote on the reorganization.
Acceptance of such offer by holders of a minimum percentage of A. L. Oslo
shares is a condition to the combination;

--A. L. Labs will invest up to NOK 100 million in New A. L. Oslo as a
capital investment within six months following closing;

In connection with the reorganization, A.S Wangs Fabrik will pay its existing
obligation to A. L. Oslo (which will be included in the assets of the Related
Norwegian Businesses). Certain debt of A. L. Oslo to banks and other lenders
which will be transferred to New A. L. Oslo may be guaranteed or otherwise
supported by A. L. Labs or refinanced.

Pursuant to the Restructuring Agreement, A. L. Labs would transfer
substantially all its assets and personnel to a wholly-owned subsidiary. In
accordance with the Restructuring Agreement, the personnel transfer will occur
simultaneously with the reorganization and the transfer of substantially all of
the assets of A. L. Labs will occur as soon as practicable after the
consummation of the reorganization. In addition, A. L. Labs would amend its
Certificate of Incorporation to change its name and to increase the number of
directors elected by the holders of its Class A Common Stock from 25% to 33
1/3%.

Except as indicated, all of the proposed transactions described above are to
occur at or about the same time. New A. L. Oslo is referred to elsewhere herein
as the Related Norwegian Businesses.

4. ACQUISITIONS

On January 1, 1993, the Related Norwegian Businesses acquired the remaining
outstanding shares (50% ownership) of Norgesplaster A/S from an unrelated third
party for NOK 15.0 million in cash. The acquisition has been accounted for
using the purchase method and the results of operations have been included in
the Related Norwegian Businesses' financial statements from the date of
acquisition. The excess of the total cost of the acquisition over the fair
value of the net assets aggregated approximately NOK 6.6 million and has been
recorded as goodwill.

As noted above, the results of operations of Norgesplaster A/S have been
included in the statement of income for the Related Norwegian Businesses from
January 1, 1993. The unaudited proforma results of operations for the year
ended December 31, 1992, as if the acquisition of Norgesplaster A/S had
occurred at the beginning of that period, are as follows: revenues NOK 531,060
and net income NOK 32,162.

E-13
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
In March 1992, the Related Norwegian Businesses purchased the distribution
rights for the antibiotics Tyrothricin and Gramicidin from an independent
French company. The purchase price of the intangible assets was NOK 5.5 million
and is being amortized over 20 years.

In November 1991, the Related Norwegian Businesses purchased the bulk
antibiotic assets of an unrelated Danish company, H. Lundbeck AS.
Simultaneously, Dumex, a wholly owned Danish subsidiary of A. L. Labs purchased
from the Related Norwegian Businesses, the polymyxin product line included in
the purchased bulk antibiotic assets for approximately $6 million in cash plus
an additional amount for inventory on hand. The Related Norwegian Businesses
recognized no gain or loss on the subsequent sale to Dumex.

The remaining bulk antibiotic assets acquired from H. Lundbeck AS consist
mainly of intangible assets, which are being amortized on a straight-line basis
over 20 years. The remaining assets were purchased with cash of DKK 5,565 (NOK
5,677) and a non-interest bearing note of DKK 160,000 (NOK 163,200), which is
payable over four years.

5. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1993 1992
------ ------
<S> <C> <C>
Finished goods................................................. 50,420 47,222
Work-in-process................................................ 15,759 16,022
Raw materials.................................................. 16,278 15,605
------ ------
Total........................................................ 82,457 78,849
====== ======
</TABLE>

6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1993 1992
-------- --------
<S> <C> <C>
Land..................................................... 18,965 18,662
Buildings and building improvements...................... 173,664 169,677
Machinery and equipment.................................. 337,658 318,530
Construction in progress................................. 9,185 3,811
Less, accumulated depreciation........................... (142,920) (114,977)
-------- --------
Total.................................................. 396,552 395,703
======== ========
</TABLE>

7. SHORT-TERM DEBT

The Related Norwegian Businesses had short term debt in the form of credit
lines and bank overdrafts amounting to NOK 116 and NOK 36,702 as of December
31, 1993 and December 31, 1992, respectively. NOK 50,000 has been utilized on a
NOK 70,000 short-term line of credit with Sparebanken NOR. Since, however, it
is management's intention to refinance this debt in 1994 utilizing the existing
long-term line of credit with Den norske Bank, this amount has been classified
as long-term (see Note 10).

At December 31, 1993, the Related Norwegian Businesses had available bank
lines of credit totaling NOK 83,363. Borrowings under these lines are generally
made for periods of up to three months. Interest

E-14
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
rates on these lines ranged from 6.34% to 15.25% at December 31, 1993. At
December 31, 1993 the amount of unused short term lines of credit totaled NOK
33,247.

The available bank lines of credit at December 31, 1993 (NOK 83,363) include
a credit line of NOK 70 million which is required to be collateralized by Class
B Common Stock of A. L. Labs. 160,000 shares must be pledged for each NOK 10
million utilized. As of December 31, 1993, 1,128,125 shares were pledged.

8. ACCRUED EXPENSES

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992
---------------- ----------------
<S> <C> <C>
Accrued VAT, holiday pay and duties........ 22,089 20,397
Accruals and other current liabilities..... 19,804 22,400
---------------- ----------------
Total.................................... 41,893 42,797
================ ================
</TABLE>

9. INCOME TAXES

The provision for income taxes, which does not include significant foreign
amounts, consists of the following:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1993 1992 1991
----------- ---------- -----------
<S> <C> <C> <C>
Current.................................. (2,825) 3,045 2,442
Deferred................................. 6,945 3,355 14,552
----------- ---------- -----------
Provision for income taxes............. 4,120 6,400 16,994
=========== ========== ===========
</TABLE>

Deferred tax liabilities (assets) are comprised of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1993 1992
------ ------
<S> <C> <C>
Accelerated depreciation and amortization for income tax
purposes................................................... 46,514 36,580
Difference between inventory valuation methods used for book
and tax purposes........................................... 3,706 2,267
Other....................................................... 231 214
------ ------
Gross deferred tax liabilities.............................. 50,451 39,061
------ ------
Pension liabilities......................................... (5,275) (3,090)
Other....................................................... (1,183) (225)
------ ------
Gross deferred tax assets................................... (6,458) (3,315)
------ ------
Net deferred tax liabilities.............................. 43,993 35,746
====== ======
</TABLE>

E-15
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Reconciliation of Norwegian statutory tax rate to the effective tax rate:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
---------- ---------- -----------
(AMOUNTS IN PERCENT)
<S> <C> <C> <C>
Provision for income taxes at statutory
rate.................................. 28.0 28.0 50.8
Non-deductible costs................... 7.1 2.9 1.7
Allowable exclusions from taxable in-
come.................................. (14.4)
Equity in net earnings of affiliated
company............................... (1.8) (0.6)
Dividend exclusion..................... (3.4)
Other.................................. 1.3 0.9 0.8
---------- ---------- -----------
36.4 30.0 34.9
========== ========== ===========
</TABLE>

10. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1993 1992
------- -------
<S> <C> <C>
Norgeskreditt................................................ 226,088 231,280
(11.36% fixed, NOK)
SND.......................................................... 58,107 50,721
(11.50% fixed, NOK)
Nordiska Investeringsbanken.................................. 59,167 60,833
(NIBOR plus 0.60%, NOK)
Lundbeck..................................................... 78,331 112,270
(10.00% fixed, DKK)
Lines of credit.............................................. 95,000
(floating rate, NOK)
Other........................................................ 630 1,815
------- -------
517,323 456,919
Less: current portion........................................ 45,726 41,586
------- -------
471,597 415,333
======= =======
</TABLE>

In October 1989, the Related Norwegian Businesses secured NOK 200,000 of
mortgage financing from Norgeskreditt in connection with the construction of
the new pharmaceutical production facility. Repayment of this mortgage will
begin with an instalment of NOK 800 in 1994 and continue with semiannual
instalments through 2021. An additional loan of NOK 24,713 collateralized by
the Skoyen production facility, was obtained from Norgeskreditt in October 1991
to retire the Related Norwegian Businesses' outstanding bonds. This loan is
payable in semiannual instalments of NOK 2,471 through 1998. The remaining NOK
1,375, collateralized by the Skoyen production facility, is payable in
semiannual amounts of NOK 125 through 1999. The outstanding principal on the
loans from Norgeskreditt are subject to interest rate adjustments as follows:
NOK 80,000 during the first and second quarter of 1994, NOK 40,000 in 1995, and
NOK 104,713 in 1996. Interest rates obtained will depend on the effective yield
on actual Norgeskreditt bonds to which the loans are linked, plus a lending
margin of approximately 0.70%.

The Related Norwegian Businesses' borrowings from SND include a loan of NOK
50,000 which was obtained in connection with the construction of the new
pharmaceutical production facility. Instalments of

E-16
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOK 1,471 are payable semiannually beginning in 1995 and terminating in 2011.
This financing is subject to an interest rate adjustment in April 1994. The
interest rate expected to be obtained on the adjustment date, will be a
function of market interest rate plus a margin of approximately 1.00%. Three
smaller loans aggregating NOK 1,107 are also outstanding with SND. The SND debt
is collateralized by the Skoyen production facility.

Following the acquisition of antibiotics product lines during the fourth
quarter of 1991, the Related Norwegian Businesses secured a NOK 50,000 loan
from Nordiska Investeringsbanken (NIB). This loan is payable in semiannual
amounts of NOK 3,571, commencing in September, 1997, and a final payment in
2004. A second loan of NOK 9,167 from NIB is payable in semiannual amounts of
NOK 833 terminating in June 1999. The Skoyen facility serves as collateral for
both NIB loans.

The NOK 78,331 outstanding debt to Lundbeck represents the present value of
the two remaining instalments of DKK 40,000 payable on the first business day
of 1994 and 1995. The Related Norwegian Businesses have hedged the currency
exposure arising from the Lundbeck instalments by purchasing DKK 40,000 forward
exchange contracts which mature on the same dates as the DKK instalments are
due. This debt has been accounted for using the interest method applying an
interest rate of 10.00%. Payments on this debt have been guaranteed by Den
norske Bank via a guarantee fee amounting to 0.75% per annum. The Den norske
Bank guarantee requires that certain minimum current, quick and interest cover
ratios, as defined, be maintained. Den norske Bank holds shares of the A. L.
Oslo subsidiary A/S Nopal as collateral.

As of December 31, 1993, the Related Norwegian Businesses had utilized NOK
45,000 of a total NOK 120,000 available long-term line of credit with Den
norske Bank. Amounts drawn on this line are due December 31, 1996 and bear
interest at NIDOR plus 0.875%. This credit line requires that certain minimum
current, quick and interest cover ratios, as defined, be maintained. 700,000
shares of A.S. Wangs Fabrik serve as a collateral for this credit facility.

Since it is management's intention to refinance the NOK 50,000 drawn on the
short-term line of credit with Sparebanken NOR (see Note 7) utilizing the
existing long-term line of credit with Den norske Bank during 1994, this amount
has been classified as long-term. The Sparebanken NOR line of credit bears
interest at NIBOR plus 0.90 %. The amounts drawn on the Den norske Bank and
Sparebanken NOR lines of credit, NOK 45,000 and NOK 50,000, respectively,
aggregate the total lines of credit classified as long-term debt. Unused long-
term bank lines of credit amount to NOK 25,000.

The A/S Nopal shares and the Skoyen production facility which serve as
collateral for certain of the above loans are owned by A. L. Oslo. These assets
will not be owned by the Related Norwegian Businesses subsequent to the
reorganization. The Skoyen production facility will, however, be available to
the Related Norwegian Businesses as collateral for financing purposes a limited
period of time, pursuant to the terms of the Restructuring Agreement. Further,
alternative pledging arrangements may be made in connection with the completion
of the combination agreement.

E-17
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Maturities of long-term debt during each of the next five years and
thereafter are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1994................................................ 45,726
1995................................................ 53,907
1996................................................ 112,665
1997................................................ 21,876
1998................................................ 25,370
Thereafter.......................................... 257,779
-------
517,323
=======
</TABLE>

11. NET INVESTMENT

Management believes that the costs related to the use of operating assets not
included in the financial statements of the Related Norwegian Businesses (the
Skoyen real estate and certain leasehold improvements) have been allocated to
the finished pharmaceutical, animal health, bulk antibiotics and aquatic animal
health businesses included herein on a reasonable basis.

Certain non-operating assets and liabilities of A. L. Oslo have been excluded
from the financial statements of the Related Norwegian Businesses.

The following is a summary of the net investment in the Related Norwegian
Businesses:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Balance, beginning of period................ 165,474 150,071 116,332
Net income.................................. 7,196 31,135 31,758
Dividends paid.............................. (8,000) (6,000) (4,800)
Group contributions......................... 2,606 (12,224) (3,410)
Cash advance (reimbursement)................ (18,064) 2,492 10,191
---------- ---------- ----------
Balance, end of period...................... 149,212 165,474 150,071
========== ========== ==========
</TABLE>

The group contributions included in the above table were made in connection
with intra-group tax allocations.

E-18
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
12. OTHER REVENUE

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
License fees received from A. L.
Laboratories, Inc. and Subsidiaries....... 13,470 10,852 9,796
Commissions received from A. L.
Laboratories, Inc. and Subsidiaries....... 100 740 1,533
Compensation received for management
services rendered to A.L. Industrier A.S,
Subsidiaries and Affiliated Companies..... 6,220 7,206 8,281
Commissions received from A.L. Industrier
A.S, Subsidiaries and Affiliated
Companies................................. 427 4,443 6,663
Commissions received from unrelated
parties................................... 2,989 2,426 1,837
Research and development contributions
received from unrelated parties........... 3,932 2,500 4,100
Royalties and other received from unrelated
parties................................... 488 636 2,356
---------- ---------- ----------
27,626 28,803 34,566
========== ========== ==========
</TABLE>

13. OTHER INCOME (EXPENSE), NET

Other income (expense), net consists of the following:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1993 1992 1991
---------- ---------- -----------
<S> <C> <C> <C>
Interest income........................... 8,083 6,113 4,737
Professional fees......................... (6,875)
---------- ---------- -----------
8,083 6,113 (2,138)
========== ========== ===========
</TABLE>

Certain non-recurring professional fees were incurred in connection with a
corporate reorganization study in 1991.

14. PENSION COMMITMENTS

The Related Norwegian Businesses' defined benefit plans cover the majority of
its employees. These pension commitments are funded through a collective
agreement with a Norwegian insurance company. The Related Norwegian Businesses
make annual contributions to the plan in accordance with Norwegian insurance
principles and practices. In addition to the annual premiums, the Related
Norwegian Businesses have made prepayments to specific premium funds. These
premium funds are used to cover ordinary future annual premiums. The pension
plan assets are deposited in the insurance company's general account which is
principally invested in fixed income securities.

The Related Norwegian Businesses also maintain a direct pension arrangement
with certain employees. These pension commitments are paid out of the Related
Norwegian Businesses' general assets and the obligations are accrued but not
prefunded.

E-19
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Net pension cost includes the following components:

<TABLE>
<CAPTION>
PLANS WITH ASSETS IN EXCESS OF PLANS WITH ACCUMULATED BENEFIT
ACCUMULATED BENEFIT OBLIGATION: OBLIGATION IN EXCESS OF ASSETS:
---------------------------------- ----------------------------------
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31,
---------------------------------- ----------------------------------
1993 1992 1991 1993 1992 1991
---------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Service cost............ 4,970 3,901 2,607 205 179
Interest cost........... 5,509 4,162 3,429 849 778 409
Actual return on plan
assets................. (85) (2,896) (3,116)
Net amortization and de-
ferral................. (3,830) (551) (598) 432 412 17
---------- ---------- ---------- ----------- ----------- ---------
6,564 4,616 2,322 1,486 1,369 426
========== ========== ========== =========== =========== =========
</TABLE>

The following tables set forth the plans' funded status as of December 31,:

<TABLE>
<CAPTION>
PLANS WITH ASSETS IN EXCESS OF PLANS WITH ACCUMULATED BENEFIT
ACCUMULATED BENEFIT OBLIGATION: OBLIGATION IN EXCESS OF ASSETS:
-------------------------------- --------------------------------
1993 1992 1993 1992
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Actuarial present value
of accumulated benefit
obligation:
Vested................ 44,566 34,713 8,056 9,084
Nonvested............. 676 580
--------------- --------------- --------------- ---------------
45,242 34,713 8,636 9,084
=============== =============== =============== ===============
Projected benefit obli-
gation................. 68,705 58,821 9,090 10,084
Plan assets, primarily
fixed income securi-
ties................... (57,338) (49,095)
--------------- --------------- --------------- ---------------
Excess of projected ben-
efit obligation over
plan assets............ 11,367 9,726 9,090 10,084
Unrecognized net gain
(loss) from past expe-
rience different from
that assumed........... 17,737 11,871 818 (752)
Unrecognized prior serv-
ice cost............... (6,109) (5,917) (3,552) (3,947)
Unfunded projected bene-
fit obligation, at Jan-
uary 1, 1988........... (10,237) ( 9,864) (274) (165)
Additional minimum lia-
bility................. 2,554 3,864
--------------- --------------- --------------- ---------------
Accrued pension cost.... 12,758 5,816 8,636 9,084
=============== =============== =============== ===============
</TABLE>

The discount rates used to determine the pension expenses are 7.00%, 8.50%
and 8.75% for 1993, 1992 and 1991, respectively. The rates of future
compensation levels were 3.5% per annum for 1993 and 5.00% per annum for 1992
and 1991. The expected long-term rate of return on assets was assumed to be
7.00% for 1993 and 8.00% for 1992 and 1991.

15. CONTINGENCIES AND COMMITMENTS

In March 1994, a court injunction was filed in the Court of Enforcement
(Namsretten) in Oslo against Apothekernes Laboratorium A.S related to a patent
infringement claim for a medicinal process. Management asserts that their
process is an independent process and believes the ultimate outcome of such a
claim will not have a material impact on the financial statements of the
Related Norwegian Businesses.

E-20
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Rental expense under operating leases was NOK 4,610 in 1993, NOK 4,000 in
1992 and NOK 7,229 in 1991. Future minimum lease commitments under non-
cancellable operating leases during each of the next five years and thereafter
are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
-------------------------
<S> <C>
1994................................................................. 3,905
1995................................................................. 1,345
-----
Total................................................................ 5,250
=====
</TABLE>

16. OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

During 1993, the Related Norwegian Businesses purchased a forward rate
agreement with a notional amount of NOK 50 million which is effective for the
period from March 7 to September 7, 1994. The contracted interest rate is
5.12%.

At December 31, 1993, the Related Norwegian Businesses had forward currency
contracts maturing in January, 1994 and January, 1995 to purchase DKK 40.0
million on each respective date. These currency contracts hedge the
corresponding instalments payable on the Lundbeck debt on the respective dates
at forward rates of NOK/DKK 1.0451 and 1.0524.

The Related Norwegian Businesses had forward currency contracts maturing on
January 13, 1993 to sell $1.0 million and to purchase $1.0 million at spot
rates of 6.1020 and 5.6960, respectively.

As of December 31, 1993, the following DKK forward currency contracts, as
discussed above, were outstanding relating to the Related Norwegian Businesses:

<TABLE>
<CAPTION>
THE RELATED NORWEGIAN THE RELATED NORWEGIAN
BUSINESSES AS RECEIVER BUSINESSES AS PAYER
---------------------------------------------------- AVERAGE
CURRENCY AMOUNT CURRENCY AMOUNT FORWARD RATE MATURITY
-------- ------------- ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
DKK 40,000 NOK 41,804 104.51 Jan. 1994
DKK 40,000 NOK 41,096 105.24 Jan. 1995
</TABLE>

As of December 31, 1992, the following forward currency contracts were
outstanding:

<TABLE>
<CAPTION>
THE RELATED NORWEGIAN THE RELATED NORWEGIAN
BUSINESSES AS RECEIVER BUSINESSES AS PAYER
---------------------------------------------------- AVERAGE
CURRENCY AMOUNT CURRENCY AMOUNT FORWARD RATE MATURITY
-------- ------------- ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
DKK 40,000 NOK 41,636 104.090 Jan. 1993
DKK 40,000 NOK 41,804 104.510 Jan. 1994
DKK 40,000 NOK 42,096 105.240 Jan. 1995
NOK 6,102 USD 1,000 6.102 Jan. 1993
USD 1,000 NOK 5,696 5.696 Jan. 1993
</TABLE>

The DKK forward currency contracts in the table above hedge the currency
exposure arising from the DKK installments payable on the Lundbeck debt. The
USD 1,000 forward currency contract was executed in order to hedge future
revenue streams. The NOK 6,102 forward currency contract was purchased at a
later date to lock in a gain realized on the USD forward currency contract.

E-21
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
As of December 31, 1991, the following forward currency contracts were
outstanding:

<TABLE>
<CAPTION>
THE RELATED NORWEGIAN THE RELATED NORWEGIAN
BUSINESSES AS RECEIVER BUSINESSES AS PAYER
---------------------------------------------------- AVERAGE
CURRENCY AMOUNT CURRENCY AMOUNT FORWARD RATE MATURITY
-------- ------------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
NOK 61,737 USD 9,550 6.46 Jan--Oct 1992
USD 550 NOK 3,494 6.35 Apr--Oct 1992
DEM 10,229 NOK 40,205 393.05 Aug 1992
DKK 40,000 NOK 40,588 101.47 Jan 1992
</TABLE>

As of December 31, 1991, the following foreign currency swap contracts were
outstanding:

<TABLE>
<CAPTION>
THE RELATED NORWEGIAN THE RELATED NORWEGIAN
BUSINESSES AS RECEIVER BUSINESSES AS PAYER
-------------------------------- ------------------------------
CURRENCY AMOUNT RATE REF. CURRENCY AMOUNT RATE REF. MATURITY
-------- ------- --------- -------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
NOK 68,730 floating USD 10,000 fixed July 1994
NOK 137,400 fixed USD 20,000 floating July 1994
NOK 25,010 fixed USD 3,862 floating Oct 1998
</TABLE>

Floating interest rates are based on the 3 month London interbank offered
rate (LIBOR).

The USD currency swap with a notional amount of $3,862 at December 31, 1991,
requires the Related Norwegian Businesses to maintain a liquidity level, as
defined, of at least 10% of the last 12 months sales.

During 1991, the Related Norwegian Businesses entered into United States
dollar swap contracts, United States dollar loans and forward currency
contracts, which combined totalled $45.0 million. These contracts resulted in
gains of NOK 14.8 million and NOK 27.2 million for the years ending December
31, 1992 and 1991.

During 1991, the Related Norwegian Businesses entered into an interest rate
collar agreement for a notional amount of $10 million. The index rate is three
month LIBOR. This agreement is comprised of a cap of 9.75% for the entire
contract period, January 25, 1992 through July 25, 1994, and a floor of 6.90%
and 7.35% for the first and second years, respectively, and 7.50% for the
period from January 25, 1994 through July 25, 1994. Under this collar
agreement, the Related Norwegian Businesses are paying three month LIBOR up to
9.75% and receiving the floor rate on the notional amount during the contract
period.

After the purchase of the above described collar agreement, the relevant
interest rates declined significantly. In order to offset the exposure to the
collar agreement floor, the Related Norwegian Businesses purchased for $459 an
interest rate floor agreement with a notional amount of $10 million in December
1991. The index rate is three month LIBOR. The strike price is: 6.90% from
January 27, 1992 through January 25, 1993; 7.35% from January 25, 1993 through
January 25, 1994; and 7.50% from January 25, 1994 through July 25, 1994. This
floor agreement effectively offsets the floor portion of the collar agreement
noted above (i.e. the Related Norwegian Businesses pay and receive the same
amounts quarterly).

Counterparties to the forward rate agreement, forward exchange contracts and
interest rate contracts are major financial institutions. Management believes
the risk of incurring losses related to credit risk is remote and any losses
would be immaterial.

17. DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:

E-22
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Cash and cash equivalents:

The carrying amount approximates fair value because of the short maturity
of these instruments.

Long-term receivables:

The carrying amount approximates the fair value since this amount is due
from a related company in the A. L. Oslo Group.

Short-term debt:

The carrying amount of the Related Norwegian Businesses' short-term debt
approximates the fair value because of the short maturity of the debt.

Long-term debt:

The fair value of the Related Norwegian Businesses' long-term debt is
estimated based on the current rates offered to A. L. Oslo for debt with
similar remaining maturities.

Forward rate agreement:

The fair value of the forward rate agreement is estimated by obtaining a
quote from a broker.

Foreign currency contracts:

The fair value of foreign currency contracts is estimated by obtaining
quotes from brokers.

Interest rate agreements:

The fair value of interest rate agreements is estimated by obtaining
quotes from brokers.

<TABLE>
<CAPTION>
DECEMBER 31, 1993 DECEMBER 31, 1992
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------------------ ------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents................. 33,295 33,295 6,611 6,611
Long-term receivables..................... 43,700 43,700 43,700 43,700
Short-term debt........................... 116 116 36,702 36,702
Long-term debt............................ 517,323 534,774 456,919 450,667
Forward rate agreement.................... 0 20
Foreign currency contracts................ 5,294 5,294 9,671 9,671
Interest rate agreements.................. 0 0 0 0
</TABLE>

18. RELATED PARTY TRANSACTIONS

Certain expenses for direct and indirect corporate overhead, including legal,
depreciation, marketing, insurance and pensions have been reimbursed to the
Related Norwegian Businesses from the demerged entities. Accordingly, these
statements may not be indicative of the expenses that might have resulted in
the Related Norwegian Businesses had they operated on a stand-alone basis.

For purposes of disclosing related party transactions, the Related Norwegian
Businesses have presented such transactions with A. L. Laboratories, Inc. and
Subsidiaries separate from A. L. Oslo and its other subsidiaries and
affiliates.

E-23
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Transactions with A. L. Laboratories, Inc. and Subsidiaries:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Inventory purchased from A. L. Laboratories, Inc.
and Subsidiaries................................ 5,217 1,892 8,952
License fees received from A. L. Laboratories,
Inc.
and Subsidiaries................................ 13,470 10,852 9,796
Sales to and commissions received from A. L. Lab-
oratories, Inc. and Subsidiaries................ 88,434 90,150 75,671
</TABLE>

As of December 31, 1993 and 1992, there was a net current receivable of NOK
18,413 and NOK 15,253 respectively, receivable from A. L. Laboratories, Inc.
and Subsidiaries.

In March 1992, the Related Norwegian Businesses sold certain production
equipment to A. L. Laboratories, Inc. for $400.

In November 1991, the Related Norwegian Businesses sold a polymyxin product
line to Dumex in Denmark, a subsidiary of A. L. Laboratories Inc., for $6,000.

Transactions with A. L. Oslo, Subsidiaries and Affiliated Companies:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
--------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Inventory purchased from and commission paid to A. L.
Oslo, Subsidiaries and Affiliated Companies.......... 4,117 10,763 7,751
Compensation received for management services rendered
to A. L. Oslo, Subsidiaries and Affiliated Companies. 6,220 7,206 8,281
Sales to and commissions received from A. L. Oslo,
Subsidiaries and Affiliated Companies................ 20,278 10,644 12,076
</TABLE>

As of December 31, 1993 and 1992, there was a net current receivable of NOK
8,588 and NOK 12,332 respectively, receivable from A. L. Oslo, Subsidiaries and
Affiliated Companies.

As of December 31, 1993 and 1992, there was a long-term, interest bearing
receivable of NOK 43,700 and NOK 43,700, respectively, receivable from A. L.
Oslo, Subsidiaries and Affiliated Companies. This receivable will be settled in
connection with the proposed demerger. The rate of interest at December 31,
1993 was 13%.

19. SUPPLEMENTAL DATA

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Allowance for doubtful accounts receivable at year
end................................................ 3,200 2,743 2,740
Research and development expense.................... 47,720 39,125 37,587
Depreciation expense................................ 32,948 29,488 16,482
Amortization expense................................ 9,931 9,553 1,400
Interest cost incurred.............................. 59,454 51,846 40,632
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest (net of amount capitalized).. 60,118 48,828 17,981
Cash paid for income taxes.......................... 2,902 4,569 5,361
</TABLE>

E-24
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
In 1991, the Related Norwegian Businesses acquired product lines from an
unrelated Danish Company for DKK 165,565 through a cash payment of DKK 5,565
(NOK 5,677) and the issuance of a note payable of DKK 160,000 (NOK 163,200).

As of January 1, 1993, the Related Norwegian Businesses acquired the
remaining outstanding shares (50% ownership) of Norgesplaster A.S for NOK 15.0
million in cash.

20. INFORMATION CONCERNING BUSINESS SEGMENTS AND GEOGRAPHICAL OPERATIONS

The Related Norwegian Businesses' two general business segments are: (1)
Finished Pharmaceuticals; (2) Animal Health, Bulk Antibiotics and Aquatic
Animal Health.

<TABLE>
<CAPTION>
DEPRECIATION AND
TOTAL OPERATING IDENTIFIABLE AMORTIZATION CAPITAL
REVENUE INCOME ASSETS EXPENSES EXPENDITURES
------- --------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C>
1993
Business segments:
Finished Pharmaceuti-
cals................. 279,630* 18,551 388,574 21,401 13,579
Animal Health, Bulk
Antibiotics and
Aquatic Animal
Health............... 269,719 47,849 334,218 20,705 9,295
Unallocated........... 6,965 (5,483) 90,025 773 1,592
------- ------ ------- ------ ------
556,314 60,917 812,817 42,879 24,466
======= ====== ======= ====== ======
Geographical distribu-
tion of revenue:
Norway................ 232,493*
Europe except Norway.. 178,802
North America......... 61,208
South America......... 22,926
Asia.................. 54,869
Australia and Africa.. 6,016
-------
556,314
=======
1992
Business segments:
Finished Pharmaceuti-
cals................. 241,440* 19,911 368,633 18,744 14,276
Animal Health, Bulk
Antibiotics and
Aquatic Animal
Health............... 233,608 30,409 329,145 19,414 25,921
Unallocated........... 11,059 (5,323) 82,187 883 910
------- ------ ------- ------ ------
486,107 44,997 779,965 39,041 41,107
======= ====== ======= ====== ======
Geographical distribu-
tion of revenue:
Norway................ 191,187*
Europe except Norway.. 175,627
North America......... 53,135
South America......... 18,968
Asia.................. 44,554
Australia and Africa.. 2,636
-------
486,107
=======
</TABLE>

E-25
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (NOTE 1)

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
DEPRECIATION AND
TOTAL OPERATING IDENTIFIABLE AMORTIZATION CAPITAL
REVENUE INCOME ASSETS EXPENSES EXPENDITURES
------- --------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C>
1991
Business segments:
Finished Pharmaceuti-
cals................. 210,772* 14,606 364,035 6,983 133,154
Animal Health, Bulk
Antibiotics and
Aquatic Animal
Health............... 188,063 15,240 304,134 9,727 15,252
Unallocated........... 14,666 (2,425) 124,952 1,172 25
------- ------ ------- ------ -------
413,501 27,421 793,121 17,882 148,431
======= ====== ======= ====== =======
Geographical distribu-
tion of revenue:
Norway................ 182,383*
Europe except Norway.. 140,430
North America......... 43,212
South America......... 13,822
Asia.................. 31,330
Australia and Africa.. 2,324
-------
413,501
=======
</TABLE>

* In 1993, 1992 and 1991, revenue from one unaffiliated customer approximated
NOK 125,400, NOK 134,500 and NOK 121,700, respectively.

E-26
<PAGE>

INDEPENDENT ACCOUNTANTS' REPORT

In connection with our audits of the combined financial statements of the
Related Norwegian Businesses (as described in Note 1 to the combined financial
statements) as of December 31, 1993 and 1992, and for each of the three years
in the period ended December 31, 1993, which financial statements are included
as an exhibit to the Proxy Statement, we have also audited the financial
statement schedules V, VI, VIII, IX and X.

In our opinion, these financial statements, when considered in relation to
the basic financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.

As discussed in our report on the above mentioned financial statements, the
Related Norwegian Businesses changed their method of accounting for income
taxes in 1992.

Coopers & Lybrand AS
/s/Coopers & Lybrand
Oslo, Norway

May 11, 1994, except for Note 2 and
Note 3 to the combined financial
statements for which the date is May
16, 1994.

E-27
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (REFER TO NOTE 1 TO THE COMBINED FINANCIAL
STATEMENTS)

SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

(in thousands of Norwegian Kroner)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -------- ------------ --------- ----------- ------------------ ---------
OTHER CHANGES
ADD (DEDUCT)
------------------
BALANCE BALANCE
AT BEGINNING ADDITIONS ACQUIRED AT END
CLASSIFICATION OF PERIOD AT COST RETIREMENTS OTHER* BUSINESSES OF PERIOD
- -------------- ------------ --------- ----------- ------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31,
1993:
Land.................. 18,662 303 18,965
Buildings and improve-
ments................ 169,677 37 3,950 173,664
Machinery and equip-
ment................. 318,530 18,625 (6,147) (71) 6,721 337,658
Construction in pro-
gress................ 3,811 5,804 (430) 9,185
------- -------- ------- ----- ------ -------
510,680 24,466 (6,577) (71) 10,974 539,472
======= ======== ======= ===== ====== =======
Year ended December 31,
1992:
Land.................. 18,461 201 18,662
Buildings and improve-
ments................ 166,182 3,495 169,677
Machinery and equip-
ment................. 286,754 37,160 (5,228) (156) 318,530
Construction in pro-
gress................ 2,149 251 1,411 3,811
------- -------- ------- ----- -------
473,546 41,107 (5,228) 1,255 510,680
======= ======== ======= ===== =======
Year ended December 31,
1991:
Land.................. 15,964 2,497 18,461
Buildings and improve-
ments................ 166,182 166,182
Machinery and equip-
ment................. 184,959 118,405 (16,501) (109) 286,754
Construction in pro-
gress................ 140,802 (138,653) 2,149
------- -------- ------- ----- -------
341,725 148,431 (16,501) (109) 473,546
======= ======== ======= ===== =======
</TABLE>
- --------
* Represents foreign currency translation adjustments and transfers between
classifications.

E-28
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (REFER TO NOTE 1 TO THE COMBINED FINANCIAL
STATEMENTS)

SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT

(in thousands of Norwegian Kroner)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- ------------ ---------- ----------- ------------- ---------
ADDITIONS
BALANCE CHARGED TO BALANCE
AT BEGINNING COST AND OTHER CHANGES AT END
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS ADD (DEDUCT)* OF PERIOD
- -------------- ------------ ---------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1993:
Buildings and improve-
ments................ 6,803 5,887 12,690
Machinery and equip-
ment................. 108,174 27,061 (4,965) (40) 130,230
------- ------ ------- --- -------
114,977 32,948 (4,965) (40) 142,920
======= ====== ======= === =======
Year ended December 31,
1992:
Buildings and improve-
ments................ 1,153 5,650 6,803
Machinery and equip-
ment................. 87,958 23,838 (3,535) (87) 108,174
------- ------ ------- --- -------
89,111 29,488 (3,535) (87) 114,977
======= ====== ======= === =======
Year ended December 31,
1991:
Buildings and improve-
ments................ 1,153 1,153
Machinery and equip-
ment................. 83,451 15,329 (10,768) (54) 87,958
------- ------ ------- --- -------
83,451 16,482 (10,768) (54) 89,111
======= ====== ======= === =======
</TABLE>
- --------
* Represents foreign currency translation adjustments and transfers between
classifications.

E-29
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (REFER TO NOTE 1 TO THE COMBINED FINANCIAL
STATEMENTS)

SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS

(in thousands of Norwegian Kroner)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- ------------ ---------------------- ----------- ---------
ADDITIONS
CHARGED (CREDIT) TO
----------------------
BALANCE BALANCE
AT BEGINNING COST AND OTHER AT END
DESCRIPTION: OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS* OF PERIOD
- ------------ ------------ --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Reserve for doubtful ac-
counts:
Year ended December 31,
1993.................. 2,743 343 291* (177)** 3,200
1992.................. 2,740 998 (965)* (30)** 2,743
1991.................. 2,740 1,622 (780)* (842)** 2,740
</TABLE>
- --------
* Includes (NOK 169), (NOK 1,009), and (NOK 780) in 1993, 1992, and 1991,
respectively, of cash collected on previously written off accounts, and NOK
460 in 1993 related to business acquisition.
** Account written off to reserve.

E-30
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (REFER TO NOTE 1 TO THE COMBINED FINANCIAL
STATEMENTS)

SCHEDULE IX--SHORT TERM BORROWINGS

(in thousands of Norwegian Kroner)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -------- ---------- -------- ----------- ----------- --------
(A) (B)
WEIGHTED WEIGHTED
MAXIMUM AVERAGE AVERAGE
WEIGHTED AMOUNT AMOUNT INTEREST
BALANCE AT AVERAGE OUTSTANDING OUTSTANDING RATE
END INTEREST DURING DURING DURING
CATEGORY OF BORROWINGS OF PERIOD RATE PERIOD PERIOD PERIOD
- ---------------------- ---------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Bank borrowings:
Year ended December 31,
1993..................... 116 15.25% 116,384 50,955 9.58%
1992..................... 36,702 12.97% 100,886 68,173 8.87%
1991..................... 19,840 7.83% 45,314 32,468 9.14%
</TABLE>
- --------
(A) Average amount outstanding during the period is computed on a monthly
basis.
(B) Weighted average interest rate during the period is computed by dividing
the actual short-term interest expense by the average short-term debt
outstanding.

E-31
<PAGE>

THE RELATED NORWEGIAN BUSINESSES (REFER TO NOTE 1 TO THE COMBINED FINANCIAL
STATEMENTS)

SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION

(In thousands of Norwegian Kroner)

<TABLE>
<CAPTION>
COLUMN A COLUMN B
- -------- -----------------------------
CHARGED TO COSTS AND EXPENSES
-----------------------------
ITEM 1993 1992 1991
- ---- --------- --------- ---------
<S> <C> <C> <C>
Maintenance and repairs........................... 17,177 13,423 9,925
Advertising costs................................. 22,712 19,390 19,752
</TABLE>
- --------
Note: All other items have been omitted because they amounted to less than 1%
of total revenues or because they are disclosed in the consolidated
financial statements.

E-32

<PAGE>

EXHIBIT 99.1

A. L. LABORATORIES, INC.
ONE EXECUTIVE DRIVE, P.O. BOX 1399, FORT LEE, NEW JERSEY 07024
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS ON SEPTEMBER 27, 1994. THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF A. L. LABORATORIES, INC.
Jeffrey E. Smith, Executive Vice President and Chief Financial Officer,
Beth P. Hecht, Secretary, and Gale R. Cataraso, Assistant Secretary, or
any one of them, with full power of substitution, are hereby authorized to
vote the shares of Class A Common Stock (the "Class A Stock") of A. L.
Laboratories, Inc. (the "Company"), which the undersigned is entitled to
vote at the Special Meeting of Stockholders to be held at The Clinton Inn
Hotel, 145 Dean Drive, Tenafly, New Jersey 07670 on Tuesday, September 27,
1994 at 11:00 a.m., local time, and at all adjournments thereof, as
follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3 AND THE
NOMINEE SET FORTH IN ITEM 4.
1. Approval of the Restructuring Agreement, dated as of May 16, 1994 (the
"Restructuring Agreement"), by and between the Company and Apothekernes
Laboratorium A.S ("A. L. Oslo"), and the transactions contemplated
thereby, including, among other things, (i) the acquisition by the
Company of the pharmaceutical, animal health and bulk antibiotics
businesses of A. L. Oslo and (ii) the transfer of substantially all of
the Company's operations to a newly formed subsidiary of the Company.
[_] FOR [_] AGAINST [_] ABSTAIN
2. If the matter referred to in item 1 is approved, approval of an
amendment to the Company's Certificate of Incorporation (the "Charter")
to increase the percentage of directors elected by the holders of Class
A Stock from 25% to 33 1/3% of the Company's Board of Directors
(rounded to the nearest whole number, but not less than two members of
the Company's Board of Directors).
[_] FOR [_] AGAINST [_] ABSTAIN
3. If the matter referred to in item 1 is approved, approval of an
amendment to the Charter to change the Company's name to "A.L. Pharma
Inc."
[_] FOR [_] AGAINST [_] ABSTAIN
4. If the matter referred to in item 1 is approved, election by the
holders of Class A Stock of the following director: Peter G. Tombros
----------------
[_] FOR the nominee listed above [_] WITHHOLD AUTHORITY to vote for the
nominee listed above
(Continued on reverse side)
<PAGE>

5. As such persons may in their discretion determine upon such matters as
may properly come before the Special Meeting of Stockholders.

SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN
THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER AND IN THE DISCRETION
OF THE PROXY HOLDERS AS TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE
THE SPECIAL MEETING OF STOCKHOLDERS OR, IF NO DIRECTION IS INDICATED, WILL
BE VOTED FOR ITEM 1, ITEM 2 AND ITEM 3 AND THE NOMINEE SET FORTH IN ITEM 4
AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE SPECIAL MEETING OF STOCKHOLDERS.

Dated: ________________, 1994 __________________________________

__________________________________

__________________________________
Signature of Stockholder(s)

NOTE: The signature should
correspond exactly with the name
of the stockholder as it appears
hereon. Where stock is registered
in Joint Tenancy, all tenants
should sign. Persons signing as
Executors, Administrators,
Trustees, etc., should so
indicate.
Please mark, sign and mail this
proxy promptly in the enclosed
envelope, which requires no
postage if mailed in the United
States.

<PAGE>

EXHIBIT 99.2

[A. L. LABORATORIES LETTERHEAD]

September , 1994

AN IMPORTANT REMINDER

Dear Stockholder:

Proxy materials for the September 27, 1994 Special Meeting of
Stockholders of A. L. Laboratories, Inc. have been previously mailed to you.
According to our records, your proxy card for this important meeting has not
been received.

Regardless of the number of shares you own, it is important that they be
represented and voted at the meeting. Accordingly, please take a moment to
sign, date and mail promptly the enclosed proxy. Your interest and
participation in the affairs of your Company is sincerely appreciated.

Thank you for your continued support.

Very truly yours,

[NAME]
[TITLE]

IF YOU HAVE RECENTLY MAILED YOUR PROXY, PLEASE
ACCEPT OUR THANKS AND DISREGARD THIS REQUEST.

<PAGE>

EXHIBIT 99.3

[LETTER TO INSTITUTIONAL BENEFICIAL OWNERS]

[A. L. LABORATORIES LETTERHEAD]

August 22, 1994

__________________
__________________
__________________
__________________
__________________

Dear _____:

I am pleased to enclose your personal copy of A. L. Laboratories, Inc.'s
(the "Company") proxy statement for the forthcoming Special Meeting of
Stockholders to be held on September 27, 1994.

Because your shares are held through a custodian bank and the normal
distribution of these items can often be delayed, I thought you would
appreciate receiving your personal copy of the materials at the same time they
are being sent to holders of record.

We urge you to give your careful attention to the proxy statement.

I look forward to discussing with you the proposed transaction. In
addition, any comments or questions you have are welcome and I would very much
appreciate the opportunity to discuss them with you personally. Please feel
free to call me at (201) 947-7774.

On behalf of your Board of Directors and management, thank you for your
continued interest and support.

Sincerely,