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REGINALD SPINELLO
2 LATTINGTOWN WOODS COURT
LATTINGTOWN, NY 11560
July 19, 2000
Board of Directors
PDK Labs, Inc.
145 Ricefield Lane
Hauppauge, NY 11788
Gentlemen:
This letter sets forth our revised proposal concerning the acquisition by a
newly formed entity to be controlled by the undersigned, Reginald Spinello
("NEWCO") of the outstanding shares of common stock and preferred stock of PDK
Labs, Inc. (the "COMPANY") not owned by Newco (the "PROPOSED TRANSACTION"). The
Proposed Transaction would be structured as a merger of the Company with Newco
and would be subject to the terms and conditions to be set forth in a definitive
merger agreement to be negotiated between the parties, the proposed form of
which is enclosed herewith. As a result of our conversations following my
original offer letter, dated July 13, 2000, the terms of the Proposed
Transaction are restated as follows:
1. Consideration to the Public Stockholders. In the Proposed
Transaction, the Company's common stockholders other than
Newco (the "PUBLIC COMMON STOCKHOLDERS") would receive $5.00
cash for each share of Company common stock, and the Company's
Preferred Stockholders other than Newco (the "PREFERRED
STOCKHOLDERS" and together with the Public Common
Stockholders, the "PUBLIC STOCKHOLDERS") would receive $8.00
in cash for each share of Company preferred stock.
2. Conditions. The Proposed Transaction would be subject to the
conditions set forth in the enclosed form of merger agreement,
including the following:
(a) Approval of a special committee of the board of
directors of the Company consisting solely of
directors who are not affiliated with Newco (the
"SPECIAL COMMITTEE");
(b) Approval of a majority of the shares of common stock
held by the Public Stockholders that are voting at
the stockholders' meeting called for such purposes;
and
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(c) Newco obtaining financing for the proposed
Transaction on acceptable terms.
3. Other Provisions. The definitive merger agreement would
contain customary representations, warranties, covenants and
termination provisions.
This letter is intended only as a proposal and not as an offer subject to
acceptance by the Company. Regardless of the form or content of any response
from the Company, this letter shall not constitute a legally binding commitment,
and neither Newco nor the undersigned shall have any obligation in respect of
the Proposed Transaction unless and until a definitive merger agreement and
other appropriate documentation has been executed and delivered by Newco and the
other parties thereto.
We would prefer to enter into negotiations of the definitive merger agreement
with the Special Committee immediately with a view to finalizing and executing
the agreement the week of July 24, 2000.
We look forward to discussing this transaction with you.
Sincerely,
Reginald Spinello
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