Twin Laboratories Inc, et al. – ‘424B3’ on 9/24/96

As of:  Tuesday, 9/24/96   ·   Accession #:  950123-96-5159   ·   File #s:  333-06781, -01, -02

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Prospectus   —   Rule 424(b)(3)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Twin Laboratories Inc.                               120    660K 

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                                 Final Prospectus Pursuant to Rule 424(b)(3)
                                                          File No. 333-06781

PROSPECTUS                                                                      
TWIN LABORATORIES INC.
OFFER TO EXCHANGE 
ANY AND ALL OUTSTANDING 
10 1/4% SENIOR SUBORDINATED NOTES DUE 2006
($100,000,000 PRINCIPAL AMOUNT OUTSTANDING) 
FOR 10 1/4% SENIOR SUBORDINATED NOTES DUE 2006

GUARANTEED BY TWINLAB CORPORATION ("TLC") 
AND BY ADVANCED RESEARCH PRESS, INC. ("ARP")

     The Exchange Offer and withdrawal rights will expire at 5:00 p.m., New York
City time, on Friday, October 25, 1996 (as such date may be extended, the       
"Expiration Date").                                                             

Twin Laboratories Inc. (the "Company") hereby offers (the "Exchange   
Offer"), upon the terms and subject to the conditions set forth in this         
Prospectus and the accompanying letter of transmittal (the "Letter of           
Transmittal"), to exchange $1,000 in principal amount of its 10 1/4% Senior     
Subordinated Notes due 2006 (the "New Notes") for each $1,000 in principal      
amount of its outstanding 10 1/4% Senior Subordinated Notes due 2006 (the "Old  
Notes") (the Old Notes and the New Notes are sometimes collectively referred to 
herein as the "Notes") held by Eligible Holders. An aggregate principal amount  
of $100,000,000 of Old Notes is outstanding. See "The Exchange Offer." For      
purposes of the Exchange Offer, "Eligible Holder" shall mean the registered     
owner of any Old Notes that remain Transfer Restricted Securities as reflected  
on the records of Fleet National Bank, as registrar for the Old Notes (in such  
capacity, the "Registrar"), or any person whose Old Notes are held of record by 
the depository of the Old Notes. For purposes of the Exchange Offer, "Transfer  
Restricted Securities" means each Old Note until the earliest to occur of (i)   
the date on which such Old Note has been exchanged for a New Note in the        
Exchange Offer, (ii) the date on which such Old Note is registered under the    
Securities Act of 1933, as amended (the "Securities Act"), and disposed of in   
accordance with a registration statement or (iii) the date on which such Old    
Note is distributed to the public pursuant to Rule 144 under the Securities Act.

     The Company will accept for exchange any and all Old Notes that are validly
tendered prior to 5:00 p.m., New York City time, on the Expiration Date. Tenders
of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City     
time, on the Expiration Date. The Exchange Offer is not conditioned upon any    
minimum principal amount of the Old Notes being tendered for exchange. However, 
the Exchange Offer is subject to certain customary conditions, which may be     
waived by the Company, and to the terms and provisions of the Registration      
Rights Agreement dated as of May 7, 1996 (the "Registration Rights Agreement")  
among the Company, TLC and ARP (the Company's sole existing subsidiary), each of
which has guaranteed the Old Notes and has agreed to guarantee the New Notes    
(collectively, the "Guarantors"), and Donaldson, Lufkin & Jenrette Securities   
Corporation and Chase Securities Inc. (collectively, the "Initial Purchasers"). 
The Old Notes may be tendered only in multiples of $1,000. See "The Exchange    
Offer."                                                                         

                                                        (continued on next page)
--------------------- 
SEE "RISK FACTORS" BEGINNING ON PAGE 18 HEREIN FOR A DISCUSSION OF CERTAIN RISKS
THAT SHOULD BE CONSIDERED BY ELIGIBLE HOLDERS IN EVALUATING THE EXCHANGE OFFER. 
--------------------- 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND  
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES   
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE  
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE  
CONTRARY IS A CRIMINAL OFFENSE.   
--------------------- 
The date of this Prospectus is September 24, 1996.

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 The Old Notes were issued in a transaction (the "Offering") pursuant to
which the Company issued an aggregate of $100,000,000 principal amount of the   
Old Notes to the Initial Purchasers on May 7, 1996 (the "Closing Date") pursuant
to a Purchase Agreement dated May 1, 1996 (the "Purchase Agreement") among the  
Company, the Guarantors and the Initial Purchasers. The Initial Purchasers      
subsequently resold the Old Notes in reliance on Rule 144A and certain other    
exemptions under the Securities Act. The Company and the Initial Purchasers also
entered into the Registration Rights Agreement, pursuant to which the Company   
granted certain registration rights for the benefit of the holders of the Old   
Notes. The Exchange Offer is intended to satisfy certain of the Company's       
obligations under the Registration Rights Agreement with respect to the Old     
Notes. See "The Exchange Offer -- Purpose and Effect."                          

    The Old Notes were issued under an indenture, dated as of May 7, 1996 (the
"Indenture"), among the Company, the Guarantors and Fleet National Bank as      
trustee (in such capacity, the "Trustee"). The New Notes will be issued under   
the Indenture as it relates to the New Notes. The form and terms of the New     
Notes will be identical in all material respects to the form and terms of the   
Old Notes, except that (i) the New Notes have been registered under the         
Securities Act and, therefore, will not bear legends restricting the transfer   
thereof, (ii) holders of New Notes will not be entitled to the liquidated       
damages of $0.05 per week per $1,000 principal amount of the Old Notes (up to a 
maximum amount of $0.30 per week per $1,000 principal amount) otherwise payable 
under the terms of the Registration Rights Agreement in respect of Old Notes    
constituting Transfer Restricted Securities held by such holders during any     
period in which a Registration Default (as defined) is continuing (the          
"Liquidated Damages") and (iii) holders of New Notes will not be, and upon the  
consummation of the Exchange Offer, Eligible Holders of Old Notes will no longer
be, entitled to certain rights under the Registration Rights Agreement intended 
for the holders of unregistered securities. The Exchange Offer shall be deemed  
consummated upon the delivery by the Company to the Registrar under the         
Indenture of New Notes in the same aggregate principal amount as the aggregate  
principal amount of Old Notes that are validly tendered by holders thereof      
pursuant to the Exchange Offer. See "The Exchange Offer -- Termination of       
Certain Rights" and "-- Procedures for Tendering Old Notes" and "Description of 
New Notes."                                                                     

    The New Notes will bear interest at a rate equal to 10 1/4% per annum from
and including their date of issuance. Interest on the New Notes is payable      
semiannually on May 15 and November 15 of each year (each, an "Interest Payment 
Date"). Eligible Holders whose Old Notes are accepted for exchange will have the
right to receive interest accrued thereon from the date of their original       
issuance or the last Interest Payment Date, as applicable, to, but not          
including, the date of issuance of the New Notes, such interest to be payable   
with the first interest payment on the New Notes. Interest on the Old Notes     
accepted for exchange will cease to accrue on the day prior to the issuance of  
the New Notes. The New Notes will mature on May 15, 2006. See "Description of   
New Notes."                                                                     

     The New Notes will not be redeemable, in whole or in part, prior to May 15,
2001. Thereafter, the New Notes will be redeemable at the redemption prices set 
forth herein, plus interest accrued thereon to the redemption date.             
Notwithstanding the foregoing, at any time on or before May 15, 1999, the       
Company may redeem up to 35% of the original aggregate principal amount of the  
New Notes, in whole or in part, with the net proceeds of one or more Equity     
Offerings (as defined herein) at a redemption price equal to 109 1/2% of the    
principal amount thereof, plus accrued and unpaid interest, if any, to the date 
of redemption. Upon the occurrence of a Change of Control (as defined herein),  
the Company will be required to make an offer to repurchase all outstanding     
Notes at 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase. See "Description of New            
Notes -- Certain Covenants -- Repurchase of Notes at the Option of the Holder   
Upon a Change of Control."                                                      

The New Notes will be general unsecured obligations of the Company    
subordinated in right of payment to all existing and future Senior Debt (as     
defined herein) of the Company, including borrowings under the New Credit       
Facility (as defined herein). The payment of the principal of, premium, if any, 
and interest on the New Notes will be guaranteed fully and unconditionally on an
unsecured senior subordinated basis by the Guarantors. The Guarantees will be   
subordinated in right of payment to all existing and future Senior Debt of the  
Guarantors. See "Description of New Notes." See also "Management's Discussion   
and Analysis of                                                                 

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Financial Condition and Results of Operations -- Liquidity and Capital          
Resources." The Indenture permits the Company and its subsidiaries to incur     
additional indebtedness, including additional Senior Debt.                      

Based on interpretations by the staff of the Securities and Exchange  
Commission (the "Commission") set forth in no-action letters issued to third    
parties, the Company believes that New Notes issued pursuant to the Exchange    
Offer to an Eligible Holder in exchange for Old Notes may be offered for resale,
resold and otherwise transferred by such Eligible Holder, other than as set     
forth below, without compliance with the registration and prospectus delivery   
provisions of the Securities Act, provided that the Eligible Holder is not an   
affiliate of the Company or any Guarantor within the meaning of Rule 405 under  
the Securities Act, is acquiring the New Notes in the ordinary course of        
business and is not participating, and has no arrangement or understanding with 
any person to participate, in the distribution of the New Notes. Eligible       
Holders wishing to accept the Exchange Offer must represent to the Company, as  
required by the Registration Rights Agreement, that such conditions have been   
met. Each broker-dealer that acquired Old Notes directly from the Company and   
that receives New Notes for its own account pursuant to the Exchange Offer must 
comply with the registration and prospectus delivery requirements of the        
Securities Act in connection with any secondary resale transaction (unless an   
exemption from registration is otherwise available). See "The Exchange Offer -- 
Resales of the New Notes." Each broker-dealer that receives New Notes in        
exchange for Old Notes that were acquired by such broker-dealer as a result of  
market-making or other trading activities must, in connection with any resale of
such New Notes, comply with the prospectus delivery requirements of the         
Securities Act and must acknowledge that it will deliver a prospectus in        
connection with any such resale. The Company has agreed that, for a period of   
180 days after the date of this Prospectus, it will make this Prospectus, as it 
may be amended or supplemented from time to time, available for use by any      
broker-dealer in connection with resales of New Notes received in exchange for  
Old Notes where such Old Notes were acquired by such broker-dealer as a result  
of market-making or other trading activities.                                   

As of September 15, 1996, Cede & Co. ("Cede"), as nominee for The     
Depository Trust Company, New York, New York ("DTC"), was the registered holder 
of $97.95 million aggregate principal amount of the Old Notes and held such Old 
Notes for 38 of its participants. The Company believes that no such participant 
is an affiliate (as such term is defined in Rule 405 of the Securities Act) of  
the Company or any Guarantor. There has previously been only a limited secondary
market, and no public market, for the Old Notes. The Old Notes are eligible for 
trading in the Private Offering, Resales and Trading through Automatic Linkages 
("PORTAL") market. There can be no assurance as to the liquidity of the trading 
market for either the New Notes or the Old Notes. The New Notes constitute      
securities for which there is no established trading market, and the Company    
does not currently intend to list the Notes on any securities exchange. If such 
a trading market develops for the New Notes, future trading prices will depend  
on many factors, including, among other things, prevailing interest rates, the  
Company's results of operations and the market for similar securities. Depending
on such factors, the New Notes may trade at a discount from their face value.   
See "Risk Factors -- Absence of Public Market for the New Notes."               

The Company will not receive any proceeds from this Exchange Offer.   
Pursuant to the Registration Rights Agreement, the Company will bear all        
expenses incident to the Company's consummation of the Exchange Offer and       
compliance with the Registration Rights Agreement.                              

THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT  
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH 
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.                               

$97.95 million aggregate principal amount of the Old Notes were issued
originally in global form (the "Global Old Note"). The Global Old Note was      
deposited with, or on behalf of, DTC, as the initial depository with respect to 
the Old Notes (in such capacity, the "Depository"). The Global Old Note is      
registered in the name of Cede, as nominee of DTC, and beneficial interests in  
the Global Old Note are shown on, and transfers thereof are effected only       
through, records maintained by the Depository and its participants. The use of  
the Global Old Note to represent certain of the Old Notes permits the           
Depository's participants, and anyone holding a beneficial interest in an Old   
Note registered in the name of such a participant, to transfer                  

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interests in the Old Notes electronically in accordance with the Depository's   
established procedures without the need to transfer a physical certificate.     
Except as provided below, the New Notes will also be issued initially as a note 
in global form (the "Global New Note", and together with the Global Old Note,   
the "Global Notes") and deposited with, or on behalf of, the Depository.        
Notwithstanding the foregoing, holders of Old Notes that are held, at any time, 
by a person that is not a qualified institutional buyer under Rule 144A (a      
"Qualified Institutional Buyer"), and any Eligible Holder that is not a         
Qualified Institutional Buyer that exchanges Old Notes in the Exchange Offer,   
will receive the New Notes in certificated form and is not, and will not be,    
able to trade such securities through the Depository unless the New Notes are   
resold to a Qualified Institutional Buyer. After the initial issuance of the    
Global New Note, New Notes in certificated form will be issued in exchange for a
holder's proportionate interest in the Global New Note only as set forth in the 
Indenture.                                                                      

TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]

                                                                                       PAGE
                                                                                       ----
                                                                                           
Available Information.................................................................   5 
Prospectus Summary....................................................................   6 
Risk Factors..........................................................................  18 
The Exchange Offer....................................................................  27 
Capitalization........................................................................  34 
Unaudited Pro Forma Condensed Consolidated Financial Data.............................  35 
Selected Historical Financial Data....................................................  38 
Management's Discussion and Analysis of Financial Condition and Results of                 
  Operations..........................................................................  40 
Business..............................................................................  45 
Management............................................................................  60 
Certain Relationships and Related Transactions........................................  63 
Principal Stockholders................................................................  65 
Description of New Notes..............................................................  67 
Description of New Credit Facility....................................................  93 
Description of Capital Stock of TLC...................................................  95 
Certain Federal Income Tax Consequences...............................................  97 
Plan of Distribution..................................................................  99 
Incorporation of Certain Documents By Reference.......................................  99 
Legal Matters......................................................................... 100 
Experts............................................................................... 100 
Index to Consolidated Financial Statements............................................ F-1 

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AVAILABLE INFORMATION 

   The Company has filed with the Commission a Registration Statement (which
term shall include any amendments thereto) on Form S-4 under the Securities Act 
with respect to the securities offered by this Prospectus. This Prospectus,     
which constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement and the exhibits and        
schedules thereto, to which reference is hereby made. Each statement made in    
this Prospectus referring to a document filed as an exhibit or schedule to the  
Registration Statement is not necessarily complete and is qualified in its      
entirety by reference to the exhibit or schedule for a complete statement of its
terms and conditions. In addition, upon the effectiveness of the Registration   
Statement filed with the Commission, the Company and the Guarantors became      
subject to the informational requirements of the Securities Exchange Act of     
1934, as amended (the "Exchange Act"), and in accordance therewith, TLC will    
file periodic reports and other information with the Commission relating to its 
business, financial statements and other matters, including therein, where      
applicable, summarized financial information of the Company and ARP. Any        
interested parties may inspect and/or copy the Registration Statement, its      
schedules and exhibits, and the periodic reports and other information filed in 
connection therewith, at the public reference facilities maintained by the      
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,   
D.C. 20549 and at the Commission's regional offices located at Citicorp Center, 
500 W. Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade   
Center, Suite 1300, New York, New York 10048. Copies of such materials can be   
obtained at prescribed rates by addressing written requests for such copies to  
the Public Reference Section of the Commission at its principal office at       
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. The 
Commission also maintains a site on the World Wide Web, the address of which is 
http://www.sec.gov, that contains reports, proxy and information statements and 
other information regarding issuers, such as the Company, that file             
electronically with the Commission. The obligations of TLC under the Exchange   
Act to file periodic reports and other information with the Commission may be   
suspended, under certain circumstances, if the New Notes are held of record by  
fewer than 300 holders at the beginning of any fiscal year and are not listed on
a national securities exchange. The Company has agreed that, whether or not it  
is required to do so by the rules and regulations of the Commission, for so long
as any of the Notes remain outstanding, it will furnish to the holders of the   
Notes and file with the Commission (unless the Commission will not accept such a
filing) all annual, quarterly and current reports that the Company is or would  
be required to file with the Commission pursuant to Section 13(a) or 15(d) of   
the Exchange Act. In addition, for so long as any of the Old Notes remain       
Transfer Restricted Securities, the Company has agreed to make available to any 
prospective purchaser of the Old Notes or beneficial owner of the Old Notes in  
connection with any sale thereof the information required by Rule 144A(d) (4)   
under the Securities Act.                                                       

   THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENT
HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS FILED BY THE COMPANY,
INCLUDING EXHIBITS TO SUCH DOCUMENTS, ARE AVAILABLE TO ANY REGISTERED HOLDER OR 
BENEFICIAL OWNER OF THE OLD NOTES UPON WRITTEN OR ORAL REQUEST AND WITHOUT      
CHARGE FROM TWIN LABORATORIES INC., 2120 SMITHTOWN AVENUE, RONKONKOMA, NEW YORK 
11779, ATTENTION: GENERAL COUNSEL. TELEPHONE REQUESTS MAY BE DIRECTED TO THE    
COMPANY AT (516) 467-3140. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, 
ANY SUCH REQUEST SHOULD BE MADE BY OCTOBER 10, 1996.                            

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY  
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR     
MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN 
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR      
SOLICITATION WITH RESPECT TO ANY SECURITY OTHER THAN THE SECURITIES OFFERED     
HEREBY OR AN OFFER TO OR SOLICITATION OF ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS   
PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES HEREUNDER SHALL UNDER ANY         
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS   
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO  
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF THE COMPANY     
SINCE THE DATE HEREOF.                                                          

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PROSPECTUS SUMMARY

   The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,    
including the notes thereto, appearing elsewhere in this Prospectus. As used in 
this Prospectus, the term "Continuing Stockholders" collectively refers to      
Brian, Dean, Neil, Ross and Steve Blechman and Stephen Welling, and the term    
"Stockholders" collectively refers to the Continuing Stockholders together with 
David and Jean Blechman. Unless the context otherwise requires, the term        
"Company" refers to (a) Twin Laboratories Inc. and, unless otherwise indicated  
and as applicable, each of its subsidiary, Advanced Research Press, Inc.        
("ARP"), and its parent, Twinlab Corporation when used with respect to          
information about events occurring upon completion of or after the Acquisition  
(as defined herein) or when giving pro forma effect thereto and (b) collectively
Natur-Pharma Inc., Twin Laboratories Inc., Alvita Products, Inc., Twinlab Export
Corp., Twinlab Specialty Corporation, B. Bros. Realty Corporation and Advanced  
Research Press, Inc., all of which were affiliated entities, as such entities   
existed prior to the consummation of the Acquisition, when used with respect to 
historical information contained herein. The term "TLC" means Twinlab           
Corporation excluding its direct and indirect subsidiaries.                     

THE COMPANY 

     The Company believes based upon its knowledge of the nutritional supplement
industry that it is one of the leading manufacturers and marketers of brand name
nutritional supplements sold through domestic health food stores. Since the     
Company's founding in 1968 by David and Jean Blechman, the Company has          
emphasized the development and introduction of high-quality, unique products in 
response to emerging trends in the nutritional supplement industry. The Company 
produces a full line of nutritional supplements and offers the broadest product 
line in the industry with more than 800 products and 1,500 stockkeeping units   
(SKU's). The Company's product line includes vitamins, minerals, amino acids,   
fish and marine oils, sports nutrition products and special formulas marketed   
under the TWINLAB(R) trademark and a full line of herbal supplements and        
phytonutrients and herb teas marketed under the Nature's Herbs(R) and Alvita(R) 
trademarks, respectively. None of the Company's products individually accounted 
for more than 7% of total net sales in 1995. The Company's broad product line,  
strong history of new product introductions and innovations, superior marketing 
and advertising programs and premium product quality have established TWINLAB,  
Nature's Herbs and Alvita as leading brands in the nutritional supplement       
industry.                                                                       

    Under the management of Mr. and Mrs. Blechman's five sons, the Company has
diversified its product line through internal growth, product development and   
selected acquisitions, including the acquisition in 1989 of Natur-Pharma Inc., a
leading manufacturer and marketer of herbal supplements and phytonutrients under
the Nature's Herbs brand name, and the acquisition in 1991 of Alvita Products,  
Inc., a leading marketer of herb teas. The Company has achieved increased net   
sales and EBITDA every year since 1990. In particular, during the three-year    
period from 1993 through 1995, the Company achieved a compound annual growth    
rate in net sales and EBITDA of 22.0% and 38.6%, respectively. For the fiscal   
year ended December 31, 1995, the Company achieved net sales growth of 26.8% to 
$148.7 million and EBITDA growth of 33.9% to $33.5 million, as compared to      
fiscal year 1994. For the six months ended June 30, 1996, the Company achieved  
net sales of $81.8 million and EBITDA of $20.5 million, representing an increase
of 17.2% and 41.1%, respectively, as compared to the six months ended June 30,  
1995.                                                                           

     The Company's products target consumers who utilize nutritional supplements
in their daily diet and who demand premium quality ingredients in a broad       
variety of dosages and delivery methods. The Company's products compete         
primarily in the health food store market, where the dominant competitive       
factors include product attributes such as quality, potency and the uniqueness  
of the product formulation. The Company sells its products domestically through 
a network of approximately 60 distributors, who service approximately 11,000    
health food stores and other selected retail outlets. The Company believes that 
its products are available in over 90% of the health food stores in the United  
States. The health food store channel of distribution has expanded significantly
in recent years and is expected to grow further as national chains, including   
those which sell the Company's products such as General Nutrition Companies,    
Inc. ("GNC"), Whole Foods Market ("WFM"), Wild Oats Markets, Fresh Fields, and  
other industry participants continue                                            

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to add stores in new and existing markets. Certain of these chains, such as GNC 
and WFM, manufacture and market their own private label products in addition to 
selling brand name products manufactured by third parties such as the Company.  
The health food store market differs significantly from the mass market for     
vitamin and other nutritional supplements where price and convenience constitute
the primary bases of competition. The nutritional supplement products sold in   
grocery stores, drug stores and mass merchandisers are typically manufactured by
large pharmaceutical companies and private label manufacturers. The Company's   
products are also offered in Europe, Asia, South America and other international
markets through arrangements with overseas distributors.                        

   The Company believes it is well positioned to capitalize on the growth of
the nutritional supplement market. Based on estimates in a 1994 market report   
conducted by Packaged Facts (the "Packaged Facts Report"), an independent       
research firm, the retail market for vitamins, minerals and other nutritional   
supplements has grown at a compound annual rate of greater than 12% from $3.3   
billion in 1991 to over $4.6 billion in 1994. Furthermore, the Company's rate of
sales growth has exceeded the industry's growth rate for each year during this  
period. Packaged Facts forecasts approximately 7% annual industry growth through
the end of the decade in vitamins, minerals and other supplements, which        
management believes will be fueled by (i) favorable demographic trends towards  
older Americans, who are more likely to consume nutritional supplements; (ii)   
product introductions in response to new scientific research findings; (iii) the
nationwide trend toward preventive medicine in response to rising health care   
costs; and (iv) the heightened understanding and awareness of the connection    
between diet and health. Moreover, although the industry has grown dramatically 
in recent years, there is still a large untapped domestic market as only an     
estimated 50% of Americans currently consume vitamins, minerals and herbal      
supplements on a regular basis.                                                 

    Twin Laboratories Inc. is incorporated under the laws of the State of Utah
and maintains its principal executive offices at 2120 Smithtown Avenue,         
Ronkonkoma, New York 11779. Its telephone number is (516) 467-3140.             

BUSINESS STRATEGY 

     The Company's strategy is to continue to enhance its leadership position in
the domestic sale of vitamins, minerals and other nutritional supplements in    
health food stores and to increase its market share and sales while continuing  
to improve its overall operating efficiency and financial performance. The      
Company intends to capitalize on the TWINLAB brand name by growing market share 
domestically, increasing penetration of the Company's other brands, continuing  
to introduce new products and product extensions, and expanding internationally.
Specifically, the Company seeks to:                                             

  Capitalize on Powerful Brand Name Recognition.  The Company's recognized
product quality, broad product line, strong history of new product introductions
and innovations, and superior marketing and advertising programs have           
established TWINLAB, Nature's Herbs and Alvita as leading brands in the         
nutritional supplement industry. Each of the Company's product categories,      
including vitamins, minerals and amino acids; sports nutrition; special         
formulas; herbal supplements and phytonutrients; and herb teas, have posted     
double digit sales growth in each of the last three years. The Company's        
extensive marketing and advertising programs have been critical components of   
its products' strong brand name recognition, and management believes that the   
Company offers its customers the strongest marketing and advertising support    
programs in the industry. In fiscal 1995, the Company invested $11.1 million, an
increase of 27% over fiscal 1994, in marketing and advertising to promote its   
products. Furthermore, since quality is a critical factor in consumer purchase  
decisions, the Company believes that its premium quality ingredients, modern    
manufacturing facilities and comprehensive quality control procedures have      
enabled the Company to establish a competitive advantage based on the quality of
its products.                                                                   

Increase Penetration in the Growing Health Food Market.  Management   
believes that the expansion of retail distribution channels and the strong      
growth characteristics of the nutritional supplement industry provide the       
Company with significant opportunities to increase sales. Management further    
believes that the established brand name recognition of the Company's products  
positions it to increase its penetration of shelf space as health food retailers
seek to align themselves with companies who possess strong brand names, offer a 

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wide range of products, demonstrate continued marketing and advertising support 
and provide consistently high levels of customer service. Since Nature's Herbs  
and Alvita products currently are available in only an estimated 60% and 50%,   
respectively, of domestic health food stores, compared to an estimated 90% for  
TWINLAB products, the Company believes that it will be able to capitalize on    
health food retailers' success with the TWINLAB product line in order to        
significantly increase shelf space for the Company's herbal supplements,        
phytonutrients and herb teas.                                                   

    Continue to Introduce New Products and Product Innovations.  A cornerstone
of the Company's success has been its ability to rapidly utilize recent         
scientific and medical findings in its new product development efforts. The     
Company has consistently been among the first in its industry to introduce new  
products and product innovations which anticipate and meet customer demands for 
newly identified nutritional supplement benefits. Furthermore, the Company's    
geographically diverse network of more than 60 distributors allows the Company  
to achieve immediate and broad distribution for new product launches. As part of
its ongoing research and development effort, the Company maintains an extensive 
database and actively researches and monitors a wide variety of publications    
containing scientific and medical research. From 1991 through 1995, the Company 
introduced over 350 products, with over 90 new products introduced in 1995      
alone. Gross sales during 1995 from new products introduced in 1995 were $18.4  
million, or approximately 11% of gross sales. The Company intends to build upon 
its historical success by continuing to introduce new and innovative products   
not previously available in health food stores.                                 

   Build Upon Established Customer Relationships.  The Company's established
relationships with distributors and health food store retailers are based upon  
the Company's long-standing commitment to a high level of customer service. In  
order to ensure that its customers receive prompt and reliable service, the     
Company has designed a flexible and responsive manufacturing process and has    
achieved a 98% fill rate for customer orders. In addition, the Company's sales  
force consists of 30 dedicated sales professionals who operate in sales         
territories which cover the entire continental United States and Alaska. The    
primary functions of the Company's sales force are to gain better placement and 
additional shelf space for the Company's products and to stay abreast of        
customer needs. The sales force personnel work with direct accounts,            
distributors and individual retailers to enhance knowledge of TWINLAB, Nature's 
Herbs and Alvita products and to achieve maximum exposure for these products.   

  Increase Penetration of Foreign Markets.  Management believes that there
are substantial opportunities for the Company to expand its presence in foreign 
markets. The Company has a department, headed by a senior sales professional,   
dedicated to increasing sales in such markets. The Company's foreign marketing  
effort is primarily focused on establishing additional relationships with       
leading overseas distributor organizations as a cost-effective method of        
increasing international sales. The Company presently has distribution          
agreements covering over 44 foreign countries and has agreements for another    
seven countries currently in negotiation. In 1995, the Company had net sales of 
$8.3 million to foreign markets.                                                

Supplement Internal Growth Through Strategic Acquisitions.  As the    
nutritional supplement industry is highly fragmented with many companies        
producing only a single product line or single product, the Company believes    
that it is strategically positioned to participate in the consolidation of the  
industry due to its established brand name, broad distribution capabilities and 
proven ability to generate sales of its products through successful marketing   
programs. Since 1989 the Company has acquired two businesses, Natur-Pharma Inc. 
(Nature's Herbs) and Alvita Products, Inc. (Alvita), and in each case has       
embarked on successful expansion programs which resulted in substantially higher
sales and EBITDA for the acquired companies. Net sales for Natur-Pharma Inc.    
increased from $5.2 million in 1990 (the first full year after its acquisition) 
to $17.9 million in 1995, and net sales for Alvita Products, Inc. increased from
$1.7 million in 1992 (the first full year after its acquisition) to $5.6 million
in 1995. The Company intends to actively pursue acquisition opportunities,      
including product line acquisitions, that complement its existing products or   
are compatible with its business philosophy and strategic goals. Some of such   
acquisition opportunities may be material and some are currently under          
investigation, discussion or negotiation, including opportunities in the natural
foods and natural personal care products industries. There can be no assurance  
that any such opportunities will result in a completed acquisition. Future      
acquisitions could be financed by internally generated funds, bank              

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borrowings, public offerings or private placements of equity or debt securities,
or a combination of the foregoing. See "Risk Factors -- Risks of Future         
Acquisitions."                                                                  

ISSUANCE OF THE OLD NOTES 

The outstanding $100.0 million principal amount of 10 1/4% Senior     
Subordinated Notes due 2006 (the "Old Notes") were sold by the Company to       
Donaldson, Lufkin & Jenrette Securities Corporation and Chase Securities Inc.   
(the "Initial Purchasers"), on May 7, 1996 (the "Closing Date") pursuant to a   
Purchase Agreement, dated May 1, 1996 (the "Purchase Agreement"), among the     
Company, TLC and ARP (collectively the "Guarantors") and the Initial Purchasers.
The Initial Purchasers subsequently resold the Old Notes in reliance on Rule    
144A under the Securities Act and other available exemptions under the          
Securities Act (the "Offering"). The Company also entered into the Registration 
Rights Agreement, dated as of the Closing Date (the "Registration Rights        
Agreement"), among the Company, the Guarantors and the Initial Purchasers,      
pursuant to which the Company granted certain registration rights for the       
benefit of the holders of the Old Notes. Under the Registration Rights          
Agreement, the Company agreed, for the benefit of the holders of the Old Notes  
that it would, at its own cost, (i) within 60 days after the Closing Date file a
registration statement (the "Exchange Offer Registration Statement") with the   
Commission with respect to a registered offer to exchange the Old Notes for New 
Notes, which will have terms substantially identical to the Old Notes and (ii)  
use its best efforts to cause such Exchange Offer Registration Statement to be  
declared effective under the Securities Act within 135 days after the Closing   
Date. If the Company is unable to effect such an Exchange Offer or if for any   
other reason the Exchange Offer is not consummated within 60 days after the     
effective date of the Exchange Offer Registration Statement, the Company is     
obligated under the Registration Rights Agreement to file a shelf registration  
statement with the Commission covering resales of the Old Notes. If the Company 
defaults with respect to its obligations under the Registration Rights Agreement
(as defined herein, a "Registration Default"), the Company will be obligated to 
pay Liquidated Damages of $0.05 per week per $1,000 principal amount of Old     
Notes outstanding (up to a maximum of $0.30 per week per $1,000 principal amount
of Old Notes). The Exchange Offer is intended to satisfy certain of the         
Company's obligations under the Registration Rights Agreement with respect to   
the Old Notes. See "-- The Exchange Offer" and "The Exchange Offer -- Purpose   
and Effect."                                                                    

THE ACQUISITION 

 The Stockholders, TLC, Natur-Pharma Inc. and Green Equity Investors II,
L.P. ("GEI") entered into a Stock Purchase and Sale Agreement, dated as of March
5, 1996, as amended (the "Acquisition Agreement"), pursuant to which, among     
other things, on the Closing Date (i) GEI acquired 48% of the common stock of   
TLC for aggregate consideration of $4.8 million and shares of non-voting junior 
redeemable preferred stock of TLC (the "Junior Preferred Stock") for aggregate  
consideration of $37.0 million, (ii) certain other investors acquired 7% of the 
common stock of TLC for aggregate consideration of $0.7 million and shares of   
non-voting senior redeemable preferred stock of TLC (the "Senior Preferred      
Stock," and, together with the Junior Preferred Stock, the "Preferred Stock")   
for aggregate consideration of $30.0 million, (iii) the Continuing Stockholders 
exchanged certain of their shares of common stock of Natur-Pharma Inc. for 45%  
of the outstanding shares of common stock of TLC, valued at $4.5 million, (iv)  
TLC purchased all of the remaining shares of common stock of Natur-Pharma Inc.  
from the Stockholders for cash, resulting in Natur-Pharma Inc. becoming a wholly
owned subsidiary of TLC, (v) Twin Laboratories Inc., Alvita Products, Inc.,     
Twinlab Export Corp., Twinlab Specialty Corporation and B. Bros. Realty         
Corporation merged into Natur-Pharma Inc. (the "Natur-Pharma Merger"); and      
Advanced Research Press, Inc. merged with Natur-Pharma II Inc., a wholly owned  
subsidiary of Natur-Pharma Inc. (together with the Natur-Pharma Merger, the     
"Mergers"; the surviving entity in such merger is referred to herein as "ARP")  
and (vi) in connection with such mergers the Stockholders received cash in      
consideration for all of their shares of capital stock of Twin Laboratories     
Inc., Alvita Products, Inc., Twinlab Export Corp., Twinlab Specialty            
Corporation, B. Bros. Realty Corporation and Advanced Research Press, Inc. The  
total cash consideration that the Stockholders received was approximately $212.5
million, the majority of which was paid to David and Jean Blechman. Of the total
cash consideration to the Stockholders, approximately $15.3 million represented 
consideration for the Non-                                                      

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Competition Agreements (as defined herein). See "Management -- Employment       
Agreements." The transactions described above are hereinafter referred to as the
"Acquisition." Concurrently with the consummation of the Acquisition, the       
Company consummated the Offering and entered into the New Credit Facility (which
provides for a term facility in the amount of $53.0 million and a revolving     
credit facility in the amount of $15.0 million) (the "New Credit Facility," and,
collectively with the Acquisition and the Offering, the "Transactions"). The net
cash proceeds of the Offering were used, together with borrowings under the New 
Credit Facility, the proceeds from the issuance of the common stock and         
Preferred Stock of TLC and available cash of the Company, to finance the        
Acquisition, to refinance approximately $7.0 million aggregate principal amount 
of debt of the Company and to pay related fees and expenses. See "Description of
New Notes," "Description of New Credit Facility" and "Description of Capital    
Stock of TLC." In connection with the Acquisition, Natur-Pharma Inc.'s name was 
changed to Twin Laboratories Inc. Subsequent to the Transactions, the Company   
repaid approximately $3.0 million of outstanding indebtedness under the term    
facility contained in the New Credit Facility.                                  

   The consolidated financial statements of TLC contained in this Prospectus
include the financial statements of Twin Laboratories Inc. and TLC's indirect   
wholly owned subsidiary, ARP, after giving retroactive effect, in a manner      
similar to a pooling of interests, to the Mergers pursuant to the Acquisition.  
The Old Notes are, and the New Notes will be, jointly and severally guaranteed  
by TLC and ARP on a full and unconditional unsecured senior subordinated basis. 
TLC has no separate operations and no significant assets other than TLC's       
investment in Twin Laboratories Inc. and, through Twin Laboratories Inc., in    
ARP. Accordingly, the Company has determined that separate financial statements 
of Twin Laboratories Inc. and ARP would not be material to investors and,       
therefore, are not included herein.                                             

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THE EXCHANGE OFFER

The Exchange Offer.........  The Company is offering, upon the terms and subject
                       to the conditions set forth herein and in the
                            accompanying letter of transmittal (the "Letter of
                        Transmittal"), to exchange $1,000 in principal
                             amount of its 10 1/4% Senior Subordinated Notes due
                           2006 (the "New Notes," with the Old Notes and the
                             New Notes sometimes collectively referred to herein
                             as the "Notes") for each $1,000 in principal amount
                     of the outstanding Old Notes (the "Exchange
                            Offer"). As of the date of this Prospectus, $100.0
                          million in aggregate principal amount of the Old
                             Notes is outstanding, the maximum amount authorized
                             by the Indenture for all Notes. As of September 15,
                            1996, there were two registered holders of the Old
                         Notes, including Cede & Co. ("Cede") which held
                             $97.95 million of aggregate principal amount of the
                        Old Notes for 38 of its participants. See "The
                         Exchange Offer -- Terms of the Exchange Offer."

Expiration Date............  5:00 p.m., New York City time, on Friday, October  
                         25, 1996, as the same may be extended. See "The
                        Exchange Offer -- Expiration Date; Extensions;
Amendments."          

Conditions of the Exchange                                                      
Offer....................  The Exchange Offer is not conditioned upon any   
                     minimum principal amount of Old Notes being
                            tendered for exchange. However, the Exchange Offer
                      is subject to the condition that it does not
                             violate any applicable law or interpretation of the
                    staff of the Commission. See "The Exchange
                     Offer -- Conditions of the Exchange Offer."

Termination of Certain                                                          
Rights.....................  Pursuant to the Registration Rights Agreement and  
                          the Old Notes, Eligible Holders of Old Notes (i)
                           have rights to receive the Liquidated Damages and
                           (ii) have certain rights intended for the holders
                          of unregistered securities. "Liquidated Damages"
                    means damages of $0.05 per week per $1,000
                             principal amount of Old Notes constituting Transfer
                             Restricted Securities (up to a maximum of $0.30 per
                             week per $1,000 principal amount) during the period
                       in which a Registration Default is continuing
                          pursuant to the terms of the Registration Rights
                            Agreement. Holders of New Notes generally will not
                          be and, upon consummation of the Exchange Offer,
                          Eligible Holders of Old Notes will no longer be,
                             entitled to (i) the right to receive the Liquidated
                        Damages or (ii) certain other rights under the
                            Registration Rights Agreement intended for holders
                       of unregistered securities. See "The Exchange
                     Offer -- Termination of Certain Rights" and
                  "-- Procedures for Tendering Old Notes."

Accrued Interest on the Old                                                     
  Notes....................  The New Notes will bear interest at a rate equal to
                            10 1/4% per annum from and including their date of
                        issuance. Eligible Holders whose Old Notes are
                      accepted for exchange will have the right to
                           receive interest accrued thereon from the date of
                        original issuance of the Old Notes or the last
                           Interest Payment Date, as applicable, to, but not
                           including, the date of issuance of the New Notes,
                             such interest to be payable with the first interest
                             payment on the New Notes. Interest on the Old Notes
                             accepted for exchange, which accrues at the rate of
                            10 1/4% per annum, will cease to accrue on the day
                 prior to the issuance of the New Notes.

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Procedures for Tendering                                                        
Old Notes..................  Unless a tender of Old Notes is effected pursuant  
                      to the procedures for book-entry transfer as
                           provided herein, each Eligible Holder desiring to
                          accept the Exchange Offer must complete and sign
                       the Letter of Transmittal, have the signature
                         thereon guaranteed if required by the Letter of
                        Transmittal, and mail or deliver the Letter of
                       Transmittal, together with the Old Notes or a
                     Notice of Guaranteed Delivery and any other
                           required documents (such as evidence of authority
                           to act, if the Letter of Transmittal is signed by
                         someone acting in a fiduciary or representative
                          capacity), to the Exchange Agent (as defined) at
                         the address set forth on the back cover page of
                           this Prospectus prior to 5:00 p.m., New York City
                            time, on the Expiration Date. Any Beneficial Owner
                           (as defined) of the Old Notes whose Old Notes are
                        registered in the name of a nominee, such as a
                          broker, dealer, commercial bank or trust company
                            and who wishes to tender Old Notes in the Exchange
                         Offer, should instruct such entity or person to
                            promptly tender on such Beneficial Owner's behalf.
                             See "The Exchange Offer -- Procedures for Tendering
                          Old Notes." By tendering Old Notes for exchange,
                      each registered holder will represent to the
                           Company that, among other things, (i) neither the
                        Eligible Holder nor any Beneficial Owner is an
                          affiliate of the Company or any Guarantor within
                           the meaning of Rule 405 under the Securities Act,
                           (ii) any New Notes to be received by the Eligible
                           Holder or any Beneficial Owner are being acquired
                           in the ordinary course of business, (iii) neither
                             the Eligible Holder nor any Beneficial Owner has an
                         arrangement or understanding with any person to
                          participate in the distribution of the New Notes
                       and (iv) if the Eligible Holder or Beneficial
                       Owner, as applicable, is a broker-dealer that
                            acquired Old Notes for its own account as a result
                            of market making or other trading activities, such
                         Eligible Holder or Beneficial Owner must comply
                          with the prospectus delivery requirements of the
                       Securities Act in connection with a secondary
                         resale transaction of the New Notes acquired by
                           such person and must agree that it will deliver a
                        prospectus in connection with any such resale.

Guaranteed Delivery                                                             
Procedures...............  Eligible Holders of Old Notes who wish to tender 
                         their Old Notes and (i) whose Old Notes are not
                          immediately available or (ii) who cannot deliver
                            their Old Notes or any other documents required by
                         the Letter of Transmittal to the Exchange Agent
                       prior to the Expiration Date (or complete the
                       procedure for book-entry transfer on a timely
                             basis), may tender their Old Notes according to the
                         guaranteed delivery procedures set forth in the
                           Letter of Transmittal. See "The Exchange Offer --
                          Procedures for Tendering Old Notes -- Guaranteed
Delivery Procedures." 

Acceptance of Old Notes and                                                     
Delivery of New Notes....  Upon satisfaction or waiver of all conditions of 
                             the Exchange Offer, the Company will accept any and
                         all Old Notes that are properly tendered in the
                          Exchange Offer prior to 5:00 p.m., New York City
                            time, on the Expiration Date. The New Notes issued
                          pursuant to the Exchange Offer will be delivered
                         promptly after acceptance of the Old Notes. See
                            "The Exchange Offer -- Acceptance of Old Notes for
           Exchange; Delivery of New Notes."

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Withdrawal Rights..........  Tenders of Old Notes may be withdrawn at any time  
                        prior to 5:00 p.m., New York City time, on the
            Expiration Date. See "The Exchange
      Offer -- Withdrawal Rights."

Certain Federal Income Tax                                                      
Considerations...........  Generally, the exchange pursuant to the Exchange 
                       Offer will not be a taxable event for federal
                          income tax purposes. See "Certain Federal Income
                  Tax Consequences -- The Exchange Offer."

The Exchange Agent.........  Fleet National Bank is the exchange agent (in such 
                          capacity, the "Exchange Agent"). The address and
                        telephone number of the Exchange Agent are set
                             forth in "The Exchange Offer -- The Exchange Agent;
Assistance."          

Fees and Expenses..........  All expenses incident to the Company's consummation
                       of the Exchange Offer and compliance with the
                            Registration Rights Agreement will be borne by the
                             Company. The Company will also pay certain transfer
                          taxes applicable to the Exchange Offer. See "The
               Exchange Offer -- Fees and Expenses."

Resales of the New Notes...  Based on interpretations by the staff of the       
                             Commission set forth in no-action letters issued to
                            third parties, the Company believes that New Notes
                     issued pursuant to the Exchange Offer to an
                          Eligible Holder in exchange for Old Notes may be
                  offered for resale, resold and otherwise
                             transferred by such Eligible Holder (other than (i)
                     a broker-dealer who purchased the Old Notes
                          directly from the Company for resale pursuant to
                         Rule 144A under the Securities Act or any other
                         available exemption under the Securities Act or
                           (ii) a person that is an affiliate of the Company
                         or any Guarantor within the meaning of Rule 405
                            under the Securities Act), without compliance with
                             the registration and prospectus delivery provisions
                           of the Securities Act, provided that the Eligible
                           Holder is acquiring the New Notes in the ordinary
                          course of business and is not participating, and
                             has no arrangement or understanding with any person
                             to participate, in a distribution of the New Notes.
                            Each broker-dealer that receives New Notes for its
                           own account in exchange for Old Notes, where such
                            Old Notes were acquired by such broker as a result
                            of market making or other trading activities, must
                          acknowledge that it will deliver a prospectus in
                           connection with any resale of such New Notes. See
                          "The Exchange Offer -- Resales of the New Notes"
     and "Plan of Distribution."

DESCRIPTION OF NEW NOTES

The form and terms of the New Notes will be identical in all material 
respects to the form and terms of the Old Notes, except that (i) the New Notes  
have been registered under the Securities Act and, therefore, will not bear     
legends restricting the transfer thereof, (ii) holders of the New Notes will not
be entitled to Liquidated Damages and (iii) holders of the New Notes will not   
be, and upon consummation of the Exchange Offer, Eligible Holders of the Old    
Notes will no longer be, entitled to certain rights under the Registration      
Rights Agreement intended for the holders of unregistered securities, except in 
limited circumstances. See "Exchange Offer -- Termination of Certain Rights."   
The Exchange Offer shall be deemed consummated upon the occurrence of the       
delivery by the Company to the Registrar under the Indenture of the New Notes in
the same aggregate principal amount as the aggregate principal amount of Old    
Notes that are tendered by holders thereof pursuant to the Exchange Offer. See  
"The Exchange Offer -- Termination of Certain Rights" and "-- Procedures for    
Tendering Old Notes" and "Description of New Notes."                            

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Maturity...................  May 15, 2006.                                      

Interest...................  10 1/4% payable in cash semi-annually in arrears,  
                   calculated on the basis of a 360-day year
             consisting of twelve 30-day months.

Interest Payment Dates.....  May 15 and November 15, commencing on November 15, 
1996.                 

Optional Redemption........  The New Notes will be redeemable at the option of  
                           the Company, in whole or in part, on or after May
                      15, 2001, at the redemption prices set forth
                           herein, plus accrued and unpaid interest, if any,
                        to the date of redemption. Notwithstanding the
                           foregoing, prior to May 15, 1999, the Company may
                             redeem from time to time up to 35% of the aggregate
                  principal amount of the Notes originally
                             outstanding at a redemption price equal to 109 1/2%
                           of the principal amount thereof, plus accrued and
                          unpaid interest, if any, to the redemption date,
                     with the net proceeds of one or more Equity
                          Offerings (as defined herein); provided, that at
                            least 65% of the aggregate principal amount of the
                          Notes originally outstanding remains outstanding
                  immediately after the occurrence of such
                           redemption. See "Description of Notes -- Optional
Redemption."          

Guarantees.................  The New Notes will be guaranteed (the "Guarantees")
                          fully and unconditionally on an unsecured senior
                            subordinated basis by TLC, ARP, the Company's only
                       existing subsidiary, and all of the Company's
                      future subsidiaries (other than Unrestricted
                             Subsidiaries) (ARP and such future subsidiaries are
                     collectively referred to as the "Subsidiary
                           Guarantors" and, together with TLC, collectively,
                       as the "Guarantors"). See "Description of New
Notes -- General."    

Ranking....................  The New Notes and the Guarantees will be general   
                      unsecured obligations of the Company and the
                            Guarantors, respectively, subordinated in right of
                           payment to all existing and future Senior Debt of
                        the Company and the Guarantors, as applicable,
                             including borrowings under the New Credit Facility.
                            As of June 30, 1996, the Company had approximately
                   $50.4 million of outstanding Senior Debt,
                     substantially all of which was secured, and
                             approximately $0.4 million of debt which ranks pari
                       passu with the Notes in right and priority of
payment.              

Change of Control Offer....  Upon a Change of Control, the Company will be      
                             required to offer to repurchase all outstanding New
                         Notes at 101% of the aggregate principal amount
                            thereof, plus accrued and unpaid interest, if any,
                            to the date of repurchase. The Company will comply
                           with Rules 13e-4 and 14e-1 under the Exchange Act
                          and any other securities laws and regulations to
                             the extent such laws and regulations are applicable
                          in the event that a Change of Control occurs and
                             the Company is required under the Indenture to make
                            a Change of Control Offer (as defined herein). See
          "Description of Notes -- Certain
                           Covenants -- Repurchase of Notes at the Option of
                        the Holder Upon a Change of Control" and "Risk
                  Factors -- Effect of Change of Control."

Certain Covenants..........  The Indenture contains certain covenants with      
                   respect to the Company and the Subsidiary
                          Guarantors that limit the ability of the Company
                       and the Subsidiary Guarantors to, among other
                       things, (i) incur additional Indebtedness (as
                            defined herein) and issue certain preferred stock,
                         (ii) pay dividends or make other distributions,
                       (iii) layer Indebtedness, (iv) create certain
                         liens, (v) sell certain assets, (vi) enter into
                        certain transactions with affiliates, or (vii)
                enter into certain mergers or consoli-

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                            dations involving the Company. See "Description of
      Notes -- Certain Covenants."

Absence of a Public Market                                                      
for the New Notes..........  The New Notes are a new issue of securities with no
                          established market. Accordingly, there can be no
                             assurance as to the development or liquidity of any
                          market for the New Notes. The Initial Purchasers
                             have advised the Company that they currently intend
                             to make a market in the New Notes. However, none of
                           the Initial Purchasers is obligated to do so, and
                             any market making with respect to the New Notes may
                         be discontinued at any time without notice. The
                             Company does not intend to apply for listing of the
             New Notes on a securities exchange.

FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY      
PROSPECTIVE INVESTORS IN CONNECTION WITH AN INVESTMENT IN THE NOTES, SEE "RISK  
FACTORS."                                                                       

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA 

  The summary information below presents historical consolidated financial
data and unaudited pro forma condensed consolidated financial data for the      
periods indicated which have been derived from the audited and unaudited        
financial statements of TLC. The results for the interim periods are not        
necessarily indicative of the results for the full fiscal year. The summary     
unaudited pro forma condensed consolidated operating data for the year ended    
December 31, 1995 and the six months ended June 30, 1995 and 1996 give effect to
the Transactions as if the Transactions had been consummated as of January 1,   
1995. See "Unaudited Pro Forma Condensed Consolidated Financial Data" and the   
notes thereto. The pro forma financial data set forth below are not necessarily 
indicative of the results that would have been achieved had the Transactions    
been consummated as of the dates indicated or that may be achieved in the       
future. The summary historical and pro forma financial data should be read in   
conjunction with "Management's Discussion and Analysis of Financial Condition   
and Results of Operations," "Selected Historical Financial Data" and the        
Consolidated Financial Statements of TLC and the notes thereto included         
elsewhere in this Prospectus.                                                   

                                                        [Enlarge/Download Table]

                                                                                     SIX MONTHS        
                                           YEAR ENDED DECEMBER 31,                 ENDED JUNE 30,      
                              -------------------------------------------------   -----------------    
                               1991      1992      1993       1994       1995      1995      1996      
                              -------   -------   -------   --------   --------   -------   -------    
                                                  (IN THOUSANDS, EXCEPT RATIOS)                        
                                                                                                       
OPERATING DATA:                                                                                        
  Net sales.................  $70,165   $83,014   $99,897   $117,342   $148,735   $69,820   $81,837    
  Gross profit..............   25,501    31,800    37,766     47,095     58,803    27,774    33,985    
  Operating expenses........   14,570    17,463    21,125     23,022     27,191    13,779    14,816    
  Income from operations....   10,931    14,337    16,641     24,073     31,612    13,995    19,169    
  Nonrecurring and                                                                                     
     transaction expenses...       --        --        --         --        656        --    15,700    
  Net income (loss).........   10,162    13,435    16,676     21,693     30,224    13,729      (663)(a)
PRO FORMA RELATING TO CHANGE                                                                           
  IN TAX STATUS:(B)                                                                                    
  Historical income before                                                                             
     provision for income                                                                              
     taxes..................  $10,331   $14,010   $16,906   $ 21,938   $ 30,464   $13,821   $ 1,170    
  Pro forma provision for                                                                              
     income taxes...........    4,017     5,436     6,644      9,087     12,060     5,471     6,588    
                              -------   -------   -------   --------   --------   -------   -------    
  Pro forma net income                                                                                 
     (loss).................  $ 6,314   $ 8,574   $10,262   $ 12,851   $ 18,404   $ 8,350   $(5,418)(a)
                              =======   =======   =======   ========   ========   =======   =======    
OTHER DATA:                                                                                            
  EBITDA(c).................  $11,734   $15,229   $17,446   $ 25,023   $ 33,516   $14,509   $20,470    
  Capital expenditures......    1,472     1,304     4,904      1,786      2,641     2,073       483    
  Depreciation..............      783       806       710        851        909       464       549    
  Amortization..............       20        86        95         99        102        50       193    
  Ratio of earnings to fixed                                                                           
     charges(d).............     13.7x     16.6x     19.8x      21.2x      24.1x     23.0x      1.4x(a)

                                                        [Enlarge/Download Table]

                                                                                 SIX MONTHS      
                                                                               ENDED JUNE 30,    
                                                          YEAR ENDED         ------------------- 
                                                       DECEMBER 31, 1995      1995        1996   
                                                       -----------------     -------     ------- 
                                                             (IN THOUSANDS, EXCEPT RATIOS)       
                                                                                                 
PRO FORMA DATA:                                                                                  
  Net sales...........................................     $ 148,735         $69,820     $81,837 
  EBITDA(c)...........................................        33,516          14,509      20,470 
  Income from operations..............................        31,212          13,795      19,028 
  Cash interest expense(e)............................        14,735           7,369       7,376 
  Ratio of EBITDA to cash interest expense............           2.3x            2.0x        2.8x
  Ratio of EBITDA less capital expenditures to cash                                              
     interest expense.................................           2.1x            1.7x        2.7x
  Ratio of net debt to EBITDA(f)......................            --              --         7.0x

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                                                        [Enlarge/Download Table]

                                                                                  AS OF     
                                                                              JUNE 30, 1996 
                                                                              --------------
                                                                              (IN THOUSANDS)
                                                                                            
BALANCE SHEET DATA:                                                                         
Cash and cash equivalents and marketable securities..........................    $  8,185   
Net working capital (excluding cash and cash equivalents, marketable                        
  securities and current debt)...............................................      37,252   
Total assets.................................................................     141,163   
Total debt (including current debt)..........................................     150,735   
Senior and junior redeemable Preferred Stock.................................      67,000   
Shareholders' deficit........................................................     (94,721)  

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

(a)  Reflects $15.3 million of nonrecurring non-competition agreement expense   
and $0.4 million of transaction expenses.                             
(b)  The Company consisted of S corporations and, accordingly, federal and state
    taxes were generally paid at the shareholder level only. Upon consummation
   of the Transactions, the Company eliminated its S corporation status and,
accordingly, became subject to federal and state income taxes.        
(c)  EBITDA represents income from operations before depreciation and           
amortization expense, and certain other charges related to legal      
    settlements, increases in inventory reserves, a tax settlement relating to
    a limited partnership interest, which interest is expected to be divested,
and the LGP Management Fee (as defined herein). While EBITDA is not   
 intended to represent cash flow from operations as defined by generally
    accepted accounting principles ("GAAP") and should not be considered as an
indicator of operating performance or an alternative to cash flow (as 
measured by GAAP) as a measure of liquidity, it is included herein to 
   provide additional information with respect to the ability of the Company
  to meet its future debt service, capital expenditure and working capital
requirements. See "Management's Discussion and Analysis of Financial  
Condition and Results of Operations."                                 
(d) The ratio of earnings to fixed charges is computed by adding fixed charges  
(interest and one-third of rental expenses, representing that portion of
rental expenses attributable to interest) to income before unusual item,
   provision for income taxes and extraordinary item, and dividing that sum by
such fixed charges.                                                     
(e)  Represents total interest expense less amortization of deferred financing  
fees.                                                                 
(f)  Net debt represents total debt less cash and cash equivalents and          
marketable securities.                                                

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RISK FACTORS

   Holders of Notes should carefully consider the following risk factors, as
well as other information contained, and incorporated by reference, in this     
Prospectus, affecting the business of the Company. Information contained or     
incorporated by reference in this Prospectus contains "forward-looking          
statements" which can be identified by the use of forward-looking terminology   
such as "believes," "expects," "may," "will," "should" or "anticipates" or the  
negative thereof or other variations thereon or comparable terminology, or by   
discussions of strategy. See, e.g., "Management's Discussion and Analysis of    
Financial Condition and Results of Operations," "Prospectus Summary -- Business 
Strategy" and "Business -- Business Strategy." No assurance can be given that   
the future results covered by the forward-looking statements will be achieved.  
The following matters constitute cautionary statements identifying important    
factors with respect to such forward-looking statements, including certain risks
and uncertainties, that could cause actual results to vary materially from the  
future results covered in such forward-looking statements. Other factors could  
also cause actual results to vary materially from the future results covered in 
such forward-looking statements.                                                

LEVERAGE                                                                        

   The Company is highly leveraged. As of June 30, 1996, the Company had (i)
approximately $150.7 million of outstanding debt, of which approximately $50.4  
million was Senior Debt, substantially all of which Senior Debt was secured and 
(ii) shareholders' deficit of $94.7 million. See "Capitalization." This         
leverage, together with restrictions in the Company's financing instruments, may
limit the Company's ability to obtain additional debt financing in the future   
and to respond to changing business and economic conditions and could adversely 
affect its ability to effect its business strategies. See "Description of New   
Notes" and "Description of New Credit Facility." Required payments of principal 
and interest on the Company's long-term debt are expected to be financed from   
operating cash flow, thus limiting the availability of such cash flow for other 
corporate purposes. The Company's ability to generate sufficient cash to meet   
its obligations is subject to many factors, certain of which are beyond its     
control, including economic conditions, regulatory factors and competition.     
While the Company believes that, based on current levels of operations and      
anticipated growth, its cash flow from operations, together with other sources  
of liquidity, will be adequate to meet its obligations, there can be no         
assurance that its actual cash flow will in fact be sufficient to service its   
debt. The Company's ability to grow is dependent on prevailing economic         
conditions and financial, business and other factors beyond its control. In the 
event the Company's operating cash flow and working capital are not sufficient  
to fund the Company's expenditures or to service its debt, including the Notes, 
the Company would be required to raise additional funds through capital         
contributions, the refinancing of all or part of its debt or the sale of assets.
There can be no assurance that any of these sources of funds would be available 
in amounts sufficient for the Company to meet its obligations.                  

SUBORDINATION OF THE NOTES                                                      

  The Notes are subordinated in right of payment to all Senior Debt of the
Company, including indebtedness under the New Credit Facility. Further, the New 
Credit Facility is secured by substantially all of the assets of the Company and
its subsidiaries as well as by TLC's interest in the capital stock of the       
Company. In addition, the Guarantees are subordinated in right of payment to all
Senior Debt of the Guarantors, including the guarantee of indebtedness under the
New Credit Facility. In the event of the bankruptcy, liquidation, dissolution,  
reorganization or other winding up of the Company or the Guarantors, the assets 
of the Company and the Guarantors will be available to pay obligations on the   
Notes only after all Senior Debt has been paid in full, and there may not be    
sufficient assets remaining to pay amounts due on any or all of the Notes then  
outstanding. The aggregate principal amount of Senior Debt to which the Notes   
were subordinated as of June 30, 1996 was approximately $50.4 million.          
Additional Senior Debt may be incurred by the Company and the Guarantors from   
time to time, subject to certain restrictions. See "Description of New Credit   
Facility" and "Description of New Notes -- Subordination."                      

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FRAUDULENT CONVEYANCE CONSIDERATIONS                                            

 The obligations of the Company under the Notes may be subject to review
under relevant federal and state fraudulent conveyance laws if a bankruptcy case
or a lawsuit (including in circumstances where bankruptcy is not involved) is   
commenced by or on behalf of any unpaid creditor of the Company or a            
representative of the Company's creditors. If a court in such a lawsuit were to 
find that, at the time the Company issued the Notes, or as a consequence of the 
Acquisition, the Company (i) intended to hinder, delay or defraud any existing  
or future creditor or contemplated insolvency with a design to prefer one or    
more creditors to the exclusion in whole or in part of others or (ii) did not   
receive fair consideration or reasonably equivalent value for issuing such Notes
and the Company (a) was insolvent, (b) was rendered insolvent, (c) was engaged  
or about to engage in a business or transaction for which its remaining assets  
constituted unreasonably small capital to carry on its business or (d) intended 
to incur, or believed that it would incur, debts beyond its ability to pay such 
debts as they matured, such court could void the Notes and the Company's        
obligations thereunder, and direct the return of any amounts paid thereunder to 
the Company or to a fund for the benefit of its creditors. Alternatively, in    
such event, claims of the holders of such Notes could be subordinated to claims 
of the other creditors of the Company. The Company's obligations under the Notes
will be guaranteed by the Guarantors, and the Guarantees may also be subject to 
review under federal and state fraudulent transfer laws. If a court were to     
determine that at the time a Guarantor became liable under its Guarantee, it    
satisfied either of clauses (i) or (ii) in the foregoing paragraph, the court   
could void the Guarantee and direct the repayment of amounts paid thereunder.   

     The measure of insolvency for purposes of the foregoing will vary depending
upon the law of the jurisdiction that is being applied. Generally, however, a   
company would be considered insolvent if the sum of its debts, including        
contingent liabilities, is greater than all of its property at a fair valuation 
or if the present fair saleable value of its assets is less than the amount that
will be required to pay its probable liability on its existing debts as they    
become absolute and mature. The obligations of each Guarantor under its         
guarantee, however, will be limited in a manner intended to avoid it being      
deemed a fraudulent conveyance under applicable law. See "Description of New    
Notes."                                                                         

The Company believes that based upon forecasts and other financial    
information, including the pro forma financial statements reflecting the        
Transactions, the Company is and will continue to be solvent, that it will have 
sufficient capital to carry on its business and will be and will continue to be 
able to pay its debts as they mature.                                           

RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS                     

The Indenture does not contain any provisions specifically intended to
protect the holders of Notes in the event of a future highly leveraged          
transaction involving the Company. However, the Indenture and the New Credit    
Facility impose upon the Company certain financial and operating covenants,     
including, among others, requirements that the Company maintain certain         
financial ratios and satisfy certain financial tests, limitations on capital    
expenditures and restrictions on the ability of the Company to incur debt, pay  
dividends or take certain other corporate actions, all of which may restrict the
Company's ability to expand or to pursue its business strategies. Changes in    
economic or business conditions, results of operations or other factors could in
the future cause a violation of one or more covenants in the Company's debt     
instruments. See "Description of New Notes -- Certain Covenants" and            
"Description of New Credit Facility."                                           

EFFECT OF CHANGE OF CONTROL                                                     

     Under the Indenture, the Company is required to make an offer (a "Change of
Control Offer") to purchase all of the Notes at a price equal to 101% of the    
aggregate principal amount thereof, plus accrued and unpaid interest, if any, to
the date of repurchase, upon the occurrence of a Change of Control. See         
"Description of New Notes -- Certain Covenants -- Repurchase of Notes at the    
Option of the Holder Upon a Change of Control." Any Change of Control, and any  
repurchase of the Notes required under the Indenture upon a Change of Control,  
would also constitute an event of default under the New Credit Facility, with   
the result that the obligations of the Company thereunder could be declared due 
and payable. Any acceleration of the Company's obligations under the New Credit 
Facility would make it unlikely that the Company would be                       

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able to purchase the Notes pursuant to a Change of Control Offer. In addition,  
in the event of a "change of control" (as defined), TLC will be required to make
an offer to repurchase the outstanding Preferred Stock at a price equal to 101% 
of the liquidation preference thereof, plus accrued and unpaid dividends.       

Under the Indenture, a Change in Control includes a sale of "all or   
substantially all" of the assets of the Company or TLC. The determination of    
whether an asset disposition would constitute all or substantially all of the   
assets of the Company or TLC, and thereby trigger a requirement to make a Change
of Control Offer, is uncertain under New York law, which governs the            
interpretation of the Indenture, and has been the subject of judicial           
interpretation in few jurisdictions. Courts addressing the issue have held that 
each determination is dependent on the particular facts involved in the         
disposition. As a result, there may be a degree of uncertainty in ascertaining  
the proportion of assets that would be necessary to constitute a sale of "all or
substantially all" of the assets of the Company or TLC for purposes of the      
Indenture.                                                                      

DEPENDENCE ON KEY PERSONNEL                                                     

  The Company believes that its continued success depends to a significant
extent on the management and other skills of Brian Blechman, Dean Blechman, Neil
Blechman, Ross Blechman and Steve Blechman (the "Blechman Brothers"), as well as
its ability to retain other key employees and to attract skilled personnel in   
the future to manage the growth of the Company. The loss or unavailability of   
the services of one or more of the Blechman Brothers could have a material      
adverse effect on the Company. The Company has entered into long-term employment
agreements with each of the Blechman Brothers and, as of August 31, 1996, each  
of the Blechman Brothers owns approximately 9% of the outstanding common stock  
of TLC. See "Management" and "Prospectus Summary -- The Acquisition."           

CERTAIN GOVERNMENT ACTION AND ADVERSE PUBLICITY REGARDING CERTAIN PRODUCTS      
CONTAINING EPHEDRINE                                                            

    Approximately 14 of the Company's products include a Chinese herb known as
"Ma Huang," which contains naturally-occurring ephedrine. Such products         
accounted for approximately 11.7% of the Company's net sales for the fiscal year
ended December 31, 1995, and approximately 10.5% of the Company's net sales for 
the six months ended June 30, 1996. The Company's products which contain Ma     
Huang are generally marketed for bodybuilding, weight loss, sports nutrition and
for other purposes, including increased endurance and energy, generally in      
conjunction with diet or exercise, and as natural alternatives to               
over-the-counter medications.                                                   

  Ma Huang has been the subject of certain adverse publicity in the United
States and other countries relating to alleged harmful or adverse effects,      
including the deaths of several individuals. The FDA has placed on public file a
list of over 600 such alleged adverse events. The death in Florida of a Long    
Island college student on March 6, 1996, reportedly from over-ingestion of an   
ephedrine-containing product (which was not manufactured or distributed by the  
Company), received significant coverage in the press and national media. A press
release dated August 2, 1996 issued by the Massachusetts Department of Public   
Health reported that a 23 year-old college student died in April 1996 of a heart
problem associated with ephedrine toxicity from the ingestion of a protein drink
containing Ma Huang. While press coverage and the deceased's death certificate  
have reported that such protein drink is Ripped Fuel, one of the Company's      
ephedrine-containing products, the Company does not have sufficient information 
to make an assessment of this matter.                                           

 On April 10, 1996, the FDA issued a statement (the "Statement") warning
consumers not to purchase or consume dietary supplements containing ephedrine   
with labels that often portray the products as apparent alternatives to illegal 
street drugs. None of the Company's products which contain Ma Huang are marketed
for such purpose. The Statement explains that the products portrayed as         
alternatives to illegal street drugs pose significant health risks to           
consumers -- dizziness, headache, gastrointestinal distress, irregular          
heartbeat, heart palpitations, heart attack, strokes, seizures, psychosis and   
death -- and that the labels on such products claim or imply that they produce  
such effects as euphoria, increased sexual sensations, heightened awareness,    
increased energy and other effects. In August 1996, the FDA sent warning letters
to several companies marketing such products as alternatives to street drugs,   
indicating that enforcement action with respect to such products may be         
initiated.                                                                      

In August 1996, the FDA convened a Food Advisory Committee (the       
"Committee") meeting to review and make recommendations concerning the safety   
and appropriate labeling of Ma Huang-containing dietary                         

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supplements. The FDA, after considering the differing views expressed at the    
Committee meeting, may propose regulations that will require reduced dosages    
coupled with strict manufacturing standards, labeling restrictions and a        
prohibition against combining Ma Huang with other central nervous system        
stimulants such as caffeine. There can be no assurance that such regulations    
will not prohibit either the sale of dietary supplements containing Ma Huang in 
combination with any other ingredients or the sale of all dietary supplements   
containing any Ma Huang. The promulgation of such regulations would require the 
Company to reformulate and relabel substantially all of its Ma Huang products.  
There can be no assurance as to the final form or content of any FDA regulations
concerning Ma Huang-containing dietary supplements or as to the effect that any 
attendant adverse publicity or resulting reformulation and relabeling of the    
Company's products would have on the sales of such products. The Company has    
experienced reduced sales of its Ma Huang-containing products due to the adverse
publicity described above. The Company recently introduced a line of Ma         
Huang-free products as alternatives to certain of its bodybuilding, weight loss 
and sports nutrition products which currently contain Ma Huang. There can be no 
assurance that such products will be received favorably by the Company's        
customers or that sales of such alternative products would offset any decrease  
in sales attributable to any reformulation and relabeling of the Company's Ma   
Huang products.                                                                 

    A number of states and local governmental entities have instituted bans on
sales of Ma Huang-containing products that are portrayed as apparent            
alternatives to illegal street drugs; many other states and foreign             
jurisdictions limit ephedrine levels and require appropriate warnings on product
labels, regulate ephedrine-containing products as controlled substances or      
prohibit the sales of products which contain Ma Huang other than by licensed    
pharmacists. For instance, the legislature of Nassau County, New York recently  
enacted a local law prohibiting the sale of all ephedrine-containing products to
persons under 18 years of age, and prohibiting the sale or distribution of all  
ephedrine-containing products claiming to produce such effects as euphoria,     
increased sexual sensations, heightened awareness, increased energy, legal      
"highs" and other similar effects (although the law allows the sale of          
ephedrine-containing products if intended and labeled for use as weight loss    
aids or sports nutrition products, such as those marketed by the Company, for   
sale to and use by those 18 years or older). There are also federal, state and  
local proposals to broaden the regulation of, or otherwise limit or prohibit,   
the sale of products containing ephedrine, including a New York State bill which
would regulate any ephedrine-containing product, including Ma Huang, as a       
controlled substance to be dispensed only by prescription, no matter what       
labeling claims are made, and a recently introduced Congressional bill which    
would regulate as a drug any Ma Huang dietary supplement claiming to produce    
euphoria, heightened awareness or similar mental or psychological effects.      

  The Company's products containing Ma Huang may become subject to further
federal, state, local or foreign laws or regulations, which could require the   
Company to: (i) reformulate its products with reduced ephedrine levels or with a
substitute for Ma Huang and/or (ii) relabel its products with different warnings
or revised directions for use. Even in the absence of further laws or           
regulations, the Company may elect to reformulate and/or relabel its products   
which contain Ma Huang. While the Company believes that its Ma Huang products   
could be reformulated and relabeled, there can be no assurance in that regard or
that reformulation and/or relabeling would not have a material adverse effect on
sales of such products. See "-- Product Liability."                             

PRODUCT LIABILITY                                                               

The Company, like other retailers, distributors and manufacturers of  
products that are ingested, faces an inherent risk of exposure to product       
liability claims in the event that the use of its products results in injury.   
The Company currently has $75 million of product liability insurance (which does
not cover matters relating to L-Tryptophan) with a $25,000 self-insurance       
retention per occurrence and $100,000 self-insurance retention in the aggregate.
However, there can be no assurance that such insurance will continue to be      
available at a reasonable cost or if available will be adequate to cover        
liabilities.                                                                    

Twin Laboratories Inc. is or was a defendant in various legal actions 
seeking compensatory and, in some cases, punitive damages for alleged personal  
injuries from the ingestion of certain products containing allegedly            
contaminated added manufactured L-Tryptophan. As of September 1, 1996, 130 of a 
total of approximately 132 such lawsuits in which the Company was a named       
defendant have been either dismissed or settled at no cost to the Company under 
a defense and indemnification agreement (the "Indemnification Agreement") with  
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manufacturer of the allegedly contaminated L-Tryptophan. As of September 1,     
1996, Twin Laboratories Inc. was a named defendant in two such actions.         

To date, the amount of damages sought in each of the two remaining    
L-Tryptophan actions has not been specified. The Company's available product    
liability insurance coverage of $3 million for L-Tryptophan matters in respect  
of claims made prior to December 31, 1993 is not available with respect to these
two actions. There can be no assurance that when damages are specified in these 
actions that the total amount thereof, if fully awarded against the Company     
alone and ignoring the existence of the Indemnification Agreement, would not    
have a material adverse effect on the Company's results of operations and       
financial condition. However, the Indemnification Agreement, the defense and    
resolution to date of numerous lawsuits by SDA without cost to the Company, the 
multitude of defendants and the possibility that liability could be assessed    
against or paid by other parties have led management of the Company, after      
consultation with outside legal counsel, to believe that the prospect for a     
material adverse effect on the Company's results of operations or financial     
condition is remote and no provision in the Company's financial statements has  
been made for any loss that may result from these actions. Although the Company 
believes that few new lawsuits concerning added manufactured L-Tryptophan are   
likely to be brought because of applicable statutes of limitation, the          
possibility of future such actions cannot be excluded. The Company no longer    
markets any products containing added manufactured L-Tryptophan. See            
"Business -- Legal Matters."                                                    

    Twin Laboratories Inc. and others are named defendants in a wrongful death
action entitled Thomas Hendry v. Twin Laboratories, Inc., et al., originally    
commenced in July 1995 in Fresno County (California) Superior Court (Action No. 
536670-3). The plaintiff in this action alleges that his wife, Victoria Hendry, 
died as a result of the ingestion of the Company's "Ripped Fuel" (a bodybuilding
product which plaintiff alleges contained Ma Huang, kola extract and chromium   
picolinate) and/or "Super Dieter's Teas", a product of Laci Le Beau Tea Company,
and seeks both compensatory and punitive damages from the defendants. The       
Company has answered the complaint and intends to vigorously contest the        
plaintiff's claims. Discovery is not yet complete and it is premature to predict
the likely outcome of the case. However, after consultation with outside legal  
counsel to the Company in this matter and after giving effect to the Company's  
available product liability insurance coverage, the Company believes that the   
prospect for a material adverse effect on the Company's results of operations or
financial condition is remote and no provision in the Company's financial       
statements has been made for any loss that may result from this action. There   
can be no assurance that the Company will not be subject to further private     
civil actions with respect to its products which contain Ma Huang. See          
"-- Certain Government Action and Adverse Publicity Regarding Certain Products  
Containing Ephedrine."                                                          

The Company is presently engaged in various other legal actions, and, 
although ultimate liability cannot be determined at the present time, the       
Company is currently of the opinion that the amount of any such liability from  
these other actions after taking into consideration the Company's insurance     
coverage, will not have a material adverse effect on its results of operations  
and financial condition.                                                        

FTC PROCEEDING                                                                  

   In 1989, Twin Laboratories Inc. received an informal inquiry from the New
York Regional Office of the Federal Trade Commission ("FTC") seeking            
substantiation for certain advertising claims made for a segment of its "Fuel"  
bodybuilding, sports nutrition and weight loss line of products. In response,   
Twin Laboratories Inc. submitted scientific substantiation and financial        
information to the FTC. The Company has been negotiating this matter with the   
FTC staff since December 1994.                                                  

In August 1995, the FTC staff informed the Company that it intended to
recommend to the FTC Commissioners that the FTC file a civil administrative     
complaint against the Company unless the Company agreed to settle the matter by 
a proposed consent order (the "Consent Order"), which Consent Order has since   
been the subject of negotiations between the FTC staff and the Company. In      
August 1996, the Company received a revised draft of the Consent Order which    
provides for, among other things: (1) injunctive relief prohibiting the Company 
from making certain muscle building and fat burning claims for four of its Fuel 
products and substantially similar products thereto without scientific          
substantiation and (2) a payment of $200,000 to the FTC. If a consent order is  
entered, violations of the terms thereof would allow the FTC to seek maximum    
penalties of $10,000 per day for each violation. The Company has determined at  
the current time not to settle this matter on the terms set forth in the most   
recent draft of the Consent Order, which draft the                              

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FTC has stated is its final offer for a negotiated settlement. The Company      
cannot at this time predict whether it will be able to reach a negotiated       
settlement of this matter.                                                      

 The FTC staff recently informed the Company that unless a settlement is
reached, it would proceed to recommend to the FTC Commissioners that a civil    
administrative complaint seeking injunctive relief be issued against the        
Company. If such a recommendation were to be made by the FTC staff, the Company 
will be entitled to a hearing before the FTC Commissioners to present its       
position that the administrative complaint should not be issued. Should a       
complaint be issued, there can be no assurance that any injunctive relief and   
other terms of any eventual litigated resolution of this matter will be limited 
to those sought in the most recent draft of the Consent Order.                  

  In addition, the FTC staff has notified the Company that if the FTC were
successful in an administrative litigation against the Company, the FTC may     
thereafter sue the Company in federal court seeking redress payments to         
consumers who purchased products containing claims that are subject to any      
administrative order that results from such administrative litigation. It is    
premature to assess whether a federal court would grant such a remedy or how any
consumer redress payments would be calculated.                                  

     The Company believes that it has adequate scientific substantiation for the
claims at issue, and intends to vigorously defend this matter if a settlement is
not reached. There can be no assurance that any injunctive relief or monetary   
payment (including the potential consumer redress payments) resulting from a    
negotiated or litigated resolution of this matter would not have a material     
adverse effect on the Company.                                                  

GOVERNMENT REGULATION                                                           

The manufacturing, processing, formulating, packaging, labeling and   
advertising of the Company's products are subject to regulation by one or more  
federal agencies, including the United States Food and Drug Administration (the 
"FDA"), the FTC, the Consumer Product Safety Commission (the "CPSC"), the United
States Department of Agriculture (the "USDA") and the Environmental Protection  
Agency (the "EPA"). The Company's activities are also regulated by various      
agencies of the states, localities and foreign countries to which the Company's 
products are distributed and in which the Company's products are sold.          

The composition and labeling of dietary supplements, which comprise a 
significant majority of the Company's products, is most actively regulated by   
the FDA under the provisions of the Federal Food, Drug, and Cosmetic Act ("FFDC 
Act"). The FFDC Act has been revised in recent years by the Nutrition Labeling  
and Education Act of 1990 ("NLEA") and by the Dietary Supplement Health and     
Education Act of 1994 ("DSHEA"). While in the judgment of the Company these     
regulatory changes are generally favorable to the dietary supplements industry, 
there can be no assurance that the Company will not in the future be subject to 
additional laws or regulations administered by various regulatory authorities.  
In addition, there can be no assurance that existing laws and regulations will  
not be repealed or be subject to more stringent or unfavorable interpretation by
applicable regulatory authorities.                                              

 The labeling requirements for dietary supplements have not been clearly
established. In December 1995, the FDA issued proposed regulations to govern the
labeling of dietary supplements. These regulations are expected to become final 
later in 1996, and would require the Company to revise all of its dietary       
supplement labels in 1997. The FDA has informally stated that it will, subject  
to public comment, withhold enforcement of these regulations until January 1,   
1998.                                                                           

The Company cannot predict the nature of future laws, regulations,    
interpretations or applications, nor can it determine what effect either        
additional governmental regulations or administrative orders, when and if       
promulgated, or disparate federal, state and local regulatory schemes would have
on its business in the future. They could, however, require the reformulation of
certain products to meet new standards, the recall or discontinuance of certain 
products not able to be reformulated, additional recordkeeping, expanded        
documentation of the properties of certain products, expanded or different      
labeling and/or scientific substantiation. Any or all of such requirements could
have a material adverse effect on the Company's results of operations and       
financial condition.                                                            

  Governmental regulations in foreign countries where the Company plans to
commence or expand sales may prevent or delay entry into the market or prevent  
or delay the introduction, or require the reformulation, of certain of the      
Company's products. Compliance with such foreign governmental regulations is    
generally the                                                                   

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responsibility of the Company's distributors for those countries. These         
distributors are independent contractors over whom the Company has limited      
control. See "Business -- Regulatory Matters."                                  

RISKS OF FUTURE ACQUISITIONS                                                    

One of the Company's business strategies is to pursue acquisition     
opportunities, including product line acquisitions, that complement its existing
products or are compatible with its business philosophy and strategic goals.    
Future acquisitions could be financed by internally generated funds, bank       
borrowings, public offerings or private placements, of equity or debt           
securities, or a combination of the foregoing. There can be no assurance that   
the Company will be able to make acquisitions on terms favorable to the Company 
and that funds to finance an acquisition will be available or permitted under   
the Company's financing instruments. See "Description of New Notes" and         
"Description of New Credit Facility." If the Company completes acquisitions, it 
will encounter various associated risks, including the possible inability to    
integrate an acquired business into the Company's operations, potentially       
increased goodwill amortization, diversion of management's attention and        
unanticipated problems or liabilities, some or all of which could have a        
material adverse effect on the Company's results of operations and financial    
condition. See "Business -- Business Strategy."                                 

COMPETITION                                                                     

   The business of developing, manufacturing and selling vitamins, minerals,
sports nutrition products and other nutritional supplements is highly           
competitive. Certain of the Company's competitors are substantially larger and  
have greater financial resources than the Company. See                          
"Business -- Competition."                                                      

ABSENCE OF CLINICAL STUDIES AND SCIENTIFIC REVIEW; EFFECT OF PUBLICITY          

While the Company conducts extensive quality control testing on its   
products, the Company generally does not conduct or sponsor clinical studies on 
its products. See "Business -- Manufacturing and Product Quality." The Company's
products consist of vitamins, minerals, herbs and other ingredients that the    
Company regards as safe when taken as suggested by the Company. However, because
the Company is highly dependent upon consumers' perception of the safety and    
quality of its products as well as similar products distributed by other        
companies (which may not adhere to the same quality standards as the Company),  
the Company could be adversely affected in the event any of the Company's       
products or any similar products distributed by other companies should prove or 
be asserted to be harmful to consumers. In addition, because of the Company's   
dependence upon consumer perceptions, adverse publicity associated with illness 
or other adverse effects resulting from consumers' failure to consume the       
Company's products as suggested by the Company or other misuse or abuse of the  
Company's products or any similar products distributed by other companies could 
have a material adverse effect on the Company's results of operations and       
financial condition.                                                            

Furthermore, the Company believes the recent growth experienced by the
nutritional supplement market is based in part on national media attention      
regarding recent scientific research suggesting potential health benefits from  
regular consumption of certain vitamins and other nutritional products. Such    
research has been described in major medical journals, magazines, newspapers and
television programs. The scientific research to date is preliminary, and there  
can be no assurance of future favorable scientific results and media attention  
or of the absence of unfavorable or inconsistent findings.                      

DEPENDENCE ON DISTRIBUTORS AND SIGNIFICANT CUSTOMER                             

   The Company's success depends in part upon its ability to attract, retain
and motivate a large base of distributors, and its ability to maintain a        
satisfactory relationship with GNC. Tree of Life, the Company's largest         
distributor, and GNC accounted for approximately 28% and 22%, respectively, of  
the Company's net sales in 1995. The loss of Tree of Life as a distributor or   
GNC as a customer, or the loss of a significant number of other distributors, or
a significant reduction in purchase volume by Tree of Life, GNC or such other   
distributors, for any reason, would have a material adverse effect on the       
Company's results of operations and financial condition. See "Business -- Sales 
and Distribution."                                                              

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AVAILABILITY OF RAW MATERIALS                                                   

     Substantially all of the Company's herbal supplements and herb teas contain
ingredients that are harvested by and obtained from third-party suppliers, and  
many of those ingredients are harvested internationally and only once per year  
or on a seasonal basis. An unexpected interruption of supply, such as a harvest 
failure, could cause the Company's results of operations derived from such      
products to be adversely affected. Although the Company has generally been able 
to raise its prices in response to significant increases in the cost of such    
ingredients, the Company has not always in the past been, and may not in the    
future always be, able to raise prices quickly enough to offset the effects of  
such increased raw material costs.                                              

INTELLECTUAL PROPERTY PROTECTION                                                

  The Company's trademarks are valuable assets which are very important to
the marketing of its products. The Company's policy is to pursue registrations  
for all of the trademarks associated with its key products. The Company has     
approximately 250 trademark registrations with the United States Patent and     
Trademark Office. The Company relies on common law trademark rights to protect  
its unregistered trademarks. Common law trademark rights do not provide the     
Company with the same level of protection as would U.S. federal registered      
trademarks. In addition, common law trademark rights extend only to the         
geographic area in which the trademark is actually used, while U.S. federal     
registration prohibits the use of the trademark by any third party anywhere in  
the United States.                                                              

CONTROL BY PRINCIPAL STOCKHOLDERS                                               

     As of August 31, 1996, GEI owned 48%, the Continuing Stockholders owned 45%
and other investors owned 7% of the common stock of TLC, which in turn owned    
100% of the common stock of the Company. Although the board of directors of each
of TLC and the Company consists of the Blechman Brothers and three GEI          
representatives, a majority of TLC's stockholders have the ability to effect the
election of a majority of the members of such boards of directors. However,     
regardless of the composition of such boards of directors, pursuant to the terms
of the Stockholders Agreement (as defined herein), a wide range of actions to be
taken by TLC and the Company will generally require approval of a majority of   
each of the GEI and the Blechman director groups. In addition, certain          
fundamental corporate actions generally require an affirmative vote of holders  
of at least 80% of the issued and outstanding shares of common stock of TLC.    
These super majority provisions are generally only effective until the          
occurrence of a Public Offering Event (as defined herein). See "Principal       
Stockholders -- Terms of the Stockholders Agreement." Thus, if the              
representatives of GEI and the Blechman Brothers are not able to reach consensus
on matters requiring such super majority approval, the operations and growth of 
the Company could be adversely affected.                                        

WAIVER OF DEFAULTS; AMENDMENT OF INDENTURE AND NOTES                            

    Pursuant to the terms of the Indenture, holders of a majority in aggregate
principal amount of the Notes at the time outstanding may waive on behalf of all
of the Holders any default by the Company except a default with respect to any  
provision requiring supermajority or unanimous approval to amend (which default 
may only be waived by such supermajority or unanimous approval, as the case may 
be) and except for a default in the payment of principal of, premium on, or     
interest on any Note. Similarly, the Company, the Guarantors and the Trustee    
may, with the consent of holders of not less than a majority in aggregate       
principal amount of the Notes at the time outstanding, amend or supplement the  
Indenture or modify the rights of holders of the Notes; provided, however, that 
for certain fundamental modifications to the terms of the Indenture or the      
rights of the holders of the Notes (including, but not limited to, further      
subordination of the Notes, changes to the maturity and certain payment         
provisions of the Notes and amendments to the Change of Control provisions of   
the Indenture), supermajority, and in some cases unanimous, consent of the      
holders of the Notes then outstanding is required. See "Description of the New  
Notes -- Events of Default and Remedies" and "-- Amendments and Supplements."   

CONSEQUENCES OF FAILURE TO EXCHANGE                                             

Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions  
on transfer of such Old Notes as set forth in the legend                        

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thereon as a consequence of the issuance of the Old Notes pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the   
Securities Act and applicable state securities laws. In general, the Old Notes  
may not be offered or sold, unless registered under the Securities Act, except  
pursuant to an exemption from, or in a transaction not subject to, the          
Securities Act and applicable state securities laws. The Company does not       
currently anticipate that it will register the Old Notes under the Securities   
Act. New Notes issued pursuant to the Exchange Offer in exchange for Old Notes  
may be offered for resale, resold or otherwise transferred by Holders thereof   
(other than any such holder which is an "affiliate" of the Company or any       
Guarantor within the meaning of Rule 405 under the Securities Act and other than
any broker-dealer who purchased Old Notes directly from the Company for resale  
pursuant to Rule 144A under the Securities Act or any other available exemption 
under the Securities Act) without compliance with the registration and          
prospectus delivery provisions of the Securities Act provided that such New     
Notes are acquired in the ordinary course of such holders' business and such    
holders have no arrangement with any person to participate in the distribution  
of such Notes. Each broker-dealer that acquired Old Notes for its own account as
a result of market making or other trading activities and that receives New     
Notes for its own account pursuant to the Exchange Offer must acknowledge that  
it will deliver a prospectus in connection with any resale of such New Notes.   
The Letter of Transmittal states that, by so acknowledging and by delivering a  
prospectus, a broker-dealer will not be deemed to admit that it is an           
"underwriter" within the meaning of the Securities Act. This Prospectus, as it  
may be amended or supplemented form time to time, may be used by a broker-dealer
in connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired by such broker-dealer as a result of market-making 
activities or other trading activities. The Company has agreed that, for a      
period of 180 days after the effective date of this Prospectus, it will make    
this Prospectus available to any broker-dealer for use in connection with any   
such resale. See "Plan of Distribution." However, to comply with the securities 
laws of certain jurisdictions, if applicable, the New Notes may not be offered  
or sold unless they have been registered or qualified for sale in such          
jurisdictions or an exemption from registration or qualification is available   
and is complied with. To the extent that Old Notes are tendered and accepted in 
the Exchange Offer, the trading market for untendered and tendered but          
unaccepted Old Notes will be adversely affected.                                

ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES                                      

  The New Notes are a new issue of securities, have no established trading
market and may not be widely distributed. The Company does not intend to list   
the New Notes on any national securities exchange or to seek the admission      
thereof to trading in the National Association of Securities Dealers Automated  
Quotation system. Although the New Notes are expected to be eligible for trading
in the PORTAL market, no assurance can be given that an active public or other  
market will develop for the New Notes or as to the liquidity of or the trading  
market for the New Notes. If a trading market does not develop or is not        
maintained, holders of the New Notes may experience difficulty in reselling the 
New Notes or may be unable to sell them at all. If a market for the New Notes   
develops, any such market may be discontinued at any time. If a public trading  
market develops for the New Notes, future trading prices of the New Notes will  
depend on many factors, including, among other things, prevailing interest      
rates, the Company's results of operations and the market for similar           
securities, and the price at which the holders of New Notes will be able to sell
such New Notes is not assured and the New Notes could trade at a premium or     
discount to their purchase price or face value. Depending on prevailing interest
rates, the market for similar securities and other facts, including the         
financial condition of the Company, the New Notes may trade at a discount from  
their principal amount.                                                         

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THE EXCHANGE OFFER

PURPOSE AND EFFECT                                                              

    The Old Notes were sold by the Company to the Initial Purchasers on May 7,
1996, pursuant to the Purchase Agreement. The Initial Purchasers subsequently   
resold the Old Notes in reliance on Rule 144A under the Securities Act and      
certain other exemptions under the Securities Act. The Company and the Initial  
Purchasers also entered into the Registration Rights Agreement, pursuant to     
which the Company agreed, with respect to the Old Notes and subject to the      
Company's determination that the Exchange Offer is permitted under applicable   
law, to (i) cause to be filed, on or prior to July 6, 1996, a registration      
statement with the Commission under the Securities Act concerning the Exchange  
Offer, (ii) use its reasonable best efforts to cause such registration statement
to be declared effective by the Commission on or prior to September 19, 1996 and
(iii) to cause the Exchange Offer to remain open for a period of not less than  
30 days. This Exchange Offer is intended to satisfy the Company's exchange offer
obligations under the Registration Rights Agreement.                            

TERMS OF THE EXCHANGE OFFER                                                     

     The Company hereby offers, upon the terms and subject to the conditions set
forth herein and in the accompanying Letter of Transmittal, to exchange $1,000  
in principal amount of the New Notes for each $1,000 in principal amount of the 
outstanding Old Notes. The Company will accept for exchange any and all Old     
Notes that are validly tendered on or prior to 5:00 p.m., New York City time, on
the Expiration Date. Tenders of the Old Notes may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is 
not conditioned upon any minimum principal amount of Old Notes being tendered   
for exchange. However, the Exchange Offer is subject to the conditions, terms   
and provisions of the Registration Rights Agreement. The form and terms of the  
New Notes will be identical in all material respects to the form and terms of   
the Old Notes, except that (i) the New Notes have been registered under the     
Securities Act and, therefore, will not bear legends restricting the transfer   
thereof, (ii) holders of New Notes will not be entitled to Liquidated Damages   
and (iii) holders of New Notes will not be, and upon consummation of the        
Exchange Offer, Eligible Holders of Old Notes will no longer be, entitled to    
certain rights under the Registration Rights Agreement intended for holders of  
unregistered securities. See "Conditions of the Exchange Offer."                

Old Notes may be tendered only in multiples of $1,000. Subject to the 
foregoing, Eligible Holders may tender less than the aggregate principal amount 
represented by the Old Notes held by them, provided that they appropriately     
indicate this fact on the Letter of Transmittal accompanying the tendered Old   
Notes (or so indicate pursuant to the procedures for book-entry transfer).      

  As of the date of this Prospectus, $100.0 million in aggregate principal
amount of the Old Notes is outstanding, the maximum amount authorized by the    
Indenture for all Notes. As of September 15, 1996, there were two registered    
holders of the Old Notes, including Cede, which held $97.95 million of aggregate
principal amount of the Old Notes for 38 of its participants. Solely for reasons
of administration (and for no other purpose), the Company has fixed the close of
business on September 15, 1996, as the record date (the "Record Date") for      
purposes of determining the persons to whom this Prospectus and the Letter of   
Transmittal will be mailed initially. Only an Eligible Holder of the Old Notes  
(or such Eligible Holder's legal representative or attorney-in-fact) may        
participate in the Exchange Offer. There will be no fixed record date for       
determining Eligible Holders of the Old Notes entitled to participate in the    
Exchange Offer. The Company believes that, as of the date of this Prospectus, no
such Eligible Holder is an affiliate (as defined in Rule 405 under the          
Securities Act) of the Company or any of the Guarantors.                        

 The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the     
Exchange Agent. The Exchange Agent will act as agent for the tendering Eligible 
Holders of Old Notes and for the purposes of receiving the New Notes from the   
Company.                                                                        

If any tendered Old Notes are not accepted for exchange because of an 
invalid tender, the occurrence of certain other events set forth herein or      
otherwise, certificates for any such unaccepted Old Notes will be returned,     
without expense, to the tendering Eligible Holder thereof as promptly as        
practicable after the Expiration Date.                                          

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EXPIRATION DATE; EXTENSIONS; AMENDMENTS                                         

 The Expiration Date shall be Friday, October 25, 1996 at 5:00 p.m., New
York City time, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the Expiration Date shall be the latest date and time to   
which the Exchange Offer is extended.                                           

     In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public         
announcement thereof, each prior to 9:00 a.m., New York City time, on the next  
business day after the previously scheduled Expiration Date. Such notice and    
public announcement shall set forth the new Expiration Date of the Exchange     
Offer.                                                                          

The Company reserves the right, in its sole discretion, (i) to delay  
accepting any Old Notes, (ii) to extend the Exchange Offer, (iii) if any of the 
conditions set forth below under "Conditions of the Exchange Offer" shall not   
have been satisfied, to terminate the Exchange Offer by giving oral or written  
notice of such delay, extension, or termination to the Exchange Agent and (iv)  
to amend the terms of the Exchange Offer in any manner. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,  
the Company will, in accordance with applicable law, file a post-effective      
amendment to the registration statement (a "Post-effective Amendment") and      
resolicit the registered holders of the Old Notes. If the Company files a       
Post-effective Amendment, it will notify the Exchange Agent of an extension of  
the Exchange Offer by oral or written notice, and will make a public            
announcement thereof, each prior to 9:00 a.m., New York City time, on the next  
business day after the effectiveness of such Post-effective Amendment. Such     
notice and public announcement shall set forth the new Expiration Date, which   
new Expiration Date shall be no less than five days after the then applicable   
Expiration Date.                                                                

CONDITIONS OF THE EXCHANGE OFFER                                                

    The Exchange Offer is not conditioned upon any minimum principal amount of
the Old Notes being tendered for exchange. However, notwithstanding any other   
provisions of the Exchange Offer, the Company shall not be required to accept   
for exchange, or to issue the New Notes in exchange for, any Old Notes, if the  
Exchange Offer violates any applicable law or interpretation of the staff of the
Commission. The Company expects that the foregoing conditions will be satisfied.

TERMINATION OF CERTAIN RIGHTS                                                   

The Registration Rights Agreement provides that, subject to certain   
exceptions, in the event of a Registration Default (as defined below), Eligible 
Holders of Old Notes are entitled to receive Liquidated Damages of $0.05 per    
week per $1,000 principal amount of Old Notes held by such holders (up to a     
maximum of $0.30 per week per $1,000 principal amount of Old Notes). A          
"Registration Default" with respect to the Exchange Offer shall generally occur 
if: (i) the registration statement concerning the exchange offer (the           
"Registration Statement") has not been filed with the Commission on or prior to 
July 6, 1996; (ii) the Registration Statement is not declared effective on or   
prior to September 19, 1996 (the "Effectiveness Target Date") or (iii) the      
Exchange Offer is not consummated within 45 days after the earlier of the       
effectiveness of the Registration Statement and the Effectiveness Target Date.  
Holders of New Notes will not be and, upon consummation of the Exchange Offer,  
Eligible Holders of Old Notes will no longer be, entitled to (i) the right to   
receive the Liquidated Damages or (ii) certain other rights under the           
Registration Rights Agreement intended for holders of Transfer Restricted       
Securities. The Exchange Offer shall be deemed consummated upon the occurrence  
of the delivery by the Company to the Registrar under the Indenture of New Notes
in the same aggregate principal amount as the aggregate principal amount of Old 
Notes that are tendered by holders thereof pursuant to the Exchange Offer.      

ACCRUED INTEREST ON THE OLD NOTES                                               

    The New Notes will bear interest at a rate equal to 10 1/4% per annum from
and including their date of issuance. Eligible Holders whose Old Notes are      
accepted for exchange will have the right to receive interest accrued thereon   
from the date of their original issuance or the last Interest Payment Date, as  
applicable, to, but not including, the date of issuance of the New Notes, such  
interest to be payable with the first interest payment on the New Notes.        
Interest on the Old Notes accepted for exchange, which interest accrued at the  
rate of 10 1/4% per annum, will cease to accrue on the day prior to the issuance
of the New Notes. See "Description of New Notes -- Principal, Maturity and      
Interest."                                                                      

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PROCEDURES FOR TENDERING OLD NOTES                                              

 The tender of an Eligible Holder's Old Notes as set forth below and the
acceptance thereof by the Company will constitute a binding agreement between   
the tendering Eligible Holder and the Company upon the terms and subject to the 
conditions set forth in this Prospectus and in the accompanying Letter of       
Transmittal. Except as set forth below, an Eligible Holder who wishes to tender 
Old Notes for exchange pursuant to the Exchange Offer must transmit such Old    
Notes, together with a properly completed and duly executed Letter of           
Transmittal, including all other documents required by such Letter of           
Transmittal, to the Exchange Agent at the address set forth on the back cover   
page of this Prospectus prior to 5:00 p.m., New York City time, on the          
Expiration Date. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE ELIGIBLE HOLDER.
IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY   
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF DELIVERY BY MAIL, IT
IS RECOMMENDED THAT THE ELIGIBLE HOLDER USE AN OVERNIGHT OR HAND DELIVERY       
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY       
DELIVERY.                                                                       

     Each signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange   
pursuant hereto are tendered (i) by a registered holder of the Old Notes who has
not completed either the box entitled "Special Exchange Instructions" or the box
entitled "Special Delivery Instructions" in the Letter of Transmittal or (ii) by
an Eligible Institution (as defined). In the event that a signature on a Letter 
of Transmittal or a notice of withdrawal, as the case may be, is required to be 
guaranteed, such guarantee must be by a firm which is a member of a registered  
national securities exchange or the National Association of Securities Dealers, 
Inc., a commercial bank or trust company having an office or correspondent in   
the United States or otherwise be an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (collectively, "Eligible         
Institutions"). If the Letter of Transmittal is signed by a person other than   
the registered holder of the Old Notes, the Old Notes surrendered for exchange  
must either (i) be endorsed by the registered holder, with the signature thereon
guaranteed by an Eligible Institution or (ii) be accompanied by a bond power, in
satisfactory form as determined by the Company in its sole discretion, duly     
executed by the registered holder, with the signature thereon guaranteed by an  
Eligible Institution. The term "registered holder" as used herein with respect  
to the Old Notes means any person in whose name the Old Notes are registered on 
the books of the Registrar.                                                     

All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Old Notes tendered for exchange will be  
determined by the Company in its sole discretion, which determination shall be  
final and binding. The Company reserves the absolute right to reject any and all
Old Notes not properly tendered and to reject any Old Notes the Company's       
acceptance of which might, in the judgment of the Company or its counsel, be    
unlawful. The Company also reserves the absolute right to waive any defects or  
irregularities or conditions of the Exchange Offer as to particular Old Notes   
either before or after the Expiration Date (including the right to waive the    
ineligibility of any holder who seeks to tender Old Notes in the Exchange       
Offer). The interpretation of the terms and conditions of the Exchange Offer    
(including the Letter of Transmittal and the instructions thereto) by the       
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes for exchange must be     
cured within such period of time as the Company shall determine. The Company    
will use reasonable efforts to give notification of defects or irregularities   
with respect to tenders of Old Notes for exchange but shall not incur any       
liability for failure to give such notification. Tenders of the Old Notes will  
not be deemed to have been made until such irregularities have been cured or    
waived.                                                                         

     If any Letter of Transmittal, endorsement, bond power, power of attorney or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, corporation or other person acting in a fiduciary or representative   
capacity, such person should so indicate when signing, and, unless waived by the
Company, proper evidence satisfactory to the Company, in its sole discretion, of
such person's authority to so act must be submitted.                            

Any beneficial owner of the Old Notes (a "Beneficial Owner") whose Old
Notes are registered in the name of a broker, dealer, commercial bank, trust    
company or other nominee and who wishes to tender Old                           

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Notes in the Exchange Offer should contact such registered holder promptly and  
instruct such registered holder to tender on such Beneficial Owner's behalf. If 
such Beneficial Owner wishes to tender directly, such Beneficial Owner must,    
prior to completing and executing the Letter of Transmittal and tendering Old   
Notes, make appropriate arrangements to register ownership of the Old Notes in  
such Beneficial Owner's name. Beneficial Owners should be aware that the        
transfer of registered ownership may take considerable time.                    

  By tendering, each registered holder will represent to the Company that,
among other things (i) the New Notes to be acquired in connection with the      
Exchange Offer by the Eligible Holder and each Beneficial Owner of the Old Notes
are being acquired by the Eligible Holder and each Beneficial Owner in the      
ordinary course of business of the Eligible Holder and each Beneficial Owner,   
(ii) the Eligible Holder and each Beneficial Owner are not participating, do not
intend to participate, and have no arrangement or understanding with any person 
to participate, in the distribution of the New Notes, (iii) the Eligible Holder 
and each Beneficial Owner acknowledge and agree that any person participating in
the Exchange Offer for the purpose of distributing the New Notes must comply    
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction of the New Notes acquired by  
such person and cannot rely on the position of the staff of the Commission set  
forth in no-action letters that are discussed herein under "Resales of New      
Notes," (iv) that if the Eligible Holder is a broker-dealer that acquired Old   
Notes as a result of market making or other trading activities, it will deliver 
a prospectus in connection with any resale of New Notes acquired in the Exchange
Offer, (v) the Eligible Holder and each Beneficial Owner understand that a      
secondary resale transaction described in clause (iii) above should be covered  
by an effective registration statement containing the selling security holder   
information required by Item 507 of Regulation S-K of the Commission and (vi)   
neither the Eligible Holder nor any Beneficial Owner is an "affiliate," as      
defined under Rule 405 of the Securities Act, of the Company or any Guarantor   
except as otherwise disclosed to the Company in writing. In connection with a   
book-entry transfer, each participant will confirm that it makes the            
representations and warranties contained in the Letter of Transmittal.          

    Guaranteed Delivery Procedures.  Eligible Holders who wish to tender their
Old Notes and (i) whose Old Notes are not immediately available or (ii) who     
cannot deliver their Old Notes or any other documents required by the Letter of 
Transmittal to the Exchange Agent prior to the Expiration Date (or complete the 
procedure for book-entry transfer on a timely basis), may tender their Old Notes
according to the guaranteed delivery procedures set forth in the Letter of      
Transmittal. Pursuant to such procedures: (i) such tender must be made by or    
through an Eligible Institution and a Notice of Guaranteed Delivery (as defined 
in the Letter of Transmittal) must be signed by such Eligible Holder, (ii) on or
prior to the Expiration Date, the Exchange Agent must have received from the    
Eligible Holder and the Eligible Institution a properly completed and duly      
executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand 
delivery) setting forth the name and address of the Eligible Holder, the        
certificate number or numbers of the tendered Old Notes, and the principal      
amount of tendered Old Notes, stating that the tender is being made thereby and 
guaranteeing that, within three (3) business days after the date of delivery of 
the Notice of Guaranteed Delivery, the tendered Old Notes, a duly executed      
Letter of Transmittal and any other required documents will be deposited by the 
Eligible Institution with the Exchange Agent and (iii) such properly completed  
and executed documents required by the Letter of Transmittal and the tendered   
Old Notes in proper form for transfer (or confirmation of a book-entry transfer 
of such Old Notes into the Exchange Agent's account at DTC) must be received by 
the Exchange Agent within three (3) business days after the Expiration Date. Any
Eligible Holder who wishes to tender Old Notes pursuant to the guaranteed       
delivery procedures described above must ensure that the Exchange Agent receives
the Notice of Guaranteed Delivery and Letter of Transmittal relating to such Old
Notes prior to 5:00 p.m., New York City time, on the Expiration Date.           

 Book-Entry Delivery.  The Exchange Agent will establish an account with
respect to the Old Notes at the DTC ("Book-Entry Transfer Facility") for        
purposes of the Exchange Offer promptly after the date of this Prospectus. Any  
financial institution that is a participant in the Book-Entry Transfer          
Facility's system may make book-entry delivery of the Old Notes by causing such 
facility to transfer Old Notes into the Exchange Agent's account in accordance  
with such facility's procedure for such transfer. Even though delivery of Old   
Notes may be effected through book-entry transfer into the Exchange Agent's     
account at the Book-Entry Transfer Facility, a properly completed and duly      
executed Letter of Transmittal (or a manually signed facsimile thereof), with   
any required signature guarantees, or an Agent's Message (as defined below) in  

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connection with a book-entry transfer, and other documents required by the      
Letter of Transmittal, must, in any case, be transmitted to and received by the 
Exchange Agent at one of its addresses set forth on the back cover of this      
Prospectus before the Expiration Date, or the guaranteed delivery procedure set 
forth above must be followed. Delivery of the Letter of Transmittal and any     
other required documents to the Book-Entry Transfer Facility does not constitute
delivery to the Exchange Agent. The term "Agent's Message" means a message      
transmitted by the Book-Entry Transfer Facility to, and received by, the        
Exchange Agent and forming a part of a book-entry Confirmation, which states    
that such Book-Entry Transfer Facility has received an express acknowledgment   
from the participant in such Book-Entry Transfer Facility tendering the Old     
Notes that such participant has received and agrees to be bound by the terms of 
the Letter of Transmittal and that the Company may enforce such agreement       
against such participant.                                                       

ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES                     

  Upon satisfaction or waiver of all the conditions to the Exchange Offer,
the Company will accept any and all Old Notes that are properly tendered in the 
Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date.  
The New Notes issued pursuant to the Exchange Offer will be delivered promptly  
after acceptance of the Old Notes. For purposes of the Exchange Offer, the      
Company shall be deemed to have accepted validly tendered Old Notes, when, as,  
and if the Company has given oral or written notice thereof to the Exchange     
Agent.                                                                          

  In all cases, issuances of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt  
by the Exchange Agent of such Old Notes, a properly completed and duly executed 
Letter of Transmittal and all other required documents (or of confirmation of a 
book-entry transfer of such Old Notes into the Exchange Agent's account at DTC);
provided, however, that the Company reserves the absolute right to waive any    
defects or irregularities in the tender or conditions of the Exchange Offer. If 
any tendered Old Notes are not accepted for any reason, such unaccepted Old     
Notes will be returned without expense to the tendering Eligible Holder thereof 
as promptly as practicable after the expiration or termination of the Exchange  
Offer.                                                                          

WITHDRAWAL RIGHTS                                                               

   Tenders of the Old Notes may be withdrawn by delivery of a written notice
to the Exchange Agent, at its address set forth on the back cover page of this  
Prospectus, at any time prior to 5:00 p.m., New York City time, on the          
Expiration Date. Any such notice of withdrawal must (i) specify the name of the 
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)   
identify the Old Notes to be withdrawn (including the certificate number or     
numbers and principal amount of such Old Notes, as applicable), (iii) be signed 
by the Eligible Holder in the same manner as the original signature on the      
Letter of Transmittal by which such Old Notes were tendered (including any      
required signature guarantees) or be accompanied by a bond power in the name of 
the person withdrawing the tender, in satisfactory form as determined by the    
Company in its sole discretion, duly executed by the registered holder, with the
signature thereon guaranteed by an Eligible Institution together with the other 
documents required upon transfer by the Indenture, and (iv) specify the name in 
which such Old Notes are to be re-registered, if different from the Depositor,  
pursuant to such documents of transfer. Any questions as to the validity, form  
and eligibility (including time of receipt) of such notices will be determined  
by the Company, in its sole discretion. The Old Notes so withdrawn will be      
deemed not to have been validly tendered for exchange for purposes of the       
Exchange Offer. Any Old Notes which have been tendered for exchange but which   
are withdrawn will be returned to the Eligible Holder thereof without cost to   
such Eligible Holder as soon as practicable after withdrawal. Properly withdrawn
Old Notes may be retendered by following one of the procedures described under  
"The Exchange Offer -- Procedures for Tendering Old Notes" at any time on or    
prior to the Expiration Date.                                                   

THE EXCHANGE AGENT; ASSISTANCE                                                  

     Fleet National Bank is the Exchange Agent. All tendered Old Notes, executed
Letters of Transmittal and other related documents should be directed to the    
Exchange Agent. Questions and requests for assistance and                       

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requests for additional copies of the Prospectus, the Letter of Transmittal and 
other related documents should be addressed to the Exchange Agent as follows:   

                                                                [Download Table]
                                                                                 
         By Mail:            By Hand/Overnight Express:   Facsimile Transmission:
    Fleet National Bank          Fleet National Bank          (860) 986-7908     
      777 Main Street              777 Main Street          To confirm receipt:  
      MSN CT/MO/0224               MSN CT/MO/0224           Tel. (860) 986-1271  
Hartford, Connecticut 06115  Hartford, Connecticut 06115                         
Attention: Corporate Trust   Attention: Corporate Trust                          
        Operations                   Operations                                  

SOLICITATION OF TENDERS; FEES AND EXPENSES                                      

No person has been authorized to give any information or to make any  
representation in connection with the Exchange Offer other than those contained 
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the        
delivery of this Prospectus nor any exchange made hereunder shall, under any    
circumstances, create any implication that there has been no change in the      
affairs of the Company since the respective dates as of which information is    
given herein. The Exchange Offer is not being made to (nor will offers be       
accepted from or on behalf of) holders of Notes in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in          
compliance with the laws of such jurisdiction. However, the Company may, at its 
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holders of Notes in   
such jurisdiction.                                                              

   All expenses incident to the Company's consummation of the Exchange Offer
and compliance with the Registration Rights Agreement will be borne by the      
Company, including, without limitation: (i) all registration and filing fees    
(including, without limitation, fees and expenses of compliance with state      
securities or Blue Sky laws), (ii) printing expenses (including, without        
limitation, expenses of printing certificates for the New Notes in a form       
eligible for deposit with DTC and of printing Prospectuses), (iii) messenger,   
telephone and delivery expenses, (iv) fees and disbursements of counsel for the 
Company and the Guarantors, (v) fees and disbursements of independent certified 
public accountants, (vi) rating agency fees, (vii) internal expenses of the     
Company and the Guarantors (including, without limitation, all salaries and     
expenses of officers and employees of the Company and the Guarantors performing 
legal or accounting duties), and (ix) fees and expenses, if any, incurred in    
connection with the listing of the New Notes on a securities exchange.          

The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others     
soliciting acceptance of the Exchange Offer. The Company, however, will pay the 
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.           

     The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, a transfer tax is     
imposed for any reason other than the exchange of Old Notes pursuant to the     
Exchange Offer, then the amount of any such transfer taxes (whether imposed on  
the registered holder or any other persons) will be payable by the tendering    
holder. If satisfactory evidence of payment of such taxes or exemption is not   
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.                                    

ACCOUNTING TREATMENT                                                            

     The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in the Company's accounting records on the date of the exchange.   
Accordingly, no gain or loss will be recognized by the Company for accounting   
purposes. The expenses of the Exchange Offer will be amortized over the term of 
the New Notes.                                                                  

RESALES OF THE NEW NOTES                                                        

Based on interpretations by the staff of the Commission set forth in  
no-action letters issued to third parties, the Company believes that the New    
Notes issued pursuant to the Exchange Offer to an Eligible Holder in exchange   
for Old Notes may be offered for resale, resold and otherwise transferred by    
such Eligible                                                                   

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Holder (other than (i) a broker-dealer who purchased Old Notes directly from the
Company for resale pursuant to Rule 144A under the Securities Act or any other  
available exemption under the Securities Act, or (ii) a person that is an       
affiliate of the Company or any of the Guarantors within the meaning of Rule 405
under the Securities Act) without compliance with the registration and          
prospectus delivery provisions of the Securities Act, provided that the Eligible
Holder is acquiring the New Notes in the ordinary course of business and is not 
participating, and has no arrangement or understanding with any person to       
participate, in the distribution of the New Notes. The Company has not requested
or obtained an interpretive letter from the Commission staff with respect to    
this Exchange Offer, and the Company and the Eligible Holders are not entitled  
to rely on interpretive advice provided by the staff to other persons, which    
advice was based on the facts and conditions represented in such letters.       
However, the Exchange Offer is being conducted in a manner intended to be       
consistent with the facts and conditions represented in such letters. If any    
Eligible Holder acquires New Notes in the Exchange Offer for the purpose of     
distributing or participating in a distribution of the New Notes, such Eligible 
Holder cannot rely on the position of the staff of the Commission enunciated in 
Morgan Stanley & Co., Incorporated (available June 5, 1991) and Exxon Capital   
Holdings Corporation (available May 13, 1988), or interpreted in the            
Commission's letters to Shearman and Sterling (available July 2, 1993) and K-III
Communications Corporation (available May 14, 1993), or similar no-action or    
interpretive letters and must comply with the registration and prospectus       
delivery requirements of the Securities Act in connection with a secondary      
resale transaction, unless an exemption from registration is otherwise          
available. Each broker-dealer that receives New Notes for its own account in    
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market making or other trading activities, must acknowledge that 
it will deliver a prospectus in connection with any resale of such New Notes.   
The Company has agreed that for a period of 180 days after the effective date of
this Prospectus, it will make this Prospectus, as amended and supplemented,     
available to any broker-dealer who receives New Notes in the Exchange Offer for 
use in connection with any such resale. See "Plan of Distribution."             

CONSEQUENCE OF FAILURE TO EXCHANGE                                              

Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions  
on transfer of such Old Notes as set forth in the legend thereon as a           
consequence of the offer or sale of the Old Notes pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the        
Securities Act and applicable state securities laws. In general, the Old Notes  
may not be offered or sold, unless registered under the Securities Act, except  
pursuant to an exception from, or in a transaction not subject to, the          
Securities Act and applicable states securities laws. The Company does not      
currently anticipate that it will register the Old Notes under the Securities   
Act. See "Risk Factors -- Consequences of Failure to Exchange."                 

OTHER                                                                           

    Participation in the Exchange Offer is voluntary, and holders of Old Notes
should carefully consider whether to participate. Holders of the Old Notes are  
urged to consult their financial and tax advisers in making their own decisions 
on what action to take.                                                         

As a result of the making of, and upon acceptance for exchange of all 
validly tendered Old Notes pursuant to the terms of, this Exchange Offer, the   
Company will have fulfilled a covenant contained in the Registration Rights     
Agreement. Holders of Old Notes who do not tender their Old Notes in the        
Exchange Offer will continue to hold such Notes and will be entitled to all the 
rights, and limitations applicable thereto, under the Indenture, except for any 
such rights under the Registration Rights Agreement that by their terms         
terminate or cease to have further effectiveness as a result of the making of   
this Exchange Offer. See "Description of New Notes." All untendered Old Notes   
will continue to be subject to the restrictions on transfer set forth in the    
Indenture. To the extent that Old Notes are tendered and accepted in the        
Exchange Offer, the trading market for untendered Old Notes could be adversely  
affected.                                                                       

    The Company may in the future seek to acquire untendered Old Notes in open
market or privately negotiated transactions, through subsequent exchange offers 
or otherwise. The Company has no present plan to acquire any Old Notes which are
not tendered in the Exchange Offer.                                             

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CAPITALIZATION

 The following tables set forth the actual capitalization of TLC and its
direct and indirect subsidiaries as of June 30, 1996 and the capitalization of  
Twin Laboratories Inc. and its subsidiary, ARP, at that date. This table should 
be read in conjunction with the Consolidated Financial Statements of TLC and the
notes thereto included elsewhere in this Prospectus.                            

CAPITALIZATION OF TLC 

                                                        [Enlarge/Download Table]

                                                                                    AS OF     
                                                                                JUNE 30, 1996 
                                                                                --------------
                                                                                    ACTUAL    
                                                                                --------------
                                                                                (IN THOUSANDS)
                                                                                              
Cash and cash equivalents and marketable securities............................   $    8,185  
                                                                                 ===========  
Long-term debt (including current portion)                                                    
  New Credit Facility..........................................................   $   50,000  
  Notes........................................................................      100,000  
  Other debt...................................................................          362  
  Capital lease obligations....................................................          373  
                                                                                --------------
          Total long-term debt.................................................      150,735  
                                                                                --------------
Senior redeemable cumulative Preferred Stock...................................       30,000  
                                                                                --------------
Junior redeemable cumulative Preferred Stock...................................       37,000  
                                                                                --------------
Shareholders' deficit                                                                         
  Capital stock................................................................        1,000  
  Additional paid-in capital...................................................       80,701  
  Accumulated deficit..........................................................     (176,422) 
                                                                                --------------
          Total shareholders' deficit..........................................      (94,721) 
                                                                                --------------
          Total capitalization.................................................   $  123,014  
                                                                                 ===========  

CAPITALIZATION OF TWIN LABORATORIES INC.

                                                        [Enlarge/Download Table]

                                                                                    AS OF     
                                                                                JUNE 30, 1996 
                                                                                --------------
                                                                                    ACTUAL    
                                                                                --------------
                                                                                (IN THOUSANDS)
                                                                                              
Cash and cash equivalents and marketable securities............................   $    8,185  
                                                                                 ===========  
Long-term debt (including current portion)                                                    
  New Credit Facility..........................................................   $   50,000  
  Notes........................................................................      100,000  
  Other debt...................................................................          362  
  Capital lease obligations....................................................          373  
                                                                                --------------
          Total long-term debt.................................................      150,735  
                                                                                --------------
Shareholder's deficit                                                                         
  Capital stock................................................................          253  
  Additional paid-in capital...................................................      129,756  
  Accumulated deficit..........................................................     (156,483) 
                                                                                --------------
          Total shareholder's deficit..........................................      (26,474) 
                                                                                --------------
          Total capitalization.................................................   $  124,261  
                                                                                 ===========  

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA 

    The following unaudited pro forma financial data have been prepared by the
Company's management from the Consolidated Financial Statements of TLC and the  
notes thereto included elsewhere in this Prospectus. The unaudited pro forma    
condensed consolidated statements of income for the year ended December 31, 1995
and the six months ended June 30, 1995 and 1996 reflect adjustments as if the   
Transactions had been consummated and were effective as of January 1, 1995. See 
"Prospectus Summary -- The Acquisition."                                        

 The financial effects of the Transactions as presented in the pro forma
financial data are not necessarily indicative of TLC's results of operations    
which would have been obtained had the Transactions actually occurred on the    
date described above, nor are they necessarily indicative of the results of     
future operations. The pro forma financial data should be read in conjunction   
with the notes thereto, which are an integral part thereof, and with the        
Consolidated Financial Statements of TLC and the notes thereto included         
elsewhere in this Prospectus.                                                   

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

YEAR ENDED DECEMBER 31, 1995

                                                        [Enlarge/Download Table]

                                                                                        PRO    
                                                            HISTORICAL   ADJUSTMENTS   FORMA   
                                                            --------     --------     -------- 
                                                              (IN THOUSANDS, EXCEPT RATIOS)    
                                                                                               
Net sales.................................................. $148,735     $     --     $148,735 
Cost of sales..............................................   89,932           --       89,932 
                                                            --------     --------     -------- 
Gross profit...............................................   58,803           --       58,803 
Operating expenses.........................................   27,191          400(a)    27,591 
                                                            --------     --------     -------- 
Income from operations.....................................   31,612         (400)      31,212 
                                                            --------     --------     -------- 
Other (expense) income:                                                                        
  Interest income..........................................      313         (313)(b)       -- 
  Interest expense.........................................     (866)     (14,818)(c)  (15,684)
  Transaction expenses.....................................     (656)         656(d)        -- 
  Other....................................................       61           --           61 
                                                            --------     --------     -------- 
                                                              (1,148)     (14,475)     (15,623)
                                                            --------     --------     -------- 
Income before provision for income taxes...................   30,464      (14,875)      15,589 
Provision for income taxes.................................      240        5,931(e)     6,171 
                                                            --------     --------     -------- 
Net income................................................. $ 30,224     $(20,806)    $  9,418 
                                                            ========     ========     ======== 
EBITDA(f).................................................. $ 33,516     $     --     $ 33,516 
Ratio of earnings to fixed charges(g)......................     24.1x                      2.0x

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SIX MONTHS ENDED JUNE 30, 1996

                                                        [Enlarge/Download Table]

                                                            HISTORICAL     ADJUSTMENTS     PRO FORMA
                                                            ----------     -----------     ---------
                                                                 (IN THOUSANDS, EXCEPT RATIOS)      
                                                                                                    
Net sales..................................................  $ 81,837        $    --        $81,837 
Cost of sales..............................................    47,852             --         47,852 
                                                            ----------     -----------     ---------
Gross profit...............................................    33,985             --         33,985 
Operating expenses.........................................    14,816            141(a)      14,957 
                                                            ----------     -----------     ---------
Income from operations.....................................    19,169           (141)        19,028 
                                                            ----------     -----------     ---------
Other (expense) income:                                                                             
  Interest income..........................................       315           (315)(b)         -- 
  Interest expense.........................................    (2,591)        (5,260)(c)     (7,851)
  Transaction expenses.....................................      (400)           400(d)          -- 
  Nonrecurring non-competition agreement expense...........   (15,300)        15,300(d)          -- 
  Other....................................................       (23)            --            (23)
                                                            ----------     -----------     ---------
                                                              (17,999)        10,125         (7,874)
                                                            ----------     -----------     ---------
Income before provision for income taxes...................     1,170          9,984         11,154 
Provision for income taxes.................................     1,833          2,629(e)       4,462 
                                                            ----------     -----------     ---------
Net income (loss)..........................................  $   (663)       $ 7,355        $ 6,692 
                                                              =======      =========       ======== 
EBITDA(f)..................................................  $ 20,470        $    --        $20,470 
Ratio of earnings to fixed charges(g)......................       1.4x                          2.4x

SIX MONTHS ENDED JUNE 30, 1995

                                                        [Enlarge/Download Table]

                                                            HISTORICAL     ADJUSTMENTS     PRO FORMA
                                                            ----------     -----------     ---------
                                                                 (IN THOUSANDS, EXCEPT RATIOS)      
                                                                                                    
Net sales..................................................  $ 69,820       $      --       $69,820 
Cost of sales..............................................    42,046              --        42,046 
                                                            ----------     -----------     ---------
Gross profit...............................................    27,774              --        27,774 
Operating expenses.........................................    13,779             200(a)     13,979 
                                                            ----------     -----------     ---------
Income from operations.....................................    13,995            (200)       13,795 
                                                            ----------     -----------     ---------
Other (expense) income:                                                                             
  Interest income..........................................       147            (147)(b)        -- 
  Interest expense.........................................      (417)         (7,427)(c)    (7,844)
  Other....................................................        96              --            96 
                                                            ----------     -----------     ---------
                                                                 (174)         (7,574)       (7,748)
                                                            ----------     -----------     ---------
Income before provision for income taxes...................    13,821          (7,774)        6,047 
Provision for income taxes.................................        92           2,302(e)      2,394 
                                                            ----------     -----------     ---------
Net income.................................................  $ 13,729       $ (10,076)      $ 3,653 
                                                              =======       =========      ======== 
EBITDA(f)..................................................  $ 14,509       $      --       $14,509 
Ratio of earnings to fixed charges(g)......................      23.0x                          1.8x

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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 
STATEMENTS OF INCOME

---------------                                                                 
(a) Represents the LGP Management Fee (as defined herein). See "Certain         
Relationships and Related Transactions -- Transactions with LGP."       
(b) Represents a reduction in interest income on cash and cash equivalents.     
(c) The interest expense adjustment is as follows:                              

                                                        [Enlarge/Download Table]

                                                                          SIX MONTHS     
                                                       YEAR ENDED       ENDED JUNE 30,   
                                                      DECEMBER 31,     ----------------- 
                                                          1995          1995       1996  
                                                      ------------     ------     ------ 
                                                                (IN THOUSANDS)           
                                                                                         
Interest expense on the Notes and the New Credit                                         
  Facility at a composite interest rate of 9.5%,                                         
  including revolving credit commitment and                                              
  administration fees................................   $ 14,676       $7,338     $5,170 
Interest expense on refinanced debt..................       (807)        (386)      (245)
                                                      ------------     ------     ------ 
                                                          13,869        6,952      4,925 
Amortization of deferred financing costs.............        949          475        335 
                                                      ------------     ------     ------ 
Interest expense adjustment..........................   $ 14,818       $7,427     $5,260 
                                                      ==========       ======     ====== 

(d) Represents a reduction in nonrecurring expenses incurred which are directly 
attributable to the Transactions.                                       
(e) Reflects (i) the net increase in the provision for income taxes assuming the
Company was a "C" corporation, and (ii) the increase in net expenses    
described in notes a, b, c and d above.                                 
(f) EBITDA represents income from operations before depreciation and            
amortization expense, and certain other charges related to legal        
    settlements, increases in inventory reserves, a tax settlement relating to a
    limited partnership interest, which interest is expected to be divested, and
   the LGP Management Fee. While EBITDA is not intended to represent cash flow
from operations as defined by GAAP and should not be considered as an   
indicator of operating performance or an alternative to cash flow (as   
measured by GAAP) as a measure of liquidity, it is included herein to   
    provide additional information with respect to the ability of the Company to
meet its future debt service, capital expenditures and working capital  
requirements. See "Management's Discussion and Analysis of Financial    
Condition and Results of Operations."                                   
(g) The ratio of earnings to fixed charges is computed by adding fixed charges  
(interest and one-third of rental expenses, representing that portion of
rental expenses attributable to interest) to income before provision for
income taxes and dividing that sum by such fixed charges.               

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SELECTED HISTORICAL FINANCIAL DATA

    The following selected consolidated financial data as of December 31, 1991
and for the year then ended and as of June 30, 1995 and 1996 and for the six    
month periods ended June 30, 1995 and 1996 are derived from the unaudited       
consolidated financial statements of TLC. In the opinion of management, the     
unaudited consolidated financial statements have been prepared on the same basis
as the audited consolidated financial statements and include all adjustments,   
consisting only of normal recurring adjustments, necessary for a fair           
presentation of the financial position and results of operations for such       
periods. The results for the interim periods are not necessarily indicative of  
the results for the related full fiscal year. The selected consolidated         
financial data as of December 31, 1992, 1993, 1994 and 1995 and for each of the 
years then ended has been derived from the audited consolidated financial       
statements of TLC. The report of Deloitte & Touche LLP, independent auditors, on
the consolidated financial statements as of December 31, 1994 and 1995, and for 
each of the three years in the period ended December 31, 1995 is included       
elsewhere herein. The selected consolidated financial data should be read in    
conjunction with, and is qualified in its entirety by, the Consolidated         
Financial Statements of TLC and the notes thereto and the other financial       
information included elsewhere in this Prospectus.                              

                                                        [Enlarge/Download Table]

                                                                                     SIX MONTHS ENDED  
                                             YEAR ENDED DECEMBER 31,                     JUNE 30,      
                                -------------------------------------------------   ------------------ 
                                 1991      1992      1993       1994       1995      1995       1996   
                                -------   -------   -------   --------   --------   -------    ------- 
                                                            (IN THOUSANDS)                             
                                                                                                       
STATEMENT OF INCOME DATA:                                                                              
  Net sales.................... $70,165   $83,014   $99,897   $117,342   $148,735   $69,820    $81,837 
  Cost of sales................  44,664    51,214    62,131     70,247     89,932    42,046     47,852 
                                -------   -------   -------   --------   --------   -------    ------- 
  Gross profit.................  25,501    31,800    37,766     47,095     58,803    27,774     33,985 
  Operating expenses...........  14,570    17,463    21,125     23,022     27,191    13,779     14,816 
                                -------   -------   -------   --------   --------   -------    ------- 
  Income from operations.......  10,931    14,337    16,641     24,073     31,612    13,995     19,169 
                                -------   -------   -------   --------   --------   -------    ------- 
  Other (expense) income:                                                                              
     Interest income...........     375       302       242        254        313       147        315 
     Interest expense..........    (461)     (494)     (487)      (761)      (866)     (417)    (2,591)
     Transaction expenses......      --        --        --         --       (656)       --       (400)
     Nonrecurring                                                                                      
       non-competition                                                                                 
       agreement expense.......      --        --        --         --         --        --    (15,300)
     Other.....................    (514)     (135)      510        354         61        96        (23)
                                -------   -------   -------   --------   --------   -------    ------- 
                                   (600)     (327)      265       (153)    (1,148)     (174)   (17,999)
                                -------   -------   -------   --------   --------   -------    ------- 
  Income before unusual item,                                                                          
     provision for income taxes                                                                        
     and extraordinary item....  10,331    14,010    16,906     23,920     30,464    13,821      1,170 
  Unusual item -- nonrecurring                                                                         
     charge for prior years'                                                                           
     income tax assessment.....      --        --        --      1,982         --        --         -- 
  Provision for income taxes...     169       651       230        245        240        92      1,833 
                                -------   -------   -------   --------   --------   -------    ------- 
  Income (loss) before                                                                                 
     extraordinary item........  10,162    13,359    16,676     21,693     30,224    13,729       (663)
  Extraordinary item...........      --        76        --         --         --        --         -- 
                                -------   -------   -------   --------   --------   -------    ------- 
  Net income (loss)............ $10,162   $13,435   $16,676   $ 21,693   $ 30,224   $13,729    $  (663)
                                =======   =======   =======   ========   ========   =======    ======= 
  PRO FORMA RELATING TO CHANGE                                                                         
     IN TAX STATUS:(A)                                                                                 
  Historical income before                                                                             
     provision for income                                                                              
     taxes..................... $10,331   $14,010   $16,906   $ 21,938   $ 30,464   $13,821    $ 1,170 
  Pro forma provision for                                                                              
     income taxes..............   4,017     5,436     6,644      9,087     12,060     5,471      6,588 
                                -------   -------   -------   --------   --------   -------    ------- 
  Pro forma net income                                                                                 
     (loss).................... $ 6,314   $ 8,574   $10,262   $ 12,851   $ 18,404   $ 8,350    $(5,418)
                                =======   =======   =======   ========   ========   =======    ======= 

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                                                        [Enlarge/Download Table]

                                                                                     SIX MONTHS ENDED  
                                             YEAR ENDED DECEMBER 31,                     JUNE 30,      
                                -------------------------------------------------   ------------------ 
                                 1991      1992      1993       1994       1995      1995       1996   
                                -------   -------   -------   --------   --------   -------    ------- 
                                                    (IN THOUSANDS, EXCEPT RATIOS)                      
                                                                                                       
OTHER DATA:                                                                                            
  EBITDA(b).................... $11,734   $15,229   $17,446   $ 25,023   $ 33,516   $14,509    $20,470 
  Capital expenditures.........   1,472     1,304     4,904      1,786      2,641     2,073        483 
  Depreciation.................     783       806       710        851        909       464        549 
  Amortization.................      20        86        95         99        102        50        193 
  Ratio of earnings to fixed                                                                           
     charges(c)................    13.7x     16.6x     19.8x      21.2x      24.1x     23.0x       1.4x

                                                        [Enlarge/Download Table]

                                               AS OF DECEMBER 31,                    AS OF JUNE 30,   
                                -------------------------------------------------  ------------------ 
                                 1991      1992      1993       1994       1995     1995       1996   
                                -------   -------   -------   --------   --------  -------    ------- 
                                                            (IN THOUSANDS)                            
                                                                                                      
BALANCE SHEET DATA:                                                                                   
  Net working capital                                                                                 
     (excluding cash and cash                                                                         
     equivalents, marketable                                                                          
     securities and current                                                                           
     debt)..................... $14,097   $18,575   $25,437   $ 35,056   $ 39,405  $35,397    $37,252 
  Property, plant and                                                                                 
     equipment, net............   7,645     7,863    10,732     12,071     13,036   13,679     12,960 
  Total assets.................  36,878    44,368    55,587     64,706     75,309   68,709    141,163 
  Total debt (including current                                                                       
     debt).....................   6,100     6,066     8,039      9,288      8,792   10,474    150,735 
  Senior and junior redeemable                                                                        
     preferred stock...........      --        --        --         --         --       --     67,000 
  Shareholders' equity                                                                                
     (deficit).................  26,587    33,180    40,543     48,671     55,405   45,903    (94,721)

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

(a) The Company consisted of S corporations and, accordingly, federal and state 
    taxes were generally paid at the shareholder level only. Upon consummation
   of the Transactions, the Company eliminated its S corporation status and,
accordingly, will be subject to federal and state income taxes.       
(b) EBITDA represents income from operations before depreciation and            
amortization expense, and certain other charges related to legal      
    settlements, increases in inventory reserves, a tax settlement relating to
    a limited partnership interest, which interest is expected to be divested,
    and the LGP Management Fee. While EBITDA is not intended to represent cash
    flow from operations as defined by GAAP and should not be considered as an
indicator of operating performance or an alternative to cash flow (as 
measured by GAAP) as a measure of liquidity, it is included herein to 
   provide additional information with respect to the ability of the Company
  to meet its future debt service, capital expenditure and working capital
requirements. See "Management's Discussion and Analysis of Financial  
Condition and Results of Operations."                                 
(c) The ratio of earnings to fixed charges is computed by adding fixed charges  
  (interest and one-third of rental expenses, representing that portion of
  rental expenses attributable to interest) to income before unusual item,
     provision for income taxes and extraordinary item, and dividing that sum by
such fixed charges.                                                   

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS                                                           

  The following discussion and analysis should be read in conjunction with
"Selected Historical Financial Data" and the audited Consolidated Financial     
Statements of TLC and the notes thereto included elsewhere in this Prospectus.  
The Company consisted of "S" corporations for the years ended December 31, 1995,
1994 and 1993 and through the consummation of the Acquisition on May 7, 1996.   
Accordingly, federal and state taxes were generally paid at the shareholder     
level only. The provision for income taxes through May 7, 1996 and for the years
ended December 31, 1995, 1994 and 1993 represented state taxes for New York,    
which imposes a corporate tax for all income in excess of $0.2 million. Upon    
consummation of the Transactions, the Company eliminated its "S" corporation    
status and, accordingly, is subject to federal and state income taxes.          

The following table sets forth, for the periods indicated, certain    
historical income statement and other data for the Company and also sets forth  
certain of such data as a percentage of net sales.                              

                                                        [Enlarge/Download Table]

                                                                                                            SIX MONTHS           
                                                            YEAR ENDED DECEMBER 31,                       ENDED JUNE 30,         
                                                ------------------------------------------------   ----------------------------- 
                                                     1993             1994             1995            1995            1996      
                                                --------------   --------------   --------------   -------------   ------------- 
                                                  $        %       $        %       $        %       $       %       $       %   
                                                ------   -----   ------   -----   ------   -----   -----   -----   -----   ----- 
                                                                             (DOLLARS IN MILLIONS)                               
                                                                                                                                 
Vitamins, Minerals & Amino Acids............... $ 29.1    29.1%  $ 32.3    27.5%  $ 37.1    24.9%  $18.3    26.2%  $19.3    23.6%
Sports Nutrition...............................   34.7    34.7     39.9    34.0     53.9    36.2    24.6    35.2    28.7    35.0 
Special Formulas...............................   23.6    23.7     31.0    26.4     41.2    27.7    16.9    24.2    21.7    26.6 
Herbal Supplements & Phytonutrients............   12.0    12.0     14.5    12.3     19.8    13.3     9.5    13.6    11.1    13.6 
Herb Teas......................................    3.0     3.0      4.2     3.6      5.8     3.9     3.2     4.6     4.1     5.0 
Publishing.....................................    2.7     2.7      3.4     3.0      4.8     3.3     2.9     4.2     2.8     3.4 
                                                ------   -----   ------   -----   ------   -----   -----   -----   -----   ----- 
  Gross Sales..................................  105.1   105.2    125.3   106.8    162.6   109.3    75.4   108.0    87.7   107.2 
  Discounts & Allowances.......................   (5.2)   (5.2)    (8.0)   (6.8)   (13.9)   (9.3)   (5.6)   (8.0)   (5.9)   (7.2)
                                                ------   -----   ------   -----   ------   -----   -----   -----   -----   ----- 
  Net Sales.................................... $ 99.9   100.0%  $117.3   100.0%  $148.7   100.0%  $69.8   100.0%  $81.8   100.0%
Gross Profit...................................   37.8    37.8     47.1    40.1     58.8    39.5    27.8    39.8    34.0    41.5 
Operating Expenses.............................   21.1    21.1     23.0    19.6     27.2    18.3    13.8    19.7    14.8    18.1 
Income From Operations.........................   16.6    16.7     24.1    20.5     31.6    21.3    14.0    20.0    19.2    23.4 
EBITDA.........................................   17.4    17.5     25.0    21.3     33.5    22.5    14.5    20.8    20.5    25.0 

SIX MONTHS ENDED JUNE 30, 1996 ("FIRST HALF 1996") COMPARED TO                  
SIX MONTHS ENDED JUNE 30, 1995 ("FIRST HALF 1995")                          

     Net Sales.  Net sales for first half 1996 was $81.8 million, an increase of
$12.0 million, or 17.2%, as compared to net sales of $69.8 million in first half
1995. The 17.2% increase was attributable to increases in gross sales in each of
the Company's six product categories other than publishing, partially offset by 
an increase in discounts and allowances which was due to the Company's increased
sales volume. Vitamins, minerals and amino acids contributed $19.3 million, an  
increase of $1.0 million, or 5.6%, as compared to $18.3 million in first half   
1995. The increase in gross sales of vitamins, minerals and amino acids was     
primarily due to continued strong consumer interest in these products. Sports   
nutrition products contributed $28.7 million, an increase of $4.1 million or    
16.6%, as compared to $24.6 million in first half 1995, primarily due to the    
increased demand for a variety of these products. Special formulas contributed  
$21.7 million, an increase of $4.8 million, or 28.9%, as compared to $16.9      
million in first half 1995. The increase in gross sales of special formulas was 
primarily due to the successful introduction of a variety of new product        
formulations. Herbal supplements and phytonutrients contributed $11.1 million,  
an increase of $1.6 million, or 16.3%, as compared to $9.5 million in first half
1995, and herb teas contributed $4.1 million, an increase of $0.9 million, or   
27.9%, as compared to $3.2 million in first half 1995. The gross sales increase 
in both herbal supplements and phytonutrients and herb teas was primarily due to
new product introductions, continued strong consumer interest in existing       
products and increased penetration of Nature's Herbs and Alvita products into   
domestic health food stores. Publishing contributed $2.8 million as compared to 
$2.9 million in first half 1995.                                                

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  Gross Profit.  Gross profit for first half 1996 was $34.0 million, which
represented an increase of $6.2 million, or 22.4%, as compared to $27.8 million 
for first half 1995. Gross profit margin was 41.5% for first half 1996 as       
compared to 39.8% for first half 1995. The overall increase in gross profit     
dollars was attributable to the Company's higher sales volume in first half     
1996. The increase in gross profit margin in first half 1996 as compared to     
first half 1995 was due primarily to a more favorable product mix, to higher    
gross profit margins on recently introduced new product formulations and product
line extensions, to a reduction in sales discounts and allowances offered on    
certain TWINLAB and Nature's Herbs products under certain sales programs        
introduced in 1995 and to continued absorption of manufacturing overhead        
expenses over a larger sales base.                                              

   Operating Expenses.  Operating expenses were $14.8 million for first half
1996, representing an increase of $1.0 million, or 7.5%, as compared to $13.8   
million for first half 1995. As a percent of net sales, operating expenses      
declined from 19.7% in first half 1995 to 18.1% in first half 1996. The increase
in operating expenses was primarily attributable to increased selling and       
advertising expenses and higher operating expenses resulting from the Company's 
increased level of sales in first half 1996. The decline in operating expenses  
as a percent of net sales was due to the Company's ability to maintain its      
expenditures for research and development and certain general and administrative
functions at approximately the same level as in first half 1995, while          
substantially increasing the Company's sales volume.                            

EBITDA.  EBITDA was $20.5 million in first half 1996, representing an 
increase of $6.0 million, or 41.1%, as compared to $14.5 million for first half 
1995. EBITDA margin increased to 25.0% of net sales in first half 1996 as       
compared to 20.8% of net sales in first half 1995. The increase in EBITDA and   
EBITDA margin was primarily due to the Company's higher sales volume in first   
half 1996 and a reduction in the Company's operating expenses as a percent of   
net sales.                                                                      

FISCAL 1995 COMPARED TO FISCAL 1994                                             

  Net Sales.  Net sales for fiscal 1995 was $148.7 million, an increase of
$31.4 million, or 26.8%, as compared to net sales of $117.3 million in fiscal   
1994. The 26.8% increase was attributable to increases in gross sales in each of
the Company's six product categories, partially offset by an increase in        
discounts and allowances due to the Company's increased sales volume. Vitamins, 
minerals and amino acids contributed $37.1 million, an increase of $4.8 million,
or 14.7%, as compared to $32.3 million in fiscal 1994, primarily due to         
continued strong consumer interest in these products. Sports nutrition          
contributed $53.9 million, an increase of $14.0 million, or 34.9%, as compared  
to $39.9 million in fiscal 1994, primarily due to the increased demand for a    
variety of these products. Special formulas contributed $41.2 million, an       
increase of $10.2 million, or 33.2%, as compared to $31.0 million in fiscal     
1994, primarily due to the successful introduction of new product formulations  
and strong growth in existing product lines. Herbal supplements and             
phytonutrients contributed $19.8 million, an increase of $5.3 million, or 37.2%,
as compared to $14.5 million in fiscal 1994, and herb teas contributed $5.8     
million, an increase of $1.6 million, or 37.4%, as compared to $4.2 million in  
fiscal 1994. The gross sales increase in both herbal supplements and            
phytonutrients and herb teas is primarily due to new product introductions,     
continued strong consumer interest in existing products and increased           
penetration of Alvita and Nature's Herbs products into domestic health food     
stores. Publishing contributed $4.8 million, an increase of $1.4 million, or    
39.1%, as compared to $3.4 million in fiscal 1994.                              

Gross Profit.  Gross profit for fiscal 1995 was $58.8 million, which  
represented an increase of $11.7 million or 24.9%, as compared to $47.1 million 
for fiscal 1994. Gross margin was 39.5% for fiscal 1995 as compared to 40.1% for
fiscal 1994. The overall increase in gross profit dollars was attributable to   
the Company's higher sales volume in fiscal 1995. The decrease in gross margin  
for fiscal 1995 as compared to fiscal 1994 was due primarily to lower gross     
margins on the Company's Nature's Herbs products due to certain raw materials   
price increases and an increase in sales discounts and allowances offered on    
certain TWINLAB and Nature's Herbs products under certain sales incentive       
programs introduced in 1995, which programs are expected to be continued in     
1996. Such decreases in gross margin were partially offset by increased sales   
from a more favorable product mix and increases in the Company's gross margins  
for TWINLAB sports nutrition products, special formulas and Alvita herb tea     
products.                                                                       

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     Operating Expenses.  Operating expenses were $27.2 million for fiscal 1995,
representing an increase of $4.2 million, as compared to $23.0 million for      
fiscal 1994. As a percent of net sales, operating expenses declined from 19.6%  
in fiscal 1994 to 18.3% in fiscal 1995. The increase in operating expenses was  
primarily attributable to increased selling and advertising expenses and higher 
operating expenses resulting from the Company's increased level of sales in     
fiscal 1995. The decline in operating expenses as a percent of net sales is due 
to the Company's ability to maintain its expenditures for research and          
development and certain general and administrative functions at approximately   
the same level as in fiscal 1994, while substantially increasing the Company's  
sales volume.                                                                   

    EBITDA.  EBITDA was $33.5 million in fiscal 1995, representing an increase
of $8.5 million, or 33.9%, compared to $25.0 million for fiscal 1994. EBITDA    
margin increased to 22.5% of net sales in fiscal 1995, as compared to 21.3% of  
net sales in fiscal 1994. The increase in EBITDA was primarily due to the       
Company's higher sales volume in fiscal 1995 and a reduction in the Company's   
operating expenses as a percent of net sales.                                   

FISCAL 1994 COMPARED TO FISCAL 1993                                             

  Net Sales.  Net sales for fiscal 1994 was $117.3 million, an increase of
$17.4 million, or 17.5%, as compared to net sales of $99.9 million in fiscal    
1993. The 17.5% increase was attributable to increases in gross sales in each of
the Company's six product categories, partially offset by an increase in        
discounts and allowances due to the Company's increased sales volume. Vitamins, 
minerals and amino acids contributed $32.3 million, an increase of $3.2 million,
or 11.2%, as compared to $29.1 million in fiscal 1993, primarily due to         
continued strong consumer interest in these products. Sports nutrition          
contributed $39.9 million, an increase of $5.2 million, or 15.2%, as compared to
$34.7 million in fiscal 1993, primarily due to the increased demand for a       
variety of these products. Special formulas contributed $31.0 million, an       
increase of $7.4 million, or 30.9%, as compared to $23.6 million in fiscal 1993,
primarily due to the successful introduction of 18 new product formulations and 
strong growth of existing product lines. Herbal supplements and phytonutrients  
contributed $14.5 million, an increase of $2.5 million, or 20.8%, as compared to
$12.0 million in fiscal 1993 and herb teas contributed $4.2 million, an increase
of $1.2 million, or 40.6%, as compared to $3.0 million in fiscal 1993. The gross
sales increase in both herbal supplements and phytonutrients and herb teas is   
primarily due to new product introductions, continued strong consumer interest  
in existing products and increased penetration of Nature's Herbs and Alvita     
products into domestic health food stores. Publishing contributed $3.4 million, 
an increase of $0.7 million, or 27.4%, as compared to $2.7 million in fiscal    
1993.                                                                           

   Gross Profit.  Gross profit for fiscal 1994 was $47.1 million compared to
$37.8 million in fiscal 1993. As a percent of net sales, gross profit was 40.1% 
for fiscal 1994 compared to 37.8% for fiscal 1993. The gross profit dollar      
increase in fiscal 1994 compared to fiscal 1993 was due to the Company's higher 
sales volumes and higher gross margins in fiscal 1994. The increase in gross    
margin in fiscal 1994 compared to fiscal 1993 was attributable to a more        
favorable product sales mix and higher gross margins on certain of the Company's
TWINLAB vitamins, minerals, amino acids, sports nutrition products and special  
formulas. This increase in gross margin was partially offset by lower gross     
margins for certain of the Company's Alvita herb tea products, which was due to 
the relocation of Alvita Products, Inc.'s operations from Ronkonkoma, New York  
to American Fork, Utah.                                                         

     Operating Expenses.  Operating expenses increased by $1.9 million, or 9.0%,
from $21.1 million in fiscal 1993 to $23.0 million in fiscal 1994. As a percent 
of net sales, operating expenses declined to 19.6% in fiscal 1994 from 21.1% in 
fiscal 1993. The dollar increase in operating expenses is primarily due to      
higher selling, advertising and delivery expenses. The decline in operating     
expenses as a percent of net sales is due partially to the Company's ability to 
limit the increase in general and administrative expenses while achieving a     
higher level of sales volume.                                                   

EBITDA.  EBITDA was $25.0 million in fiscal 1994, an increase of $7.6 
million, or 43.4%, compared to $17.4 million for fiscal 1993. EBITDA margin     
increased to 21.3% of net sales in 1994 as compared to 17.5% of net sales in    
fiscal 1993. The increase in EBITDA and EBITDA margin was due to increased sales
volumes together with higher gross margins and lower operating expenses as a    
percent of net sales.                                                           

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LIQUIDITY AND CAPITAL RESOURCES                                                 

For first half 1996, cash provided by operating activities was $16.8  
million, and during fiscal 1995 cash provided by operating activities was $26.8 
million, compared to $12.9 million in fiscal 1994 and $10.6 million in fiscal   
1993. The increase in fiscal 1995 compared to fiscal 1994 and fiscal 1993 was   
primarily due to higher net income and reflects higher levels of accounts       
payable and accrued liabilities, partially offset by higher accounts receivable 
and inventory balances due to higher levels of sales volume at the Company. Cash
used in financing activities was $24.0 million in fiscal 1995, $13.0 million in 
fiscal 1994 and $7.3 million in fiscal 1993 and primarily consisted of          
distributions to the Stockholders of $23.5 million, $13.6 million and $9.4      
million for fiscal 1995, fiscal 1994 and fiscal 1993, respectively. Cash used in
financing activities was $10.2 million in first half 1996, reflecting the net   
cash effect of the Transactions, including the payments to the Stockholders made
pursuant to the Acquisition, and distributions of $8.9 million to the           
Stockholders.                                                                   

   Capital expenditures, including purchases under capital leases, were $0.5
million, $2.6 million, $2.5 million and $4.9 million for first half 1996, fiscal
1995, fiscal 1994 and fiscal 1993, respectively. The higher level of capital    
expenditures in fiscal 1993 reflects the construction of the Company's          
manufacturing facility in American Fork, Utah, which commenced operations in the
last quarter of fiscal 1993. Historical capital expenditures were primarily used
to purchase production equipment, expand capacity and improve manufacturing     
efficiency. Capital expenditures are expected to be approximately $3.4 million  
in fiscal 1996 and will be used to purchase manufacturing equipment and fund    
plant expansion to support the Company's future growth. The Company estimates   
that its historical level of maintenance capital expenditures has been          
approximately $0.5 million per fiscal year. See "Business."                     

     In connection with the Acquisition, the Company issued the Senior Preferred
Stock and the Junior Preferred Stock for aggregate consideration of $67.0       
million, entered into the New Credit Facility and borrowed $53.0 million        
thereunder, and issued $100.0 million principal amount of 10 1/4% Senior        
Subordinated Notes due 2006. Subsequent to the Transactions, the Company repaid 
approximately $3.0 million of outstanding indebtedness under the Term Loan      
contained in the New Credit Facility. See "Prospectus Summary -- The            
Acquisition."                                                                   

Financing arrangements under which the Company is the borrower contain
certain financial and operating covenants which, among other things, require the
maintenance of a maximum leverage ratio and a minimum fixed charge ratio and    
which restrict the payment of dividends and the making of loans, advances or    
other distributions to TLC except in certain limited circumstances. See         
"Description of New Notes" and "Description of New Credit Facility."            

 Management believes that the Company has adequate capital resources and
liquidity to meet its borrowing obligations, fund all required capital          
expenditures and pursue its business strategy for the next 18 to 24 months. The 
Company's capital resources and liquidity are expected to be provided by the    
Company's cash flow from operations and borrowings under the revolving credit   
facility contained in the New Credit Facility.                                  

One of the Company's business strategies is to pursue acquisition     
opportunities, including product line acquisitions, that complement its existing
products or are compatible with its business philosophy and strategic goals.    
Future acquisitions could be financed by internally generated funds, bank       
borrowings, public offerings or private placements of equity or debt securities,
or a combination of the foregoing. There can be no assurance that the Company   
will be able to make acquisitions on terms favorable to the Company and that    
funds to finance an acquisition will be available or permitted under the        
Company's financing instruments. See "Description of New Notes" and "Description
of New Credit Facility." If the Company completes acquisitions, it will         
encounter various associated risks, including the possible inability to         
integrate an acquired business into the Company's operations, potentially       
increased goodwill amortization, diversion of management's attention and        
unanticipated problems or liabilities, some or all of which could have a        
material adverse effect on the Company's results of operations and financial    
condition. See "Business -- Business Strategy."                                 

    The Natur-Pharma Merger was treated as taxable asset purchases for federal
and state income tax purposes and as a recapitalization for financial accounting
purposes. For federal and state income tax purposes, the purchase price was     
allocated among the various corporations and their respective assets and        
liabilities                                                                     

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based on the respective fair values as of the date of the consummation of the   
Acquisition. This resulted in different book and tax asset bases for the assets 
of Twin Laboratories Inc., Alvita Products, Inc., Twinlab Export Corp., Twinlab 
Specialty Corporation and B. Bros. Realty Corporation, which resulted in        
deferred tax assets of approximately $57.3 million which will reduce future tax 
liabilities.                                                                    

IMPACT OF INFLATION                                                             

Generally, the Company has been able to pass on inflation-related cost
increases; consequently, inflation has not had a material impact on the         
Company's historical operations or profitability.                               

RECENT FINANCIAL ACCOUNTING STANDARDS BOARD STATEMENTS                          

  Recent pronouncements of the Financial Accounting Standards Board, which
are not required to be adopted at this date, include Statement of Financial     
Accounting Standards ("SFAS") No. 121, "Accounting For the Impairment of        
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and SFAS No. 123,
"Accounting for Stock Based Compensation." These pronouncements are not expected
to have a material impact on the Company's financial statements.                

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BUSINESS

GENERAL                                                                         

     The Company believes based upon its knowledge of the nutritional supplement
industry that it is one of the leading manufacturers and marketers of brand name
nutritional supplements sold through domestic health food stores. Since the     
Company's founding in 1968 by David and Jean Blechman, the Company has          
emphasized the development and introduction of high-quality, unique products in 
response to emerging trends in the nutritional supplement industry. The Company 
produces a full line of nutritional supplements and offers the broadest product 
line in the industry with more than 800 products and 1,500 SKU's. The Company's 
product line includes vitamins, minerals, amino acids, fish and marine oils,    
sports nutrition products and special formulas marketed under the TWINLAB(R)    
trademark and a full line of herbal supplements and phytonutrients and herb teas
marketed under the Nature's Herbs(R) and Alvita(R) trademarks, respectively.    
None of the Company's products individually accounted for more than 7% of total 
net sales in 1995. The Company's broad product line, strong history of new      
product introductions and innovations, superior marketing and advertising       
programs and premium product quality have established TWINLAB, Nature's Herbs   
and Alvita as leading brands in the nutritional supplement industry.            

    Under the management of Mr. and Mrs. Blechman's five sons, the Company has
diversified its product line through internal growth, product development and   
selected acquisitions, including the acquisition in 1989 of Natur-Pharma Inc., a
leading manufacturer and marketer of herbal supplements and phytonutrients under
the Nature's Herbs brand name, and the acquisition in 1991 of Alvita Products,  
Inc., a leading marketer of herb teas. The Company has achieved increased net   
sales and EBITDA every year since 1990. In particular, during the three-year    
period from 1993 through 1995, the Company achieved a compound annual growth    
rate in net sales and EBITDA of 22.0% and 38.6%, respectively. For the fiscal   
year ended December 31, 1995, the Company achieved net sales growth of 26.8% to 
$148.7 million and EBITDA growth of 33.9% to $33.5 million, as compared to      
fiscal year 1994. For the six months ended June 30, 1996, the Company achieved  
net sales of $81.8 million and EBITDA of $20.5 million, representing an increase
of 17.2% and 41.1%, respectively, as compared to the six months ended June 30,  
1995.                                                                           

     The Company's products target consumers who utilize nutritional supplements
in their daily diet and who demand premium quality ingredients in a broad       
variety of dosages and delivery methods. The Company's products compete         
primarily in the health food store market, where the dominant competitive       
factors include product attributes such as quality, potency and the uniqueness  
of the product formulation. The Company sells its products domestically through 
a network of approximately 60 distributors, who service approximately 11,000    
health food stores and other selected retail outlets. The Company believes that 
its products are available in over 90% of the health food stores in the United  
States. The health food store channel of distribution has expanded significantly
in recent years and is expected to grow further as national chains, including   
those which sell the Company's products such as GNC, WFM, Wild Oats Markets,    
Fresh Fields, and other industry participants continue to add stores in new and 
existing markets. Certain of these chains, such as GNC and WFM, manufacture and 
market their own private label products in addition to selling brand name       
products manufactured by third parties such as the Company. The health food     
store market differs significantly from the mass market for vitamin and other   
nutritional supplements where price and convenience constitute the primary bases
of competition. The nutritional supplement products sold in grocery stores, drug
stores and mass merchandisers are typically manufactured by large pharmaceutical
companies and private label manufacturers. The Company's products are also      
offered in Europe, Asia, South America and other international markets through  
arrangements with overseas distributors.                                        

   The Company believes it is well positioned to capitalize on the growth of
the nutritional supplement market. Based on estimates contained in the Packaged 
Facts Report, the retail market for vitamins, minerals and other nutritional    
supplements has grown at a compound annual rate of greater than 12% from $3.3   
billion in 1991 to over $4.6 billion in 1994. Furthermore, the Company's rate of
sales growth has exceeded the industry's growth rate for each year during this  
period. Packaged Facts forecasts approximately 7% annual industry growth through
the end of the decade in vitamins, minerals and supplements, which management   
believes will be fueled by (i) favorable demographic trends towards older       
Americans, who are more likely to                                               

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consume nutritional supplements; (ii) product introductions in response to new  
scientific research findings; (iii) the nationwide trend toward preventive      
medicine in response to rising health care costs; and (iv) the heightened       
understanding and awareness of the connection between diet and health. Moreover,
although the industry has grown dramatically in recent years, there is still a  
large untapped domestic market as only an estimated 50% of Americans currently  
consume vitamins, minerals and herbal supplements on a regular basis.           

     Twin Laboratories Inc. was incorporated in 1989 under the laws of the State
of Utah and maintains its principal executive offices at 2120 Smithtown Avenue, 
Ronkonkoma, New York 11779. Its telephone number is (516) 467-3140. In          
connection with the consummation of the Acquisition, the name of the Company was
changed from Natur-Pharma Inc. to Twin Laboratories Inc.                        

BUSINESS STRATEGY                                                               

     The Company's strategy is to continue to enhance its leadership position in
the domestic sale of vitamins, minerals and other nutritional supplements in    
health food stores and to increase its market share and sales while continuing  
to improve its overall operating efficiency and financial performance. The      
Company intends to capitalize on the TWINLAB brand name by growing market share 
domestically, increasing penetration of the Company's other brands, continuing  
to introduce new products and product extensions, and expanding internationally.
Specifically, the Company seeks to:                                             

  Capitalize on Powerful Brand Name Recognition.  The Company's recognized
product quality, broad product line, strong history of new product introductions
and innovations, and superior marketing and advertising programs have           
established TWINLAB, Nature's Herbs and Alvita as leading brands in the         
nutritional supplement industry. Each of the Company's product categories,      
including vitamins, minerals and amino acids; sports nutrition; special         
formulas; herbal supplements and phytonutrients; and herb teas, have posted     
double digit sales growth in each of the last three years. The Company's        
extensive marketing and advertising programs have been critical components of   
its products' strong brand name recognition, and management believes that the   
Company offers its customers the strongest marketing and advertising support    
programs in the industry. In fiscal 1995 the Company invested $11.1 million, an 
increase of 27% over fiscal 1994, on marketing and advertising to promote its   
products. Furthermore, since quality is a critical factor in consumer purchase  
decisions, the Company believes that its premium quality ingredients, modern    
manufacturing facilities and comprehensive quality control procedures have      
enabled the Company to establish a competitive advantage based on the quality of
its products.                                                                   

Increase Penetration in the Growing Health Food Market.  Management   
believes that the expansion of retail distribution channels and the strong      
growth characteristics of the nutritional supplement industry provide the       
Company with significant opportunities to increase sales. Management further    
believes that the established brand name recognition of the Company's products  
positions it to increase its penetration of shelf space as health food retailers
seek to align themselves with companies who possess strong brand names, offer a 
wide range of products, demonstrate continued marketing and advertising support 
and provide consistently high levels of customer service. Since Nature's Herbs  
and Alvita products currently are available in only an estimated 60% and 50%,   
respectively, of domestic health food stores, compared to an estimated 90% for  
TWINLAB products, the Company believes that it will be able to capitalize on    
health food retailers' success with the TWINLAB product line in order to        
significantly increase shelf space for the Company's herbal supplements,        
phytonutrients and herb teas.                                                   

    Continue to Introduce New Products and Product Innovations.  A cornerstone
of the Company's success has been its ability to rapidly utilize recent         
scientific and medical findings in its new product development efforts. The     
Company has consistently been among the first in its industry to introduce new  
products and product innovations which anticipate and meet customer demands for 
newly identified nutritional supplement benefits. Furthermore, the Company's    
geographically diverse network of more than 60 distributors allows the Company  
to achieve immediate and broad distribution for new product launches. As part of
its ongoing research and development effort, the Company maintains an extensive 
database and actively researches and monitors a wide variety of publications    
containing scientific and medical research. From 1991 through 1995, the Company 
introduced over 350 products, with over 90 new products introduced in 1995      
alone. Gross sales                                                              

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during 1995 from new products introduced in 1995 were $18.4 million, or         
approximately 11% of gross sales. The Company intends to build upon its         
historical success by continuing to introduce new and innovative products not   
previously available in health food stores.                                     

   Build Upon Established Customer Relationships.  The Company's established
relationships with distributors and health food store retailers are based upon  
the Company's long-standing commitment to a high level of customer service. In  
order to ensure that its customers receive prompt and reliable service, the     
Company has designed a flexible and responsive manufacturing process and has    
achieved a 98% fill rate for customer orders. In addition, the Company's sales  
force consists of 30 dedicated sales professionals who operate in sales         
territories which cover the entire continental United States and Alaska. The    
primary functions of the Company's sales force are to gain better placement and 
additional shelf space for the Company's products and to stay abreast of        
customer needs. The sales force personnel work with direct accounts,            
distributors and individual retailers to enhance knowledge of TWINLAB, Nature's 
Herbs and Alvita products and to achieve maximum exposure for these products.   

  Increase Penetration of Foreign Markets.  Management believes that there
are substantial opportunities for the Company to expand its presence in foreign 
markets. The Company has a department, headed by a senior sales professional,   
dedicated to increasing sales in such markets. The Company's foreign marketing  
effort is primarily focused on establishing additional relationships with       
leading overseas distributor organizations as a cost-effective method of        
increasing international sales. The Company presently has distribution          
agreements covering over 44 foreign countries and has agreements for another    
seven countries currently in negotiation. In 1995, the Company had net sales of 
$8.3 million to foreign markets.                                                

Supplement Internal Growth Through Strategic Acquisitions.  As the    
nutritional supplement industry is highly fragmented with many companies        
producing only a single product line or single product, the Company believes    
that it is strategically positioned to participate in the consolidation of the  
industry due to its established brand name, broad distribution capabilities and 
proven ability to generate sales of its products through successful marketing   
programs. Since 1989 the Company has acquired two businesses, Natur-Pharma Inc. 
(Nature's Herbs) and Alvita Products, Inc., and in each case has embarked on    
successful expansion programs which resulted in substantially higher sales and  
EBITDA for the acquired companies. Net sales for Natur-Pharma Inc. increased    
from $5.2 million in 1990 (the first full year after its acquisition) to $17.9  
million in 1995, and net sales for Alvita Products, Inc. increased from $1.7    
million in 1992 (the first full year after its acquisition) to $5.6 million in  
1995. The Company intends to actively pursue acquisition opportunities,         
including product line acquisitions, that complement its existing products or   
are compatible with its business philosophy and strategic goals. Some of such   
acquisition opportunities may be material and some are currently under          
investigation, discussion or negotiation, including opportunities in the natural
foods and natural personal care products industries. There can be no assurance  
that any such opportunities will result in a completed acquisition. Future      
acquisitions could be financed by internally generated funds, bank borrowings,  
public offerings or private placements of equity or debt securities, or a       
combination of the foregoing. See "Risk Factors -- Risks of Future              
Acquisitions."                                                                  

INDUSTRY                                                                        

Based on estimates in the Packaged Facts Report, the retail market for
vitamins, minerals and other supplements has grown over 12% annually from $3.3  
billion in 1991 to $4.6 billion in 1994. The herbal supplements and herb tea    
market has grown at a compound annual growth rate of over 10% since 1991 to     
approximately $1.1 billion in 1995. Sports nutrition products have grown 9%     
annually since 1991 to over $1.2 billion in 1994. The Company believes that     
these market segments will continue to experience strong growth due to recent   
scientific research suggesting potential health benefits from regular           
consumption of vitamins and other nutritional supplement products, increasing   
national interest in preventive health measures and favorable demographic trends
that indicate increased usage of vitamins and other nutritional supplements.    
Packaged Facts estimates compound annual growth rates in the market for         
vitamins, minerals and other supplements of approximately 7% from 1994 through  
1999. The market for herbal supplements and herb teas is projected to grow over 
11% annually from 1994 through 1999, while sports nutrition sales are projected 
to increase 8% annually from 1994 through 1999.                                 

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The Company expects that the aging of the United States population,   
together with a corresponding increased focus on preventive health measures,    
will result in increased demand for nutritional supplement products. According  
to Congressional findings that accompanied the Dietary Supplement Health and    
Education Act of 1994, national surveys reveal that almost 50% of Americans     
regularly consume vitamins, minerals and herbal supplements. The 35-and-older   
age group of consumers, which represent 78% of regular users of vitamin and     
mineral supplements, is expected to grow dramatically over the next two decades.
Specifically, based on data provided by the U.S. Bureau of the Census, from 1990
to 2010, the 35-44 and 45-and-older age groups are projected to grow at rates   
175% and 225% faster than the general U.S. population, respectively. In         
addition, the "baby boom echo" (the children of baby boomers) is projected to   
result in substantial growth in the 16-21 age group, the largest segment of     
consumers of sports nutrition products. The Company expects that growth in this 
age group will result in increased demand for its sports nutrition products.    

   Vitamins and other nutritional supplements are sold primarily through six
channels of distribution: health food stores, drug stores, supermarkets and     
other grocery stores, discount stores, mail order and direct sales              
organizations. Mass market retailers (drug stores, grocery stores and discount  
stores) account for approximately 60% of sales, while health food stores, mail  
order and direct selling account for approximately 40% of sales.                

  The United States health food store market is comprised of approximately
11,000 stores, which are generally either independently owned or associated with
one of several regional or national chains, including GNC and WFM. According to 
a 1994 retail survey, nutritional supplements account for over 41% of a typical 
health food store's sales. Moreover, 54% of health food retailers state that    
these products are their primary product. The health food store channel of      
distribution has grown significantly in recent years and is expected to continue
to grow as customers of the Company, such as GNC, WFM, Wild Oats Markets, Fresh 
Fields, and other industry participants continue to add stores in new and       
existing markets. The growth in the health food channel of distribution is      
partially attributable to the general growth in natural product sales. Natural  
products are defined as products that are minimally processed, environmentally  
friendly, largely or wholly free from artificial chemicals and, in general, as  
close to their natural states as possible. Natural product industry sales have  
consistently grown at nearly 10% per year since 1988, even during the recession 
of the early 1990s. During 1994, natural products industry sales rose 23% to    
$7.6 billion. The rate of growth accelerated from 7% in 1990 to 10%, 14% and 18%
in 1991, 1992 and 1993, respectively.                                           

PRODUCTS                                                                        

The Company has a highly diversified array of products and product    
categories, each of which achieves strong gross margins. The Company            
manufactures and markets over 800 products and over 1,500 SKU's in five product 
categories: vitamins, minerals and amino acids; sports nutrition; special       
formulas; herbal supplements and phytonutrients; and herb teas. The Company also
operates a subsidiary which publishes health, fitness and nutrition-related     
publications.                                                                   

   The following table sets forth certain information concerning each of the
Company's product categories in fiscal 1995.                                    

                                                        [Enlarge/Download Table]

                                                                               THREE-YEAR   
                                                                             COMPOUND ANNUAL
                                               NUMBER OF    PERCENTAGE OF      GROSS SALES  
              PRODUCT CATEGORY                   SKU'S    TOTAL GROSS SALES      GROWTH     
---------------------------------------------  ---------  -----------------  ---------------
                                                                                            
Vitamins, Minerals and Amino Acids...........      315           22.8%             12.9%    
Sports Nutrition.............................      285           33.1              24.6     
Special Formulas.............................      309           25.4              32.0     
Herbal Supplements and Phytonutrients........      465           12.2              28.7     
Herb Teas....................................      143            3.5              39.0     
Publishing...................................      N/A            3.0              33.1     
                                               ---------       ------             -----     
                                                 1,517          100.0%             24.4%    
                                               ========   =============      =============  

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     Vitamins, Minerals and Amino Acids.  The vitamins, minerals and amino acids
category is comprised of a complete line of vitamins, minerals and amino acids  
marketed under the TWINLAB brand name, including multivitamins and single-entity
vitamins (such as B-complex, C and E), minerals (such as calcium and magnesium) 
and amino acids (such as glutamine and carnitine). These products are available 
in a variety of delivery forms, including liquid, powder, capsule and tablet to 
accommodate a variety of consumer preferences. This category targets a broad    
array of health conscious consumers, with particular emphasis on consumers who  
utilize nutritional supplements in their daily diet and who demand premium      
quality ingredients in a broad variety of dosages and delivery methods.         

     Sports Nutrition.  The sports nutrition category includes a wide variety of
nutritional supplements designed for and targeted to athletes. Sports nutrition 
products include Hydra Fuel and Ultra Fuel drinks, which replenish glucose and  
electrolytes depleted during strenuous exercise; and DietFuel, RxFuel, and      
Ripped Fuel, which are marketed, as part of a low fat diet and exercise program,
for the preservation of lean body mass and the building of muscle mass. The     
Company's sports nutrition products are utilized by both amateur and            
professional athletes in a variety of competitive sports. The Company believes  
that its strong sports nutrition business serves to increase the Company's brand
awareness among customers who, as they grow older, will shift their buying      
patterns to include vitamins, minerals and herbal products, and who, based on   
their positive experiences with the Company's brand name, are more likely to    
purchase products from the Company's other product categories.                  

Special Formulas.  The special formulas category consists of a broad  
assortment of products formulated with specific health conditions or objectives 
in mind. Special formulas are primarily targeted to sophisticated users of      
health related products, including regular customers of health food stores.     
Examples include OcuGuard, which is formulated for nutritional support of the   
eyes, MaxiLIFE, which offers an advanced antioxidant formula, and Coenzyme      
Q(10), which is designed for cardiovascular health. In addition, the Company    
sells a variety of fish and marine oils in a number of different delivery forms 
which offer a multitude of nutritional benefits, including favorable effects on 
cardiovascular health.                                                          

Herbal Supplements and Phytonutrients.  Herbal supplements and        
phytonutrients (nutrients from botanical sources that are considered to have    
medicinal properties) have become increasingly important categories in health   
food stores. Through its Nature's Herbs product line, the Company produces a    
full line of herbal supplements and phytonutrients which offer natural          
alternatives to over-the-counter ("OTC") medications. The Company manufactures  
and markets approximately 400 herbal and botanical supplements which are        
produced at the Company's modern FDA registered manufacturing facility in       
American Fork, Utah and sold under the Nature's Herbs brand name. Nature's Herbs
products include single herbs, such as saw palmetto, garlic, gingko, ginseng and
golden seal; traditional combinations, such as echinacea-golden seal;           
standardized extracts, such as Bilberry Power and Milk Thistle Power sold under 
the POWER HERBS(R) brand name; and natural HealthCare product formulations, such
as Allerin and Coldrin. Nature's Herbs products are packaged using the          
innovative FRESH CARE(R) System developed by the Company. The FRESH CARE System 
is the first all-glass and antioxidant-protected herbal packaging system that   
helps remove oxygen while locking out air, moisture and light in order to       
maintain potency and to extend freshness. Management believes that the          
association of the Nature's Herbs product line with TWINLAB's strong name brand 
recognition and reputation for premium quality and service, combined with the   
increased penetration of herbal supplements and phytonutrients in the growing   
health food store channel of distribution, have contributed to the rapid growth 
experienced by this product line.                                               

Herb Teas.  Through its Alvita product line, the Company offers       
approximately 100 herb teas in both single use bags and bulk. Alvita is a       
leading brand of herb teas and is one of the most recognizable tea brands sold  
through health food stores. Alvita was founded in 1922 and is one of the        
nation's oldest herb tea companies. Alvita purchases tea in bulk form,          
formulates blends of natural herb teas and designs the packaging for its        
products. Alvita's teas are currently blended and packaged by an independent    
contractor. Representative Alvita teas include Peppermint Leaf, Chamomile,      
Echinacea, Golden Seal, Ginger and Senna Leaf, as well as new-age blends such as
Chinese Green Tea, available in a choice of citrus flavors, and TrimTime        
Thermogenic Diet Tea. Alvita markets its products with an environmentally       
conscious theme by packaging bulk tea and tea bags in paper and by not utilizing
shrink wrap for either its outer boxes or tea bags.                             

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Alvita recently launched a new line of herbal tea blends named Herbal Remeteas, 
including Highland Lullaby, Manchurian Brain Blend, Jamaica Digesti Brew, and   
Canadian Natur-Tussin. The Company believes that significant opportunities for  
product line expansion exist in combining Alvita teas and other nutritional     
supplements to create a new delivery form for traditional herbal supplements and
phytonutrients.                                                                 

   Publishing.  Through Advanced Research Press, Inc., the Company publishes
Muscular Development, Fitness & Health, a high-quality bodybuilding and fitness 
magazine featuring a scientific advisory board and contributors considered to be
among the most accomplished and knowledgeable in their respective fields. The   
magazine covers recent developments and provides innovative information in the  
fields of training and nutrition research, supplements, health, fitness and     
diet. This publication serves as a useful vehicle to increase public awareness  
of the Company's products and as an outlet for a portion of the Company's       
advertising program. Muscular Development, Fitness & Health currently has a     
monthly paid circulation of approximately 113,000 readers. The Company also     
publishes health and fitness related books and is exploring the introduction of 
new health and fitness related products.                                        

PRODUCT DEVELOPMENT                                                             

     The Company is recognized as an industry leader in new product development.
The Company closely monitors consumer trends and scientific research, and has   
consistently introduced innovative products and programs in response thereto.   
The Company's product development staff regularly studies over 50 different     
health and nutrition periodicals, including the New England Journal of Medicine 
and the Journal of the American Medical Association, in order to generate ideas 
for new product formulations. Management believes that the Company's            
introduction of new products has increased market share for both the Company and
its retail customers, and the Company intends to continue developing new        
products and programs in the future. The Company was the first major nutritional
supplement manufacturer to introduce such industry-wide innovations as: an      
all-capsule vitamin and mineral line that is well tolerated by allergy-prone    
individuals; a complete line of amino acids and fish and marine oils; the most  
advanced and complete array of antioxidants, including beta carotene,           
L-glutathione, L-cysteine, N-acetyl cysteine (NAC) and an entirely new class of 
antioxidants, including polyphenols, flavonoids and isoflavones; concentrated   
Coenzyme Q(10); high potency phosphatidyl choline and patented GTF Chromium;    
pioneering thermogenic products; standardized herbal extracts guaranteeing      
potency (Certified Potency); the FRESH CARE packaging system, designed to       
preserve potency and freshness; a full line of Ayurvedic Indian herbal products;
and a complete line of herb teas in single use bag and bulk form. From 1991     
through 1995, the Company introduced over 350 products with over 90 new products
introduced in 1995 alone.                                                       

    The Company's research and development expenses were $1.1 million in 1995,
$1.0 million in 1994 and $0.9 million in 1993, including the support of         
scientific research at independent research centers located at major            
universities and medical centers.                                               

SALES AND DISTRIBUTION                                                          

The Company believes that its TWINLAB products are available in       
approximately 90% of domestic health food stores. The Company sells its products
primarily through a network of approximately 60 distributors, which service     
approximately 11,000 health food stores throughout the country and selected     
retail outlets. Sales to domestic distributors represented approximately 88% of 
the Company's gross sales in 1995. The Company's distributor customers include  
GNC, Tree of Life, Cornucopia, Stow Mills, Nature's Best and other distributors 
that supply retailers of vitamins, minerals and other nutritional supplements.  
Management believes that it sells its products to every major nutritional       
supplement distributor servicing health food stores and is generally the largest
independent supplier of nutritional supplements to each such distributor. The   
Company is also currently expanding distribution into domestic military         
exchanges.                                                                      

    Several of the Company's distributors, such as GNC, Cornucopia and Tree of
Life, are national in scope, but most are regional in nature and operate one or 
more localized distribution centers. Generally, the Company enters into         
nonexclusive area rights agreements with its domestic distributors, who are also
responsible for new account development. Retailers typically place orders with  
and are supplied directly by the                                                

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Company's distributors. In the past ten years, the Company has not lost a major 
distributor customer other than through consolidation with an existing customer 
of the Company. The breadth and depth of the products manufactured and the      
ability to manufacture with minimal throughput times enables the Company to     
maintain extremely high order fill rates, which management believes are among   
the highest in the industry, with its customer base.                            

     Tree of Life and GNC accounted for approximately 28% and 22%, respectively,
of the Company's net sales in 1995. No other single customer accounted for more 
than 10% of the Company's net sales in 1995. The largest retail organization    
which sells the Company's products is GNC, which operates approximately 2,400   
stores.                                                                         

    Approximately 6%, or $8.3 million, of the Company's net sales in 1995 were
derived from international sales which originate from overseas distributor      
organizations. The Company presently has distribution agreements for fifteen    
European countries, including Great Britain, The Benelux Countries and the      
Scandinavian countries; fourteen Latin American countries, including Mexico,    
Brazil and Paraguay; eight Middle Eastern countries, including Israel and Saudi 
Arabia; and various other countries in the Far East and the Caribbean. The      
Company also has agreements for another seven countries currently in            
negotiation.                                                                    

MARKETING AND CUSTOMER SALES SUPPORT                                            

The Company's marketing strategy, which centers around an extensive   
advertising and promotion program, together with the Company's customer sales   
support services have been critical components of the Company's growth, strong  
brand name recognition and leading position within the nutritional supplement   
industry. Management believes that the levels of its advertising and promotional
support and of its customer service rank among the highest in the industry.     

 The Company's marketing and advertising expenditures were approximately
$11.1 million in 1995, $8.7 million in 1994 and $7.1 million in 1993. Of the    
Company's $8.4 million in 1995 advertising expenditures, approximately $5.5     
million, or 65%, was spent on print advertising, approximately $2.0 million, or 
24%, was spent on television and radio advertising and approximately $0.9       
million, or 11%, was spent on production of advertising materials. As the       
Company's customers align themselves with fewer vendors of brand name products, 
the Company believes that its strong commitment to advertising and promotion    
will continue to constitute a significant competitive advantage. The Company's  
advertising strategy stresses brand awareness of the Company's various product  
segments in order to generate purchases by customers and also communicates the  
points-of-difference between the Company's products and those of its            
competitors.                                                                    

 A significant portion of the Company's advertising budget is focused on
advertisements in magazines. The Company regularly advertises in consumer       
magazines such as Better Nutrition, Delicious, Vegetarian Times, Let's Live,    
Natural Health, New Age Journal, Bicycling, VeloNews, Triathlete, Runner's      
World, Muscle & Fitness, Flex, and Ironman, as well as trade magazines such as  
Natural Foods Merchandiser, Vitamin Retailer, Nutrition Science News, Health    
Foods Business and Whole Foods.                                                 

   Other marketing and advertising programs conducted by the Company include
participation in or sponsorship of sporting events such as running competitions,
including the Boston Marathon and the Los Angeles Marathon, and bodybuilding    
competitions, including the Arnold Classic and the NPC National Bodybuilding    
Championships, and sponsorship of health-oriented television and radio programs.
In addition, the Company promotes its products at major industry trade shows and
through in-store point of sale materials. The Company also engages athletic     
personalities as well as scientists to communicate on the Company's behalf with 
the trade and the public and to promote the Company's products.                 

The Company's established customer relationships are based upon the   
Company's long-standing commitment to a high level of customer service. The     
Company's sales force currently consists of 30 dedicated sales professionals    
whose primary functions are to gain better placement and additional shelf space 
for TWINLAB, Nature's Herbs and Alvita products and to stay abreast of customer 
needs. These sales representatives are assigned to specific territories covering
the entire continental United States and Alaska. These personnel work with      
direct accounts, distributors and individual retailers to enhance knowledge of  
the                                                                             

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Company's products and to maximize exposure for TWINLAB, Nature's Herbs and     
Alvita products. An additional three person sales and marketing staff supports  
Nature's Herbs products and the servicing of customer needs. The Company also   
designs and supplies marketing literature to help educate retailers and         
consumers as to the benefits of the Company's products.                         

    The Company operates an in-house customer service department to respond to
inquiries requesting information concerning product applications, background    
data, ingredient compositions and the efficacy of products. The department is   
currently staffed by three nutrition experts.                                   

MANUFACTURING AND PRODUCT QUALITY                                               
 Virtually all of the Company's TWINLAB products are manufactured at the
Company's 80,000 square foot manufacturing facility located in Ronkonkoma, New  
York. Herbal supplements and phytonutrients are manufactured at the Company's   
48,000 square foot FDA registered manufacturing facility in American Fork, Utah.
Herb teas are currently packaged by an independent contractor and are warehoused
at the American Fork, Utah, facility. The Company's two modern manufacturing    
facilities provide the Company with the capability to meet customers' sales     
demands with a prompt response time and to maintain the highest level of quality
control. The Company is continuously upgrading its facilities and enhancing its 
manufacturing capabilities through new equipment purchases and technological    
improvements. Management believes that the Company's manufacturing facilities   
are among the most advanced in the nutritional supplement industry. In 1995, the
Company acquired additional property adjacent to its American Fork, Utah,       
facility to provide additional plant capacity for the operations of the         
Natur-Pharma (Nature's Herbs) and Alvita Products Divisions of the Company. The 
Company is constructing an 8,500 square foot addition to its Utah facility at a 
cost of approximately $700,000. Management believes that the Company's Utah     
facility will be sufficient to enable the Company to meet sales demand for the  
foreseeable future and that its New York facility will be sufficient to meet    
sales demand for TWINLAB products for approximately three years. Management     
believes that it will have the option to lease additional space or to construct 
a new facility at such time. The Company expects to enter into a contract for   
the purchase of an approximately 110,000 square foot facility near its current  
owned facility in Ronkonkoma, New York, which would be used to expand the       
Company's manufacturing and warehousing capabilities. The transaction, which    
will be subject to a number of customary conditions, is expected to close in    
November 1996. The cost to the Company of the facility, including anticipated   
renovations, is expected to aggregate approximately $6.0 million. There can be  
no assurance at this time that the Company will acquire this facility.          

The Company's modern manufacturing operations feature pharmaceutical  
quality blending, filling and packaging capabilities, which enable the Company  
to offer quality and consistency in formulation and delivery. The Company       
operates flexible manufacturing lines which enables it to efficiently and       
effectively shift output among various products as dictated by customer demand. 
The Company is capable of producing over 25 million capsules and tablets, over  
100,000 pounds of blended powder and up to 2,500 gallons of liquid preparations 
per day. The Company has six high-speed capsule and tablet packaging lines, two 
high-speed liquid filling lines, two powder filling lines and one chewable      
tablet packaging line which are capable of operating simultaneously, at its     
Ronkonkoma, New York, and American Fork, Utah, facilities. The Company          
manufactures the powders used in its line of single-serving sports drink        
products but utilizes a contract bottler for the hydration and bottling of these
products. The Company operates on a 24-hour work day that includes two          
production shifts and a third shift dedicated solely to cleaning, maintenance   
and equipment set-up.                                                           

The Company sources its raw material needs from over 200 different    
suppliers, including some of the largest pharmaceutical and chemical companies  
in the world. The Company's raw materials and packaging supplies are readily    
available from multiple suppliers, and the Company is not dependent on any      
single supplier for its needs. No single supplier accounted for more than 10% of
the Company's total purchases in 1995.                                          

    The Company's quality standards are a critical factor in consumer purchase
decisions, and the Company believes it has established a competitive advantage  
based on the quality of its products. All of the Company's capsule and tablet   
products are visually inspected before being packaged in virtually light-proof  
amber glass for better product freshness and stability. Moreover, each of the   
Company's products undergoes comprehensive quality control testing procedures   
from the receipt of raw materials to the release of the packaged product.       

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The Company utilizes real-time computerized monitoring of its manufacturing     
processes to ensure proper product weights and measures. In addition, the       
Company maintains two in-house laboratories with state-of-the-art testing and   
analysis equipment where the Company performs most of its testing, including    
stability tests, active component characterization utilizing thin-layer and     
high-pressure liquid chromatography, and UV visible and infrared spectrometry.  
The Company contracts with independent laboratories to perform the balance of   
its testing requirements. A team of 50 full-time quality assurance professionals
regularly conducts a wide variety of visual and scientific tests on all         
manufactured products, and samples of raw materials and finished products are   
retained for quality control purposes for up to four years.                     

The Company has a strong commitment to maintaining the quality of the 
environment. All of the Company's plastic containers are recyclable and,        
wherever possible, the Company uses recyclable glass. The Company was also one  
of the first companies in the industry to use biodegradable starch pellets for  
packing materials. In addition, the Company has removed most solvents from its  
production processes (using natural, environmentally-safe alternatives) and     
helped develop a special glue, for manufacturing purposes, that contains        
virtually no harmful hydrocarbons. The Company believes it is in material       
compliance with all applicable environmental regulations.                       

COMPETITION                                                                     

   Within the nutritional supplement industry, suppliers can be divided into
three major categories: specialty firms, like the Company, which focus on       
vitamins, minerals and other nutritional supplements targeted to health food    
store retailers; major pharmaceutical companies and private label contractors,  
which sell vitamins and other nutritional supplements that are targeted to mass 
market retailers; and direct sale and mail order companies.                     

   The domestic nutritional supplement industry that targets products to the
health food store market is highly fragmented, with a number of small           
competitors involved in manufacturing and marketing vitamin and other           
nutritional supplement products to health food retailers and distributors. Most 
of these companies are relatively small businesses operating on a local or      
regional level. Although most companies are privately held, resulting in the    
Company's inability to precisely assess the size of its competitors, management 
believes that the Company is substantially larger than the next largest firm    
that targets independently-owned health food stores and that, among competitors 
which sell through independent distributors, it is the largest company which    
manufactures a majority of its own products.                                    

     The Company's principal competitors in the health food store market include
Nutraceuticals, Weider/ Schiff, Nature's Way, Solgar and Nature's Plus. Private 
label products of the Company's customers also provide competition to the       
Company's products. For example, a substantial portion of GNC's vitamin and     
mineral supplement offerings are products offered under GNC's own private label.
Many of the Company's competitors in markets other than the health food store   
market, including the major pharmaceutical companies, have substantially greater
financial and other resources than the Company.                                 

   The Company believes that the growing number of health food retailers are
increasingly likely to align themselves with those companies which offer a wide 
variety of high quality products, have a loyal customer base, support their     
brands with strong marketing and advertising programs and provide consistently  
high levels of customer service. The Company believes that it competes favorably
with other nutritional supplement companies because of its comprehensive line of
products, premium brand names, commitment to quality, ability to rapidly        
introduce innovative products, competitive pricing, high customer-order fill    
rate, strong and effective sales force and distribution network, and            
sophisticated advertising and promotional support. The wide variety and         
diversity of the forms, potencies and categories of the Company's products are  
important points of differentiation between the Company and many of its         
competitors.                                                                    

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REGULATORY MATTERS                                                              

Government Regulation                                                       

The manufacturing, processing, formulating, packaging, labeling and   
advertising of the Company's products are subject to regulation by one or more  
federal agencies, including the FDA, the FTC, the CPSC, the USDA and the EPA.   
These activities are also regulated by various agencies of the states,          
localities and foreign countries to which the Company's products are distributed
and in which the Company's products are sold. The FDA, in particular, regulates 
the formulation, manufacture, and labeling of vitamin and other nutritional     
supplements.                                                                    

    On October 25, 1994, the President signed into law the DSHEA. This new law
revises the provisions of the FFDC Act concerning the composition and labeling  
of dietary supplements and, in the judgment of the Company, is favorable to the 
dietary supplement industry. The legislation creates a new statutory class of   
"dietary supplements." This new class includes vitamins, minerals, herbs, amino 
acids and other dietary substances for human use to supplement the diet, and the
legislation grandfathers, with certain limitations, dietary ingredients on the  
market before October 15, 1994. A dietary supplement which contains a new       
dietary ingredient, one not on the market before October 15, 1994, will require 
evidence of a history of use or other evidence of safety establishing that it   
will reasonably be expected to be safe, such evidence to be provided by the     
manufacturer or distributor to the FDA before it may be marketed. The DSHEA also
invalidates the FDA's prior enforcement theory that dietary supplements are food
additives requiring pre-market approval.                                        

The substantial majority of the products marketed by the Company are  
classified as dietary supplements under the FFDC Act. Advertising and label     
claims for dietary supplements have been regulated by state and federal         
authorities under a number of disparate regulatory schemes. There can be no     
assurance that a state will not interpret claims presumptively valid under      
federal law as illegal under that state's regulations, or that future FDA or FTC
regulations or decisions will not restrict the permissible scope of such claims.

 The labeling requirements for dietary supplements have not been clearly
established. In December 1995, the FDA issued proposed regulations to govern the
labeling of dietary supplements. These regulations are expected to become final 
later in 1996, and would require the Company to revise all of its dietary       
supplement labels in 1997. The FDA has informally stated that it will, subject  
to public comment, withhold enforcement of these regulations until January 1,   
1998.                                                                           

 A small portion of the herb products sold by the Company are labeled as
over-the-counter drugs as opposed to dietary supplements. The regulatory status 
of these products is determined by the classification of their active           
ingredients. If certain of these active ingredients are determined to not be in 
compliance with the applicable FDA Over-The-Counter Drug Monographs, which      
prescribe permissible ingredients and permit the sale of such products, the     
Company could be required to relabel or reformulate such products.              

    Some of the products marketed by the Company as dietary supplements may be
determined to be conventional foods by regulatory authorities. In such case,    
labeling changes could be required to conform the labels for such products to   
existing conventional food labeling regulations.                                

    Both foods and dietary supplements are subject to the NLEA which prohibits
the use of any health claim for foods, including dietary supplements, unless the
health claim is supported by significant scientific agreement and is            
pre-approved by the FDA. To date, the FDA has approved the use of health claims 
for dietary supplements only in connection with calcium for osteoporosis, and   
folic acid for neural tube defects. However, among other things, the DSHEA      
amends, for dietary supplements, the NLEA by providing that "statements of      
nutritional support" may be used in labelling for dietary supplements without   
FDA pre-approval if certain requirements, including prominent disclosure on the 
label of the lack of FDA review of the relevant statement, possession by the    
marketer of substantiating evidence for the statement and post-use notification 
to the FDA, are met. Such statements may describe how particular nutritional    
supplements affect the structure, function or general well-being of the body    
(e.g. "promotes your cardiovascular health").                                   

  Governmental regulations in foreign countries where the Company plans to
commence or expand sales may prevent or delay entry into the market or prevent  
or delay the introduction, or require the reformulation,                        

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of certain of the Company's products. Compliance with such foreign governmental 
regulations is generally the responsibility of the Company's distributors for   
those countries. These distributors are independent contractors over whom the   
Company has limited control.                                                    

     As a result of the Company's efforts to comply with applicable statutes and
regulations, the Company has from time to time reformulated, eliminated or      
relabeled certain of its products and revised certain provisions of its sales   
and marketing program. The Company cannot predict the nature of any future laws,
regulations, interpretations or applications, nor can it determine what effect  
additional governmental regulations or administrative orders, when and if       
promulgated, would have on its business in the future. They could, however,     
require the reformulation of certain products to meet new standards, the recall 
or discontinuance of certain products not capable of reformulation, additional  
recordkeeping, expanded documentation of the properties of certain products,    
expanded or different labeling, and/or scientific substantiation. Any or all of 
such requirements could have a material adverse effect on the Company's results 
of operations and financial condition.                                          

     The Company's American Fork, Utah, facility is registered with the FDA as a
manufacturer of OTC drugs and is subject to periodic inspection by the FDA.     

   Compliance with the provisions of national, state and local environmental
laws and regulations has not had a material adverse effect upon the capital     
expenditures, earnings, financial position, liquidity or competitive position of
the Company.                                                                    

FTC Proceeding                                                              

   In 1989, Twin Laboratories Inc. received an informal inquiry from the New
York Regional Office of the FTC seeking substantiation for certain advertising  
claims made for a segment of its "Fuel" bodybuilding, sports nutrition and      
weight loss line of products. In response, Twin Laboratories Inc. submitted     
scientific substantiation and financial information to the FTC. The Company has 
been negotiating this matter with the FTC staff since December 1994.            

In August 1995, the FTC staff informed the Company that it intended to
recommend to the FTC Commissioners that the FTC file a civil administrative     
complaint against the Company unless the Company agreed to settle the matter by 
a proposed consent order (the "Consent Order"), which Consent Order has since   
been the subject of negotiations between the FTC staff and the Company. In      
August 1996, the Company received a revised draft of the Consent Order which    
provides for, among other things: (1) injunctive relief prohibiting the Company 
from making certain muscle building and fat burning claims for four of its Fuel 
products and substantially similar products thereto without scientific          
substantiation and (2) a payment of $200,000 to the FTC. If a consent order is  
entered, violations of the terms thereof would allow the FTC to seek maximum    
penalties of $10,000 per day for each violation. The Company has determined at  
the current time not to settle this matter on the terms set forth in the most   
recent draft of the Consent Order, which draft the FTC has stated is its final  
offer for a negotiated settlement. The Company cannot at this time predict      
whether it will be able to reach a negotiated settlement of this matter.        

 The FTC staff recently informed the Company that unless a settlement is
reached, it would proceed to recommend to the FTC Commissioners that a civil    
administrative complaint seeking injunctive relief be issued against the        
Company. If such a recommendation were to be made by the FTC staff, the Company 
will be entitled to a hearing before the FTC Commissioners to present its       
position that the administrative complaint should not be issued. Should a       
complaint be issued, there can be no assurance that any injunctive relief and   
other terms of any eventual litigated resolution of this matter will be limited 
to those sought in the most recent draft of the Consent Order.                  

  In addition, the FTC staff has notified the Company that if the FTC were
successful in an administrative litigation against the Company, the FTC may     
thereafter sue the Company in federal court seeking redress payments to         
consumers who purchased products containing claims that are subject to any      
administrative order that results from such administrative litigation. It is    
premature to assess whether a federal court would grant such a remedy or how any
consumer redress payments would be calculated.                                  

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    The Company believes that it has adequate scientific substantiation or the
claims at issue, and intends to vigorously defend this matter if a settlement is
not reached. There can be no assurance that any injunctive relief or monetary   
payment (including the potential consumer redress payments) resulting from a    
negotiated or litigated resolution of this matter would not have a material     
adverse effect on the Company.                                                  

Ma Huang                                                                    

    Approximately 14 of the Company's products include a Chinese herb known as
"Ma Huang," which contains naturally-occurring ephedrine. Such products         
accounted for 11.7% of the Company's net sales for the fiscal year ended        
December 31, 1995, and 10.5% of the Company's net sales for the six months ended
June 30, 1996. The Company's products which contain Ma Huang are generally      
marketed for bodybuilding, weight loss, sports nutrition and for other purposes,
including increased endurance and energy, generally in conjunction with diet or 
exercise, and as natural alternatives to over-the-counter medications.          

  Ma Huang has been the subject of certain adverse publicity in the United
States and other countries relating to alleged harmful or adverse effects,      
including the deaths of several individuals. The FDA has placed on public file a
list of over 600 such alleged adverse events. The death in Florida of a Long    
Island college student on March 6, 1996, reportedly from over-ingestion of an   
ephedrine-containing product (which was not manufactured or distributed by the  
Company), received significant coverage in the press and national media. A press
release dated August 2, 1996 issued by the Massachusetts Department of Public   
Health reported that a 23 year-old college student died in April 1996 of a heart
problem associated with ephedrine toxicity from the ingestion of a protein drink
containing Ma Huang. While press coverage and the deceased's death certificate  
have reported that such protein drink is Ripped Fuel, one of the Company's      
ephedrine-containing products, the Company does not have sufficient information 
to make an assessment of this matter.                                           

 On April 10, 1996, the FDA issued a statement (the "Statement") warning
consumers not to purchase or consume dietary supplements containing ephedrine   
with labels that often portray the products as apparent alternatives to illegal 
street drugs. None of the Company's products which contain Ma Huang are marketed
for such purpose. The Statement explains that the products portrayed as apparent
alternatives to illegal street drugs pose significant health risks to           
consumers -- dizziness, headache, gastrointestinal distress, irregular          
heartbeat, heart palpitations, heart attack, strokes, seizures, psychosis and   
death -- and that the labels on such products claim or imply that they produce  
such effects as euphoria, increased sexual sensations, heightened awareness,    
increased energy and other effects. In August 1996, the FDA sent warning letters
to several companies marketing such products as alternatives to illegal street  
drugs, indicating that enforcement action with respect to such products may be  
initiated.                                                                      

In August 1996, the FDA convened a Food Advisory Committee (the       
"Committee") meeting to review and make recommendations concerning the safety   
and appropriate labeling of Ma Huang-containing dietary supplements. The FDA,   
after considering the differing views expressed at the Committee meeting, may   
propose regulations that will require reduced dosages coupled with strict       
manufacturing standards, labeling restrictions and a prohibition against        
combining Ma Huang with other central nervous system stimulants such as         
caffeine. There can be no assurance that such regulations will not prohibit     
either the sale of dietary supplements containing Ma Huang in combination with  
any other ingredients or the sale of all dietary supplements containing any Ma  
Huang. The promulgation of such regulations would require the Company to        
reformulate and relabel substantially all of its Ma Huang products. There can be
no assurance as to the final form or content of any FDA regulations concerning  
Ma Huang-containing dietary supplements or as to the effect that any attendant  
adverse publicity or resulting reformulation and relabeling of the Company's    
products would have on the sales of such products. The Company has experienced  
reduced sales of its Ma Huang-containing products due to the adverse publicity  
described above. The Company recently introduced a line of Ma Huang-free        
products as alternatives to certain of its bodybuilding, weight loss and sports 
nutrition products which currently contain Ma Huang. There can be no assurance  
that such products will be received favorably by the Company's customers or that
sales of such alternative products would offset any decrease in sales           
attributable to any reformulation and relabeling of the Company's Ma Huang      
products.                                                                       

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    A number of states and local governmental entities have instituted bans on
sales of Ma Huang-containing products that are portrayed as apparent            
alternatives to illegal street drugs; many other states and foreign             
jurisdictions limit ephedrine levels and require appropriate warnings on product
labels, regulate ephedrine-containing products as controlled substances or      
prohibit the sales of products which contain Ma Huang other than by licensed    
pharmacists. For instance, the legislature of Nassau County, New York recently  
enacted a local law prohibiting the sale of all ephedrine-containing products to
persons under 18 years of age, and prohibiting the sale or distribution of all  
ephedrine-containing products claiming to produce such effects as euphoria,     
increased sexual sensations, heightened awareness, increased energy, legal      
"highs" and other similar effects (although the law allows the sale of          
ephedrine-containing products if intended and labeled for use as weight loss    
aids or sports nutrition products, such as those marketed by the Company, for   
sale to and use by those 18 years or older). There are also federal, state and  
local proposals to broaden the regulation of, or otherwise limit or prohibit,   
the sale of products containing ephedrine, including a New York State bill which
would regulate any ephedrine-containing product, including Ma Huang, as a       
controlled substance to be dispensed only by prescription, no matter what       
labeling claims are made, and a recently introduced Congressional bill which    
would regulate as a drug any Ma Huang dietary supplement claiming to produce    
euphoria, heightened awareness or similar mental or psychological effects.      

  The Company's products containing Ma Huang may become subject to further
federal, state, local or foreign laws or regulations, which could require the   
Company to: (i) reformulate its products with reduced ephedrine levels or with a
substitute for Ma Huang and/or (ii) relabel its products with different warnings
or revised directions for use. Even in the absence of further laws or           
regulations, the Company may elect to reformulate and/or relabel its products   
which contain Ma Huang. While the Company believes that its Ma Huang products   
could be reformulated and relabeled, there can be no assurance in that regard or
that reformulation and/or relabeling would not have a material adverse effect on
sales of such products.                                                         

     The Company and others are defendants in a wrongful death action originally
commenced in July 1995 with respect to one of the Company's products containing 
Ma Huang and with respect to a product that does not contain Ma Huang           
manufactured by another defendant. There can be no assurance that the Company   
will not be subject to further private civil actions with respect to its        
products which contain Ma Huang. See "-- Legal Matters."                        

EMPLOYEES                                                                       

At June 30, 1996, the Company employed 557 persons, of which 114 were 
involved in executive, sales and administrative activities. The balance of the  
Company's employees were engaged in production, packaging and shipping          
activities. None of the Company's employees are covered by a collective         
bargaining agreement, and management considers relations with its employees to  
be good.                                                                        

PROPERTIES                                                                      

The Company owns a modern vitamin, mineral and nutritional supplement 
manufacturing facility in Ronkonkoma, New York. This 80,000 square foot facility
also houses the Company's executive offices. The Company leases 26,300 square   
feet of warehouse space in Ronkonkoma, 50,000 square feet of warehouse space in 
Hauppauge, New York (the "Hauppauge Warehouse"), and 5,000 square feet of office
space in Ronkonkoma. The Company has settled a dispute with the landlord of the 
Hauppauge Warehouse whose August 1996 notice of petition seeking the Company's  
eviction from the facility was granted on September 19, 1996. As a result of    
such settlement, the Company will be required to vacate the facility by November
15, 1996 and to relocate its primary distribution facility. The Company believes
that the settlement of this matter will not have an adverse effect on its       
results of operations or financial condition. In addition, the Company owns a   
modern FDA-registered 48,000 square foot manufacturing facility in American     
Fork, Utah. This facility, which was constructed in 1993, houses office,        
manufacturing and warehousing facilities for the operations of the Natur-Pharma 
(Nature's Herbs) Division of the Company and office and warehousing facilities  
for the operations of the Alvita Products Division of the Company.              

   The Company believes that its facilities and equipment generally are well
maintained and in good operating condition. In 1995, the Company acquired       
additional property adjacent to its American Fork, Utah, facility to provide    
additional plant capacity for the operations of the Natur-Pharma (Nature's      
Herbs) and                                                                      

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Alvita Products Divisions of the Company. The Company is constructing an 8,500  
square foot addition to its Utah facility at a cost of approximately $700,000.  
Management believes that the Company's Utah facility will be sufficient to      
enable the Company to meet sales demand for the foreseeable future and that its 
New York facility will be sufficient to meet sales demand for TWINLAB products  
for approximately three years. Management believes that it will have the option 
to lease additional space or to construct a new facility at such time.          

The Company expects to enter into a contract for the purchase of an   
approximately 110,000 square foot facility near its current owned facility in   
Ronkonkoma, New York, which would be used to expand the Company's manufacturing 
and warehousing capabilities. The transaction, which will be subject to a number
of customary conditions, is expected to close in November 1996. The cost to the 
Company of the facility, including anticipated renovations, is expected to      
aggregate approximately $6.0 million. There can be no assurance at this time    
that the Company will acquire this facility.                                    

TRADEMARKS                                                                      

  The Company owns trademarks registered with the United States Patent and
Trademark Office and/or similar regulatory authorities in many other countries  
for its TWINLAB, Nature's Herbs, Alvita and Fuel family of trademarks, and has  
rights to use other names material to its business. In addition, the Company has
obtained trademarks for various of its products and has approximately 250       
trademark registrations with the United States Patent and Trademark Office for  
TWINLAB, Nature's Herbs and Alvita brands. Federally registered trademarks have 
perpetual life, provided they are renewed on a timely basis and used properly as
trademarks, subject to the rights of third parties to seek cancellation of the  
marks. The Company regards its trademarks and other proprietary rights as       
valuable assets and believes that they have significant value in the marketing  
of its products. The Company vigorously protects its trademarks against         
infringement.                                                                   

LEGAL MATTERS                                                                   

   Twin Laboratories Inc. and other encapsulators, and various distributors,
manufacturers, and retailers of added manufactured L-Tryptophan are defendants  
in actions in federal and state courts seeking compensatory and, in some cases, 
punitive damages for alleged personal injuries resulting from the ingestion of  
products containing added manufactured L-Tryptophan. As of September 1, 1996,   
Twin Laboratories Inc. was named defendant in two of these actions. The Company 
believes that few new lawsuits are likely to be brought in view of the statutes 
of limitations. Twin Laboratories Inc. has entered into the Indemnification     
Agreement with SDA, a U.S. subsidiary of a Japanese corporation, Showa Denko,   
K.K. ("SDK"). Under the Indemnification Agreement, SDA agrees to assume the     
defense of all claims arising out of the ingestion of L-Tryptophan products and 
to pay all legal fees and indemnify Twin Laboratories Inc. against liability in 
any action if it is determined that a proximate cause of the injury sustained by
the plaintiff in the action was a constituent of the raw material sold by SDA to
Twin Laboratories Inc. or was a factor for which SDA or any of its affiliates   
was responsible, except to the extent that action by Twin Laboratories Inc.     
proximately contributed to the injury, and except for certain claims relating to
punitive damages, SDA appears to have been the supplier of all of the allegedly 
contaminated L-Tryptophan. SDA has posted a revolving irrevocable letter of     
credit for the benefit of the Indemnified Group if SDA is unable or unwilling to
satisfy any claims or judgement. SDK has unconditionally guaranteed the payment 
obligations of SDA under the Indemnification Agreement. As of September 1, 1996,
130 of a total of approximately 132 suits in which the Company was a named      
defendant have been dismissed or settled by SDA at no cost to the Company.      

To date, the amount of damages sought in each of the remaining two    
L-Tryptophan actions has not been specified. The Company's available product    
liability insurance coverage of $3 million for L-Tryptophan matters in respect  
of claims made prior to December 21, 1993 is not available with respect to these
two actions. There can be no assurance that when damages are specified in these 
actions that the total amount thereof, if fully awarded against the Company     
alone and ignoring the existence of the Indemnification Agreement, would not    
have a material adverse impact upon the financial condition and results of      
operations of the Company. However, the Indemnification Agreement, the defense  
and resolution to date of numerous lawsuits by SDA without cost to the Company, 
the multitude of defendants and the possibility that liability                  

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could be assessed against or paid by other parties, have led management of the  
Company, after consultation with outside legal counsel, to believe that the     
prospect for a material adverse effect on the Company's results of operations or
financial condition is remote and no provision in the Company's financial       
statements has been made for any loss that may result from these actions. The   
Company no longer markets any products containing added manufactured            
L-Tryptophan.                                                                   

The Company, like other retailers, distributors and manufacturers of  
products that are ingested, faces an inherent risk of exposure to product       
liability claims in the event that, among other things, the use of its products 
results in injury. With respect to product liability insurance coverage, the    
Company currently has $75 million of product liability insurance (which does not
cover matters relating to L-Tryptophan) with a $25,000 self-insurance retention 
per occurrence and $100,000 self-insurance retention in the aggregate. There can
be no assurance that such insurance will continue to be available at a          
reasonable cost, or if available will be adequate to cover liabilities.         

    Twin Laboratories Inc. and others are named defendants in a wrongful death
action entitled Thomas Hendry v. Twin Laboratories, Inc., et al., originally    
commenced in July 1995 in Fresno County (California) Superior Court (Action No. 
536670-3). The plaintiff in this action alleges that his wife, Victoria Hendry, 
died as a result of the ingestion of the Company's "Ripped Fuel" (a bodybuilding
product which plaintiff alleges contained Ma Huang, kola extract and chromium   
picolinate) and/or "Super Dieter's Teas", a product of Laci Le Beau Tea Company,
and seeks both compensatory and punitive damages from the defendants. The       
Company has answered the complaint and intends to vigorously contest the        
plaintiff's claims. Discovery is not yet complete and it is premature to predict
the likely outcome of the case. However, after consultation with outside legal  
counsel to the Company in this matter and after giving effect to the Company's  
available product liability insurance coverage, the Company believes that the   
prospect for a material adverse effect on the Company's result of operations or 
financial condition is remote and no provision in the Company's financial       
statements has been made for any loss that may result from this action. See     
"-- Regulatory Matters."                                                        

The Company is presently engaged in various other legal actions, and  
although ultimate liability cannot be determined at the present time, the       
Company is currently of the opinion that the amount of any such liability from  
these other actions and the lawsuit described in the preceding paragraph, after 
taking into consideration the Company's insurance coverage, will not have a     
material adverse effect on its results of operations and financial condition.   

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS                                                

   The following table sets forth certain information concerning each of the
Company's directors and executive officers:                                     

                                                        [Enlarge/Download Table]

              NAME                 AGE                        POSITION                      
---------------------------------  ---  ----------------------------------------------------
                                                                                            
Brian Blechman...................  46   Executive Vice President, Treasurer and Director    
Dean Blechman....................  39   Executive Vice President and Director               
Neil Blechman....................  46   Executive Vice President, Secretary and Director    
Ross Blechman....................  43   Chairman of the Board, Chief Executive Officer and  
                                        President                                           
Steve Blechman...................  43   Executive Vice President and Director; Chairman of  
                                        the Board, Chief Executive Officer and President of 
                                        ARP                                                 
Stephen Welling..................  42   President of Natur-Pharma (Nature's Herbs) Division 
                                        of Twin Laboratories Inc.                           
John G. Danhakl..................  40   Director                                            
Jennifer Holden Dunbar...........  33   Director                                            
Jonathan D. Sokoloff.............  39   Director                                            

Brian Blechman, became an Executive Vice President and Director of the
Company upon consummation of the Acquisition. Mr. Blechman joined Twin          
Laboratories Inc. in 1972 and served as Vice President, Purchasing & Quality    
Control of the Company prior to the Acquisition. He is responsible for the      
purchasing of all raw materials and has final responsibility for all quality    
control and management of the plant facilities. He is also responsible for      
capital expenditures for plant and equipment and for product formulations.      

Dean Blechman, became an Executive Vice President and Director of the 
Company upon consummation of the Acquisition. Mr. Blechman joined Twin          
Laboratories Inc. in 1979 and served as Vice President, Sales of the Company    
prior to the Acquisition. He has responsibility for overseeing the national     
sales force and distributor network. Mr. Blechman is on the board of directors  
of the National Nutritional Foods Association, a leading trade organization that
governs the industry's retailers, distributors and manufacturers.               

Neil Blechman, became an Executive Vice President and Director of the 
Company upon consummation of the Acquisition. Mr. Blechman joined Twin          
Laboratories Inc. in 1972 and served as Vice President, Marketing & Advertising 
of the Company prior to the Acquisition. He is primarily responsible for        
directing marketing and advertising strategies, the design of product packaging 
and point of sale materials, the production and creation of merchandising       
displays, advertising, promotional activities and trade show activities.        

Ross Blechman, became Chairman of the Board, Chief Executive Officer, 
President and Director of the Company upon consummation of the Acquisition. Mr. 
Blechman jointed Twin Laboratories Inc. in 1974 and served as Vice President,   
Production of the Company prior to the Acquisition. He is primarily responsible 
for plant operations, shipping, warehouse management, and for assuring that     
quality standards are maintained. He is also responsible for MIS and human      
resource functions. Mr. Blechman also directs the operations of the Alvita      
Products Division of the Company.                                               

Steve Blechman, became an Executive Vice President and Director of the
Company and Chairman of the Board, Chief Executive Officer and President of ARP 
upon consummation of the Acquisition. Mr. Blechman joined Twin Laboratories Inc.
in 1974 and served as Vice President, Product Development & Marketing of the    
Company prior to the Acquisition. He is involved in product development and     
marketing, and is primarily responsible for developing new products for the     
TWINLAB, Nature's Herbs and Alvita brands. Mr. Blechman also directs the        
operations of ARP and the customer service department of Twin Laboratories Inc. 

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    Stephen Welling, became the President of the Natur-Pharma (Nature's Herbs)
Division of Twin Laboratories Inc. upon consummation of the Acquisition. Mr.    
Welling joined Natur-Pharma Inc. in 1977 as the controller and served as        
President of Natur-Pharma Inc. prior to the Acquisition. Prior to his promotion 
to President, Mr. Welling served as Vice President of Operations with           
responsibility for manufacturing, personnel, quality management, legal affairs  
and finance.                                                                    

   John G. Danhakl became a director of the Company upon consummation of the
Acquisition. He has been an executive officer and an equity owner of Leonard    
Green & Partners, L.P. ("LGP"), a merchant banking firm which manages GEI, since
1995. Mr. Danhakl had previously been a Managing Director at Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ") and had been with DLJ since 1990. Prior 
to joining DLJ, Mr. Danhakl was a Vice President at Drexel Burnham Lambert      
Incorporated. Mr. Danhakl is also a director of The Arden Group, Inc. and Kash  
n' Karry Food Stores, Inc.                                                      

   Jennifer Holden Dunbar became a director of the Company upon consummation
of the Acquisition. She joined Leonard Green & Associates, L.P. ("LGA"), a      
merchant banking firm, as an associate in 1989, became a principal in 1993, and 
through a corporation became a partner in 1994. Since 1994, Ms. Holden Dunbar   
has also been an executive officer and equity owner of LGP. Ms. Holden Dunbar   
previously was an associate with the merchant banking firm of Gibbons, Green,   
van Amerongen and a financial analyst in mergers and acquisitions with Morgan   
Stanley & Co. Ms. Holden Dunbar is also a director of Thrifty PayLess Holdings, 
Inc., Thrifty PayLess, Inc., Kash n' Karry Food Stores, Inc. and several private
companies.                                                                      

    Jonathan D. Sokoloff became a director of the Company upon consummation of
the Acquisition. He joined LGA as a partner in 1990. Mr. Sokoloff has also been 
an executive officer and equity owner of LGP since its formation in 1994. Mr.   
Sokoloff was previously a Managing Director at Drexel Burnham Lambert           
Incorporated. Mr. Sokoloff is also a director of Thrifty PayLess Holdings, Inc.,
Thrifty PayLess, Inc., Carr-Gottstein Foods Co. and several private companies.  

The Company's By-laws and Certificate of Incorporation provide for the
Company's Board of Directors to be comprised of between eight and eleven        
members, as determined from time to time by the stockholders. The Board is      
currently comprised of eight members. Each Director holds office until the next 
annual meeting of stockholders and until his successor is duty elected and      
qualified, or until his earlier death, resignation or removal.                  

  All of the Company's current Directors were nominated and elected to the
Company's Board of Directors in accordance with the Stockholders Agreement (as  
hereinafter defined) as designees of GEI and the Continuing Stockholders,       
respectively. See "Principal Stockholders -- Terms of the Stockholders          
Agreement." Executive officers of the Company are appointed by, and serve at the
discretion of, the Board of Directors. Except for the Blechman Brothers'        
familial relationships, there are no family relationships among the executive   
officers or Directors of the Company.                                           

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EXECUTIVE COMPENSATION                                                          

 Summary Compensation Table.  The following table shows the compensation
paid by the Company during the year ended December 31, 1995 ("Fiscal Year 1995")
to the five most highly compensated executive officers of the Company, who      
collectively acted in a similar capacity to a chief executive officer, serving  
as such at the end of Fiscal Year 1995 (the "Named Executive Officers").        

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                             ANNUAL COMPENSATION                      
                                                   FISCAL  -----------------------      ALL OTHER     
           NAME AND PRINCIPAL POSITION              YEAR   SALARY($)   BONUS($)(A)  COMPENSATION($)(B)
-------------------------------------------------  ------  ---------   -----------  ------------------
                                                                                                      
Ross Blechman....................................    1995   402,461      368,145           9,527      
  Vice President                                                                                      
Brian Blechman...................................    1995   401,523      368,145           9,822      
  Vice President                                                                                      
Dean Blechman....................................    1995   402,545      368,145           9,235      
  Vice President                                                                                      
Neil Blechman....................................    1995   402,545      368,145           9,822      
  Vice President                                                                                      
Steve Blechman...................................    1995   402,548      368,145           9,527      
  Vice President                                                                                      

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

(a)  Bonuses are reported in the fiscal year earned and paid.                   
(b)  (i) payment of premiums for term life insurance policies of $1,365 for Ross
   Blechman; $1,660 for Brian Blechman; $1,073 for Dean Blechman; $1,660 for
 Neil Blechman; and $1,365 for Steve Blechman, for 1995; (ii) payment of
premiums for executive medical insurance policies for each of Ross    
    Blechman, Brian Blechman, Dean Blechman, Neil Blechman and Steve Blechman,
  of $1,250 for 1995 and (iii) payments under the Company's Profit Sharing
  Plan of $6,912 for each of Ross Blechman, Brian Blechman, Dean Blechman,
  Neil Blechman and Steve Blechman, for 1995. The amount set forth in this
   column does not include "S" corporation dividend distributions sufficient
 to pay income taxes on the earnings of the Company that were treated as
having been earned by the individual as a shareholder of the Company. 

EMPLOYMENT AGREEMENTS                                                           

   Upon consummation of the Acquisition, the Company entered into employment
agreements with each of the Blechman Brothers (each an "Employment Agreement"). 
The Employment Agreement provides that, unless a Public Offering Event (as      
defined below, see "Principal Stockholders -- Terms of the Stockholders         
Agreement") has occurred, the relevant individual will be employed as an        
executive of the Company for a term of five years, renewable for terms of one   
year thereafter. From and after the occurrence of a Public Offering Event, the  
employment term is deemed to end on the third anniversary of such event;        
provided that, the employment term will be automatically extended so as to      
establish a three year remaining term of employment upon a termination of       
employment for the purposes of the noncompetition and severance provisions of   
the Employment Agreement. The Employment Agreement provides for a base salary of
$400,000 (as adjusted for inflation), in addition to other customary perquisites
and benefits. In addition to receiving a base salary, the executive is also     
eligible to participate in the TLC's Bonus Plan which entitles such individual  
to a bonus payment of up to 128% of his base salary for the relevant calendar   
year based on annual increases in EBITDA (as defined therein) realized by the   
Company for each year of the employment term. The Employment Agreement also     
provides, subject to certain exceptions, that upon a termination of the         
individual's employment during the term thereof (other than for "cause" as      
defined therein), the Company is generally obligated to pay the individual an   
amount equal to his base salary for the remaining term under the Employment     
Agreement.                                                                      

Upon consummation of the Acquisition, the Company entered into an     
employment agreement with Stephen Welling to serve as President of the          
Natur-Pharma (Nature's Herbs) Division of the Company (the "Division") (the     
"Welling Employment Agreement"). The Welling Employment Agreement provides that 
Mr. Welling will be employed as an executive of the Company for a term of three 
years, renewable for terms                                                      

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of one year thereafter. The Welling Employment Agreement provides for a base    
salary of $135,000 (as adjusted for inflation), in addition to other customary  
perquisites and benefits. In addition to receiving a base salary, Mr. Welling is
also eligible to participate in the Division Bonus Plan which entitles him to a 
bonus payment up to 202.5% of his base salary for the relevant calendar year    
based on annual increases in EBITDA (as defined therein) realized by the        
Division for each year of the employment term. The Welling Employment Agreement 
also provides, subject to certain exceptions, that upon a termination of Mr.    
Welling's employment during the term thereof (other than for "cause" as defined 
therein), the Company is generally obligated to pay Mr. Welling an amount equal 
to his base salary for the remaining term under the Welling Employment          
Agreement.                                                                      

   Upon consummation of the Acquisition, the Company entered into consulting
agreements with each of David and Jean Blechman (each a "Consulting Agreement").
The Consulting Agreement provides that the relevant individual be engaged as an 
independent consultant to the Company for a term of five years. As consideration
for such consulting services, the Company is obligated to pay the individual an 
annual consulting fee of $100,000, in addition to certain limited perquisites   
and benefits.                                                                   

     Upon consummation of the Acquisition, the Company and TLC also entered into
non-competition agreements with each of the Stockholders (each a                
"Non-Competition Agreement"). The term of the Non-Competition Agreement is equal
to the initial term of the relevant individual's employment or consulting       
agreement, as the case may be. The Non-Competition Agreement generally prevents 
the individual from participating in any manner in the management, operation    
and/or ownership of any entity, anywhere in the world, which is engaged in      
similar lines of business to those of the Company.                              

DIRECTOR COMPENSATION                                                           

Directors who are employees of the Company receive no compensation for
serving on the Board of Directors. Non-employee directors are reimbursed for    
their out-of-pocket expenses in attending Board meetings. Messrs. Danhakl and   
Sokoloff and Ms. Holden Dunbar receive no fees in their capacities as directors,
but see "Certain Relationships and Related Transactions -- Transactions with    
LGP" for a description of certain other arrangements pursuant to which LGP, of  
which they (or corporations owned by them) are partners, receives compensation  
from the Company.                                                               

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

THE ACQUISITION                                                                 

     The Acquisition Agreement contains provisions customary for transactions of
similar size and type, including representations and warranties, which generally
will expire at the end of the fourteenth month following the month in which the 
Acquisition Agreement was consummated. However, those representations and       
warranties that are related to tax and environmental matters will expire,       
respectively, at the date on which the applicable statute of limitations has    
expired and the third anniversary of the consummation of the Acquisition        
Agreement. Subject to the limitations set forth in the Acquisition Agreement    
(which include, subject to certain exceptions, a $2,000,000 deductible on       
liability and a maximum liability of $25,000,000), the Stockholders have agreed 
to indemnify GEI, its permitted assigns and the Company against any liabilities 
arising out of the breach of such representations and warranties while such     
representations and warranties are still in effect. Pursuant to the Acquisition 
Agreement, the Stockholders received, in addition to certain payments described 
elsewhere in this Prospectus, a payment in respect of their estimated liability 
for taxes on the Company's income prior to the consummation of the Transactions,
when the Company had "S" corporation status for federal income tax purposes.    
This payment is subject to adjustment based on the actual tax liability as      
calculated for the relevant period. In addition, certain fees, taxes and        
expenses of parties to the Acquisition Agreement were or will be paid by the    
Company in connection with the consummation of the Acquisition. See "Prospectus 
Summary -- The Acquisition."                                                    

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EMPLOYMENT AND CONSULTING AGREEMENTS                                            

   Upon consummation of the Acquisition, the Company entered into employment
agreements with each of the Continuing Stockholders and consulting agreements   
with each of David and Jean Blechman. See "Management -- Employment Agreements."

TRANSACTIONS WITH DAVID BLECHMAN AND JEAN BLECHMAN                              

 During the period from 1989 to 1992, Twin Laboratories Inc. assigned to
David and Jean Blechman certain promissory notes of Natur-Pharma Inc.,          
representing inter-company payables, in the aggregate principal amount of       
$1,500,000. These promissory notes bore interest at a rate of 10% per annum, and
$1,000,000 of the principal was repaid in 1994 and the remainder was repaid on  
May 2, 1996. In June and July of 1991, Alvita Products, Inc. issued four        
promissory notes payable to David Blechman and Jean Blechman in the aggregate   
principal amount of $250,000. Such promissory notes bore interest at a rate of  
9% per annum and were repaid in April 1994. In 1988 and 1989, ARP borrowed funds
from David Blechman and Jean Blechman in the aggregate principal amount of      
$545,500. These loans were non-interest bearing, and $200,000 of the principal  
was repaid in 1994 and the remainder was repaid on May 3, 1996. The Company     
believes that these transactions were on terms at least as favorable to the     
Company as could be obtained in transactions with independent third parties.    

TRANSACTIONS WITH LGP                                                           

     LGP is the investment advisor to and an affiliate of the general partner of
GEI, which after consummation of the Acquisition owns 48% of the outstanding    
shares of common stock of TLC. Following consummation of the Acquisition,       
Messrs. Danhakl and Sokoloff and Ms. Holden Dunbar, stockholders and directors  
of the general partner of LGP, became directors of the Company. See             
"Management -- Directors and Executive Officers."                               

    Upon the consummation of the Acquisition, LGP received a fee of $1 million
for its services in arranging and structuring the Acquisition, including, among 
other things, structuring and negotiating the Acquisition Agreement and the     
Stockholders Agreement, arranging and negotiating the terms of the New Credit   
Facility and related documents, assistance with the Offering, financial and     
market analyses, and other similar consulting and investment banking services.  
The majority of such services were performed on behalf of LGP by Messrs. Danhakl
and Sokoloff and Ms. Holden Dunbar.                                             

   In connection with the Acquisition, the Company entered into a Management
Services Agreement with LGP pursuant to which LGP will receive an annual        
retainer fee of $400,000 plus reasonable expenses for providing certain         
management, consulting and financial planning services (the "LGP Management     
Fee"). The Company believes that the contacts and expertise provided by LGP in  
these areas enhance the Company's opportunities and management's expertise in   
these matters and that the fees to be paid to LGP fairly reflect the value of   
the services to be provided by LGP. The specialized consulting services provided
by LGP overlap to some extent with the role of Messrs. Danhakl and Sokoloff and 
Ms. Holden Dunbar as directors of the Company, for which they do not receive any
additional compensation. See "Management -- Director Compensation." In addition 
to the LGP Management Fee, the Management Services Agreement provides that LGP  
may receive reasonable and customary fees and reasonable expenses from time to  
time for providing financial advisory and investment banking services in        
connection with major financial transactions that may be undertaken in the      
future; provided, however, that if the Continuing Stockholders maintain         
ownership of more than 30% of the shares of common stock of TLC, then the       
retention of LGP in connection with such major financial transactions is subject
to the approval of a majority of the Blechman Brothers then serving as directors
of the Company. The Management Services Agreement will terminate on the earlier 
of its seventh anniversary or such time as GEI no longer owns two-thirds of the 
shares of common stock of TLC issued to GEI pursuant to the Acquisition         
Agreement.                                                                      

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PRINCIPAL STOCKHOLDERS

The shares of common stock of the Company are wholly owned by TLC.    

    The information in the following table sets forth certain information with
respect to the beneficial ownership of the common stock of TLC as of June 30,   
1996 by (i) each person who beneficially owns more than 5% of the outstanding   
shares of TLC's common stock, (ii) each executive officer of the Company, (iii) 
each director of the Company and (iv) all directors and executive officers of   
the Company as a group. Except as noted below, each person or entity has sole   
voting and investment power with respect to the shares shown.                   

                                                        [Enlarge/Download Table]

                                                                                       PERCENT 
                                                                           NUMBER OF     OF    
                            NAME AND ADDRESS                                SHARES    OWNERSHIP
-------------------------------------------------------------------------  ---------  ---------
                                                                                               
Green Equity Investors II, L.P. .........................................   480,000       48%  
  c/o Leonard Green & Partners, L.P.                                                           
  333 South Grand Avenue, Suite 5400                                                           
  Los Angeles, CA 90071                                                                        
John G. Danhakl(a).......................................................   480,000       48%  
  c/o Leonard Green & Partners, L.P.                                                           
  333 South Grand Avenue, Suite 5400                                                           
  Los Angeles, CA 90071                                                                        
Jennifer Holden Dunbar(a)................................................   480,000       48%  
  c/o Leonard Green & Partners, L.P.                                                           
  333 South Grand Avenue, Suite 5400                                                           
  Los Angeles, CA 90071                                                                        
Jonathan D. Sokoloff(a)..................................................   480,000       48%  
  c/o Leonard Green & Partners, L.P.                                                           
  333 South Grand Avenue, Suite 5400                                                           
  Los Angeles, CA 90071                                                                        
Brian Blechman...........................................................    89,689        9%  
  c/o Twin Laboratories Inc.                                                                   
  2120 Smithtown Avenue                                                                        
  Ronkonkoma, NY 11779                                                                         
Dean Blechman............................................................    89,689        9%  
  c/o Twin Laboratories Inc.                                                                   
  2120 Smithtown Avenue                                                                        
  Ronkonkoma, NY 11779                                                                         
Neil Blechman............................................................    89,689        9%  
  c/o Twin Laboratories Inc.                                                                   
  2120 Smithtown Avenue                                                                        
  Ronkonkoma, NY 11779                                                                         
Ross Blechman............................................................    89,689        9%  
  c/o Twin Laboratories Inc.                                                                   
  2120 Smithtown Avenue                                                                        
  Ronkonkoma, NY 11779                                                                         
Steve Blechman...........................................................    89,689        9%  
  c/o Twin Laboratories Inc.                                                                   
  2120 Smithtown Avenue                                                                        
  Ronkonkoma, NY 11779                                                                         

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                                                        [Enlarge/Download Table]

                                                                                       PERCENT 
                                                                           NUMBER OF     OF    
                            NAME AND ADDRESS                                SHARES    OWNERSHIP
-------------------------------------------------------------------------  ---------  ---------
                                                                                               
Stephen Welling..........................................................     1,555     *      
  c/o Twin Laboratories Inc.                                                                   
  2120 Smithtown Avenue                                                                        
  Ronkonkoma, NY 11779                                                                         
All directors and executive officers as a group (9 persons)(b)...........   930,000       93%  

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

(a)  The shares shown as beneficially owned by Messrs. Danhakl and Sokoloff and 
     Ms. Holden Dunbar represent 480,000 shares owned of record by GEI. GEI is a
   Delaware limited partnership managed by LGP, which is an affiliate of the
 general partner of GEI. Each of Leonard I. Green, Jonathan D. Sokoloff,
John G. Danhakl, Gregory J. Annick and Jennifer Holden Dunbar, either 
     directly (whether through ownership interest or position) or through one or
     more intermediaries, may be deemed to control LGP and such general partner.
LGP and such general partner may be deemed to control the voting and  
 disposition of the shares of common stock of TLC owned by GEI. As such,
  Messrs. Sokoloff and Danhakl and Ms. Holden Dunbar may be deemed to have
    shared voting and investment power with respect to all shares held by GEI.
   However, such individuals disclaim beneficial ownership of the securities
  held by GEI except to the extent of their respective pecuniary interests
therein.                                                              
(b)  Includes the shares referred to in Note (a) above.                         
*  Less than 1%.                                                            

TERMS OF THE STOCKHOLDERS AGREEMENT                                             

    Upon consummation of the Acquisition, GEI, the Continuing Stockholders and
TLC entered into a Stockholders Agreement (the "Stockholders Agreement") in     
respect of their holdings of shares of common stock of TLC. Pursuant to such    
Stockholders Agreement, certain transfers of such stock by the parties to the   
agreement are subject to tag-along rights of the other party and, for the five  
years subsequent to the date of the agreement, the reasonable consent of the    
other party. Such rights are generally effective until such time as the common  
stock of TLC is publicly held (a "Public Offering Event"). In addition, such    
consent rights of each party are contingent upon that party maintaining         
ownership of two-thirds of the shares of common stock of TLC issued to such     
party pursuant to the Acquisition Agreement.                                    

Pursuant to the Stockholders Agreement, each of GEI and the Continuing
Stockholders is granted certain demand registration rights which commence on the
earlier of nine months after a Public Offering Event and the second anniversary 
of the date of the agreement. The Stockholders Agreement also contains certain  
"piggyback" registration rights arising in the event that TLC registers its     
securities under the Securities Act.                                            

Under the Stockholders Agreement, each of GEI and the Continuing      
Stockholders are granted certain preemptive rights in the event that TLC issues 
to the other party any equity or debt securities of TLC. These rights are       
generally effective (i) until a Public Offering Event and (ii) provided that the
preempting party maintains ownership of two-thirds of the shares of common stock
of TLC issued to such party pursuant to the Acquisition Agreement.              

Pursuant to the Stockholders Agreement, each of GEI and the Continuing
Stockholders agreed to vote their shares in favor of five nominees of the       
Continuing Stockholders and three nominees of GEI to the Board of Directors of  
TLC and the Company. The agreement provides that a wide range of actions to be  
taken by TLC, including but not limited to the payment of certain dividends,    
engagement in new businesses, and the acquisition of other businesses, require  
the affirmative approval of a majority of each of the Continuing Stockholders   
nominees and the GEI nominees to the Board of Directors. Generally, such rights 
of each party are contingent upon that party maintaining ownership of two-thirds
of the shares of common stock of TLC issued to such party pursuant to the       
Acquisition Agreement. Certain fundamental corporate actions, including but not 
limited to, amendments to the Certificate of Incorporation, the sale of         
substantially all of the assets of the Company, and the merger or combination of
the Company with another entity, additionally require an affirmative vote of    
holders of at least 80% of the issued and outstanding common stock of TLC.      
Generally,                                                                      

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such requirements for a super-majority stockholder vote are contingent upon the 
Continuing Stockholders maintaining ownership of two-thirds of the shares of    
common stock of TLC issued to them pursuant to the Acquisition Agreement. In    
addition, all of these rights and requirements are generally only effective     
until the occurrence of a Public Offering Event. See "Risk Factors -- Control by
Principal Stockholders."                                                        

    Subject to the early termination of certain provisions of the Stockholders
Agreement upon the occurrence of a Public Offering Event, the Stockholders      
Agreement terminates on the tenth anniversary of the date thereof.              

  Shares of common stock and Preferred Stock of TLC were issued to various
institutional investors (the "Senior Preferred Holders") pursuant to a Stock    
Subscription Agreement among each such investor and TLC.                        

     Upon consummation of the Acquisition, GEI, the Continuing Stockholders, the
Senior Preferred Holders and TLC entered into a secondary stockholders agreement
(the "Secondary Stockholders Agreement") in respect of their holdings of shares 
of stock of TLC. Pursuant to such Secondary Stockholders Agreement, the Senior  
Preferred Holders will have tag-along rights with respect to certain transfers  
of common stock of TLC by GEI and/or the Continuing Stockholders. In addition,  
on a sale of all or substantially all of the common stock of TLC by GEI and/or  
the Continuing Stockholders, such sellers will have drag-along rights with      
respect to shares of common stock of TLC held by the Senior Preferred Holders.  
Further, GEI, the Company and the other Senior Preferred Holders will have      
certain first option rights on sales by a Senior Preferred Holder of shares of  
common stock of TLC. All of the above rights will terminate on the occurrence of
a Public Offering Event.                                                        

In addition, commencing on the fifth anniversary of the Secondary     
Stockholders Agreement, the Senior Preferred Holders will be entitled to        
exercise one demand registration right with respect to their shares of common   
stock of TLC. Finally, the Senior Preferred Holders will have certain           
"piggyback" registration rights on other registrations of equity securities of  
TLC.                                                                            

 Subject to the early termination of certain provisions of the Secondary
Stockholders Agreement upon the occurrence of a Public Offering Event, the      
Secondary Stockholders Agreement terminates on the tenth anniversary of the date
thereof.                                                                        

DESCRIPTION OF NEW NOTES

  Set forth below is a summary of certain provisions of the New Notes. The
New Notes will be issued pursuant to an indenture dated May 7, 1996, by and     
among the Company, TLC, the Subsidiary Guarantors (as defined below) and Fleet  
National Bank as trustee (the "Trustee"). Except as otherwise indicated below,  
the following summary applies to both the Old Notes and the New Notes. As used  
herein, the term "Notes" shall mean the Old Notes and the New Notes, unless     
otherwise indicated.                                                            

     The form and terms of the New Notes are substantially identical to the form
and terms of the Old Notes, except that the New Notes (i) will be registered    
under the Securities Act, (ii) will not provide for payment of penalty interest 
as Liquidated Damages, which terminate upon consummation of the Exchange Offer, 
and (iii) will not bear any legends restricting transfer thereof. The New Notes 
will be issued solely in exchange for an equal principal amount of Old Notes. As
of the date hereof, $100 million aggregate principal amount of Old Notes is     
outstanding. See "The Exchange Offer."                                          

The following summaries of certain provisions of the New Notes, the   
Indenture and the Registration Rights Agreement are summaries only, do not      
purport to be complete and are qualified in their entirety by reference to all  
of the provisions of the Indenture and the Registration Rights Agreement,       
including the definitions therein, which documents have been filed as exhibits  
to this Registration Statement. Capitalized terms used herein and not otherwise 
defined shall have the meanings assigned to them in the Indenture or the        
Registration Rights Agreement, as appropriate. As used in this section, the     
"Company" refers to the entity which survived the Natur-Pharma Merger, and shall
not refer to the subsidiaries of the Company. Wherever particular provisions of 
the Indenture are referred to in this summary, such provisions are incorporated 
by                                                                              

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reference as a part of the statements made and such statements are qualified in 
their entirety by such reference.                                               

GENERAL                                                                         

The New Notes will be unsecured, general obligations of the Company,  
subordinate in right of payment to all Senior Debt of the Company, and senior or
pari passu in right of payment to all existing and future subordinated          
Indebtedness of the Company. The New Notes will be limited in aggregate         
principal amount to $100 million. The Notes will be jointly and severally       
guaranteed (the "Guarantees") fully and unconditionally on an unsecured senior  
subordinated basis by ARP, the Company's sole existing Subsidiary, and by each  
of the Company's future Subsidiaries (the "Subsidiary Guarantors") and by TLC   
(together with the Subsidiary Guarantors, the "Guarantors"). The obligations of 
each Guarantor under its guarantee, however, will be limited in a manner        
intended to avoid it being deemed a fraudulent conveyance under applicable law. 
The term "Subsidiaries" as used herein or in the Indenture, however, does not   
include any Unrestricted Subsidiaries. The New Notes will be issued only in     
fully registered form, without coupons, in denominations of $1,000 and integral 
multiples thereof.                                                              

The Notes will mature on May 15, 2006. The Notes will bear interest at
10 1/4% per annum from the date of issuance or from the most recent Interest    
Payment Date to which interest has been paid or provided for, payable           
semi-annually on May 15 and November 15 of each year, commencing November 15,   
1996, to the persons in whose names such Notes are registered at the close of   
business on the May 1 or November 1 immediately preceding such Interest Payment 
Date. Interest will be calculated on the basis of a 360-day year consisting of  
twelve 30-day months.                                                           

   Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be presented for registration of transfer or exchange, at the 
office or agency of the Company maintained for such purpose, which office or    
agency shall be maintained in the Borough of Manhattan, The City of New York. At
the option of the Company, payment of interest may be made by check mailed to   
the Holders of the Notes at the addresses set forth upon the registry books of  
the Company. No service charge will be made for any registration of transfer or 
exchange of Notes, but the Company may require payment of a sum sufficient to   
cover any tax or other governmental charge payable in connection therewith.     
Until otherwise designated by the Company, the Company's office or agency will  
be the corporate trust office of the Trustee presently located at 14 Wall       
Street, New York, New York 10005.                                               

SUBORDINATION                                                                   

    The New Notes and the Guarantees will be general, unsecured obligations of
the Company and the Guarantors, respectively, subordinated in right of payment  
to all Senior Debt of the Company and the Guarantors, as applicable. As of June 
30, 1996, the Company had approximately $50.4 million of outstanding Senior     
Debt, substantially all of which was secured, and approximately $0.4 million of 
debt which ranks pari passu with the Notes in right and priority of payment.    

 The Indenture provides that no payment (by set-off or otherwise) may be
made by or on behalf of the Company or a Guarantor, as applicable, on account of
the principal of, premium, if any, or interest on the Notes (including any      
repurchases of Notes), or on account of the redemption provisions of the Notes  
or any Obligation in respect of the Notes, for cash or property, (i) upon the   
maturity of any Senior Debt of the Company or such Guarantor, as applicable, by 
lapse of time, acceleration (unless waived) or otherwise, unless and until all  
principal of, premium, if any, and the interest on and fees in respect of such  
Senior Debt are first paid in full in cash or Cash Equivalents (or such payment 
is duly provided for) or otherwise to the extent holders of Senior Debt accept  
satisfaction of amounts due by settlement in other than cash or Cash            
Equivalents, or (ii) in the event of default in the payment of any principal of,
premium, if any, or interest on or fee in respect of Senior Debt of the Company 
or such Guarantor, as applicable, when it becomes due and payable, whether at   
maturity or at a date fixed for prepayment or by declaration or otherwise (a    
"Payment Default"), unless and until such Payment Default has been cured or     
waived or otherwise has ceased to exist.                                        

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Upon (i) the happening of an event of default (other than a Payment   
Default) that permits the holders of Senior Debt to declare such Senior Debt to 
be due and payable and (ii) written notice of such event of default is given to 
the Company and the Trustee by the Senior Bank Representative or the holders of 
an aggregate of at least $20 million principal amount outstanding of any other  
Senior Debt or their representative (a "Payment Notice"), then, unless and until
such event of default has been cured or waived or otherwise has ceased to exist,
no payment (by set-off or otherwise) may be made by or on behalf of the Company,
if the Company is an obligor on such Senior Debt, or any Guarantor which is an  
obligor under such Senior Debt on account of the principal of, premium, if any, 
or interest on the Notes (including any repurchases of any of the New Notes), or
on account of the redemption provisions of the Notes or any Obligation in       
respect of the Notes, in any such case. Notwithstanding the foregoing, unless   
the Senior Debt in respect of which such event of default exists has been       
declared due and payable in its entirety within 179 days after the Payment      
Notice is delivered as set forth above (the "Payment Blockage Period") (and such
declaration has not been rescinded or waived), at the end of the Payment        
Blockage Period, the Company and the Guarantors shall be required to pay all    
sums not paid to the Holders of the Notes during the Payment Blockage Period due
to the foregoing prohibitions and to resume all other payments as and when due  
on the Notes. Any number of Payment Notices may be given; provided, however,    
that (i) not more than one Payment Notice shall be given within a period of any 
360 consecutive days, and (ii) no default that existed upon the date of such    
Payment Notice or the commencement of such Payment Blockage Period (whether or  
not such event of default is on the same issue of Senior Debt) shall be made the
basis for the commencement of any other Payment Blockage Period.                

In the event that, notwithstanding the foregoing, any payment or      
distribution of assets of the Company or any Guarantor shall be received by the 
Trustee or the Holders at a time when such payment or distribution is prohibited
by the foregoing provisions, such payment or distribution shall be held in trust
for the benefit of the holders of such Senior Debt, and shall be paid or        
delivered by the Trustee or such Holders, as the case may be, to the holders of 
such Senior Debt remaining unpaid or unprovided for or to their representative  
or representatives, or to the trustee or trustees under any indenture pursuant  
to which any instruments evidencing any of such Senior Debt may have been       
issued, ratably according to the aggregate principal amounts remaining unpaid on
account of such Senior Debt held or represented by each, for application to the 
payment of all such Senior Debt remaining unpaid, to the extent necessary to pay
or to provide for the payment of all such Senior Debt in full in cash or Cash   
Equivalents or otherwise to the extent holders of Senior Debt accept            
satisfaction of amounts due by settlement in other than cash or Cash Equivalents
after giving effect to any concurrent payment or distribution to the holders of 
such Senior Debt.                                                               

  Upon any distribution of assets of the Company or any Guarantor upon any
dissolution, winding up, total or partial liquidation or reorganization of the  
Company or a Guarantor, whether voluntary or involuntary, in bankruptcy,        
insolvency, receivership or a similar proceeding or upon assignment for the     
benefit of creditors or any marshalling of assets or liabilities, (i) the       
holders of all Senior Debt of the Company or such Guarantor, as applicable, will
first be entitled to receive payment in full in cash or Cash Equivalents (or    
have such payment duly provided for) or otherwise to the extent holders of      
Senior Debt accept satisfaction of amounts due by settlement in other than cash 
or Cash Equivalents before the Holders are entitled to receive any payment on   
account of the principal of, premium, if any, and interest on the Notes or any  
Obligation in respect of the Notes (other than Junior Securities) and (ii) any  
payment or distribution of assets of the Company or such Guarantor of any kind  
or character from any source, whether in cash, property or securities (other    
than Junior Securities) to which the Holders or the Trustee on behalf of the    
Holders would be entitled (by set-off or otherwise), except for the             
subordination provisions contained in the Indenture, will be paid by the        
liquidating trustee or agent or other person making such a payment or           
distribution directly to the holders of such Senior Debt or their representative
to the extent necessary to make payment in full (or have such payment duly      
provided for) on all such Senior Debt remaining unpaid, after giving effect to  
any concurrent payment or distribution to the holders of such Senior Debt.      

No provision contained in the Indenture or the Notes will affect the  
obligation of the Company and the Guarantors, which is absolute and             
unconditional, to pay, when due, principal of, premium, if any, and interest on 
the New Notes. The subordination provisions of the Indenture and the Notes will 
not prevent the occurrence of any Default or Event of Default under the         
Indenture or limit the rights of the Trustee or any                             

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Holder, subject to the four immediately preceding paragraphs, to pursue any     
other rights or remedies with respect to the New Notes.                         

    As a result of the subordination provisions contained in the Indenture, in
the event of the liquidation, bankruptcy, reorganization, insolvency,           
receivership or similar proceeding or an assignment for the benefit of the      
creditors of the Company or a marshalling of assets or liabilities of the       
Company, Holders of the New Notes may receive less, ratably, and holders of     
Senior Debt may receive more, ratably, than other creditors of the Company or   
the Guarantors.                                                                 

OPTIONAL REDEMPTION                                                             

  The Company will not have the right to redeem any Notes prior to May 15,
2001, except as provided in the immediately following paragraph. The Notes will 
be redeemable at the option of the Company, in whole or in part, at any time on 
or after May 15, 2001, upon not less than 30 days nor more than 60 days notice  
to each Holder of Notes, at the following redemption prices (expressed as       
percentages of the principal amount) if redeemed during the 12-month period     
commencing May 15, of the years indicated below, together with accrued and      
unpaid interest thereon to the Redemption Date (subject to the right of Holders 
of record on a Record Date to receive interest due on an Interest Payment Date  
that is on or prior to such Redemption Date):                                   

                                                        [Enlarge/Download Table]

                                   YEAR                                     PERCENTAGE
--------------------------------------------------------------------------  ----------
                                                                                      
2001......................................................................    105.125%
2002......................................................................    102.562%
2003......................................................................    101.281%
2004 and thereafter.......................................................    100.000%

Notwithstanding the foregoing, prior to May 15, 1999, the Company may 
redeem from time to time up to 35% of the aggregate principal amount of the     
Notes originally outstanding at a redemption price of 109 1/2% of the principal 
amount thereof, plus accrued and unpaid interest thereon, if any, to the        
Redemption Date, with the net proceeds of one or more Equity Offerings;         
provided, that at least 65% of the aggregate principal amount of the New Notes  
originally outstanding remain outstanding immediately after the occurrence of   
such redemption; provided, further, that such notice of redemption shall be sent
within 30 days after the date of closing of any such Equity Offering, and such  
redemption shall occur within 60 days after the date such notice is sent.       

    In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a pro rata basis, by lot or in such other    
manner it deems appropriate and fair. The New Notes may be redeemed in part in  
multiples of $1,000 only.                                                       

 Notice of any redemption will be sent, by first class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption to the    
Holder of each Note to be redeemed to such Holder's last address as then shown  
upon the registry books of the Registrar. Any notice which relates to a Note to 
be redeemed in part only must state the portion of the principal amount equal to
the unredeemed portion thereof and must state that on and after the date of     
redemption, upon surrender of such Note, a different Note or New Notes in a     
principal amount equal to the unredeemed portion thereof will be issued. On and 
after the date of redemption, interest will cease to accrue on the Notes or     
portions thereof called for redemption.                                         

The Notes will not have the benefit of any sinking fund.              

  The New Credit Facility limits, and any agreements governing Senior Debt
incurred after the closing of the Acquisition (the "Closing Date") may limit or 
prohibit, the optional redemption of the Notes until all such Senior Debt has   
been paid in full.                                                              

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CERTAIN COVENANTS                                                               

Repurchase of Notes at the Option of the Holder Upon a Change of Control    

The Indenture provides that in the event that a Change of Control has 
occurred, each Holder of Notes will have the right, at such holder's option,    
pursuant to an irrevocable and unconditional offer by the Company (the "Change  
of Control Offer"), to require the Company to repurchase all or any part of such
Holder's Notes (provided, that the principal amount of such Notes must be $1,000
or an integral multiple thereof) on a date (the "Change of Control Purchase     
Date") that is no later than 45 Business Days after the occurrence of such      
Change of Control, at a cash price (the "Change of Control Purchase Price")     
equal to 101% of the principal amount thereof, together with accrued interest to
the Change of Control Purchase Date. The Change of Control Offer shall be made  
within 15 Business Days following a Change of Control and shall remain open for 
not less than 20 Business Days following its commencement (the "Change of       
Control Offer Period"). Upon expiration of the Change of Control Offer Period,  
the Company shall purchase all Notes properly tendered in response to the Change
of Control Offer.                                                               

     As used herein, a "Change of Control" means (i) any merger or consolidation
of the Company or TLC with or into any person or any sale, transfer or other    
conveyance, whether direct or indirect, of all or substantially all of the      
assets of either the Company or TLC, on a consolidated basis, in one transaction
or a series of related transactions, if, immediately after giving effect to such
transaction, any "person" or "group," (as such terms are used for purposes of   
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange  
Act"), whether or not applicable), other than any Excluded Person or Excluded   
Persons or TLC, is or becomes the Beneficial Owner, directly or indirectly, of  
more than 50% of the total voting power in the aggregate normally entitled to   
vote in the election of directors, managers, or trustees, as applicable, of the 
transferee or surviving entity, (ii) any "person" or "group," other than any    
Excluded Person or Excluded Persons or TLC, is or becomes the Beneficial Owner, 
directly or indirectly, of more than 50% of the total voting power in the       
aggregate of all classes of Capital Stock of the Company then outstanding       
normally entitled to vote in elections of directors, provided that any "person" 
or "group" will be deemed to be the Beneficial Owner of any Capital Stock of the
Company held by TLC so long as such person or group is the Beneficial Owner of, 
directly or indirectly, in the aggregate a majority of the Capital Stock of TLC 
then outstanding normally entitled to vote in elections of directors, or (iii)  
during any period of 12 consecutive months after May 7, 1996, individuals who at
the beginning of any such 12-month period constituted the Board of Directors of 
either the Company or TLC (together, in each case, with any new directors whose 
election by such Board or whose nomination for election by the shareholders of  
the Company was approved by LGP or a Related Party of LGP or by the Excluded    
Persons or by a vote of a majority of the directors then still in office who    
were either directors at the beginning of such period or whose election or      
nomination for election was previously so approved) cease for any reason to     
constitute a majority of the Board of Directors of the Company or TLC then in   
office, as applicable.                                                          

On or before the Change of Control Purchase Date, the Company will (i)
accept for payment Notes or portions thereof properly tendered pursuant to the  
Change of Control Offer, (ii) deposit with the Paying Agent cash sufficient to  
pay the Change of Control Purchase Price (together with accrued and unpaid      
interest) of all New Notes so tendered and (iii) deliver to the Trustee Notes so
accepted together with an Officers' Certificate listing the Notes or portions   
thereof being purchased by the Company. The Paying Agent will promptly mail to  
the Holders of Notes so accepted payment in an amount equal to the Change of    
Control Purchase Price (together with accrued and unpaid interest), and the     
Trustee will promptly authenticate and mail or deliver to such Holders a new    
Note equal in principal amount to any unpurchased portion of the Note           
surrendered. Any Notes not so accepted will be promptly mailed or delivered by  
the Company to the Holder thereof. The Company will publicly announce the       
results of the Change of Control Offer on or as soon as practicable after the   
Change of Control Purchase Date.                                                

  Under clause (iii) of the definition of "Change of Control" above, among
other things, a Change of Control could occur in certain circumstances upon a   
change in the constitution of a majority of the Board of Directors of either the
Company or TLC resulting from a proxy contest involving the solicitation of     
revocable proxies.                                                              

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     The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Company, and, thus, the removal of incumbent    
management. The Change of Control purchase feature resulted from negotiations   
between the Company and the Initial Purchasers.                                 

 The phrase "all or substantially all" of the assets of the Company will
likely be interpreted under applicable state law and will be dependent upon     
particular facts and circumstances. As a result, there may be a degree of       
uncertainty in ascertaining whether a sale or transfer of "all or substantially 
all" of the assets of the Company has occurred.                                 

    Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, any tender offer rules   
under the Exchange Act, including Rules 13e-4 and 14e-1, as then in effect, and 
the rules thereunder and all other applicable Federal and state securities laws 
and any provisions of the Indenture which conflict with such laws shall be      
deemed to be superseded by the provisions of such laws.                         

     The New Credit Facility prohibits, and any agreements governing Senior Debt
incurred after the Closing Date may prohibit, the purchase of Notes in response 
to a Change in Control Offer, unless all such Senior Debt has been paid in full.
Furthermore, a Change in Control will constitute an event of default under the  
New Credit Facility. In addition, the Company's ability to purchase Notes upon a
Change in Control will be limited by its then available financial resources and,
if those resources are insufficient, its ability to arrange financing to effect 
those purchases. There can be no assurance that the Company will have sufficient
funds to repurchase the Notes upon a Change in Control or that it will be able  
to arrange financing for that purpose. Nevertheless, the Company's failure to   
make a Change in Control Offer or to purchase all Notes properly tendered       
pursuant to a Change in Control Offer will constitute an Event of Default under 
the Indenture. See "Risk Factors -- Effect of Change of Control."               

Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock                                                                           

    The Indenture provides that the Company and the Subsidiary Guarantors will
not, directly or indirectly, issue, assume, guaranty, incur, become directly or 
indirectly liable with respect to (including as a result of an Acquisition), or 
otherwise become responsible for, contingently or otherwise (individually and   
collectively, to "Incur" or, as appropriate, an "Incurrence"), any Indebtedness 
or any Disqualified Capital Stock (including Acquired Indebtedness), except for 
Permitted Indebtedness.                                                         

    Notwithstanding the foregoing, if (i) no Default or Event of Default shall
have occurred and be continuing at the time of, or would occur after giving     
effect on a pro forma basis to, such Incurrence of Indebtedness (including      
without duplication guarantees of Indebtedness of the Company and the Subsidiary
Guarantors otherwise permitted by the Indenture) or Disqualified Capital Stock  
and (ii) on the date of such Incurrence (the "Incurrence Date"), the            
Consolidated Interest Coverage Ratio of the Company for the Reference Period    
immediately preceding the Incurrence Date, after giving effect on a pro forma   
basis to such Incurrence of such Indebtedness (without duplication) or          
Disqualified Capital Stock and, to the extent set forth in the definition of    
Consolidated Interest Coverage Ratio, the use of proceeds thereof, would be at  
least 2.00 to 1 (the "Debt Incurrence Ratio"), then the Company and the         
Subsidiary Guarantors may Incur such Indebtedness or Disqualified Capital Stock.

 Indebtedness of any Person which is outstanding at the time such Person
becomes a Subsidiary of the Company or is merged with or into or consolidated   
with the Company or a Subsidiary of the Company shall be deemed to have been    
Incurred at the time such Person becomes such a Subsidiary of the Company or is 
merged with or into or consolidated with the Company or a Subsidiary of the     
Company, as applicable.                                                         

  Notwithstanding anything to the contrary contained in the Indenture, the
Subsidiary Guarantors each may guaranty Indebtedness of the Company or any other
Subsidiary Guarantor that is permitted to be Incurred hereunder, either at the  
time such Subsidiary Guarantor becomes a Guarantor of the New Notes or if later 
the time the Company or such other Subsidiary Guarantor Incurs such             
Indebtedness.                                                                   

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Limitation on Restricted Payments                                           

    The Indenture provides that the Company and the Subsidiary Guarantors will
not, directly or indirectly, make any Restricted Payment if, after giving effect
to such Restricted Payment on a pro forma basis, (1) a Default or an Event of   
Default shall have occurred and be continuing, (2) the Company is not permitted 
to Incur at least $1.00 of additional Indebtedness pursuant to the Consolidated 
Interest Coverage Ratio in the second paragraph of the covenant "Limitation on  
Incurrence of Additional Indebtedness and Disqualified Capital Stock," or (3)   
the aggregate amount of all Restricted Payments made by the Company and its     
Subsidiaries, including after giving effect to such proposed Restricted Payment,
from and after May 7, 1996, would exceed the sum of (a) 50% of the aggregate    
Consolidated Net Income of the Company for the period (taken as one accounting  
period), commencing on the first day after May 7, 1996, to and including the    
last day of the fiscal quarter ended immediately prior to the date of each such 
calculation (or, in the event Consolidated Net Income for such period is a      
deficit, then minus 100% of such deficit), plus (b) the aggregate Net Cash      
Proceeds received by the Company as a capital contribution or from the sale of  
its Qualified Capital Stock (other than (i) from or to a Subsidiary of the      
Company, (ii) to the extent applied in connection with a Qualified Exchange and 
(iii) to the extent applied to repurchase Capital Stock pursuant to clause (d)  
of the definition of Permitted Payments), after May 7, 1996.                    

The foregoing provisions will not prohibit or be violated by (A) a    
Qualified Exchange; (B) the payment or making of any Restricted Payment within  
60 days after the date of declaration thereof or the making of any binding      
commitment in respect thereof, if at said date of declaration or commitment,    
such Restricted Payment would have complied with the provisions contained in    
clauses (1), (2) and (3) of the first paragraph hereof; (C) Permitted Payments; 
(D) Restricted Investments, provided, that, after giving pro forma effect to    
such Restricted Investment, the aggregate amount of all such Restricted         
Investments made on or after May 7, 1996 pursuant to this subclause (D) that are
outstanding (after giving effect to (x) the amount of such Restricted           
Investments returned in cash to the Company or a Subsidiary Guarantor, the      
payment of cash dividends or the repayment in cash of the principal of loans or 
the cash return on any Restricted Investment to the Company or the Subsidiary   
Guarantor that made such Restricted Investment and (y) the release of any       
guarantee that constituted a Restricted Investment, to the extent it has been   
released, in each case on or prior to the date of such calculation) at any time 
does not exceed $10 million; and (E) Restricted Payments in an amount not to    
exceed $5 million minus (x) the amount of any Restricted Payments made (other   
than pursuant to subclauses (A), (C) and (D) above) since May 7, 1996 and (y)   
(1) 100% of the amount of any deficit in Consolidated Net Income for the period 
(taken as one accounting period) commencing on the first day after May 7, 1996  
to the date of such Restricted Payment plus (2) the aggregate Net Cash Proceeds 
received by the Company as a capital contribution or from the sale of its       
Qualified Capital Stock (other than (i) from or to a Subsidiary of the Company, 
(ii) to the extent applied in connection with a Qualified Exchange, and (iii) to
the extent applied to repurchase Capital Stock pursuant to clause (d) of the    
definition of Permitted Payments), after May 7, 1996, up to the amount of the   
deficit, if any, applied pursuant to clause (y) (1) above. The full amount of   
any Restricted Payment made pursuant to the foregoing clauses (B) and (D) (but  
not pursuant to clauses (A), (C) or (E)) of the immediately preceding sentence, 
however, will be deducted in the calculation of the aggregate amount of         
Restricted Payments available to be made referred to in clause (3) of the       
immediately preceding paragraph.                                                

 Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries

    The Indenture provides that the Company and the Subsidiary Guarantors will
not, directly or indirectly, create, assume or suffer to exist any consensual   
restriction on the ability of any Subsidiary of the Company: (i) (a) to pay     
dividends or make other distributions to the Company or any of its Subsidiaries 
(1) on its Capital Stock or (2) with respect to any other interest or           
participation in, or measured by, its profits, or (b) to pay any Indebtedness   
owed to the Company or any of its Subsidiaries, (ii) to make loans or advances  
to the Company or any of its Subsidiaries or (iii) to transfer any of its       
properties or assets to the Company or any of its Subsidiaries, except (a)      
restrictions imposed by the Notes or the Indenture, (b) restrictions imposed by 
applicable law and regulation, (c) existing restrictions under Indebtedness     
outstanding on May 7, 1996 or under any Acquired Indebtedness not incurred in   
violation of the Indenture or any agreement relating to any                     

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property, asset, or business acquired by the Company or any of its Subsidiaries,
which restrictions in each case existed at the time of acquisition, were not put
in place in connection with or in anticipation of such acquisition and are not  
applicable to any person, other than the person acquired, or to any property,   
asset or business, other than the property, assets and business so acquired, (d)
any such restriction or requirement imposed by Indebtedness Incurred under      
clause (b) under the definition of "Permitted Indebtedness," provided such      
restriction or requirement is not materially more restrictive than that imposed 
by the Credit Agreement as of May 7, 1996, (e) restrictions with respect to a   
Subsidiary of the Company imposed pursuant to a binding agreement which has been
entered into for the sale or disposition of all or substantially all of the     
Capital Stock or assets of such Subsidiary, provided such restrictions apply    
solely to the Capital Stock or assets of such Subsidiary which are being sold,  
(f) restrictions on transfer contained in Purchase Money Indebtedness Incurred  
pursuant to paragraph (e) of the definition of Permitted Indebtedness, provided 
such restrictions relate only to the transfer of the property acquired with the 
proceeds of such Purchase Money Indebtedness, (g) customary restrictions imposed
on the transfer of copyrighted or patented materials and customary provisions in
agreements that restrict the assignment of such agreements or any rights        
thereunder, and (h) in connection with and pursuant to permitted Refinancings,  
replacements of restrictions imposed pursuant to clause (c) or (f) of this      
paragraph that are not materially more restrictive than those being replaced and
do not apply to any other person or assets than those that would have been      
covered by the restrictions in the Indebtedness so refinanced. Notwithstanding  
the foregoing, neither (a) customary provisions restricting subletting or       
assignment of any lease entered into in the ordinary course of business, nor (b)
Liens not prohibited by the terms of the Indenture shall be considered a        
restriction on the ability of the applicable Subsidiary to transfer such lease  
or any assets, as the case may be.                                              

Limitations on Layering Indebtedness                                        

The Indenture provides that the Company and the Guarantors will not,  
directly or indirectly, Incur, or suffer to exist any Indebtedness that is      
subordinate in right of payment to any other Indebtedness of the Company or a   
Guarantor unless, by its terms, such Indebtedness (i) has a maturity date       
subsequent to the Stated Maturity of the Notes and an Average Life longer than  
that of the Notes and (ii) is subordinate in right of payment to, or ranks pari 
passu with, the New Notes or the Guarantee, as applicable. For purposes of this 
provision, no Indebtedness shall be deemed to be subordinated in right of       
payment to any other Indebtedness solely by reason of the fact that such other  
Indebtedness is secured by any Lien.                                            

Limitation on Liens                                                         

    The Indenture provides that the Company and the Subsidiary Guarantors will
not, create, incur, assume or suffer to exist, to secure any Indebtedness other 
than Senior Debt, any Lien, other than Permitted Liens, upon any of their       
respective assets now owned or acquired on or after the date of the Indenture or
upon any income or profits therefrom unless the Company or such Subsidiary      
Guarantor provides, concurrently or immediately thereafter, that the Notes are  
equally and ratably secured, provided that, if such Indebtedness is Subordinated
Indebtedness, the Lien securing such Subordinated Indebtedness shall be         
subordinate and junior to the Lien securing the Notes or the Guarantee, as      
applicable, with the same relative priority as such Subordinated Indebtedness   
shall have with respect to the Notes or the Guarantee, as applicable, provided, 
further, that, in the case of Indebtedness of a Subsidiary Guarantor, if such   
Subsidiary Guarantor shall cease to be a Subsidiary Guarantor in accordance with
the provisions of the Indenture, such equal and ratable Lien to secure the Notes
shall, without any further action, cease to exist.                              

Limitation on Sale of Assets and Subsidiary Stock                           

    The Indenture provides that the Company and the Subsidiary Guarantors will
not, in one transaction or a series of related transactions, convey, sell,      
transfer, assign or otherwise dispose of, directly or indirectly, any of their  
respective property, business or assets (other than cash or Cash Equivalents),  
including by merger or consolidation (in the case of a Subsidiary Guarantor),   
and including any sale or other transfer or issuance of any Capital Stock (other
than directors qualifying shares) of any Subsidiary of the Company, whether by  
the Company or a Subsidiary (an "Asset Sale"), unless within 360 days following 
such Asset Sale (1)(a) the Net                                                  

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Cash Proceeds received from such Asset Sale are (i) (x) used to purchase one or 
more businesses or to purchase more than 50% of the Capital Stock of a person   
operating one or more businesses, (y) used to make capital expenditures or (z)  
used to acquire other long-term assets, in each case, so long as such business  
or businesses, capital expenditures or long-term assets will constitute, be a   
part of or be used in a Related Business or (ii) used to retire Senior Debt and 
to permanently reduce the amount of such Indebtedness outstanding (including    
that in the case of a revolver or similar arrangement that makes credit         
available, such commitment is so permanently reduced by such amount) and (b) the
Net Cash Proceeds of such Asset Sale not applied as provided in clause (a) (the 
"Asset Sale Offer Amount") are applied to the optional redemption of the Notes  
in accordance with the terms of the Indenture or to the repurchase of the Notes 
pursuant to an irrevocable, unconditional cash offer (the "Asset Sale Offer") to
repurchase Notes at a purchase price (the "Asset Sale Offer Price") of 100% of  
the principal amount, plus accrued interest to the date of payment, (2) at least
75% of the consideration for such Asset Sale consists of cash or Cash           
Equivalents; provided that (x) the amount of any liabilities (as shown on the   
Company's most recent consolidated balance sheet) of the Company or any         
Subsidiary that are assumed by the transferee in such Asset Sale and (y) any    
notes or other obligations received by the Company or any such Subsidiary       
Guarantor from such transferee that are immediately (but in no event more than  
30 days after receipt) converted by the Company or such Subsidiary Guarantor    
into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents, as
the case may be, received), shall be deemed to be cash or Cash Equivalents, as  
the case may be, for purposes of this provision and, provided, further, this    
clause (2) shall not apply to the sale or disposition of assets or as a result  
of a foreclosure (or a secured party taking ownership of such assets in lieu of 
foreclosure) or as a result of an involuntary proceeding in which the Company   
cannot, directly or through its Subsidiaries, direct the type of proceeds       
received; (3) no Default or Event of Default would occur after giving effect, on
a pro forma basis, to, such Asset Sale, and (4) with respect to any Asset Sale  
or series of related Asset Sales, the Net Cash Proceeds of which exceed         
$500,000, the Board of Directors of the Company determines in good faith that   
the Company or such Subsidiary, as applicable, receives Fair Market Value for   
such Asset Sale. The Indenture will provide that an Asset Sale Offer may be     
deferred until the accumulated Net Cash Proceeds from Asset Sales not applied to
the uses set forth in clause (l)(a) above exceeds $10 million and that each     
Asset Sale Offer shall remain open for not less than 20 Business Days following 
its commencement (the "Asset Sale Offer Period"). Upon expiration of the Asset  
Sale Offer Period, the Company shall apply the Asset Sale Offer Amount plus an  
amount equal to accrued interest to the purchase of all Notes properly tendered 
(on a pro rata basis if the Asset Sale Offer Amount is insufficient to purchase 
all Notes so tendered) at the Asset Sale Offer Price (together with accrued     
interest). To the extent Holders of Notes do not tender Notes in connection with
any such Asset Sale Offer, the remaining Net Cash Proceeds may be applied in any
manner not prohibited by the Indenture.                                         

Notwithstanding the foregoing provisions of the prior paragraph, the  
following transactions shall not be deemed Asset Sales:                         

     (i) the Company and the Subsidiary Guarantors may in the ordinary
course of business, convey, sell, lease, transfer, assign or otherwise
dispose of property in the ordinary course of business;               

        (ii) the Company and the Subsidiary Guarantors may (x) convey, sell,
   lease, transfer, assign or otherwise dispose of assets pursuant to and in
accordance with the limitation on mergers, sales or consolidations    
    provisions in the Indenture, (y) make Restricted Payments permitted by the
 Restricted Payment covenant in the Indenture and (z) engage in Exempted
Affiliate Transactions;                                               

     (iii) the Company and the Subsidiary Guarantors may convey, sell,
 lease, transfer, assign or otherwise dispose of assets or issue Capital
Stock to the Company or any of the Subsidiary Guarantors;             

         (iv) the Company and the Subsidiary Guarantors may sell or dispose of
damaged, worn out or other obsolete property in the ordinary course of
 business so long as such property is no longer necessary for the proper
 conduct of the business of the Company or such Subsidiary Guarantor, as
applicable;                                                           

          (v) the Company and the Subsidiary Guarantors may exchange assets held
   by the Company or a Subsidiary Guarantor for assets held by any person or
 entity; provided, that the assets received in such exchange in the good
  faith reasonable judgment of the Board will immediately constitute, be a
part of, or                                                           

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be used in, a Related Business; provided, further, that the Board has 
determined that the terms of any exchange are fair and reasonable;    

          (vi) the Company and the Subsidiary Guarantors may enter into Sale and
     Leaseback Transactions with respect to property acquired or completed after
the Issue Date;                                                       

      (vii) the Company and the Subsidiary Guarantors may liquidate Cash
Equivalents in the ordinary course of business;                       

         (viii) the Company and the Subsidiary Guarantors may create or assume
Liens (or permit any foreclosure thereon) securing Indebtedness to the
   extent that such Lien does not violate the "-- Liens" covenant above; and

       (ix) the Subsidiary Guarantors may consummate any sale or series of
 related sales of assets or properties of the Company and the Subsidiary
     Guarantors having an aggregate Fair Market Value of less than $2 million in
any fiscal year.                                                      

    Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal   
and state securities laws, and any provisions of the Indenture which conflict   
with such laws shall be deemed to be superseded by the provisions of such laws. 

The New Credit Facility prohibits, and any agreements governing Senior
Indebtedness incurred after the Closing Date may prohibit or restrict, the      
purchase of Notes in response to an Asset Sale Offer unless all such Senior     
Indebtedness has been paid in full.                                             

Limitation on Transactions with Affiliates                                  

   The Indenture provides that neither the Company nor any of the Subsidiary
Guarantors will be permitted after May 7, 1996 to enter into any contract,      
agreement, arrangement or transaction with any Affiliate (an "Affiliate         
Transaction"), or any series of related Affiliate Transactions (other than      
Exempted Affiliate Transactions), unless the terms of such Affiliate Transaction
are fair and reasonable to the Company or such Subsidiary, as the case may be,  
and are at least as favorable as the terms which could reasonably be expected to
be obtained by the Company or such Subsidiary, as the case may be, in a         
comparable transaction made on an arm's length basis with persons who are not   
Affiliates.                                                                     

Without limiting the foregoing, in connection with any Affiliate      
Transaction or series of related Affiliate Transactions (other than Exempted    
Affiliate Transactions) (1) involving consideration to either party in excess of
$1 million, the Company must deliver an Officers' Certificate to the Trustee,   
stating that the terms of such Affiliate Transaction are fair and reasonable to 
the Company, and no less favorable to the Company than could reasonably be      
expected to have been obtained in an arm's length transaction with a            
non-Affiliate, and (2) involving consideration to either party in excess of $5  
million, the Company must also, prior to the consummation thereof, obtain a     
written favorable opinion as to the fairness of such transaction to the Company 
from a financial point of view from an independent investment banking firm of   
national reputation, provided, that this sentence shall not apply to the sale of
the products of the Company or its Subsidiaries to any Affiliate of LGP or any  
Related Party thereof, which sale is in the ordinary course of business and in  
accordance with industry practice.                                              

Limitation on Merger, Sale or Consolidation                                 

  The Indenture provides that the Company will not directly or indirectly,
consolidate with or merge with or into another person or sell, lease, convey or 
transfer all or substantially all of its assets (computed on a consolidated     
basis), whether in a single transaction or a series of related transactions, to 
another person or group of affiliated persons or adopt a Plan of Liquidation,   
unless (i) either (a) the Company is the continuing entity or (b) the resulting,
surviving or transferee entity or, in the case of a Plan of Liquidation, the    
entity which receives the greatest value from such Plan of Liquidation, is a    
corporation organized under the laws of the United States, any state thereof or 
the District of Columbia and expressly assumes by supplemental                  

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indenture all of the obligations of the Company in connection with the Notes and
the Indenture; (ii) no Default or Event of Default shall exist or shall occur   
immediately after giving effect on a pro forma basis to such transaction; (iii) 
immediately after giving effect to such transaction on a pro forma basis, the   
Consolidated Net Worth of the consolidated surviving or transferee entity or, in
the case of a Plan of Liquidation, the entity which receives the greatest value 
from such Plan of Liquidation, is at least equal to the Consolidated Net Worth  
of the Company immediately prior to such transaction; and (iv) immediately after
giving effect to such transaction on a pro forma basis, the consolidated        
resulting, surviving or transferee entity or, in the case of a Plan of          
Liquidation, the entity which receives the greatest value from such Plan of     
Liquidation, would immediately thereafter be permitted to incur at least $1.00  
of additional Indebtedness pursuant to the Debt Incurrence Ratio set forth in   
the covenant "Limitation on Incurrence of Additional Indebtedness and           
Disqualified Capital Stock."                                                    

  Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Company or consummation of a Plan of Liquidation in    
accordance with the foregoing, the successor corporation formed by such         
consolidation or into which the Company is merged or to which such transfer is  
made or, in the case of a Plan of Liquidation, the entity which receives the    
greatest value from such Plan of Liquidation, shall succeed to, and be          
substituted for, and may exercise every right and power of, the Company under   
the Indenture with the same effect as if such successor corporation had been    
named therein as the Company, and the Company shall be released from all        
obligations under the Notes and the Indenture.                                  

    For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or   
more Subsidiaries, the Capital Stock of which constitutes all or substantially  
all of the properties and assets of the Company, shall be deemed to be the      
transfer of all or substantially all of the properties and assets of the        
Company.                                                                        

Limitation on Lines of Business                                             

     The Indenture provides that neither the Company nor any of its Subsidiaries
shall directly or indirectly engage to any substantial extent in any line or    
lines of business activity other than that which, in the reasonable good faith  
judgment of the Board of Directors of the Company, is a Related Business.       

Restriction on Sale and Issuance of Subsidiary Stock                        

   The Indenture provides that the Company will not sell, and the Subsidiary
Guarantors will not issue or sell, any shares of Capital Stock (other than      
directors qualifying shares) of any Subsidiary of the Company to any person     
other than the Company or a wholly owned Subsidiary of the Company, except for  
shares of common stock with no preferences or special rights or privileges and  
with no redemption or prepayment provisions. Notwithstanding the foregoing, (a) 
the Company and the Subsidiary Guarantors may consummate an Asset Sale of all of
the Capital Stock owned by the Company and the Subsidiary Guarantors of any     
Subsidiary and (b) the Company or any Subsidiary Guarantor may pledge,          
hypothecate or otherwise grant a Lien on any Capital Stock of any Subsidiary to 
the extent not prohibited under the "-- Liens" covenant.                        

Future Subsidiary Guarantors                                                

The Indenture provides that all present and future Subsidiaries of the
Company jointly and severally will guaranty irrevocably and unconditionally all 
principal, premium, if any, and interest on the Notes on a senior subordinated  
basis. The term Subsidiary does not include Unrestricted Subsidiaries.          

Release of Guarantors                                                       

     Upon the sale or disposition (whether by merger, stock purchase, asset sale
or otherwise) of a Subsidiary Guarantor (or all or substantially all of the     
assets of any such Subsidiary Guarantor or 50% or more of the Capital Stock of  
any such Subsidiary Guarantor) to an entity which is not a Subsidiary of the    
Company, which transaction is otherwise in compliance with the Indenture, such  
Subsidiary Guarantor shall be deemed released from all its obligations under its
guarantee of the Notes; provided, however, that any such termination shall occur
only to the extent that all obligations of such Subsidiary Guarantor under all  
of its guarantees of,                                                           

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and under all of its pledges of assets or other security interests which secure,
any Indebtedness of the Company shall also terminate upon such release, sale or 
transfer. Upon the release of any Subsidiary Guarantor from its Guarantee       
pursuant to the provisions of the Indenture, each other Subsidiary Guarantor not
so released shall remain liable for the full amount of principal of, and        
interest on, the Notes as and to the extent provided in the Indenture.          

Limitation on Status as Investment Company                                  

The Indenture prohibits the Company and its Subsidiaries from being   
required to register as an "investment company" (as that term is defined in the 
Investment Company Act of 1940, as amended).                                    

REPORTS                                                                         

  The Indenture provides that whether or not the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company  
shall deliver to the Trustee and to each Holder and to prospective holders of   
New Notes identified to the Company by an Initial Purchaser, within 15 days     
after it is or would have been required to file such with the Commission, annual
and quarterly financial statements substantially equivalent to financial        
statements that would have been included in reports filed with the Commission,  
if the Company were subject to the requirements of Section 13 or 15(d) of the   
Exchange Act, including, with respect to annual information only, a report      
thereon by the Company's certified independent public accountants as such would 
be required in such reports to the Commission, and, in each case, together with 
a management's discussion and analysis of financial condition and results of    
operations which would be so required. In addition, from and after the          
effectiveness of the Exchange Offer Registration Statement or the Shelf         
Registration Statement, whether or not required by the rules and regulations of 
the Commission, the Company will file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not     
accept such a filing) and make such information available to securities analysts
and prospective investors upon request.                                         

EVENTS OF DEFAULT AND REMEDIES                                                  

 The Indenture defines an Event of Default as (i) the failure to pay any
installment of interest on the Notes as and when the same becomes due and       
payable and the continuance of any such failure for 30 days, (ii) the failure to
pay all or any part of the principal, or premium, if any, on the Notes when and 
as the same becomes due and payable at maturity, redemption, by acceleration or 
otherwise, including, without limitation, payment of the Change of Control      
Purchase Price or the Asset Sale Offer Price, or otherwise, (iii) the failure by
the Company or any Subsidiary Guarantor to observe or perform any other covenant
or agreement on the part of the Company or any Subsidiary Guarantor contained in
the Notes or the Indenture and, subject to certain exceptions, the continuance  
of such failure for a period of 30 days after written notice is given to the    
Company by the Trustee or to the Company and the Trustee by the Holders of at   
least 25% in aggregate principal amount of the Notes then outstanding,          
specifying such Default and requiring that it be remedied, (iv) certain events  
of bankruptcy, insolvency or reorganization in respect of the Company or any of 
its Significant Subsidiaries, (v) a default in any Indebtedness of the Company  
or any of its Subsidiaries with an aggregate principal amount in excess of $10  
million (a) resulting from the failure to pay principal at maturity or (b) as a 
result of which the maturity of such Indebtedness has been accelerated prior to 
its stated maturity, and (vi) final unsatisfied judgments not covered by        
insurance aggregating in excess of $10 million, at any one time rendered against
the Company or any of its Subsidiaries and not stayed, bonded or discharged     
within 60 days. The Indenture provides that if an Event of Default occurs and is
continuing, generally the Trustee must, within 90 days after the occurrence of  
such default, give to the Holders notice of such Event of Default.              

 If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv), above, relating to the Company or any         
Significant Subsidiary) then in every such case, unless the principal of all of 
the Notes shall have already become due and payable, either the Trustee or the  
Holders of 25% in aggregate principal amount of the Notes then outstanding, by  
notice in writing to the Company (and to the Trustee if given by Holders) (an   
"Acceleration Notice"), may declare all principal and accrued interest thereon  
to be due and payable immediately, provided such acceleration shall not be      
effective until five                                                            

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(5) Business Days after the Senior Bank Representative shall have been notified 
of such acceleration. If an Event of Default specified in clause (iv), above,   
relating to the Company or any Significant Subsidiary occurs, all principal and 
accrued interest thereon will be immediately due and payable on all outstanding 
Notes without any declaration or other act on the part of Trustee or the        
Holders. The Holders of a majority in aggregate principal amount of Notes       
generally are authorized to rescind such acceleration if all existing Events of 
Default (other than the non-payment of the principal of, premium, if any, and   
interest on the Notes which have become due solely by such acceleration) have   
been cured or waived, except a default with respect to any provision requiring  
supermajority approval to amend, which default may only be waived by such       
supermajority.                                                                  

    Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time    
outstanding may waive on behalf of all of the Holders any default, except a     
default with respect to any provision requiring supermajority approval to amend,
which default may only be waived by such supermajority, except a default in the 
payment of principal of, premium on, or interest on any Note not yet cured, and 
except a default with respect to any covenant or provision which cannot be      
modified or amended without the consent of the Holder of each outstanding Note  
affected. Subject to the provisions of the Indenture relating to the duties of  
the Trustee, the Trustee will be under no obligation to exercise any of its     
rights or powers under the Indenture at the request, order or direction of any  
of the Holders, unless such Holders have offered to the Trustee reasonable      
security or indemnity. Subject to all provisions of the Indenture and applicable
law, the Holders of a majority in aggregate principal amount of the Notes at the
time outstanding will have the right to direct the time, method and place of    
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee. See "Risk Factors -- Waiver of     
Defaults; Amendment of Indenture and Notes."                                    

LEGAL DEFEASANCE AND COVENANT DEFEASANCE                                        

    The Indenture provides that the Company may, at its option and at any time
elect to have its obligations and the obligations of the Guarantors discharged  
with respect to the outstanding Notes ("Legal Defeasance"). Such Legal          
Defeasance means that the Company shall be deemed to have paid and discharged   
the entire Indebtedness represented by, and the Indenture shall cease to be of  
further effect as to, all outstanding Notes and Guarantees, except as to (i)    
rights of Holders to receive payments in respect of the principal of, premium,  
if any, and interest on such Notes when such payments are due from the trust    
funds described below; (ii) the Company's obligations with respect to such Notes
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost or stolen Notes, and the maintenance of an office or agency for payment and
money for security payments held in trust; (iii) the rights, powers, trust,     
duties, and immunities of the Trustee, and the Company's and the Guarantor's    
obligations in connection therewith; and (iv) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,     
elect to have the obligations of the Company and the Guarantors released with   
respect to certain covenants that are set forth in the Indenture ("Covenant     
Defeasance") and thereafter any omission to comply with such obligations shall  
not constitute a Default or Event of Default with respect to the Notes. In the  
event Covenant Defeasance occurs, certain events (not including non-payment,    
bankruptcy, receivership, rehabilitation and insolvency events) described under 
"Events of Default" will no longer constitute an Event of Default with respect  
to the Notes.                                                                   

  In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, U.S. legal tender, non-callable government         
securities or a combination thereof, in such amounts as will be sufficient, in  
the opinion of a nationally recognized firm of independent public accountants,  
to pay the principal of, premium, if any, and interest on such Notes on the     
stated date for payment thereof or on the redemption date of such principal or  
installment of principal of, premium, if any, or interest on such Notes, and the
Holders of Notes must have a valid, perfected, exclusive security interest in   
such trust; (ii) in the case of Legal Defeasance before the date that is one    
year prior to the Stated Maturity, the Company shall have delivered to the      
Trustee an opinion of counsel in the United States reasonably acceptable to the 
Trustee confirming that (A) the Company has received from, or there has been    
published by the Internal Revenue Service, a ruling or (B) since the date of    

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the Indenture, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such opinion of counsel    
shall confirm that, the Holders of such Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal Defeasance and   
will be subject to federal income tax on the same amounts, in the same manner   
and at the same times as would have been the case if such Legal Defeasance had  
not occurred; (iii) in the case of Covenant Defeasance before the date that is  
one year prior to the Stated Maturity, the Company shall have delivered to the  
Trustee an opinion of counsel in the United States reasonably acceptable to such
Trustee confirming that the Holders of such Notes will not recognize income,    
gain or loss for federal income tax purposes as a result of such Covenant       
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant  
Defeasance had not occurred; (iv) no Default or Event of Default shall have     
occurred and be continuing on the date of such deposit or, insofar as Events of 
Default from bankruptcy or insolvency events are concerned, at any time in the  
period ending on the 91st day after the date of deposit; (v) such Legal         
Defeasance or Covenant Defeasance shall not result in a breach or violation of, 
or constitute a default under the Indenture or any other material agreement or  
instrument to which the Company or any of its Subsidiaries is a party or by     
which the Company or any of its Subsidiaries is bound; (vi) the Company shall   
have delivered to the Trustee an Officers' Certificate stating that the deposit 
was not made by the Company with the intent of preferring the Holders of such   
Notes over any other creditors of the Company or with the intent of defeating,  
hindering, delaying or defrauding any other creditors of the Company or others; 
and (vii) the Company shall have delivered to the Trustee an Officers'          
Certificate and an opinion of counsel, each stating that the conditions         
precedent provided for in, in the case of the Officers' Certificate, clauses (i)
through (vi) and, in the case of the opinion of counsel, clauses (i), (with     
respect to the validity and perfection of the security interest), (ii), (iii)   
and (v) of this paragraph have been complied with. Upon Legal Defeasance as     
provided in the Indenture, the Guarantee of each Guarantor shall be fully       
released and discharged and the Trustee shall promptly execute and deliver to   
the Company any documents reasonably requested by the Company to evidence or    
effect the foregoing.                                                           

AMENDMENTS AND SUPPLEMENTS                                                      

  The Indenture contains provisions permitting the Company, the Guarantors
and the Trustee to enter into a supplemental indenture for certain limited      
purposes without the consent of the Holders. With the consent of the Holders of 
not less than a majority in aggregate principal amount of the Notes at the time 
outstanding, the Company, the Guarantors and the Trustee are permitted to amend 
or supplement the Indenture or any supplemental indenture or modify the rights  
of the Holders; except that any amendments or supplements to the provisions     
relating to the "Repurchase of Notes at the Option of the Holder Upon a Change  
of Control" covenant in a manner adverse to the Holders shall require the       
consent of not less than 66 2/3% of the aggregate principal amount of Notes at  
the time outstanding; provided, further, that no such modification may, without 
the consent of each Holder affected thereby: (i) change the Stated Maturity on  
any Note, or reduce the principal amount thereof or the rate (or extend the time
for payment) of interest thereon or any premium payable upon the redemption     
thereof, or change the place of payment where, or the coin or currency in which,
any Note or any premium or the interest thereon is payable, or impair the right 
to institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption     
Date), or reduce the Change of Control Purchase Price or Asset Sale Offer Price 
or alter the redemption provisions of the Indenture in a manner adverse to the  
Holders, (ii) reduce the percentage in principal amount of the outstanding      
Notes, the consent of whose Holders is required for any such amendment,         
supplemental indenture or waiver provided for in the Indenture, (iii) modify any
of the waiver provisions, except to increase any required percentage or to      
provide that certain other provisions of the Indenture cannot be modified or    
waived without the consent of the Holder of each outstanding Note affected      
thereby, or (iv) make the Notes further subordinated in right of payment to any 
extent or under any circumstances to any other Indebtedness (it being understood
that amendments to the covenant "Limitation on Incurrence of Additional         
Indebtedness and Disqualified Capital Stock" which may have the effect of       
increasing the amount of Senior Indebtedness that the Company and the Subsidiary
Guarantors may Incur shall not, for purposes of this clause (iv), be deemed to  
make the Notes further subordinated in right of                                 

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payment to any extent or under any circumstances to any other Indebtedness). See
"Risk Factors -- Waiver of Defaults; Amendment of Indenture and Notes."         

NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS            

  The Indenture provides that no direct or indirect stockholder, employee,
officer or director, as such, past, present or future of the Company, the       
Guarantors or any successor entity shall have any personal liability in respect 
of the obligations of the Company or the Guarantors under the Indenture or the  
New Notes by reason of his or its status as such stockholder, employee, officer 
or director.                                                                    

CERTAIN DEFINITIONS                                                             

     "Acquired Indebtedness" means Indebtedness or Disqualified Capital Stock of
any person existing at the time such person becomes a Subsidiary of the Company 
or is merged or consolidated into or with the Company or one of its             
Subsidiaries.                                                                   

"Acquisition" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by      
purchase, stock purchase, merger, consolidation, or other transfer, and whether 
or not for consideration.                                                       

"Affiliate" means any person, directly or indirectly, controlling or  
controlled by or under direct or indirect common control with the Company. For  
purposes of this definition, the term "control" means the power to direct the   
management and policies of a person, directly or through one or more            
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, provided, that, a Beneficial Owner of 10% or more of the total    
voting power normally entitled to vote in the election of directors, managers or
trustees, as applicable, shall for such purposes be deemed to constitute        
control.                                                                        

    "Average Life" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of (a) the
product of the number of years from the date of determination to the date or    
dates of each successive scheduled principal (or redemption) payment of such    
security or instrument and (b) the amount of each such respective principal (or 
redemption) payment by (ii) the sum of all such principal (or redemption)       
payments.                                                                       

"Beneficial Owner" has the meaning attributed to it in Rules 13d-3 and
13d-5 under the Exchange Act (as in effect on May 7, 1996), whether or not      
applicable, except that a "person" shall be deemed to have "beneficial          
ownership" of all shares that any such person has the right to acquire, whether 
such right is exercisable immediately or only after the passage of time.        

   "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are      
authorized or obligated by law or executive order to close.                     

     "Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable           
Indebtedness), warrants, options, participations or other equivalents of or     
interests (however designated) in stock issued by that corporation.             

  "Cash Equivalent" means for all purposes of the Indenture other than the
provisions thereof described under the caption "Subordination" above, (a)       
securities issued or directly and fully guaranteed or insured by the United     
States Government, or any agency or instrumentality thereof, having maturities  
of not more than one year from the date of acquisition: (b) marketable general  
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing    
within one year from the date of acquisition thereof and, at the time of        
acquisition thereof, having a credit rating of "A" or better from either        
Standard & Poor's Ratings Group or Moody's Investors Service, Inc.; (c)         
certificates of deposit, time deposits, eurodollar time deposits, overnight bank
deposits or bankers' acceptances having maturities of not more than one year    
from the date of acquisition thereof of any domestic commercial bank, the       
long-term debt of which is rated at the time of acquisition thereof at least A  
or the equivalent thereof by Standard & Poor's Ratings Group, or A or the       
equivalent thereof by Moody's Investors                                         

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Service, Inc. and having capital and surplus in excess of $500,000,000; (d)     
repurchase obligations with a term of not more than seven days for underlying   
securities of the types described in clauses (a), (b) and (c) above entered into
with any bank meeting the qualifications specified in clause (c) above; (e)     
commercial paper rated at the time of acquisition thereof at least A-2 or the   
equivalent thereof by Standard & Poor's Ratings Group or P-2 or the equivalent  
thereof by Moody's Investors Service, Inc., or carrying an equivalent rating by 
a nationally recognized rating agency, if both of the two named rating agencies 
cease publishing ratings of investments, and in either case maturing within 270 
days after the date of acquisition thereof, and (f) interests in any investment 
company which invests solely in instruments of the type specified in clauses (a)
through (e) above. For purposes of the provisions of the Indenture described    
under the caption "Subordination" above, "Cash Equivalent" means (a) securities 
issued or directly and fully guaranteed or insured by the United States         
Government, or any agency or instrumentality thereof, having maturities of not  
more than 180 days from the date of acquisition; (b) marketable general         
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing    
within 180 days from the date of acquisition thereof and, at the time of        
acquisition thereof, having a credit rating of "A" or better from either        
Standard & Poor's Ratings Group or Moody's Investors Service, Inc.; (c)         
certificates of deposit, time deposits, eurodollar time deposits, overnight bank
deposits or bankers' acceptances having maturities of not more than 180 days    
from the date of acquisition thereof of any domestic commercial bank the        
long-term debt of which is rated at the time of acquisition thereof at least A  
or the equivalent thereof by Standard & Poor's Ratings Group, or A or the       
equivalent thereof by Moody's Investors Service, Inc. and having capital and    
surplus in excess of $500,000,000; (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(a), (b) and (c) above entered into with any bank meeting the qualifications    
specified in clause (c) above; (e) commercial paper rated at the time of        
acquisition thereof at least A-1 or the equivalent thereof by Standard & Poor's 
Ratings Group or P-1 or the equivalent thereof by Moody's Investors Service,    
Inc., or carrying an equivalent rating by a nationally recognized rating agency,
if both of the two named rating agencies cease publishing ratings of            
investments, and in either case maturing within 180 days after the date of      
acquisition thereof; and (f) interests in any investment company which invests  
solely in instruments of the type specified in clauses (a) through (e) above.   

  "Consolidated EBITDA" means, with respect to any person, for any period,
the Consolidated Net Income of such person for such period adjusted to add      
thereto (to the extent deducted from net revenues in determining Consolidated   
Net Income), without duplication, the sum of (i) Consolidated income tax        
expense, (ii) Consolidated depreciation and amortization expense (including     
amortization of debt discount and deferred financing costs in connection with   
any Indebtedness of such person and its Subsidiaries), provided that            
Consolidated depreciation and amortization of a Subsidiary that is less than    
wholly owned shall only be added to the extent of the equity interest of the    
Company in such Subsidiary, (iii) Consolidated Interest Expense, (iv) all other 
non-cash items and (v) up to $13.6 million of fees and expenses actually        
incurred in connection with the Transactions.                                   

"Consolidated Interest Coverage Ratio" of any person on any date of   
determination (the "Transaction Date") means the ratio, on a pro forma basis, of
(a) the aggregate amount of Consolidated EBITDA of such person attributable to  
continuing operations and businesses (exclusive of amounts attributable to      
operations and businesses permanently discontinued or disposed of) for the      
Reference Period to (b) the aggregate Consolidated Interest Expense of such     
person (exclusive of amounts attributable to operations and businesses          
permanently discontinued or disposed of, but only to the extent that the        
obligations giving rise to such Consolidated Interest Expense would no longer be
obligations contributing to such person's Consolidated Interest Expense         
subsequent to the Transaction Date) during the Reference Period; provided, that 
for purposes of calculating each of Consolidated EBITDA and Consolidated        
Interest Expense for this definition, (i) with respect to any Reference Period  
commencing prior to May 7, 1996, the Transactions shall be assumed to have      
occurred on the first day of such Reference Period, (ii) Acquisitions which     
occurred during the Reference Period or subsequent to the Reference Period and  
on or prior to the Transaction Date shall be assumed to have occurred on the    
first day of the Reference Period, (iii) transactions giving rise to the need to
calculate the Consolidated Interest Coverage Ratio shall be assumed to have     
occurred on the first day of the Reference Period, (iv) the incurrence of any   
Indebtedness or issuance of any Disqualified Capital Stock                      

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during the Reference Period or subsequent to the Reference Period and on or     
prior to the Transaction Date (and the application of the proceeds therefrom to 
the extent used to refinance or retire other Indebtedness) shall be assumed to  
have occurred on the first day of such Reference Period, and (v) the            
Consolidated Interest Expense of such person attributable to interest on any    
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating  
interest (or dividend) rate shall be computed on a pro forma basis as if the    
average rate in effect from the beginning of the Reference Period to the        
Transaction Date had been the applicable rate for the entire period, unless such
person or any of its Subsidiaries is a party to an Interest Swap or Hedging     
Obligation (which shall provide a term including at least the 12-month period   
immediately following the Transaction Date) that has the effect of fixing the   
interest rate on the date of computation, in which case such rate (whether      
higher or lower) shall be used.                                                 

  "Consolidated Interest Expense" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance 
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled 
to be paid or accrued (including, in accordance with the following sentence,    
interest attributable to Capitalized Lease Obligations) of such person and its  
Consolidated Subsidiaries during such period, excluding amortization of debt    
issuance costs incurred in connection with the Notes or the New Credit Facility 
but including (i) original issue discount and non-cash interest payments or     
accruals on any Indebtedness, (ii) the interest portion of all deferred payment 
obligations, and (iii) all commissions, discounts and other fees and charges    
owed with respect to bankers' acceptances and letters of credit financings and  
currency and Interest Swap and Hedging Obligations, in each case to the extent  
attributable to such period and (b) the amount of cash dividends paid by such   
person or any of its Consolidated Subsidiaries in respect of Preferred Stock    
(other than by Subsidiaries of such person to such person or such person's      
wholly owned Subsidiaries). For purposes of this definition, (x) interest on a  
Capitalized Lease Obligation shall be deemed to accrue at an interest rate      
reasonably determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP, and (y) interest expense  
attributable to any Indebtedness represented by the guaranty by such person or a
Subsidiary of such person of an obligation of another person shall be deemed to 
be the interest expense attributable to the Indebtedness guaranteed.            

     "Consolidated Net Income" means, with respect to any person for any period,
the net income (or loss) of such person and its Consolidated Subsidiaries       
(determined on a consolidated basis in accordance with GAAP) for such period,   
adjusted to exclude (only to the extent included in computing such net income   
(or loss) and without duplication): (a) all gains and losses which are either   
extraordinary (as determined in accordance with GAAP) or are either unusual or  
nonrecurring (including any gain or loss from the sale or other disposition of  
assets outside the ordinary course of business or from the issuance or sale of  
any Capital Stock), (b) the net income, if positive, of any person, other than a
Consolidated Subsidiary but including an Unrestricted Subsidiary, in which such 
person or any of its Consolidated Subsidiaries has an interest, except to the   
extent of the amount of any dividends or distributions actually paid in cash to 
such person or a wholly owned Consolidated Subsidiary of such person during such
period, but in any case not in excess of such person's pro rata share of such   
person's net income for such period, (c) the net income or loss of any person   
acquired in a pooling of interests transaction for any period prior to the date 
of such acquisition, (d) the net income, if positive, of any of such person's   
Consolidated Subsidiaries in the event and solely to the extent that the        
declaration or payment of dividends or similar distributions is not at the time 
permitted by operation of the terms of its charter or bylaws or any other       
agreement, instrument, judgment, decree, order, statute, rule or governmental   
regulation applicable to such Consolidated Subsidiary, (e) the effects of       
changes in accounting principles, (f) any non-cash compensation expense in      
connection with the exercise of, grant to or repurchase from officers, directors
and employees of stock, stock options or stock equivalents, (g) any one-time    
non-cash charge or expense associated with the write-off of deferred debt       
issuance costs associated with the New Credit Facility or the Notes and (h) the 
amortization of the consideration for the Non-Competition Agreements entered    
into in connection with the Transactions.                                       

"Consolidated Net Worth" of any person at any date means the aggregate
consolidated stockholders' equity of such person (plus amounts of equity        
attributable to preferred stock) and its Consolidated Subsidiaries, as would be 
shown on the consolidated balance sheet of such person prepared in accordance   
with GAAP, adjusted to exclude (to the extent included in calculating such      
consolidated stockholders' equity),                                             

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(a) the amount of any such stockholders' equity attributable to Disqualified    
Capital Stock or treasury stock of such person and its Consolidated Subsidiaries
and (b) all upward revaluations and other write-ups in the book value of any    
asset of such person or a Consolidated Subsidiary of such person subsequent to  
May 7, 1996.                                                                    

  "Consolidated Subsidiary" means, for any person, each Subsidiary of such
person (whether now existing or hereafter created or acquired) the financial    
statements of which are consolidated for financial statement reporting purposes 
with the financial statements of such person in accordance with GAAP.           

"Credit Agreement" means the one or more credit agreements (including,
without limitation, the New Credit Facility) entered into by and among the      
Company, certain of its subsidiaries, and certain financial institutions, which 
provide for in the aggregate one or more term loans and/or revolving credit     
facilities, including any related notes, guarantees, collateral documents,      
instruments and agreements executed in connection therewith, as such credit     
agreement and/or related documents may be amended, restated, supplemented,      
renewed, replaced or otherwise modified from time to time whether or not with   
the same agent, trustee, representative lenders or holders, and, subject to the 
proviso to the next succeeding sentence, irrespective of any changes in the     
terms and conditions thereof. Without limiting the generality of the foregoing, 
the term "Credit Agreement" shall include any amendment, amendment and          
restatement, renewal, extension, restructuring, supplement or modification to   
any such credit agreement and all refundings, refinancings and replacements of  
any such credit agreement, including any agreement (i) extending the maturity of
any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or    
deleting borrowers or guarantors thereunder, so long as borrowers and issuers   
include one or more of the Company and its Subsidiaries and their respective    
successors and assigns, (iii) increasing the amount of Indebtedness Incurred    
thereunder or available to be borrowed thereunder, provided that on the date    
such Indebtedness is Incurred it would not be prohibited by the covenant        
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital   
Stock," or (iv) otherwise altering the terms and conditions thereof in a manner 
not prohibited by the terms hereof.                                             

     "Disqualified Capital Stock" means (a) except as set forth in clause (b) of
this paragraph, with respect to any person, Capital Stock of such person that,  
by its terms or by the terms of any security into which it is then convertible, 
exercisable or exchangeable, is, or upon the happening of an event or the       
passage of time would be, required to be redeemed or repurchased (including at  
the option of the holder thereof) by such person or any of its Subsidiaries, in 
whole or in part, on or prior to the Stated Maturity of the New Notes and (b)   
with respect to any Subsidiary of such person (including with respect to any    
Subsidiary of the Company), any Capital Stock (i) not held by the Company or a  
wholly owned Subsidiary of the Company or (ii) other than any common stock with 
no preference, privileges, or redemption or repayment provisions.               

"Equity Offering" means an underwritten public offering pursuant to a 
registration statement filed with the SEC in accordance with the Securities Act,
the consequence of which is that the common stock of either the Company or TLC  
is listed on a national securities exchange or quoted on the national market    
system or the SmallCap Market of NASDAQ.                                        

     "Excluded Person" means collectively or individually Green Equity Investors
II, L.P., David Blechman, Jean Blechman, Brian Blechman, Dean Blechman, Neil    
Blechman, Ross Blechman and Steve Blechman and their respective Related Parties.

  "Exempted Affiliate Transaction" means (a) compensation, indemnification
and other benefits paid or made available (x) pursuant to the Employment        
Agreements and Consulting Agreements, or (y) for or in connection with services 
actually rendered and comparable to those generally paid or made available by   
entities engaged in the same or similar businesses (including reimbursement or  
advancement of reasonable out-of-pocket expenses, loans to officers, directors  
and employees in the ordinary course of business consistent with past practice  
and directors' and officers' liability insurance), (b) certain transactions,    
expenses and payments pursuant to the terms of or contemplated by the           
Stockholders Agreement, the Secondary Stockholders Agreement or the Stock       
Purchase Agreement, (c) any Restricted Payments or other payments or            
transactions expressly permitted under the covenant discussed above under       
"Limitation on Restricted Payments," (d) transactions between the Company and   
any of its wholly owned Subsidiaries or among wholly owned Subsidiaries of the  
Company, (e) payments to LGP for management services under the Management       

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Services Agreement in an amount not to exceed $1 million in any fiscal year, (f)
payments to LGP for reasonable and customary fees and expenses for financial    
advisory and investment banking services provided to the Company in connection  
with major financial transactions; provided, however, that to the extent that   
any such Affiliate Transaction referred to in clause (f) involves payments in   
excess of $2.5 million, such Affiliate Transaction must be evidenced by a       
resolution of the Board of Directors set forth in an Officers' Certificate      
addressed and delivered to the Trustee certifying that such Affiliate           
Transaction has been approved by a majority of the disinterested members of the 
Board of Directors, and (g) transactions between or among the Company and its   
Subsidiaries or between or among Subsidiaries of the Company, provided that any 
ownership interest in any such Subsidiary which is not beneficially owned       
directly or indirectly by the Company or any of its Subsidiaries is not         
beneficially owned by an Affiliate of the Company or TLC other than by virtue of
the direct or indirect ownership interest in such Subsidiary held (in the       
aggregate) by the Company and/or one or more of its Subsidiaries.               

   "Existing Indebtedness" means Indebtedness of the Company or a Subsidiary
Guarantor in existence on May 7, 1996.                                          

 "GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of  
the American Institute of Certified Public Accountants and statements and       
pronouncements of the Financial Accounting Standards Board or in such other     
statements by such other entity as approved by a significant segment of the     
accounting profession, as in effect on May 7, 1996.                             

"Indebtedness" of any person means, without duplication, (a) all      
liabilities and obligations, contingent or otherwise, of any such person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the  
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the      
balance deferred and unpaid of the purchase price of any property or services,  
except those incurred in the ordinary course of its business that would         
constitute a trade payable to trade creditors, (iv) evidenced by bankers'       
acceptances or similar instruments issued or accepted by banks, (v) for the     
payment of money relating to a Capitalized Lease Obligation, or (vi) evidenced  
by a letter of credit or a reimbursement obligation of such person with respect 
to any letter of credit; (b) all net obligations of such person under Interest  
Swap and Hedging Obligations; (c) all liabilities and obligations of others of  
the kind described in the preceding clause (a) or (b) that such person has      
guaranteed or which are secured by a Lien on any assets or property of such     
person and all obligations to purchase, redeem or acquire any Capital Stock     
which are related to a payment obligation in respect of such Indebtedness;      
provided that if the liabilities or obligations which are secured by a Lien have
not been assumed in full by such person or are not such person's legal liability
in full, the amount of such Indebtedness for the purposes of this definition    
shall be limited to the lesser of the amount of such Indebtedness secured by    
such Lien or the Fair Market Value of the assets or property securing such Lien;
and (d) any and all deferrals, renewals, extensions, refinancing and refundings 
(whether direct or indirect) of, or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses (a), (b) or 
(c), or this clause (d), whether or not between or among the same parties.      

     "Interest Swap and Hedging Obligation" means any monetary obligation of any
person pursuant to any interest rate swap agreement, interest rate cap          
agreement, interest rate collar agreement, interest rate exchange agreement,    
currency exchange agreement or any other agreement or arrangement designed to   
protect against fluctuations in interest rates or currency values, including,   
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by        
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a  
fixed or floating rate of interest on the same notional amount.                 

    "Investment" by any person in any other person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such person (whether for cash, property, services, securities or otherwise) of  
Capital Stock, bonds, notes, debentures, partnership or other ownership         
interests or other securities, including any options or warrants, of such other 
person or any agreement to make                                                 

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any such acquisition; (b) the making by such person of any deposit with, or     
advance, loan or other extension of credit to, such other person (including the 
purchase of property from another person subject to an understanding or         
agreement, contingent or otherwise, to resell such property to such other       
person) or any commitment to make any such advance, loan or extension (but      
excluding accounts receivable or deposits arising in the ordinary course of     
business); (c) other than guarantees of Indebtedness of the Company or any      
Subsidiary Guarantor to the extent permitted by the covenant "Limitation on     
Incurrence of Additional Indebtedness and Disqualified Capital Stock," the      
entering into by such person of any guarantee of, or other credit support or    
contingent obligation with respect to, Indebtedness or other liability of such  
other person; (d) the making of any capital contribution by such person to such 
other person; and (e) the designation by the Board of Directors of the Company  
of any person to be an Unrestricted Subsidiary. The Company shall be deemed to  
make an Investment in an amount equal to the fair market value of the net assets
of any Subsidiary (or, if neither the Company nor any of its Subsidiaries has   
theretofore made an Investment in such Subsidiary, in an amount equal to the    
Investments being made), at the time that such Subsidiary is designated an      
Unrestricted Subsidiary, and any property transferred to an Unrestricted        
Subsidiary from the Company or a Subsidiary shall be deemed an Investment valued
at its fair market value at the time of such transfer. The amount of any such   
Investment shall be reduced by any liabilities or obligations of the Company or 
any of its Subsidiaries to be assumed or discharged in connection with such     
Investment by an entity other than the Company or any of its Subsidiaries.      

   "Junior Security" means, so long as the effect of any exclusion employing
this definition is not to cause the Notes to be treated in any bankruptcy case  
or proceeding or similar event as part of the same class of claims as Senior    
Debt or any class of claims pari passu with, or senior to, the Senior Debt, for 
any payment or distribution, debt or equity securities of the Company or any    
successor corporation provided for by a plan of reorganization or readjustment  
that are subordinated at least to the same extent that the Notes are            
subordinated to the payment of all Senior Debt then outstanding; provided that  
(a) if a new corporation results from such reorganization or readjustment, such 
corporation assumes any Senior Debt not paid in full in cash or Cash Equivalents
in connection with such reorganization or readjustment and (b) the rights of the
holders of such Senior Debt are not, without the consent of such holders,       
altered by such reorganization or readjustment.                                 

"LGP" means Leonard Green & Partners, L.P.                            

  "Management Services Agreement" means the management services agreement,
dated as of the May 7, 1996, between the Company and LGP substantially as in    
effect on May 7, 1996.                                                          

    "Net Cash Proceeds" means the aggregate amount of Cash or Cash Equivalents
received by the Company in the case of a sale of Qualified Capital Stock and by 
the Company and its Subsidiaries in respect of an Asset Sale plus, in the case  
of an issuance of Qualified Capital Stock upon any exercise, exchange or        
conversion of securities (including options, warrants, rights and convertible or
exchangeable debt) of the Company that were issued for cash after the Issue     
Date, the amount of cash originally received by the Company upon the issuance of
such securities (including options, warrants, rights and convertible or         
exchangeable debt) less, in each case, the sum of all payments, fees,           
commissions and (in the case of Asset Sales, reasonable and customary) expenses 
(including, without limitation, the fees and expenses of legal counsel and      
investment banking fees and expenses) incurred in connection with such Asset    
Sale or sale of Qualified Capital Stock, and, in the case of an Asset Sale only,
less (i) the amount (estimated reasonably and in good faith by the Company) of  
income, franchise, sales and other applicable taxes required to be paid by the  
Company or any of its respective Subsidiaries in connection with such Asset     
Sale, (ii) the amounts of any repayments of Indebtedness secured, directly or   
indirectly, by Liens on the assets which are the subject of such Asset Sale or  
Indebtedness associated with such assets which is due by reason of such Asset   
Sale (i.e., such disposition is permitted by the terms of the instruments       
evidencing or applicable to such Indebtedness, or by the terms of a consent     
granted thereunder, on the condition that the proceeds (or portion thereof) of  
such disposition be applied to such Indebtedness), and other fees, expenses and 
other expenditures, in each case, reasonably incurred as a consequence of such  
repayment of Indebtedness (whether or not such fees, expenses or expenditures   
are then due and payable or made, as the case may be); (iii) all amounts deemed 
appropriate by the Company (as evidenced by a signed certificate of the Chief   
Financial Officer of the Company delivered to                                   

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the Trustee) to be provided as a reserve, in accordance with GAAP ("GAAP        
Reserves"), against any liabilities associated with such assets which are the   
subject of such Asset Sale; and (iv) with respect to Asset Sales by Subsidiaries
of the Company, the portion of such cash payments attributable to Persons       
holding a minority interest in such Subsidiary.                                 

    "Obligation" means any principal, premium or interest payment, or monetary
penalty, or damages, or purchase price due by the Company or any Guarantor under
the terms of the New Notes or the Indenture, including any liquidated damages   
due pursuant to the terms of the Registration Rights Agreement.                 

"Permitted Indebtedness" means, without duplication (a) Indebtedness  
evidenced by the Notes and represented by the Indenture, (b) Indebtedness of the
Company and the Subsidiary Guarantors (without duplication) Incurred from time  
to time under or in respect to the Credit Agreement up to an aggregate amount   
outstanding at any time in an aggregate principal amount up to $88 million,     
minus the amount of any such Indebtedness permanently reduced with Net Cash     
Proceeds from any Asset Sale or assumed by a transferee in an Asset Sale; (c)   
Indebtedness incurred by the Company or any Subsidiary Guarantor from time to   
time in an aggregate principal amount outstanding at any time of up to $10      
million (which may be Incurred pursuant to the Credit Agreement); (d)           
Indebtedness incurred by the Company to any Subsidiary Guarantor, and           
Indebtedness incurred by any Subsidiary Guarantor to any other Subsidiary       
Guarantor or Subsidiary Guarantors or to the Company; provided, that, in the    
case of Indebtedness of the Company, such obligations shall be unsecured and    
subordinated in right of payment to the Company's obligations pursuant to the   
Notes; (e) Purchase Money Indebtedness Incurred by the Company or any Subsidiary
Guarantor, in an aggregate principal amount not to exceed $20 million at any    
time outstanding from time to time; (f) Indebtedness arising from tender, bid,  
performance or government contract bonds, other obligations of like nature, or  
warranty or contractual service obligations of like nature, or warranty or      
contractual service obligations, in any case, Incurred by the Company or the    
Subsidiary Guarantors in the ordinary course of business; (g) Interest Swap and 
Hedging Obligations that are Incurred for the purpose of fixing or hedging      
interest rate or currency risk with respect to any fixed or floating rate       
Indebtedness that is permitted by the Indenture to be outstanding or any        
receivable or liability the payment of which is determined by reference to a    
foreign currency; provided, that the notional amount of any such Interest Swap  
and Hedging Obligation does not exceed the principal amount of Indebtedness or  
the amount of such receivable or liability to which such Interest Swap and      
Hedging Obligation relates; and (h) Indebtedness in respect of bankers'         
acceptances and letters of credit, all in the ordinary course of business in an 
aggregate amount outstanding at any time of up to $2.5 million; (i) Existing    
Indebtedness; and (j) Refinancing Indebtedness that serves to Refinance, without
duplication, in whole or in part, the Indebtedness permitted by this paragraph  
or any one or more successive Refinancings of any thereof.                      

"Permitted Lien" means any of the following:                          

(a) Liens existing on May 7, 1996;                          

        (b) Liens imposed by governmental authorities for taxes, assessments
     or other charges not yet subject to penalty or which are being contested in
good faith and by appropriate proceedings, if adequate reserves with  
  respect thereto are maintained on the books of the Company in accordance
with GAAP;                                                            

          (c) statutory liens of carriers, warehousemen, mechanics, materialmen,
     landlords, repairmen or other like Liens arising by operation of law in the
  ordinary course of business provided that (i) the underlying obligations
   are not overdue for a period of more than 30 days, or (ii) such Liens are
   being contested in good faith and by appropriate proceedings and adequate
     reserves with respect thereto are maintained on the books of the Company in
accordance with GAAP;                                                 

      (d) Liens securing the performance of bids, trade contracts (other
than borrowed money), leases, statutory obligations, surety and appeal
     bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;                                      

        (e) easements, rights-of-way, zoning, similar restrictions and other
     similar encumbrances or title defects which, singly or in the aggregate, do
not in any case materially detract from the value of the              

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   property, subject thereto (as such property is used by the Company or any
     of its Subsidiaries) or interfere with the ordinary conduct of the business
of the Company or any of its Subsidiaries;                            

       (f) Liens arising by operation of law in connection with judgments,
only to the extent, for an amount and for a period not resulting in an
Event of Default with respect thereto;                                

      (g) pledges or deposits made in the ordinary course of business in
 connection with workers' compensation, unemployment insurance and other
types of social security legislation;                                 

(h) Liens securing the Notes;                               

         (i) Liens securing Indebtedness of a person existing at the time such
person becomes a Subsidiary or is merged with or into the Company or a
  Subsidiary or Liens securing Indebtedness incurred in connection with an
    Acquisition, provided in each case that such Liens were in existence prior
     to the date of such acquisition, merger or consolidation, were not incurred
in anticipation thereof, and do not extend to any other assets;       

  (j) Liens securing or arising from Purchase Money Indebtedness
  permitted to be incurred under clause (e) of the definition of Permitted
Indebtedness, provided such Liens relate to the property (and monetary
proceeds thereof) which was acquired or constructed with such Purchase
  Money Indebtedness and the Capital Stock of any Person formed to acquire
such property and that does not own any other material property; and  

         (k) Liens securing Refinancing Indebtedness incurred to refinance any
     Indebtedness that was previously so secured in a manner not materially more
  adverse to the Holders of the Notes than the terms of the Liens securing
such refinanced Indebtedness.                                         

    "Permitted Payments" means, without duplication, (a) payments to TLC in an
amount sufficient to permit TLC to pay reasonable and necessary operating       
expenses and other general corporate expenses (including any reasonable         
professional fees and expenses, but excluding all expenses payable to or to be  
paid to or on behalf of an Excluded Person); (b) payments to TLC to enable TLC  
to pay foreign, federal, state or local tax liabilities, not to exceed the      
amount of any tax liabilities that would be otherwise payable by the Company and
its Subsidiaries and Unrestricted Subsidiaries to the appropriate taxing        
authorities if they filed separate tax returns to the extent that TLC has an    
obligation to pay such tax liabilities relating to the operations, assets or    
capital of the Company or its Subsidiaries and Unrestricted Subsidiaries,       
provided any such payment shall either be used by TLC to pay such tax           
liabilities within 90 days of TLC's receipt of such payment or refunded to the  
payee; (c) payments to TLC to enable TLC to pay, or the payment by the Company  
directly of, the payments provided for by clauses (a), (e) and (f) and the      
transactions, expenses and payments described in clause (b) of the definition of
"Exempted Affiliated Transaction"); and (d) cash dividends paid to TLC to the   
extent necessary to permit TLC to repurchase common stock, stock options and    
stock equivalents of TLC held by departing or deceased directors, officers or   
employees of TLC, the Company or any of the Subsidiary Guarantors, in an        
aggregate amount not to exceed in any fiscal year $1,000,000 plus (x) the       
cumulative amount by which (1) the product of $1,000,000 times the number of    
preceding fiscal years subsequent to May 7, 1996 exceeds (2) the amount of such 
payments made during such fiscal years, plus (y) the aggregate cash             
consideration received by TLC, after May 7, 1996 and prior to or substantially  
concurrently with the date of such repurchase, from the sale or issuance of     
common stock of TLC to directors, officers and employees of TLC, the Company and
the Subsidiary Guarantors (including, to the extent not otherwise included in   
the amount of such cash consideration, cash repayments of principal received by 
TLC on loans made to such persons to enable them to purchase such stock) to the 
extent such cash consideration was contributed, or is substantially concurrently
with such dividend contributed, to the Company as a capital contribution        
(provided that the net amount of cash dividends paid under this clause (d) shall
not exceed $7.5 million).                                                       

    "Purchase Money Indebtedness" means any Indebtedness of such person to any
seller or other person incurred to finance the acquisition or construction      
(including in the case of a Capitalized Lease Obligation, the lease) of any     
business or real or personal tangible property (or, in each case, any interest  
therein) acquired or constructed after May 7, 1996 which, in the reasonable good
faith judgment of the Board of Directors of the                                 

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Company, is related to a Related Business of the Company and which is incurred  
concurrently with, or within 180 days of, such acquisition or the completion of 
such construction and, if secured, is secured only by the assets so financed.   

  "Qualified Capital Stock" means any Capital Stock of the Company that is
not Disqualified Capital Stock.                                                 

  "Qualified Exchange" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Indebtedness of the Company 
with the Net Cash Proceeds received by the Company from the substantially       
concurrent sale of Qualified Capital Stock or a substantially concurrent capital
contribution to the Company, or any exchange of Qualified Capital Stock for any 
Capital Stock or Indebtedness of the Company.                                   

 "Reference Period" with regard to any person means the four full fiscal
quarters (or such lesser period during which such person has been in existence) 
ended immediately preceding any date upon which any determination is to be made 
pursuant to the terms of the New Notes or the Indenture.                        

     "Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which 
are used substantially concurrently to repay, redeem, defease, refund,          
refinance, discharge or otherwise retire for value, in whole or in part, or (b) 
constituting an amendment, modification or supplement to, or a deferral or      
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any          
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after     
deduction of the amount of fees, consents, premiums, prepayment penalties and   
reasonable expenses incurred in connection with such Refinancing) the principal 
amount of the Indebtedness so refinanced (or if such Indebtedness provides for  
an amount less than the principal amount thereof to be due and payable upon the 
acceleration thereof, such lesser amount as of the date of the issuance of such 
Refinancing Indebtedness) or, in the case of Disqualified Capital Stock, the    
liquidation preference of the Disqualified Capital Stock so refinanced, plus, in
the case of the Credit Agreement, additional Indebtedness which on the date of  
Incurrence is permitted by the covenant "Limitation on Incurrence of Additional 
Indebtedness and Disqualified Capital Stock"; provided, that other than with    
respect to a Refinancing of Indebtedness under the Credit Agreement, (A) such   
Refinancing Indebtedness of any Subsidiary of the Company shall only be used to 
refinance outstanding Indebtedness or Disqualified Capital Stock of such        
Subsidiary, (B) Refinancing Indebtedness shall (x) not have an Average Life     
shorter than the Indebtedness or Disqualified Capital Stock to be so refinanced 
at the time of such Refinancing and (y) in all respects, be no less subordinated
or junior, if applicable, to the rights of Holders of the New Notes than was the
Indebtedness or Disqualified Capital Stock to be refinanced and (C) such        
Refinancing Indebtedness shall have no installment of principal (or redemption  
payment) scheduled to come due earlier than the scheduled maturity of any       
installment of principal of the Indebtedness or Disqualified Capital Stock to be
so refinanced which was scheduled to come due prior to the Stated Maturity.     

"Related Business" means the business conducted (or proposed to be    
conducted, including the activities referred to in and being contemplated by the
Company, as described or referred to in this Prospectus) by the Company and its 
Subsidiaries as of May 7, 1996 and any and all businesses that in the good faith
judgment of the Board of Directors of the Company are reasonably related        
businesses, including reasonably related extensions thereof and including,      
without limitation, any business related to the manufacturing or marketing of   
products sold through health food stores.                                       

"Related Party" means (i) with respect to any Excluded Person, (A) any
controlling stockholder, 80% or more owned Subsidiary, or spouse or immediate   
family member (in the case of an individual) of such Excluded Person or (B) any 
trust, corporation, partnership or other entity, the beneficiaries,             
stockholders, partners, owners or persons beneficially holding an 80% or more   
controlling interest of which consist of such Excluded Person and/or such other 
persons referred to in the immediately preceding clause (A), and (ii) only with 
respect to Green Equity Investors II, L.P. (and in addition to the persons      
described in the foregoing clause (i)) any partnership or corporation which is  
managed by or controlled by LGP or any affiliate thereof. For the purposes of   
this definition, "control" of any individual, corporation, partnership, trust,  
unincorporated organization or a government or any agency or political          
subdivision thereof (a "Person"), shall mean the                                

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possession, directly or indirectly, of the power to direct or cause the         
direction of the management or policies of such Person, whether through the     
ownership of voting securities or by contract or otherwise.                     

    "Restricted Investment" means, in one or a series of related transactions,
any Investment, other than investments in (a) Cash Equivalents, (b) the Company 
or a Subsidiary Guarantor, (c) Investments in or acquisitions of Capital Stock, 
bonds, notes, debentures, partnership or other ownership interests or other     
securities, including any option or warrant of or in any Person that is or      
becomes, at the time of the acquisition thereof, a Subsidiary of the Company and
is or is to be primarily engaged in a Related Business; (d) Investments of such 
Person existing as of the date of the Indenture and any extension, modification 
or renewal of such Restricted Investment (but not increases thereof, other than 
as a result of the accrual or accretion of interest or original issue discount  
pursuant to the terms of such Investment), (e) transactions or arrangements with
officers or directors of the Company or any Subsidiary of the Company entered   
into in the ordinary course of business (including compensation or employee     
benefit arrangements with any officer or director of the Company or any         
Subsidiary of the Company permitted under the covenant "Transactions with       
Affiliates"); (f) investments in or acquisitions of Capital Stock or similar    
interests in Persons (other than Affiliates of the Company) received in the     
bankruptcy or reorganization of or by such Person or any exchange of such       
investment with the issuer thereof or taken in settlement of or other resolution
of claims or disputes, and, in each case, extensions, modifications and renewals
thereof; and (g) Investments in Persons (other than Affiliates of the Company)  
received by such Person as consideration from Asset Sales to the extent not     
prohibited by "Limitation on Sale of Assets and Subsidiary Stock" covenant or   
any exchange of any such Investment with the issuer thereof, and extensions,    
modifications and renewals thereof; provided, however, that a merger of another 
person with or into the Company or a Subsidiary Guarantor shall not be deemed to
be a Restricted Investment so long as the surviving entity is the Company or a  
direct wholly owned Subsidiary Guarantor.                                       

     "Restricted Payment" means, with respect to any person, (a) the declaration
or payment of any dividend or other distribution in respect of Capital Stock of 
such person, (b) any payment on account of the purchase, redemption or other    
acquisition or retirement for value of Capital Stock of such person or, (c)     
other than with the proceeds from the substantially concurrent sale of, or in   
exchange for, Refinancing Indebtedness, any purchase, redemption, or other      
acquisition or retirement for value of, any payment in respect of any amendment 
of the terms of or any defeasance of, any Subordinated Indebtedness, directly or
indirectly, by such person prior to the scheduled maturity, any scheduled       
repayment of principal, or scheduled sinking fund payment, as the case may be,  
of such Indebtedness and (d) any Restricted Investment by such person; provided,
however, that the term "Restricted Payment" does not include (i) any dividend,  
distribution or other payment on or with respect to Capital Stock of a person to
the extent payable in shares of Qualified Capital Stock of such person; (ii) any
dividend, distribution or other payment to the Company, or to any of its wholly 
owned Subsidiary Guarantors, by the Company or any of its Subsidiaries; or (iii)
the declaration or payment of dividends by any Subsidiary of the Company        
provided such distributions are made to the Company (or a Subsidiary of the     
Company, as applicable) on a pro rata basis (and in like form) to all           
distributions so made to all other stockholders thereof.                        

     "Sale and Leaseback Transaction" means any transaction by which the Company
or a Subsidiary Guarantor, directly or indirectly, becomes liable as a lessee or
as a guarantor or other surety with respect to any lease of any property        
(whether real or personal or mixed), whether now owned or hereafter acquired    
that the Company or any Subsidiary Guarantor has sold or transferred or is to   
sell or transfer to any other Person in a substantially concurrent transaction  
with such assumption of liability.                                              

   "Senior Bank Representative" means, at any time, the then-acting agent or
agents under the Credit Agreement, which shall initially be Chemical Bank.      

     "Senior Debt" of the Company or any Subsidiary Guarantor means Indebtedness
(including, without limitation, interest accruing after the commencement of any 
bankruptcy case or proceedings whether or not allowed as a claim in such case or
proceeding) of the Company or such Guarantor arising under the Credit Agreement 
or any Interest Swap and Hedging Obligation relating to such Indebtedness or    
that, by the terms of the instrument creating or evidencing such Indebtedness,  
is expressly designated Senior Debt and made                                    

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senior in right of payment to the New Notes or the applicable guarantee;        
provided, that in no event shall Senior Debt include (a) Indebtedness to any    
Subsidiary of the Company or any officer, director or employee of the Company or
any Subsidiary of the Company, (b) Indebtedness incurred in violation of the    
terms of the Indenture, (c) Indebtedness to trade creditors, and (d)            
Disqualified Capital Stock.                                                     

    "Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X promulgated    
pursuant to the Securities Act, as such Regulation S-X is in effect on the Issue
Date.                                                                           

  "Stated Maturity," when used with respect to any New Note, means May 15,
2006.                                                                           

"Subordinated Indebtedness" means Indebtedness of the Company or a    
Subsidiary Guarantor that is subordinated by its terms in right of payment to   
the New Notes or such Guarantee, as applicable.                                 

"Subsidiary," with respect to any person, means (i) a corporation a   
majority of whose Capital Stock with voting power, under ordinary circumstances 
to elect directors, is at the time, directly or indirectly, owned by such       
person, by such person and one or more Subsidiaries of such person or by one or 
more Subsidiaries of such person, (ii) any other person (other than a           
corporation) in which such person, one or more Subsidiaries of such person, or  
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof has at least majority equity ownership     
interest, or (iii) a partnership in which such person or a Subsidiary of such   
person is, at the time, a general partner and in which such person, directly or 
indirectly, at the date of determination thereof has at least a majority equity 
ownership interest. Notwithstanding the foregoing, an Unrestricted Subsidiary   
shall not be a Subsidiary of the Company or of any Subsidiary or Subsidiaries of
the Company for any purpose whatsoever.                                         

  "Transactions" means the transactions contemplated by the Stock Purchase
and Sale Agreement, dated as of March 5, 1996, as amended, among TLC, the       
Company, Green Equity Investors II, L.P., David Blechman, Jean Blechman, Brian  
Blechman, Dean Blechman, Neil Blechman, Ross Blechman, Steve Blechman and       
Stephen Welling and the related financings thereof.                             

     "Unrestricted Subsidiary" means any subsidiary of the Company that does not
own any Capital Stock of, or hold any Lien on any property of, the Company or   
any other Subsidiary Guarantor and that, at the time of determination, shall be 
an Unrestricted Subsidiary (as designated by the Board of Directors of the      
Company); provided, that (i) neither immediately prior thereto nor after giving 
pro forma effect to such designation would there exist a Default or Event of    
Default and (ii) immediately after giving pro forma effect thereto, the Company 
could incur at least $1.00 of Indebtedness pursuant to the Debt Incurrence Ratio
in the second paragraph of the covenant "Limitation on Incurrence of Additional 
Indebtedness and Disqualified Capital Stock." The Board of Directors of the     
Company may designate any Unrestricted Subsidiary to be a Subsidiary, provided  
that (i) no Default or Event of Default is existing or will occur as a          
consequence thereof and (ii) immediately after giving effect to such            
designation, on a pro forma basis, the Company could incur at least $1.00 of    
Indebtedness pursuant to the Debt Incurrence Ratio in the second paragraph of   
the covenant "Limitation of Incurrence of Additional Indebtedness and           
Disqualified Capital Stock." Each such designation shall be evidenced by filing 
with the Trustee a certified copy of the resolution giving effect to such       
designation and an Officers' Certificate certifying that such designation       
complied with the foregoing conditions.                                         

BOOK-ENTRY, DELIVERY AND FORM                                                   

  Except as set forth below, the New Notes will initially be issued in the
form of one or more registered New Notes in global form (the "Global Notes").   
Each Global Note will be deposited on the date of the closing of the sale of the
Notes (the "Closing Date") with, or on behalf of, The Depository Trust Company  
(the "Depositary") and registered in the name of Cede & Co., as nominee of the  
Depositary. Interests in Global Notes will be available for purchase only by    
"qualified institutional buyers," as defined in Rule 144A under the Securities  
Act ("QIBs").                                                                   

 Notes that are (i) originally issued to or transferred to institutional
"accredited investors," as defined in Rule 501(a)(1), (2), (3) or (7) under the 
Securities Act, who are not QIBs or to any other persons who are not QIBs or    
(ii) issued as described below under "Certificated Securities," will be issued  
in registered form                                                              

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without coupons (the "Certificated Securities"). Upon the transfer to a QIB of  
Certificated Securities, such Certificated Securities will, unless the Global   
Note has previously been exchanged for Certificated Securities, be exchanged for
an interest in the Global Note representing the principal amount of New Notes   
being transferred.                                                              

 The Depositary has advised the Company that it is (i) a limited-purpose
trust company organized under the laws of the State of New York, (ii) a member  
of the Federal Reserve System, (iii) a "clearing corporation" within the meaning
of the Uniform Commercial Code, as amended, and (iv) a "Clearing Agency"        
registered pursuant to Section 17A of the Exchange Act. The Depositary was      
created to hold securities for its participating organizations (collectively,   
the "Participants") and to facilitate the clearance and settlement of           
transactions in such securities between Participants through electronic         
book-entry changes in accounts of its Participants. The Depositary's            
Participants include securities brokers and dealers (including the Initial      
Purchasers), banks and trust companies, clearing corporations and certain other 
organizations. Access to the Depositary's system is also available to other     
entities such as banks, brokers, dealers and trust companies (collectively, the 
"Indirect Participants") that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly. QIBs may elect to hold New   
Notes purchased by them through the Depositary. QIBs who are not Participants   
may beneficially own securities held by or on behalf of the Depositary only     
through Participants or Indirect Participants. Persons that are not QIBs may not
hold New Notes through the Depositary.                                          

The Company expects that pursuant to procedures established by the    
Depositary (i) upon deposit of the Global Note, the Depositary will credit the  
accounts of Participants designated by the Initial Purchasers with an interest  
in the Global Note and (ii) ownership of the New Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained 
by the Depositary (with respect to the interests of Participants), the          
Participants and the Indirect Participants. The laws of some states require that
certain persons take physical delivery in definitive form of securities that    
they own and that security interests in negotiable instruments can only be      
perfected by delivery of certificates representing the instruments.             
Consequently, the ability to transfer New Notes or to pledge the New Notes as   
collateral will be limited to such extent. The New Notes will be subject to     
certain other restrictions on transferability.                                  

So long as the Depositary or its nominee is the registered owner of a 
Global Note, the Depositary or such nominee, as the case may be, will be        
considered the sole owner or holder of the New Notes represented by the Global  
Note for all purposes under the Indenture. Except as provided below, owners of  
beneficial interests in a Global Note will not be entitled to have New Notes    
represented by such Global Note registered in their names, will not receive or  
be entitled to receive physical delivery of Certificated Securities, and will   
not be considered the owners or holders thereof under the Indenture for any     
purpose, including with respect to the giving of any directions, instructions or
approvals to the Trustee thereunder. As a result, the ability of a person having
a beneficial interest in New Notes represented by a Global Note to pledge such  
interest to persons or entities that do not participate in the Depositary's     
system, or to otherwise take actions with respect to such interest, may be      
affected by the lack of a physical certificate evidencing such interest.        

  Accordingly, each QIB owning a beneficial interest in a Global Note must
rely on the procedures of the Depositary and, if such QIB is not a Participant  
or an Indirect Participant, on the procedures of the Participant through which  
such QIB owns its interest, to exercise any rights of a holder under the        
Indenture or such Global Note. The Company understands that under existing      
industry practice, in the event the Company requests any action of holders of   
New Notes or a QIB that is an owner of a beneficial interest in a Global Note   
desires to take any action that the Depositary, as the holder of such Global    
Note, is entitled to take, the Depositary would authorize the Participants to   
take such action and the Participants would authorize QIBs owning through such  
Participants to take such action or would otherwise act upon the instructions of
such QIBs. Neither the Company nor the Trustee will have any responsibility or  
liability for any aspect of the records relating to or payments made on account 
of New Notes by the Depositary, or for maintaining, supervising or reviewing any
records of the Depositary relating to such New Notes.                           

     Payments with respect to the principal of, premium, if any, and interest on
any New Notes represented by a Global Note registered in the name of the        
Depositary or its nominee on the applicable record date will be                 

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payable by the Trustee to or at the direction of the Depositary or its nominee  
in its capacity as the registered holder of the Global Note representing such   
New Notes under the Indenture. Under the terms of the Indenture, the Company and
the Trustee may treat the persons in whose names the New Notes, including the   
Global Notes, are registered as the owners thereof for the purpose of receiving 
such payments and for any and all other purposes whatsoever. Consequently,      
neither the Company nor the Trustee has or will have any responsibility or      
liability for the payment of such amounts to beneficial owners of New Notes     
(including principal, premium, if any, and interest), or to immediately credit  
the accounts of the relevant Participants with such payment, in amounts         
proportionate to their respective holdings in principal amount of beneficial    
interest in the Global Note as shown on the records of the Depositary. Payments 
by the Participants and the Indirect Participants to the beneficial owners of   
New Notes will be governed by standing instructions and customary practice and  
will be the responsibility of the Participants or the Indirect Participants.    

Certificated Securities                                                     

   If (i) the Company notifies the Trustee in writing that the Depositary is
no longer willing or able to act as a depository and the Company is unable to   
locate a qualified successor within 90 days or (ii) the Company, at its option, 
notifies the Trustee in writing that it elects to cause the issuance of New     
Notes in definitive form under the Indenture, then, upon surrender by the       
Depositary of its Global Note, Certificated Securities will be issued to each   
person that the Depositary identifies as the beneficial owner of the New Notes  
represented by the Global Note. In addition, subject to certain conditions, any 
person having a beneficial interest in a Global Note may, upon request to the   
Trustee, exchange such beneficial interest for Certificated Securities. Upon any
such issuance, the Trustee is required to register such Certificated Securities 
in the name of such person or persons (or the nominee of any thereof), and cause
the same to be delivered thereto.                                               

  Neither the Company nor the Trustee shall be liable for any delay by the
Depositary or any Participant or Indirect Participant in identifying the        
beneficial owners of the related New Notes and each such person may conclusively
rely on, and shall be protected in relying on instructions from the Depositary  
for all purposes (including with respect to the registration and delivery, and  
the respective principal amounts, of the New Notes to be issued).               

    The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable. The    
Company will have no responsibility for the performance by DTC or its           
Participants of their respective obligations as described hereunder or under the
rules and procedures governing their respective operations.                     

SAME-DAY FUNDS SETTLEMENT AND PAYMENT                                           

The Indenture requires that payments in respect of the New Notes      
represented by the Global Note (including principal, premium, if any, interest  
and liquidated damages, if any) be made by wire transfer of immediately         
available funds to the accounts specified by the registered holder of the Global
Note. With respect to Certificated Securities, the Company will make all        
payments of principal, premium, if any, interest and liquidated damages, if any,
by wire transfer of immediately available funds to the accounts specified by the
holders thereof or, if no such account is specified, by mailing a check to each 
such holder's registered address. Secondary trading in long-term notes and      
debentures of corporate issuers is generally settled in clearing-house or       
next-day funds. In contrast, the New Notes represented by the Global Note are   
expected to be eligible to trade in the PORTAL market and to trade in the       
Depositary's Same-Day Funds Settlement System, and any permitted secondary      
market trading activity in such New Notes will, therefore, be required by the   
Depositary to be settled in immediately available funds. The Company expects    
that secondary trading in the Certificated Securities will also be settled in   
immediately available funds.                                                    

DESCRIPTION OF NEW CREDIT FACILITY

The New Credit Facility, agented by The Chase Manhattan Bank          
(s/k/a/Chemical Bank; "Chase") and The Bank of New York, provides for (i) a     
six-year term loan facility, in the amount of $53.0 million maturing on May 7,  
2002 (the "Term Loan"), and (ii) a six-year revolving credit facility (the      
"Revolving Credit                                                               

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Facility") of $15.0 million expiring on May 7, 2002. The Revolving Credit       
Facility and the Term Loan bear interest at an annual rate, at the Company's    
option, equal to the "ABR plus the Applicable Margin" ("ABR Loans") or the      
"Eurodollar Rate plus Applicable Margin" ("Eurodollar Loans"). As used herein   
"ABR" means the highest of (i) the rate of interest publicly announced by Chase 
as its prime rate in effect at its principal office in New York City, (ii) the  
secondary market rate for certificates of deposit (grossed up for maximum       
statutory reserve requirements) plus 1% and (iii) the federal funds effective   
rate from time to time plus 0.5%. "Eurodollar Rate" means the rate (grossed up  
for maximum statutory reserve requirements for eurocurrency liabilities) at     
which eurodollar deposits for one, two, three or six months (as selected by the 
Company) are offered to Chase in the interbank eurodollar market in the         
approximate amount of Chase's share of the applicable loan. "Applicable Margin" 
means (a) 1.25%, in the case of ABR Loans and (b) 2.50%, in the case of         
Eurodollar Loans. Interest rates on the credit facilities are subject to        
reduction in the event the Company meets certain financial tests.               

The principal amount of the $53.0 million Term Loan is required to be 
amortized commencing on October 31, 1996. Scheduled amortization payments under 
the Term Loan will be $1.5 million in 1996, $3.8 million in 1997, $5.6 million  
in 1998, $7.8 million in 1999, $10.1 million in 2000, $14.9 million in 2001 and 
$9.3 million in 2002. Subsequent to the Transactions, the Company repaid        
approximately $3.0 million of outstanding indebtedness under the Term Loan.     

The proceeds of the Term Loan were used, together with proceeds of the
Offering and the issuance of the common stock and Preferred Stock of TLC and    
available cash of the Company, to finance the Acquisition, to refinance certain 
debt of the Company and to pay related fees and expenses. The proceeds of the   
Revolving Credit Facility can be used to provide for the working capital        
requirements of the Company on or after the consummation of the Acquisition and 
for general corporate purposes, including, without limitation, the payment of   
transaction fees and tax adjustments.                                           

    The New Credit Facility is secured by first priority security interests in
all of the tangible and intangible assets of the Company and its direct and     
indirect subsidiaries. In addition, the loans under the New Credit Facility are 
guaranteed by TLC, ARP and certain of the Company's future subsidiaries.        
Additionally, the Company will be required to apply 75% (subject to reduction to
50% if certain financial tests are met) of excess cash flow (as defined in the  
New Credit Facility), 100% of the net proceeds of certain dispositions of       
material assets (other than inventory in the ordinary course of business), 50%  
of the net proceeds of the issuance or sale of the first $60 million of equity  
by TLC and 100% of the net proceeds of the incurrence of certain indebtedness,  
to the repayment of the New Credit Facility.                                    

    The New Credit Facility contains certain financial and operating covenants
including a maximum leverage ratio, a minimum EBITDA and a minimum fixed charge 
coverage ratio. In addition, the Company is limited in the amount of annual     
capital expenditures and capital lease obligations it may incur.                

   The operating covenants of the New Credit Facility include limitations on
the ability of the Company to (i) incur additional indebtedness, other than     
certain permitted indebtedness, (ii) permit additional liens or encumbrances,   
other than certain permitted liens, (iii) make any investments in other persons,
other than certain permitted investments, (iv) become obligated with respect to 
contingent obligations, other than certain permitted contingent obligations, and
(v) make restricted junior payments (including dividends on its common stock).  
The operating covenants also include restrictions on certain specified          
fundamental changes, such as mergers and asset sales, transactions with         
shareholders and affiliates, and business outside the ordinary course as        
currently conducted and certain extensions thereof, amendments or waivers of    
certain specified agreements, and the issuance of guarantees or other credit    
enhancements.                                                                   

     If for any reason the Company is unable to comply with the terms of the New
Credit Facility, including the covenants included therein, such noncompliance   
would result in an event of default under the New Credit Facility and could     
result in acceleration of the payment of the indebtedness outstanding under the 
New Credit Facility.                                                            

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DESCRIPTION OF CAPITAL STOCK OF TLC 

In August 1996, TLC amended its Amended and Restated Certificate of   
Incorporation (as amended, the "Certificate of Incorporation") to change its    
authorized capital stock to 75,000,000 shares of common stock, $1.00 par value  
per share ("TLC Common Stock"), of which 1,000,000 shares were outstanding as of
August 31, 1996, and 2,000,000 shares of preferred stock, $.01 par value per    
share, of which 67,000 shares were outstanding as of August 31, 1996.           

    The following summary description of the capital stock of TLC is qualified
in its entirety by reference to the Certificate of Incorporation and TLC's      
Amended and Restated Bylaws (the "Bylaws"), copies of which are filed as        
exhibits to the Registration Statement of which this Prospectus forms a part.   

COMMON STOCK                                                                    

     Holders of shares of TLC common stock vote as a single class on all matters
submitted to a vote of the stockholders, including the election of directors,   
with each share of TLC Common Stock entitled to one vote. There is no cumulative
voting with respect to the election of directors, with the result that holders  
of more than 50% of the shares voting for the election of directors can elect   
all of the directors. As of August 31, 1996, GEI owned 48% and the Continuing   
Stockholders owned 45% of the TLC Common Stock. As a result, GEI and the        
Continuing Stockholders, should they choose to act together, will retain the    
voting power required to elect all directors and approve most other matters     
required to be voted upon by the stockholders of TLC. See "Risk                 
Factors -- Control by Principal Stockholders."                                  

   Holders of TLC Common Stock on the applicable record date are entitled to
share ratably in such dividends, if any, as may be declared from time to time by
the Board of Directors out of funds legally available therefor, subject to the  
rights of the holders of any series of preferred stock. Upon the liquidation,   
dissolution or winding up of TLC, each holder of TLC Common Stock will be       
entitled to share ratably in any distribution of TLC's assets after the payment 
of all debts and other liabilities, subject to any superior rights of the       
holders of any outstanding shares of preferred stock.                           

Holders of the shares of TLC Common Stock have no preemptive or other 
subscription rights and there are no conversion rights or redemption or sinking 
fund provisions with respect to such shares. All of the outstanding shares of   
TLC Common Stock are fully paid and non-assessable.                             

     Special meetings of stockholders may be called by TLC's Board of Directors,
the Chairman of the Board of Directors, the President or the holders of         
twenty-five (25%) of the then outstanding TLC Common Stock.                     

   Stockholders of TLC are required to provide advance notice of nominations
of directors to be made at, and of business proposed to be brought before, a    
meeting of stockholders. The failure to deliver proper notice within the period 
specified in TLC's Bylaws will result in the denial to the stockholder of the   
right to make such nominations or propose such action at the meeting.           

PREFERRED STOCK                                                                 

     TLC's Board of Directors has authority (without action by the stockholders)
to issue authorized and unissued shares of preferred stock in one or more       
series, to designate the number of shares constituting any series, and to fix,  
by resolution, the voting powers, designations, preferences and relative,       
optional or other special rights thereof, including liquidation preferences and 
the dividend, conversion and redemption rights of each such series; provided,   
however, that TLC may not issue any additional series of preferred stock while  
any shares of Senior Preferred Stock or Junior Preferred Stock are outstanding. 
Under certain circumstances, TLC could issue the preferred stock as a method of 
discouraging, delaying or preventing a change of control of TLC.                

  In connection with the consummation of the Acquisition and the Offering,
TLC issued the Senior Preferred Stock and Junior Preferred Stock, the terms of  
which are described below.                                                      

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SENIOR PREFERRED STOCK                                                          

The Certificate of Incorporation limits the number of shares of Senior
Preferred Stock which can be issued to 30,000 plus additional shares of Senior  
Preferred Stock which may be issued in payment of dividends on the Senior       
Preferred Stock if TLC elects to pay dividends in additional shares of Senior   
Preferred Stock. The aggregate liquidation preference of the Senior Preferred   
Stock issued upon the consummation of the Acquisition was $30.0 million.        
Dividends on the Senior Preferred Stock accrue at the rate of 14% per annum and 
will be payable quarterly when, as and if declared by the Board of Directors.   
Dividends shall be paid in additional fully paid and non-assessable shares of   
Senior Preferred Stock having an aggregate liquidation preference equal to the  
amount of such dividends; provided, however, that TLC may, at its option and    
upon a majority vote of directors not affiliated with LGP ("Unaffiliated        
Directors"), pay dividends in cash.                                             

    The Senior Preferred Stock is redeemable at any time, in whole or in part,
at the option of TLC and upon a majority vote of Unaffiliated Directors, at the 
amount of the liquidation preference including accrued and unpaid dividends,    
except that (i) no partial redemption is allowed unless full cumulative         
dividends have been paid on all shares and (ii) no optional redemption is       
allowed at any time when TLC is making or required to make an offer to purchase 
Preferred Stock upon a change of control. The Senior Preferred Stock will be    
subject to mandatory redemption at the amount of the liquidation preference     
including accrued and unpaid dividends on May 1, 2007.                          

   In the event of a Change of Control (as defined), TLC will be required to
make an offer to repurchase the outstanding Senior Preferred Stock at a price   
equal to 101% of the liquidation preference thereof, plus accrued and unpaid    
dividends.                                                                      

The Senior Preferred Stock ranks junior in right of payment to all    
liabilities of TLC and to any preferred stock senior in right of payment to the 
Senior Preferred Stock (if consented to by holders of a majority of the shares  
of Senior Preferred Stock) and ranks senior in right of payment to the Junior   
Preferred Stock and TLC Common Stock.                                           

     Holders of the Senior Preferred Stock have no voting rights with respect to
general corporate matters except as provided by law or as set forth in the      
Certificate of Incorporation. The Certificate of Incorporation provides that the
Senior Preferred Stock will have class voting rights with regard to, among other
things, (i) authorization or issuance of stock which is senior to or on a parity
with the Senior Preferred Stock as to dividends and distributions upon          
liquidation; (ii) issuance of additional shares of Senior Preferred Stock other 
than in payment of dividends on Senior Preferred Stock; (iii) changes to the    
Certificate of Incorporation or Bylaws of TLC so as to affect adversely any of  
the preferences, rights, powers or privileges of the Senior Preferred Stock or  
of the holders thereof as such; (iv) mergers, consolidations or sales of all or 
substantially all of the assets of TLC (or of TLC and its subsidiaries, taken as
a whole) unless (a) the shares of Senior Preferred Stock will be redeemed upon  
consummation of such transaction or (b) certain other conditions are met; (v)   
certain transactions with affiliates; and (vi) subject to certain exceptions    
(including exceptions relating to the Junior Preferred Stock), payment of       
dividends on, or redemption or repurchase of, junior securities.                

JUNIOR PREFERRED STOCK                                                          

The Certificate of Incorporation limits the number of shares of Junior
Preferred Stock which can be issued to 37,000, plus additional shares of Junior 
Preferred Stock which may be issued in payment of dividends on the Junior       
Preferred Stock if TLC elects to pay dividends in additional shares of Junior   
Preferred Stock. The aggregate liquidation preference of the Junior Preferred   
Stock issued upon the consummation of the Acquisition was $37.0 million.        
Dividends on the Junior Preferred Stock accrue at the rate of 11.25% per annum  
and will be payable quarterly when, as and if declared by the Board of          
Directors. Dividends shall be paid in additional fully paid and non-assessable  
shares of Junior Preferred Stock having an aggregate liquidation preference     
equal to the amount of such dividends; provided, however, that if dividends are 
then being paid in cash on the Senior Preferred Stock, TLC may, at its option   
and upon a majority vote of Unaffiliated Directors, pay dividends on the Junior 
Preferred Stock in cash. The Junior Preferred Stock will be                     

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subject to mandatory redemption at the amount of the liquidation preference     
including accrued and unpaid dividends on May 1, 2008.                          

The Junior Preferred Stock ranks junior in right of payment to all    
liabilities of TLC and to the Senior Preferred Stock and any other preferred    
stock senior in right of payment to the Junior Preferred Stock (if consented to 
by holders of a majority of the shares of Junior Preferred Stock) and ranks     
senior in right of payment to any additional preferred stock which does not     
expressly provide that it ranks senior to or on a parity with the Junior        
Preferred Stock and the TLC Common Stock.                                       

    Other than as set forth above with respect to ranking, the powers, rights,
designations and preferences, and qualifications, restrictions and limitations  
thereof, of the Junior Preferred Stock are substantially similar to those of the
Senior Preferred Stock.                                                         

CERTAIN FEDERAL INCOME TAX CONSEQUENCES 

     In the opinion of Kramer, Levin, Naftalis & Frankel, counsel to the Company
("Counsel"), the following are the material anticipated federal income tax      
consequences expected to result to holders from the acquisition, ownership and  
disposition of the New Notes. This discussion is based upon current provisions  
of the Internal Revenue Code of 1986, as amended (the "Code"), applicable       
Treasury regulations, judicial authority and administrative pronouncements, all 
of which are subject to change, possibly with retroactive effect. Holders should
note that Counsel's opinion is not binding on the Internal Revenue Service (the 
"Service"), and there can be no assurance that the Service will have a similar  
view with respect to the tax consequences described below. No ruling has been or
will be requested by the Company from the Service on any matters relating to the
New Notes.                                                                      

     The following discussion is for general information only. The tax treatment
of a holder of the New Notes may vary depending upon such holder's particular   
situation. The discussion only addresses the tax consequences to holders who    
acquire the New Notes pursuant to the Exchange Offer and who hold the New Notes 
as capital assets and does not deal with special classes of holders, such as    
insurance companies, tax-exempt organizations, financial institutions, dealers  
in securities, foreign corporations and persons who are not citizens or         
residents of the United States, that may be subject to special rules not        
discussed below. EACH HOLDER OF OLD NOTES SHOULD CONSULT HIS OR HER TAX ADVISOR 
AS TO THE PARTICULAR TAX CONSEQUENCES OF PURCHASING, HOLDING, EXCHANGING AND    
DISPOSING OF THE NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE,
LOCAL OR FOREIGN TAX LAWS.                                                      

THE EXCHANGE OFFER                                                              

  The exchange of the New Notes for the Old Notes pursuant to the Exchange
Offer should not be taxable to a holder thereof for federal income tax purposes.
An exchanging holder's tax basis in the New Notes should be equal to his        
adjusted tax basis in the Old Notes, and the holding period of the New Notes    
should include the holding period of the Old Notes.                             

ORIGINAL ISSUE DISCOUNT AND STATED INTEREST                                     

The New Notes will be issued without original issue discount. Stated  
interest on the Old and New Notes will be taxable to a holder as ordinary       
interest income at the time it is accrued or paid in accordance with such       
holder's method of accounting for tax purposes.                                 

BOND PREMIUM ON THE NEW NOTES                                                   

   If a holder of a New Note purchased the Old Notes for an amount in excess
of the amount payable at the maturity date (or a call date, if appropriate) of  
the Old Notes, the holder may deduct such excess as amortizable bond premium    
over the aggregate terms of the Old Notes and the New Notes (taking into account
earlier call dates, as appropriate), under a yield-to-maturity formula. The     
deduction is available only if an election is made by the purchaser or is in    
effect. This election is revocable only with the consent of the Service. The    
election applies to all obligations owned or subsequently acquired by the       
holder. The holder's                                                            

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adjusted tax basis in the Old Notes and the New Notes will be reduced to the    
extent of the deduction of amortizable bond premium. Except as may otherwise be 
provided in future regulations, under the Code the amortizable bond premium is  
treated as an offset to interest income on the Old Notes and the New Notes      
rather than as a separate deduction item.                                       

MARKET DISCOUNT ON THE NEW NOTES                                                

   Tax consequences of a disposition of the New Notes may be affected by the
market discount provisions of the Code. These rules generally provide that if a 
holder acquired the Old Notes (other than in an original issue) at a market     
discount which equals or exceeds 1/4 of 1% of the stated redemption price of the
New Notes at maturity multiplied by the number of remaining complete years to   
maturity and thereafter recognizes gain upon a disposition (or makes a gift) of 
the New Notes, the lesser of (i) such gain (or appreciation, in the case of a   
gift) or (ii) the portion of the market discount which accrued while the Old or 
New Notes were held by such holder will be treated as ordinary income at the    
time of the disposition (or gift). For these purposes, market discount means the
excess (if any) of the stated redemption price at maturity over the basis of    
such Old or New Notes immediately after their acquisition by the holder. A      
holder of the New Notes may elect to include any market discount (whether       
accrued under the Old Notes or the New Notes) in income currently rather than   
upon disposition of the New Notes. This election once made applies to all market
discount obligations acquired on or after the first taxable year to which the   
election applies, and may not be revoked without the consent of the Service.    

 A holder of any New Note who acquired the Old Note at a market discount
generally will be required to defer the deduction of a portion of the interest  
on any indebtedness incurred or maintained to purchase or carry such Old or New 
Note until the market discount is recognized upon a subsequent disposition of   
such New Note. Such a deferral is not required, however, if the holder elects to
include accrued market discount in income currently.                            

REDEMPTION OR SALE OF THE NEW NOTES                                             

Generally, any redemption or sale of the New Notes by a holder should 
result in taxable gain or loss equal to the difference between the amount of    
cash and the fair market value of property received (except to the extent that  
such cash or property received is attributable to accrued, but previously       
untaxed, interest) and the holder's tax basis in the New Notes. The tax basis of
a holder of the New Notes should generally be equal to the price paid for the   
Old Notes exchanged therefor, plus any accrued market discount on the New Notes 
(and the Old Notes exchanged therefor) included in the holder's income prior to 
sale or redemption of the New Notes, or reduced by any amortizable bond premium 
applied against the holder's income prior to sale or redemption of the New      
Notes. Such gain or loss generally would be long-term capital gain or loss if   
the holding period exceeded one year, except to the extent it constitutes       
accrued market discount.                                                        

BACKUP WITHHOLDING AND INFORMATION REPORTING                                    

     A 31% "backup" withholding tax and information reporting requirements apply
to certain payments of interest and original issue discount on an obligation,   
and to proceeds of the sale of an obligation before maturity, to certain        
non-corporate holders. The Company, and/or any paying and and/or collection     
agent, including a broker, as the case may be, will be required to withhold from
any payment that is subject to backup withholding a tax equal to 31% of such    
payment unless the holder furnishes its taxpayer identification number (i.e.,   
social security number in the case of an individual) in the manner prescribed in
applicable Treasury regulations, certifies that such number is correct,         
certifies (with respect to payments of interest) as to no loss of exemption from
backup withholding and meets certain other conditions. Backup withholding,      
however, in any event, generally does not apply to payments to certain "exempt  
recipients" such as corporations.                                               

    THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH HOLDER OF THE 
OLD NOTES SHOULD CONSULT HIS OR HER TAX ADVISOR WITH RESPECT TO THE TAX         
CONSEQUENCES TO HIM OR HER OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE 
NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND  
OTHER TAX LAWS.                                                                 

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PLAN OF DISTRIBUTION

Each broker-dealer that holds Old Notes that were acquired for its own
account as a result of market making or other trading (other than Old Notes     
acquired directly from the Company), may exchange Old Notes for New Notes in the
Exchange Offer. However, any such broker-dealer may be deemed to be an          
"underwriter" within the meaning of such term under the Securities Act and must,
therefore, acknowledge that it will deliver a prospectus in connection with any 
resale of New Notes received in the Exchange Offer. This prospectus delivery    
requirement may be satisfied by the delivery by such broker-dealer of this      
Prospectus, as it may be amended or supplemented from time to time. The Company 
has agreed that, for a period of 180 days after the effective date of this      
Prospectus, it will make this Prospectus, as amended or supplemented, available 
to any broker-dealer who receives New Notes in the Exchange Offer for use in    
connection with any such sale. The Company will not receive any proceeds from   
any sales of New Notes by broker-dealers. New Notes received by broker-dealers  
for their own accounts pursuant to the Exchange Offer may be sold from time to  
time in one or more transactions in the over-the-counter market, in negotiated  
transactions, through the writing of options on the New Notes or a combination  
of such methods of resale, at market prices at the time of resale, at prices    
related to such prevailing market prices or negotiated prices. Any such resale  
of New Notes by broker-dealers may be made directly to a purchaser or to or     
through brokers or dealers who may receive compensation in the form of          
commissions or concessions from any such broker-dealer and/or the purchasers of 
any such New Notes. Any broker-dealer that resells New Notes that were received 
by it for its own account pursuant to the Exchange Offer and any broker or      
dealer that participates in a distribution of such New Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on any 
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act. 
The Company has agreed to pay all expenses incident to the Exchange Offer other 
than commissions or concessions of any brokers or dealers and will indemnify    
Eligible Holder (including any broker-dealer) against certain liabilities,      
including liabilities under the Securities Act.                                 

   By acceptance of the Exchange Offer, each broker-dealer that receives New
Notes pursuant to the Exchange Offer hereby agrees to notify the Company prior  
to using the Prospectus in connection with the sale or transfer of New Notes,   
and acknowledges and agrees that, upon receipt of notice from the Company of the
happening of any event which makes any statement in the Prospectus untrue in any
material respect or which requires the making of any changes in the Prospectus  
in order to make the statements herein not misleading (which notice the Company 
agrees to deliver promptly to such broker-dealer), such broker-dealer will      
suspend use of the Prospectus until the Company has amended or supplemented the 
Prospectus to correct such misstatement or omission and has furnished copies of 
the amended or supplemented prospectus to such broker-dealer.                   

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

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 Prospectus 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, except as so modified or superseded, shall 
not be deemed to constitute a part of this Prospectus.                          

  The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of such      
person, a copy of any or all of the documents incorporated herein by reference, 
other than exhibits to such documents unless they are specifically incorporated 
by reference into such documents. Requests for such copies should be directed   
to: Twin Laboratories Inc., 2120 Smithtown Avenue, Ronkonkoma, New York 11779,  
Attention: Philip M. Kazin, General Counsel.                                    

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LEGAL MATTERS 

The validity of the Guarantees will be passed upon for the Company by 
Kramer, Levin, Naftalis & Frankel, New York, New York. The validity of the New  
Notes will be passed upon for the Company by Ray, Quinney & Nebeker, Salt Lake  
City, Utah.                                                                     

EXPERTS 

  The consolidated financial statements of TLC as of December 31, 1994 and
1995 and for each of the three years in the period ended December 31, 1995 which
are included in this Prospectus and the related financial statement schedule    
included elsewhere in the Registration Statement have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports appearing herein   
and elsewhere in the Registration Statement and have been so included in        
reliance upon the reports of such firm given upon their authority as experts in 
accounting and auditing.                                                        

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                        [Enlarge/Download Table]

                                                                                       PAGE
                                                                                       ----
                                                                                           
Independent Auditors' Report.......................................................... F-2 
Financial Statements                                                                       
  Consolidated Balance Sheets as of December 31, 1994 and 1995 and June 30, 1996           
     (unaudited)...................................................................... F-3 
  Consolidated Statements of Income for the Years Ended December 31, 1993, 1994 and        
     1995 and the Six Months Ended June 30, 1995 (unaudited) and 1996 (unaudited)..... F-4 
  Consolidated Statements of Shareholders' Equity for the Years Ended December 31,         
     1993, 1994 and 1995 and the Six Months Ended June 30, 1996 (unaudited)........... F-5 
  Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1994        
     and 1995 and the Six Months Ended June 30, 1995 (unaudited) and 1996                  
     (unaudited)...................................................................... F-6 
  Notes to Consolidated Financial Statements.......................................... F-7 

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INDEPENDENT AUDITORS' REPORT

To the Shareholders of                                                          
Twinlab Corporation (formerly TLG Laboratories Holding Corp.)                   
Ronkonkoma, New York                                                            

 We have audited the accompanying consolidated balance sheets of Twinlab
Corporation (formerly TLG Laboratories Holding Corp.) and subsidiaries as of    
December 31, 1994 and 1995, and the related consolidated statements of income,  
shareholders' equity and cash flows for each of the three years in the period   
ended December 31, 1995. These financial statements are the responsibility of   
the Company's management. Our responsibility is to express an opinion on these  
financial statements based on our audits.                                       

We conducted our audits in accordance with generally accepted auditing
standards. 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.          

   In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the Company as of 
December 31, 1994 and 1995, and the results of their consolidated operations and
their consolidated cash flows for each of the three years in the period ended   
December 31, 1995 in conformity with generally accepted accounting principles.  

DELOITTE & TOUCHE LLP                                                           

Jericho, New York                                                               
February 9, 1996                                                                
(May 7, 1996 as to Notes 1 and 16a, and                                         
August 7, 1996 as to Notes 16b and 16c)                                         

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TWINLAB CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 
(IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                                  DECEMBER 31,                
                                                                -----------------             
                                                                 1994      1995               
                                                                -------   -------   JUNE 30,  
                                                                                   -----------
                                                                                      1996    
                                                                                   -----------
                                                                                   (UNAUDITED)
                                                                                              
ASSETS                                                                                        

Current assets:                                                                               
  Cash and cash equivalents (Note 7)..........................  $ 5,735   $ 7,945   $   7,984 
  Marketable securities (Note 2)..............................    1,178       201         201 
  Accounts receivable, net of allowance for bad debts of $63,                                 
     $177 and $228, respectively (Notes 7 and 15).............   17,892    24,372      22,701 
  Inventories (Notes 3 and 7).................................   22,732    25,273      30,953 
  Deferred tax assets (Note 16)...............................       --        --         417 
  Prepaid expenses and other current assets...................    1,179       872       1,330 
                                                                -------   -------  -----------
          Total current assets................................   48,716    58,663      63,586 
Marketable securities (Note 2)................................      201        --          -- 
Property, plant and equipment, net (Notes 4, 8 and 9).........   12,071    13,036      12,960 
Deferred tax assets (Note 16).................................       --        --      55,155 
Other assets (Note 5).........................................    3,718     3,610       9,462 
                                                                -------   -------  -----------
Total.........................................................  $64,706   $75,309   $ 141,163 
                                                                =======   =======  ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                                                
Current liabilities:                                                                          
  Current portion of long-term debt (Notes 8 and 16)..........  $ 1,101   $ 1,479   $   1,500 
  Current portion of capital lease obligations (Note 9).......      126       136         141 
  Loan payable -- bank (Note 7)...............................      660       660          -- 
  Notes payable -- shareholders (Note 14).....................    1,846       846          -- 
  Accounts payable............................................    3,612     6,854       8,678 
  Accrued expenses and other current liabilities (Note 6).....    3,135     4,258       9,471 
                                                                -------   -------  -----------
          Total current liabilities...........................   10,480    14,233      19,790 
Long-term debt, less current portion (Notes 5 and 16).........    5,116     5,367      48,862 
Capital lease obligations, less current portion (Note 9)......      439       304         232 
Senior subordinated notes (Note 16)...........................       --        --     100,000 
                                                                -------   -------  -----------
          Total liabilities...................................   16,035    19,904     168,884 
                                                                -------   -------  -----------
Senior redeemable cumulative preferred stock, $.01 par value;                                 
  156,410 shares authorized; 30,000 shares outstanding as of                                  
  June 30, 1996 (Note 16).....................................       --        --      30,000 
                                                                -------   -------  -----------
Junior redeemable cumulative preferred stock, $.01 par value;                                 
  140,090 shares authorized; 37,000 shares outstanding as of                                  
  June 30, 1996 (Note 16).....................................       --        --      37,000 
                                                                -------   -------  -----------
Commitments and contingencies (Notes 12 and 13)                                               
Shareholders' equity (deficit):                                                               
  Common stock, $1 par value; 1,000,000 shares authorized;                                    
     450,000 shares outstanding as of December 31, 1994 and                                   
     1995 and 1,000,000 shares outstanding as of June 30, 1996                                
     (Note 16)................................................      450       450       1,000 
  Additional paid-in capital..................................       68        68      80,701 
  Retained earnings (deficit).................................   48,153    54,887    (176,422)
                                                                -------   -------  -----------
          Total shareholders' equity (deficit)................   48,671    55,405     (94,721)
                                                                -------   -------  -----------
Total.........................................................  $64,706   $75,309   $ 141,163 
                                                                =======   =======  ===========

See notes to consolidated financial statements. 

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TWINLAB CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME 
(IN THOUSANDS OF DOLLARS) 

                                                        [Enlarge/Download Table]

                                                        YEAR ENDED              SIX MONTHS ENDED  
                                                       DECEMBER 31,                 JUNE 30,      
                                               -----------------------------   ------------------ 
                                                1993       1994       1995      1995       1996   
                                               -------   --------   --------   -------   -------- 
                                                                                  (UNAUDITED)     
                                                                                                  
Net sales (Note 15)........................... $99,897   $117,342   $148,735   $69,820   $ 81,837 
Cost of sales.................................  62,131     70,247     89,932    42,046     47,852 
                                               -------   --------   --------   -------   -------- 
Gross profit..................................  37,766     47,095     58,803    27,774     33,985 
Operating expenses............................  21,125     23,022     27,191    13,779     14,816 
                                               -------   --------   --------   -------   -------- 
Income from operations........................  16,641     24,073     31,612    13,995     19,169 
                                               -------   --------   --------   -------   -------- 
Other (expense) income:                                                                           
  Interest income.............................     242        254        313       147        315 
  Interest expense............................    (487)      (761)      (866)     (417)    (2,591)
  Transaction expenses (Note 1)...............      --         --       (656)       --       (400)
  Nonrecurring non-competition agreement                                                          
     expense (Note 16)........................      --         --         --        --    (15,300)
  Other.......................................     510        354         61        96        (23)
                                               -------   --------   --------   -------   -------- 
                                                   265       (153)    (1,148)     (174)   (17,999)
                                               -------   --------   --------   -------   -------- 
Income before unusual item and provision for                                                      
  income taxes................................  16,906     23,920     30,464    13,821      1,170 
Unusual item -- nonrecurring charge for prior                                                     
  years' income tax assessment (Note 13)......      --      1,982         --        --         -- 
Provision for income taxes (Note 10)..........     230        245        240        92      1,833 
                                               -------   --------   --------   -------   -------- 
Net income (loss)............................. $16,676   $ 21,693   $ 30,224   $13,729   $   (663)
                                               =======   ========   ========   =======   ======== 
Pro forma (Note 1)                                                                                
Historical income before provision for income                                                     
  taxes....................................... $16,906   $ 21,938   $ 30,464   $13,821   $  1,170 
Pro forma provision for income taxes..........   6,644      9,087     12,060     5,471      6,588 
                                               -------   --------   --------   -------   -------- 
Pro forma net income (loss)................... $10,262   $ 12,851   $ 18,404   $ 8,350   $ (5,418)
                                               =======   ========   ========   =======   ======== 

See notes to consolidated financial statements. 

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TWINLAB CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 
(IN THOUSANDS OF DOLLARS) 

                                                        [Enlarge/Download Table]

                                                               ADDITIONAL                        
                                                       COMMON   PAID-IN    RETAINED              
                                                       STOCK    CAPITAL    EARNINGS      TOTAL   
                                                       ------  ----------  ---------   --------- 
                                                                                                 
Balance at January 1, 1993...........................  $ 442    $      1   $  32,737   $  33,180 
Issuance of capital stock -- B. Bros.................      8          67          --          75 
Net income...........................................     --          --      16,676      16,676 
Distributions to shareholders........................     --          --      (9,388)     (9,388)
                                                       ------  ----------  ---------   --------- 
Balance at December 31, 1993.........................    450          68      40,025      40,543 
Net income...........................................     --          --      21,693      21,693 
Distributions to shareholders........................     --          --     (13,565)    (13,565)
                                                       ------  ----------  ---------   --------- 
Balance at December 31, 1994.........................    450          68      48,153      48,671 
Net income...........................................     --          --      30,224      30,224 
Distributions to shareholders........................     --          --     (23,490)    (23,490)
                                                       ------  ----------  ---------   --------- 
Balance at December 31, 1995.........................    450          68      54,887      55,405 
Net loss (unaudited).................................     --          --        (663)       (663)
Distributions to shareholders (unaudited)............     --          --      (8,929)     (8,929)
Issuance of common stock (Note 16) (unaudited).......    550       4,950          --       5,500 
Repurchase of shareholders' common stock and                                                     
  recapitalization including income tax effects (Note                                            
  16) (unaudited)....................................     --      24,497    (169,284)   (144,787)
Conversion of tax status from "S" corporation to "C"                                             
  corporation (Note 16) (unaudited)..................     --      51,186     (51,186)         -- 
Dividends declared on senior preferred stock and                                                 
  junior preferred stock (unaudited).................     --          --      (1,247)     (1,247)
                                                       ------  ----------  ---------   --------- 
Balance at June 30, 1996 (unaudited).................  $1,000   $ 80,701   $(176,422)  $ (94,721)
                                                       ======    =======   =========   ========= 

See notes to consolidated financial statements. 

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TWINLAB CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 
(IN THOUSANDS OF DOLLARS) 

                                                        [Enlarge/Download Table]

                                                                   YEAR ENDED                SIX MONTHS     
                                                                  DECEMBER 31,             ENDED JUNE 30,   
                                                           ---------------------------   ------------------ 
                                                            1993      1994      1995      1995       1996   
                                                           -------   -------   -------   -------   -------- 
                                                                                            (UNAUDITED)     
                                                                                                            
Cash flows from operating activities:                                                                       
  Net income (loss)....................................... $16,676   $21,693   $30,224   $13,729   $   (663)
  Adjustment to reconcile net income (loss) to net cash                                                     
     provided by operating activities:                                                                      
     Depreciation and amortization........................     805       950     1,011       514        742 
     Gain on sale of equipment............................     (35)     (153)      (58)      (58)        -- 
     Bad debt expense.....................................      --       (59)      169        25         51 
     Deferred income taxes................................      --        --        --        --      1,728 
     Nonrecurring non-competition agreement expense.......      --        --        --        --     15,300 
     Other................................................       8         1        --        --         -- 
     Changes in operating assets and liabilities:                                                           
       Accounts receivable................................  (3,817)   (5,880)   (6,649)     (690)     1,620 
       Inventories........................................  (4,381)   (3,717)   (2,541)   (4,901)    (5,680)
       Prepaid expenses and other current assets..........    (547)      295       307      (359)      (458)
       Accounts payable...................................   2,354      (752)    3,242     5,260      1,824 
       Accrued expenses and other current liabilities.....    (471)      494     1,123       324      2,316 
                                                           -------   -------   -------   -------   -------- 
          Net cash provided by operating activities.......  10,592    12,872    26,828    13,844     16,780 
                                                           -------   -------   -------   -------   -------- 
Cash flows from investing activities:                                                                       
  Maturities of marketable securities.....................   1,163     1,120     1,178       375         -- 
  Purchases of marketable securities......................  (1,767)       --        --        --         -- 
  Proceeds from sales of property, plant and equipment....   1,358       435       825        59         10 
  Acquisition of property, plant and equipment............  (4,904)   (1,786)   (2,641)   (2,073)      (483)
  Decrease (increase) in other assets.....................    (283)     (519)        6       240     (6,045)
                                                           -------   -------   -------   -------   -------- 
          Net cash used in investing activities...........  (4,433)     (750)     (632)   (1,399)    (6,518)
                                                           -------   -------   -------   -------   -------- 
Cash flows from financing activities:                                                                       
  Proceeds from issuance of debt..........................   2,758     6,073     4,685     4,154    153,000 
  Proceeds from issuance of senior and junior preferred                                                     
     stock................................................      --        --        --        --     67,000 
  Distributions to shareholders...........................  (9,388)  (13,565)  (23,490)  (16,496)    (8,929)
  Payments of debt........................................    (785)   (5,389)   (5,056)   (2,905)   (10,990)
  Issuance of capital stock...............................      75        --        --        --      5,500 
  Principal payments of capital lease obligations.........      --      (121)     (125)      (62)       (67)
  Repurchase of shareholders' common stock and                                                              
     recapitalization.....................................      --        --        --        --   (215,737)
                                                           -------   -------   -------   -------   -------- 
          Net cash used in financing activities...........  (7,340)  (13,002)  (23,986)  (15,309)   (10,223)
                                                           -------   -------   -------   -------   -------- 
Net (decrease) increase in cash and cash equivalents......  (1,181)     (880)    2,210    (2,864)        39 
Cash and cash equivalents at beginning of period..........   7,796     6,615     5,735     5,735      7,945 
                                                           -------   -------   -------   -------   -------- 
Cash and cash equivalents at end of period................ $ 6,615   $ 5,735   $ 7,945   $ 2,871   $  7,984 
                                                           =======   =======   =======   =======   ======== 
Supplemental disclosures of cash flow information:                                                          
  Cash paid during the periods for:                                                                         
     Interest............................................. $   466   $   780   $   853   $   344   $    435 
                                                           =======   =======   =======   =======   ======== 
     Income taxes......................................... $   248   $   267   $   216   $    67   $    123 
                                                           =======   =======   =======   =======   ======== 
Supplemental disclosure of non-cash investing                                                               
  activities -- Assets acquired under capital lease                                                         
  obligations............................................. $    --   $   686   $    --   $    --   $     -- 
                                                           =======   =======   =======   =======   ======== 

See notes to consolidated financial statements. 

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TWINLAB CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 
(INFORMATION AS IT RELATES TO THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS
UNAUDITED)
(DOLLAR AMOUNTS ARE IN THOUSANDS OF DOLLARS)

1.  DESCRIPTION OF ENTITY AND BASIS OF PRESENTATION                             

   Prior to May 7, 1996, Twin Laboratories Inc. ("Twin") and its affiliates,
Twinlab Export Corp. ("Export"), Twinlab Specialty Corporation ("Specialty"),   
Alvita Products, Inc. ("Alvita"), Natur-Pharma, Inc. ("Natur-Pharma"), B. Bros. 
Realty Corporation ("B Bros.") and Advanced Research Press, Inc. ("ARP")        
(collectively the "Companies") operated as separate corporations, all of which  
were wholly-owned by the same individuals (with some companies having different 
ownership percentages among such individuals) except for Natur-Pharma and B.    
Bros. which were only ninety-seven percent owned by such individuals.           

     In July 1995, the shareholders of the Companies signed a non-binding letter
of intent to sell an interest in the Companies and subsequently entered into a  
stock purchase and sale agreement (the "Acquisition Agreement") (see Note 16).  
In connection with the transactions contemplated by the Acquisition Agreement,  
the Companies incurred $656 of professional expenses as of December 31, 1995    
(the "Transaction Expenses").                                                   

On February 27, 1996, Twinlab Corporation (formerly TLG Laboratories  
Holding Corp. ("TLC")) was incorporated in contemplation of the Acquisition     
Agreement. The accompanying consolidated financial statements include the       
accounts of TLC and subsidiaries (the "Company") after giving retroactive       
effect, in a manner similar to a pooling of interests, to the merger of the     
Companies pursuant to the Acquisition Agreement.                                

   The Company's product line includes vitamins, minerals, amino acids, fish
and marine oils, sports nutrition products and special formulas marketed under  
the TWINLAB trademark and a full line of herbal supplements and phytonutrients  
and herb teas marketed under the Nature's Herbs and Alvita trademarks,          
respectively. The Company sells its products through a network of approximately 
60 distributors, who service approximately 11,000 health food stores and other  
selected retail outlets.                                                        

 Twin manufactures and markets complete lines in two product categories:
vitamins, minerals and amino acids; and sports nutrition, consisting of a total 
of over 400 products.                                                           

   Export sells Twin's products outside the United States. Specialty markets
innovative and special nutritional supplements, some in unique dosage form.     
Alvita Products, Inc., under the brand Alvita, markets over 100 natural single  
herb teas and blends in both teabag and bulk form. Natur-Pharma manufactures and
markets approximately 400 herbal and botanical supplements under the Nature's   
Herbs brand. Natur-Pharma operates a manufacturing facility registered with the 
Food and Drug Administration (FDA).                                             

 B. Bros. was incorporated for the purpose of constructing a building to
serve as Natur-Pharma's new office, warehouse and production facility.          

ARP is a publisher of sports nutrition books and a body building and  
fitness magazine entitled "Muscular Development, Fitness & Health."             

 The Companies had been S Corporations, pursuant to the Internal Revenue
Code, during the years ended December 31, 1993, 1994 and 1995 and through May 7,
1996. Upon completion of the Acquisition Agreement, the Companies terminated    
their S Corporation status. The pro forma income statement information reflects 
adjustments to the historical net income had the Companies not elected S        
Corporation status for income tax purposes for all periods presented.           

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TWINLAB CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

a. Principles of combination -- All material intercompany accounts and
transactions have been eliminated.                                              

     b. Cash equivalents -- Investments with original maturities of three months
or less are considered cash equivalents and consist primarily of money market   
funds.                                                                          

c. Marketable securities -- The Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in   
Debt and Equity Securities" during the year ended December 31, 1994, which      
requires changes in the accounting and reporting of investments in debt and     
equity securities. The effect of adopting SFAS No. 115 on the Company's         
consolidated financial statements was not material.                             

  The marketable securities portfolio primarily consists of investments in
tax-exempt municipal bonds. Marketable securities are stated at amortized cost  
as the Company has the intent and ability to hold these securities to maturity. 
The aggregate fair value of the current marketable securities as of December 31,
1994 and 1995 was $1,170 and $201, respectively. The aggregate fair value of the
noncurrent marketable securities was $196 as of December 31, 1994.              

  d. Inventories -- Inventories are stated at the lower of cost (first-in,
first-out method) or market value.                                              

e. Property, plant and equipment -- Depreciation is computed using the
straight-line method based upon the estimated useful lives of the related assets
which range from three to forty years. Amortization of leasehold improvements is
computed by the straight-line method over the shorter of the estimated useful   
lives of the related assets or lease term.                                      

     f. Intangible assets -- Trademarks are being amortized on the straight-line
method over their expected lives, not to exceed forty years. Goodwill, which    
represents the excess of purchase price over fair value of net assets acquired, 
is being amortized on the straight-line method over forty years. Covenants not  
to compete are being amortized on the straight-line method over five years.     

 g. Income taxes -- In February 1992, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards ("SFAS") No. 109,      
"Accounting for Income Taxes", which required significant changes in accounting 
for income taxes, including an asset and liability approach to income taxes. The
Company adopted SFAS No. 109 in the year ended December 31, 1993. There was no  
cumulative effect to the consolidated financial statements as a result of the   
change in accounting, nor did SFAS No. 109 have a material effect on the amount 
of income taxes provided in the year ended December 31, 1993.                   

   h. Revenue recognition -- Revenue from product sales is recognized at the
time of shipment to the customer. Revenue from magazine subscriptions is        
recorded as deferred revenue at the time of sale and a pro rata share is        
included in revenue as magazines are delivered to subscribers. Advertising      
revenue is recognized when the related magazines are issued.                    

  i. Research and development expenses -- The Company charges research and
development expenses to operations as incurred. Research and development        
expenses were $861, $1,030 and $1,140 for the years ended December 31, 1993,    
1994 and 1995, respectively.                                                    

j. Fair value of financial instruments -- The following methods and   
assumptions were used to estimate the fair value of each class of financial     
instruments:                                                                    

         1) Cash and cash equivalents -- The carrying amounts approximate fair
value because of the short maturity of these instruments.             

     2) Marketable securities -- Fair value approximates quoted market
value.                                                                

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TWINLAB CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

         3) Receivables -- The carrying amount approximates fair value because
of the short maturity of these instruments.                           

   4) Debt -- The carrying amounts approximate fair value based on
borrowing rates currently available to the Company for bank loans with
similar terms.                                                        

k. Use of estimates in the preparation of financial statements -- The 
preparation of financial statements in conformity with generally accepted       
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of         
contingent assets and liabilities at the date of the financial statements and   
the reported amounts of revenues and expenses during the reporting period.      
Actual results could differ from those estimates.                               

    l. Unaudited interim financial statements -- In the opinion of management,
the unaudited consolidated financial statements for the six months ended June   
30, 1995 and 1996 are presented on a basis consistent with the audited          
consolidated financial statements and reflect all adjustments, consisting of    
only normal recurring adjustments, necessary for a fair presentation of the     
results thereof. The results of operation for interim periods are not           
necessarily indicative of the results to be expected for the entire year.       

    m. Reclassifications -- Certain prior year balances have been reclassified
to conform with current year classifications.                                   

3.  INVENTORIES                                                                 

                                                        [Enlarge/Download Table]

                                                             DECEMBER 31,     JUNE 30,
                                                           -----------------  --------
                                                            1994      1995      1996  
                                                           -------   -------  --------
                                                                                      
Inventories consist of the following:                                                 
  Raw materials........................................... $10,183   $11,006  $ 12,115
  Work in process.........................................   4,720     4,550     6,892
  Finished goods..........................................   7,829     9,717    11,946
                                                           -------   -------  --------
          Total........................................... $22,732   $25,273  $ 30,953
                                                           =======   =======   =======

4.  PROPERTY, PLANT AND EQUIPMENT                                               

Property, plant and equipment consist of the following:               

                                                        [Enlarge/Download Table]

                                                                     DECEMBER 31,    
                                                                  -------------------
                                                                   1994        1995  
                                                                  -------     -------
                                                                                     
Land, building and leasehold improvements........................ $10,039     $11,204
Plant equipment..................................................   5,883       6,097
Office equipment.................................................   1,776       1,942
Automobiles......................................................      70          56
                                                                  -------     -------
                                                                   17,768      19,299
Less: accumulated depreciation and amortization..................   5,697       6,263
                                                                  -------     -------
  Property, plant and equipment -- net........................... $12,071     $13,036
                                                                  -------     -------
  Depreciation and amortization expense.......................... $   851     $   909
                                                                  =======     =======

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TWINLAB CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

5.  OTHER ASSETS                                                                

Other assets consist of the following:                                

                                                        [Enlarge/Download Table]

                                                                      DECEMBER 31,   
                                                                    -----------------
                                                                     1994       1995 
                                                                    ------     ------
                                                                                     
Due from related trust(a).......................................... $1,640     $1,786
Trademarks, net of accumulated amortization of $128 and $157,                        
  respectively.....................................................    948      1,063
Goodwill, net of accumulated amortization of $96 and $114,                           
  respectively.....................................................    607        590
Other..............................................................    523        171
                                                                    ------     ------
          Total.................................................... $3,718     $3,610
                                                                    ======     ======

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

(a)  The Company had advanced, to a related party trust, payments for premiums  
on a split dollar life insurance policy on the lives of the principal 
   shareholders. The amounts advanced were to be repaid from the benefits or
cash value of the policy and were collateralized by the cash surrender
   value of the policy. The principal shareholders were covered by a "second
     to die" policy in the face amount of $10,000. Such policy was terminated in
May 1996 and the related advances were collected (see Note 16).       

6.  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES                              

  Accrued expenses and other current liabilities consist of the following:

                                                        [Enlarge/Download Table]

                                                                      DECEMBER 31,   
                                                                    -----------------
                                                                     1994       1995 
                                                                    ------     ------
                                                                                     
Accrued salaries, employee benefits and payroll taxes.............. $  839     $  935
Deferred revenue...................................................    689        787
Accrued professional fees..........................................    134        700
Other..............................................................  1,473      1,836
                                                                    ------     ------
          Total.................................................... $3,135     $4,258
                                                                    ======     ======

7.  LOAN PAYABLE -- BANK                                                        

Natur-Pharma had a revolving line of credit arrangement with a bank. A
maximum of $1,000 was available to Natur-Pharma with interest payable monthly at
the bank's variable base rate (8.5 percent at December 31, 1995). Terms of the  
agreement included maintaining a $75 compensating balance, achieving quarterly  
net income of at least $50 and limitations on repayment of notes payable to     
shareholders. Borrowings were secured by inventories, accounts receivable and a 
guarantee by Twin. The credit arrangement was to mature on June 1, 1996 and was 
subject to annual review by the bank. Borrowings against such line of credit    
aggregated $660 at December 31, 1994 and 1995. Such borrowings were refinanced  
in May 1996 in connection with the Acquisition Agreement (see Note 16).         

  Twin had entered into a line of credit arrangement with a bank which was
cancelable by either party at any time and was to expire on May 31, 1996. A     
maximum amount of $10,000 was available with interest charged at the Alternate  
Base Rate of the bank, which was the higher of the prime rate (8.5 percent at   
December 31, 1995) or the Federal Funds rate (6.0 percent at December 31, 1995) 
plus 1/2 percent. There were no borrowings against such line of credit at       
December 31, 1994 and 1995. The line of credit agreement was cancelled in May   
1996 (see Note 16).                                                             

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8.  LONG-TERM DEBT                                                              

Long-term debt consists of the following:                             

                                                        [Enlarge/Download Table]

                                                                        DECEMBER 31,  
                                                                       ---------------
                                                                        1994     1995 
                                                                       ------   ------
                                                                                      
Mortgage payable to a bank collateralized by land and building,                       
  payable in monthly installments of $22, including interest at 9.5                   
  percent plus a $1,737 balloon payment due May 1, 2002(a)...........  $2,282   $2,228
Mortgage payable to a bank collateralized by land and building,                       
  payable in monthly installments of $24, including interest at 9.9                   
  percent, maturing August 2006(a)...................................   2,171    2,104
Loan payable to a bank, payable in monthly installments of $14,                       
  inclusive of interest at the prime rate plus .5 percent with the                    
  balance due on June 1, 1996(a).....................................      --    1,121
Note payable to a bank collateralized by equipment, payable in                        
  monthly installments of $10, including interest at 8.43 percent,                    
  maturing August 31, 2001(a)........................................     584      516
Note payable to a bank, unsecured, payable in monthly installments of                 
  $8, including interest at 7.7 percent, maturing July 1, 2002(a)....      --      506
Note payable to a power authority, payable in monthly installments of                 
  $2, including interest at 6.38 percent, maturing February 2011.....     296      289
Loan payable to a bank due on August 1, 1995.........................     792       --
Other................................................................      92       82
                                                                       ------   ------
                                                                        6,217    6,846
Less: current portion................................................   1,101    1,479
                                                                       ------   ------
          Total......................................................  $5,116   $5,367
                                                                       ======   ======

---------------                                                                 
(a) Such debt was refinanced in May 1996 in connection with the Acquisition     
Agreement (see Note 16).                                                        

The mortgages payable to banks provide, among other things, for the   
maintenance by certain of the companies of a minimum tangible net worth balance,
certain financial ratios and limitations on additional borrowings.              

Maturities of long-term debt are as follows:                          

                                                                [Download Table]

                          YEAR ENDING DECEMBER 31,                                  
----------------------------------------------------------------------------        
                                                                                    
     1996...................................................................  $1,479
     1997...................................................................     315
     1998...................................................................     335
     1999...................................................................     366
     2000...................................................................     396
     Thereafter.............................................................   3,955
                                                                              ------
          Total.............................................................  $6,846
                                                                              ======

9.  CAPITAL LEASE OBLIGATIONS                                                   

   The Company is obligated under leases for equipment, which are treated as
capital leases for financial reporting purposes due to certain provisions in the
lease agreements. Included in plant equipment at December 31, 1994 and 1995 are 
assets held under capital leases with a net carrying value of $652 and $583,    

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respectively. Accumulated amortization on these assets at December 31, 1994 and 
1995 was $34 and $103, respectively.                                            

  The future minimum lease payments, by year and in the aggregate, and the
present value of the future minimum lease payments at December 31, 1995 are as  
follows:                                                                        

                                                                [Download Table]

                          YEAR ENDING DECEMBER 31,                                  
----------------------------------------------------------------------------        
                                                                                    
     1996...................................................................   $164 
     1997...................................................................    164 
     1998...................................................................    164 
                                                                              ------
            Total...........................................................    492 
     Amount representing interest...........................................     52 
                                                                              ------
     Present value of the future minimum lease payments (including $136             
      payable currently)....................................................   $440 
                                                                              ======

10.  INCOME TAXES                                                               

Prior to the consummation of the Acquisition Agreement, all of the    
Companies were "S" corporations and as such Federal and state taxes were        
generally paid at the shareholder level only. However, when corporate taxable   
income of any company exceed $200, such company was required to pay New York    
State corporate income taxes equal to the difference between the personal and   
the corporate tax rate (approximately 2 percent at December 31, 1995) for all   
taxable income in excess of $200, except for Natur-Pharma, Alvita and B. Bros., 
which are subject to the tax laws of the State of Utah.                         

Some of the companies were not "S" corporations since inception. The  
following table sets forth the effective date each company elected "S"          
corporation status and the "C" corporation retained earnings at the time of "S" 
corporation election:                                                           

                                                        [Enlarge/Download Table]

                                                                            "C" CORPORATION 
                                                     EFFECTIVE DATE OF "S"      RETAINED    
                      COMPANY                        CORPORATION ELECTION       EARNINGS    
---------------------------------------------------  ---------------------  ----------------
                                                                                            
Twin...............................................     January 1, 1987          $6,299     
Export.............................................        At inception            None     
Specialty..........................................        At inception            None     
Alvita.............................................     January 1, 1992          $   39     
Natur-Pharma.......................................     January 1, 1993          $  575     
B. Bros............................................        At inception            None     
ARP................................................     January 1, 1989          $  (89)    

    The provision for income taxes for the years ended December 31, 1993, 1994
and 1995 and through the consummation of the Acquisition Agreement on May 7,    
1996 represents state taxes.                                                    

     Twin is undergoing a routine audit of its Federal income tax return for the
year ended December 31, 1993. Management believes that any amounts which might  
be assessed will not have a material effect on the consolidated financial       
statements.                                                                     

11.  EMPLOYEE BENEFIT PLANS                                                     

  Twin provides a profit sharing plan for all full-time employees who have
satisfied length of service and minimum age requirements. Profit sharing expense
related to Twin's plan was $250 for the years ended December 31, 1993, 1994 and 
1995.                                                                           

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    Under the Natur-Pharma, Inc. Employee Savings Plan, eligible participating
employees may elect to contribute up to twenty-five percent of their salaries to
an investment trust. Natur-Pharma may, at its sole discretion, contribute to the
plan. Participants are fully vested in their own contributions and vest in      
Natur-Pharma's contributions at a rate of 20 percent per year beginning one year
after the date of contribution. Natur-Pharma contributed and charged to expense 
$7, $11 and $37 under this plan for the years ended December 31, 1993, 1994 and 
1995, respectively.                                                             

12.  COMMITMENTS AND CONTINGENCIES                                              

     a. Leases -- The Company leases certain warehouse space and equipment under
operating leases. Generally, the leases carry renewal provisions and require the
payment of maintenance costs. Rental payments may be adjusted for increases in  
taxes and other costs above specific amounts. Rental expense charged to         
operations for the years ended December 31, 1993, 1994 and 1995 was             
approximately $1,254, $1,281 and $1,370, respectively.                          

    Future minimum payments under noncancellable operating leases with initial
or remaining terms of more than one year, are as follows:                       

                                                                [Download Table]

                          YEAR ENDING DECEMBER 31,                                  
----------------------------------------------------------------------------        
                                                                                    
       1996.................................................................  $1,269
       1997.................................................................     981
       1998.................................................................     866
       1999.................................................................     764
       2000.................................................................     829
                                                                              ------
                 Total......................................................  $4,709
                                                                              ======

b. Legal matters -- Twin and other encapsulators, and various         
manufacturers, distributors, suppliers, importers and retailers of added        
manufactured L-Tryptophan or products containing added manufactured L-Tryptophan
are or were defendants in various legal actions brought in federal and state    
courts seeking compensatory and, in some cases, punitive damages for alleged    
personal injuries resulting from the ingestion of certain products containing   
added manufactured L-Tryptophan. As of January 31, 1996, Twin was a named       
defendant in three of these actions. Although Twin believes that few new        
lawsuits are likely to be brought because of applicable statutes of limitations,
the possibility of future such actions cannot be excluded. Twin and certain     
other companies in the industry (the "Indemnified Group") have each entered into
a Defense and Indemnification Agreement with Showa Denko America, Inc. ("SDA")  
(the "Indemnification Agreement"), under which SDA has agreed to assume the     
defense of all claims against any of the Indemnified Group arising out of the   
ingestion of L-Tryptophan products and to pay all legal fees incurred and       
indemnify Twin against liability in any action if it is determined that a       
proximate cause of the injury sustained by the plaintiff was a constituent of   
the raw material sold by SDA to Twin or was a factor for which SDA or any of its
affiliates was responsible, except to the extent that action by Twin proximately
contributed to the injury, and except for certain claims relating to punitive   
damages. SDA appears to have been the supplier of all of the allegedly          
contaminated L-Tryptophan. SDA has posted a revolving irrevocable letter of     
credit for the benefit of the Indemnified Group if SDA is unable or unwilling to
satisfy any claims or judgments. Showa Denko, K.K. ("SDK"), the Japanese parent 
of SDA and manufacturer of the relevant L-Tryptophan, has unconditionally       
guaranteed the payment obligations of SDA under the Indemnification Agreement.  
As of January 31, 1996, 129 lawsuits in which Twin was a named defendant had    
been dismissed or settled by SDA at no cost to Twin.                            

The total of all damages alleged in each of the remaining three       
L-Tryptophan actions has not been specified. Twin's available product liability 
insurance coverage of $3 million for L-Tryptophan matters in respect of claims  
made prior to December 31, 1993, is only available with respect to one of the   
three actions. There can be no assurance that when damages are specified in     
these actions that the total amount thereof, if                                 

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fully awarded against Twin alone and ignoring the existence of the              
Indemnification Agreement, would not exceed such insurance coverage and would   
not have a material adverse effect on the Company's results of operations and   
financial condition. However, the Indemnification Agreement, the defense and    
resolution to date of numerous lawsuits by SDA without cost to Twin, the        
multitude of defendants and the possibility that liability could be assessed    
against or paid by other parties or by insurance carriers have led management,  
after consultation with outside legal counsel, to believe that the prospect for 
a material adverse effect on the Company's consolidated financial condition or  
results of operations is remote and no provision in the consolidated financial  
statements has been made for any loss that may result from these actions. During
the year ended December 31, 1993, SDA reimbursed Twin approximately $461        
primarily for unsalable L-Tryptophan related merchandise.                       

In 1989, Twin received an informal inquiry from the New York Regional 
Office of the Federal Trade Commission ("FTC") seeking substantiation for       
certain advertising claims made for a segment of its "Fuel" bodybuilding/sports 
nutrition line of products. In response, Twin submitted scientific              
substantiation and financial information to the FTC. Twin is currently          
negotiating this matter with the FTC and has received from the FTC a revised    
proposed Complaint and Consent Decree (the "Decree") seeking, among other       
things, injunctive relief restricting certain muscle building, fat loss and     
other marketing claims in connection with the sale of Twin's weight control,    
bodybuilding and sports nutrition products. In addition, the Decree seeks       
payment of $200. If a settlement is not reached, the FTC could pursue injunctive
relief and other remedies beyond those currently specified in the Decree. The   
FTC could also pursue remedies against Twin in federal court. The Company       
believes that it has adequate scientific substantiation for the claims at issue,
and it intends to vigorously defend the matter if a settlement is not reached.  
The Company has reserved $200 for this matter.                                  

 The Company is also engaged in various other litigation in the ordinary
course of business. Management is of the opinion that the amounts which may be  
awarded or assessed in connection with these matters, if any, will not have a   
material effect on the consolidated financial statements.                       

13.  INVESTMENT IN LIMITED PARTNERSHIP                                          

    As a result of investments in certain limited partnerships, Hambrose 3 and
4 ("Partnerships"), Twin entered into an agreement with the Partnerships wherein
Twin subscribed to additional limited interests in the Partnerships. Twin also  
agreed to contribute a total of $360 as "Additional Capital Contribution" to the
Partnerships, which consists of a nonrecourse note of $240 and another          
noninterest-bearing note due in the year 2010 in the amount of $120. In lieu of 
making the Additional Capital Contribution in cash or subscription note, Twin   
has assigned 100 percent of certain distribution rights until such time as the  
assignee has recovered the full amount of the Additional Capital Contribution.  
Twin is contingently liable to the Partnerships in the amount of approximately  
$3,450. Management is of the opinion that there will be sufficient income       
generated from the Partnerships' leasing operations to repay all the debt due   
and Twin will not be required to make any further cash payments. These          
investments have not been assigned any value on the accompanying consolidated   
balance sheets.                                                                 

     The Hambrose 3 limited partnership has been audited by the Internal Revenue
Service ("IRS") for the years ended December 31, 1985 and 1986, at which time   
Twin was a "C" corporation. A settlement was reached during 1995 in which Twin  
paid approximately $2,082, including interest. In addition, Twin was responsible
for additional state taxes, inclusive of interest of approximately $28. Twin    
recorded an estimated settlement amount during 1994 totaling $1,982 which was   
reflected as a nonrecurring charge to operations. An additional $128 of interest
was recorded in 1995, and was included in operating expenses in the accompanying
consolidated statement of income.                                               

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14.  RELATED PARTY TRANSACTIONS                                                 

     Natur-Pharma had outstanding notes payable to certain shareholders totaling
$1,500 and $500 as of December 31, 1994 and 1995, respectively. Such notes bear 
interest at ten percent per annum, which is payable semi-annually. Interest     
expense on such notes was approximately $179, $150 and $100 for the years ended 
December 31, 1993, 1994 and 1995, respectively. Alvita had outstanding notes    
payable to certain shareholders totaling $250 as of December 31, 1993. Such     
notes were repaid in the year ended December 31, 1994. Interest expense on such 
notes was approximately $23 and $5 for the years ended December 31, 1993 and    
1994, respectively. ARP had outstanding notes payable to certain shareholders   
totaling $346 as of December 31, 1994 and 1995. Such notes are non-interest     
bearing.                                                                        

15.  MAJOR CUSTOMERS AND CREDIT CONCENTRATIONS                                  

     The Company has two significant customers which accounted for approximately
27 and 19 percent, respectively, of net sales for 1993; 28 and 20 percent,      
respectively, of net sales for 1994; and 28 and 22 percent, respectively, of net
sales for 1995. No other customer accounted for more than 10 percent of net     
sales in any of the three years ended December 31, 1995.                        

 The Company's customers are primarily large independent distributors of
health food products. At December 31, 1994 and 1995, approximately 69 and 73    
percent, respectively, of accounts receivable related to two customers.         

16.  SUBSEQUENT EVENTS                                                          

  a. Acquisition Agreement and related transactions -- The shareholders of
the Companies entered into the Acquisition Agreement, which is dated as of March
5, 1996 and which was consummated on May 7, 1996, pursuant to which, among other
things, (i) TLC acquired all of the outstanding capital stock of Natur-Pharma,  
(ii) Green Equity Investors II L.P. ("GEI") acquired 480,000 shares (48%) of the
common stock of TLC for aggregate consideration of $4,800, and shares of        
non-voting junior redeemable preferred stock of TLC for aggregate consideration 
of $37,000, (iii) certain other investors acquired 70,000 shares (7%) of the    
common stock of TLC (however, each of these other investors own less than 5% of 
the common stock of TLC) for aggregate consideration of $700 and shares of      
non-voting senior redeemable preferred stock of TLC for aggregate consideration 
of $30,000, (iv) certain of the shareholders of the Companies (the "Continuing  
Shareholders") received from TLC, in exchange for certain of their shares of    
common stock of Natur-Pharma, 450,000 shares (45%) of the outstanding shares of 
common stock of TLC, valued at $4,500, and (v) the shareholders of the Companies
received a total of $212,500 in consideration of the balance of their shares of 
common stock of Natur-Pharma and for all of their shares of capital stock of    
Twin, Alvita, Export, Specialty, B. Bros., and ARP. Of the total cash           
consideration to the shareholders, approximately $15,300 represented            
consideration for non-competition agreements entered into by the shareholders of
the Companies, which was recognized as a non-recurring expense upon the         
consummation of the Acquisition Agreement.                                      

   Pursuant to the terms of the Acquisition Agreement, Twin, Alvita, Export,
Specialty, and B. Bros. were merged into Natur-Pharma. ARP was merged with      
Natur-Pharma II, Inc., a wholly owned subsidiary of Natur-Pharma, and           
Natur-Pharma became a wholly owned subsidiary of TLC. Natur-Pharma changed its  
name to Twin Laboratories Inc. ("New Twin"). TLC's initial board of directors   
consists of five of the Continuing Shareholders and three designees of GEI. A   
majority of TLC's shareholders have the ability to elect a majority of its      
directors. However, regardless of the composition of the board of directors,    
pursuant to the terms of the TLC shareholders agreement, a wide range of actions
to be taken by TLC require the affirmative approval of both a majority of the   
Continuing Shareholder directors and a majority of the GEI designee directors.  
These actions include, but are not limited to, payment of certain dividends,    
engagement in new businesses, acquisition of other businesses, entering certain 
contracts, incurring certain debt or obligations, making certain investments,   
relocation of executive offices, selection of location and date of the annual   

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shareholders meeting, termination or material modification of any employee      
benefit plan, selection of auditors or legal counsel, adoption or amendment of  
strategic plans or operating budgets, and election or termination of any        
executive officers. In addition, certain fundamental corporate actions,         
including but not limited to, amendments to the certificate of incorporation,   
the sale of substantially all of the assets of the Company, and the merger or   
combination of the Company with another entity additionally require an          
affirmative vote of holders of at least 80% of the issued and outstanding stock 
of TLC. Such voting rights are generally effective until such time as the common
stock of TLC is publicly held. Because the transactions contemplated by the     
Acquisition Agreement do not result in a change in control as defined in        
Emerging Issues Task Force Issue No. 88-16, "Basis in Leveraged Buyout          
Transactions" ("EITF 88-16"), the transactions were accounted for as a          
recapitalization under the guidance of EITF 88-16 and the Companies' historical 
basis of accounting were applied to the consolidated financial statements of    
TLC.                                                                            

  Upon consummation of the Acquisition Agreement, the Companies terminated
their S Corporation status. The mergers of Twin, Alvita, Export, Specialty and  
B. Bros. into Natur-Pharma were treated as taxable asset purchases for federal  
and state income tax purposes and as a recapitalization for financial accounting
purposes. For federal and state income tax purposes, the purchase price was     
allocated among the various corporations and their respective assets and        
liabilities based on the respective fair values as of the closing of the        
Acquisition Agreement. This resulted in different book and tax asset bases for  
the assets of these companies, which resulted in deferred tax assets of         
approximately $57,300.                                                          

 Cumulative dividends on the preferred stock accrue at a rate of 14% per
annum (in the case of the senior preferred stock) and 11.25% per annum (in the  
case of the junior preferred stock) and are payable quarterly, if declared by   
the board of directors. Such dividends are payable in additional shares of      
preferred stock (valued at the liquidation preference of $1,000 per share plus  
accrued and unpaid dividends) unless the board of directors, upon a majority    
vote of directors not affiliated with Leonard Green & Partners, L.P., determines
that any such dividends will be paid in cash.                                   

 The redemption price of the preferred stock, as well as the liquidation
preference, is $1,000 per share plus accrued and unpaid dividends. The preferred
stock may be redeemed, in whole or in part, by TLC at any time, except that (1) 
no partial redemption can be made by TLC unless all cumulative dividends have   
been paid on all shares, (2) TLC may not redeem shares of preferred stock at any
time when it is making, or is required to make, an offer to purchase preferred  
stock upon a change of control and (3) so long as any shares of senior preferred
stock are outstanding, no shares of junior preferred stock may be redeemed      
without the consent of the holders of a majority of the outstanding shares of   
senior preferred stock.                                                         

   The preferred stock is subject to mandatory redemption, at the redemption
price, including accrued and unpaid dividends, eleven years after the issuance  
thereof (in the case of the senior preferred stock) or twelve years after the   
issuance thereof (in the case of the junior preferred stock). In addition, upon 
a change in control TLC is required to offer to purchase the preferred stock at 
101 percent of the liquidation preference thereof, plus accrued and unpaid      
dividends.                                                                      

     New Twin obtained additional financing necessary to effect the transactions
contemplated by the Acquisition Agreement, repay certain existing indebtedness  
of the Company, and pay the fees and expenses incurred in connection with the   
Acquisition Agreement through the incurrence of debt which totalled $153,000.   
Such debt included: (1) borrowings of $53,000 under a term loan credit facility 
provided by certain banks, financial institutions and other entities, and (2)   
gross proceeds of $100,000 from the private placement of subordinated debt. A   
six-year $15,000 revolving credit facility was also obtained from the term loan 
lenders, to provide for working capital requirements.                           

 The term loan is payable in defined percentages over a six-year period.
Borrowings under the term loan and revolving credit facilities bear interest, at
the borrower's discretion, at either the Alternative Base Rate, as defined, plus
a margin of 1.25 percent, or at the Eurodollar Rate, as defined, plus a margin  
of 2.5 percent. Such                                                            

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margins are subject to reduction based upon the achievement of certain          
performance targets, as defined. New Twin also must pay a commitment fee of .5  
percent per annum (subject to reduction based on the achievement of certain     
performance targets, as defined) on the average daily unused portion of the     
revolving credit facility. These credit facilities are secured by all tangible  
and intangible assets of New Twin and are subject to certain restrictive        
covenants including, among other things, the maintenance of defined levels of   
earnings and certain debt coverage rates, as well as restrictions on additional 
indebtedness, dividends, investments and certain other significant transactions.

    The subordinated debt matures in ten years and bears interest at a rate of
10 1/4% per annum. The subordinated debt is callable after five years at a      
premium to par which will decline to par after eight years. During the first    
three years, New Twin has the option to redeem up to 35 percent of the          
subordinated debt with the proceeds of a public offering at a redemption price  
of 109 1/2%. Upon a change of control, as defined, New Twin is required to offer
to redeem the subordinated debt at 101 percent of the principal amount plus     
accrued and unpaid interest. Restrictive covenants on the subordinated debt     
include, among other things, limitations on additional indebtedness,            
investments, dividends and certain other significant transactions.              

    Borrowings of New Twin under the term loan and revolving credit facilities
and the subordinated debt restrict the payment of dividends and the making of   
loans, advances or other distributions to TLC, except in certain limited        
circumstances. All assets relating to New Twin and ARP are restricted as to the 
transfer thereof to TLC as loans, advances and other distributions.             

     The subordinated debt is jointly and severally guaranteed by TLC and ARP on
a full and unconditional unsecured senior subordinated basis. The assets,       
results of operations and shareholders' equity of New Twin comprise             
substantially all of the assets, results of operations and shareholders' equity 
of TLC on a consolidated basis. TLC has no separate operations and has no       
significant assets other than TLC's investment in New Twin and, through New     
Twin, in ARP. New Twin has no direct or indirect subsidiaries other than ARP;   
and neither New Twin nor ARP has any stockholder other than, respectively, TLC  
and New Twin. Accordingly, the Company has determined that separate financial   
statements of New Twin and ARP would not be material to investors and,          
therefore, are not included herein.                                             

After giving retroactive effect, in a manner similar to a pooling of  
interests, to the merger of the Companies pursuant to the Acquisition Agreement,
the condensed financial information of TLC on a stand-alone basis, is as follows
(because TLC had no cash prior to the consummation of the Acquisition Agreement,
no condensed statements of cash flows are presented):                           

CONDENSED BALANCE SHEETS                                                        

                                                                [Download Table]

                                                                 DECEMBER 31,     
                                                               -----------------  
                                                                1994      1995    
                                                               -------   -------  
                                                                                  
ASSETS                                                                            
Investment in subsidiaries.................................... $48,671   $55,405  
                                                               =======   =======  
SHAREHOLDERS' EQUITY                                                              
Common stock ($1.00 par value: 1,000,000 shares authorized;                       
  450,000 shares outstanding)................................. $   450   $   450  
Additional paid-in capital....................................      68        68  
Retained earnings.............................................  48,153    54,887  
                                                               -------   -------  
                                                               $48,671   $55,405  
                                                               =======   =======  

CONDENSED STATEMENTS OF INCOME                                                  

                                                        [Enlarge/Download Table]

                                                                 YEAR ENDED DECEMBER 31,  
                                                               ---------------------------
                                                                1993      1994      1995  
                                                               -------   -------   -------
                                                                                          
Equity interest in net income of subsidiaries................. $16,676   $21,693   $30,224
                                                               =======   =======   =======

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Summarized financial information of New Twin is as follows:           

                                                        [Enlarge/Download Table]

                                                                      SIX MONTHS      
                                      YEAR ENDED DECEMBER 31,       ENDED JUNE 30,    
                                   -----------------------------  ------------------- 
                                    1993       1994       1995      1995       1996   
                                   -------   --------   --------  --------   -------- 
                                                                                      
Current assets.................... $40,178   $ 48,716   $ 58,663  $ 51,402   $ 63,586 
Noncurrent assets.................  15,409     15,990     16,646    17,307     77,577 
Current liabilities...............  10,481     10,480     14,233    17,447     18,543 
Noncurrent liabilities............   4,563      5,555      5,671     5,359    149,094 
Shareholders' equity (deficit)....  40,543     48,671     55,405    45,903    (26,474)
Net sales.........................  99,897    117,342    148,735    69,820     81,837 
Gross profit......................  37,766     47,095     58,803    27,774     33,985 
Net income (loss).................  16,676     21,693     30,224    13,729       (663)

Summarized financial information of ARP is as follows:                

                                                        [Enlarge/Download Table]

                                                                        SIX MONTHS    
                                         YEAR ENDED DECEMBER 31,      ENDED JUNE 30,  
                                        --------------------------   -----------------
                                         1993     1994      1995       1995      1996 
                                        ------   ------   --------   --------   ------
                                                                                      
Current assets......................... $  763   $1,339   $  1,266   $  1,431   $1,563
Noncurrent assets......................    173      168        168        171      172
Current liabilities....................  1,051    1,155      1,211        955    1,292
Noncurrent liabilities.................     --       --         --         --       --
Total shareholders' equity (deficit)...   (116)     350        222        647      443
Net sales..............................  3,188    3,930      5,200      2,726    3,038
Gross profit...........................     68      711        259        456      467
Net income (loss)......................    (94)     466       (128)       297      276

The following unaudited pro forma results of operations assume the    
transactions contemplated by the Acquisition Agreement occurred as of January 1,
1995. The pro forma operations data has been prepared for comparative purposes  
only and does not purport to represent what the Company's actual results of     
operations would have been had the transactions contemplated by the Acquisition 
Agreement in fact occurred at January 1, 1995.                                  

                                                        [Enlarge/Download Table]

                                                          YEAR ENDED      SIX MONTHS ENDED
                                                       DECEMBER 31, 1995   JUNE 30, 1996  
                                                       -----------------  ----------------
                                                                                          
Net sales.............................................     $ 148,735          $ 81,837    
Interest expense......................................        15,684             7,851    
Net income............................................         9,418             6,692    

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TWINLAB CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

    b. Changes in authorized capital -- In August 1996, the Board of Directors
(the "Board") and the stockholders authorized an increase in the number of      
common shares authorized to 75,000,000 and an increase in the number of shares  
of preferred stock authorized to 2,000,000, which preferred stock may be issued 
by the Board on such terms and with such rights, preferences and designations as
the Board may determine, without further stockholder action.                    

    c. Stock incentive plan -- In July 1996, the Board and stockholders of the
Company approved and adopted the Twinlab Corporation 1996 Stock Incentive Plan  
(the "1996 Plan"). The 1996 Plan provides for the issuance of a total of up to  
400,000 authorized and unissued shares of common stock, treasury shares and/or  
shares acquired by the Company for purposes of the 1996 Plan. Awards under the  
1996 Plan may be made in the form of (i) incentive stock options, (ii)          
nonqualified stock options, (iii) stock appreciation rights, (iv) restricted    
stock and (v) performance shares. Options become exercisable over five years    
from the date of grant at the rate of 20% of the grant each year.               

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ALL TENDERED OLD NOTES, EXECUTED LETTERS OF TRANSMITTAL AND OTHER RELATED   
DOCUMENTS SHOULD BE DIRECTED TO THE EXCHANGE AGENT. QUESTIONS AND REQUESTS FOR  
ASSISTANCE AND REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS, THE LETTER OF  
TRANSMITTAL AND OTHER RELATED DOCUMENTS SHOULD BE ADDRESSED TO THE EXCHANGE     
AGENT AS FOLLOWS:                                                               
By Mail:
FLEET NATIONAL BANK 
777 MAIN STREET 
MSN CT/MO/0224
HARTFORD, CONNECTICUT 06115 
ATTENTION: CORPORATE TRUST OPERATIONS 

By Hand/Overnight Express:
FLEET NATIONAL BANK 
777 MAIN STREET 
MSN CT/MO/0224
HARTFORD, CONNECTICUT 06115 
ATTENTION: CORPORATE OPERATIONS 

Facsimile Transmission: 
(860) 986-7908

To confirm receipt: 
TEL. (860) 986-1271 

  (ORIGINALS OF ALL DOCUMENTS SUBMITTED BY FACSIMILE SHOULD BE SENT PROMPTLY
BY HAND, OVERNIGHT COURIER OR REGISTERED OR CERTIFIED MAIL)                     

   NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT  
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR        
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE        
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION 
OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED HEREBY, NOR   
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF 
THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS  
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE      
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY         
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS    
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.                           
------------------------------------------------------
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OFFER TO EXCHANGE ALL OUTSTANDING 10 1/4% 
SENIOR SUBORDINATED NOTES DUE 2006
($100,000,000 PRINCIPAL AMOUNT) FOR 10 1/4% 
SENIOR SUBORDINATED NOTES DUE 2006. 
TWIN
LABORATORIES
INC.
------------------------
PROSPECTUS
------------------------
September 24, 1996

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Dates Referenced Herein   and   Documents Incorporated by Reference

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		5/1/96		2		9
		4/10/96		20		56
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		3/5/96		9		115
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		12/31/95		6		118
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		12/31/94		38		115
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		12/31/93		22		115
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