Laboratory Corp of America Holdings – ‘DEFM14A’ on 3/30/95

As of:  Thursday, 3/30/95   ·   Accession #:  950130-95-600   ·   File #:  1-11353

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Definitive Proxy Solicitation Material — Merger or Acquisition   —   Schedule 14A
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Document/Exhibit                   Description                      Pages   Size 

 1: DEFM14A     Notice & Proxy Statement                             241   1.33M 

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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) 
OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant [X]                                                     

Filed by a party other than the registrant [_]                                  

Check the appropriate box:                                                      

[_] Preliminary proxy statement                                             

[X] Definitive proxy statement                                              

[_] Definitive additional materials                                         

[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12           

NATIONAL HEALTH LABORATORIES HOLDINGS INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NATIONAL HEALTH LABORATORIES HOLDINGS INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)

Payment of filing fee (Check the appropriate box):                              

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

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

[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.    
(1) Title of each class of securities to which transaction applies:     

(i) Common Stock, par value $0.01 per share, of the Registrant ("NHL    
   Common Stock") to be issued in connection with the transaction, and
       (ii) Common Stock, without par value, of Roche Biomedical Laboratories,
 Inc. ("RBL Common Stock") to be acquired by the Registrant in the
transaction.                                                    
(2) Aggregate number of securities to which transaction applies:        

(i) 61,341,742, being the number of shares of NHL Common Stock expected 
       to be issued to the stockholder of RBL in the transaction and (ii) 100,
      being the number of shares of RBL Common Stock expected to be acquired
in the transaction.                                             
(3) Per unit price or other underlying value of transaction computed    
pursuant to Exchange Act Rule 0-11:                             

   The filing fee of $162,229 is calculated in accordance with Rule 0-
      11(c)(1) under the Exchange Act as follows: one-50th of one percent of
      the sum of (A) the total net cash consideration expected to be paid to
holders of NHL Common Stock ($474,700,000) and stock options    
    ($5,747,469) in the transaction plus (B) the value of the NHL Common
       Stock to be issued to the holder of RBL Common Stock in the transaction
   ($330,700,000). The value of the NHL Common Stock was determined in
     accordance with Rule 0-11(a)(4) under the Exchange Act based upon the
     value of the RBL Common Stock to be acquired by the Registrant in the
 transaction. The value of the RBL Common Stock to be acquired was
        determined based upon the book value of the RBL Common Stock computed as
        of September 30, 1994, as adjusted to give effect to the RBL Stand-Alone
Adjustments described in the Proxy Statement.                   

(4) Proposed maximum aggregate value of transaction: $811,147,469.      

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

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

--------------------------------------------------------------------------
(3)Filing party:                                                            

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(4)Date filed:                                                              
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NATIONAL HEALTH LABORATORIES HOLDINGS INC.

                                                    March 31, 1995

Dear Stockholder:                                                               

You are cordially invited to attend a special meeting of the stockholders of
National Health Laboratories Holdings Inc. ("NHL") to be held at the Sheraton   
New York Hotel, 811 Seventh Avenue, New York, NY 10019, at 9:00 a.m., New York  
City Time, on April 28, 1995.                                                   

At the special meeting, you will be asked to consider and vote upon the     
approval and adoption of an Agreement and Plan of Merger (the "Merger           
Agreement") among NHL, HLR Holdings Inc. ("HLR"), Roche Biomedical              
Laboratories, Inc. ("RBL") and (for the purposes stated therein) Hoffmann-La    
Roche Inc. ("Roche") providing for, among other things, the merger of RBL with  
and into NHL. In the merger, subject to certain exceptions described in the     
enclosed Proxy Statement/Prospectus, each outstanding share of NHL common stock 
will be converted into (i) 0.72 of a share of NHL common stock and (ii) the     
right to receive $5.60 in cash, without interest. In addition, all shares of    
common stock, no par value, of RBL issued and outstanding immediately prior to  
the effective time of the merger (other than treasury shares, which will be     
canceled) will be converted into, and become, that number of newly issued       
shares of NHL common stock as would, in the aggregate and after giving effect   
to the merger and the NHL common stock owned by HLR, RBL and their subsidiaries 
immediately prior to the effective time of the merger, equal 49.9% of the total 
number of shares of NHL common stock outstanding immediately after the          
effective time of the merger (after giving effect to the issuance of NHL common 
stock in respect of the NHL employee stock options in connection with the       
merger as described in the Proxy Statement/Prospectus).                         

In connection with the merger, NHL currently intends to declare a dividend, 
payable to holders of record of shares of NHL common stock as of April 21,      
1995, consisting of 0.16308 of a warrant per outstanding share of NHL common    
stock. Each such warrant will represent the right to purchase one newly issued  
share of NHL common stock for $22.00 (subject to adjustments) on April 28,      
2000. In addition, the Merger Agreement provides for the purchase by Roche, for 
a purchase price of $51,048,900, of 8,325,000 warrants to purchase shares of    
NHL common stock, which warrants will have the terms described in the preceding 
sentence.                                                                       

The consummation of the proposed merger is subject to, among other things,  
the obtaining by NHL of financing for a portion of the cash consideration to be 
paid in the merger.                                                             

At the special meeting, you will also be asked to consider and vote upon a  
proposal to change the name of National Health Laboratories Holdings Inc. to    
Laboratory Corporation of America Holdings in connection with the merger.       

The Board of Directors of NHL believes that the merger is in the best       
interests of NHL and its stockholders and unanimously recommends that you vote  
FOR the approval and adoption of the Merger Agreement at the special meeting.   
The NHL Board also recommends that you vote FOR the proposed change of the name 
of the corporation to Laboratory Corporation of America Holdings. The enclosed  
Notice of Special Meeting of Stockholders and Proxy Statement/Prospectus        
explain in detail the proposed merger. Please carefully review and consider all 
of this information. In considering the recommendation of the NHL Board with    
respect to the merger, stockholders should be aware that certain directors and  
executive officers of NHL have interests in the merger which may be different   
from, or in addition to, the interest of NHL's stockholders, including rights   
under employment contracts, employee stock options and other interests. See     
"CERTAIN CONSIDERATIONS" and "THE MERGER--Interests of Certain Persons in the   
Merger" in the enclosed Proxy Statement/Prospectus.                             

It is especially important that your shares be represented and voted at the 
special meeting. Although you may currently plan to attend the special meeting, 
please complete, sign, date and promptly return the enclosed proxy card. If you 
attend the special meeting and vote in person, your vote will supersede your    
proxy.                                                                          

We have authorized NHL's proxy solicitor, D. F. King & Co., Inc., to answer 
questions and provide assistance for NHL stockholders. Please feel free to call 
D. F. King & Co., Inc. at 1-800-769-7666.                                       

              Sincerely,

                  James R. Maher
                       President and Chief
                     Executive Officer

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NATIONAL HEALTH LABORATORIES HOLDINGS INC.
4225 EXECUTIVE SQUARE, SUITE 805
LA JOLLA, CA 92037

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS 

A special meeting of the stockholders of National Health Laboratories       
Holdings Inc. ("NHL") will be held at the Sheraton New York Hotel, 811 Seventh  
Avenue, New York, NY 10019, at 9:00 a.m., New York City Time, on April 28,      
1995.                                                                           

The special meeting is being held for the purpose of considering and voting 
upon the approval and adoption of the Agreement and Plan of Merger dated as of  
December 13, 1994 (the "Merger Agreement"), among NHL, HLR Holdings Inc.        
("HLR"), Roche Biomedical Laboratories, Inc. ("RBL") and (for the purposes set  
forth therein) Hoffmann-La Roche Inc. ("Roche") providing for, among other      
things, the merger of RBL with and into NHL with NHL as the surviving           
corporation (the "Merger"), and pursuant to which, subject to certain           
exceptions described in the enclosed Proxy Statement/Prospectus, each           
outstanding share of common stock, par value $0.01 per share, of NHL ("NHL      
Common Stock"), will be converted into (i) 0.72 of a share of NHL Common Stock  
and (ii) the right to receive $5.60 in cash, without interest.                  

In addition, all shares of common stock, no par value, of RBL issued and    
outstanding immediately prior to the effective time of the Merger (other than   
treasury shares, which will be canceled) will be converted into, and become,    
that number of newly issued shares of NHL Common Stock as would, in the         
aggregate and after giving effect to the Merger and the NHL Common Stock owned  
by HLR, RBL and their subsidiaries immediately prior to the effective time of   
the Merger, equal 49.9% of the total number of shares of NHL Common Stock       
outstanding immediately after the effective time of the Merger (after giving    
effect to the issuance of NHL Common Stock in respect of the NHL employee stock 
options in connection with the Merger as described in the enclosed Proxy        
Statement/Prospectus).                                                          

In connection with the Merger, NHL currently intends to declare a dividend, 
payable to holders of record of shares of NHL Common Stock as of April 21,      
1995, consisting of 0.16308 of a warrant per outstanding share of NHL Common    
Stock, each such warrant (a "Warrant") representing the right to purchase one   
newly issued share of NHL Common Stock for $22.00 (subject to adjustments) on   
April 28, 2000. In addition, the Merger Agreement provides for the issuance to  
and purchase by Roche, for a purchase price of $51,048,900, of 8,325,000        
Warrants to purchase shares of NHL Common Stock, which Warrants will have the   
terms described in the preceding sentence.                                      

The special meeting is also being held for the purpose of considering and   
voting upon the amendment of the Certificate of Incorporation of National       
Health Laboratories Holdings Inc. to change the name of the corporation to      
Laboratory Corporation of America Holdings at the effective time of the Merger. 

 The close of business on March 10, 1995 has been fixed as the record date for
the determination of stockholders entitled to notice of, and to vote at, the    
special meeting and any adjournment thereof. Only holders of record of NHL      
Common Stock on the record date are entitled to notice of, and to vote at, the  
meeting.                                                                        

ALL STOCKHOLDERS WHO ARE ENTITLED TO VOTE, EVEN IF THEY NOW PLAN TO ATTEND  
THE SPECIAL MEETING, ARE REQUESTED TO EXECUTE THE ENCLOSED PROXY CARD AND       
RETURN IT WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. STOCKHOLDERS     
PRESENT AT THE SPECIAL MEETING MAY WITHDRAW THEIR PROXY AND VOTE PERSONALLY ON  
EACH MATTER BROUGHT BEFORE THE SPECIAL MEETING.                                 

                               By Order of the Board of Directors,

       Alvin Ezrin
     Secretary

March 31, 1995                                                                  

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND SIGN    
THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. IF YOU ATTEND   
THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON. PLEASE DO 
NOT SEND IN ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.                      

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NATIONAL HEALTH LABORATORIES HOLDINGS INC.

PROXY STATEMENT/PROSPECTUS

This Proxy Statement/Prospectus is being furnished to the stockholders of   
National Health Laboratories Holdings Inc. ("NHL") in connection with the       
solicitation of proxies by the Board of Directors of NHL for use at the special 
meeting of stockholders of NHL to be held at the Sheraton New York Hotel, 811   
Seventh Avenue, New York, NY 10019, at 9:00 a.m., New York City Time, on April  
28, 1995, including any adjournments or postponements of the meeting (the "NHL  
Meeting").                                                                      

At the NHL Meeting, the holders of common stock, par value $0.01 per share, 
of NHL ("NHL Common Stock") will consider and vote upon the approval and        
adoption of the Agreement and Plan of Merger dated as of December 13, 1994 (the 
"Merger Agreement"), among NHL, HLR Holdings Inc. ("HLR"), Roche Biomedical     
Laboratories, Inc. ("RBL") and (for the purposes specified therein) Hoffmann-La 
Roche Inc. ("Roche") providing for, among other things, the merger of RBL with  
and into NHL (the "Merger"). NHL will be the surviving corporation in the       
Merger (the "Surviving Corporation"). Pursuant to the Merger Agreement, each    
outstanding share of NHL Common Stock (other than shares of NHL Common Stock    
owned by RBL, HLR or any subsidiary of RBL or HLR and other than Dissenting     
Common Shares (as hereinafter defined)) will be converted, upon the             
effectiveness of the Merger (the "Effective Time"), into (i) 0.72 of a share of 
NHL Common Stock and (ii) the right to receive $5.60 in cash, without interest. 
In addition, all shares of common stock, no par value, of RBL issued and        
outstanding immediately prior to the Effective Time (other than treasury        
shares, which will be canceled) will be converted into, and become, that number 
of newly issued shares of NHL Common Stock as would, in the aggregate and after 
giving effect to the Merger and the NHL Common Stock owned by HLR, RBL and      
their subsidiaries immediately prior to the Effective Time, equal 49.9% of the  
total number of shares of NHL Common Stock outstanding immediately after the    
Effective Time (after giving effect to the issuance of NHL Common Stock in      
respect of the NHL employee stock options in connection with the Merger as      
described herein).                                                              

In connection with the Merger, NHL currently intends to declare a dividend  
(the "Warrant Distribution"), payable to holders of record of shares of NHL     
Common Stock as of April 21, 1995, consisting of 0.16308 of a warrant per       
outstanding share of NHL Common Stock, each such warrant (a "Warrant", and      
together with the Roche Warrants (as defined below), the "Warrants")            
representing the right to purchase one newly issued share of NHL Common Stock   
for $22.00 (subject to adjustments) on April 28, 2000. In addition, the Merger  
Agreement provides for the issuance to and purchase by Roche, for a purchase    
price of $51,048,900 (the "Roche Warrant Consideration") of 8,325,000 Warrants  
to purchase shares of NHL Common Stock (the "Roche Warrants"), which Roche      
Warrants will have the terms described in the preceding sentence.               

The aggregate cash consideration of $474,700,000 to be paid to stockholders 
of NHL in the Merger will be financed from three sources: a cash contribution   
by NHL of $288,000,000 (the "NHL Cash Contribution") out of the proceeds of     
borrowings by NHL in an equal amount, a cash contribution to be made by HLR in  
the amount of $135,651,100 (the "HLR Cash Contribution") and the Roche Warrant  
Consideration.                                                                  

At the NHL Meeting, the holders of NHL Common Stock will also consider and  
vote upon a proposal to amend the Certificate of Incorporation of NHL to change 
the name of the corporation to Laboratory Corporation of America Holdings at    
the Effective Time (the "Name Change Amendment").                               

The Merger is presently anticipated to be consummated on or about April 28, 
1995.                                                                           

This Proxy Statement/Prospectus also serves as a Prospectus of NHL under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the      
shares of NHL Common Stock issuable in connection with the Merger.              

This Proxy Statement/Prospectus and the accompanying proxy card are first   
being mailed to stockholders of NHL on or about March 31, 1995.                 

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

IN  CONSIDERING  WHETHER  TO  APPROVE AND  ADOPT  THE  MERGER  AGREEMENT, 
STOCKHOLDERS OF  NHL SHOULD  CAREFULLY  EVALUATE THE  MATTERS  SET
FORTH  UNDER  "CERTAIN  CONSIDERATIONS" AND  "THE  MERGER-- 
INTERESTS OF CERTAIN PERSONS IN THE MERGER".        

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

THE  SECURITIES  TO  BE ISSUED  IN  THE  MERGER  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 PROXY STATEMENT/PROSPECTUS. ANY  REPRESENTATION 
TO THE CONTRARY IS A CRIMINAL OFFENSE.                        

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

The date of this Proxy Statement/Prospectus is March 31, 1995.      

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NO PERSON IS AUTHORIZED BY NHL TO GIVE ANY INFORMATION OR TO MAKE ANY       
REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/ PROSPECTUS, 
IN CONNECTION WITH THE SOLICITATION AND THE OFFERING MADE BY THIS PROXY         
STATEMENT/PROSPECTUS. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE THE   
SOLICITATION OF A PROXY OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO   
PURCHASE, ANY SECURITIES IN ANY JURISDICTION IN WHICH SUCH SOLICITATION OR      
OFFERING MAY NOT LAWFULLY BE MADE.                                              

AVAILABLE INFORMATION 

NHL is subject to the informational requirements of the Securities Exchange 
Act of 1934, as amended (the "Exchange Act"). In accordance with the Exchange   
Act, NHL files proxy statements, reports and other information with the         
Securities and Exchange Commission (the "SEC"). This filed material can be      
inspected and copied at the public reference facilities maintained by the SEC   
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the        
following Regional Offices of the SEC: Midwest Regional Office (Suite 1400,     
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661) and          
Northeast Regional Office (7 World Trade Center, 13th Floor, New York, New York 
10048). Copies of such material can be obtained by mail from the Public         
Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549,   
at prescribed rates. In addition, the NHL Common Stock is listed on the New     
York Stock Exchange, Inc. (the "NYSE") and such material can be inspected at    
the offices of the NYSE, 20 Broad Street, New York, New York 10005.             

NHL has filed a Registration Statement on Forms S-4/S-3 (the "Registration  
Statement") with the SEC under the Securities Act with respect to the NHL       
Common Stock to be issued upon consummation of the Merger and with respect to   
the reoffering by National Health Care Group, Inc. ("NHCG"), a corporation      
indirectly wholly owned through Mafco Holdings Inc. by Ronald O. Perelman, of   
shares of NHL Common Stock to be received by NHCG in the Merger and the         
Warrants to be received by NHCG in the Warrant Distribution. This Proxy         
Statement/Prospectus does not contain all the information set forth in the      
Registration Statement and the exhibits thereto, certain portions of which have 
been omitted as permitted by the rules and regulations of the SEC. Copies of    
the Registration Statement are available from the SEC, upon payment of          
prescribed rates. For further information, reference is made to the             
Registration Statement and the exhibits filed therewith. Statements contained   
in this Proxy Statement/Prospectus or in any document incorporated by reference 
in this Proxy Statement/Prospectus relating to the contents of any contract or  
other document referred to herein or therein are not necessarily complete, and  
in each instance reference is made to the copy of such contract or other        
document filed as an exhibit to the Registration Statement or such other        
document, each such statement being qualified in all respects by such           
reference.                                                                      

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

The following documents are incorporated by reference in this Proxy         
Statement/Prospectus: (i) NHL's Annual Report on Form 10-K for the year ended   
December 31, 1994 (the "NHL 10-K"), (ii) the description of NHL Common Stock    
set forth in NHL's Registration Statements filed pursuant to Section 12 of the  
Exchange Act and (iii) the Quarterly Report on Form 10-Q for the quarterly      
period ended March 31, 1994 of Allied Clinical Laboratories, Inc. ("Allied").   

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A COPY OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (EXCLUDING EXHIBITS
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE        
INFORMATION INCORPORATED HEREIN) THAT ARE NOT PRESENTED HEREIN OR DELIVERED     
HEREWITH WILL BE PROVIDED BY FIRST-CLASS MAIL WITHOUT CHARGE TO EACH PERSON,    
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A PROXY STATEMENT/PROSPECTUS IS         
DELIVERED, UPON ORAL OR WRITTEN REQUEST OF ANY SUCH PERSON. REQUESTS SHOULD BE  
DIRECTED TO JAMES G. RICHMOND, EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL,    
NATIONAL HEALTH LABORATORIES HOLDINGS INC., 4225 EXECUTIVE SQUARE, SUITE 805,   
LA JOLLA, CA 92037 (TELEPHONE (619) 550-0600). IN ORDER TO ENSURE TIMELY        
DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE MEETING TO WHICH THIS PROXY         
STATEMENT/PROSPECTUS RELATES, ANY SUCH REQUEST SHOULD BE MADE BY APRIL 13,      
1995.                                                                           

All reports and definitive proxy or information statements filed by NHL     
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent  
to the date of this Proxy Statement/Prospectus and prior to the date of the NHL 
Meeting shall be deemed to be incorporated by reference into this Proxy         
Statement/Prospectus from the dates of filing of such documents. Any statement  
contained in a document incorporated or deemed to be incorporated in this Proxy 
Statement/Prospectus shall be deemed to be modified or superseded for purposes  
of this Proxy Statement/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 modifies or supersedes such statement.          

All information contained in this Proxy Statement/Prospectus relating to NHL
has been supplied by NHL, and all information relating to RBL (other than the   
information set forth under the caption "THE MERGER--Opinion of NHL's Financial 
Advisor") has been supplied by RBL.                                             

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                                            PAGE
                                                                            ----
                                                                                
AVAILABLE INFORMATION.....................................................    2 
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...........................    2 
SUMMARY...................................................................    5 
 The NHL Meeting..........................................................    5 
 Vote Required............................................................    5 
 The Merger...............................................................    5 
 The Stockholder Agreement................................................   13 
 Plan of Financing........................................................   14 
 Market Price Data........................................................   14 
 Selected Historical and Pro Forma Condensed Combined Consolidated              
  Financial Data..........................................................   15 
 Comparative per Share Data...............................................   20 
CERTAIN CONSIDERATIONS....................................................   21 
THE NHL MEETING...........................................................   26 
 General..................................................................   26 
 NHL Share Ownership......................................................   27 
THE CLINICAL LABORATORY TESTING                                                 
 INDUSTRY.................................................................   28 
 General...................................................................  28 
 Effect of the Growth of the Managed Care Sector on the Clinical                
  Laboratory Business......................................................  28 
 Competition...............................................................  29 
 Regulation and Reimbursement..............................................  30 
 OIG Investigations........................................................  33 
NHL.......................................................................   35 
RBL.......................................................................   36 
 General..................................................................   36 
 Laboratory Testing Operations and Services...............................   36 
 Types of Testing and Procedures..........................................   37 
 Clients and Payees.......................................................   38 
 Sales and Marketing......................................................   39 
 Quality Assurance........................................................   39 
 Raw Materials and Supplies...............................................   40 
 Employees................................................................   40 
 Properties...............................................................   40 
 Legal Proceedings and Insurance..........................................   41 
RBL MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND             
 RESULTS OF OPERATIONS....................................................   42 
 Results of Operations of RBL (dollars in millions).......................   42 
 Liquidity and Capital Resources (dollars in millions)....................   43 
THE MERGER................................................................   45 
 Background of the Merger.................................................   45 
 Recommendation of the NHL Board of Directors and NHL's Reasons for the         
  Merger..................................................................   49 
 Opinion of NHL's Financial Advisor.......................................   53 
 Reasons of RBL and HLR for the Merger....................................   59 
 Exchange Agent; Procedures for Exchange of Certificates; No Fractional         
  Shares..................................................................   59 
 Expenses.................................................................   60 
 Material Federal Income Tax Consequences.................................   60 
 Accounting Treatment.....................................................   61 
 Effect on NHL Employee Stock Options.....................................   61 
 Interests of Certain Persons in the Merger...............................   63 
 No Solicitation..........................................................   67 
 Right of the NHL Board of Directors to Withdraw Recommendation Upon            
  Receipt of a Superior Proposal..........................................   67 
 Certain Fees.............................................................   68 
PLAN OF FINANCING.........................................................   69 
 Description of Bank Facility.............................................   69 
THE MERGER AGREEMENT......................................................   74 
 The Merger...............................................................   74 
                                                                [Download Table]

                           PAGE
                           ----
                               
 The Surviving                 
  Corporation............   75 
 Representations and           
  Warranties.............   76 
 Covenants of NHL........   79 
 Covenants of HLR and          
  RBL....................   81 
 Covenants of NHL, HLR         
  and RBL................   82 
 Agreements of Roche.....   82 
 Tax Matters.............   83 
 Conditions to the             
  Merger.................   84 
 Amendments..............   86 
 Termination.............   86 
THE WARRANT AGREEMENT....   87 
 Issuance, Exercise and        
  Redemption.............   87 
 Anti-Dilution                 
  Provisions.............   90 
 Warrant Agent...........   91 
 Certain Miscellaneous         
  Provisions.............   92 
THE STOCKHOLDER                
 AGREEMENT...............   93 
 Corporate Governance....   93 
 Anti-Dilutive Rights....   96 
 Acquisitions and              
  Transfers of Equity          
  Securities.............   96 
 Registration Rights.....   97 
 Termination.............   99 
MANAGEMENT AND OPERATIONS      
 AFTER THE MERGER........   99 
 Directors and Executive       
  Officers of the              
  Surviving Corporation..   99 
 Operations After the          
  Merger.................  101 
 Restructuring Costs of        
  NHL....................  102 
 Liquidity and Capital         
  Resources After the          
  Merger.................  102 
MARKET PRICES AND              
 DIVIDENDS...............  104 
UNAUDITED PRO FORMA            
 CONDENSED COMBINED            
 CONSOLIDATED FINANCIAL        
 INFORMATION.............  105 
THE SHARING AND CALL           
 OPTION AGREEMENT........  111 
 Sharing Payments........  111 
 Sale and Voting of            
  Stockholder Shares           
  Prior to the Merger....  111 
 Call Rights.............  112 
 Covenants...............  112 
 Registration Rights.....  112 
 Amendments and                
  Termination............  112 
OTHER MATTERS............  113 
 Regulatory Approvals          
  Required...............  113 
NAME CHANGE AMENDMENT....  113 
APPRAISAL RIGHTS.........  113 
SOLICITATION OF PROXIES..  116 
STOCKHOLDER PROPOSALS....  116 
NHL STOCKHOLDER LIST.....  116 
EXPERTS..................  116 
LEGAL MATTERS............  116 
INDEX TO CONSOLIDATED          
 FINANCIAL STATEMENTS OF       
 RBL.....................  F-1 

ANNEXES                                                                         

                                                                [Download Table]
                                                               
ANNEX I   --Agreement and Plan of Merger                       
ANNEX II  --Form of Warrant Agreement                          
ANNEX III --Form of Stockholder Agreement                      
ANNEX IV  --Opinion of Morgan Stanley & Co. Incorporated       
ANNEX V   --Section 262 of the Delaware General Corporation Law

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SUMMARY 

 The following is a summary of certain information contained elsewhere in this
Proxy Statement/Prospectus and does not purport to be a full description of     
such information. Reference is made to, and this summary is qualified in its    
entirety by, the more detailed information contained elsewhere in this Proxy    
Statement/Prospectus, in the Annexes included herewith and in the documents     
incorporated herein by reference. Stockholders are urged to read carefully this 
Proxy Statement/Prospectus (including the information incorporated by reference 
herein) and the attached Annexes in their entirety.                             

THE NHL MEETING                                                                 

The NHL Meeting will be held at the Sheraton New York Hotel, 811 Seventh    
Avenue, New York, NY 10019, at 9:00 a.m., New York City Time, on April 28,      
1995. Only holders of record of NHL Common Stock at the close of business on    
March 10, 1995 (the "NHL Record Date") will be entitled to notice of, and to    
vote at, the NHL Meeting. At the NHL Meeting, holders of NHL Common Stock will  
be asked to consider and vote upon the approval and adoption of the Merger      
Agreement and the Name Change Amendment. Each properly completed proxy card     
returned in time for voting at the NHL Meeting will be voted in accordance with 
the instructions indicated on the proxy card, or, if no instructions are        
provided, will be voted FOR the approval and adoption of the Merger Agreement   
and the Name Change Amendment.                                                  

VOTE REQUIRED                                                                   

The affirmative vote of the holders of a majority of the outstanding shares 
of NHL Common Stock is required for the approval and adoption of the Merger     
Agreement and the Name Change Amendment. As of the NHL Record Date, there were  
84,766,109 shares of NHL Common Stock outstanding, of which approximately 26%   
were beneficially owned by directors and executive officers of NHL and their    
respective affiliates (including Ronald O. Perelman). Pursuant to a Sharing and 
Call Option Agreement dated as of December 13, 1994 among HLR, Mafco Holdings   
Inc., NHCG and (for the purposes set forth therein) NHL (the "Sharing and Call  
Option Agreement"), NHCG, a corporation indirectly wholly owned through Mafco   
Holdings Inc. by Mr. Perelman, has agreed to vote all shares of NHL Common      
Stock owned by it (which on the date hereof constitute approximately 24% of all 
outstanding shares of NHL Common Stock) in favor of the approval and adoption   
of the Merger Agreement. The directors and executive officers of NHL have       
advised NHL that they intend to vote the shares of NHL Common Stock as to which 
they have sole voting power FOR the approval and adoption of the Merger         
Agreement and the Name Change Amendment.                                        

THE MERGER                                                                      

The Parties. NHL. NHL is one of the leading clinical laboratory companies in
the United States. Through a national network of laboratories, NHL offers a     
broad range of testing services used by the medical profession in the           
diagnosis, monitoring and treatment of disease. Office-based physicians         
constitute approximately 90% of NHL's clients. The remainder is comprised       
primarily of clinics, nursing homes, hospitals and other clinical laboratories. 

Since its founding in 1971, NHL has grown into a network of 23 major        
laboratories, including a national reference laboratory which performs esoteric 
testing, and approximately 950 service sites consisting of sales ports, patient 
service centers and STAT laboratories (which provide immediate results on       
certain laboratory tests), serving customers in 45 states.                      

On June 23, 1994, NHL acquired Allied, the then sixth largest independent   
clinical laboratory testing company in the United States (measured by net       
revenues), as a wholly owned subsidiary for approximately $191.5 million in     
cash plus the assumption of $24.0 million of Allied indebtedness and the        
recognition of approximately $5.0 million of Allied net liabilities (the        
"Allied Acquisition").                                                          

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The principal executive offices of NHL are located at 4225 Executive Square,
Suite 805, La Jolla, California 92037, and its telephone number is (619) 550-   
0600.                                                                           

RBL. RBL is the fourth largest independent clinical laboratory in the United
States (in terms of revenues for the year ended December 31, 1994). RBL         
provides clinical laboratory testing services to hospitals, laboratories and    
physicians and offers a comprehensive line of over 1,600 tests and procedures,  
all of which are performed in RBL's facilities, with a majority performed in    
RBL's 17 major testing centers located primarily in the midwestern, eastern and 
southern United States. For the year ended December 31, 1994, RBL derived       
approximately 58% of its revenues from testing services provided to physicians, 
about 11% from services provided to hospitals and the remaining 31% from        
services provided to other clinical laboratories (and other clients).           

RBL has approximately 160 branch offices serving as hubs for RBL's          
professional service network (couriers, specimen pickup and result delivery)    
and which maintain daily logistical contact with clients who forward specimens  
to RBL for testing. RBL operates approximately 100 STAT laboratories. RBL has   
approximately 440 patient service centers ("PSCs") which perform specimen       
collection services for patients when specimens are not collected by the        
physicians in their own offices. Additionally, RBL has been developing business 
from nontraditional customers, such as industrial and corporate clients. Such   
customers have found a need for tests and procedures similar to certain of      
those offered by RBL to hospitals and physicians, such as employment-related    
testing for substance abuse and testing to determine exposure to toxic          
substances in the work place.                                                   

Originally known as HLR Lab Holdings, Inc. ("HLR Lab"), RBL was formed on   
March 23, 1982 by Roche and acquired the business of Biomedical Reference       
Laboratories, Inc. ("BRL") through a merger in June 1982. Following the merger, 
the surviving corporation changed its name to RBL in February 1983. The stock   
of RBL was subsequently transferred to HLR, a wholly owned subsidiary of Roche. 
Roche is a wholly owned indirect subsidiary of Roche Holding Ltd ("Roche        
Holding") which was incorporated in 1896 in Basel, Switzerland, under the name  
F. Hoffmann-La Roche and Co.                                                    

Roche Holding is the parent company of an international health care concern 
operating in more than 100 countries and employing approximately 60,000 people  
worldwide. Roche Holding, including through its subsidiaries (collectively, the 
"Roche Group"), engages primarily in the development and manufacture of         
pharmaceuticals, vitamins and fine chemicals, diagnostics, flavors and          
fragrances and in the business of analytical laboratory services. The Roche     
Group is one of the world's leading research-based health care groups active in 
the discovery, development, manufacture and marketing of pharmaceuticals and    
diagnostic systems. The Roche Group is also one of the world's largest          
producers of vitamins and carotenoids and of fragrances and flavors. The        
principal executive offices of Roche Holding are located in Basel, Switzerland. 

RBL's headquarters and principal executive offices are located at 358 South 
Main Street, Burlington, North Carolina 27215, and its telephone number is      
(800) 222-7566.                                                                 

Conversion of Shares. At the Effective Time, each outstanding share of NHL  
Common Stock (other than shares of NHL Common Stock owned by RBL, HLR or any    
subsidiary of RBL or HLR and other than Dissenting Common Shares) will be       
converted (the "NHL Share Conversion") into (i) 0.72 of a share of NHL Common   
Stock and (ii) the right to receive $5.60 in cash, without interest (the "Cash  
Consideration"; together with the NHL Common Stock received as described in     
clause (i), the "Conversion Consideration"). In addition, all shares of common  
stock, no par value, of RBL issued and outstanding immediately prior to the     
Effective Time (other than treasury shares, which will be canceled) will be     
converted into, and become, that number of newly issued shares of NHL Common    
Stock as would, in the aggregate and after giving effect to the Merger and the  
NHL Common Stock owned by HLR, RBL and their subsidiaries immediately prior to  
the Effective Time, equal 49.9% of the total number of shares of NHL Common     
Stock outstanding immediately after the Effective Time. No fractional shares of 
NHL Common Stock will be issued in the                                          

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Merger and holders of shares of NHL Common Stock will be entitled to a cash     
payment in lieu of any fractional shares that would otherwise be payable. The   
nature and amount of the Conversion Consideration, the terms of the Warrant     
Distribution and the amount of the NHL Cash Contribution, as well as the number 
of shares of NHL Common Stock to be issued to HLR, the amount of the HLR Cash   
Contribution and the amount of the Roche Warrant Consideration, were determined 
by negotiation between representatives of NHL and representatives of HLR, Roche 
and RBL. See "THE MERGER--Background of the Merger".                            

 HLR's Ability to Increase Its Ownership Interest. Pursuant to the Stockholder
Agreement to be entered into immediately prior to the Merger among NHL, HLR and 
Roche (the "Stockholder Agreement"), HLR and its affiliates (the "HLR Group")   
may not, subject to certain exceptions, increase its ownership of NHL Common    
Stock (the "HLR Group Interest") above 49.99% during the one-year period        
following the Effective Time. After the first anniversary of the Effective      
Time, the HLR Group will have the right to acquire equity securities of the     
Surviving Corporation to the extent that, after giving effect thereto, the HLR  
Group Interest would not exceed 75%. Moreover, the HLR Group may acquire        
additional equity securities notwithstanding the fact that, after giving effect 
thereto, the HLR Group Interest would exceed 75%, if HLR or any member of the   
HLR Group offers, prior to consummation of such purchase, to purchase all       
outstanding equity securities and holders of equity securities totalling more   
than 50% of the outstanding equity securities (excluding any securities held by 
the HLR Group) accept such offer. After the third anniversary of the Effective  
Time, the Stockholder Agreement does not restrict purchases by the HLR Group of 
equity securities of the Surviving Corporation. Certain provisions of the       
Stockholder Agreement described below, including provisions relating to the     
composition of the Board of Directors of the Surviving Corporation, would be    
suspended if the HLR Group Interest were to be increased to over 50%. See "THE  
STOCKHOLDER AGREEMENT".                                                         

Warrants. In connection with the Merger, NHL currently intends to make the  
Warrant Distribution, payable to holders of record of shares of NHL Common      
Stock as of April 21, 1995, consisting of 0.16308 of a Warrant per outstanding  
share of NHL Common Stock, each such Warrant representing the right to purchase 
one newly issued share of NHL Common Stock for $22.00 (subject to adjustments)  
on April 28, 2000 (subject to extension as provided in the Warrant Agreement    
(as defined below), the "Expiration Date"). In addition, the Merger Agreement   
provides for the issuance to and purchase by Roche of the Roche Warrants. The   
terms of the Warrants (including the Roche Warrants) will be set forth in a     
warrant agreement (the "Warrant Agreement") between NHL and American Stock      
Transfer & Trust Company, as warrant agent (the "Warrant Agent"). Pursuant to   
the Warrant Agreement, NHL will have the right, exercisable by notice at least  
60 but not more than 90 days prior to the Expiration Date, to redeem the        
Warrants on the Expiration Date for a cash redemption price per Warrant equal   
to the average closing price of the shares of NHL Common Stock over a specified 
period prior to the Expiration Date minus the exercise price of $22.00 per      
share (subject to adjustments). Fractional Warrants will not be issued to       
holders of shares of NHL Common Stock, and in lieu thereof, each holder of      
shares of NHL Common Stock who otherwise would be entitled to receive a         
fractional Warrant will be paid an amount in cash, without interest, equal to   
such holder's proportionate interest in the net proceeds from the sale or sales 
in the open market by the Warrant Agent, on behalf of all such holders, of the  
aggregate fractional Warrants, if any, that would have been issued in the       
Warrant Distribution.                                                           

 Effect on NHL Employee Stock Options. The Merger Agreement provides that each
employee stock option or right to acquire shares of NHL Common Stock under      
NHL's 1988 and 1994 Stock Option Plans ("NHL Employee Stock Options")           
outstanding on the date of the Merger Agreement will be deemed fully vested and 
NHL will use reasonable efforts, including with respect to obtaining consents,  
to cause each NHL Employee Stock Option to be canceled and terminated           
immediately prior to the Effective Time in exchange for an amount in cash and   
shares of NHL Common Stock (in the proportions set forth below) equal to the    
product of (i) the number of shares of NHL Common Stock subject to such NHL     
Employee Stock Option immediately prior to the Effective Time and (ii) the      
excess of (1) $18.50 over (2) the per share exercise price of such NHL Employee 
Stock Option (such product, the "Option Value Amount"). The Option Value        

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Amount will be payable at the Effective Time as follows: 40% of such amount     
will be payable in cash, and 60% of such amount (the "Option Stock Amount")     
will be payable in the number of shares of NHL Common Stock obtained by         
dividing the Option Stock Amount by $15.42; provided that any fractional share  
resulting from such calculation will be paid in cash, with the value of a whole 
share for such purpose assumed to be $15.42. All such amounts payable will be   
subject to any required withholding taxes and will be paid without interest.    

 The Merger Agreement provides that NHL Employee Stock Options with respect to
which the requisite consents are not obtained will not be canceled, but instead 
will be immediately converted as of the Effective Time into the right (an       
"Adjusted Option") to purchase the Option Conversion Number (as defined below)  
of shares of NHL Common Stock. Each Adjusted Option will have substantially the 
same terms as the NHL Employee Stock Option to which it is related, except      
that: (i) the Adjusted Option will be deemed fully vested and (ii) the exercise 
price of an Adjusted Option will be an amount equal to the exercise price of    
the NHL Employee Stock Option related to such Adjusted Option as of the date of 
the Merger Agreement divided by the Conversion Number (as defined below). The   
"Option Conversion Number" for any Adjusted Option will be equal to the number  
of shares of NHL Common Stock purchasable pursuant to the NHL Employee Stock    
Option related to such Adjusted Option as of the date of the Merger Agreement   
multiplied by the Conversion Number. The "Conversion Number" will be a number   
equal to (i) the sum of (x) the product of (A) the average closing price of a   
share of NHL Common Stock on the NYSE Composite Tape for the period of five     
consecutive trading days beginning on the trading day following the date on     
which the Effective Time occurs (the "Post Merger Value") and (B) 0.72 and (y)  
$6.60 divided by (ii) the Post Merger Value.                                    

See "THE MERGER--Effect on NHL Employee Stock Options" for examples         
illustrating the operation of the provisions described in the preceding two     
paragraphs.                                                                     

Recommendation of the NHL Board of Directors and NHL's Reasons for the      
Merger. THE BOARD OF DIRECTORS OF NHL, BY A UNANIMOUS VOTE OF THOSE DIRECTORS   
PRESENT AT THE DECEMBER 12, 1994 MEETING OF THE BOARD OF DIRECTORS, HAS         
APPROVED THE MERGER AGREEMENT. THE BOARD OF DIRECTORS OF NHL HAS DETERMINED     
THAT THE MERGER IS IN THE BEST INTERESTS OF NHL AND ITS STOCKHOLDERS AND        
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF NHL VOTE FOR THE APPROVAL AND   
ADOPTION OF THE MERGER AGREEMENT. The NHL Board of Directors believes that the  
Merger offers the potential for achieving significant cost savings, and the     
potential for achieving earnings growth, thereby furthering NHL's objective of  
achieving long-term value for its stockholders. In addition, the Merger offers  
stockholders of NHL the opportunity to receive a cash payment in respect of     
their shares while retaining a substantial continuing equity interest in the    
combined company and the consequent ability to realize a portion of the         
benefits arising from the synergies expected to result from the Merger. See     
"THE MERGER--Background of the Merger" and "Recommendation of the NHL Board of  
Directors and NHL's Reasons for the Merger" and "CERTAIN CONSIDERATIONS".       

 In reaching its decision to approve the Merger, the Board of Directors of NHL
also considered the costs of the transaction to NHL and its stockholders,       
including restructuring costs in the amount of approximately $84 million        
expected to be recorded by NHL at the time of the Merger described under        
"MANAGEMENT AND OPERATIONS AFTER THE MERGER--Restructuring Costs of NHL",       
transaction costs and expenses to be incurred in connection with the Merger in  
an amount that could not be determined at that time but that was estimated to   
be up to $20 million, the fact that HLR's ownership interest in the Surviving   
Corporation and its rights under the Stockholder Agreement described below will 
permit it to exercise significant influence on the governance of the Surviving  
Corporation and the fact that HLR's ownership interest may prevent the          
Surviving Corporation, without HLR's consent, from entering into a merger or    
other transaction that would result in stockholders receiving a premium for     
their shares. In evaluating the recommendation of the Board of Directors of     
NHL, and in considering whether to approve and adopt the Merger Agreement,      
stockholders of NHL should carefully evaluate the matters set forth under       
"CERTAIN CONSIDERATIONS" and "THE MERGER--Interests of Certain Persons in the   
Merger".                                                                        

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 In the event that the stockholders of NHL do not approve and adopt the Merger
Agreement at the NHL Meeting, NHL will continue to take actions which it        
believes will build shareholder value in NHL over both the short and long term. 

Reasons of RBL and HLR for the Merger. The Board of Directors of each of RBL
and HLR believe that the Merger is in the best interest of RBL and HLR because  
the operations and business of NHL are strategically complementary with those   
of RBL. The Boards believe the Merger will create a more diversified clinical   
laboratory capable of providing a broad range of high quality testing and       
related services on a nationwide basis. Additionally, the Boards of RBL and HLR 
regard the combination of NHL's strengths in marketing and client relations and 
RBL's growing specialized testing and other niche businesses, as well as RBL's  
experience in centralized management and information systems, as significant    
benefits for the combined entity. See "THE MERGER--Reasons of RBL and HLR for   
the Merger".                                                                    

Opinion of NHL's Financial Advisor. Morgan Stanley & Co. Incorporated       
("Morgan Stanley") has delivered its written opinion dated December 14, 1994 to 
the Board of Directors of NHL that, as of such date, the consideration, in the  
aggregate, to be received by stockholders of NHL pursuant to the Merger         
Agreement, when considered together with the Warrants currently intended to be  
distributed as a dividend in the Warrant Distribution, is fair to such          
stockholders from a financial point of view. For purposes of its opinion as to  
the fairness, from a financial point of view, to the holders of shares of NHL   
Common Stock of the Conversion Consideration received by such holders pursuant  
to the Merger Agreement together with the Warrants to be dividended to such     
holders in the Warrant Distribution, Morgan Stanley arrived at a range of       
values for NHL by utilizing three principal valuation methodologies: comparable 
company analysis, a precedent transaction analysis and discounted cash flow     
analysis, but it did not present to the NHL Board a range of values for NHL     
derived from the comparable company analysis or the precedent transaction       
analysis because the Allied Acquisition was not fully reflected in NHL's        
financial condition and results of operations, which rendered the values        
implied from such analyses not meaningful. The discounted cash flow analysis    
resulted in a range of values for NHL of between $8.88 and $13.17 per share. In 
addition to these valuation methodologies, and given that the structure of the  
clinical laboratory industry may allow for synergies to arise from business     
combinations, Morgan Stanley also considered the estimated after-tax value of   
the synergies expected to result from the proposed transaction in forming its   
opinion (which, when fully realized, are expected to amount to between $5.85    
and $7.92 per share of common stock of the Surviving Corporation). For purposes 
of its opinion, Morgan Stanley compared the range of stand-alone values it      
derived for NHL as described above to the value of the Conversion Consideration 
together with the value of the Warrants to be dividended to such holders in the 
Warrant Distribution (collectively, the "Transaction Value"). In order to       
determine the Transaction Value for purposes of its opinion, Morgan Stanley     
applied a range of multiples (ranging from 15x to 18x) to the Surviving         
Corporation's estimated 1995 earnings per share (which estimate gave effect to, 
among other things, the estimated combined net income of NHL and RBL, expected  
synergies, goodwill amortization and interest charges) to arrive at a range of  
projected market values for the shares of the Surviving Corporation. The        
Warrants are intended to have a value of approximately $1.00 per share to       
holders of NHL Common Stock prior to the Effective Time. However, the actual    
value of the Warrants will ultimately depend upon several market factors        
including, but not limited to, general market conditions and the Surviving      
Corporation's volatility and pro forma trading value, on which Morgan Stanley   
has not separately opined. The assumed value of the Warrants was determined     
based upon the following parameters, which were agreed upon by NHL, Roche and   
their respective financial advisors: an assumed volatility of approximately 43% 
for the Surviving Corporation, a five year maturity, an assumed pro forma       
trading value for the Surviving Corporation of approximately $16.00 and a       
strike price of $22.00. By adding $6.60 (the sum of the Cash Consideration per  
share and the estimated per share value of the Warrant) to NHL's pro rata share 
of such market values, Morgan Stanley arrived at a reference range of           
Transaction Values of between $16.65 and $18.66 per share. The full text of the 
opinion of Morgan Stanley, which sets forth the assumptions made, matters       
considered and limitations on the review undertaken by Morgan Stanley, is       
included as Annex IV to this Proxy Statement/Prospectus. NHL stockholders are   
urged to read the opinion                                                       

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in its entirety. See also "THE MERGER--Opinion of NHL's Financial Advisor" for  
a description of the analyses Morgan Stanley utilized in arriving at its        
opinion.                                                                        

Interests of Certain Persons in the Merger. In addition to (i) shares of NHL
Common Stock held by directors and executive officers of NHL, for which they    
will receive the same consideration as other NHL stockholders, (ii) options to  
acquire shares of NHL Common Stock, which will be treated as described above    
under "Effect on NHL Employee Stock Options" and (iii) the special bonus        
payable to James R. Maher, the current President and Chief Executive Officer of 
NHL, described under "THE MERGER--Interests of Certain Persons in the Merger",  
certain executive officers of NHL are parties to employment agreements with NHL 
pursuant to which such persons may terminate their employment for "good reason" 
(which is defined generally in the employment agreements to include an          
assignment of duties that is materially inconsistent with the status of such    
persons as executive officers, an adverse alteration in the nature of the       
responsibilities of such person, a reduction in salary or guaranteed bonus, or  
a material breach of such employment agreements by NHL--certain of which        
circumstances may occur as a result of the contemplated consolidation of        
certain NHL and RBL operations following the Merger), whereupon significant     
payments and other benefits may be required to be provided to such persons.     

The Merger Agreement provides that the certificate of incorporation and by- 
laws of the Surviving Corporation will contain the provisions with respect to   
indemnification set forth in NHL's certificate of incorporation and by-laws on  
the date of the Merger Agreement, which provisions may not be amended, repealed 
or otherwise modified for a period of six years from the Effective Time in any  
manner that would adversely affect the rights of individuals who on or prior to 
the Effective Time were directors, officers, employees or agents of NHL or RBL  
(unless such modification is required by law). In addition, the Merger          
Agreement requires the Surviving Corporation to indemnify the present and       
former officers and directors of NHL and RBL in respect of acts or omissions    
occurring prior to the Effective Time to the maximum extent provided under its  
certificate of incorporation and by-laws (except that, subject to certain       
exceptions, such indemnification will be mandatory rather than permissive). The 
Merger Agreement also provides that, subject to certain exceptions, the         
Surviving Corporation will maintain NHL's and RBL's current directors' and      
officers' insurance policies for a period of six years after the Effective      
Time. See "THE MERGER--Interests of Certain Persons in the Merger".             

See "THE SHARING AND CALL OPTION AGREEMENT" for a description of certain    
registration rights granted to NHCG with respect to shares of NHL Common Stock  
to be received in the Merger.                                                   

Regulatory Approvals. NHL and RBL each filed notification and report forms  
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the 
"HSR Act") on January 3, 1995 with respect to the Merger. The waiting period    
under the HSR Act expired on February 2, 1995. On February 6, 1995, NHL and RBL 
filed a joint letter informing the Committee on Foreign Investment in the       
United States ("CFIUS") of the Merger under the Section 721 of Title VII of the 
Defense Production Act of 1950 as amended (the "Exon-Florio Amendment"). CFIUS  
determined on March 8, 1995 that the Merger raises no issues of national        
security sufficient to warrant an investigation under the Exon-Florio Amendment 
and that action under the Exon-Florio Amendment had been concluded with respect 
to the Merger. See OTHER MATTERS--Regulatory Approvals Required".               

Conditions to the Merger. The consummation of the Merger is subject to      
certain conditions, including the approval of the holders of a majority of the  
outstanding shares of NHL Common Stock and the obtaining by NHL of sufficient   
financing to effect the refinancing of NHL's existing indebtedness and to       
finance the NHL Borrowings (as defined below).                                  

No Solicitation. The Merger Agreement provides that NHL may not, nor may it 
permit any of its subsidiaries to, nor may it authorize or permit any officer,  
director or employee of, or any investment banker, attorney or other adviser or 
representative of, NHL or any of its subsidiaries to, directly or indirectly    
(i)                                                                             

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solicit, initiate or encourage the submission of any Acquisition Proposal (as   
defined below) or (ii) participate in any discussions or negotiations           
regarding, or furnish to any person any information with respect to, or take    
any other action to facilitate any inquiries or the making of any proposal that 
constitutes, or may reasonably be expected to lead to, any Acquisition          
Proposal. However, to the extent required by the fiduciary obligations of the   
Board of Directors of NHL, as determined in good faith by the Board of          
Directors based on the advice of outside counsel, NHL may, (i) in response to   
an unsolicited request therefor, furnish information with respect to NHL to any 
person pursuant to a customary confidentiality agreement (as determined by      
NHL's outside counsel) and discuss such information (but not the terms of any   
possible Acquisition Proposal) and the terms of this provision of the Merger    
Agreement with such person and (ii) upon receipt by NHL of an Acquisition       
Proposal, following delivery of a notice to HLR in accordance with the Merger   
Agreement, participate in negotiations regarding such Acquisition Proposal. As  
used in the Merger Agreement, an "Acquisition Proposal" means any proposal with 
respect to a merger or other business combination involving NHL or any of its   
subsidiaries or any proposal or offer to acquire in any manner, directly or     
indirectly, an equity interest in securities representing not less than 20% of  
the outstanding voting securities of, or assets representing not less than 10%  
of the annual revenues of, NHL or any of its subsidiaries, other than the       
transactions contemplated in the Merger Agreement or the Sharing and Call       
Option Agreement.                                                               

Right of the NHL Board of Directors to Withdraw Recommendation Upon Receipt 
of a Superior Proposal. Under the Merger Agreement, neither the Board of        
Directors of NHL nor any committee thereof may (i) withdraw or modify, or       
propose to withdraw or modify, in a manner adverse to RBL or HLR, its approval  
or recommendation of the Merger Agreement or the Merger (or the other           
transactions contemplated thereby), (ii) approve or recommend, or propose to    
approve or recommend, any Acquisition Proposal or (iii) enter into any          
agreement with respect to any Acquisition Proposal. However, if the Board of    
Directors of NHL receives an Acquisition Proposal that, in the exercise of its  
fiduciary obligations (as determined in good faith by the Board of Directors    
after reviewing the advice of outside counsel) it determines to be a Superior   
Proposal (as defined below) the Board of Directors of NHL may withdraw or       
modify its approval or recommendation of the Merger Agreement or the Merger,    
approve or recommend such Superior Proposal, enter into an agreement with       
respect to such Superior Proposal or terminate the Merger Agreement, in each    
case at any time after the second business day following HLR's receipt of       
written notice of such Superior Proposal. As used in the Merger Agreement, a    
"Superior Proposal" means any bona fide Acquisition Proposal on terms which the 
Board of Directors of NHL determines in its good faith reasonable judgment      
(after reviewing the advice of a financial advisor of nationally recognized     
reputation) to be more favorable to NHL's stockholders than the Merger and the  
other transactions contemplated by the Merger Agreement.                        

The Merger Agreement requires NHL to pay to HLR, in immediately available   
funds, $30.0 million, plus up to an additional $7.0 million as reimbursement of 
Expenses, promptly after the termination of the Merger Agreement (i) by NHL (in 
accordance with the provision described in the preceding paragraph) or by HLR   
(if the NHL Board of Directors has withdrawn its recommendation of the Merger   
or the Merger Agreement (or the transactions contemplated thereby), if, in      
either case, any person or "group" (as defined in Section 13(d)(iii) of the     
Exchange Act) (other than HLR or an affiliate of HLR) has made an Acquisition   
Proposal or become the "beneficial owner" (as defined in Rule 13d-3 under the   
Exchange Act) of at least 20% of the outstanding shares of NHL Common Stock or  
(ii) by HLR (if the NHL Board of Directors has recommended or approved any      
Acquisition Proposal other than an Acquisition Proposal made by HLR or a        
controlled affiliate of HLR). As used in the Merger Agreement, "Expenses" means 
all documented expenses actually incurred by HLR and RBL in connection with the 
Merger Agreement and the transactions contemplated thereby.                     

Termination. The Merger Agreement may be terminated at any time prior to the
Effective Time (i) by the mutual written consent of NHL and HLR; (ii) by either 
NHL or HLR, if the Merger has not been consummated by September 1, 1995;        
(iii)(a) by either NHL or HLR, if any law or regulation exists that makes       

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consummation of the Merger illegal or otherwise prohibited or if there is any   
judgment, injunction, order or decree (other than a temporary restraining order 
or a preliminary injunction) that enjoins consummation of the Merger, (b) by    
NHL, if any such law or regulation or any judgment, injunction, order or decree 
exists, that, if applicable, would in NHL's reasonable judgment constitute an   
NHL Adverse Condition (as defined under "THE MERGER AGREEMENT--Conditions to    
the Merger") or (c) by HLR, if any such law or regulation or any judgment,      
injunction, order or decree exists, that, if applicable, would in HLR's         
reasonable judgment constitute an HLR Adverse Condition (as defined under "THE  
MERGER AGREEMENT--Conditions to the Merger"); (iv) by NHL in accordance with    
the provision of the Merger Agreement described under "Right of the NHL Board   
of Directors to Withdraw Recommendation Upon Receipt of a Superior Proposal"    
above; (v) by either NHL or HLR, if the stockholders of NHL fail to approve and 
adopt the Merger Agreement at the NHL Meeting; (vi) by HLR, if it is not in     
material breach of its obligations under the Merger Agreement, if the Board of  
Directors of NHL (a) withdraws its recommendation of the Merger or the Merger   
Agreement (or the transactions contemplated thereby) or (b) recommends or       
approves any Acquisition Proposal (other than an Acquisition Proposal made by   
HLR or a controlled affiliate of HLR); or (vii) by NHL or HLR, if NHL or RBL or 
HLR, as the case may be, receives any communication from the Department of      
Justice or the Federal Trade Commission (each, an "HSR Authority") that causes  
such party to reasonably believe that any HSR Authority has authorized the      
institution, under United States antitrust laws, of litigation seeking an       
order, decree or injunction that, if entered, would (in the reasonable judgment 
of the party invoking the provision), be reasonably likely to constitute an NHL 
Adverse Condition, if NHL is the invoking party, or an HLR Adverse Condition,   
if HLR is the invoking party.                                                   

Appraisal Rights. Subject to compliance with the procedures set forth in    
Section 262 of the Delaware General Corporation Law (the "Delaware Corporation  
Law"), the full text of which is included as Annex V to this Proxy              
Statement/Prospectus, holders of NHL Common Stock are entitled to appraisal     
rights in connection with the Merger. Any demand for appraisal must be made     
prior to the vote on the Merger Agreement at the NHL Meeting. Holders of NHL    
Common Stock who, prior to the stockholder vote on the Merger Agreement, demand 
appraisal of their shares in accordance with the Delaware Corporation Law and   
who do not vote (nor grant a proxy to vote) in favor of the approval and        
adoption of the Merger Agreement (such shares being referred to herein as       
"Dissenting Common Shares") will have the right to obtain a cash payment for    
the "fair value" of their shares (excluding any element of value arising from   
the accomplishment or expectation of the Merger). Such "fair value" would be    
determined in judicial proceedings, the result of which cannot be predicted.    
Failure to take any of the steps required under Section 262 of the Delaware     
Corporation Law on a timely basis may result in the loss of appraisal rights.   
Holders of NHL Common Stock considering seeking appraisal should be aware that  
the fair value of their shares of NHL Common Stock as determined under Section  
262 could be more than, the same as or less than the value of the Conversion    
Consideration that they would otherwise receive if they did not seek appraisal  
of their shares of NHL Common Stock. Holders of NHL Common Stock who demand     
appraisal rights will continue to be entitled to receive their pro rata share   
of the Warrant Distribution.                                                    

Because a proxy card that does not contain voting instructions will, unless 
revoked, be voted for approval and adoption of the Merger Agreement, a          
stockholder who wishes to exercise his appraisal rights must either refrain     
from signing and returning his proxy card or, if he signs and returns his proxy 
card, vote against or abstain from voting on the approval and adoption of the   
Merger Agreement.                                                               

 Certain Federal Income Tax Consequences. The Warrant Distribution will not be
a taxable event. The NHL Share Conversion is intended to constitute a           
redemption within the meaning of Section 317(b) of the Internal Revenue Code of 
1986, as amended (the "Code"). It is expected that holders of NHL Common Stock  
will recognize gain or loss equal to the difference between the amount of cash  
they receive in respect of the shares being redeemed and the tax basis          
allocated to such shares. A holder's tax basis attributable to the shares being 
redeemed will be the product of (i) the holder's aggregate tax basis in NHL     
Common Stock (which will be reduced by the amount of tax basis, if any,         
allocated to the Warrants) and (ii) the percentage                              

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of the holder's NHL Common Stock that is being redeemed (i.e., 28% with an      
adjustment for fractional shares). Any such gain or loss will constitute        
capital gain or loss if their NHL Common Stock is held as a capital asset at    
the Effective Time. Except as described above, holders of NHL Common Stock will 
not have any tax consequences resulting from the Merger.                        

Accounting Treatment. The Merger will be accounted for by the Surviving     
Corporation under the purchase method of accounting in accordance with          
Accounting Principles Board Opinion No. 16 "Business Combinations" ("APB No.    
16"). Under this method of accounting, the purchase price will be allocated to  
assets acquired and liabilities assumed based on their estimated fair values at 
the Effective Time.                                                             

Certain Considerations. In considering whether to approve and adopt the     
Merger Agreement, stockholders of NHL should carefully evaluate the matters set 
forth under "CERTAIN CONSIDERATIONS".                                           

Effective Time. The Effective Time of the Merger will occur at such time as 
certificates of merger to be executed by NHL and RBL in connection with the     
Merger (collectively, the "Certificate of Merger") are filed with the Secretary 
of State of the State of Delaware and the Secretary of State of the State of    
New Jersey or at such later time as is specified in the Certificate of Merger.  
The Certificate of Merger will be filed as soon as practicable following the    
approval and adoption of the Merger Agreement by the stockholders of NHL and    
the satisfaction or waiver of the other conditions to the Merger specified in   
the Merger Agreement.                                                           

THE STOCKHOLDER AGREEMENT                                                       

NHL, HLR and Roche have agreed that, immediately prior to the Merger, they  
will enter into the Stockholder Agreement setting forth, among other things,    
certain agreements and understandings regarding the governance of the Surviving 
Corporation following the Merger, including the composition of the Board of     
Directors. Pursuant to the Stockholder Agreement (subject to the exceptions     
provided therein), immediately after the Effective Time and for a period of one 
year thereafter (the "Initial Period"), the Board of Directors of the Surviving 
Corporation will be comprised of seven members, consisting of James R. Maher    
(the current President and Chief Executive Officer of NHL), three designees of  
HLR (the "HLR Directors"), who will be Jean-Luc Belingard (the Director         
General, Diagnostics Division and Executive Committee Member of F. Hoffmann-La  
Roche Ltd), Thomas P. Mac Mahon (a Senior Vice President of Roche and the       
President of Roche Diagnostics Group) and Dr. James B. Powell (the President of 
RBL) and three independent directors (which the Stockholder Agreement defines   
generally as persons who are not officers, employees or affiliates of the       
Surviving Corporation or HLR). The persons who will serve as the independent    
directors for the Initial Period are required to be mutually acceptable to a    
majority of the members of NHL's Board of Directors in office immediately prior 
to the Effective Time and to HLR. Following the Initial Period, the Board of    
Directors of the Surviving Corporation will (subject to specified exceptions)   
be comprised of seven members, consisting of three HLR Directors and four       
independent directors nominated by the Nominating Committee of the Board of     
Directors as described under "THE STOCKHOLDER AGREEMENT". The Nominating        
Committee will consist of one HLR Director and two independent directors and    
will act by majority vote of the entire committee.                              

The Stockholder Agreement provides that Mr. Maher will serve as Chairman of 
the Board and Mr. Mac Mahon will serve as Vice Chairman of the Board of the     
Surviving Corporation for the Initial Period. Following the Initial Period, Mr. 
Maher will resign his board and committee positions, Mr. Mac Mahon will become  
Chairman of the Board and the position of Vice Chairman will be eliminated.     

The Stockholder Agreement also provides that, among other things, certain   
actions by the Surviving Corporation will require approval by a majority of the 
entire Board of Directors of the Surviving Corporation, which majority must     
include at least a majority of the HLR Directors and at least one independent   
director (a "Special Majority").                                                

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The Stockholder Agreement prohibits, subject to certain exceptions, the     
Surviving Corporation from issuing, selling or transferring any of its Equity   
Securities (as defined under "THE STOCKHOLDER AGREEMENT--Anti-Dilutive Rights") 
to any person unless HLR is offered the right to purchase, on the same terms,   
the amount of such Equity Securities as is necessary for the HLR Group to       
maintain the same percentage ownership interest it held in the Surviving        
Corporation immediately prior to such issuance. The Stockholder Agreement       
provides that, during the one year period following the Effective Time, HLR     
will not, and will use its best efforts to cause each member of the HLR Group   
not to (except, in either case, under the circumstances described under "THE    
STOCKHOLDER AGREEMENT-- Acquisitions and Transfers of Equity Securities"),      
directly or indirectly, purchase or otherwise acquire any Equity Securities if, 
after giving effect thereto, the HLR Group Interest would exceed 49.99%. After  
the first anniversary of the Effective Time, the HLR Group will have the right  
to acquire Equity Securities to the extent that, after giving effect thereto,   
the HLR Group Interest would not exceed 75%. Moreover, the HLR Group may        
acquire additional Equity Securities notwithstanding the fact that, after       
giving effect thereto, the HLR Group Interest would exceed 75%, if HLR or any   
member of the HLR Group offers, prior to consummation of such purchase, to      
purchase all outstanding Equity Securities and holders of Equity Securities     
totalling more than 50% of the outstanding Equity Securities (excluding any     
securities held by the HLR Group) accept such offer. After the third            
anniversary of the Effective Time, the Stockholder Agreement does not restrict  
purchases by the HLR Group of Equity Securities. Certain provisions of the      
Stockholder Agreement described below, including provisions relating to the     
composition of the Board of Directors of the Surviving Corporation, would be    
suspended if the HLR Group Interest were to be increased to over 50%. See "THE  
STOCKHOLDER AGREEMENT--Acquisitions and Transfers of Equity Securities" for a   
description of certain other provisions relating to acquisitions and transfers  
of Equity Securities by HLR or members of the HLR Group. The Stockholder        
Agreement also provides HLR with certain demand and "piggyback" registration    
rights with respect to certain Equity Securities that will be held by HLR and   
the Roche Warrants that will be held by Roche, in each case after the Merger.   

PLAN OF FINANCING                                                               

It is estimated that the total funds required to pay the aggregate Cash     
Consideration to be paid to stockholders of NHL in the Merger will be           
approximately $474,700,000. This amount will be financed from three sources:    
(i) the NHL Cash Contribution in the amount of $288,000,000 out of the proceeds 
of borrowings by NHL in an equal amount, (ii) the HLR Cash Contribution in the  
amount of $135,651,100 and (iii) the proceeds of the Roche Warrant              
Consideration in the amount of $51,048,900. NHL has received and accepted a     
commitment from Credit Suisse (the "Credit Suisse Commitment Letter") for a     
credit facility to refinance NHL's existing indebtedness, to finance the NHL    
Cash Contribution and for certain other purposes (the "NHL Borrowings"). NHL    
and Credit Suisse are currently negotiating the terms of the definitive         
documentation for such credit facility. HLR and RBL have agreed to use their    
good faith best efforts to assist NHL in NHL's effecting of the refinancing of  
NHL's existing indebtedness and obtaining the NHL Borrowings. See "PLAN OF      
FINANCING".                                                                     

MARKET PRICE DATA                                                               

NHL Common Stock (symbol: NH) is listed for trading on the NYSE. The last   
reported sales prices per share of NHL Common Stock on the NYSE Composite       
Transactions Tape on December 13, 1994, the last trading day before             
announcement of the Merger Agreement, was $12.00, and the last reported sales   
price per share of NHL Common Stock on the NYSE Composite Transactions Tape on  
March 29, 1995, the latest trading day for which information was practicably    
available before the printing of this Proxy Statement/Prospectus, was $14 5/8.  
RBL has no publicly traded securities.                                          

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SELECTED HISTORICAL AND PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL     
DATA                                                                            

The following tables present selected historical consolidated financial data
for each of NHL and RBL and selected pro forma condensed combined consolidated  
financial data for NHL. The selected historical consolidated financial data for 
NHL for, and as of the end of, each of the years in the five-year period ended  
December 31, 1994 are derived from the historical consolidated financial        
statements of NHL and its subsidiaries, which consolidated financial statements 
have been audited by KPMG Peat Marwick LLP, independent certified public        
accountants. The consolidated financial statements of NHL as of December 31,    
1994 and 1993, and for each of the years in the three-year period ended         
December 31, 1994, and the report thereon, are incorporated by reference in     
this Proxy Statement/Prospectus. The selected historical consolidated financial 
data for RBL as of and for the years ended December 31, 1992, 1993 and 1994 are 
derived from the historical consolidated financial statements of RBL that are   
included in this Proxy Statement/Prospectus. The selected historical            
consolidated financial data for RBL as of and for each of the years ended       
December 31, 1990 and 1991 are derived from the historical consolidated         
financial statements of RBL as of such dates and for such periods. The          
financial statements of RBL and the selected historical consolidated financial  
data for RBL that are included in this Proxy Statement/Prospectus do not        
include the Roche Image Analysis Systems division of RBL ("RIAS"), the          
ownership of which is expected to be transferred by RBL to an affiliate prior   
to the Effective Time. The selected pro forma condensed combined consolidated   
financial data are derived from the unaudited pro forma condensed combined      
consolidated financial statements of NHL, Allied and RBL that are included in   
this Proxy Statement/Prospectus. The information set forth below should be read 
in conjunction with such historical and pro forma financial statements and the  
notes thereto and the historical consolidated financial statements of Allied as 
of March 31, 1994 and for the three months then ended contained in Allied's     
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1994.    
The historical consolidated financial statements of NHL have been audited by    
KPMG Peat Marwick LLP, independent certified public accountants, for each of    
the five years in the period ended December 31, 1994. The historical            
consolidated financial statements of RBL have been audited by Price Waterhouse  
LLP, independent certified public accountants, for each of the five years in    
the period ended December 31, 1994.                                             

RBL is currently a wholly owned subsidiary of HLR and an indirect wholly    
owned subsidiary of Roche. The selected pro forma condensed combined            
consolidated financial data reflect adjustments to RBL's financial position and 
results of operations as if it had been a stand-alone entity, rather than a     
subsidiary of HLR. The adjustments primarily consist of eliminating certain     
intercompany charges for services that RBL would no longer require from the     
Roche Group (net of the costs that RBL would have incurred to obtain such       
services if it had been a stand-alone entity), eliminating certain debt which   
will be eliminated as a liability of RBL at or prior to the Merger and          
eliminating intercompany accounts, other than current trade payables (the "RBL  
Stand-Alone Adjustments"). The selected pro forma condensed combined            
consolidated earnings data for the year ended December 31, 1994 reflect the     
consolidated operating results for NHL as if the Allied Acquisition, the RBL    
Stand-Alone Adjustments and the Merger had all occurred as of the beginning of  
the applicable period. The selected pro forma condensed combined consolidated   
balance sheet data give effect to the Allied Acquisition, the RBL Stand-Alone   
Adjustments and the Merger as if they had all occurred on December 31, 1994.    
THE PRO FORMA FINANCIAL DATA ARE PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND   
ARE NOT NECESSARILY INDICATIVE OF THE RESULTS OF OPERATIONS OR FINANCIAL        
CONDITION THAT WOULD HAVE BEEN ACHIEVED HAD THE TRANSACTIONS SET FORTH ABOVE    
ACTUALLY OCCURRED AS OF THE DATES INDICATED OR OF THE FUTURE RESULTS OF         
OPERATIONS OR FINANCIAL CONDITION OF THE SURVIVING CORPORATION. The Merger will 
be accounted for by the Surviving Corporation under the purchase method of      
accounting. The pro forma condensed combined consolidated balance sheet data as 
of December 31, 1994 reflects the effect of a restructuring charge of           
approximately $84 million expected to be recorded by the Surviving Corporation  
at the Effective Time in connection with the Merger. The pro forma condensed    
combined consolidated earnings data does not reflect the effect of this         
restructuring charge as it is not expected to have a continuing effect on the   
results of operations of the Surviving Corporation. See "MANAGEMENT AND         
OPERATIONS AFTER THE MERGER--Restructuring Costs of NHL".                       

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NATIONAL HEALTH LABORATORIES HOLDINGS INC.

SELECTED FINANCIAL DATA--HISTORICAL 
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)

                                                                [Download Table]

                                      YEAR ENDED DECEMBER 31,                   
                                --------------------------------------------    
                                 1990    1991    1992      1993     1994(1)     
                                ------  ------  ------    ------    --------    
                                                                                
STATEMENT OF EARNINGS DATA:                                                     
Net sales.....................  $501.9  $603.9  $721.4    $760.5    $  872.5    
Cost of sales.................   279.3   332.5   395.1     444.5       597.0    
                                ------  ------  ------    ------    --------    
 Gross profit.................   222.6   271.4   326.3     316.0       275.5    
Selling, general and                                                            
 administrative expenses......    82.2    97.9   117.9     121.4       149.3    
Amortization of intangibles                                                     
 and                                                                            
 other assets.................     7.3     7.7     8.3       9.1        16.3    
Settlement and related                                                          
expenses......................      --      --   136.0(2)     --          --    
                                ------  ------  ------    ------    --------    
 Operating income.............   133.1   165.8    64.1     185.5       109.9    
Other income (expenses):                                                        
 Litigation settlement and                                                      
  related expenses............      --      --      --        --       (21.0)(4)
 Other gains and expenses,                                                      
  net.........................      --      --      --      15.3(3)       --    
 Investment income............     4.1     3.6     2.2       1.2         1.0    
 Interest expense.............    (0.1)   (0.1)   (4.2)    (10.9)      (34.5)   
                                ------  ------  ------    ------    --------    
 Earnings before income taxes.   137.1   169.3    62.1     191.1        55.4    
Provision for income taxes....    54.5    65.4    21.5      78.4        25.3    
                                ------  ------  ------    ------    --------    
 Net earnings.................  $ 82.6  $103.9  $ 40.6    $112.7    $   30.1    
                                ======  ======  ======    ======    ========    
Net earnings per common share.  $ 0.83  $ 1.05  $ 0.43(2) $ 1.26    $   0.36(4) 
                                ======  ======  ======    ======    ========    
Dividends per common share....  $ 1.58  $ 0.27  $ 0.31    $ 0.32    $   0.08    
                                ======  ======  ======    ======    ========    
BALANCE SHEET DATA (AT PERIOD                                                   
 END):                                                                          
Cash and cash equivalents.....  $ 45.8  $ 51.3  $ 33.4    $ 12.3    $   26.8    
Intangible assets, net (5)(6).   192.7   193.1   188.3     281.5       551.9    
Total assets..................   374.2   411.3   477.4     585.5     1,012.7    
Total debt (2)(6)(7)(8)(9)....     4.4     7.6   154.2     341.5       648.9    
Due to affiliates (10)........    66.4      --     0.9       0.1          --    
Total stockholders' equity                                                      
(7)(10).......................   256.7   330.8   212.5     140.8       166.0    

--------                                                                        
(1) The statement of earnings data for year ended December 31, 1994 include   
   Allied's results of operations from June 23, 1994 (the date of the Allied
Acquisition) through December 31, 1994. The balance sheet data as of  
December 31, 1994 also reflect the occurrence of the corporate        
reorganization that was effected on June 7, 1994 that created NHL as a
    public holding company parent of National Health Laboratories Incorporated
    (the "Reorganization"), the borrowings by a subsidiary of NHL of $585.0 to
    finance the Allied Acquisition and refinance certain existing indebtedness
(the "Allied Acquisition Financing") and the Allied Acquisition.      
(2) In the fourth quarter of 1992, NHL took a one-time pretax charge of $136.0
    to cover estimated costs related to the Federal government's investigation
of certain of NHL's pricing practices and the related settlements that
concluded the investigation in December 1992 (the "1992 NHL Government
  Settlement"). At December 31, 1994, remaining principal payments due the
 Federal government aggregated $11.0 and are reflected under the caption
"Total debt".                                                         
(3) Represents a one-time pretax gain comprised of expense reimbursement and  
termination fees of $21.6 in connection with NHL's attempt to purchase
Damon Corporation, a competing independent clinical laboratory, less  
 related expenses and write-off of certain bank financing costs of $6.3.

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(4) In the third quarter of 1994, NHL took a one-time pretax charge of $21.0  
related to an approved settlement of previously disclosed shareholder 
  class and derivative litigation. At February 15, 1995, all payments have
been made under the settlement agreement.                             
(5) During 1993, NHL acquired 34 clinical laboratories for an aggregate amount
  of $78.2 in cash plus the recognition of $28.7 of liabilities, comprised
primarily of future contractual and contingent payments. During 1994, 
 excluding the Allied Acquisition, NHL acquired 11 clinical laboratories
for an aggregate amount of $46.4 plus the recognition of $32.9 of     
   liabilities. The cash portion of such purchases was financed with cash on
   hand and borrowings under revolving credit facilities in existence at the
 time of the acquisitions. The excess of cost over the fair value of net
  tangible assets acquired was $100.1 in 1993 and $72.1 in 1994, excluding
the Allied Acquisition, and is included in Intangible Assets, net.    
(6) On June 23, 1994, NHL completed the Allied Acquisition for approximately  
$191.5 in cash, of which $185.0 was borrowed under a revolving credit 
  facility constituting a portion of the Allied Acquisition Financing. The
 purchase price included the assumption of approximately $24.0 of Allied
indebtedness and the assumption of approximately $5.0 of Allied net   
  liabilities. The acquisition was accounted for using the purchase method
  of accounting; as such, Allied's assets and liabilities were recorded at
   their fair values on the date of acquisition. The purchase price exceeded
the fair value of net tangible assets by approximately $220.5, which  
amount is included in Intangible Assets, net.                         
(7) On January 16, 1992, NHL purchased 4,808,000 shares of NHL Common Stock   
from its stockholders pursuant to a tender offer (the "1992 Tender    
Offer"). NHL borrowed $100.0 under a revolving credit facility in     
   existence at that time and used $25.8 of cash on hand to finance the 1992
Tender Offer. During 1992 and 1993, NHL made open market purchases of 
310,000 and 9,485,800 of its outstanding shares of common stock,      
 respectively, for an aggregate amount of $6.1 and $154.2, respectively.
Such purchases were financed with cash on hand and borrowings under   
 revolving credit facilities in existence at such times. At December 31,
  1992 and 1993, $75.0 and $278.0, respectively, was outstanding under the
  revolving credit facilities in existence on those dates. At December 31,
1994, the amount outstanding under a revolving credit facility        
constituting a portion of the Allied Acquisition Financing was $213.0.
(8) In the fourth quarter of 1992, NHL relocated its Long Island-based        
   laboratory to a newly constructed facility. The transaction is treated as
   a capital lease for financial reporting purposes; as such, the associated
 long-term lease obligation totalled $9.6, $9.7 and $9.8 at December 31,
1992, 1993 and 1994, respectively.                                    
(9) Total debt includes the expected value of future contractual and          
contingent amounts to be paid to the principals of acquired clinical  
   laboratories. Such payments are primarily based on a percentage of future
   revenues derived from the acquired customer lists or specified amounts to
   be paid over a period of time. At December 31, 1990, 1991, 1992, 1993 and
  1994, such amounts were $4.4, $7.6, $4.6, $26.8 and $35.1, respectively.
(10) In July 1990, NHL paid a special dividend of $150.6. Due to affiliates at  
  December 31, 1990 principally represents borrowings from Revlon Holdings
Inc. (then known as Revlon, Inc.) in the original principal amount of 
  $77.0 incurred in connection with the special dividend paid in 1990, net
of an $11.0 principal payment made in 1990.                           

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ROCHE BIOMEDICAL LABORATORIES, INC.(1)

SELECTED FINANCIAL DATA--HISTORICAL 
(DOLLARS IN MILLIONS) 

                                                                [Download Table]

                                           YEAR ENDED DECEMBER 31,              
                                      ----------------------------------------- 
                                       1990       1991   1992      1993   1994  
                                      ------     ------ ------    ------ ------ 
                                                                                
STATEMENT OF INCOME DATA:                                                       
Net sales...........................  $550.6     $577.3 $667.4    $711.6 $729.8 
Cost of sales.......................   374.2      392.6  459.2     488.7  498.0 
                                      ------     ------ ------    ------ ------ 
  Gross profit......................   176.4      184.7  208.2     222.9  231.8 
Selling, general and administrative.   117.4      130.6  134.6     150.3  152.7 
Amortization of goodwill and other                                              
 intangibles........................    30.8(2)    10.7   13.1(4)   13.2   13.9 
                                      ------     ------ ------    ------ ------ 
  Income from operations............    28.2       43.4   60.5      59.4   65.2 
Interest expense....................    26.7       25.9   24.5      15.4   15.5 
Other expenses (income), net........   (20.2)(3)    0.3   (0.7)      0.8   (0.9)
                                      ------     ------ ------    ------ ------ 
  Income before taxes...............    21.7       17.2   36.7      43.2   50.6 
Income taxes........................    13.0        7.7   16.6      19.7   22.7 
                                      ------     ------ ------    ------ ------ 
  Income before cumulative effect of                                            
   change in accounting principle...     8.7        9.5   20.1      23.5   27.9 
Cumulative effect of change in                                                  
 accounting principle(5)............                       9.8                  
                                      ------     ------ ------    ------ ------ 
  Net income........................  $  8.7     $  9.5 $ 10.3    $ 23.5 $ 27.9 
                                      ======     ====== ======    ====== ====== 
BALANCE SHEET DATA (AT PERIOD END):                                             
Cash................................  $  4.3     $  2.9 $  4.3    $  7.7 $ 12.6 
Goodwill and other intangibles, net.    86.9       82.4  130.0(4)  122.0  108.9 
Total assets........................   400.0      417.6  456.1     474.4  508.3 
Debt................................   293.7      291.4  285.7     285.5  285.4 
Invested capital of HLR.............    24.1       31.4   48.2      75.0  102.9 

--------                                                                        
(1) Represents the results of operations and financial position of RBL,         
excluding RIAS, which RBL intends to divest prior to the Effective Time.
(2) In 1990, RBL wrote-off certain intangible assets relating to obsolete       
 technology, which no longer had continuing value, in the amount of $16.0.
(3) On December 31, 1990, RBL divested the assets and core testing customer     
base of certain clinical laboratory businesses located in Sacramento,   
  California and Denver, Colorado for $41.9. The gain on the sale was $26.8.
(4) On February 11, 1992, RBL acquired all of the issued and outstanding shares 
  of CompuChem Corporation for $74.6. The transaction was accounted for as a
   purchase and was financed with internally generated cash and cash from HLR,
RBL's direct parent. The excess of cost over fair market value of net   
tangible assets acquired was $63.7.                                     
(5) In 1992, RBL adopted Statement of Financial Accounting Standards No. 106,   
"Employers' Accounting for Postretirement Benefits Other than Pensions".
   This amount represents the charge, on an after-tax basis, for recording the
transition obligation.                                                  

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NATIONAL HEALTH LABORATORIES HOLDINGS INC.

SELECTED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL DATA 
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)

                                                                [Download Table]

                                                                   YEAR ENDED   
                                                                  DECEMBER 31,  
                                                                    1994 (1)    
                                                                  ------------  
                                                                                
STATEMENT OF EARNINGS DATA:                                                     
Net sales........................................................   $1,692.6    
Cost of sales....................................................    1,153.1    
                                                                    --------    
  Gross profit...................................................      539.5    
Selling, general and administrative expenses.....................      316.3    
Amortization of intangibles and other assets.....................       29.5    
Gain on disposition of regional assets...........................       (0.7)   
                                                                    --------    
  Operating income...............................................      194.4    
Other income (expenses):                                                        
  Litigation settlement and related expenses.....................      (21.0)(2)
  Other gains and expenses, net..................................        0.9    
  Investment income..............................................        1.3    
  Interest expense...............................................      (50.4)   
                                                                    --------    
  Earnings before income taxes...................................      125.2    
Provision for income taxes.......................................       54.2    
                                                                    --------    
  Net earnings...................................................   $   71.0    
                                                                    ========    
Net earnings per common share (3)................................   $   0.58    
                                                                    ========    
Weighted average common shares outstanding (millions) (3)........      122.9    
                                                                    ========    
BALANCE SHEET DATA (AT PERIOD END):                                             
Cash and cash equivalents........................................   $   33.1    
Intangible assets, net...........................................      885.5    
Total assets.....................................................    1,710.7    
Total debt.......................................................    1,003.0    
Total stockholders' equity.......................................      366.1    

--------                                                                        
(1) For a description of the assumptions underlying the pro forma amounts, see  
"UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL          
INFORMATION".                                                           
(2) In the third quarter of 1994, NHL took a one-time pretax charge of $21.0    
  related to an approved settlement of previously disclosed class action and
  shareholder derivative litigation. At February 15, 1995, all payments have
been made under the settlement agreement.                               
(3) Pro forma net earnings per share is computed by dividing pro forma net      
  earnings by NHL's historical weighted average number of shares outstanding
after giving effect to (a) the NHL Share Conversion, (b) the issuance of
 approximately 61,341,742 shares of NHL Common Stock at December 31, 1994,
to HLR in connection with the Merger, and (c) the issuance of 559,092   
shares of NHL Common Stock at December 31, 1994 in connection with the  
cancelation of all NHL Employee Stock Options.                          

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COMPARATIVE PER SHARE DATA                                                      

The following table sets forth for NHL Common Stock certain historical, pro 
forma consolidated and pro forma equivalent per share financial data for the    
year ended December 31, 1994. The following information should be read in       
conjunction with and is qualified in its entirety by the consolidated financial 
statements and accompanying notes of NHL included in the documents described    
under "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE", and the pro forma      
condensed combined consolidated financial statements and accompanying           
discussion and notes set forth under "UNAUDITED PRO FORMA CONDENSED COMBINED    
CONSOLIDATED FINANCIAL INFORMATION". Per share data is not presented for RBL    
because RBL is a wholly owned subsidiary of HLR and the presentation of such    
information would not be meaningful.                                            

                                                                [Download Table]

                                                                     YEAR ENDED 
                                                                    DECEMBER 31,
                                                                        1994    
                                                                    ------------
                                                                                
NHL COMMON STOCK                                                                
Net earnings per common share:                                                  
  Historical.......................................................    $0.36    
  Pro forma consolidated...........................................     0.58    
Dividends per common share:                                                     
  Historical.......................................................     0.08    
  Pro forma consolidated...........................................     0.08    
Book value per common share at period end:                                      
  Historical.......................................................     1.96    
  Pro forma consolidated...........................................     3.00    

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CERTAIN CONSIDERATIONS

In deciding whether to approve and adopt the Merger Agreement, NHL          
stockholders should consider the following factors, in addition to the other    
matters set forth or incorporated by reference herein:                          

Interests of Certain Persons in the Merger; Possible Conflicts of           
Interest. Certain directors and executive officers of NHL have interests in the 
Merger that may be different from, or in addition to, those of stockholders of  
NHL generally, including employment contracts, NHL Employee Stock Options,      
indemnification from and insurance against certain liabilities and registration 
rights. Messrs. James R. Maher, David C. Flaugh, Timothy J. Brodnik, Robert E.  
Whalen, Haywood D. Cochrane, Jr., Larry L. Leonard, Ph.D., John F. Markus, W.   
David Slaunwhite, Ph.D., James G. Richmond and Bernard E. Statland, M.D. have   
employment agreements with NHL pursuant to which such persons may terminate     
their employment for "good reason" (as defined therein), whereupon significant  
payments and other benefits may be required to be provided to such persons. It  
is anticipated that Mr. Maher's employment agreement will be terminated and he  
will receive a payment of $3 million as provided therein following Effective    
Time. In addition, in connection with the Merger, NHL will pay Mr. Maher a      
special bonus of $1 million, subject to certain conditions, in recognition for  
his efforts on behalf of NHL with respect to the Merger. Certain executive      
officers of NHL have NHL Employee Stock Options which may be cancelled in       
connection with the Merger in exchange for a payment in cash and shares of NHL  
Common Stock as described under "THE MERGER--Effect on NHL Employee Stock       
Options". If the currently outstanding NHL Employee Stock Options are so        
cancelled, the amount to be paid in cash and the number of shares of NHL Common 
Stock to be issued in connection therewith (which shares will not be converted  
in the NHL Share Conversion) for each of such executive officer is as follows:  
Mr. Maher: $1,042,500 and 101,410; Mr. Flaugh: $548,750 and 53,379; Mr.         
Brodnik: $378,750 and 36,842; Mr. Cochrane: $1,107,525 and 107,735; Dr.         
Leonard: $284,250 and 27,649; Mr. Markus: $284,250 and 27,649; Mr. Richmond:    
$68,750 and 6,687; Dr. Slaunwhite: $176,250 and 17,144; Dr. Statland: $83,750   
and 8,146; and Mr. Whalen: $378,750 and 36,842. See "THE MERGER--Interests of   
Certain Persons in the Merger".                                                 

Potential Difficulty of the Integration of NHL and RBL. The successful      
integration of NHL and RBL is important to the future financial performance of  
the Surviving Corporation. The anticipated benefits of the Merger might not be  
achieved unless the operations of RBL are successfully combined with those of   
NHL in a timely manner. It is currently estimated that the integration of the   
operations of NHL and RBL could take up to three years to accomplish. This      
integration will require substantial attention from the management of the       
Surviving Corporation. The diversion of the attention of management, and any    
difficulties encountered in the transition process, could have an adverse       
impact on the revenues and operating results of the Surviving Corporation. In   
addition, the process of combining the two organizations could cause the        
interruption of, or loss of momentum in, the activities of either or both of    
NHL's and RBL's businesses, which could have an adverse effect on their         
combined operations. The difficulty of combining NHL and RBL may be increased   
by the need to integrate personnel. It is possible that changes brought about   
by the Merger may cause key employees to leave. There can be no assurance that  
the Surviving Corporation will retain its key employees. Because of the         
inherent uncertainties associated with merging two large companies, there can   
be no assurance that the Surviving Corporation will be able to realize the cost 
savings NHL and RBL currently expect to realize as a result of the Merger and   
the consolidation of the operations of NHL and RBL or that such savings will be 
realized at the times currently anticipated. Furthermore, there can be no       
assurance that cost savings which are realized will not be offset by increases  
in other expenses, operating losses, other charges to earnings or losses of     
revenue, including losses due to problems in integrating the two companies. See 
"MANAGEMENT AND OPERATIONS AFTER THE MERGER--Operations After the Merger".      

Substantial Stockholder; Ability of Substantial Stockholder to Increase Its 
Ownership Interest; Potential Differing Interests from Other                    
Stockholders. Immediately following the Merger, approximately 49.9% of the      
outstanding common stock of the Surviving Corporation will be owned by HLR, a   
wholly owned subsidiary of Roche, and the equity interest and relative voting   
power of current NHL stockholders will be considerably                          

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reduced after giving effect to the Merger. Pursuant to the Stockholder          
Agreement, the HLR Group may not, subject to certain exceptions, increase the   
HLR Group Interest above 49.99% during the one-year period following the        
Effective Time. After the first anniversary of the Effective Time, the HLR      
Group will have the right to acquire Equity Securities to the extent that,      
after giving effect thereto, the HLR Group Interest would not exceed 75%.       
Moreover, the HLR Group may acquire additional Equity Securities                
notwithstanding the fact that, after giving effect thereto, the HLR Group       
Interest would exceed 75%, if HLR, or any member of the HLR Group, offers,      
prior to consummation of such purchase, to purchase all outstanding Equity      
Securities and holders of Equity Securities totalling more than 50% of the      
outstanding Equity Securities (excluding Equity Securities held by the HLR      
Group) accept such offer. After the third anniversary of the Effective Time,    
the Stockholder Agreement does not restrict purchases by the HLR Group of       
Equity Securities. Certain provisions of the Stockholder Agreement described    
below, including provisions relating to the composition of the Board of         
Directors of the Surviving Corporation, would be suspended if the HLR Group     
Interest were to be increased to over 50%. See "THE STOCKHOLDER AGREEMENT--     
Acquisitions and Transfers of Equity Securities". There can be no assurance     
that the interests of the HLR Group will be the same as those of the other      
stockholders of the Surviving Corporation.                                      

Ability of Substantial Stockholder to Exercise Significant Influence. HLR's 
ownership interest in the Surviving Corporation and its rights under the        
Stockholder Agreement described below will permit it to exercise significant    
influence on the governance of the Surviving Corporation, and on the            
composition of its board of directors. NHL, HLR and Roche have agreed that      
immediately prior to the Merger, they will enter into the Stockholder           
Agreement, which sets forth, among other things, certain agreements and         
understandings regarding the governance of the Surviving Corporation following  
the Merger, including the composition of the Board of Directors. Pursuant to    
the Stockholder Agreement (subject to the exceptions provided therein), during  
the Initial Period the Board of Directors of the Surviving Corporation will be  
comprised of seven members, consisting of Mr. Maher (the current President and  
Chief Executive Officer of NHL), three HLR Directors, who will be Mr. Belingard 
(the Director General, Diagnostics Division and Executive Committee Member of   
F. Hoffmann-La Roche Ltd), Mr. Mac Mahon (a Senior Vice President of Roche and  
the President of Roche Diagnostics Group) and Dr. Powell (the President of      
RBL), and three independent directors (which the Stockholder Agreement defines  
generally as persons who are not officers, employees or affiliates of the       
Surviving Corporation or HLR). The persons who will serve as the independent    
directors for the Initial Period are required to be mutually acceptable to a    
majority of the members of NHL's Board of Directors in office immediately prior 
to the Effective Time and to HLR. Following the Initial Period, the Board of    
Directors of the Surviving Corporation will (subject to specified exceptions)   
be comprised of seven members, consisting of three HLR Directors and four       
independent directors nominated by the Nominating Committee of the Board of     
Directors as described under "THE STOCKHOLDER AGREEMENT--Corporate Governance". 
The Nominating Committee will consist of one HLR Director and two independent   
directors and will act by a majority vote of the entire committee.              

Special Majority Board Approval Required for Certain Actions. Under the     
Stockholder Agreement, for so long as the HLR Group Interest (as defined below) 
is at least 30%, a significant number of types of major corporate actions       
cannot be taken without the approval of a Special Majority of the Board of      
Directors (which is defined in the Stockholder Agreement as a majority of the   
entire Board of Directors that includes a majority of the HLR Directors and at  
least one independent director). These actions include, among others, certain   
executive officer appointments, certain business combinations, acquisitions or  
sales of assets, amendments to the Surviving Corporation's Certificate of       
Incorporation or by-laws, settlements of material litigation, changes in Board  
or committee composition, material capital expenditures, issuance of securities 
and incurrence of indebtedness. See "THE STOCKHOLDER AGREEMENT--Corporate       
Governance". In addition, as described under "THE STOCKHOLDER AGREEMENT--       
Corporate Governance", the Stockholder Agreement requires that NHL prepare      
Annual Operating Plans and Strategic Plans, each for approval by a Special      
Majority of the Board of Directors.                                             

Substantial Indebtedness.  Immediately subsequent to the Merger, the        
Surviving Corporation will have approximately $1.0 billion of indebtedness      
outstanding. In addition, the terms of the credit agreement to be               

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entered into to effect the NHL Borrowings among NHL and a group of banks for    
which Credit Suisse will act as administrative agent (the "Credit Agreement")   
will permit the Surviving Corporation to incur up to $250 million of additional 
indebtedness. The level of the Surviving Corporation's indebtedness could have  
important consequences, including the following: (i) the ability of the         
Surviving Corporation to obtain additional debt financing in the future for     
working capital, capital expenditures or acquisitions may be limited and (ii)   
the Surviving Corporation's level of indebtedness could limit its flexibility   
in planning for, or reacting to, changes in market conditions, including        
adverse governmental regulations (including reductions in the amounts           
reimbursable to the Surviving Corporation under Medicare and Medicaid). See "-- 
Limitations on Third Party Payor Reimbursement of Health Care Costs" below.     
Furthermore, the ability of the Surviving Corporation to satisfy its            
obligations will be dependent upon its future performance and market            
conditions, which will be subject to prevailing economic conditions and to      
financial, business and other factors, including factors beyond the Surviving   
Corporation's control. In addition, because the borrowings outstanding under    
the Credit Agreement will bear interest at a floating rate, the Surviving       
Corporation's financial performance may be adversely affected by increases in   
interest rates.                                                                 

Increase in Credit Agreement Interest Rate Upon Reduction of HLR Group      
Interest.  It is expected that the Credit Agreement providing for the NHL       
Borrowings will have interest rate margins and facility fees that are           
substantially more favorable than those currently applicable to borrowings      
under NHL's existing credit facility. It is expected that the Credit Agreement  
will provide, however, that in the event of a reduction in the HLR Group        
Interest below 25%, the applicable interest margins and facility fees on NHL    
Borrowings outstanding under the Credit Agreement will increase. The amount of  
the increase will depend, in part, on the Interest Coverage Ratio and the       
Leverage Ratio (each, as defined in the Credit Agreement) of the Surviving      
Corporation at the time of such reduction and management believes it is         
unlikely that such increased amounts would exceed those under NHL's existing    
credit facility. See "PLAN OF FINANCING--Description of Bank Facility".         

Shares Available for Future Sale by HLR. Following the Effective Time, HLR  
will own approximately 49.9% of the outstanding shares of NHL Common Stock.     
Pursuant to the Stockholder Agreement, NHL has granted certain registration     
rights to HLR with respect to certain securities of NHL held by it. Subject to  
compliance with applicable Federal and state securities laws, HLR may determine 
to sell or otherwise transfer any or all the shares of NHL Common Stock it owns 
from time to time for any reason. Although NHL cannot make any prediction as to 
the effect, if any, that sales in the public market of shares of NHL Common     
Stock owned by HLR would have on the market price for NHL Common Stock          
prevailing from time to time, sales of substantial amounts of NHL Common Stock  
or the availability of such shares for sale could adversely affect prevailing   
market prices.                                                                  

Warrants Available for Future Sale by Roche. Following the effective time,  
Roche will own approximately 37.6% of the outstanding Warrants. Pursuant to the 
Stockholder Agreement, NHL has granted certain registration rights to Roche     
with respect to the Roche Warrants. Subject to compliance with applicable       
Federal and state securities laws, Roche may determine to sell or otherwise     
transfer any or all the Roche Warrants from time to time for any reason.        
Although NHL cannot make any prediction as to the effect, if any, that sales in 
the public market of Roche Warrants would have on the market price for Warrants 
prevailing from time to time, sales of substantial amounts of Roche Warrants or 
the availability of such Warrants for sale could adversely affect prevailing    
market prices.                                                                  

Shares and Warrants Available for Future Sale by NHCG. Following the        
Effective Time, NHCG will own approximately 11.8% of the outstanding shares of  
NHL Common Stock and approximately 14.9% of the outstanding Warrants. Pursuant  
to the Sharing and Call Option Agreement, NHL has granted certain registration  
rights to NHCG with respect to the securities of NHL held by it and, pursuant   
thereto, NHL has included a resale prospectus in the Registration Statement to  
facilitate such sales from time to time. Subject to compliance with applicable  
Federal and state securities laws, NHCG may determine to sell or otherwise      
transfer any or all the shares of NHL Common Stock or Warrants it owns from     
time to time for any reason. Although NHL cannot make any prediction as to the  
effect, if any, that sales in the public market of shares of NHL Common Stock   
or Warrants owned by NHCG would have on the market price for NHL Common Stock   
or Warrants prevailing from time to time, sales of substantial amounts of NHL   
Common Stock or Warrants or the availability of such shares or Warrants for     
sale could adversely affect prevailing market prices. The Sharing and Call      
Option Agreement provides that, at any time after the third anniversary         

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of the Effective Time, HLR or any of its affiliates may exercise the right to   
purchase all, but not less than all, the shares of NHL Common Stock then owned  
by NHCG, Mafco Holdings Inc. or any of their controlled affiliates at a price   
equal to 102% of the average closing price per share of such security for the   
30 trading days before the exercise date.                                       

Absence of Public Market for Warrants. There is currently no public market  
for any warrants of NHL and there can be no assurance that an active public     
market for the Warrants will develop after the Merger. The Warrants are         
expected to be approved for listing on the NYSE at or before the Effective      
Time.                                                                           

Governmental Regulation. The clinical laboratory industry is subject to     
significant governmental regulation at the Federal, state and local levels.     
Virtually all clinical laboratories, including those to be operated by the      
Surviving Corporation, are required to be certified or licensed under the       
Clinical Laboratory Improvement Act of 1967, and the Clinical Laboratory        
Improvement Amendments of 1988 (collectively, as amended, "CLIA"), the Medicare 
and Medicaid programs and various state and local laws, and may be subject to   
periodic inspections by regulatory agencies. The Surviving Corporation will     
also be subject to licensing and regulation under Federal, state and local laws 
relating to the handling and disposal of medical specimens, infectious and      
hazardous waste and radioactive materials as well as to the safety and health   
of laboratory employees. The sanction for failure to comply with these          
regulations may be denial of the right to conduct business, significant fines   
and criminal penalties. The loss of a license, imposition of a fine or future   
changes in such Federal, state and local laws and regulations (or in the        
interpretation of current laws and regulations) could have a material adverse   
effect on the Surviving Corporation and its subsidiaries. NHL and RBL each      
believes that it conforms in all material respects with all applicable          
statutory and regulatory requirements.                                          

Limitations on Third Party Payor Reimbursement of Health Care Costs. The    
health care industry is undergoing significant change as third party payors,    
such as Medicare and Medicaid and insurers, increase their efforts to control   
the cost of health care services. In 1994, NHL and RBL derived approximately    
35% and 27%, respectively, of their net revenues from tests performed for       
beneficiaries of Medicare and Medicaid programs. NHL's and RBL's other business 
depends significantly on continued participation in these programs. NHL and RBL 
are required by law to accept reimbursement from Medicare and Medicaid as       
payment in full for most of the tests performed for Medicare and Medicaid       
beneficiaries. In an effort to address the problem of increasing health care    
costs, legislation has been proposed at both Federal and state levels to        
further regulate health care delivery in general and clinical laboratories in   
particular and legislation has been enacted that reduces the amounts            
reimbursable to NHL and RBL and other independent clinical laboratories under   
Medicare and Medicaid. Pursuant to this legislation, Congress reduced the       
ceilings on Medicare reimbursement to clinical laboratories from previously     
authorized levels to 84% of the 1984 national median effective January 1, 1994  
and to 80% of the 1984 national median effective January 1, 1995. The           
legislation provides for a further reduction in the reimbursement ceiling to    
76% of the 1984 national median to become effective January 1, 1996. The        
provision for annual fee schedule increases based upon the consumer price index 
was also eliminated for 1994 and 1995. RBL and NHL cannot predict the effect    
health care reform (if enacted) or future changes in Federal, state and local   
regulations affecting governmental reimbursement for clinical laboratory        
testing may have on their businesses and there can be no assurance that any     
such reforms will not have a material adverse effect on the Surviving           
Corporation. See "THE CLINICAL LABORATORY TESTING INDUSTRY--Regulation and      
Reimbursement".                                                                 

Potential Additional Costs Resulting from Proposed Medicare Administrative  
Policies. In November 1994, the Health Care Financing Administration ("HCFA")   
of the Department of Health and Human Services ("HHS") proposed changes in the  
policies used to administer Medicare payments to clinical laboratories for the  
most frequently performed automated blood chemistry profiles. Among other       
things, the proposed changes would establish a consistent standard nationwide   
for the content of the automated chemistry profiles. Another change             
incorporated in the HCFA proposal would require laboratories performing certain 
automated blood chemistry profiles to obtain and provide documentation of the   
medical necessity of tests included in the profiles for each Medicare           
beneficiary. If such a requirement were to be established, all laboratories,    
including those operated by the Surviving Corporation, would incur significant  

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additional costs associated with compliance. In addition, if implemented, such  
changes would increase the losses associated with unreimbursed testing caused   
by the inability to obtain sufficient information from physicians to allow the  
laboratory to file valid claims with Medicare. The HCFA proposals may be        
modified or replaced with other proposals and no prediction can be made         
regarding what proposals, if any, will ultimately be adopted.                   

Challenges Presented by the Growth of the Managed Care Sector. In recent    
years, there has been a significant shift away from traditional, fee-for-       
service medicine and toward managed-cost health care. Managed care providers    
typically contract with a limited number of clinical laboratories and negotiate 
discounts to the fees charged by such laboratories in an effort to control      
costs. In addition, managed care providers have used capitated payment          
contracts which function to shift the risks of additional testing beyond that   
covered by the capitated payment to the clinical laboratory. Historically, NHL  
has had a limited presence in the managed care sector. In 1993, NHL assembled a 
dedicated sales force to address this increasingly important market segment. In 
the last two years, NHL's revenues from the managed care sector have risen from 
approximately 3% of total revenues to approximately 8-9% of total revenues. For 
the last several years, RBL has had a strong presence in the managed care       
sector and has designed its sales efforts to expand its presence in that        
sector. RBL's net sales from the managed care sector were approximately 12% for 
the year ended December 31, 1994. There can be no assurance, however, that the  
Surviving Corporation will be successful in expanding its share of this market  
sector, or that the Surviving Corporation will not experience additional        
declines in test utilization or per-test revenue in the future as a result of   
managed care growth or otherwise.                                               

Governmental Investigations of Clinical Laboratory Companies. As part of an 
examination of the rapid growth of Federal expenditures for clinical laboratory 
services, several Federal agencies, including the Federal Bureau of             
Investigation and the Office of Inspector General (the "OIG") of HHS, have      
investigated allegations of fraudulent and abusive conduct by health care       
providers. In August 1993, RBL and Allied each received a subpoena from the OIG 
requesting documents and information concerning pricing and billing practices.  
According to published reports, other independent clinical laboratories have    
received similar subpoenas as part of a nationwide OIG audit and investigation. 
In September 1993, NHL received a subpoena from the OIG which required NHL to   
provide documents to the OIG concerning its regulatory compliance procedures.   
NHL, RBL and Allied have complied with or are in the process of complying with  
their respective subpoenas and are cooperating with the OIG. Neither NHL nor    
RBL can, however, predict the outcome of any such investigation or the impact,  
if any, any such investigation may have on the financial condition or results   
of operations of any of NHL, RBL or the Surviving Corporation. However, a       
criminal conviction or the successful prosecution of a civil fraud or false     
claims action could result in the exclusion of the defendant from the Medicare  
and Medicaid programs. In addition, any such exclusion would likely have a      
material adverse effect on the Surviving Corporation's non-Medicare and non-    
Medicaid testing business. See "THE CLINICAL LABORATORY TESTING INDUSTRY--OIG   
Investigations".                                                                

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THE NHL MEETING 

This Proxy Statement/Prospectus is being provided to the stockholders of NHL
in connection with the NHL Meeting. The meeting will be held at the location,   
at the time, on the date and to consider the matters set forth below. The Board 
of Directors of NHL is soliciting proxies for use at the NHL Meeting. A proxy   
card is being provided to the holders of NHL Common Stock with this Proxy       
Statement/Prospectus.                                                           

GENERAL                                                                         

The NHL Meeting is scheduled to be held at 9:00 a.m., New York City Time, on
April 28, 1995 at the Sheraton New York Hotel, 811 Seventh Avenue, New York, NY 
10019. At the NHL Meeting, the holders of NHL Common Stock will be asked to     
consider and vote upon the approval and adoption of the Merger Agreement and    
the Name Change Amendment.                                                      

 THE BOARD OF DIRECTORS OF NHL, BY A UNANIMOUS VOTE OF THOSE DIRECTORS PRESENT
AT THE DECEMBER 12, 1994 MEETING OF THE BOARD OF DIRECTORS, HAS APPROVED THE    
MERGER AGREEMENT AND THE NAME CHANGE AMENDMENT. THE NHL BOARD OF DIRECTORS HAS  
DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF NHL AND ITS STOCKHOLDERS 
AND UNANIMOUSLY RECOMMENDS THAT THE NHL STOCKHOLDERS VOTE FOR THE APPROVAL AND  
ADOPTION OF THE MERGER AGREEMENT. SEE "THE MERGER--BACKGROUND OF THE MERGER"    
AND "RECOMMENDATION OF THE NHL BOARD OF DIRECTORS AND NHL'S REASONS FOR THE     
MERGER". IN EVALUATING THE RECOMMENDATION OF THE BOARD OF DIRECTORS OF NHL, AND 
IN CONSIDERING WHETHER TO APPROVE AND ADOPT THE MERGER AGREEMENT, STOCKHOLDERS  
OF NHL SHOULD CAREFULLY EVALUATE THE MATTERS SET FORTH UNDER "CERTAIN           
CONSIDERATIONS" AND "THE MERGER--INTERESTS OF CERTAIN PERSONS IN THE MERGER".   
THE NHL BOARD ALSO RECOMMENDS THAT STOCKHOLDERS OF NHL VOTE FOR THE NAME CHANGE 
AMENDMENT.                                                                      

 NHL Record Date and Voting Rights. Only holders of record of NHL Common Stock
on the NHL Record Date will be entitled to notice of, and to vote at, the NHL   
Meeting. As of the NHL Record Date, there were 84,766,109 shares of NHL Common  
Stock outstanding. Each share of NHL Common Stock will entitle the holder       
thereof to one vote.                                                            

NHL Stockholder Vote Required. Holders of at least a majority of the        
outstanding shares of NHL Common Stock must be represented, either in person or 
by proxy, at the NHL Meeting for a quorum to be present. The approval and       
adoption of the Merger Agreement requires the affirmative vote of the holders   
of a majority of the outstanding shares of NHL Common Stock. The approval and   
adoption of the Name Change Amendment also requires the affirmative vote of the 
holders of a majority of the outstanding shares of NHL Common Stock.            

 Abstentions may be specified with respect to the approval and adoption of the
Merger Agreement and the Name Change Amendment and will be counted as present   
for the purpose of determining the existence of a quorum but will have the      
effect of a negative vote with respect to the approval and adoption of the      
Merger Agreement and the Name Change Amendment due to the voting requirement    
described in the previous paragraph.                                            

Under the rules of the NYSE, brokers who hold shares in street name have the
authority to vote on certain items when they have not received instructions     
from beneficial owners. Brokers who do not receive instructions who are         
present, in person or by proxy, at the NHL Meeting will be counted as present   
for quorum purposes and will be entitled to vote on the approval and adoption   
of the Name Change Amendment, but will not be entitled to vote on the approval  
and adoption of the Merger Agreement. Under the Delaware Corporation Law, a     
broker non-vote will have the effect of a negative vote on the approval and     
adoption of the Merger Agreement.                                               

If a quorum is not present or represented at the NHL Meeting, the holders of
NHL Common Stock present in person or represented by proxy may adjourn the NHL  
Meeting, without notice other than announcement at the meeting, until a quorum  
is present or represented. At such adjourned meeting at which a quorum is       
present or represented, any business may be transacted which might have been    
transacted at the NHL Meeting as originally noticed. If the adjournment is for  
more than 30 days, or if after the adjournment                                  

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a new record date is fixed for the adjourned meeting, a notice of the adjourned 
meeting will be given to each holder of NHL Common Stock entitled to vote at    
the NHL Meeting.                                                                

NHL Proxies. Each properly completed proxy card returned in time for voting 
at the NHL Meeting will be voted in accordance with the instructions indicated  
on the proxy, or, if no instructions are provided, will be voted FOR the        
approval and adoption of the Merger Agreement and the Name Change Amendment. It 
is not expected that any matters other than those referred to in this Proxy     
Statement/Prospectus will be brought before the NHL Meeting. If, however, other 
matters are properly presented, the persons named as proxy appointees will vote 
in accordance with their best judgment on such matters. The grant of a proxy    
will also confer discretionary authority on the persons named in the proxy as   
proxy appointees to vote in accordance with their best judgment on matters      
incident to the conduct of the NHL Meeting.                                     

 A holder of NHL Common Stock entitled to vote at the NHL Meeting may revoke a
proxy at any time before it is voted by filing with the General Counsel of NHL, 
James G. Richmond, 4225 Executive Square, Suite 805, La Jolla, CA 92037, an     
instrument revoking the proxy, by submitting a duly executed proxy bearing a    
later date or by attending the NHL Meeting and voting in person. Attendance at  
the NHL Meeting will not by itself constitute revocation of a proxy.            

 NHL STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY CARDS. A
TRANSMITTAL FORM WITH INSTRUCTIONS WITH RESPECT TO THE SURRENDER OF NHL STOCK   
CERTIFICATES WILL BE MAILED TO EACH NHL STOCKHOLDER AS SOON AS PRACTICABLE      
AFTER THE EFFECTIVE TIME.                                                       

NHL SHARE OWNERSHIP                                                             

The following table sets forth information with respect to all stockholders 
known by NHL to beneficially own more than 5% of the outstanding shares of NHL  
Common Stock as of March 15, 1995:                                              

                                                                [Download Table]

                                                       AMOUNT AND NATURE PERCENT
                                                         OF BENEFICIAL     OF   
                                                           OWNERSHIP      CLASS 
                                                       ----------------- -------
                                                                                
Ronald O. Perelman....................................    20,176,729(1)     24% 
  35 East 62nd Street                                                           
  New York, NY 10021                                                            
GEICO Corporation.....................................     6,404,000         7  
  GEICO Plaza                                                                   
  Washington, D.C. 20076                                                        
The Equitable Companies Incorporated..................     5,812,300(2)      7  
  787 Seventh Avenue                                                            
  New York, NY 10019                                                            
ESL Partners, L.P.....................................     4,653,400         5  
  LBP Associates, L.P.                                                          
  115 East Putnam Avenue                                                        
  Greenwich, CT 06830                                                           
Heine Securities Corporation..........................     4,356,500         5  
  51 John F. Kennedy Parkway                                                    
  Short Hills, NJ 07078                                                         

--------                                                                        
(1) All such shares of NHL Common Stock are owned by NHCG, a corporation        
   indirectly wholly owned through Mafco Holdings Inc. by Mr. Perelman. All of
such shares owned are pledged to secure obligations.                    
(2) As reported in the Schedule 13G filed with the SEC on February 10, 1995, on 
 behalf of The Equitable Companies Incorporated, 5,077,600 of these shares
   are held by Alliance Capital Management L.P., a subsidiary of The Equitable
Companies, for investment purposes on behalf of client discretionary    
investment advisory accounts, 697,500 of these shares are held by The   
  Equitable Life Assurance Society of the United States, a subsidiary of The
Equitable Companies, solely for investment purposes, and the remaining  
  37,200 of these shares are held by Donaldson, Lufkin & Jenrette Securities
   Corporation, a subsidiary of The Equitable Companies, solely for investment
purposes.                                                               

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 NHL knows of no other person who beneficially owned more than 5% of any class
of NHL's voting securities as of March 15, 1995. As of March 29, 1995, the      
directors and executive officers of NHL and their respective affiliates as a    
group (including Mr. Perelman) beneficially owned 21,881,466 shares of NHL      
Common Stock (representing 26% of the outstanding shares of NHL Common Stock),  
including 1,512,167 shares that the directors, executive officers and their     
respective affiliates had the right to acquire within 60 days after March 29,   
1995 through the exercise of stock options, and including 3,000 shares as to    
which the directors, executive officers and their respective affiliates either  
disclaimed beneficial ownership or did not have sole dispositive and voting     
power. Other than Mr. Perelman, no director or executive officer of NHL         
beneficially owned in excess of 1% of the outstanding shares of NHL Common      
Stock as of March 29, 1995. The directors and executive officers of NHL have    
indicated that they intend to vote the shares as to which they have sole voting 
power FOR the approval and adoption of the Merger Agreement. Pursuant to the    
Sharing and Call Option Agreement, NHCG has agreed to vote all shares of NHL    
Common Stock owned by it in favor of the approval and adoption of the Merger    
Agreement.                                                                      

THE CLINICAL LABORATORY TESTING INDUSTRY

GENERAL                                                                         

Laboratory tests and procedures are used generally by hospitals, physicians 
and other health care providers to assist in the diagnosis, evaluation,         
monitoring and treatment of diseases and other medical conditions through the   
examination of substances in the blood, tissues and other specimens. Clinical   
laboratory testing is generally categorized as either clinical testing, which   
is performed on bodily fluids including blood and urine, or anatomical          
pathology testing, which is performed on tissue and other samples, including    
human cells. Clinical and anatomical pathology procedures are frequently        
ordered as part of regular physician office visits and hospital admissions in   
connection with the diagnosis and treatment of illnesses. Certain of these      
tests and procedures are used principally as tools in the diagnosis and         
treatment of a wide variety of medical conditions such as cancer, AIDS,         
endocrine disorders, cardiac disorders and genetic disease. The most frequently 
requested tests include blood chemistry analyses, urinalyses, blood cell        
counts, PAP smears, AIDS tests, microbiology cultures and procedures and        
alcohol and other substance-abuse tests. The clinical laboratory industry       
consists primarily of three types of providers: hospital-based laboratories,    
physician-office laboratories and independent clinical laboratories, such as    
those owned by NHL and RBL.                                                     

NHL and RBL believe that in 1994 about half of the clinical laboratory      
testing revenues in the United States were derived by hospital-based            
laboratories and approximately half of the revenues was derived by independent  
laboratories and by physicians in their offices and laboratories. The HCFA has  
estimated that there are approximately 5,700 independent clinical laboratories  
in the United States. NHL and RBL believe that the volume of clinical           
laboratory testing has grown over the past few years due to several factors,    
including primarily: an expanded base of scientific knowledge which has led to  
the development of more sophisticated specialized tests and an increase in the  
awareness of physicians of the value of clinical laboratory testing as a cost-  
effective means of prevention, early detection of disease and monitoring of     
treatment. Additional factors which have contributed to the recent growth       
include: an increase in the number and types of tests which are, due to         
advances in technology and increased cost efficiencies, readily available on a  
more affordable basis to physicians; expanded substance-abuse testing by        
corporations and governmental agencies; increased testing for sexually          
transmitted diseases such as AIDS and the general aging of the population in    
the United States.                                                              

EFFECT OF THE GROWTH OF THE MANAGED CARE SECTOR ON THE CLINICAL LABORATORY      
BUSINESS                                                                        

Many market-based changes in the clinical laboratory business have occurred,
most notably involving the shift away from traditional, fee-for-service         
medicine and toward managed-cost health care. The growth of the managed care    
sector presents various challenges to NHL and RBL and other independent         
clinical laboratories. Managed care providers typically contract with a limited 
number of clinical laboratories and                                             

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negotiate discounts to the fees charged by such laboratories in an effort to    
control costs. In addition, managed care providers have used capitated payment  
contracts in an attempt to promote more efficient use of laboratory test        
services. Under a capitated payment contract, the clinical laboratory and the   
managed care provider agree to a per member per month payment to cover all      
laboratory tests during the month, regardless of the number or cost of the      
tests actually performed. Such contracts shift the risks of additional testing  
beyond that covered by the capitated payment to the clinical laboratory.        

Historically, NHL has had a limited presence in the managed care sector. In 
1993, NHL assembled a dedicated sales force to address this increasingly        
important market segment. In the last two years, NHL's revenues from the        
managed care sector have risen from approximately 3% of total revenues to       
approximately 8-9% of total revenues. For the last several years RBL has had a  
strong presence in the managed care sector and has designed its sales efforts   
to expand its presence in that sector. RBL's net sales from the managed care    
sector were approximately 12% for the year ended December 31, 1994. There can   
be no assurance, however, that the Surviving Corporation will be successful in  
expanding its share of this market sector, or that the Surviving Corporation    
will not experience additional declines in test utilization or per-test revenue 
in the future as a result of managed care growth or otherwise.                  

In response to the growth of the managed care sector and the developments   
described above, many health care providers have established new alliances.     
Hospital-physician networks are emerging in many markets in order to offer      
comprehensive, integrated service capabilities, either to the managed care      
plans or directly to employers. While adapting to these changes, the clinical   
laboratory industry is also facing a significantly intensified level of         
regulatory and investigative scrutiny, in many cases in areas that have, until  
recently, been left without clear regulatory guidance for providers. There is   
currently uncertainty in the industry regarding the impact of these factors on  
the clinical laboratory business.                                               

COMPETITION                                                                     

The clinical laboratory business is highly fragmented and intensely         
competitive. According to HCFA representatives, there are over 151,000          
Federally regulated clinical laboratories, of which approximately 5,700 were    
independent clinical laboratories and the remainder were hospital-based         
laboratories and physician-office laboratories. RBL and NHL believe that during 
1994, approximately 50% of the clinical laboratory testing industry's revenues  
were generated by hospital laboratories, with the balance having been generated 
by independent clinical laboratories and by physician-office laboratories.      

In recent years, certain independent laboratories have engaged in           
acquisitions of other laboratories and taken advantage of opportunities for     
cost efficiencies afforded by larger scale, automated testing operations. For   
example, in June 1994, Corning Inc. ("Corning") and Nichols Institute entered   
into a merger agreement pursuant to which Corning acquired Nichols Institute in 
exchange for Corning common stock. In 1993 Corning acquired the stock of Damon  
Corporation and in June 1994, NHL acquired Allied. RBL and NHL believe that     
acquisition activity will continue in the clinical laboratory business. Several 
factors are contributing to this activity, including legislative initiatives    
such as restrictions on physician referrals and ownership of laboratories,      
increasing demand for higher quality services and more stringent service        
requirements, the growth of managed health care entities which require low-cost 
testing services and, generally, the demands by health care providers and       
payers for faster reporting of test results and lower prices.                   

Each of NHL and RBL competes primarily on the basis of the quality of its   
testing, reporting and information services, its reputation in the medical      
community, the pricing of its services and its ability to employ qualified      
laboratory personnel. Each of NHL and RBL also believes that its ability to     
compete also depends on its ability to make investments in equipment and        
management information systems and offer testing services on a broad regional   
geographic basis.                                                               

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REGULATION AND REIMBURSEMENT                                                    

Overview. The clinical laboratory industry is subject to significant        
governmental regulation at the Federal, state and local levels. Under CLIA,     
virtually all clinical laboratories, including those owned by NHL and RBL, must 
be certified by the Federal government. Many clinical laboratories also must    
meet governmental standards, undergo proficiency testing and are subject to     
inspection. Certifications or licenses are also required by various state and   
local laws.                                                                     

The health care industry is undergoing significant change as third party    
payers, such as Medicare (which principally serves patients 65 and older) and   
Medicaid (which principally serves indigent patients) and insurers, increase    
their efforts to control the cost, utilization and delivery of health care      
services. In an effort to address this problem of increasing health care costs, 
legislation has been proposed or enacted at both the Federal and state levels   
to regulate health care delivery in general and clinical laboratories in        
particular. Some of the proposals include managed competition, global budgeting 
and price controls. Although the Clinton Administration's health care reform    
proposal was not enacted by the 103rd Congress, such proposal or other          
proposals may be considered in the future. In particular, NHL and RBL believe   
that reductions in reimbursement for Medicare services will continue to be      
implemented from time to time. Reductions in the reimbursement rates of other   
third party payers may occur as well. Neither NHL or RBL can predict the effect 
health care reform, if enacted, would have on its business, and there can be no 
assurance that such reforms, if enacted, would not have a material adverse      
effect on the Surviving Corporation's business and operations.                  

Regulation of Clinical Laboratories. CLIA extends Federal oversight to      
virtually all clinical laboratories by requiring that laboratories be certified 
by the government. Many clinical laboratories must also meet governmental       
quality and personnel standards, undergo proficiency testing and be subject to  
biennial inspection. Rather than focusing on location, size or type of          
laboratory, this extended oversight is based on the complexity of the tests     
performed by the laboratory.                                                    

In 1992, HHS published regulations implementing CLIA. The quality standards 
and enforcement procedure regulations became effective in 1992, although        
certain personnel, quality control and proficiency testing requirements are     
currently being phased in by HHS. The quality standards regulations divide all  
tests into three categories (waivered, moderate complexity and high complexity) 
and establish varying requirements depending upon the complexity of the testing 
performed. A laboratory that performs high complexity tests must meet more      
stringent requirements than a laboratory that performs only moderate complexity 
tests, while those that perform only one or more of eight routine "waivered"    
tests may apply for a waiver from most requirements of CLIA. All major and many 
smaller NHL and RBL facilities are certified by CLIA to perform high complexity 
testing. The remaining smaller testing sites of NHL and RBL are certified by    
CLIA to perform moderate complexity testing or have obtained a waiver from most 
requirements of CLIA. Generally, the HHS regulations require, for laboratories  
that perform high complexity or moderate complexity tests, the implementation   
of systems that ensure the accurate performance and reporting of test results,  
establishment of quality control systems, proficiency testing by approved       
agencies and biennial inspections.                                              

The sanction for failure to comply with these regulations may be suspension,
revocation or limitation of a laboratory's CLIA certificate necessary to        
conduct business, significant fines and criminal penalties. The loss of a       
license, imposition of a fine or future changes in such Federal, state and      
local laws and regulations (or in the interpretation of current laws and        
regulations) could have a material adverse effect on the Surviving Corporation  
and its subsidiaries.                                                           

NHL and RBL are also subject to state regulation. CLIA provides that a state
may adopt more stringent regulations than Federal law. For example, state law   
may require that laboratory personnel meet certain qualifications, specify      
certain quality controls, maintain certain records and undergo proficiency      
testing. For                                                                    

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example, certain of NHL's and RBL's laboratories are subject to the State of    
New York's clinical laboratory regulations, which contain provisions that are   
more stringent than Federal law.                                                

NHL's and RBL's laboratories have continuing programs to ensure that their  
operations meet all applicable regulatory requirements.                         

Regulation Affecting Reimbursement of Clinical Laboratory                   
Services. Containment of health care costs, including reimbursement for         
clinical laboratory services, has been a focus of ongoing governmental          
activity. In 1984, Congress established a Medicare fee schedule for clinical    
laboratory services performed for patients covered under Part B of the Medicare 
program. Subsequently, Congress imposed a national ceiling on the amount that   
can be paid under the fee schedule. Laboratories must accept the scheduled      
amount as payment in full for most tests performed on behalf of Medicare        
beneficiaries and must bill the program directly. In addition, state Medicaid   
programs are prohibited from paying more than the Medicare fee schedule amount  
for clinical laboratory services furnished to Medicaid recipients. In 1994, NHL 
and RBL derived approximately 35% and 27%, respectively, of their net sales     
from tests performed for beneficiaries of Medicare and Medicaid programs. In    
addition, NHL's and RBL's other business depends significantly on continued     
participation in these programs because clients often want a single laboratory  
to perform all of their testing services. Since the 1984 establishment of       
Medicare fee schedules, Congress has periodically reduced the ceilings on       
Medicare reimbursement to clinical laboratories from previously authorized      
levels. In 1993, pursuant to provisions in the Omnibus Budget and               
Reconciliation Act of 1993 ("OBRA '93"), Congress reduced, effective January 1, 
1994, the Medicare national limitations from 88% of the 1984 national median to 
76% of the 1984 national median, which reductions are being implemented on a    
phased-in basis from 1994 through 1996 (to 84% in 1994, 80% in 1995 and 76% in  
1996). The 1995 reduction to 80% was implemented as scheduled on January 1,     
1995. OBRA '93 also eliminated the provision for annual fee schedule increases  
based upon the consumer price index for 1994 and 1995. Because a significant    
portion of NHL's and RBL's costs are relatively fixed, these Medicare           
reimbursement reductions have a direct adverse effect on NHL's and RBL's net    
earnings and cash flows.                                                        

In addition, in 1993, Medicare and Medicaid determined to cease reimbursing 
laboratories for certain tests, such as LDL cholesterol, that had previously    
been reimbursable. Moreover, Medicare denied reimbursement to NHL for claims    
submitted for HDL cholesterol and serum ferritin (a measure of iron in the      
blood) tests from September 1993 to December 1993, at which time NHL removed    
such tests from its basic test profiles.                                        

In November 1994, the HCFA proposed changes in the policies used to         
administer Medicare payments to clinical laboratories for the most frequently   
performed automated blood chemistry profiles. Among other things, the proposed  
changes would establish a consistent standard nationwide for the content of the 
automated chemistry profiles. Another change incorporated in the HCFA proposal  
would require laboratories performing certain automated blood chemistry         
profiles to obtain and provide documentation of the medical necessity of tests  
included in the profiles for each Medicare beneficiary. If such a requirement   
were to be established, all laboratories would incur significant additional     
costs associated with compliance. In addition, if implemented, such changes     
would increase the losses associated with unreimbursed testing caused by the    
inability to obtain sufficient information from physicians to allow the         
laboratory to file valid claims with Medicare. The HCFA proposals may be        
modified or replaced with other proposals and no prediction can be made         
regarding what proposals, if any, will ultimately be adopted.                   

Future changes in Federal, state and local regulations (or in the           
interpretation of current regulations) affecting governmental reimbursement for 
clinical laboratory testing could have a material adverse effect on the         
Surviving Corporation. NHL and RBL are unable to predict, however, whether and  
what type legislation will be enacted into law.                                 

Fraud and Abuse Regulations. The Medicare and Medicaid anti-kickback laws   
prohibit intentionally paying anything of value to influence the referral of    
Medicare and Medicaid business. HHS has published                               

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safe harbor regulations which specify certain business activities that do not   
violate the Medicare/Medicaid anti-kickback laws. Failure to fall within a safe 
harbor does not constitute a violation of the anti-kickback laws; rather, the   
arrangement would remain subject to scrutiny by HHS.                            

 In October 1994, the OIG of HHS issued a Special Fraud Alert, which set forth
a number of practices allegedly engaged in by clinical laboratories and health  
care providers that the OIG believes violate the anti-kickback laws. These      
practices include providing employees to collect patient samples at physician   
offices if the employees perform additional services for physicians that are    
typically the responsibility of the physicians' staff; selling laboratory       
services to renal dialysis centers at prices that are below fair market value   
in return for referrals of Medicare tests which are billed to Medicare at       
higher rates; providing free testing to a physician's HMO patients in           
situations where the referring physician benefits from such lower utilization;  
providing free pick-up and disposal of bio-hazardous waste for physicians for   
items unrelated to a laboratory's testing services; providing facsimile         
machines or computers to physicians which are not exclusively used in           
connection with the laboratory services performed; and providing free testing   
for health care providers, their families and their employees (professional     
courtesy testing). The OIG stressed in the Fraud Alert that when one purpose of 
the arrangements is to induce referral of program-reimbursed laboratory         
testing, both the clinical laboratory and the health care provider or physician 
may be liable under the anti-kickback laws and may be subject to criminal       
prosecution and exclusion from participation in the Medicare and Medicaid       
programs.                                                                       

According to the 1995 work plan of the OIG, its recently established Office 
of Civil Fraud and Administrative Adjudication ("OCFAA") will be responsible    
for protecting the government-funded health care programs and deterring         
fraudulent conduct by health care providers through the negotiations and        
imposition of civil monetary penalties, assessments and program exclusions. The 
OCFAA works very closely with the Department of Justice, the Office of General  
Counsel and the OIG investigative and audit offices in combatting fraud and     
abuse. In addition, the OIG has stated in its 1995 work plan that it will       
determine the extent to which laboratories supply physicians' offices with      
phlebotomists (blood-drawing technicians), offer management services or medical 
waste pick-up to physicians, provide training to physicians or engage in other  
financial arrangements with purchasers of laboratories' services. The OIG will  
assess the potential benefits of such arrangements as well as the extent to     
which such arrangements might be unlawful.                                      

Infectious Wastes and Radioactive Materials. NHL and RBL are subject to     
licensing and regulation under Federal, state and local laws relating to the    
handling and disposal of medical specimens, infectious and hazardous waste and  
radioactive materials as well as to the safety and health of laboratory         
employees. All NHL and RBL laboratories are operated in accordance with         
applicable Federal and state laws and regulations relating to biohazard         
disposal of all laboratory specimens and both NHL and RBL utilize outside       
vendors for disposal of such specimens. Although NHL and RBL each believes that 
it is currently in compliance in all material respects with such Federal, state 
and local laws, failure to comply could subject NHL and RBL to denial of the    
right of conduct business, fines, criminal penalties and/or other enforcement   
actions.                                                                        

 Occupational Safety. In addition to its comprehensive regulation of safety in
the workplace, the Federal Occupational Safety and Health Administration        
("OSHA") has established extensive requirements relating to workplace safety    
for health care employers, including clinical laboratories, whose workers may   
be exposed to blood-borne pathogens such as HIV and the hepatitis B virus.      
These regulations, among other things, require work practice controls,          
protective clothing and equipment, training, medical follow-up, vaccinations    
and other measures designed to minimize exposure to, and transmission of,       
blood-borne pathogens. In addition, in January 1990, OSHA established safety    
requirements for the use of chemicals as reagents and for other purposes.       

Drug Testing. Drug testing for public sector employees is regulated by the  
Substance Abuse and Mental Health Services Administration ("SAMSHA") (formerly  
the National Institute on Drug Abuse), which has established detailed           
performance and quality standards that laboratories must meet in order to be    
approved to perform drug testing on employees of the Federal government,        
Federal government contractors and certain other entities. To the extent that   
NHL and RBL perform such testing, each must be certified as meeting             

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SAMSHA standards. NHL's Herndon, Virginia; Nashville, Tennessee; Redmond,       
Washington; Reno, Nevada and Winston Salem, North Carolina laboratories are     
SAMSHA-certified as are RBL's Research Triangle Park, North Carolina; Southern  
New Jersey and Raritan, New Jersey laboratories.                                

Controlled Substances. The use of controlled substances in testing for drugs
of abuse is regulated by the Federal Drug Enforcement Administration.           

 Specimen Transportation. Regulations of the Department of Transportation, the
Public Health Service and the Postal Service apply to the transportation of     
clinical laboratory specimens.                                                  

 Each of NHL and RBL believe that it is in compliance in all material respects
with all statutes, regulations and other requirements applicable to its         
clinical laboratory operations. The clinical laboratory testing industry is,    
however, subject to extensive regulation, and many of these statutes and        
regulations have not been interpreted by the courts. There can be no assurance  
therefore that applicable statutes and regulations might not be interpreted or  
applied by a prosecutorial, regulatory or judicial authority in a manner that   
would adversely affect NHL or RBL. Potential sanctions for violation of these   
statues and regulations include significant fines and the loss of various       
licenses, certificates and authorizations.                                      

OIG INVESTIGATIONS                                                              

In addition to general health care reform, the Federal government has been  
examining the rapid growth of Federal expenditures for clinical laboratory      
services. Several Federal agencies are responsible for investigating            
allegations of fraudulent and abusive conduct by health care providers,         
including the Federal Bureau of Investigation and the OIG. In its published     
work plan for 1992-1993, the OIG indicated its intention to target certain      
laboratory practices for investigation and prosecution. Pursuant to one such    
project described in such work plan, entitled "Laboratory Unbundle,"            
laboratories that offer packages of tests to physicians and "unbundle" them     
into several "tests to get higher reimbursement when billing Medicare and       
Medicaid" will be identified and "suitable cases will be presented for          
prosecution." Under another project described in such work plan, laboratories   
"that link price discounts to the volume of physician referrals, "unbundle'     
tests in order to bill Medicare at a higher total rate, and conduct unnecessary 
tests . . . will be identified to coordinate investigations throughout the      
country."                                                                       

 1992 NHL Government Settlement. In November 1990, NHL became aware of a grand
jury inquiry relating to its pricing practices being conducted by the United    
States Attorney for the San Diego area (the Southern District of California)    
with the assistance of the OIG. On December 18, 1992, NHL entered into the 1992 
NHL Government Settlement, which related to the government's contention that    
NHL improperly included its tests for HDL cholesterol and serum ferritin in its 
basic test profile, without clearly offering an alternative profile that did    
not include these medical tests. The government also contended that, in certain 
instances, physicians were told that these additional tests would be included   
in the basic test profile at no extra charge. As a result, the government       
contended, NHL's marketing activities denied physicians the ability to exercise 
their judgment as to the medical necessity of these tests.                      

Pursuant to the 1992 NHL Government Settlement, NHL pleaded guilty to the   
charge of presenting two false claims to the Civilian Health and Medical        
Program of the Uniformed Services ("CHAMPUS") and paid a $1 million fine. In    
connection with pending and threatened civil claims, NHL also agreed to pay     
$100 million to the Federal government in installments. At December 31, 1994,   
the remaining payments due to the government under the 1992 NHL Government      
Settlement aggregated $11.0 million. Concurrent with the 1992 NHL Government    
Settlement, NHL settled related Medicaid claims with states that account for    
over 99.5% of its Medicaid business and paid $10.4 million to the settling      
states.                                                                         

1993 OIG Investigation. In August 1993, RBL and Allied each received a      
subpoena from the OIG requesting documents and information concerning pricing   
and billing practices. According to published reports, other independent        
clinical laboratories have received similar subpoenas as part of a nationwide   
OIG audit and investigation. In September 1993, NHL received a subpoena from    
the OIG which required NHL                                                      

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to provide documents to the OIG concerning its regulatory compliance            
procedures. Each of NHL, RBL and Allied have complied with or are in the        
process of complying with their respective subpoenas and are cooperating with   
the related OIG investigation. Among other things, the OIG subpoena received by 
RBL and Allied called for the production of documents regarding 14 blood        
chemistry tests which were being or had been performed by certain independent   
clinical laboratories in conjunction with automated chemistry profiles and which
were being or had been billed separately to Medicare or Medicaid. An automated  
chemistry profile is a grouping of up to 23 tests that can be performed together
on a single specimen and that Medicare and Medicaid pay for under the Medicare  
fee schedule.                                                                   

Based on published reports, NHL and RBL believe that the OIG's investigation
is primarily focused on two alleged practices. The first alleged practice       
consists of offering the automated chemistry profile as a part of a "standard"  
blood chemistry profile that also includes one or more of the 14 tests          
referenced in the OIG subpoena in a manner which is misleading to the ordering  
physician or which fails to provide the physician with the choice of ordering   
only the automated chemistry profile. Representatives of the OIG have publicly  
stated that this practice may lead to the ordering of "unnecessary" tests. The  
second alleged practice involves the failure to disclose to physicians that the 
prices charged by those laboratories to Medicare and Medicaid for many of these 
tests referenced in the OIG subpoena were greater than the prices the           
laboratories charged to the physicians for those same tests where the tests     
were performed in conjunction with an automated chemistry profile.              
Representatives of the OIG have publicly stated that undisclosed pricing        
differences may cause physicians to believe incorrectly that they are ordering  
tests at little or no cost to the Medicare and Medicaid programs, possibly      
causing tests to be ordered which are not medically necessary. RBL's and        
Allied's laboratories have included some of the 14 tests in their respective    
"standard" blood chemistry profiles, and also in "custom" profiles created for  
individual physicians at their request. Tests performed for Medicare and        
Medicaid patients are, in accordance with applicable laws, billed directly to   
the Medicare and Medicaid programs.                                             

If the OIG were to pursue and successfully prove a violation of the laws    
related to the Medicare and Medicaid programs, potential sanctions may include  
significant fines, recovery of the amounts paid to the clinical laboratory for  
the tests involved and, in the case of a criminal conviction, mandatory         
exclusion from the Medicare and Medicaid programs for a period of at least five 
years. If the OIG asserts a claim against RBL or Allied and is successful in    
pursuing such a claim, RBL's or NHL's, as the case may be, business and         
financial condition could be adversely affected. Although neither the 1992      
Government Settlement nor, based on published reports, any settlement           
agreements with the OIG entered into by other major clinical laboratory         
companies, provided for exclusion from participation in the Medicare and        
Medicaid programs, there can be no assurance that RBL or Allied will be able to 
negotiate settlement agreements with similar terms if the government asserts    
(or threatens to assert) a claim. In addition, a criminal conviction or the     
successful prosecution of a civil fraud or false claims action could result in  
the exclusion of the defendant from the Medicare and Medicaid programs. Any     
such exclusion would likely have a material adverse effect on the Surviving     
Corporation's non-Medicare and non-Medicaid testing business. No prediction,    
however, can be made as to the outcome of the OIG investigation or the impact   
of such outcome on RBL's, NHL's or the Surviving Corporation's, as the case may 
be, financial condition or results of operations.                               

1994 OIG Investigation of Allied. In April 1994, Allied received a subpoena 
from the OIG requesting documents and certain information regarding the         
Medicare billing practices of its Cincinnati, Ohio clinical laboratory with     
respect to certain cancer screening tests. In March 1995, Allied resolved the   
issues raised by the April 1994 subpoena and a related qui tam action commenced 
in Cincinnati, Ohio Federal court by entering into agreements with, among       
others, HHS, the United States Department of Justice and the relators in the    
qui tam action pursuant to which it agreed to pay $4.9 million to settle all    
pending claims and inquiries regarding these billing practices and certain      
others. NHL had previously established reserves that were adequate to cover     
such settlement payment. In connection with the settlement, Allied agreed with  
HHS, among other things, to implement a corporate integrity program to ensure   
that Allied and its representatives remain in compliance with applicable laws   
and regulations and to provide certain reports and information to HHS regarding 
such compliance efforts.                                                        

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NHL 

 The following is a summary of certain information relating to the business of
NHL. Reference is made to, and this summary is qualified in its entirety by,    
the more detailed information contained in the NHL 10-K, which is incorporated  
herein by reference.                                                            

NHL, together with its recently acquired subsidiary, Allied, is the third   
largest independent clinical laboratory company in the United States (measured  
by net revenues). Through a national network of laboratories, NHL offers a      
broad range of testing services used by the medical profession to diagnose,     
monitor and treat diseases and other clinical states. NHL also provides         
extensive testing services in the areas of esoteric clinical testing, cytologic 
examinations and anatomical testing. Historically, office-based physicians have 
constituted substantially all NHL's clients. NHL is also increasing its         
position in the growing hospital, managed care and other non-physician          
segments.                                                                       

Laboratory Operations and Testing Services. NHL has 23 major laboratories,  
and approximately 950 service sites consisting of sales ports, patient service  
centers and STAT laboratories serving customers in 45 states. A "sales port" is 
a central office which collects specimens in a region for shipment to one of    
the NHL's laboratories for testing. Test results can be printed at a sales port 
and conveniently delivered to the client. A sales port also is used as a base   
for sales staff. A "patient service center" generally is a facility maintained  
by NHL to serve the physicians in a medical professional building. The patient  
service center collects specimens as requested by the physician. The specimens  
are sent, principally through NHL's in-house courier system (and, to a lesser   
extent, through independent couriers), to one of NHL's major laboratories for   
testing. Some of NHL's patient service centers have "STAT laboratories," which  
are laboratories that have the ability to perform certain routine tests quickly 
and report the results to the physician immediately.                            

Currently, NHL processes approximately 152,000 patient specimens on an      
average day. Patient specimens are delivered to NHL accompanied by a test       
request form. These forms, which are completed by the client, indicate the      
tests to be performed and provide the necessary billing information.            

Each specimen and related request form is checked for completeness and then 
given a unique identification number. The unique identification number assigned 
to each patient helps to assure that the results are attributed to the correct  
patient. The test request forms are sent to a data entry terminal where a file  
is established for each patient and the necessary testing and billing           
information is entered. Once this information is entered into the computer      
system, the tests are performed and the results are entered primarily via       
computer interface or manually, depending upon the tests and the type of        
equipment involved. Most of NHL's computer testing equipment is directly linked 
with NHL's computer system. Most routine testing is completed by early the next 
morning, and test results are printed and prepared for distribution by service  
representatives that day. Some clients have local printer capability and have   
reports printed out directly in their offices. Clients who request that they be 
called with a result are so notified in the morning. It is NHL's policy to      
notify the client immediately if at any time in the course of the testing       
process a life-threatening result is found.                                     

The vast majority of the tests performed by NHL are considered by NHL to be 
routine tests. NHL performs all such routine tests in each of its 23 major      
regional laboratories often using sophisticated and computerized laboratory     
testing equipment. Currently, NHL performs approximately 104 million routine    
tests on an annualized basis.                                                   

In March 1989, NHL opened a new, state-of-the-art national reference        
laboratory in Nashville, Tennessee. This laboratory provides a central location 
for esoteric testing for all NHL's major laboratories. NHL performs             
approximately 90% of all types of tests considered by NHL to be esoteric at     
this facility, representing approximately 2,300,000 tests annually. With the    
opening of this facility, NHL has reduced both the types and numbers of         
esoteric tests that are referred to outside laboratories to be performed.       

NHL also performs cytological and anatomical testing, which may be either   
routine or esoteric. NHL currently performs approximately 4.0 million cytologic 
examinations annually, 99% of which are PAP smears. In addition, NHL currently  
performs approximately 810,000 anatomical tests annually.                       

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NHL provides management services in a variety of additional health care     
settings. NHL generally provides the laboratory manager and other laboratory    
personnel, as well as, equipment and testing supplies to manage a laboratory    
that is owned by a hospital, physician or other health care provider. In        
addition, NHL maintains a data processing system to organize and report test    
results and to provide billing and other pertinent information to the tests     
performed in the managed laboratory. Under the typical clinical management      
agreement, the laboratory manager, who is employed by NHL, reports to the       
hospital or clinic administration. Thus, the provider maintains control of the  
laboratory. A pathologist designated by the provider serves as medical director 
for the laboratory.                                                             

RBL 

GENERAL                                                                         

RBL provides clinical laboratory testing services to physicians, hospitals  
and other clinical laboratories and offers a comprehensive line of over 1,600   
tests and procedures, all of which are performed in RBL's facilities.           

RBL is the fourth largest independent clinical laboratory in the United     
States (in terms of revenues for the year ended December 31, 1994). RBL         
provides clinical laboratory testing services to hospitals, laboratories and    
physicians and offers a comprehensive line of over 1,600 tests and procedures,  
all of which are performed in RBL's facilities, with a majority performed in    
RBL's 17 major testing centers located primarily in the midwestern, eastern and 
southern United States. For the year ended December 31, 1994, RBL derived       
approximately 58% of its revenues from testing services provided to physicians, 
about 11% from services provided to hospitals and the remaining 31% from        
services provided to other clinical laboratories (and other clients).           

Originally known as HLR Lab, RBL was formed on March 23, 1982 by Roche and  
acquired the business of BRL through a merger in June 1982. Following the       
merger, the surviving corporation changed its name to RBL in February 1983. The 
stock of RBL was subsequently transferred to HLR, a wholly owned subsidiary of  
Roche. Roche is an indirect wholly owned subsidiary of Roche Holding which was  
incorporated in 1896 in Basel, Switzerland under the name F. Hoffmann-La Roche  
and Co. RBL's headquarters and principal executive offices are located at 358   
South Main Street, Burlington, North Carolina 27215, and its telephone number   
is (800) 222-7566.                                                              

Roche Holding is the parent company of an international health care concern 
operating in more than 100 countries and employing approximately 60,000 people  
worldwide. Roche Holding assumed its present name in June 1989 following a      
restructuring which established Roche Holding solely as a holding company and   
transferred operating businesses and related assets and liabilities to a newly  
established operating subsidiary, F. Hoffmann-La Roche Ltd. HLR is a holding    
company for, among other businesses, Roche Holding's diagnostics subsidiaries   
operating principally in the United States.                                     

Roche Holding, including through its subsidiaries (collectively, the "Roche 
Group"), engages primarily in the development and manufacture of                
pharmaceuticals, vitamins and fine chemicals, diagnostics, flavors and          
fragrances and in the business of analytical laboratory services. The Roche     
Group is one of the world's leading research-based health care groups active in 
the discovery, development, manufacture and marketing of pharmaceuticals and    
diagnostic systems. The Roche Group is also one of the world's largest          
producers of vitamins and carotenoids and of fragrances and flavors. The        
principal executive offices of Roche Holding are located in Basel, Switzerland. 

LABORATORY TESTING OPERATIONS AND SERVICES                                      

Operational Facilities. RBL's business operations consist of the following  
facilities:                                                                     

Major and Subregional Laboratories. RBL operates 17 major testing centers in
which the majority of RBL's testing is performed. Such facilities receive       
specimens from surrounding branch locations and generally offer most of RBL's   
routine testing. Extensive use of automated instrumentation and computerization 
enables                                                                         

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these facilities to operate with high efficiency and low cost. Some of these    
facilities also have specialized testing capabilities that serve the entire     
clinical laboratory RBL network.                                                

Branches and STAT Laboratories. RBL has approximately 160 branch offices    
(also referred to as "sales ports" by certain other laboratories, including     
NHL) serving as hubs for RBL's professional service network (couriers, specimen 
pickup and result delivery) and which maintain daily contact with clients who   
forward specimens to RBL for testing. These offices stock supplies and forms    
needed by clients, coordinate specimen pickups, receive electronically          
transmitted results from RBL laboratory locations for delivery to clients and   
perform limited customer service functions. RBL operates approximately 100      
limited testing or "STAT" testing laboratories, which laboratories perform high 
priority or urgent testing at or near some of its branch locations, based on    
customer and market requirements.                                               

Patient Service Centers. RBL has approximately 440 patient service centers  
("PSCs") which perform specimen collection services for patients when specimens 
are not collected by the physicians in their own offices. RBL operates PSCs in  
medical buildings and other locations conveniently accessible to patients,      
staffed by RBL personnel qualified to draw blood and other specimens.           

Specialty Testing Centers. RBL's Center for Molecular Biology in Research   
Triangle Park, North Carolina, specializes in new test development and          
education and training related thereto. Additional specialized testing is       
performed in certain of RBL's facilities, notably involving identity testing    
and specialized microbiological procedures. Certain of RBL's other facilities   
include in their operations specialized testing capabilities for serving        
specific market needs, such as the performance of clinical research trials      
testing for pharmaceutical companies (Raritan, New Jersey) and veterinary       
testing (Burlington, North Carolina).                                           

During 1994, RBL performed testing for 80,000 patients on an average day.   
Samples are delivered to RBL accompanied by a test request form. Each specimen  
is given a unique identification number which helps to assure that the results  
are attributed to the right patient. The test request forms are sent to a data  
entry terminal where a file is established for each specimen and the necessary  
testing and billing information entered. With some clients, test ordering       
information is transferred electronically from the client's computer system to  
RBL's system. RBL operates an integrated network of computer systems that       
handles the tracking, scheduling and reporting for all RBL clients.             

Once the relevant information is entered into the system, the tests are     
performed and the results are entered either manually or through computer       
interface, depending upon the tests and the type of equipment involved. Most of 
RBL's testing equipment is interfaced with RBL's computer network. Most regular 
testing is completed by early the next morning and test results are printed and 
prepared for distribution that day. Some clients have local printer capability  
and have reports printed out directly in their offices. An increasing number of 
clients receive results through an electronic interface with an RBL facility.   
Clients who request that they be called with a result are so notified in the    
morning. In addition, certain critical test results are communicated by         
telephone as soon as the tests are completed.                                   

TYPES OF TESTING AND PROCEDURES                                                 

Physician Offices and Clinics. RBL currently offers approximately 1,600     
different clinical laboratory tests or procedures, approximately 1,000 of which 
have been widely available from clinical laboratories for use by physicians     
since the 1960s. Of these, 200 to 400 tests or procedures are frequently used   
in patient care to establish or support a diagnosis, to monitor treatment or    
medication or to search for an otherwise undiagnosed condition and are widely   
available at clinical laboratories. These types of tests and procedures are     
most often used by practicing physicians in their outpatient, office practices. 

 Hospitals. Hospitals generally maintain an on-site laboratory to perform most
of the same 200 to 400 routine tests or procedures and some additional, more    
specialized, procedures that must be promptly available for their admitted      
patients whose conditions and treatment are generally more acute than that of   
patients visiting clinics or physician offices. Many larger hospitals have the  
capability to perform an extensive range                                        

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of such specialized procedures. Some specialized tests or procedures may be     
sent to an outside reference laboratory such as RBL.                            

Niche (Specialty) Testing. RBL has been developing business from            
nontraditional customers such as industrial and corporate clients for more than 
a decade. Such customers have found a need for tests and procedures similar to  
certain of those offered by RBL to hospitals and physicians, such as            
employment-related testing for substance abuse and testing to determine         
exposure to toxic substances in the workplace.                                  

The following are niche businesses in which RBL offers testing and related  
services:                                                                       

Allergy Testing. RBL offers an extensive range of allergen testing services 
as well as a computerized analysis and a treatment program that enables primary 
care physicians to diagnose and treat many kinds of allergic disorders.         

Ambulatory Monitoring. RBL performs a computer assisted analysis of         
electrocardiograms and blood pressure measurements. Many of these analyses are  
submitted by physicians who require extended (up to 24 hours) monitoring of     
these parameters for patients.                                                  

Clinical Trials Testing. RBL regularly performs clinical laboratory testing 
for pharmaceutical companies conducting clinical research trials on new drugs.  
This testing often involves periodic testing of patients participating in the   
trial over several years.                                                       

 Diagnostic Genetics. RBL offers cytogenetic biochemical and molecular genetic
tests.                                                                          

Industrial Hygiene Testing. RBL maintains a separate testing facility in    
Richmond, Virginia, dedicated to the analysis of potentially toxic substances   
in the workplace environment.                                                   

Kidney Stone Analysis. RBL offers specialized patient analysis assessing the
risk of kidney stones based on laboratory measurements and patient history.     

 Oncology Testing. RBL offers an extensive series of testing technologies that
aid in diagnosing and monitoring certain cancers and predicting the outcome of  
certain treatments.                                                             

Identity Testing. RBL provides forensic identity testing used in connection 
with criminal proceedings and parentage evaluation services which are used to   
assist in the resolution of disputed parentage in child support litigation.     
Parentage testing involves the evaluation of immunological and genetic markers  
in specimens obtained from the child, the mother and the alleged father.        

Substance Abuse Testing. RBL provides urinalysis testing services for the   
detection of drugs of abuse for private and government customers, and also      
provides blood testing services for the detection of drugs of abuse and         
alcohol. These testing services are designed to produce "forensic" quality test 
results that satisfy the rigorous requirements for admissibility as evidence in 
legal proceedings.                                                              

Veterinary Testing. RBL offers clinical laboratory testing of animal        
specimens for veterinarians which require specialized testing procedures and    
handling due to their differing characteristics.                                

CLIENTS AND PAYEES                                                              

 RBL currently receives requests for tests or procedures from more than 50,000
physicians. In 1994, no single RBL client or group of RBL clients under the     
same contract accounted for more than three percent of RBL's net sales. RBL     
believes that the loss of any one of its laboratory service agreements would be 
unlikely to have a material adverse effect on RBL's financial results. For the  
year ended December 31, 1994, billings to private patients or their insurance   
carriers accounted for approximately 24% of RBL's net sales, billings to        
Medicare and Medicaid accounted for approximately 27% of net sales and billings 
paid directly by physicians and other commercial clients accounted for          
approximately 49% of RBL's net sales.                                           

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SALES AND MARKETING                                                             

RBL has, over the past several years, offered its services through a        
combination of direct sales generalists and specialists. Sales generalists      
market the mainstream or traditional routine laboratory services primarily to   
physicians, while specialists concentrate on individual market segments, such   
as hospitals or managed care organizations, or on testing niches, such as       
identity testing or genetic testing. Specialist positions are established when  
an in-depth level of expertise is necessary to effectively offer RBL's          
specialized services. When the need arises, specialists and generalists work    
cooperatively to address specific opportunities. In 1994, RBL employed          
approximately 190 generalists and 70 specialists. RBL sales generalists and     
specialists are compensated through a combination of salaries, commissions and  
bonuses, at levels commensurate with each individual's qualifications and       
responsibilities. Commissions are primarily based upon the individual's         
productivity in generating new business for RBL.                                

RBL also employs customer service representatives ("CSRs") to interact with 
clients on an ongoing basis. CSRs monitor the status of the services being      
provided to clients, act as problem-solvers, provide information on new testing 
developments and serve as the client's regular point of contact with RBL. In    
1994, RBL employed approximately 130 CSRs. CSRs are compensated with a          
combination of salaries and bonuses commensurate with each individual's         
qualifications and responsibilities.                                            

RBL believes that the clinical laboratory service business is shifting away 
from the traditional direct sales structure and into one in which the           
purchasing decisions for laboratory services are increasingly made by managed   
care organizations, insurance plans, employers and even patients themselves. In 
view of these changes, RBL has adapted its sales and marketing structure to     
more appropriately address the new opportunities. For example, RBL has expanded 
its specialist sales positions in both its primary business and its niche       
businesses in order to maximize RBL's competitive strengths of advanced         
technology and marketing focus. Additionally, RBL has begun to integrate        
traditional sales and customer support functions into a new position, the       
Account Manager, which position will have responsibility for certain sales,     
service and daily operational contact with physician-clients.                   

QUALITY ASSURANCE                                                               

RBL considers the quality of its tests to be of critical importance, and it 
has established a comprehensive quality assurance program for all of its        
laboratories and other facilities, designed to help assure accurate and timely  
test results. In addition to the compulsory external inspections and            
proficiency programs demanded by HCFA and other regulatory agencies, RBL has    
company-wide systems and procedures in place to emphasize and monitor quality   
assurance. All RBL regional laboratories are subject to on-site evaluations,    
the College of American Pathologists' ("CAP") proficiency testing program,      
state surveys and RBL's own internal quality control programs.                  

Internal Quality Control. RBL regularly performs internal quality control   
testing by running quality control samples with known values with patient       
samples submitted for testing. All quality control sample test results are      
entered into RBL's national laboratory computer, which connects RBL facilities  
nationwide to a common on-line quality control database. This system helps      
technologists and technicians check quality control values and requires further 
prompt verification if any quality control value is out of range. RBL has an    
extensive, internally administered program of blind sample proficiency testing  
(i.e. the testing laboratory does not know the sample being tested is a quality 
control sample), as part of which RBL locations receive specimens from the RBL  
Quality Assurance and Corporate Technical Services departments for analysis.    

 External Proficiency/Accreditations. RBL participates in numerous externally-
administered, blind quality surveillance programs, including the CAP program.   
The blind programs supplement all other quality assurance procedures and give   
RBL management the opportunity to review its technical and service performance  
from the client's perspective.                                                  

The CAP accreditation program involves both on-site inspections of the      
laboratory and participation in the CAP's proficiency testing program for all   
categories in which the laboratory is accredited by the CAP.                    

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The CAP is an independent non-governmental organization (which has been         
recently accredited by HCFA to inspect clinical laboratories to determine CLIA  
qualifications) of board certified pathologists which offers an accreditation   
program to which laboratories can voluntarily subscribe. A laboratory's receipt 
of accreditation by the CAP satisfies the Medicare requirement for              
participation in proficiency testing programs administered by an external       
source. All of RBL's major laboratories are accredited by the CAP. See "THE     
CLINICAL LABORATORY TESTING INDUSTRY--Regulation and Reimbursement."            

RAW MATERIALS AND SUPPLIES                                                      

RBL purchases substantially all of its raw materials (primarily chemicals)  
and supplies from various commercial sources in the United States. RBL is not   
dependent upon any one or a limited number of suppliers and has not experienced 
any difficulties in obtaining necessary supplies.                               

EMPLOYEES                                                                       

On December 31, 1994, RBL had approximately 7,800 full-time employees and   
approximately 1,070 part-time employees. RBL's employees have never been        
covered by a collective bargaining agreement. RBL does, however, receive        
courier services on western Long Island, New York, from its affiliate Lab       
Delivery Services of N.Y., Inc., whose 30 employees are covered by a collective 
bargaining agreement. RBL has never experienced any significant work stoppages, 
slowdowns or other serious labor problems and considers relations with its      
employees to be good.                                                           

PROPERTIES                                                                      

The following table summarizes certain information as to RBL's principal    
operating and administrative facilities as of December 31, 1994:                

                                                        [Enlarge/Download Table]

                         APPROXIMATE                                                 
                          SQ. FEET                                                   
LOCATION(1)               OF SPACE                 NATURE OF OCCUPANCY               
-----------              -----------               -------------------               
                                                                                     
Operating Facilities                                                                 
  Birmingham, AL........    98,000   lease expires 2005                              
  Burlington, NC........   205,000   owned                                           
  Charleston, SC........     9,000   lease expires 1998                              
  Charlotte, NC.........    25,000   lease expires 1995; renewal option every 3 years
  Chesapeake, VA........    21,000   lease expires 2002; three 5 year renewal options
  Columbia, SC..........    21,000   lease expires 2002; two 5 year renewal options  
  Dublin, OH............    82,000   owned                                           
  Fairmount, WV.........    25,000   lease expires 2005; three 5 year renewal options
  Houston, TX...........    29,000   lease expires 1998                              
  Kansas City, MO.......    28,000   owned                                           
  Pensacola, FL.........    16,000   owned                                           
  Raritan, NJ...........   186,000   owned                                           
  Research Triangle         71,000   lease expires 2008; three 5 year renewal options
  Park, NC..............                                                             
                            70,000   lease expires 1996; two 5 year renewal options  
  Richmond, VA..........    57,000   lease expires 2001; one 5 year renewal option   
  Southhaven, MS........    25,000   owned                                           
                             4,000   lease expires 1995; annual renewal options      
                             5,000   lease expires 1996; one 3 year renewal option   
  Tucker, GA............    22,000   lease expires 1999                              
  Wichita, KS...........    25,000   lease expires 2003; two 5 year renewal options  
Administrative Facilities                                                            
  Burlington, NC........   127,000   owned                                           
                            59,000   lease expires 2008; option to purchase          
                            14,000   lease expires 1998; option to purchase          
                             9,000   lease expires 1997; two 3 year renewal options  
                             9,000   lease expires 1997; three 3 year renewal options
                             7,000   lease expires 1997; three 3 year renewal options

--------                                                                        
(1) Multiple entries listed under a single location indicate separate           
properties.                                                             

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 All of the principal operating facilities have been built or improved for the
single purpose of providing clinical laboratory testing services. RBL believes  
that these facilities are suitable and adequate and have sufficient operating   
capacity for its currently foreseeable level of operations. RBL believes that   
if it were to lose the lease on any of the facilities it presently leases, it   
could find alternate space at competitive market rates and readily relocate its 
operations to such new locations without material disruption to its operations. 

LEGAL PROCEEDINGS AND INSURANCE                                                 

RBL is involved in litigation usually arising in the ordinary course of its 
business. Such litigation usually involves claims for compensation for damages  
purportedly arising as a result of the services rendered by RBL. Most claims    
are disposed of through the exoneration of RBL or the payment by RBL of         
relatively small amounts.                                                       

For a description of a pending investigation by the OIG of RBL, see "THE    
CLINICAL LABORATORY TESTING INDUSTRY--OIG Investigations".                      

The performance of clinical laboratory testing services subjects RBL to the 
risk of professional liability claims, which may be substantial, that could     
result from inaccurate testing results, including claims that may result from   
testing for cancer and drug abuse. RBL maintains liability insurance for such   
liability claims (subject to maximums and self-insured retentions). RBL has     
participated in a self-insurance program which covers Roche and all of Roche's  
wholly owned subsidiaries. Participants self-insure certain self-insured        
retention amounts which vary depending upon the liabilities covered. For        
example, during 1994, the self-insured retention for products and clinical      
testing claims and losses was $25 million and for medical malpractice and       
general liability claims was $5 million. Once any combination of payments by    
the covered participants exceeds the self-insured retention amount, additional  
amounts are covered by significant levels of excess insurance. Participation in 
the Roche self-insurance program will cease upon the completion of the Merger.  

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

RESULTS OF OPERATIONS OF RBL (DOLLARS IN MILLIONS)                              

Year Ended December 31, 1994 compared with Year Ended December 31, 1993. Net
sales for the year ended December 31, 1994 were $729.8, an increase of 2.6%     
from $711.6 reported in 1993. Growth in new accounts and other volume-related   
growth increased net sales by approximately 7.6%. This increase was offset by a 
reduction in Medicare fee schedule reimbursement rates from 88% to 84% of the   
1984 national median fee amounts, effective January 1, 1994, reducing net sales 
by approximately 0.7%, and an adjustment to Medicare fee schedules to           
discontinue reimbursement for certain procedures, effective August 1, 1993,     
reducing net sales by approximately 5.2%. An increase in net sales of           
approximately 0.9% resulted from price increases effective December 1, 1993 and 
1994, and was partially offset by price erosion in the industry as a whole,     
utilization declines as a result of an increased presence of capitated managed  
care arrangements and severe weather in the first quarter of 1994. Sales        
derived from tests performed for beneficiaries of Medicare and Medicaid         
programs were approximately 26.8% and 29.2% of net sales for the years ended    
December 31, 1994 and 1993, respectively.                                       

Cost of sales, which primarily includes laboratory and distribution costs,  
was $498.0 for the year ended December 31, 1994, an increase of 1.9%, from      
$488.7 in 1993. The increase is attributable primarily to an increased number   
of patient service centers opened to meet market demand and to increased        
testing volume. Partially offsetting this increase was the implementation of a  
cost containment program by management to eliminate excess non-value adding     
costs through a reduction of 10.1% of its full and part-time employees in 1994  
and closure of certain laboratories. As a percentage of net sales, cost of      
sales was 68.2% and 68.7% for the years ended December 31, 1994 and 1993        
respectively.                                                                   

Selling, general and administrative expenses were $152.7 for the year ended 
December 31, 1994, an increase of 1.6% from $150.3 in 1993. Included in the     
increase were approximately $3.4 in additional litigation and future claims     
reserves recorded in 1994. The reserves were slightly increased to provide for  
settlement of certain litigation and to provide a reserve for unasserted        
claims. As a percentage of net sales, selling, general and administrative       
expenses were 20.9% and 21.1% for the year ended December 31, 1994 and 1993,    
respectively.                                                                   

 RBL management believes that scheduled Medicare fee reductions will adversely
affect net sales. These fees were reduced from 84% to 80% of the 1984 national  
median fee amounts, effective January 1, 1995, to be followed by an additional  
reduction to 76% of such amounts effective January 1, 1996. As a result, cost   
of sales as a percentage of net sales, and selling, general, and administrative 
expenses as a percentage of net sales will be also adversely affected. RBL      
management is unable to predict if fee reductions or utilization declines will  
continue or the ultimate impact of these factors on net sales or results of     
operations. RBL management believes that the increases in cost of sales as a    
percentage of net sales and selling, general and administrative expenses as a   
percentage of net sales may be offset through ongoing comprehensive cost        
reduction programs at RBL's facilities. However, there can be no assurance of   
the timing or the success of such measures.                                     

Amortization of goodwill and other intangibles increased to $13.9 for the   
year ended December 31, 1994 from $13.2 for the year ended December 31, 1993,   
due to an adjustment of amortization expense for certain intangible assets      
which were fully amortized during 1994.                                         

 Interest expense increased from $15.4 for the year ended December 31, 1993 to
$15.5 for the year ended December 31, 1994.                                     

Other income, net, for the year ended December 31, 1994 was ($0.9) compared 
to other expense, net, of $0.8 for the year ended December 31, 1993. The        
increase is primarily attributed to a gain of ($1.3) resulting                  
from the sale of a building and land RBL owned in Sacramento, California.       
Additionally, RBL divested certain operations in New England, which resulted in 
a gain of approximately ($1.0).                                                 

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The provision for income taxes as a percentage of income before taxes is    
44.8% for the year ended December 31, 1994 compared to 45.6% for the year ended 
December 31, 1993.                                                              

Year Ended December 31, 1993 compared with Year Ended December 31, 1992. Net
sales were $711.6 in 1993, an increase of 6.6% from $667.4 in 1992. Growth in   
new accounts and other volume-related growth increased net sales by             
approximately 7.9%. This increase was offset by a reduction of approximately    
2.2% in net sales as a result of discontinued Medicare fee schedule             
reimbursement for certain procedures, effective August 1, 1993. A price         
increase effective December 1, 1992, partially offset by price erosion in the   
industry as a whole and an increasing presence of capitated managed care        
arrangements, resulted in an increase in net sales of approximately 0.9%. Sales 
derived from tests performed for beneficiaries of Medicare and Medicaid         
programs were approximately 29.2% and 29.5% of net sales in 1993 and 1992,      
respectively.                                                                   

Cost of sales primarily includes laboratory and distribution costs and was  
$488.7 in 1993, an increase of 6.4% from $459.2 in 1992. As a percentage of net 
sales, cost of sales slightly decreased to 68.7% in 1993 from 68.8% in 1992.    
Cost of sales increased in 1993 primarily as a result of the reduction in       
Medicare reimbursements. As a percentage of net sales, this increase, however,  
was offset by management's implementation of a cost containment program in 1993 
to eliminate excess non-value adding costs through headcount reductions and     
closure of certain laboratories.                                                

Selling, general, and administrative expenses were $150.3 in 1993, an       
increase of 11.7% from $134.6 in 1992. As a percentage of net sales, selling,   
general, and administrative expenses increased to 21.1% in 1993 compared with   
20.2% in 1992. A large portion of this increase is attributable to the increase 
in the provision for bad debts. Bad debts as a percentage of net sales          
increased from 3.6% in 1992 to 4.3% in 1993 primarily as a result of the weak   
economy and the impact of a significant patient price increase in 1992.         

Amortization of goodwill and other intangibles increased to $13.2 in 1993   
from $13.1 in 1992. This increase is attributable to a full year of             
amortization related to the CompuChem Corporation acquisition in 1993 compared  
to 10.5 months in 1992.                                                         

Interest expense decreased from $24.5 in 1992 to $15.4 in 1993, attributable
primarily to lower average interest rates on outstanding debt.                  

 Other expenses, net, increased to $0.8 in 1993 compared to other income, net,
of ($0.7) in 1992. This additional 1993 expense increase was primarily          
attributable to a write-off of an old laboratory facility in Columbus, Ohio.    

The provision for income taxes as a percentage of income before taxes       
increased to 45.6% in 1993 from 45.3% in 1992.                                  

LIQUIDITY AND CAPITAL RESOURCES (DOLLARS IN MILLIONS)                           

RBL has generated cash flow in excess of operating requirements in each of  
the three past years. For the years ended December 31, 1994, 1993 and 1992, net 
cash provided by operations was $32.9, $38.7 and $120.5, respectively.          

Cash used for net capital expenditures was $30.1, $29.1 and $34.7 for the   
years ended December 31, 1994, 1993 and 1992, respectively. RBL estimates that  
capital expenditures will approximate $35.0 in 1995 to accommodate increased    
testing volume and to further improve efficiency and laboratory processes with  
new technologically advanced equipment and computer support.                    

During 1994, RBL acquired four small clinical laboratory companies for an   
aggregate amount of $1.0 in cash and the recognition of $0.1 of liabilities.    
RBL acquired six small laboratory companies during 1993 for an aggregate amount 
of $1.3 in cash. In 1992, RBL acquired six small clinical laboratory companies  
for an aggregate amount of $1.9 in cash and the recognition of $0.2 of          
liabilities. Also in 1992, RBL acquired all of the issued and outstanding stock 
of CompuChem Corporation. The purchase price consisted of $74.6 in              

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cash for the shares and certain transaction costs. The acquisition was          
accounted for as a purchase and resulted in $63.7 of goodwill and other         
intangible assets.                                                              

Historically, RBL has relied on HLR, the direct parent of RBL, for cash     
needs. All excess cash generated from operations is paid to HLR through a daily 
cash sweep. In 1989, RBL incurred $200.0 of indebtedness. Interest payments on  
this debt, which are based on LIBOR, amounted to $7.8, $8.7 and $17.2 for 1994, 
1993 and 1992, respectively. Additionally, RBL has intercompany notes due to    
HLR arising from acquisitions made in prior years. At December 31, 1994, 1993,  
and 1992, this intercompany debt aggregated $85.1. Interest expense on the debt 
is paid to HLR semi-annually. A portion of this debt carries a LIBOR based      
rate, and a portion of the debt carries a fixed interest rate of 11.5%. The     
daily cash sweep described above will not continue following the Merger.        

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THE MERGER

BACKGROUND OF THE MERGER                                                        

As a result of many factors, including the factors described under "CERTAIN 
CONSIDERATIONS--Governmental Regulation", "--Limitations on Third Party Payor   
Reimbursement of Health Care Costs", "--Potential Additional Costs Resulting    
From Proposed Medicare Administrative Policies" and "--Challenges Presented by  
the Growth of the Managed Care Sector", the clinical laboratory industry has    
been experiencing significant acquisition activity. The NHL Board has from time 
to time discussed these industry developments and their implications. In 1993,  
the NHL Board expressly authorized James R. Maher, the President and Chief      
Executive Officer of NHL, to undertake a program of acquisitions of smaller     
clinical laboratory companies. Although the NHL Board believed that NHL could   
continue independently without combining with another large laboratory company, 
it recognized that NHL might be more successful when combined with one of the   
other large clinical laboratory companies because of the significant synergies  
that could be achieved. Accordingly, the NHL Board indicated its receptiveness  
to pursuing such a transaction, and Mr. Maher had general authority, as NHL's   
Chief Executive Officer and a member of the NHL Board's Executive Committee, to 
initiate and conduct discussions with respect to a possible combination         
transaction involving NHL with representatives of and advisors to other         
clinical laboratory companies.                                                  

In the early spring of 1994, NHL engaged in discussions with another large  
clinical laboratory company about a possible business combination. The NHL      
Board of Directors considered the proposed transaction at two separate board    
meetings at which presentations were made by the management of NHL and its      
legal and financial advisors. Although the discussions with the other clinical  
laboratory company did not result in the execution of an agreement with respect 
to a transaction, the NHL Board's review and analysis of the proposed           
transaction made it aware of the benefits that could be achieved through the    
combination of two large clinical laboratory companies.                         

In April 1994, following the termination of the discussions described above,
James R. Maher, the President and Chief Executive Officer of NHL, who had       
become aware that CS First Boston Corporation ("CS First Boston") was acting as 
financial advisor to HLR and RBL, telephoned CS First Boston for the purpose of 
exploring a possible merger between NHL and RBL. Following that conversation,   
CS First Boston, on behalf of HLR and RBL, sent to Mr. Maher certain            
preliminary information relating to a combination transaction involving NHL and 
RBL, including financial information for the two companies and Roche's initial  
position as to the relative valuations of the two companies given various       
transaction structures. Mr. Maher subsequently contacted Charles R. Cory, a     
representative of Morgan Stanley, to inform him of the developments. Morgan     
Stanley had been retained by NHL in 1993 in connection with NHL's proposed      
acquisition of Damon Corporation, had just served as NHL's financial advisor in 
connection with the discussions with another large clinical laboratory company  
about a possible combination transaction that had taken place in the early      
spring of 1994 and was at the time serving as NHL's financial advisor in        
connection with preparations for the Allied Acquisition, NHL's financing plans  
and certain other matters. Accordingly, representatives of Morgan Stanley were  
very familiar with NHL and the clinical laboratory industry, had attended and   
made presentations at various meetings of the NHL Board of Directors and were   
personally known to the directors. Although NHL did not enter into a formal     
engagement letter with Morgan Stanley with respect to the NHL-RBL transaction   
until December 1994, Morgan Stanley was acting as NHL's financial advisor       
throughout the course of the negotiations with Roche and its affiliates.        

 On May 3, 1994, the NHL Board of Directors authorized the Allied Acquisition,
which was finally consummated on June 23, 1994. At the May 3rd meeting, Mr.     
Maher briefed the NHL Board with respect to the contacts that had occurred      
between representatives of NHL and representatives of Roche and RBL.            

On May 5, 1994, a representative of CS First Boston sent to Mr. Maher a     
revised proposal with respect to certain elements of a potential transaction    
between NHL and RBL which assumed, among other things, that newly issued shares 
representing 43% of the outstanding NHL shares would be issued to HLR in        
exchange for all of the shares of RBL and that approximately 20% of the then    
outstanding NHL shares would                                                    

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be purchased by NHL in a self-tender or share repurchase program at $15 per     
share. On May 9, 1994, Mr. Maher met with Thomas P. Mac Mahon, a Senior Vice    
President of Roche and the President of Roche Diagnostics Group, and a          
representative of CS First Boston to discuss the possibility of a merger. At    
this meeting representatives of each company discussed their recent results of  
operations and their respective business strategies. The parties also discussed 
their views regarding the proposed terms set forth in the materials provided by 
CS First Boston to Mr. Maher. The meeting concluded with a decision to proceed  
with further discussions, to gather and exchange financial information and to   
meet again soon thereafter to introduce senior management of each company to    
their counterparts. Subsequently, on May 17, 1994, representatives of the       
managements of NHL and RBL, Mr. Mac Mahon and representatives of CS First       
Boston met to produce a detailed analysis of the potential for operating        
efficiencies and cost savings that could be generated by a combination of the   
two companies and to discuss their views regarding the operation of their       
business and the clinical laboratory industry. In late May, representatives of  
RBL, including Dr. James B. Powell, the President of RBL, and Mr. Mac Mahon met 
with representatives of NHL, including Mr. Maher, to refine the synergy         
analyses that had been developed at the prior meeting.                          

In June 1994, Mr. Maher met with Mr. Mac Mahon and a representative of CS   
First Boston to further discuss a possible combination of NHL and RBL. The      
discussions did not result in any agreement.                                    

On August 30, 1994, Mr. Maher met with Mr. Mac Mahon and a representative of
CS First Boston to determine if the Roche Group would be interested in resuming 
the discussions. The parties discussed their views of various possible terms of 
a proposed transaction and certain preliminary results of their due diligence   
investigations. On September 19, 1994, a representative of CS First Boston      
responded by forwarding a proposal for a combination transaction between NHL    
and RBL that would involve the issuance of 61.4 million shares of NHL Common    
Stock to HLR (implying an RBL:NHL exchange ratio of 42:58), the purchase by NHL 
of 12 million shares of NHL Common Stock at $24 per share and the purchase by   
HLR of 8 million shares of NHL Common Stock at $24 per share. This transaction  
would have resulted in NHL stockholders owning 64.8 million shares of NHL       
Common Stock after the Merger and HLR owning 69.4 million shares of NHL Common  
Stock after the Merger.                                                         

On September 13, 1994, the NHL Board met and approved two smaller           
acquisitions. At the meeting, Mr. Maher gave the Board an update on the status  
of the discussions with respect to a possible transaction between NHL and RBL.  

On September 23, 1994, a representative of Morgan Stanley communicated to CS
First Boston NHL's response to the September 19th HLR proposal, which included  
two alternative counterproposals. The first counterproposal assumed an RBL:NHL  
exchange ratio of 42:58 and involved Roche purchasing 14 million shares of NHL  
Common Stock for $26 per share and NHL purchasing 12 million shares at $26 per  
share. The second counterproposal assumed an RBL:NHL exchange ratio of 40:60    
and involved Roche purchasing 10 million shares of NHL Common Stock at $26 per  
share and NHL purchasing 12 million shares at $26 per share.                    

 On October 11, 1994, Mr. Maher met with Dr. H.B. Meier, Group Chief Financial
Officer and Executive Committee Member of F. Hoffmann-La Roche Ltd, in Basel,   
Switzerland, to discuss certain variations to the transaction proposals. At     
this meeting, the parties agreed to include warrants to be issued by NHL in the 
transaction structure. Following this meeting, on October 19, 1994, CS First    
Boston sent, on behalf of HLR and RBL , a term sheet for the proposed           
transaction to representatives of NHL and NHL's financial advisor. The terms    
proposed included a transfer by HLR of RBL and up to $240 million in cash to    
NHL in exchange for 72.04 million shares of NHL Common Stock, and the proposed  
buyback by NHL of 22 million shares of NHL Common Stock for an aggregate of     
$528 million (funded with the $240 million provided by HLR and $288 million by  
NHL) and would result in NHL stockholders owning 62.8 million shares of NHL     
Common Stock. Additionally, the proposal contemplated that warrants with an     
aggregate value of approximately $67.9 million would be distributed pro rata to 
NHL stockholders, including to HLR. In connection with this proposal, HLR       
requested that NHL agree in the definitive documentation for any transaction    
between NHL and HLR to grant HLR an option to purchase an amount of newly       
issued shares of NHL and to pay to HLR                                          

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an amount in cash in the event that, following the execution of such definitive 
documentation, NHL were to enter into an alternative business combination       
transaction with an entity not affiliated with Roche. No agreement was reached  
at that time with respect to this request although a modified "break-up" fee    
provision was ultimately included in the final documentation executed on        
December 13, 1994.                                                              

 On October 20, 1994, representatives of RBL and Roche and their financial and
legal advisors met with representatives of NHL to conduct a due diligence       
review regarding certain regulatory proceedings involving NHL. On October 21,   
1994, Jean-Luc Belingard, Director General, Diagnostics Division, and Executive 
Committee Member of F. Hoffmann-La Roche Ltd. and Mr. Mac Mahon met in New York 
with Ronald O. Perelman, the Chairman of the Board of NHL, Howard Gittis, a     
Director of NHL, and Mr. Maher to discuss the principal features of the         
proposed transaction and a proposed timetable for the completion of a           
transaction between NHL and RBL.                                                

On October 24 and 25, 1994, representatives of RBL and their legal and      
financial advisors met with representatives of NHL and their financial advisors 
in La Jolla, California to conduct a due diligence review of NHL's operations   
and financial condition. Following this meeting, on October 27, 1994            
representatives of NHL and their legal and financial advisors met with          
representatives of RBL and their financial advisors in Burlington, North        
Carolina to conduct a due diligence review of RBL's operations and financial    
condition. Additional due diligence meetings were held in late October in       
Washington, D.C. and Baltimore, Maryland at which representatives of NHL and    
RBL and their legal advisors continued their respective legal due diligence     
investigations with respect to certain matters.                                 

At the November 4 and 8, 1994 meetings of the Board of Directors of NHL, Mr.
Maher informed the Board of the progress of the ongoing discussions regarding a 
possible transaction with RBL.                                                  

In the first week of November 1994, Mr. Maher received an unsolicited call  
from another clinical laboratory company expressing interest in a possible      
combination transaction with NHL. Representatives of that company subsequently  
met with Mr. Maher in order to discuss the synergies that could be generated    
from a combination of the two companies and various possible transactions       
structures. Although that company expressed general interest in exploring a     
possible transaction, it did not make a specific proposal to Mr. Maher. In late 
November, Mr. Maher asked representatives of Morgan Stanley, NHL's financial    
advisor, to meet with the representatives of that company in order to follow-up 
on the earlier meeting and to ascertain that company's level of interest in     
entering into a transaction with NHL and to report back to NHL. Representatives 
of Morgan Stanley met with representatives of that company on December 6, 1994, 
at which meeting the representatives of Morgan Stanley described various        
possible transaction structures for a combination of the two companies and the  
synergies that could be expected to be generated by such a combination and      
indicated NHL's expectations as to valuation in an attempt to see if a          
transaction could be structured with that company that would generate more      
value for stockholders of NHL than the proposed NHL-RBL transaction. That       
company indicated that it would not be interested in entering into a            
transaction at the valuation levels sought by NHL and no definitive proposal    
with respect to a transaction was made by that company. The NHL Board discussed 
the impending meeting between Morgan Stanley and that company at the December   
5th Board meeting described below and the results of the meeting at the         
December 12th Board meeting.                                                    

 On November 23, 1994, after analyzing the results of its due diligence review
and considering various structural issues that had arisen during their          
evaluation of the proposed transaction, CS First Boston, on behalf of HLR and   
RBL, forwarded a revised proposal to NHL that provided for the purchase from    
holders of NHL Common Stock of 17.6 million shares at an average price of $27   
per share and a pro rata distribution of warrants with an aggregate value of    
approximately $67.1 million in a transaction that would result in NHL           
stockholders owning 67.2 million shares of NHL Common Stock after the Merger    
and HLR owning 66.9 million shares of NHL Common Stock after the Merger. This   
proposal was described to the NHL Board of Directors at the December 5th Board  
meeting.                                                                        

On December 1, 1994, Mr. Maher met with Dr. Meier in Basel to discuss the   
revised proposal.                                                               

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At a meeting of the NHL Board of Directors held on December 5, 1994, Mr.    
Maher reported that discussions with Roche had progressed and described the     
status of the talks concerning the proposed transaction. Mr. Maher described to 
the Board the industry factors which made the transaction attractive from the   
point of view of both companies. Mr. Maher also described the potential         
synergies and cost savings that the managements of NHL and RBL believed could   
be obtained following the transaction. Mr. Maher also reported that Morgan      
Stanley, NHL's financial advisor, was preparing analyses so as to be able to    
render a fairness opinion on the proposed transaction, and representatives of   
Morgan Stanley then delivered a preliminary report on the transaction. There    
was a discussion of the results of the business and legal due diligence         
investigation of RBL. The NHL Board of Directors, after discussing the          
potential risks and benefits of the proposed transaction, authorized management 
to continue discussions with RBL. See "Recommendation of the NHL Board of       
Directors and NHL's Reasons for the Merger".                                    

During the first and second weeks of December, members of the senior        
management of NHL (including Mr. Maher, David C. Flaugh, Senior Executive Vice  
President, Chief Operating Officer and Acting Chief Financial Officer of NHL,   
and James G. Richmond, Executive Vice President, General Counsel and Assistant  
Secretary of NHL), Roche, HLR and RBL, together with their financial and legal  
advisors, negotiated the terms of the Merger Agreement and related agreements,  
including the Stockholder Agreement and the Warrant Agreement. The final terms  
of the transaction were agreed to (subject to the approval of the parties'      
boards of directors), including a structure that provided in effect for the     
purchase from holders of NHL Common Stock of 23.7 million shares at an average  
price of $20 per share (at an aggregate cost of approximately $474 million),    
the distribution to NHL stockholders of warrants with an aggregate value of     
approximately $84.8 million and the purchase by Roche from NHL of additional    
warrants for approximately $51 million, in a transaction that would result in   
NHL stockholders owning 61.07 million shares of NHL Common Stock after the      
Merger and HLR owning 60.83 million shares of NHL Common Stock after the        
Merger. However, NHL, in negotiating the terms of the Merger Agreement,         
obtained the agreement of Roche, HLR and RBL to a change in the final           
transaction structure to provide, in lieu of the stock repurchase, for the NHL  
Share Conversion, which results in the same aggregate amount of cash being      
transferred to the stockholders of NHL (approximately $474.7 million) as the    
stock repurchase but which ensures that each NHL stockholder would be able to   
participate pro rata. Such discussions also resolved various other outstanding  
issues, including the treatment of NHL Employee Stock Options in the Merger and 
other executive compensation issues. The parties also resolved the outstanding  
issues relating to HLR's request for a termination fee and an option to         
purchase NHL Common Stock in the event the Merger Agreement was terminated      
under certain circumstances following a third party proposal to acquire NHL.    
NHL agreed to pay HLR a termination fee of $30.0 million, plus up to an         
additional $7.0 million in reimbursement of expenses, in the event the Merger   
Agreement was terminated under certain circumstances following a third party    
proposal to acquire NHL or a third party's acquisition of at least 20% of the   
outstanding shares of NHL Common Stock, but no stock option was granted by NHL. 
The terms of the Sharing and Call Option Agreement relating to the shares of    
NHL Common Stock held by NHCG, a subsidiary of Mafco Holdings Inc., were        
negotiated during the same time frame.                                          

On December 12, 1994, the NHL Board of Directors met to consider the Merger 
Agreement, the Stockholder Agreement, the Sharing and Call Option Agreement and 
the Warrant Agreement. Mr. Maher and representatives of NHL's legal and         
financial advisors made presentations to the NHL Board of Directors and         
discussed with the NHL Board of Directors their views and analyses of various   
aspects of the proposed transactions and the effects thereof. Morgan Stanley    
delivered its oral opinion, subsequently confirmed in writing, that the         
consideration, in the aggregate, to be received by holders of shares of NHL     
Common Stock pursuant to the Merger Agreement, when considered together with    
the Warrants to be distributed to such holders prior to the Merger, is fair     
from a financial point of view to such holders. On December 12, 1994, the Board 
of Directors of NHL, by a unanimous vote of those directors present (with Dr.   
Thier not present for the vote), approved the Merger Agreement, the Stockholder 
Agreement, the Sharing and Call Option Agreement and the Warrant Agreement. All 
members of the NHL Board of Directors, including Dr. Thier, were present for    
the presentations with respect to the transaction made by management and by     
NHL's legal and financial advisors. Because of a scheduling conflict, however,  
Dr. Thier did not participate in that part of                                   

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the meeting in which the vote has taken. Subsequent to the December 12 meeting, 
the NHL Board unanimously recommended that the stockholders of NHL vote for the 
approval and adoption of the Merger Agreement.                                  

RECOMMENDATION OF THE NHL BOARD OF DIRECTORS AND NHL'S REASONS FOR THE MERGER   

The Board of Directors of NHL approved the Merger Agreement by a unanimous  
vote of those directors present at the December 12 meeting. The NHL Board has   
determined that the Merger is in the best interests of NHL and its stockholders 
and unanimously recommends that the stockholders of NHL vote FOR the approval   
and adoption of the Merger Agreement. In evaluating the recommendation of the   
Board of Directors of NHL, and in considering whether to approve and adopt the  
Merger Agreement, stockholders of NHL should be aware that certain directors    
and executive officers of NHL have interests in the Merger which may be         
different from, or in addition to, the interests of NHL stockholders generally, 
including NHL Employee Stock Options that may be cancelled in the Merger in     
exchange for a payment of cash and shares of NHL Common Stock, employment       
contracts with NHL pursuant to which such persons may terminate their           
employment for "good reason" and receive certain payments and other interests   
(including, in the case of James R. Maher, the current President and Chief      
Executive Officer of NHL, a special bonus to be paid in connection with the     
Merger). See "CERTAIN CONSIDERATIONS" and "THE MERGER--Interests of Certain     
Persons in the Merger".                                                         

In reaching its decision to approve the Merger Agreement, the NHL Board     
considered a number of factors including but not limited to the following:      

(i) The NHL Board considered the current conditions and trends in the   
clinical laboratory industry that have resulted in a high level of          
acquisition activity (including NHL's proposed acquisition of Damon         
Corporation, the Allied Acquisition and Corning's acquisition of Damon      
Corporation in 1993 and Nichols Institute in 1994). The NHL Board believes  
that recent industry trends, including the growth of health maintenance     
organizations and other managed care providers, the reduction in the number 
of tests being ordered per patient, continued changes in healthcare         
reimbursement policies of the Federal government and cost containment       
efforts of private insurers, have caused the clinical laboratory industry   
to experience volume and price pressures. The NHL Board believes that these 
pressures will continue in the future and that larger independent clinical  
laboratories will be better positioned to operate under these conditions. A 
significant portion of the clinical laboratory industry's costs are         
relatively fixed, which makes high volume laboratories more cost efficient. 
In addition, the NHL Board considered the fact that, since the structure of 
the clinical laboratory industry may allow for significant synergies to     
arise from business combinations, the high level of acquisition activity is 
likely to continue. Finally, the NHL Board considered that the number of    
large clinical laboratory companies that are regarded as suitable and       
potentially available for a business combination transaction with NHL is    
limited and that failure to effect a business combination transaction could 
result in other clinical laboratory companies becoming significantly larger 
than NHL but that, if the Merger with RBL is consummated, the Surviving     
Corporation would be the largest participant in the U.S. clinical           
laboratory industry. On balance the discussion among members of the NHL     
Board evidenced the general view that the high level of acquisition         
activity in the clinical laboratory industry, the limited number of         
suitable clinical laboratory companies that were thought to be available    
for a business combination transaction with NHL and the fact that the       
failure to enter into a business combination transaction might result in    
NHL being at a competitive disadvantage with respect to other clinical      
laboratory companies that had realized the benefits of the synergies        
available through business combinations, were factors that weighed in favor 
of approving the transaction.                                               

(ii) The NHL Board considered the financial condition, results of       
operations, business and prospects of RBL, including RBL's sales, earnings  
before interest and taxes ("EBIT") and net income for 1993 and projections  
of sales, EBIT and net income for 1994 and 1995. On balance the discussion  
of this financial information among members of the NHL Board evidenced the  
general view that the                                                       

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combination of NHL and RBL would result in the Surviving Corporation's pro  
forma financial condition and results of operations being improved from     
those of NHL and, accordingly, that this information was a factor that      
weighed in favor of approving the transaction.                              

(iii) The NHL Board considered the financial condition, results of      
operations, business and prospects of NHL, including NHL's sales, earnings  
before interest, taxes, depreciation and amortization ("EBITDA"), EBIT and  
net income for the five years ended December 31, 1993 and projections of    
NHL's sales, EBITDA, EBIT and net income for 1994, 1995 and 1996. The NHL   
Board considered the potential effect of the transaction on NHL's earnings  
per share. The members of the NHL Board of Directors were generally         
familiar with and knowledgeable about NHL's affairs and further reviewed    
these matters in the course of their deliberations. On balance the          
discussion among members of the NHL Board evidenced the general view that   
the financial condition, results of operation and prospects of NHL, were it 
not to approve the transaction, were factors that weighed in favor of       
approving the transaction in light of the benefits that could be achieved   
through the combination of NHL and RBL.                                     

(iv) The NHL Board of Directors considered the opportunity presented by 
the Merger for the constituent companies to improve their profitability     
through the achievement of economies of scale, the elimination of           
redundancies and the enhancement of market position. By consolidating       
certain NHL operations with those of RBL and eliminating redundant          
expenses, the Surviving Corporation would be able to achieve substantial    
savings of operating costs. Such savings would be realized over time as     
consolidation is completed. The NHL Board considered the analyses of        
management that anticipated that the Surviving Corporation would realize    
annual aggregate savings of between $80 million and $90 million within      
three years following the Merger. The synergies expected to be realized by  
the Surviving Corporation would be derived from several sources, including  
an expected $25 million of savings in corporate, general and administrative 
expenses including the consolidation of administrative staff. Combining the 
NHL sales force with the RBL sales force where duplicate territories exist  
would be expected to add approximately $9 million of synergies. Operational 
savings would be expected to result in approximately $55 million of         
synergies. These include closing overlapping laboratories and other         
facilities and savings to be realized from additional buying power by the   
larger Surviving Corporation. The Surviving Corporation also would be       
expected to realize approximately $5 million of savings relating to         
employee benefits as a result of expected changes to certain benefit        
arrangements. These estimated savings were anticipated to be partially      
offset by a loss of existing accounts during the conversion process in the  
amount of approximately $4 million. The NHL Board recognized that the       
realization of improvements in profitability is dependent, in part, on the  
extent to which the revenues of the constituent companies are maintained    
and will be influenced by many factors, including factors outside of the    
control of the Surviving Corporation, and that there can be no assurance    
that the estimated cost savings will be realized or achieved in a timely    
manner or that improvements, if any, in profitability would be achieved or  
that such savings would not be offset by increases in other expenses.       
Although the NHL Board recognized the risk that the expected synergies      
might not be achieved, or might not be achieved in a timely manner, the NHL 
Board accepted the overall analyses and conclusions of the management of    
NHL that the Merger presented the opportunity to achieve significant cost   
savings and resultant improvements in profitability, and accordingly the    
discussion among members of the NHL Board evidenced the general view that   
the expected synergies were a factor that weighed in favor of approving the 
transaction.                                                                

(v) The NHL Board considered the fact that the transaction enables the  
stockholders of NHL to receive a cash payment of $5.60 in respect of their  
shares, while retaining a substantial equity interest in the Surviving      
Corporation and the consequent ability to realize a portion of the benefits 
arising from the synergies expected to result from the Merger. On balance   
the discussion among members of the NHL Board of the cash payment of $5.60  
per share to be received by holders of NHL Common Stock in the Merger       
evidenced the general view that such payment represented a significant      
percentage of the market price of the NHL Common Stock prior to the         
announcement of the Merger Agreement, and that, when considered together    
with the fact that the stockholders of NHL would retain a substantial       
equity interest in the Surviving Corporation and would therefore be able to 
participate in the prospects for the Surviving                              

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Corporation (including the value of the synergies expected to result from   
the Merger), such payment was a factor that weighed in favor of approving   
the transaction.                                                            

 (vi) The NHL Board considered the view of Morgan Stanley, NHL's financial
advisor, that the consideration, in the aggregate, to be received by        
holders of shares of NHL Common Stock pursuant to the Merger Agreement,     
when considered together with the Warrants to be distributed in the Warrant 
Distribution, is fair to such stockholders from a financial point of view.  
The NHL Board also considered Morgan Stanley's underlying analyses that     
suggested, based on a discounted cash flow analysis, a stand-alone range of 
asset values for NHL of between $8.88 and $13.17 per share, that the        
aggregate after-tax value of the synergies expected to result from the      
transaction, when fully realized, could amount to be between $5.85 and      
$7.92 per share of common stock of the Surviving Corporation and that the   
aggregate value of the consideration to be received by holders of NHL       
Common Stock in the Merger and the Warrant Distribution would be between    
$16.65 and $18.66 per share. The NHL Board also considered the data         
presented by Morgan Stanley with respect to the performance of NHL Common   
Stock over the last five years, three years and twelve months and a price   
volume analysis suggesting the percentages of outstanding shares that have  
traded within various indicated price ranges. While the NHL Board did not   
take any specific action with respect to the Morgan Stanley presentation,   
in making its decision to approve the Merger, the NHL Board accepted the    
overall analyses and conclusions presented by Morgan Stanley. Accordingly,  
the opinion and presentation of Morgan Stanley were factors that weighed in 
favor of approving the transaction.                                         

 (vii) The NHL Board considered the structure of the proposed transaction,
including that NHL's stockholders would retain approximately 50.1% of the   
common equity of the Surviving Corporation, that Mr. Maher would serve as   
Chairman of the Board of NHL for one year after the Merger and that Board   
of Directors of the Surviving Corporation would consist of seven directors  
(during the initial one-year period following the Merger consisting of Mr.  
Maher, three independent directors and three directors designated by HLR    
and, thereafter, consisting of four independent directors and three         
directors designated by HLR). On balance the discussion among members of    
the NHL Board evidenced the general view that the fact the existing         
stockholders of NHL would retain a majority of the equity interest in the   
Surviving Corporation, the fact that the Surviving Corporation would have   
the benefit of Mr. Maher's experience during the one-year period following  
the Merger and the fact that Mr. Maher and three independent directors      
would constitute four of the seven members of the board of directors of the 
Surviving Corporation during the Initial Period following the Merger, and   
that there would be four independent directors thereafter, were factors     
that weighed in favor of approving the transaction.                         

(viii) The NHL Board considered the terms of the Merger Agreement,      
  Stockholder Agreement, Sharing and Call Option Agreement and Warrant Agreement
 and the presentations with respect thereto made by management and NHL's legal
 and financial advisors. The NHL Board determined that the structure and terms
  of the transaction, including the combined effect of the NHL Share Conversion,
the Warrant Distribution, the sale of the Roche Warrants, the incurrence of 
 the NHL Borrowings and the issuance of shares of NHL Common Stock to HLR were
in the best interests of the stockholders. The NHL Board considered the fact
 that the issuance of shares of NHL Common Stock to HLR in connection with the
Merger would significantly reduce the ownership interest of the public      
stockholders. On balance the discussion among members of the NHL Board      
  evidenced the general view that, although the fact that the ownership interest
 of the stockholders of NHL would be significantly reduced in the transaction,
when considered alone, was a factor that weighed against approving the      
 transaction, the fact that the transaction, when considered as a whole, would
  allow the stockholders of NHL to receive a payment in cash in respect of their
shares and the opportunity to participate in the future performance of the  
 Surviving Corporation (which would be substantially larger than NHL), through
both the substantial equity interest that would continue to be held by such 
stockholders and through the Warrants, were factors that weighed in favor of
 approving the transaction. On balance the discussion among members of the NHL
Board evidenced the general view that the ability of the HLR Group to       

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obtain a controlling equity interest in NHL by making further purchases of  
NHL Common Stock after the Initial Period, when considered alone, was a     
factor that weighed against approving the transaction, but that the         
provisions of the Stockholder Agreement that prohibit the HLR Group from    
acquiring additional Equity Securities of the Surviving Corporation during  
the Initial Period, and that for two years thereafter prohibit the HLR      
Group from acquiring more than 75% of the outstanding Equity Securities of  
the Surviving Corporation unless HLR or any member of the HLR Group first   
offers to purchase all outstanding Equity Securities of the Surviving       
Corporation and holders of more than 50% of the outstanding Equity          
Securities (excluding securities held by the HLR Group) accept such offer,  
were appropriate protections for the stockholders of NHL under the          
circumstances.                                                              

(ix) The NHL Board considered the provision of the Merger Agreement     
providing for the payment of a termination fee and expense reimbursement to 
HLR under certain circumstances, which the Board believed was reasonable    
under the circumstances.                                                    

 (x) The NHL Board considered the reports made by management and by Morgan
Stanley with respect to the discussions that had taken place in November    
and early December with another large clinical laboratory company with      
respect to a possible business combination and the likelihood of being able 
to negotiate a favorable transaction with that company. On balance the      
discussion among members of the NHL Board evidenced the general view that   
it was unlikely that NHL would be able to negotiate a transaction with that 
company that would be more favorable to the stockholders of NHL than the    
Merger, and accordingly, that this factor weighed in favor of approving the 
transaction.                                                                

(xi) The Board of Directors of NHL also considered the costs of the     
transaction to NHL and its stockholders, including restructuring costs in   
the amount of approximately $84 million expected to be recorded by NHL at   
the time of the Merger and transaction costs in an amount that could not be 
determined at that time but that were estimated to be up to $20 million. On 
balance the discussion among members of the NHL Board evidenced the general 
view that these costs were reasonable in light of the expected benefits of  
the transaction, including the synergies expected to be achieved following  
the Merger.                                                                 

(xii) The NHL Board considered the fact that HLR's ownership interest in
the Surviving Corporation and its rights under the Stockholder Agreement    
described below will permit it to exercise significant influence on the     
governance of the Surviving Corporation and the fact that HLR's ownership   
interest may prevent the Surviving Corporation, without HLR's consent, from 
entering into a merger or other transaction that would result in            
stockholders receiving a premium for their shares. However, the Board       
determined that the package of securities and cash to be received by        
holders of NHL Common Stock in the Merger, taken as a whole, should be      
regarded as adequate compensation to such holders for such loss of          
opportunity.                                                                

(xiii) The NHL Board considered the provision of the Stockholder        
Agreement providing that, for so long as the HLR Group Interest is at least 
30%, a significant number of types of major corporate actions cannot be     
taken without the approval of a Special Majority of the Board of Directors  
(which is defined in the Stockholder Agreement as a majority of the entire  
Board of Directors that includes a majority of the HLR directors and at     
least one independent director) including, among others, certain executive  
officer appointments, certain business combinations, acquisitions or sales  
of assets, amendments to the Surviving Corporation's Certificate of         
Incorporation or by-laws, settlements of material litigation, changes in    
Board or committee composition, material capital expenditures, issuance of  
securities and incurrence of indebtedness. On balance the discussion among  
members of the NHL Board evidenced the general view that this provision     
weighed in favor of approving the transaction because it was expected to    
operate in part to the benefit of the public stockholders of the Surviving  
Corporation (since all the enumerated actions, including certain actions    
that might not otherwise require specific approval by the board of          
directors of the Surviving Corporation, would require the consent of at     
least one independent director). In addition, the discussion among members  
of the NHL Board evidenced the general view that the benefits accorded to   
HLR by these provisions were not inappropriate given the size of HLR's      
equity ownership interest in the Surviving Corporation.                     

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(xiv) The NHL Board of Directors took into account the results of NHL's 
due diligence review of RBL's business, including its review of RBL's       
selling, pricing and billing practices (including NHL's assessment of RBL's 
practices and procedures with respect to the matters described under "THE   
CLINICAL LABORATORY TESTING INDUSTRY--Regulation and Reimbursement" and "-- 
OIG Investigations").                                                       

(xv) The NHL Board considered the fact that Mr. Flaugh would be expected
to serve as Chief Operating Officer of NHL after the Merger, which the      
Board regarded as important to the successful integration of the two        
companies and to the success of the Surviving Corporation, and the likely   
effect of the transaction on certain other executive officers of NHL.       

(xvi) The NHL Board considered the presentation and recommendation made 
by the management of NHL, which weighed in favor of approving the           
transaction.                                                                

(xvii) The NHL Board also considered the interests of certain directors 
and executive officers of NHL in the Merger, including the fact that        
certain directors and executive officers of NHL have NHL Employee Stock     
Options that may be cancelled in connection with the Merger in exchange for 
a payment in cash and shares of NHL Common Stock and employment contracts   
with NHL pursuant to which such persons may terminate their employment for  
"good reason" and receive certain payments and certain other interests      
(including in the case of James R. Maher, the current President and Chief   
Executive Officer of NHL, a special bonus to be paid in connection with the 
Merger). During its deliberations at the December 12, 1994 meeting, members 
of the NHL Board who were not affiliated with NHL or Mafco Holdings Inc.    
had the opportunity to meet separately with, and ask questions of, NHL's    
legal and financial advisors prior to voting on the proposed transaction.   
On balance the discussion among members of the NHL Board evidenced the      
general view that the potential benefits to be received by certain          
directors and executive officers in connection with the Merger were not     
inappropriate under the circumstances, and, accordingly, that such benefits 
were not a factor that weighed against approving the transaction.           

In light of all the factors set forth above, the Board of Directors of NHL  
approved the Merger Agreement. In view of the wide variety of factors           
considered in connection with its evaluation of the Merger Agreement, the NHL   
Board of Directors did not find it practicable to assign relative weights to    
the specific factors considered in reaching its decision or to undertake to     
make any specific determination as to whether any particular factor (or any     
aspect of any particular factor) was favorable or unfavorable to the NHL        
Board's ultimate determination. However, on balance the discussions among the   
members of the NHL Board of Directors evidenced the general view that the       
factors set forth in paragraphs (i), (ii), (iii), (iv), (v), (vi), (vii), (x),  
(xv) and (xvi) were favorable to the Board's determination to approve the       
Merger Agreement and the factors set forth in paragraphs (viii), (ix), (xi),    
(xii), (xiii) and (xiv) contained both favorable and unfavorable aspects.       

OPINION OF NHL'S FINANCIAL ADVISOR                                              

Morgan Stanley delivered its opinion to the Board of Directors of NHL on    
December 12, 1994, subsequently confirmed in its written opinion dated December 
14, 1994, that, as of such date, the consideration, in the aggregate, to be     
received by the holders of shares of NHL Common Stock pursuant to the Merger    
Agreement, when considered together with the Warrants currently intended to be  
distributed as a dividend to such holders prior to the Merger, is fair from a   
financial point of view to such holders. No limitations were imposed by NHL     
with respect to the investigations made or the procedures followed by Morgan    
Stanley in rendering its opinion.                                               

The full text of the opinion of Morgan Stanley, which sets forth assumptions
made, matters considered and limitations on the review undertaken by Morgan     
Stanley, is included as Annex IV to this Proxy Statement/Prospectus. NHL        
stockholders are urged to read the opinion in its entirety. Morgan Stanley's    
opinion does not constitute a recommendation to any NHL stockholder as to how   
such stockholder should                                                         

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vote at the NHL Meeting. The summary of the opinion of Morgan Stanley set forth 
in this Proxy Statement/Prospectus is qualified in its entirety by reference to 
the full text of such opinion.                                                  

In arriving at its opinion, Morgan Stanley (i) analyzed certain publicly    
available financial statements and other information of NHL; (ii) analyzed      
certain internal financial statements and other financial and operating data    
concerning NHL prepared by the management of NHL; (iii) analyzed certain        
financial projections prepared by the management of NHL; (iv) discussed the     
past and current operations and financial condition and the prospects of NHL    
with senior executives of NHL; (v) reviewed the reported prices and trading     
activity for NHL Common Stock; (vi) compared the financial performance of NHL   
and the prices and trading activity of NHL Common Stock with that of certain    
other comparable publicly traded companies and their securities; (vii) reviewed 
the financial terms, to the extent publicly available, of certain comparable    
acquisition transactions; (viii) analyzed certain internal financial statements 
and other financial and operating data concerning RBL prepared by the           
management of RBL; (ix) discussed the past and current operations and financial 
condition and prospects of RBL with senior executives of RBL; (x) participated  
in discussions and negotiations among representatives of NHL and HLR and their  
financial and legal advisors; (xi) discussed with managements of both of NHL    
and RBL certain cost savings and synergies expected to be derived from the      
Merger; (xii) reviewed the Merger Agreement and certain related documents and   
(xiii) performed such other analyses as it deemed appropriate.                  

 Morgan Stanley assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by it for purposes of     
rendering its opinion. Morgan Stanley also assumed that the financial           
projections provided to it were reasonably prepared on bases reflecting the     
best currently available estimates and judgments of the future financial        
performance of NHL. Morgan Stanley also relied upon the assumptions of the      
managements of NHL and RBL regarding certain cost savings and synergies that    
are expected to result from the Merger. Morgan Stanley did not make any         
independent valuation or appraisals of the assets or liabilities of NHL. Morgan 
Stanley did not review and was not provided with any unaudited or other         
financial information of RBL for any period prior to 1993. Morgan Stanley's     
opinion was based on the economic, market and other conditions in effect on,    
and the information made available to it as of, the date of the opinion.        
Although Morgan Stanley was not generally authorized to solicit interest from   
any party with respect to a transaction with NHL, Morgan Stanley did engage at  
NHL's request in certain discussions with a company that was engaged in         
negotiations with NHL in the early spring of 1994 and with another company that 
made an unsolicited call to NHL in November 1994. See "Background of the        
Merger".                                                                        

The following is a summary of the analyses Morgan Stanley utilized in       
arriving at its opinion and that Morgan Stanley discussed with the NHL Board of 
Directors on December 5 and December 12, 1994. The presentations made by Morgan 
Stanley at the December 5th and December 12th meetings of the NHL Board of      
Directors were substantially similar, except that the description of the terms  
and structure of the transaction in the December 12th presentation reflected    
the changes to the transaction resulting from the negotiations of the final     
terms of the definitive documentation that had ensued since the December 5th    
presentation, and certain financial and market data as of December 2, 1994,     
contained in the December 5th presentation was updated to December 9, 1994, in  
the December 12th presentation.                                                 

 Overview. Morgan Stanley presented an overview of Roche Holding, the indirect
parent company of RBL, noting particularly its status as the world's largest    
health care company measured by market capitalization, its strong growth rate,  
its high level of investment in research and development and its strong         
commitment to biotechnology. Morgan Stanley reviewed Roche Holding's recent     
acquisitions and divestiture, and set forth Roche Holding's revenues on a       
segment basis and a geographic basis. Morgan Stanley then presented an overview 
of RBL, noting that it has the fourth largest independent clinical laboratory   
testing network in the United States and offers a broad range of laboratory     
tests and procedures. Morgan Stanley presented data that had been provided by   
CS First Boston, RBL's financial advisor, with respect to 1993 actual, and 1994 
and 1995 estimated, sales, EBIT, and net income, including information with     
respect to growth rates and margins. Morgan Stanley summarized the principal    
terms and the structure of the proposed                                         

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transaction, evaluated the positions and strengths of the combined company      
after the Merger and qualitatively reviewed the significant issues and          
opportunities (including with respect to estimated synergies) represented by    
the transaction. Morgan Stanley then presented an overview of certain           
information relating to NHL, including a review of the closing prices of NHL    
Common Stock over the five and three year periods ending December 9, 1994, a    
review of the performance of NHL Common Stock over the five and one year        
periods ending December 9, 1994 relative to the S&P 400 Index and a composite   
index comprised of the common stock of certain comparable companies. The        
comparable companies were IG Laboratories, Inc., LabOne, Inc., Physicians       
Clinical Laboratory, Inc., Unilab Corporation and Universal Standard Medical    
Laboratories, Inc. Morgan Stanley also presented a price volume analysis that   
suggested the percentage of the total number of outstanding shares of NHL       
Common Stock that had traded within specified price ranges over the last four   
years. Morgan Stanley reviewed certain historical and projected financial       
information for NHL, including sales, EBITDA, EBIT and net income.              

 Stand-Alone Valuation of NHL. Morgan Stanley arrived at a range of values for
NHL by utilizing three principal valuation methodologies: a comparable company  
analysis, a precedent transactions analysis and a discounted cash flow          
analysis, but it accorded the most weight to the discounted cash flow analysis. 
Comparable company analysis analyzes a company's operating performance and      
outlook relative to a group of publicly traded peers to determine an implied    
unaffected market trading value. Precedent transactions analysis provides a     
valuation range based upon financial information of companies in the same or    
similar industries as the target which have been acquired in selected recent    
transactions. Discounted cash flow analysis provides insight into the intrinsic 
value of a company based on projected earnings and capital requirements and the 
subsequent cash flows generated by the assets of the target company. No company 
used in the comparable company analyses described below is identical to NHL and 
no transaction used in the precedent transactions analyses described below is   
identical to the Merger. Accordingly, an analysis of the results of analyses    
described below necessarily involves complex considerations and judgments       
concerning differences in financial and operating characteristics of the        
companies and other factors that could affect the public trading value or the   
acquisition value of the companies to which they are being compared.            

Comparable Company Analysis. Morgan Stanley compared certain financial  
information of NHL with the following group of companies that Morgan        
Stanley believed to be appropriate for comparison: IG Laboratories, Inc.,   
LabOne, Inc., Physicians Clinical Laboratory, Inc., Unilab Corporation and  
Universal Standard Medical Laboratories, Inc. The financial information     
compared included market value; aggregate value; common stock price; last   
12 month's ("LTM") high and low common stock price; LTM EBIT and net income 
margins; five year projected growth rate; earnings per share for LTM, 1994  
and 1995; LTM revenues and the three year historical growth rate for        
revenues; LTM gross margin, selling, general and administrative expenses,   
EBITDA, EBIT and net income expressed in the aggregate as well as a         
percentage of revenues; the three year historical net income growth rate    
and the five year projected net income growth rate. Morgan Stanley also     
compared certain capitalization and credit statistics of the comparable     
companies, including cash; short-term debt; long-term debt; preferred       
stock; book value; long-term debt as a percentage of adjusted book          
capitalization; total debt as a percentage of adjusted book capitalization; 
long-term debt as a percentage of adjusted market capitalization; total     
debt as a percentage of adjusted market capitalization; LTM return on       
equity and certain interest coverage ratios. In order to arrive at          
hypothetical implied values for NHL, Morgan Stanley derived multiples for   
the comparable companies, including market value as a multiple of earnings  
per share for LTM and for 1994 and 1995, market value as a multiple of LTM  
cash flow, market value as a multiple of LTM book value, aggregate value as 
a multiple of LTM revenues, aggregate value as a multiple of LTM EBITDA and 
aggregate value as a multiple of LTM EBIT. The hypothetical implied values  
per share for NHL derived from such analysis, based on the median multiples 
for all of the statistics considered, ranged from $4.60 (based on the       
comparable companies' median market value to book value multiple) to $11.13 
(based on the comparable companies' median aggregate value to LTM EBIT      
multiple). The market price information used in such analysis was as of     
December 9, 1994. The earnings per share estimates used were based on       
estimates as of October 20, 1994, by Institutional Brokers Estimate System, 
a data service                                                              

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that monitors and publishes a compilation of earnings estimates regarding   
companies of interest to institutional investors produced by selected       
research analysts. The LTM book values used were as of September 30, 1994,  
and the LTM earnings per share, cash flow, revenues, EBITDA and EBIT used   
were calculated from each of the comparable companies' most recently        
available quarterly and annual reports.                                     

                                                        [Enlarge/Download Table]

COMPANY                                                              EPS         MULTIPLE                           
-------                                                      ------------------- --------                           
                                                                                   CASH   BOOK                      
                                                                                   FLOW   VALUE REVENUE EBITDA EBIT 
                                                             (LTM) (1994) (1995)  (LTM)   (LTM)  (LTM)  (LTM)  (LTM)
                                                             ----- ------ ------ -------- ----- ------- ------ -----
                                                                                                                    
Comparable                                                                                                          
Companies                                                                                                           
 High....................................................... 30.6   21.1   15.5    13.9    3.5    2.4    9.4   17.3 
 Low........................................................ 17.2   10.2    7.3     5.7    0.9    0.7    7.8   11.7 
 Median..................................................... 23.4   14.4    8.3     5.7    2.5    1.4    9.3   15.0 
NHL(1)...................................................... 26.3                  12.2    6.3    1.9    11.2  15.4 

--------                                                                
(1) Morgan Stanley did not regard the multiples derived from the        
  comparable company analysis to be meaningful given that the Allied
    Acquisition was not fully reflected in NHL's financial condition and
results of operations.                                          

Precedent Transactions Analysis. The transactions used in the analysis  
included Corning's acquisition of Nichols Institute; the Allied             
Acquisition; Corning's acquisition of Maryland Medical Labs; Corning's      
acquisition of Damon Corporation; Corning's acquisition of the non-         
California laboratories of Unilab Corporation; Genzyme Corp.'s acquisition  
of Vivigen, Inc.; Corning's acquisition of JS Pathology PLC; Corning's      
acquisition of the U.S. assets of MDS Health Group Ltd.; RBL's acquisition  
of CompuChem Corp.; Unilab Corporation's acquisition of RBL's western       
operations; Unilab Corporation's acquisition of Central Diagnostic          
Laboratory; Allied's acquisition of the clinical laboratory subsidiary of   
Hospital Corporation of America; and SmithKline Beckman's acquisition of    
International Clinical Labs. The financial information compared in the      
analysis included equity value; aggregate value; and premium paid to the    
price one month before announcement. In order to arrive at hypothetical     
implied values for NHL, Morgan Stanley derived multiples for the precedent  
transactions, including equity value as a multiple of LTM earnings, equity  
value as a multiple of book value, aggregate value as a multiple of LTM     
revenues, aggregate value as a multiple of LTM EBITDA and aggregate value   
as a multiple of LTM EBIT. The hypothetical implied values per share for    
NHL derived from such analysis, based on the median multiples for all of    
the statistics considered, ranged from $5.33 (based on the precedent        
transactions' median market value to book value multiple) to $16.07 (based  
on the precedent transactions' median aggregate value to LTM EBITDA         
multiple). The various information used in such analysis was derived from   
the same sources as for the comparable company analysis.                    

                                                                [Download Table]

PRECEDENT                                                                  
TRANSACTION(1)                                      MULTIPLE               
--------------                                      --------               
                                       EPS  BOOK VALUE REVENUE EBITDA EBIT 
                                      (LTM)   (LTM)     (LTM)  (LTM)  (LTM)
                                      ----- ---------- ------- ------ -----
                                                                           
 High................................ 37.4     4.7       3.3    17.8  32.6 
 Low................................. 21.7     1.9       1.0     8.1  14.3 
 Median.............................. 30.2     2.9       1.6    13.9  18.6 

--------                                                                
(1) Morgan Stanley did not regard the multiples derived from the        
precedent transactions analysis to be meaningful given that the 
Allied Acquisition was not fully reflected in NHL's financial   
condition and results of operations.                            

Discounted Cash Flow Analysis. The stand-alone asset value of NHL was   
determined by adding (i) the present value of the projected unlevered free  
cash flows of NHL over a 9-year period from 1995 through 2003 and (ii) the  
present value of NHL's 2003 terminal value. The stand-alone equity value    
was determined by subtracting NHL's net debt as of September 30, 1994 from  
NHL's asset value. The terminal value of NHL at the end of the 9-year       
period was determined by projecting a range of nominal perpetual growth     
rates of NHL's unlevered free cash flow after 2003 of 3%, 4% and 5%.        
Earnings were projected assuming NHL performed in accordance with NHL's     
management's forecast and certain extrapolations thereof. The unlevered     
free cash flows and terminal value of NHL were discounted to                

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present values using a 13%, 13.5% and 14% discount rate, representing NHL's 
weighted average cost of capital as determined by the capital asset pricing 
model. This analysis resulted in a range of values for NHL of between       
$752.3 million and $1,116.3 million (or $8.88 to $13.17 per share ).        

 Although Morgan Stanley considered all three valuation methodologies outlined
above, it placed greater reliance on the discounted cash flow analysis in       
forming its opinion and did not present to the NHL Board a range of values for  
NHL derived from the comparable company analysis or the precedent transaction   
analysis because of certain difficulties in applying the multiples derived from 
the comparable company analysis and the precedent transaction analysis to NHL   
given the effect of the Allied Acquisition on NHL's LTM results of operations   
and because of the relative lack of comparable companies whose financial        
condition approximates NHL's. When calculating LTM results for NHL, Morgan      
Stanley subtracted from the results for the fiscal year ended December 31, 1993 
the results for the nine months ended September 30, 1993 and added the results  
for the nine months ended September 30, 1994. Since NHL completed the Allied    
Acquisition on June 21, 1994, the LTM results for the twelve months ended       
September 30, 1994 do not portray NHL's financial results giving full effect to 
the Allied Acquisition, and Morgan Stanley did not deem it appropriate to use   
these results as basis to imply a value for NHL. Both comparable company        
analysis and precedent transaction analysis require complex considerations and  
judgments concerning differences in financial and operating characteristics of  
the companies involved, and other factors that can affect the public trading    
value or the acquisition value of the companies being compared. Accordingly,    
mathematical analysis (such as determining average or median multiples) is not, 
in itself, a meaningful application of comparable company analysis or precedent 
transaction analysis. In addition to the valuation methodologies described      
above and given that the structure of the clinical laboratory industry may      
allow for significant synergies to arise from business combinations, Morgan     
Stanley also considered the estimated value of the synergies expected to result 
from the proposed transaction in forming its opinion. Based on preliminary      
estimates of such synergies, developed by the managements of both NHL and RBL,  
the Surviving Corporation is expected to realize annualized pretax operating    
savings of between $80 million and $90 million within three years following the 
Merger. Assuming a 40% tax rate, such savings, after taxes, would amount to     
between $48 million and $54 million, or approximately $0.39 to $0.44 per share  
of common stock of the Surviving Corporation. Using price/earnings multiples    
ranging from 15x to 18x, the aggregate after tax value of such synergies, when  
fully realized, would amount to between $5.85 and $7.92 per share of common     
stock of the Surviving Corporation. See "MANAGEMENT AND OPERATIONS AFTER THE    
MERGER--Operations After the Merger" for a discussion of the synergies that are 
expected to be realized in connection with the Merger. NHL expects to record a  
restructuring charge of approximately $84 million in connection with the Merger 
and to incur transaction costs in an amount that cannot be determined at this   
time but that are estimated to be up to $20 million.                            

Transaction Value. For purposes of its opinion as to the fairness, from a   
financial point of view, to the holders of shares of NHL Common Stock of the    
consideration, in the aggregate, to be received by such holders pursuant to the 
Merger Agreement, when considered together with the Warrants currently intended 
to be dividended to such holders prior to the Merger (collectively, the         
"Transaction Value"), Morgan Stanley compared the range of stand-alone values   
it derived for NHL as described above to the Transaction Value. In order to     
determine the Transaction Value for purposes of its opinion, Morgan Stanley     
applied a range of multiples (ranging from 15x to 18x) to the Surviving         
Corporation's estimated 1995 earnings per share (which estimate gave effect to, 
among other things, the estimated combined net income of NHL and RBL, expected  
synergies, goodwill amortization and interest charges) to arrive at a range of  
projected market values for the shares of the Surviving Corporation. The        
Warrants are intended to have a value of approximately $1.00 per share to       
holders of NHL Common Stock prior to the Effective Time. However, the actual    
value of the Warrants will ultimately depend upon several market factors        
including, but not limited to, general market conditions and the Surviving      
Corporation's volatility and pro forma trading value, on which Morgan Stanley   
has not separately opined. The assumed value of the Warrants was determined     
based upon the following parameters, which were agreed upon by NHL, Roche and   
their respective financial advisors: an assumed volatility of approximately 43% 
for the Surviving Corporation, a five year maturity, an assumed pro forma       

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trading value for the Surviving Corporation of approximately $16.00 and a       
strike price of $22.00. By adding $6.60 (the sum of the Cash Consideration per  
share and the estimated per share value of the Warrant) to NHL's pro rata share 
of such market values, Morgan Stanley arrived at a reference range of           
Transaction Values of between $16.65 and $18.66 per share.                      

As indicated above, a stand-alone valuation of NHL based on a comparable    
company analysis or a precedent transaction analysis would not be meaningful    
given that NHL's LTM results do not portray NHL's financial results giving full 
effect to the Allied Acquisition. In arriving at its opinion, Morgan Stanley    
considered NHL's stand-alone discounted cash flow valuation of $8.88 to $13.17  
per share, the value of the synergies of between $5.85 to $7.92 per share of    
common stock of the Surviving Corporation, the average trading price of NHL     
Common Stock over the twelve months preceding the announcement of the Merger    
Agreement of $12.94, and determined that the reference range of Transaction     
Values of between $16.65 and $18.66 per share was fair to NHL's stockholders    
from a financial point of view.                                                 

The summary set forth above does not purport to be a complete description of
the analyses performed by Morgan Stanley. The preparation of a fairness opinion 
is a complex process and is not necessarily susceptible to partial analysis or  
summary description. Morgan Stanley believes that its analyses must be          
considered as a whole and that selecting portions of its analyses, without      
considering all analyses, would create an incomplete view of the process        
underlying its opinion. In addition, Morgan Stanley may have given various      
analyses more or less weight than other analyses (and, as described above,      
accorded the most weight to the discounted cash flow analysis) and may have     
deemed various assumptions more or less probable than other assumptions. In     
performing its analyses, Morgan Stanley made numerous assumptions with respect  
to industry performance, general business and economic conditions and other     
matters, many of which are beyond the control of NHL or RBL. The analyses       
performed by Morgan Stanley are not necessarily indicative of actual values,    
which may be significantly more or less favorable than suggested by such        
analyses. Additionally, analyses relating to the values of businesses do not    
purport to be appraisals or to reflect the prices at which such businesses      
actually may be sold. The analyses performed were prepared solely as part of    
Morgan Stanley's analysis of the fairness of the consideration to be received   
by holders of NHL Common Stock, and were provided to the NHL Board of Directors 
in connection with the delivery of Morgan Stanley's opinion. Because such       
analyses are inherently subject to uncertainty, none of NHL, the NHL Board of   
Directors or management, Morgan Stanley or any other person assumes             
responsibility if future events do not conform to the judgments reflected in    
the opinion of Morgan Stanley. Morgan Stanley's opinion was addressed to the    
fairness, from a financial point of view, of the consideration to be received   
by holders of NHL Common Stock in the NHL Share Conversion and the Warrant      
Distribution and was not a recommendation as to the amount of the consideration 
to be paid or received.                                                         

The NHL Board of Directors retained Morgan Stanley based upon its experience
and expertise. Morgan Stanley is a nationally recognized investment banking and 
advisory firm. Morgan Stanley, as part of its investment banking business, is   
continuously engaged in the valuation of businesses and securities in           
connection with mergers and acquisitions, negotiated underwritings, competitive 
biddings, secondary distributions of listed and unlisted securities, private    
placements and valuations for corporate and other purposes. Morgan Stanley has  
provided, and continues to provide, certain other financial advisory,           
investment banking and agency services to NHL and its affiliates. Morgan        
Stanley provided financial advisory and other services, including the rendering 
of a fairness opinion, to NHL in connection with the Allied Acquisition and     
NHL's proposed acquisition of Damon Corporation, and received fees of $500,000  
and $750,000, respectively, in connection therewith. Morgan Stanley has         
underwritten equity offerings by NHL.                                           

Pursuant to a letter agreement dated December 16, 1994, between NHL and     
Morgan Stanley (the "Engagement Letter"), Morgan Stanley agreed to render a     
fairness opinion and to provide limited financial advisory services to NHL.     
Morgan Stanley will receive from NHL a fee of $3.75 million for its role as a   
limited financial advisor and for rendering a fairness opinion concerning the   
Merger. In addition, the Engagement Letter with Morgan Stanley provides that    
NHL will reimburse Morgan Stanley for its reasonable out-of-pocket expenses and 
will indemnify Morgan Stanley against certain liabilities incurred in           
connection with its services.                                                   

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REASONS OF RBL AND HLR FOR THE MERGER                                           

The Board of Directors of each of RBL and HLR believe that the Merger is in 
the best interest of RBL and HLR because the operations and business of NHL are 
strategically complementary with those of RBL. The Boards believe the Merger    
will create a more diversified clinical laboratory capable of providing a broad 
range of high quality testing and related services on a nationwide basis.       
Additionally, the Boards of RBL and HLR regard the combination of NHL's         
strengths in marketing and client relations and RBL's growing specialized       
testing and other niche businesses, as well as RBL's experience in centralized  
management and information systems, as significant benefits for the combined    
entity. The Board of Directors of each of RBL and HLR was also favorably        
influenced by their understanding that certain persons familiar with RBL's      
business and operations would serve as executive officers and/or directors of   
the Surviving Corporation, including that Mr. Mac Mahon would serve as Vice     
Chairman during the Initial Period and as Chairman of the Board of Directors    
following such period, that Dr. Powell would serve as President and Chief       
Executive Officer of the Surviving Corporation and by their understanding that  
the Stockholder Agreement would contain governance provisions appropriate in    
light of HLR's substantial minority interest in the Surviving Corporation. The  
possibility of efficiencies in the operations of the Surviving Corporation      
through the consolidation of NHL's and RBL's operations and the elimination of  
redundant expenses and associated cost savings was also viewed favorably by the 
Boards of RBL and HLR.                                                          

EXCHANGE AGENT; PROCEDURES FOR EXCHANGE OF CERTIFICATES; NO FRACTIONAL SHARES   

Exchange Agent. The Merger Agreement requires (i) HLR to deposit at or prior
to the Effective Time, with or for the account of a bank or trust company       
appointed by NHL and HLR for the purpose of paying the Cash Consideration (the  
"Exchange Agent"), the HLR Cash Contribution, (ii) Roche to provide to NHL, at  
or prior to the Effective Time, the Roche Warrant Consideration and (iii) NHL   
to deposit with the Exchange Agent, at or prior to the Effective Time, the NHL  
Cash Contribution and the Roche Warrant Consideration received from Roche.      
Pursuant to instructions from the Surviving Corporation, the Exchange Agent     
will deliver the Cash Consideration to stockholders of NHL who have complied    
with the Procedures for Exchange of Certificates set forth below. No interest   
will be paid or will accrue on any cash payable as Cash Consideration.          

Procedures for Exchange of Certificates. As soon as practicable after the   
Effective Time, the Surviving Corporation will cause the Exchange Agent to send 
a transmittal form to each holder of NHL Common Stock. The transmittal form     
will contain instructions with respect to the surrender of certificates         
representing NHL Common Stock to be converted pursuant to the NHL Share         
Conversion. Upon surrender of a certificate for shares of NHL Common Stock for  
cancellation to the Exchange Agent, together with such transmittal form         
properly completed and duly executed, and such other documents as may           
reasonably be required by the Exchange Agent, the holder of such certificate    
will be entitled to receive in exchange a certificate representing the number   
of shares of NHL Common Stock not redeemed in the NHL Share Conversion and the  
Cash Consideration which such holder has the right to receive (and cash, if     
any, payable in lieu of fractional shares). Until surrendered, each certificate 
will be deemed at any time after the Effective Time to represent only the       
number of shares of NHL Common Stock and the right to receive the Cash          
Consideration (and cash, if any, payable in lieu of fractional shares) to which 
such holder is entitled pursuant to the NHL Share Conversion, and the holder of 
such certificate will cease to have any rights with respect to the number of    
shares of NHL Common Stock represented by such certificate immediately prior to 
the Effective Time in excess of the number of shares of NHL Common Stock to     
which such holder is entitled pursuant to the NHL Share Conversion, except as   
otherwise provided in the Merger Agreement or by law.                           

From and after the Effective Time, there will be no further registration of 
transfers of shares of NHL Common Stock converted in the NHL Share Conversion.  
Any portion of the aggregate Cash Consideration and proceeds from the sale of   
fractional shares that remains undistributed six months after the Effective     
Time will be delivered to the Surviving Corporation upon demand, and any        
holders of such NHL Common Stock who have not theretofore duly surrendered      
certificates representing shares of NHL Common Stock converted                  

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in the NHL Share Conversion must thereafter look only to the Surviving          
Corporation for the Cash Consideration (and cash, if any, payable in lieu of    
fractional shares) to which they are entitled). Neither HLR nor the Surviving   
Corporation will be liable to any holder of shares of NHL Common Stock          
converted in the NHL Share Conversion for any such Cash Consideration (or cash, 
if any, payable in lieu of fractional shares) or any certificates for any NHL   
Common Stock delivered to a public official pursuant to any applicable          
abandoned property, escheat or similar law.                                     

 NHL STOCKHOLDERS SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY
CARD. NHL STOCKHOLDERS SHOULD NOT FORWARD NHL STOCK CERTIFICATES TO THE         
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS.                      

 No Fractional Shares. No fractional shares of NHL Common Stock will be issued
to any NHL stockholder or holder of NHL Employee Stock Options in connection    
with the consummation of the Merger. In lieu of any such fractional shares,     
each holder of NHL Common Stock who otherwise would be entitled to receive a    
fractional share of NHL Common Stock pursuant to the Merger will be paid an     
amount by check, without interest, equal to such holder's proportionate         
interest in the net proceeds from the sale or sales in the open market by the   
Exchange Agent, on behalf of all such holders, of the aggregate fractional      
shares of NHL Common Stock (the "Excess Shares"), if any, that would have been  
issued in the Merger. As soon as practicable following the Effective Time, the  
Exchange Agent will determine the number of Excess Shares, if any, and the      
Exchange Agent, as agent of the holders of NHL Common Stock, will sell any such 
Excess Shares at the prevailing prices on the NYSE. The sales of the Excess     
Shares by the Exchange Agent will be executed on the NYSE through one or more   
member firms of the NYSE and will be executed in round lots to the extent       
practicable. The Surviving Corporation will pay all commissions, transfer taxes 
and other out-of-pocket transaction costs, including the expenses and           
compensation of the Exchange Agent, incurred in connection with such sale or    
sales of Excess Shares. Until the net proceeds of such sale or sales have been  
distributed to the holders of certificates relating to Excess Shares, the       
Exchange Agent will hold such proceeds in trust for such holders. As soon as    
practicable after the determination of the amount of cash to be paid to holders 
of certificates in lieu of any fractional shares of NHL Common Stock, the       
Exchange Agent will make available such amounts to such holders.                

EXPENSES                                                                        

The Merger Agreement provides that (except under the circumstances described
under "--Certain Fees" below) NHL and RBL each will pay their own expenses in   
connection with the Merger and the transactions contemplated thereby, including 
fees and expenses of their own financial or other consultants, investment       
bankers, accountants and counsel, except that in the event that RBL's legal and 
financial advisory fees and expenses exceed in the aggregate those of NHL, HLR  
or an affiliate will pay the excess amount.                                     

MATERIAL FEDERAL INCOME TAX CONSEQUENCES                                        

The following discussion summarizes the principal Federal income tax        
consequences of the Warrant Distribution, the NHL Share Conversion and the      
Merger Agreement to holders of NHL Common Stock. The discussion is based on the 
Federal income tax laws and regulations as now in effect and currently          
interpreted, and does not take into account possible changes in such laws,      
regulations or interpretations, which changes may be retroactive. The           
discussion does not reflect the individual tax position of any holder of NHL    
Common Stock and may not be applicable to holders of NHL Common Stock with a    
special tax status or tax situation, including but not limited to financial     
institutions, broker-dealers, holders that are not citizens or residents of the 
United States, tax-exempt entities and holders that acquired NHL Common Stock   
upon the exercise of employee stock options or otherwise as compensation.       
Holders of shares of NHL Common Stock are urged to consult with their own tax   
advisors regarding the tax consequences of the distribution of Warrants, the    
NHL Share Conversion and the Merger, including the effects of Federal, state,   
local, foreign and other tax laws.                                              

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The Warrant Distribution will constitute a nontaxable distribution by NHL of
rights to acquire its stock within the meaning of Section 305 of the Code.      
Accordingly, the distribution of the Warrants will not be a taxable event to    
holders of NHL Common Stock, and a holder's holding period for the Warrants     
will include the holder's holding period for the NHL Common Stock. A holder     
will have no tax basis in the Warrants unless the holder elects to allocate     
part of its tax basis in NHL Common Stock to the Warrants in a statement        
attached to the holder's tax return for the taxable year in which the Warrants  
are distributed. If such election is made by a holder, the tax basis allocated  
to the Warrants will be equal to the product of (x) the holder's tax basis in   
NHL Common Stock and (y) the ratio (immediately after the distribution) of the  
fair market value of the Warrants to the fair market value of NHL Common Stock  
held by such holder. Upon a sale or a redemption of the Warrants (including a   
sale of Fractional Warrants), the holder will recognize gain or loss, if any,   
in an amount equal to the difference between the proceeds of such sale or       
redemption and the tax basis, if any, allocated to such Warrants. If the        
Warrants are exercised, the tax basis allocated to the Warrants as a result of  
the election will be added to the tax basis in the NHL Common Stock that the    
holder will receive as a result of exercising the Warrants. However, if the     
Warrants lapse, a holder who made an election to allocate tax basis to the      
Warrants will not recognize any loss with respect to the Warrants, but the tax  
basis allocated to the Warrants will be reallocated to the NHL Common Stock.    

 The NHL Share Conversion is intended to constitute a redemption of NHL Common
Stock within the meaning of Section 317(b) of the Code. It is expected that     
stockholders of NHL will recognize gain or loss equal to the difference between 
the amount of cash they receive in respect of the shares being redeemed (and in 
lieu of fractional share interests) and the tax basis allocated to such shares. 
A holder's tax basis allocable to the shares redeemed will be the product of    
(i) the holder's aggregate tax basis in NHL Common Stock (which will be reduced 
by the amount of tax basis, if any, allocated to the Warrants) and (ii) the     
percentage of the holder's NHL Common Stock that is redeemed (i.e., 28% with an 
adjustment for fractional shares).                                              

Gain or loss recognized by a holder with respect to shares of NHL Common    
Stock or Warrants will be capital gain or loss if the NHL Common Stock or       
Warrants, as the case may be, are held as capital assets, and any such capital  
gain or loss will be long-term if, as of the date of the disposition, the NHL   
Common Stock or Warrants had a holding period of more than one year. If gain    
does not qualify for a long-term capital gain treatment, such gain will be      
taxable at the same rate as ordinary income.                                    

The Exchange Agent will be required to withhold 31% of the gross proceeds   
otherwise payable to a holder or other payee pursuant to the NHL Share          
Conversion unless either (i) the holder or other payee provides its taxpayer    
identification number (i.e., social security number or employer identification  
number) and certifies that such number is correct or (ii) an exemption applies  
under the applicable law and regulations concerning "backup withholding" of     
United States Federal income tax. Each holder will be required to complete and  
sign the main signature form and the Substitute Form W-9 included in the Letter 
of Transmittal, so as to provide the information and certification necessary to 
avoid backup withholding, unless an applicable exemption exists and is          
established in a manner satisfactory to NHL and the Exchange Agent.             

 Holders of NHL Common Stock will not have any tax consequences resulting from
the Merger other than the tax consequences with respect to the distribution of  
the Warrants and the NHL Share Conversion.                                      

ACCOUNTING TREATMENT                                                            

The Merger will be accounted for by the Surviving Corporation under the     
purchase method of accounting in accordance with APB No. 16. Under this method  
of accounting, the purchase price will be allocated to assets acquired and      
liabilities assumed based on their estimated fair values at the Effective Time. 

EFFECT ON NHL EMPLOYEE STOCK OPTIONS                                            

 The Merger Agreement provides that each NHL Employee Stock Option outstanding
on the date of the Merger Agreement will be deemed fully vested, and NHL will   
use reasonable efforts, including with respect                                  

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to obtaining consents, to cause each NHL Employee Stock Option to be canceled   
and terminated immediately prior to the Effective Time in exchange for an       
amount in cash and shares of NHL Common Stock (in the proportions set forth     
below) equal to the Option Value Amount, which is defined as the product of (i) 
the number of shares of NHL Common Stock subject to such NHL Employee Stock     
Option immediately prior to the Effective Time and (ii) the excess of (1)       
$18.50 over (2) the per share exercise price of such NHL Employee Stock Option. 
The Option Value Amount will be payable at the Effective Time as follows: 40%   
of such amount will be payable in cash and 60% of such amount will be payable   
in the number of shares of NHL Common Stock obtained by dividing the Option     
Stock Amount by $15.42, provided that any fractional share resulting from such  
calculation will be paid in cash, with the value of a whole share for such      
purpose assumed to be $15.42. All amounts payable as provided in this paragraph 
will be subject to applicable tax withholding requirements and will be paid     
without interest. The shares of NHL Common Stock issued upon cancellation and   
termination of NHL Employee Stock Options will not participate in the NHL Share 
Conversion and no Warrants will be issued with respect thereto. If all current  
holders of NHL Employee Stock Options elect to convert all such options to cash 
and NHL Common Stock (as described above), NHL will issue an additional 557,502 
shares of NHL Common Stock to such holders and pay such holders an amount in    
cash equal to approximately $5.8 million.                                       

The following example illustrates the operation of the formula described    
above. If an individual holds NHL Employee Stock Options to purchase 100 shares 
at an assumed exercise price of $11.75 per share, the formula would operate as  
follows:                                                                        

                                                                [Download Table]
                                                                         
                                                                  $ 18.50
Option exercise price............................................   11.75
                                                                  -------
  Excess of $18.50 over option exercise price.................... $  6.75
Number of shares subject to option...............................     100
                                                                  -------
  Option Value Amount............................................ $675.00
                                                                  =======
Cash payable (40%)............................................... $270.00
                                                                  =======
Option Stock Amount (60%)........................................ $405.00
  Divide by $15.42............................................... $ 15.42
                                                                  -------
Shares of NHL Common Stock payable............................... 26.2646
                                                                  =======
Shares of NHL Common Stock issued................................      26
                                                                  =======
Fractional amount paid in cash:                                          
  Fractional shares..............................................  0.2646
  Multiply by $15.42............................................. $ 15.42
                                                                  -------
    Cash paid for fractional shares.............................. $  4.08
                                                                  =======

The NHL Employee Stock Options with respect to which the requisite consents 
are not obtained will not be canceled, but instead will be immediately          
converted as of the Effective Time into an Adjusted Option to purchase the      
Option Conversion Number (the number of shares of NHL Common Stock purchasable  
pursuant to the NHL Employee Stock Option related to such Adjusted Option       
multiplied by the Conversion Number) of shares of NHL Common Stock. Each        
Adjusted Option will have substantially the same terms as the Employee Stock    
Option to which it is related, except that: (i) the Adjusted Option will be     
deemed fully vested and (ii) the exercise price of an Adjusted Option will be   
an amount equal to the exercise price of the NHL Employee Stock Option related  
to such Adjusted Option as of the date of the Merger Agreement divided by the   
Conversion Number, which will be a number equal to (i) the sum of (x) the       
product of (A) the average closing price of a share of NHL Common Stock on NYSE 
Composite Tape for the period of five consecutive trading days beginning on the 
trading day following the date on which the Effective Time occurs, which is the 
Post Merger Value, and (B) 0.72 and (y) $6.60 divided by (ii) the Post Merger   
Value.                                                                          

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The following example illustrates the operation of the formula described    
above. If an individual holds NHL Employee Stock Options to purchase 100 shares 
at an assumed exercise price of $11.75 per share, and assuming that the average 
closing price of a share of NHL Common Stock for the period of five consecutive 
trading days beginning on the trading day following the date on which the       
Effective Time occurs is $12.00, such options will be converted into options to 
purchase 127 shares of NHL Common Stock at an exercise price of $9.25 per       
share, determined as follows:                                                   

                                                                [Download Table]
                                                    
Conversion Number           = ($12.00 X .72) + $6.60
                              ----------------------
                                      $12.00        

                            = $8.64 + $6.60 = 1.27  
                              ----------------------
                                  $12.00            

Option Conversion Number    = 100 X 1.27 = 127      

Adjusted Exercise Price     = $11.75 = $9.25        
                              ------                
                               1.27                 

INTERESTS OF CERTAIN PERSONS IN THE MERGER                                      

In considering the recommendation of the NHL Board with respect to the      
Merger, stockholders should be aware that certain directors and executive       
officers of NHL have interests in the Merger which may be different from, or in 
addition to, the interests of NHL's stockholders generally. The NHL Board was   
aware of these interests and considered them, among other items, in approving   
the Merger Agreement and the transactions contemplated hereby. These interests  
include the following: certain directors and executive officers of NHL hold     
shares of NHL Common Stock, for which they will receive the same consideration  
in the Merger as other NHL stockholders, in the amounts set forth below under   
"Merger Consideration". Certain directors and executive officers of NHL have    
NHL Employee Stock Options, which may be cancelled in connection with the       
Merger in exchange for a payment in cash and shares of NHL Common Stock as      
described above under "Effect on NHL Employee Stock Options" and below under    
"Employee Stock Options". As described below under "Employment Contracts",      
certain executive officers of NHL have employment contracts with NHL pursuant   
to which such persons may terminate their employment for "good reason" (which   
is defined generally in the employment agreements to include an assignment of   
duties that is materially inconsistent with the status of such persons as       
executive officers, an adverse alteration in the nature of the responsibilities 
of such person, a reduction in salary or guaranteed bonus, or a material breach 
of such employment agreements by NHL--certain of which circumstances may occur  
as a result of the contemplated consolidation of certain NHL and RBL operations 
following the Merger), whereupon significant payments and other benefits may be 
required to be provided to such persons. In addition, as described below, James 
R. Maher, the current President and Chief Executive Officer of NHL, will        
receive a special bonus in connection with the Merger. Finally, the directors   
and officers of NHL will be entitled to indemnification as described below      
under "Indemnification and Insurance" and NHCG will be entitled to the          
registration rights set forth under "Registration Rights".                      

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Merger Consideration. The following table sets forth the number of shares of
NHL Common Stock owned by directors and executive officers of NHL as of March   
29, 1995, and the number of shares of NHL Common Stock and the amount of cash   
to be received by such persons in the NHL Share Conversion and the number of    
Warrants to be received by such persons in the Warrant Distribution:            

                                                        [Enlarge/Download Table]

                                         SHARES OF NHL       CASH CONSIDERATION TO     WARRANTS TO BE     
                     NUMBER OF        COMMON STOCK TO BE      BE RECEIVED IN THE       RECEIVED IN THE    
                    SHARES OWNED   RECEIVED IN THE MERGER(3)        MERGER         WARRANT DISTRIBUTION(3)
                    ------------   ------------------------- --------------------- -----------------------
                                                                                                          
NHCG (1)             20,176,729          14,527,244.88          $112,989,682.40         3,290,420.97      
James R. Maher          140,000             100,800.00              $784,000.00            22,831.20      
David C. Flaugh           3,570               2,570.40               $19,992.00               582.20      
Howard Gittis            46,000(2)           33,120.00              $257,600.00             7,501.68      
Paul A. Marks, M.D.       3,000               2,160.00               $16,800.00               489.24      

--------                                                                        
(1) A corporation indirectly wholly owned through Mafco Holdings Inc. by Ronald 
O. Perelman.                                                                    
(2) Includes 3,000 shares owned by Mr. Gittis' spouse as to which he disclaims  
beneficial ownership.                                                           
(3) Fractional shares will not be issued in the NHL Share Conversion and        
fractional Warrants will not be distributed in the Warrant Distribution.  

Employee Stock Options. Certain executive officers of NHL have NHL Employee 
Stock Options which may be cancelled in connection with the Merger in exchange  
for a payment in cash and shares of NHL Common Stock as described under "THE    
MERGER--Effect on NHL Employee Stock Options". If such NHL Employee Stock       
Options are so cancelled, the amount to be paid in cash and the number of       
shares of NHL Common Stock to be issued in connection therewith (which shares   
will not be converted in the NHL Share Conversion) for each of such executive   
officers is as follows (based on the number of options owned by each person as  
of March 29, 1995): Mr. Maher: $1,042,500 and 101,410; Mr. Flaugh: $548,750 and 
53,379; Mr. Brodnik: $378,750 and 36,842; Mr. Cochrane $1,107,525 and 107,735;  
Dr. Leonard: $284,250 and 27,649; Mr. Markus: $284,250 and 27,649; Mr.          
Richmond: $68,750 and 6,687; Dr. Slaunwhite: $176,250 and 17,144; Dr. Statland: 
$83,750 and 8,146; and Mr. Whalen: $378,750 and 36,842. See "--Effect on NHL    
Employee Stock Options". For a description of the ownership interest of         
directors and executive officers of NHL and their affiliates in the NHL Common  
Stock, see "THE NHL MEETING--NHL Share Ownership".                              

Employment Contracts. NHL has an employment agreement with James R. Maher   
which provides for his employment as Chief Executive Officer of NHL through     
December 31, 1995 at an annual salary of $1,000,000 with an annual bonus of     
$500,000 and an additional discretionary bonus as may be awarded at the         
discretion of the Board of Directors. If the employment agreement is terminated 
by Mr. Maher for certain specified reasons, including, but not limited to, (i)  
the assignment of duties materially inconsistent with Mr. Maher's status as     
Chief Executive Officer of NHL or resulting in an adverse alteration in the     
nature of his responsibilities, (ii) a reduction by NHL in the annual salary or 
annual bonus or a failure by NHL to pay any such amount when due, (iii) the     
relocation of NHL's principal executive offices to a location more than 50      
miles from La Jolla, California or NHL's failure to permit Mr. Maher to         
maintain his principal places of employment at both NHL's principal executive   
offices in La Jolla, California and in New York, New York or (iv) the           
occurrence of a change in control of NHL which, for such purpose, is deemed to  
occur if Mr. Perelman ceases beneficially to own 5% or more of the combined     
voting power of NHL's outstanding securities, then NHL will be required to pay  
Mr. Maher, within five days following the date of such termination, in a lump   
sum in cash, the sum of (i) any amounts due to Mr. Maher as annual salary and   
annual bonus, but unpaid, and (ii) $3,000,000. It is anticipated that Mr.       
Maher's employment agreement will be terminated and he will receive a payment   
of $3,000,000 as provided therein following the Effective Time. In addition, in 
connection with the Merger, NHL will pay Mr. Maher a special bonus of           
$1,000,000, subject to certain conditions, in recognition for his efforts on    
behalf of NHL with respect to the Merger. The special bonus is in addition to   
any other payments Mr. Maher may become entitled to under his employment        
agreement with NHL in connection with the Merger.                               

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NHL has an amended employment agreement with David C. Flaugh which provides 
for his employment as Senior Executive Vice President and Chief Operating       
Officer of NHL through December 31, 1996 at an annual salary of $500,000 with   
an annual bonus of 50% of the annual salary then in effect and an additional    
discretionary bonus as may be awarded at the discretion of the Board of         
Directors. The employment agreement also provides that the duties assigned to   
Mr. Flaugh will be performed primarily at the offices of NHL in San Diego       
County, California. If the employment agreement is terminated by Mr. Flaugh for 
certain specified reasons including (i) the assignment of duties materially     
inconsistent with Mr. Flaugh's status as Senior Executive Vice President, (ii)  
a reduction by NHL in the annual salary or annual bonus or a failure by NHL to  
pay any such amount when due or (iii) a material breach of any of the terms of  
the employment agreement by NHL, then NHL will be required to pay, in monthly   
installments, (i) the annual salary Mr. Flaugh would have otherwise received    
during the remainder of the employment period and (ii) for a period of one year 
following the date of the expiration of the employment term, in consideration   
of the performance of specified noncompetition obligations, an amount equal to  
one-half the annual salary at the rate in effect on the date of expiration of   
the employment term.                                                            

NHL has amended employment agreements with Timothy J. Brodnik and Robert E. 
Whalen which provide for each of them to be employed as an Executive Vice       
President through December 31, 1996 at an annual salary of $325,000 with an     
annual bonus equal to 50% of the annual salary then in effect and an additional 
discretionary bonus as may be awarded at the discretion of the Board of         
Directors. The employment agreements also provide that the respective duties    
assigned to Mr. Brodnik and Mr. Whalen will be performed primarily at the       
offices of NHL in Fairfax County, Virginia and in San Diego County, California, 
respectively. If the respective employment agreements are terminated by Mr.     
Brodnik or Mr. Whalen for certain specified reasons, including, (i) the         
assignment of duties materially inconsistent with the status of the office of   
Executive Vice President of NHL or resulting in an adverse alteration in the    
nature of the responsibilities associated therewith, (ii) a reduction by NHL in 
the annual salary or annual bonus or a failure by NHL to pay any such amount    
when due or (iii) a material breach of any of the terms of the employment       
agreements by NHL, then NHL will be required to pay, in monthly installments,   
(i) the respective annual salary and annual bonus Mr. Brodnik and Mr. Whalen    
would have otherwise received during the remainder of their respective          
employment periods and (ii) for a period of one year following the respective   
dates of expiration of their respective employment terms, in consideration of   
the performance of specified noncompetition obligations, an amount equal to     
one-half the annual salary at the rate in effect on the date of expiration of   
their respective employment terms.                                              

NHL has an employment agreement with Haywood D. Cochrane, Jr. which provides
for his employment as an executive through June 21, 1995 at an annual salary of 
$500,000 with an annual bonus of not more than $500,000 as well as any other    
bonus as may be awarded through any executive bonus plan applicable to similar  
executives of NHL from time to time. In addition, Mr. Cochrane will receive a   
total of 200,000 stock options in NHL Common Stock pursuant to the NHL 1994     
Stock Option Plan, one third of which vested on July 12, 1994 and one third of  
which will vest on each of July 12, 1995 and July 12, 1996. The employment      
agreement also provides that the duties assigned to Mr. Cochrane will be        
performed primarily in La Jolla, California. If the employment agreement is     
terminated by Mr. Cochrane following a material breach of the terms of the      
agreement by NHL, then NHL will be required to pay, in monthly installments,    
(i) the annual salary Mr. Cochrane would otherwise have received during the     
remainder of the employment period and (ii) if NHL, in its discretion, elects   
to have Mr. Cochrane perform specified noncompetition obligations, for a period 
of 24 months following the date of the expiration of the employment term, an    
amount equal to one-half of the annual salary at the rate in effect on the date 
of expiration of the employment term.                                           

NHL has amended employment agreements with Larry L. Leonard, Ph.D., John    
Markus and W. David Slaunwhite, Ph.D. which provide for each of them to be      
employed as an Executive Vice President through December 31, 1996 at an annual  
salary of $325,000 with an annual bonus equal to 50% of the annual salary then  
in effect and an additional discretionary bonus as may be awarded at the        
discretion of the Board of Directors. If the respective employment agreements   
are terminated by Dr. Leonard, Mr. Markus or Dr.                                

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Slaunwhite for certain specified reasons, including, (i) the assignment of      
duties materially inconsistent with the status of the office of Executive Vice  
President of NHL or resulting in an adverse alteration in the nature of the     
responsibilities associated therewith, (ii) a reduction by NHL in the annual    
salary or annual bonus or a failure by NHL to pay any such amount when due or   
(iii) a material breach of any of the terms of the employment agreement by NHL, 
then NHL will be required to pay, in monthly installments, (i) the respective   
annual salary and annual bonus Dr. Leonard, Mr. Markus and Dr. Slaunwhite would 
have otherwise received during the remainder of their respective employment     
periods and (ii) for a period of one year following the respective dates of     
expiration of their respective employment terms, in consideration of the        
performance of specified noncompetition obligations, an amount equal to one-    
half the annual salary at the rate in effect on the date of expiration of their 
respective employment terms.                                                    

 NHL has an employment agreement with James G. Richmond which provides for his
employment as Executive Vice President/General Counsel through December 31,     
1995 at an annual salary of $350,000 with a discretionary bonus as may be       
awarded at the discretion of the Board of Directors and a deferred bonus equal  
to $37,500 per quarter plus interest, which deferred bonus is payable in a      
single cash payment 10 days after the December 31 coincident with, or next      
following, the date of the end of the employment period or for 18 months after  
such termination, whichever period is greater. The employment agreement also    
provides that the duties assigned to Mr. Richmond will be performed primarily   
at the offices of NHL in La Jolla, California. If the employment agreement is   
terminated by Mr. Richmond following a material breach of any of the terms of   
the agreement by NHL, then NHL will be required to pay, (i) the annual salary   
Mr. Richmond would have otherwise received during the remainder of the          
employment period, in monthly installments, and (ii) the accumulated deferred   
compensation, both subject to Mr. Richmond's duty to mitigate his damages by    
seeking other employment.                                                       

 NHL has an amended employment agreement with Bernard E. Statland, M.D., which
provides for his employment as Executive Vice President of NHL and Chief        
Executive Officer of the NHL National Reference Laboratory through December 31, 
1995 at an annual salary of $325,000 with an annual bonus equal to 50% of the   
annual salary then in effect and an additional discretionary bonus as may be    
awarded at the discretion of the Board of Directors. If the employment          
agreement is terminated by Dr. Statland following a material breach of any of   
the terms of the agreement by NHL, then NHL will be required to pay, in monthly 
installments, (i) the annual salary Dr. Statland would have otherwise received  
during the remainder of the employment period and (ii) for a period of one year 
following the date of the expiration of the employment term, in consideration   
of the performance of specified noncompetition obligations, an amount equal to  
one-half the annual salary at the rate in effect on the date of expiration of   
the employment term.                                                            

Indemnification and Insurance. The Merger Agreement provides that the       
certificate of incorporation and by-laws of the Surviving Corporation will      
contain the provisions with respect to indemnification set forth in NHL's       
certificate of incorporation and by-laws on the date of the Merger Agreement,   
which provisions will not be amended, repealed or otherwise modified for a      
period of six years from the Effective Time in any manner that would adversely  
affect the rights of individuals who on or prior to the Effective Time were     
directors, officers, employees or agents of NHL or RBL (unless such             
modification is required by law) and such indemnification shall be, to the      
extent legally permitted, mandatory and not permissive.                         

The Delaware Corporation Law provides that all debts, liabilities and duties
of constituent corporations merged under such law attach to the surviving       
corporation and may be enforced against it to the same extent as if said debts, 
liabilities and duties had been incurred or contracted by it. On this basis,    
indemnification obligations of RBL that have arisen or arise under New Jersey   
law or pursuant to the indemnification provisions of the RBL certificate of     
incorporation or bylaws prior to the Effective Time would be enforceable        
against the Surviving Corporation. The indemnification provisions contained in  
the RBL bylaws are substantially similar to those contained in NHL's bylaws.    

In addition, the by-laws of NHL contain a provision, which closely parallels
a provision of the Delaware Corporation Law, making the indemnification         
provisions thereof applicable to any constituent corporation                    

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absorbed by NHL in a consolidation or merger. Any person who is or was a        
director, officer, employee or agent of such constituent corporation, or is or  
was serving at the request of such constituent corporation stands in the same   
position under the indemnification provisions of the NHL bylaws with respect to 
the Surviving Corporation as such person would have with respect to such        
constituent corporation if its separate existence had continued.                

The Merger Agreement requires the Surviving Corporation, for a period of six
years after the Effective Time, to maintain the current policies of officers'   
and directors' liability insurance in respect of acts or omissions occurring    
prior to the Effective Time covering each such person covered on the date of    
the Merger Agreement by RBL's officers' and directors' liability insurance      
policy or NHL's officers' and directors' liability insurance policy or who      
becomes covered thereby prior to the Effective Time, provided that the          
Surviving Corporation may substitute therefor policies of at least the same     
coverage containing terms and conditions which in all material respects are no  
less favorable than those of the policies in effect on the date hereof for so   
long as such substitution does not result in gaps or lapses in coverage; and    
provided further that the Surviving Corporation will not be obligated to pay    
premiums in excess of 200% of the aggregate amount per annum which RBL and NHL  
paid in their last full fiscal years, but provided further, that the Surviving  
Corporation will be obligated to provide such coverage as may be obtained for   
such amount.                                                                    

 Registration Rights. For a description of certain registration rights granted
by NHL to NHCG with respect to shares of NHL Common Stock to be received by     
NHCG in the Merger and the Warrants to be received by NHCG in the Warrant       
Distribution (including NHL's agreement to include a resale prospectus with     
respect to such securities in the Registration Statement, to keep the           
Registration Statement effective for up to three years (if necessary) and to    
pay certain associated expenses), see "THE SHARING AND CALL OPTION AGREEMENT".  
See also "CERTAIN CONSIDERATIONS".                                              

NO SOLICITATION                                                                 

The Merger Agreement provides that NHL may not, nor may it permit any of its
subsidiaries to, nor may it authorize or permit any officer, director or        
employee of, or any investment banker, attorney or other adviser or             
representative of, NHL or any of its subsidiaries to, directly or indirectly    
(i) solicit, initiate or encourage the submission of any Acquisition Proposal   
or (ii) participate in any discussions or negotiations regarding, or furnish to 
any person any information with respect to, or take any other action to         
facilitate any inquiries or the making of any proposal that constitutes, or may 
reasonably be expected to lead to, any Acquisition Proposal. However, to the    
extent required by the fiduciary obligations of the Board of Directors of NHL,  
as determined in good faith by the Board of Directors based on the advice of    
outside counsel, NHL may, (i) in response to an unsolicited request therefor,   
furnish information with respect to NHL to any person pursuant to a customary   
confidentiality agreement (as determined by NHL's outside counsel) and discuss  
such information (but not the terms of any possible Acquisition Proposal) and   
the terms of this provision of the Merger Agreement with such person and (ii)   
upon receipt by NHL of an Acquisition Proposal, following delivery of notice to 
HLR, participate in negotiations regarding such Acquisition Proposal. Any       
violation of these restrictions by any officer, director or employee of NHL or  
any of its subsidiaries or any investment banker, attorney or other advisor or  
representative of NHL or any of its subsidiaries will be deemed to be a         
violation by NHL.                                                               

RIGHT OF THE NHL BOARD OF DIRECTORS TO WITHDRAW RECOMMENDATION UPON RECEIPT OF  
A SUPERIOR PROPOSAL                                                             

Under the Merger Agreement, neither the Board of Directors of NHL nor any   
committee thereof may (i) withdraw or modify, or propose to withdraw or modify, 
in a manner adverse to RBL or HLR, the approval or recommendation of the Board  
of Directors or any such committee thereof of the Merger Agreement or the       
Merger (or the other transactions contemplated thereby), (ii) approve or        
recommend, or propose to approve or recommend, any Acquisition Proposal or      
(iii) enter into any agreement with respect to any Acquisition Proposal.        
However, if the Board of Directors of NHL receives an Acquisition Proposal      
that, in the exercise of its fiduciary obligations (as determined in good faith 
by the Board of Directors after reviewing                                       

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the advice of outside counsel) it determines to be a Superior Proposal, the     
Board of Directors of NHL may withdraw or modify its approval or recommendation 
of the Merger Agreement or the Merger, approve or recommend such Superior       
Proposal, enter into an agreement with respect to such Superior Proposal or     
terminate the Merger Agreement, in each case at any time after the second       
business day following HLR's receipt of written notice of such Superior         
Proposal.                                                                       

CERTAIN FEES                                                                    

The Merger Agreement requires NHL to pay to HLR, in immediately available   
funds, $30.0 million, plus up to an additional $7.0 million as reimbursement of 
Expenses, promptly after the termination of the Merger Agreement (i) by NHL (in 
accordance with the provision described under "Right of NHL Board of Directors  
to Withdraw Recommendation Upon Receipt of a Superior Proposal" above) or by    
HLR (if the NHL Board of Directors has withdrawn its recommendation of the      
Merger, the Merger Agreement or the transactions contemplated thereby), if, in  
either case, any person or group (as defined in Section 13(d)(iii) of the       
Exchange Act) (other than HLR or an affiliate of HLR) has made an Acquisition   
Proposal (excluding for this purpose any indication of interest that has not    
resulted in an offer or proposal) or become the beneficial owner (as defined in 
Rule 13d-3 under the Exchange Act) of at least 20% of the outstanding shares of 
NHL Common Stock or (ii) by HLR (if the NHL Board of Directors has recommended  
or approved any Acquisition Proposal other than an Acquisition Proposal made by 
HLR or a controlled affiliate of HLR).                                          

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PLAN OF FINANCING 

It is estimated that the total funds required to pay the aggregate Cash     
Consideration to be paid to stockholders of NHL in the Merger will be           
approximately $474,700,000. This amount will be financed from three sources:    
(i) the NHL Cash Contribution (in the amount of $288,000,000) out of the        
proceeds of the NHL Borrowings in an equal amount, (ii) the HLR Cash            
Contribution (in the amount of $135,651,100) and (iii) the Roche Warrant        
consideration (in the amount of $51,048,900). NHL has received and accepted a   
commitment from Credit Suisse contained in a commitment letter (the "Credit     
Suisse Commitment Letter") for a credit facility (a) to refinance NHL's         
existing indebtedness (including, as of December 31, 1994, a revolving credit   
facility of $213.0 million and a term loan facility of $380.0 million entered   
into in connection with the Allied Acquisition Financing), (b) to refinance     
certain of RBL's existing indebtedness, (c) to finance the NHL Cash             
Contribution, (d) to pay transaction costs and expenses associated with the     
Merger and (e) for general corporate purposes of the Surviving Corporation and  
its subsidiaries.                                                               

It is a condition to the Merger that NHL shall have obtained the NHL        
Borrowings. In addition, the Merger Agreement requires HLR and RBL to use their 
good faith best efforts to assist NHL in NHL's effecting of the refinancing of  
NHL's existing indebtedness and obtaining the NHL Borrowings.                   

DESCRIPTION OF BANK FACILITY                                                    

General. In connection with the consummation of the Merger, NHL expects to  
obtain bank financing consisting of (i) not more than $800,000,000 as a six     
year amortizing senior term loan facility (the "Term Loan Facility") and (ii)   
not more than $450,000,000 as a senior five year revolving credit facility (the 
"Revolving Credit Facility" and together with the Term Loan Facility, the "Bank 
Facility"). The Bank Facility will be provided pursuant to the terms of, and    
will become effective only upon the execution and delivery of, mutually         
satisfactory definitive loan documentation for the Credit Agreement. Pursuant   
to the Credit Suisse Commitment Letter, Credit Suisse has committed (the        
"Commitment"), subject to certain conditions, to provide the full amount of the 
Bank Facility. The following description constitutes a summary of the expected  
principal terms of the Credit Agreement based upon a draft of the agreement     
currently being negotiated. The definitive Credit Agreement may contain more or 
less restrictive provisions (including, but not limited to, those relating to   
interest rates and fees) than those referred to below.                          

Guaranty. The Bank Facility (including Competitive Bid Advances, as defined 
below) will be unconditionally and irrevocably guaranteed by certain of the     
Surviving Corporation's subsidiaries (each, a "Subsidiary Guarantor"),          
including National Health Laboratories Incorporated and Allied.                 

 Syndication. Credit Suisse (New York Branch) will act as sole agent under the
Bank Facility. Credit Suisse (New York Branch) intends to syndicate the Bank    
Facility to additional banks and other financial institutions (the "Lenders"),  
and, as agent for the Lenders, Credit Suisse will manage all aspects of the     
syndication.                                                                    

Interest Rates and Facility Fees. The Surviving Corporation will pay        
interest, as set forth in the chart below, on unpaid principal advanced under   
the Bank Facility at a rate per annum equal to the Base Rate (as defined below) 
plus the applicable Base Rate Margin (as set forth below) or the Eurodollar     
Rate (as defined below) plus the applicable Eurodollar Rate Margin (as set      
forth below). "Eurodollar Rate" means the reserve adjusted average (rounded     
upward to the next higher 1/16 of 1%) of the rates at which deposits are offered
by Credit Suisse to prime banks in the London interbank market. "Base Rate"     
means the higher of Credit Suisse's base rate and the federal funds rate plus   
0.5% per annum. During the term of the Revolving Credit Facility, a competitive 
bid option also will be available, advances pursuant to which ("Competitive Bid 
Advances") will reduce availability under the Revolving Credit Facility.        
Competitive Bid Advances may be requested on a fixed rate basis or on another   
basis (e.g., LIBOR) specified by the Surviving Corporation in its solicitation  
of Competitive Bid Advances.                                                    

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For as long as the HLR Group Interest remains at least 25%, applicable      
interest margins and facility fees (facility fees will be payable against       
commitment amounts regardless of usage) would be fixed as set forth below:      

                                                                [Download Table]

                                             REVOLVING CREDIT TERM LOAN
                                                 FACILITY     FACILITY 
                                             ---------------- ---------
                                                                       
Eurodollar Rate Margin......................      0.25%         0.375% 
Facility Fee................................      0.125%        0.0%   
Base Rate Margin............................      0.0%          0.0%   

In the event there is a reduction in the HLR Group Interest to below 25%,   
applicable interest margins and facility fees will not be determined as set     
forth above, but instead will be determined based upon the Surviving            
Corporation's Interest Coverage Ratio and Leverage Ratio (each as defined       
below), as set forth in the chart below:                                        

                                                                [Download Table]

                                       LEVEL  I(1) LEVEL II LEVEL III LEVEL IV 
                                       ----------- -------- --------- ---------
RATIOS:                                                                        
-------                                                                        
                                                                               
  Interest Coverage Ratio greater than                                         
   or equal to:.......................              5.0:1.0   6.0:1.0   7.0:1.0
    and                                                                        
  Leverage Ratio of less than or equal             2.50:1.0 2.00:1.00 1.50:1.00
   to:................................                                         
INTEREST AND FACILITY FEES:                                                    
---------------------------                                                    
  TERM LOAN FACILITY:                                                          
    Term Loan Facility Eurodollar Rate                                         
     Margin...........................    1.50%     1.25%     1.00%     0.75%  
    Term Loan Facility Base Rate Mar-                                          
     gin..............................    0.50%     0.25%     0.0%      0.0%   
  REVOLVING CREDIT FACILITY:                                                   
    Revolving Credit Facility                                                  
     Eurodollar Rate Margin...........    1.00%     0.875%    0.75%     0.625% 
    Revolving Credit Facility Base                                             
     Rate Margin......................    0.0%      0.0%      0.0%      0.0%   
    Revolving Credit Facility Fee.....    0.50%     0.375%    0.25%     0.125% 

--------                                                                        
(1) The Surviving Corporation's performance will be deemed to be at Level I if  
it does not meet the requirements of Level II, III or IV.               

"Interest Coverage Ratio", as defined in the Credit Agreement, means, with      
respect to any specified period, a ratio of (a) "EBITDA" (defined generally,    
for the purposes of the Credit Agreement, as consolidated earnings before       
deduction of interest, taxes, depreciation and certain non-cash adjustments)    
(subject to certain adjustments under certain circumstances) to (b) the sum of  
interest expense on all Debt (as defined in the Credit Agreement) of the        
Surviving Corporation and its subsidiaries on a consolidated basis in           
accordance with generally accepted accounting principles, including certain     
types of indebtedness specified in the Credit Agreement, to the extent not      
otherwise included in accordance with generally accepted accounting principles. 
"Leverage Ratio", as defined in the Credit Agreement means, with respect to any 
fiscal quarter, the ratio of (a) the total Consolidated Debt (as defined in the 
Credit Agreement) of the Surviving Corporation and its subsidiaries as of the   
last day of such fiscal quarter to (b) EBITDA (subject to certain adjustments   
in certain circumstances) for any specified period ended at the end of such     
fiscal quarter.                                                                 

Default interest will be equal to the rate of interest applicable to each   
defaulted advance, plus 200 basis points (2.00%) per annum.                     

Availability. The entire amount of the Term Loan Facility will be drawn down
in one advance shortly before the Effective Time.                               

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The Revolving Credit Facility will provide revolving credit, with minimum   
borrowings of at least $10 million, for five years beginning on or about the    
Effective Time, subject to mandatory commitment reductions described below.     
Revolving Credit Facility availability will be reduced by Competitive Bid       
Advances outstanding from time to time.                                         

 Term Loan Amortization. Total amortization of the Term Loan Facility for each
12-month period following the Effective time shall be made (in quarterly        
installments) in accordance with the following table:                           

                                                                [Download Table]

YEAR ENDING APRIL                                              AMOUNT   
-----------------                                              ------   
                                                                        
1996....................................................... $ 50,000,000
1997.......................................................   75,000,000
1998.......................................................  150,000,000
1999.......................................................  150,000,000
2000.......................................................  175,000,000
2001.......................................................  200,000,000
                                                            ------------
Total...................................................... $800,000,000
                                                            ============

 Mandatory and Optional Commitment Reduction/Prepayment. The amounts available
under the Revolving Credit Facility will be subject to certain mandatory        
permanent reduction and prepayment requirements and the Term Loan Facility will 
be subject to specified mandatory prepayment requirements as follows: (i) the   
proceeds of debt issuances, subject to certain exceptions, must first be        
applied to repay scheduled Term Loan Facility payments until the Term Loan      
Facility is repaid in full and then to reduce the commitments and advances      
under the Revolving Credit Facility; and (ii) the proceeds of certain asset     
sales, unless reinvested within one year of the applicable asset sale in        
productive assets of a kind then used or usable in the business of the          
Surviving Corporation and its subsidiaries, must first be applied to scheduled  
Term Loan Facility payments until the Term Loan Facility is repaid in full and  
then to reduce the commitments and advances under the Revolving Credit          
Facility.                                                                       

Optional reductions of the commitment for the Revolving Credit Facility and 
optional prepayments under the Term Loan Facility will be permitted at any time 
subject to certain conditions.                                                  

Representations and Warranties. The Credit Agreement will contain certain   
customary representations and warranties with respect to NHL and its            
subsidiaries and, to the best knowledge of NHL, with respect to RBL and its     
subsidiaries and HLR, including, without limitation, the following: (i) the     
corporate existence and power of NHL, RBL and each Subsidiary Guarantor,        
including the qualification to do business as a foreign corporation in each     
jurisdiction where such qualification is necessary, except for those            
jurisdictions where the failure to be so qualified would not have a Material    
Adverse Effect (as defined in the Credit Agreement), and the validity of the    
NHL Common Stock; (ii) the corporate existence and power of NHL's and RBL's     
material subsidiaries and the ownership of the stock of such subsidiaries;      
(iii) the authorization of the execution, delivery and performance of, and the  
binding effect of, the Loan Documents and the Transaction Documents (each, as   
defined in the Credit Agreement) and the absence of any contravention of the    
certificate of incorporation or the by-laws of each relevant person's           
organizational documents, or any violation of any provision of any law, rule,   
regulation, order, writ, judgment, injunction, decree, determination or award   
which would conflict with or result in breach of certain contracts binding or   
affecting NHL, RBL or their subsidiaries which is reasonably likely to have a   
Material Adverse Effect; (iv) the absence of the need for any action by or      
filing with, any governmental authority or regulatory body with respect to (A)  
the execution, delivery and performance by NHL, RBL, any Subsidiary Guarantor   
or any other relevant party of any Loan Document or Transaction Document to     
which it is a party, or (B) the exercise by Credit Suisse or any Lender of its  
rights under the Loan Documents; (v) the due execution and delivery of each     
Loan Document and each Transaction Document by each party thereto; (vi) the     
accuracy of audited consolidated financial statements of each of NHL and RBL    
for 1994 and unaudited pro forma financial information of NHL, which were       
provided to each Lender; (vii) the absence of any Material Adverse Change       

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(as defined in the Credit Agreement) with respect to NHL, RBL and their         
subsidiaries or HLR; (viii) the absence of material litigation involving NHL,   
RBL or any of their respective subsidiaries, which is reasonably likely to have 
a Material Adverse Effect; (ix) the nature of NHL's and RBL's employee benefit  
plans and arrangements and the compliance of the plans with the applicable      
provisions of ERISA; (x) environmental compliance by NHL, RBL and their         
subsidiaries; (xi) the non-investment company status of NHL, RBL and their      
subsidiaries; (xii) the filing of tax returns and payment of taxes by NHL, RBL  
and their subsidiaries; (xiii) the qualification of the Merger as a             
reorganization within the meaning of Section 368(a)(1) of the Code; (xiv) NHL's 
non-engagement in the business of extending credit for the purpose of           
purchasing or carrying Margin Stock (as defined in the Credit Agreement); (xv)  
the solvency of NHL, RBL and the Subsidiary Guarantors; (xvi) the ownership of  
NHL Common Stock by HLR and its affiliates, after giving effect to the Merger;  
(xvii) the secured and unsecured indebtedness of NHL, RBL and their             
subsidiaries of $5 million or more at the Effective Time; and (xviii) the       
sufficiency of NHL's assets, properties and rights at the Effective Time,       
giving effect to the Merger, in order for the Surviving Corporation to conduct  
business as presently conducted and as proposed to be conducted.                

 Conditions Precedent. The obligations of each Lender to make an advance as of
the Effective Time are subject to customary conditions precedent, including the 
following (i) the Effective Time shall have occurred on or before June 1, 1995; 
(ii) Credit Suisse shall have received appropriate certificates, legal opinions 
and recent financial information with respect to NHL and RBL; (iii) all         
outstanding debt under the Allied Acquisition Financing shall have been         
prepaid; (iv) there shall have occurred no Material Adverse Change relating to  
NHL or RBL; (v) NHL shall have paid accrued fees and expense of Credit Suisse   
and the Lenders (including the reasonable fees and expenses of Credit Suisse's  
special counsel); (vi) the representations and warranties shall be true and     
correct; (vii) there shall have been be no defaults or material litigation; and 
(viii) Credit Suisse shall have received satisfactory evidence of the authority 
of NHL to enter into the Credit Agreement and shall have received a guaranty    
signed by the Subsidiary Guarantors.                                            

Covenants. Under the Credit Agreement NHL will agree to certain customary   
covenants pursuant to which, among other things, (i) the Surviving Corporation  
will comply, and cause each of its subsidiaries to comply, with all applicable  
laws, rules, regulations and orders, the failure to comply with which would be  
reasonably likely to have a Material Adverse Effect on the Surviving            
Corporation; (ii) the Surviving Corporation will comply, and cause each of its  
subsidiaries to comply, with environmental laws and permits applicable to its   
operations and properties; (iii) the Surviving Corporation will maintain, and   
cause each of its subsidiaries to maintain, insurance adequate insurance with   
reputable insurance companies; (iv) the Surviving Corporation will preserve and 
maintain, and cause each of its subsidiaries to preserve and maintain, its      
corporate existence, rights and franchises, subject to certain exceptions; (v)  
the Surviving Corporation shall permit, upon reasonable prior notice, Credit    
Suisse or any Lender, to the extent reasonably requested, to examine and make   
copies of, and abstracts from the records and books of account of, and visit    
the properties of, NHL and of its subsidiaries; (vi) the Surviving Corporation  
will keep, and cause each of its subsidiaries to keep, proper books of record   
and account to the extent necessary to permit the preparation of financial      
statements required to be delivered under the Credit Agreement; (vii) the       
Surviving Corporation will maintain and preserve, and cause each of its         
subsidiaries to maintain and preserve, all of its properties in good working    
order and condition; (viii) not later than 180 days immediately after the       
Effective Time, the Surviving Corporation will enter into and thereafter        
maintain interest rate hedge agreements covering at least 50% of the Term Loan  
Facility advances, such agreements having terms and conditions satisfactory to  
Credit Suisse; and (ix) the Surviving Corporation will comply with certain      
reporting requirements by furnishing to Credit Suisse: (A) on a quarterly basis 
consolidated financial statements for each of the first three quarters during   
each fiscal year and on an annual basis, copies of each annual report on Form   
10-K, together with notice whether a default under the Bank Facility has        
occurred and is continuing, (B) annual management financial models, (C) copies  
of certain filings with the SEC, (D) copies of certain reports and notices      
received or filed in connection with ERISA and notices relating thereto, (E)    
copies of IRS notices with respect to material additional tax liability, (F)    
within 45 days of the end of each month during the 12-month period following the
Effective Time, copies of summary reports prepared by the chief financial       
officer of the Surviving                                                        

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Corporation reviewing significant business and financial issues and (G) such    
other information as any Lender may reasonably request.                         

In addition, the Credit Agreement will contain certain negative covenants,  
subject to such baskets and exceptions as the parties may agree, pursuant to    
which the Surviving Corporation or its subsidiaries will agree not to (i)       
create or permit the creation of certain liens, (ii) grant guaranties, (iii)    
engage in certain mergers or certain sales of assets, (iv) invest in certain    
other persons, (v) engage in certain acquisitions outside the ordinary course   
of business, (vi) incur additional debt or prepay other debt, subject to        
certain exceptions, (vii) pay dividends to the Surviving Corporation's          
stockholders or repurchase outstanding securities of the Surviving Corporation, 
subject to certain exceptions if certain specified performance levels are       
achieved, (viii) change the nature of their business, (ix) increase lease       
obligations over certain levels, (x) make capital expenditures over certain     
levels, (xi) adopt accounting changes without the consent of the Lenders, (xii) 
make certain prepayments or redemptions of debt subject to certain exceptions,  
or (xiii) subject to certain exceptions, enter into any agreement prohibiting   
the creation or assumption of any lien on the assets of the subsidiaries of the 
Surviving Corporation.                                                          

 Financial Covenants. In addition, the Credit Agreement will contain financial
covenants, including with respect to the Interest Coverage Ratio, the Leverage  
Ratio and minimum stockholders' equity. The covenants will be tested quarterly. 

Events of Default. The Credit Agreement will set forth certain customary    
events of default, including (i) the failure to make any principal payment when 
due; (ii) failure to pay interest, fees or other payments within five business  
days of the date due; (iii) the breach of any representation or warranty; (iv)  
default in any covenant or financial covenant (subject in certain cases to a    
grace period); (v) the imposition of a nonmonetary judgment which remains       
unstayed for 30 days which is likely to have a Material Adverse Effect on the   
Surviving Corporation or its subsidiaries; (vi) default under any other         
indebtedness in excess of $25,000,000; (vii) certain events of bankruptcy or    
insolvency; (viii) the occurrence of a Change of Control of the Surviving       
Corporation (as defined in the Credit Agreement, including the acquisition by a 
person or group other than HLR or its affiliates of 51% of the outstanding      
stock of the Surviving Corporation); (ix) certain ERISA defaults; (x) the       
imposition of an individual final judgment in excess of $25,000,000, or one or  
more final judgments aggregating more than $50,000,000, in each case which is   
unstayed for 30 days and not covered by insurance, and (xi) any material        
provision of any Loan Document being judicially determined to be invalid and    
non-binding or unenforceable or the Surviving Corporation or any Subsidiary     
Guarantor so asserting in writing.                                              

Cost and Yield Protection. The Credit Agreement will contain standard       
provisions limiting the costs of and protecting the yield of the Lenders,       
including provisions relating to illegality, inability to determine rate,       
funding losses, and increased costs or reduced return, including those arising  
from reserve requirements, taxes and capital requirements.                      

Assignment. Lenders will be permitted (i) to sell assignments (other than   
Competitive Bid Advances) in specified amounts to other Lenders or affiliates   
or, subject to the consent of the Surviving Corporation (not to be unreasonably 
withheld), to certain other specified lenders, and (ii) to sell participations  
in all or part of their loans or commitments.                                   

Amendments and Waivers. Amendments to and waivers of provisions of the Loan 
Documents may be made or given by the lenders holding a majority of the         
advances and commitments under the Bank Facility, except for, among other       
things: increases in commitment amounts; reduction of principal, interest, fees 
or other amounts payable to the Lenders; postponement of final maturity and     
waiver of conditions to the financing closing, each of which will require the   
consent of all the lenders.                                                     

Expenses and Indemnification. The Surviving Corporation will pay all of     
Credit Suisse's and its affiliates' (including CS First Boston's) reasonable    
out-of-pocket costs and expenses in connection with the                         

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preparation, execution, delivery, administration, modification and amendment of 
the Loan Documents (including, without limitation, the fees and expenses of     
counsel). The Surviving Corporation will also pay all expenses incurred by the  
Lenders in connection with the enforcement of the rights and remedies available 
to any of them under the Loan Documents. NHL will agree to indemnify and hold   
harmless Credit Suisse and each Lender and their affiliates from and against    
any and all claims, damages, losses, liabilities and expenses that may be       
incurred by or asserted or awarded against any of such parties, in each case    
arising out of or in connection with or by reason of any investigation,         
litigation or proceeding arising out of, related to or in connection with the   
Loan Documents and the transactions contemplated thereby.                       

THE MERGER AGREEMENT

The following is a brief summary of all material provisions of the Merger   
Agreement not described elsewhere in this Proxy Statement/Prospectus. The       
Merger Agreement is included as Annex I to this Proxy Statement/Prospectus and  
is incorporated herein by reference. Such summary is qualified in its entirety  
by reference to the Merger Agreement.                                           

THE MERGER                                                                      

The Merger. The Merger Agreement provides that, following the approval and  
adoption of the Merger Agreement by the stockholders of NHL and the             
satisfaction or waiver of the other conditions to the Merger, RBL will be       
merged with and into NHL (with NHL being the Surviving Corporation). The Merger 
will become effective upon the filing of a Certificate of Merger with the       
Secretary of State of the State of Delaware and the Secretary of State of the   
State of New Jersey. The filing of the Certificate of Merger will occur as soon 
as practicable after satisfaction or waiver of the conditions to the Merger.    
The Surviving Corporation will possess all the rights, privileges, powers and   
franchises and be subject to all restrictions, disabilities and duties of NHL   
and RBL, all as provided by the Delaware Corporation Law.                       

Conversion of Shares. At the Effective Time, each outstanding share of NHL  
Common Stock (other than shares of NHL Common Stock owned by RBL or HLR and     
other than Dissenting Common Shares) will be converted in the NHL Share         
Conversion into (i) 0.72 of a share of NHL Common Stock and (ii) the right to   
receive $5.60 in cash, without interest. No fractional shares of NHL Common     
Stock will be issued in the Merger and, in lieu thereof, each holder of NHL     
Common Stock who otherwise would be entitled to receive a fractional share of   
NHL Common Stock pursuant to the Merger will be paid an amount in cash, without 
interest, equal to such holder's proportionate interest in the net proceeds     
from the sale or sales in the open market by the Exchange Agent, on behalf of   
all such holders, of the aggregate fractional shares of NHL Common Stock, if    
any, that would have been issued in the Merger. See "THE MERGER--Exchange       
Agent; Procedures for Exchange of Certificates; No Fractional Shares".          

In addition, all shares of common stock, no par value, of RBL outstanding   
immediately prior to the Effective Time (other than treasury shares, which will 
be canceled) will be converted into, and become, that number of newly issued    
shares of NHL Common Stock as would, in the aggregate and after giving effect   
to the Merger and the NHL Common Stock owned by HLR, RBL and their subsidiaries 
immediately prior to the Effective Time, equal 49.9% of the total number of     
shares of NHL Common Stock outstanding immediately after the Effective Time     
(after giving effect to the issuance of NHL Common Stock in respect of the NHL  
Employee Stock Options in connection with the Merger as described herein). If   
between the date of the Merger Agreement and the Effective Time, the            
outstanding shares of NHL Common Stock have been changed into a different       
number of shares or a different class, by reason of any stock dividend,         
subdivision, reclassification, recapitalization, split, combination or exchange 
of shares, the number of shares to be issued in respect of the shares of RBL    
common stock will be correspondingly adjusted to reflect such stock dividend,   
subdivision, classification, recapitalization, split, combination or exchange   
of shares.                                                                      

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The Warrants. In connection with the Merger, NHL currently intends to make  
the Warrant Distribution to holders of record of shares of NHL Common Stock as  
of April 21, 1995, consisting of 0.16308 of a Warrant per outstanding share of  
NHL Common Stock, each such Warrant representing the right to purchase one      
newly issued share of NHL Common Stock for $22.00 (subject to adjustments) on   
the Expiration Date. NHL will have the right, exercisable by notice at least 60 
but not more than 90 days prior to the Expiration Date, to redeem the Warrants  
on the Expiration Date for a cash redemption price per Warrant equal to the     
average closing price of NHL Common Stock over a specified period prior to the  
Expiration Date minus the exercise price of $22.00 per share (subject to        
adjustments). No fractional Warrants will be issued to the holders of shares of 
NHL Common Stock, and in lieu thereof, each holder of NHL Common Stock who      
otherwise would be entitled to receive a fractional Warrant will be paid an     
amount in cash, without interest, equal to such holder's proportionate interest 
in the net proceeds from the sale or sales in the open market by the Warrant    
Agent on behalf of all such holders, of the aggregate fractional Warrants, if   
any, that would have been issued in the dividend distribution.                  

The Merger Agreement also provides for the issuance by NHL and the purchase 
by Roche of 8,325,000 Warrants to purchase shares of NHL Common Stock for the   
Roche Warrant Consideration. The principal terms of the Roche Warrants will be  
identical to those of the Warrants issued to the NHL stockholders in the        
dividend distribution. See "THE WARRANT AGREEMENT."                             

It is a condition to each party's obligation to consummate the Merger that  
the Warrants be listed on the NYSE, subject to official notice of issuance. NHL 
has agreed to use its best efforts to cause the Warrants to be so listed,       
subject to official notice of issuance. See "CERTAIN CONSIDERATIONS."           

Stock Options. Each NHL Employee Stock Option outstanding on the date of the
Merger Agreement will be deemed fully vested, and NHL will use reasonable       
efforts, including with respect to obtaining consents, to cause each NHL        
Employee Stock Option to be canceled and terminated immediately prior to the    
Effective Time in exchange for an amount in cash and shares of NHL Common Stock 
(in the proportions set forth below) equal to the Option Value Amount, which is 
defined as the product of (i) the number of shares of NHL Common Stock subject  
to such NHL Employee Stock Option immediately prior to the Effective Time and   
(ii) the excess of (1) $18.50 over (2) the per share exercise price of such NHL 
Employee Stock Option. The Option Value Amount will be payable at the Effective 
Time as follows: 40% of such amount will be payable in cash and 60% of such     
amount will be payable in the number of shares of NHL Common Stock obtained by  
dividing the Option Stock Amount by $15.42, provided that any fractional share  
resulting from such calculation will be paid in cash, with the value of a whole 
share for such purpose assumed to be $15.42.                                    

Each of the NHL Employee Stock Options with respect to which the requisite  
consent is not obtained will not be canceled, but instead will be immediately   
converted as of the Effective Time into an Adjusted Option to purchase the      
Option Conversion Number (the number of shares of NHL Common Stock purchasable  
pursuant to the NHL Employee Stock Option related to such Adjusted Option       
divided by the Conversion Number) of shares of NHL Common Stock. Each Adjusted  
Option will have substantially the same terms as the NHL Employee Stock Option  
to which it is related, except that: (i) the Adjusted Option will be deemed     
fully vested and (ii) the exercise price of an Adjusted Option will be an       
amount equal to the exercise price of the NHL Employee Stock Option related to  
such Adjusted Option as of the date of the Merger Agreement divided by the      
Conversion Number.                                                              

THE SURVIVING CORPORATION                                                       

Certificate of Incorporation and By-laws. The certificate of incorporation  
and the by-laws of NHL in effect at the Effective Time will, except as amended  
to give effect, as necessary, to the provisions of the Merger Agreement and the 
Stockholder Agreement, be the certificate of incorporation and the bylaws of    
the Surviving Corporation until amended in accordance with applicable law.      

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Board of Directors and Executive Officers. Pursuant to the Stockholder      
Agreement (subject to the exceptions provided therein), during the Initial      
Period the Board of Directors of the Surviving Corporation will be comprised of 
seven members, consisting of Mr. Maher (the current President and Chief         
Executive Officer of NHL), three HLR Directors, who will be Mr. Belingard (the  
Director General, Diagnostics Division and Executive Committee Member of F.     
Hoffmann-La Roche Ltd), Mr. Mac Mahon (a Senior Vice President of Roche and the 
President of Roche Diagnostics Group) and Dr. Powell (the President of RBL),    
and three independent directors (which the Stockholder Agreement defines        
generally as persons who are not officers, employees or affiliates of the       
Surviving Corporation or HLR). The persons who will serve as the independent    
directors for the Initial Period are required to be mutually acceptable to a    
majority of the members of NHL's Board of Directors in office immediately prior 
to the Effective Time and to HLR. Following the Initial Period, the Board of    
Directors of the Surviving Corporation will (subject to specified exceptions)   
be comprised of seven members, consisting of three HLR Directors and four       
independent directors (each of whom must be reasonably acceptable to a majority 
of the HLR Directors) selected by the Nominating Committee of the Board of      
Directors as described under "THE STOCKHOLDER AGREEMENT." Prior to the          
Effective Time, the Board of Directors of NHL will take all action as is        
necessary to make effective as of the Effective Time the resignations from the  
NHL Board of Directors of any Persons then serving on the Board of Directors    
who are not identified in a certificate delivered by HLR to NHL in accordance   
with the Merger Agreement and the Stockholder Agreement and to cause each of    
the Persons designated to be directors in such certificate to be duly appointed 
to the Surviving Corporation's Board of Directors, in each case effective at    
the Effective Time.                                                             

The Merger Agreement provides that from and after the Effective Time, the   
executive officers of the Surviving Corporation will be such persons as are     
identified on a certificate delivered by HLR to NHL prior to the Effective      
Time.                                                                           

 Mr. Maher will serve as Chairman of the Board and Mr. Mac Mahon will serve as
Vice Chairman of the Board of the Surviving Corporation for the Initial Period. 
Following the Initial Period, Mr. Maher will resign his board and committee     
positions, Mr. Mac Mahon will become Chairman of the Board and the position of  
Vice Chairman will be eliminated. See "THE STOCKHOLDER AGREEMENT".              

REPRESENTATIONS AND WARRANTIES                                                  

The Merger Agreement includes various customary representations and         
warranties of the parties thereto. The Merger Agreement includes                
representations and warranties by NHL, subject to exceptions set forth on the   
disclosure schedule delivered by NHL to HLR prior to the execution of the       
Merger Agreement (the "NHL Disclosure Schedule"), as to, among other things,    
(i) the corporate existence and power of NHL, including the qualification to do 
business as a foreign corporation in each jurisdiction where such qualification 
is necessary, except for those jurisdictions where the failure to be so         
qualified would not, individually or in the aggregate, have a material adverse  
effect on the business, financial condition, assets, results of operations or   
prospects of NHL and its subsidiaries, taken as a whole (an "NHL Material       
Adverse Effect"), (ii) the authorization of the execution, delivery and         
performance of and the binding effect of the Merger Agreement, the Warrant      
Agreement, the Stockholder Agreement and the Sharing and Call Option Agreement  
by NHL, (iii) the absence of the need for any action by, or filing with, any    
governmental body with respect to the execution, delivery and performance of    
the Merger Agreement, the Warrant Agreement, the Stockholder Agreement and the  
Sharing and Call Option Agreement by NHL, other than as described in the Merger 
Agreement, (iv) the absence of any contravention of the certificate of          
incorporation or the bylaws of NHL, the organizational documents of any of its  
subsidiaries or any provision of any law, order or decree binding upon or       
applicable to NHL or any of its subsidiaries, the absence of any default or     
right of termination or acceleration of any right or obligation of NHL or any   
of its subsidiaries or any loss of any benefit to which NHL or any of its       
subsidiaries is entitled under any provision of any agreement, contract or      
other instrument binding on NHL or any of its subsidiaries and the absence of   
any liens on any asset of NHL or any of its subsidiaries as a result of the     
execution, delivery and performance of the Merger Agreement, the Warrant        

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Agreement, the Stockholder Agreement and the Sharing and Call Option Agreement  
by NHL, (v) the capital structure of NHL and the issuance of NHL Common Stock   
and the Warrants in connection with the Merger, (vi) the corporate existence    
and power of NHL's subsidiaries, the ownership of the stock of the subsidiaries 
and certain activities of the subsidiaries pertaining to the manufacture or     
production of drugs of abuse reagent products, (vii) the completeness and       
accuracy of the required reports, forms and other documents NHL has filed with  
the SEC since January 1, 1992 (the "SEC Documents"), (viii) the accuracy of the 
financial statements included in any of the SEC Documents and their preparation 
in accordance with applicable accounting principles and SEC rules and           
regulations (ix) the accuracy of the information supplied by NHL in connection  
with the Proxy Statement/Prospectus and the Registration Statement, (x) the     
absence of certain changes since December 31, 1993, including any material      
adverse change in the business, financial condition, assets or results of       
operations of NHL and its subsidiaries, taken as a whole, or any event,         
occurrence or development of circumstances or facts known to NHL or any of its  
subsidiaries which could reasonably be expected to result in such a material    
adverse change, any declaration of any dividend with respect to any shares of   
capital stock of NHL or any repurchase, redemption or other acquisition by NHL  
or any of its subsidiaries of any outstanding shares of capital stock or other  
securities, any amendment of any material term of any outstanding shares of     
capital stock or other voting securities of NHL or of any of its subsidiaries,  
any incurrence, assumption or guarantee by NHL or any of its subsidiaries of    
any indebtedness for borrowed money other than in the ordinary course of        
business and in excess of $25,000,000 and which is on terms consistent with     
past practices, any creation or assumption by NHL or any of its subsidiaries of 
any lien on any material asset other than in the ordinary course of business    
consistent with past practices, any making of any loan, advance or capital      
contributions to, or any investment in, any person, including an individual,    
corporation, partnership, association, trust or any other entity or             
organization, (including a governmental or political subdivision or any agency  
thereof) (a "Person"), other than loans, advances or capital contributions to,  
or investments in, wholly owned subsidiaries made in the ordinary course of     
business consistent with past practices, any damage, destruction or other       
casualty loss (whether or not covered by insurance) affecting the business or   
assets of NHL or any of its subsidiaries which, individually or in the          
aggregate, has had or would reasonably be expected to have an NHL Material      
Adverse Effect, any transaction or commitment made, or any contract or          
agreement entered into, by NHL or any of its subsidiaries relating to its       
assets or business (including the acquisition or disposition of any assets) or  
any relinquishment by NHL or any of its subsidiaries of any contract or other   
right, in either case, material to NHL and its subsidiaries, taken as a whole,  
other than transactions and commitments in the ordinary course of business      
consistent with past practices, any change in any method of accounting or       
accounting practice by NHL or any of its subsidiaries, except for any such      
change required by reason of a concurrent change in generally accepted          
accounting principles ("GAAP"), the grant of severance or termination pay other 
than pursuant to existing contracts, certain increases in severance or          
termination pay, entry into of certain employment, deferred compensation or     
other similar agreements or increases in the compensation, bonus or other       
benefits payable to certain directors, officers or employees of NHL or any of   
its subsidiaries or any labor dispute, other than routine individual            
grievances, any proceeding by a labor union, or any lockouts, strikes,          
slowdowns, work stoppages or threats thereof by or with respect to certain      
employees of NHL, (xi) the absence of any undisclosed liabilities of NHL or any 
of its subsidiaries that could be reasonably expected to have an NHL Material   
Adverse Effect, (xii) the absence of any undisclosed action, suit,              
investigation or proceeding pending against NHL or any of its subsidiaries      
before any court or arbitrator or any governmental body, agency or official     
that could reasonably be expected to have an NHL Material Adverse Effect,       
impair the ability of NHL to perform its obligations under the Merger Agreement 
or prevent or materially delay the consummation of any of the transactions      
contemplated by the Merger Agreement, the Stockholder Agreement, the Warrant    
Agreement or the Sharing and Call Option Agreement, (xiii) matters relating to  
the filing of tax returns and payment of taxes by NHL and its subsidiaries, and 
the absence of any action by NHL or its subsidiaries or knowledge of any fact   
or circumstance that is reasonably likely to prevent the Merger from qualifying 
as a reorganization with the meaning of Section 368(a)(1) of the Code, (xiv)    
the nature of NHL's employee benefit plans and arrangements and the compliance  
of the plans with the applicable provisions of the Employee Retirement Income   
Security Act of 1974 ("ERISA") and the Code, (xv) the absence of violations     
that, individually or in the aggregate, could be reasonably expected to have an 
NHL Material Adverse Effect by NHL or any of its                                

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subsidiaries of any applicable provisions of any laws, statutes, ordinances or  
regulations or any term of any judgement, decree, injunction or other order     
outstanding against NHL or any of its subsidiaries, (xvi) the absence of any    
fees payable by NHL or any of its subsidiaries to any investment banker, broker 
or finder or other intermediary which has been authorized to act on behalf of   
NHL or any of its subsidiaries which might be entitled to any fee or commission 
from HLR upon consummation of the Merger, other than those fees previously      
disclosed to HLR, (xvii) the preparation of NHL's projections and forward-      
looking information, (xviii) the nature of the environmental liabilities of NHL 
and its subsidiaries, (xix) the approval of the Merger, the Merger Agreement,   
the Warrant Agreement, the Stockholder Agreement and the Sharing and Call       
Option Agreement by the Board of Directors of NHL and the inapplicability of    
Section 203 of the Delaware Corporation Law, (xx) the receipt of an opinion by  
NHL's financial advisor and (xxi) the voting requirements for the approval of   
the Merger.                                                                     

The Merger Agreement also includes representations and warranties by HLR and
RBL, subject to exceptions set forth on the disclosure schedule delivered by    
HLR and RBL to NHL prior to the execution of the Merger Agreement (the "RBL     
Disclosure Schedule"), as to, among other things, (i) the corporate existence   
and power of HLR and RBL, including the qualification to do business as a       
foreign corporation in each jurisdiction where such qualification is necessary, 
except for those jurisdictions where the failure to be so qualified would not,  
individually or in the aggregate, have a material adverse effect on the         
business, financial condition, assets, results of operations or prospects of    
RBL and its subsidiaries, taken as a whole (an "RBL Material Adverse Effect"),  
(ii) the authorization of the execution, delivery and performance of and the    
binding effect of the Merger Agreement by HLR and RBL and of the Stockholder    
Agreement and the Sharing and Call Option Agreement by HLR, (iii) the absence   
of the need for any action by, or filing with, any governmental body with       
respect to the execution, delivery and performance of the Merger Agreement by   
HLR and with respect to the execution, delivery and performance of the          
Stockholder Agreement and the Sharing and Call Option Agreement by HLR, other   
than as described in the Merger Agreement, (iv) the absence of any              
contravention of the certificate of incorporation or the bylaws of HLR, RBL or  
any of RBL's subsidiaries or (assuming the necessary governmental filings and   
approvals are made and obtained) any provision of any law, order or decree      
binding upon or applicable to HLR, RBL or any of RBL's subsidiaries and the     
absence of any default or right of termination or acceleration of any right or  
obligation of HLR, RBL or any of RBL's subsidiaries or any loss of any benefit  
to which HLR, RBL or any of RBL's subsidiaries is entitled under any provision  
of any agreement, contract or other instrument binding on HLR, RBL or any of    
RBL's subsidiaries and the absence of any liens on any asset of RBL or any of   
its subsidiaries as a result of the execution, delivery and performance of the  
Merger Agreement by HLR and RBL and the execution, delivery and performance of  
the Stockholder Agreement by HLR, (v) the capital structure of RBL, (vi) the    
corporate existence and power of RBL's subsidiaries and the ownership of the    
stock of the subsidiaries, (vii) the delivery by RBL to NHL of certain          
financial statements, their accuracy, and their preparation in accordance with  
applicable accounting principles and SEC rules and regulations, (viii) the      
accuracy of the information supplied by HLR and RBL in connection with the      
Proxy Statement/Prospectus and the Registration Statement, (ix) the absence of  
certain changes since December 31, 1993, including any material adverse change  
in the business, financial condition, assets or results of operations of RBL    
and its subsidiaries, taken as a whole, or any event, occurrence or development 
of circumstances or facts known to RBL or any of its subsidiaries which could   
reasonably be expected to result in such a material adverse change, any         
declaration of any dividend with respect to any shares of capital stock of RBL  
or any repurchase, redemption or other acquisition by RBL or any of its         
subsidiaries of any outstanding shares of capital stock or other securities,    
any amendment of any material term of any outstanding shares of capital stock   
or other voting securities of RBL or any of its subsidiaries, any incurrence,   
assumption or guarantee by RBL or any of its subsidiaries of any indebtedness   
for borrowed money other than in the ordinary course of business and in excess  
of $25,000,000 and which is on terms consistent with past practices, any        
creation or assumption by RBL or any of its subsidiaries of any lien on any     
material asset other than in the ordinary course of business consistent with    
past practices, any making of any loan, advance or capital contributions to, or 
any investment in, any Person other than loans, advances or capital             
contributions to, or investments in, wholly owned subsidiaries made in the      
ordinary course of business consistent with past practices, any damage,         
destruction                                                                     

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or other casualty loss (whether or not covered by insurance) affecting the      
business or assets of RBL or any of its subsidiaries which, individually or in  
the aggregate, has had or would reasonably be expected to have an RBL Material  
Adverse Effect, any transaction or commitment made, or any contract or          
agreement entered into, by RBL or any of its subsidiaries relating to its       
assets or business (including the acquisition or disposition of any assets) or  
any relinquishment by RBL or any of its subsidiaries of any contract or other   
right, in either case, material to RBL and its subsidiaries, taken as a whole,  
other than transactions and commitments in the ordinary course of business      
consistent with past practices and other than mergers and consolidations of one 
or more of RBL's subsidiaries into or with another subsidiary or into RBL and   
activities in connection with the transfer of the business and assets of RIAS,  
any change in any method of accounting by RBL or any of its subsidiaries,       
except for any such change required by reason of a concurrent change in GAAP,   
the grant of severance or termination pay other than pursuant to existing       
contracts, certain increases in severance or termination pay, entry into of     
certain employment, deferred compensation or other similar agreements or        
increases in the compensation, bonus or other benefits payable to certain       
directors, officers or employees of RBL or any of its subsidiaries or any labor 
dispute, other than routine individual grievances, any proceeding by a labor    
union, or any lockouts, strikes, slowdowns, work stoppages or threats thereof   
by or with respect to certain employees of RBL, (x) the absence of any          
undisclosed liabilities of RBL or any of its subsidiaries that could be         
reasonably expected to have an RBL Material Adverse Effect, (xi) the absence of 
any undisclosed action, suit, investigation or proceeding pending against RBL   
or any of its subsidiaries before any court or arbitrator of any governmental   
body, agency or official that could reasonably be expected to have an RBL       
Material Adverse Effect, impair the ability of HLR or RBL to perform its        
obligations under the Merger Agreement or impair the ability of HLR to perform  
its obligations under the Shareholder Agreement or the Sharing and Call Option  
Agreement or prevent or materially delay the consummation of any of the         
transactions contemplated by the Merger Agreement, the Stockholder Agreement,   
the Warrant Agreement or the Sharing and Call Option Agreement, (xii) matters   
relating to the filing of tax returns and payment of taxes by RBL, its          
subsidiaries, and the affiliated, combined, consolidated or unitary group of    
which HLR is a member (the "HLR Tax Group"), the absence of any action by HLR,  
RBL or its subsidiaries or knowledge of any fact or circumstance that is        
reasonably likely to prevent the Merger from qualifying as a reorganization     
within the meaning of Section 368(a)(1) of the Code, and, except as provided in 
the Merger Agreement, the absence of any plan or current intention on the part  
of HLR to cause the Surviving Corporation to amend its certificate of           
incorporation, (xiii) the nature of RBL's employee benefit plans and            
arrangements and the compliance of the plans with the applicable provisions of  
ERISA and the Code, (xiv) the absence of violations that, individually or in    
the aggregate, could be reasonably expected to have an RBL Material Adverse     
Effect by RBL or any of its subsidiaries of any applicable provisions of any    
laws, statutes, ordinances or regulations or any term of any judgement, decree, 
injunction or other order outstanding against RBL or any of its subsidiaries,   
(xv) the absence of any fees payable by RBL or any of its subsidiaries to any   
investment banker, broker or finder or other intermediary which has been        
authorized to act on behalf of RBL or any of its subsidiaries which might be    
entitled to any fee or commission from NHL upon consummation of the Merger,     
other than those fees previously disclosed to NHL, (xvi) the nature of the      
environmental liabilities of RBL and its subsidiaries, (xvii) the sufficiency   
of the funds, investments and credit facilities available to HLR and its        
affiliates to pay the HLR Cash Contribution, (xviii) the absence to RBL's       
knowledge of any state takeover statute applicable to RBL or HLR that applies   
to the Merger, the Warrant Agreement, the Stockholder Agreement or the Sharing  
and Call Option Agreement and (xix) the ownership by HLR, RBL and their         
subsidiaries of shares of NHL Common Stock.                                     

COVENANTS OF NHL                                                                

 Conduct of NHL. NHL has agreed that, prior to the Effective Time, (i) NHL and
it subsidiaries will conduct their businesses in the ordinary course and use    
all reasonable efforts to preserve intact their business organizations and      
relationships with third parties and to keep available the services of their    
present officers and employees and that (ii) it will not, and (where relevant)  
it will not permit its subsidiaries to, (1) propose or adopt any change in its  
certificate of incorporation or bylaws, except as provided in the Merger        
Agreement, (2) enter into certain, or amend existing, employment, severance or  
similar contracts, agreements, plans or                                         

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arrangements covering any director, officer or employee of NHL or any of its    
subsidiaries, (3) adopt a plan of complete or partial liquidation, dissolution, 
merger, consolidation, restructuring, recapitalization or other reorganization  
or make any acquisition of any business or other material assets of any Person, 
whether by means of merger, consolidation or otherwise, except for the Merger   
or as set forth on the NHL Disclosure Schedule, (4) sell, lease, license or     
otherwise dispose of any material assets or property except pursuant to         
existing contracts or commitments or in the ordinary course of business         
consistent with past practice or as set forth on the NHL Disclosure Schedule,   
(5) incur any indebtedness for borrowed money or guarantee any such             
indebtedness except for borrowings under existing credit facilities,            
replacements therefor and refinancings thereof and borrowings in the ordinary   
course of business and consistent with past practice and except for the NHL     
Borrowings, (6) issue any shares of capital stock or other voting securities of 
NHL except as contemplated in the Merger Agreement or pursuant to the NHL       
Employee Stock Options or (7) take any action that would result in any of the   
representations and warranties set forth in the Merger Agreement that are       
qualified as to materiality from becoming untrue or any such representations    
and warranties that are not so qualified becoming untrue in any material        
respect or any conditions to the Merger not being satisfied.                    

 Additional Agreements. NHL has also agreed that, prior to the Effective Time,
(i) it will (1) call and hold the NHL Meeting and, in connection therewith, (A) 
promptly prepare and file with the SEC, and use all reasonable efforts to have  
cleared by the SEC under the Exchange Act, this Proxy Statement/Prospectus and, 
subject to the fiduciary duties of the Board of Directors, recommend and use    
all reasonable efforts to obtain the approval and adoption by NHL's             
stockholders of the Merger Agreement, (B) promptly prepare and file with the    
SEC the Registration Statement, in which this Proxy Statement/Prospectus will   
be included as a prospectus, use its best efforts to have the Registration      
Statement declared effective under the Securities Act, and take any action      
(other than qualifying to do business in any jurisdiction in which it is not    
now so qualified) required to be taken under any applicable state securities    
laws in connection with the issuance of NHL Common Stock in the Merger (and HLR 
and RBL will furnish all information concerning the HLR and RBL as may be       
reasonably requested in connection with any action contemplated by the          
covenants of NHL), (C) as promptly as practicable after the Registration        
Statement is declared effective under the Securities Act, cause this Proxy      
Statement/Prospectus to be mailed to its stockholders and (D) use all           
reasonable efforts to cause the Warrants to be issued as contemplated in the    
Merger Agreement and to be listed on the NYSE, (2) give HLR, RBL, their         
counsel, financial advisors, auditors and other authorized representatives      
reasonable access during normal business hours to the offices, properties,      
books and records of NHL and its subsidiaries and hold, and use its best        
efforts to cause its officers, directors, employees, counsel, financial         
advisors, auditors and other advisors and agents to hold, in confidence, unless 
compelled to disclose by judicial or administrative process or by other         
requirements of law, all confidential documents and information concerning HLR, 
RBL and RBL's subsidiaries furnished to NHL in connection with transactions     
contemplated by the Merger Agreement, except as provided therein, (3) promptly  
notify HLR of any notice or other communication from any Person alleging that   
the consent of such Person is or may be required or from any governmental or    
regulatory agency or authority in connection with the transactions contemplated 
by the Merger Agreement and of any actions, suits, claims, investigations or    
proceedings commenced or, to the best of NHL's knowledge, threatened against,   
relating to, involving or otherwise affecting NHL or any of its subsidiaries    
which, if pending on the date of the Merger Agreement, would have been required 
to have been disclosed pursuant to the terms thereof or which relate to the     
consummation of the transactions contemplated by the Merger Agreement, the      
Warrant Agreement, the Stockholder Agreement or the Sharing and Call Option     
Agreement, (4) file, and cause its subsidiaries to file, and timely pay, and    
cause it subsidiaries to timely pay, all taxes shown due as payable on all      
material tax returns, statements, reports and forms required to be filed with   
any taxing authority in accordance with all applicable laws, (5) take all       
action as is necessary to make effective the resignations of any persons        
serving on the Board of Directors of NHL who are not identified on the          
certificate delivered by HLR to NHL pursuant to the terms of the Merger         
Agreement and to cause each of the persons designated to be directors in such   
certificate to be duly appointed to the Surviving Corporation's Board of        
Directors, in each case as of the Effective Time, and that (ii) it will not,    
and it will not permit any of its subsidiaries to, and it also will not permit  
or authorize any officer, director or employee of, or any investment banker,    
attorney or other advisor or representative of NHL or any of its                

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subsidiaries to, directly or indirectly, solicit, initiate or encourage the     
submission of any Acquisition Proposal or participate in any discussions or     
negotiations regarding, or furnish to any Person any information with respect   
to, or take any other action to facilitate any inquiries or the making of any   
proposal that constitutes, or may reasonably be expected to lead to, any        
Acquisition Proposal, except as set forth under the section of the Merger       
Agreement entitled "Other Offers". See "THE MERGER--No Solicitation" and "THE   
MERGER--Right of the NHL Board of Directors to Withdraw Recommendation Upon     
Receipt of a Superior Proposal".                                                

COVENANTS OF HLR AND RBL                                                        

Conduct of RBL. HLR and RBL have agreed that, prior to the Effective Time,  
(i) RBL and its subsidiaries will conduct their businesses in the ordinary      
course and use all reasonable efforts to preserve intact their business         
organizations and relationships with third parties and to keep available the    
services of their present officers and employees and that (ii) it will not, and 
(where relevant) it will not permit its subsidiaries to, (1) propose or adopt   
any change in its certificate of incorporation or bylaws, (2) enter into        
certain or amend existing employment, severance or similar contracts,           
agreements, plans or arrangements covering any director, officer or employee of 
RBL or any of its subsidiaries (3) adopt a plan of complete or partial          
liquidation, dissolution, merger, consolidation, restructuring,                 
recapitalization or other reorganization or make any acquisition of any         
business or other material assets of any Person, whether by means of merger,    
consolidation or otherwise, except for the Merger or as set forth on the RBL    
Disclosure Schedule, (4) sell, lease, license or otherwise dispose of any       
material assets or property except pursuant to existing contracts or            
commitments, in the ordinary course of business consistent with past practice,  
as set forth on the RBL Disclosure Schedule, as NHL agrees in writing or that   
RBL or a subsidiary thereof may dispose of or transfer RIAS, the assets and     
liabilities of which were disclosed to NHL prior to the date of the Merger      
Agreement and the proceeds of such distribution may be paid as a dividend or    
otherwise HLR or any other Person (5) declare, set aside, or apply any dividend 
or make any other distribution with respect to any shares of RBL capital stock, 
except as provided in the Merger Agreement or as set forth on the RBL           
Disclosure Schedule, (6) incur any indebtedness for borrowed money or guarantee 
any such indebtedness except for borrowings under existing credit facilities,   
replacements therefor and refinancings thereof and borrowings in the ordinary   
course of business and consistent with past practice, (7) issue any shares of   
capital stock or other voting securities other than to HLR, (8) directly or     
indirectly acquire any NHL Common Stock prior to any termination fee becoming   
payable under the Merger Agreement to HLR or (9) take any action that would     
result in any of the representations and warranties set forth in the Merger     
Agreement that are qualified as to materiality from becoming untrue or any such 
representations and warranties that are not so qualified becoming untrue in any 
material respect or any conditions to the Merger not being satisfied.           

Additional Agreements. HLR and RBL have also agreed that, prior to the      
Effective Time, (i) RBL will (1) give NHL, its counsel, financial advisors,     
auditors and other authorized representatives reasonable access during normal   
business hours to the offices, properties, books and records of RBL and its     
subsidiaries and hold, and use their best efforts to cause their officers,      
directors, employees, counsel, financial advisors, auditors and other advisors  
and agents to hold, in confidence, unless compelled to disclose by judicial or  
administrative process or by other requirements of law, all confidential        
documents and information concerning NHL and NHL's subsidiaries furnished to    
each of HLR and RBL in connection with transactions contemplated by the Merger  
Agreement, except as provided therein, (2) promptly notify NHL of any notice or 
other communication from any Person alleging that the consent of such Person is 
or may be required or from any governmental or regulatory agency or authority   
in connection with the transactions contemplated by the Merger Agreement, and   
of any actions, suits, claims, investigations or proceedings commenced or, to   
the best of RBL's knowledge, threatened against, relating to, involving or      
otherwise affecting RBL or any of its subsidiaries which, if pending on the     
date of the Merger Agreement, would have been required to have been disclosed   
pursuant to terms thereof or which relate to the consummation of the            
transactions contemplated by the Merger Agreement or the Sharing and Call       
Option Agreement, (3) file, and cause their subsidiaries to file, timely pay,   
and cause their subsidiaries to timely pay, all taxes shown due as payable on   
all material tax                                                                

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returns, statements, reports and forms required to be filed with any taxing     
authority in accordance with all applicable laws, (4) vote any shares of NHL    
Common Stock beneficially owned in favor of approval and adoption of the Merger 
Agreement at the NHL Meeting and (5) prepare a pro forma balance sheet for RBL  
and its subsidiaries (excluding RIAS) as of December 31, 1994 to eliminate any  
outstanding intercompany account balances (other than current trade payables    
but including any intercompany balances with respect to taxes) as of that date  
and to remove and eliminate as liabilities of RBL and any of its subsidiaries   
indebtedness for borrowed money ("Borrowed Funds"), such that the aggregate     
liabilities of RBL (excluding RIAS) and its subsidiaries for Borrowed Funds as  
of December 31, 1994, reduced by cash and cash equivalents as of that date,     
will not exceed $44,000,000 (the "Net Debt Amount") and that (ii) (A) HLR will  
not take any action to prevent NHL from honoring the financial terms of the     
existing employment agreements between NHL and its employees to the extent that 
copies of such agreements have been provided to HLR prior to the date of the    
Merger Agreement (or if not so provided, if such agreements were entered into   
after the date of the Merger Agreement and would not result in any of the       
representations and warranties of NHL contained in the Merger Agreement         
becoming untrue at the Effective Time and which are otherwise entered into in   
compliance with the Merger Agreement) and (B) from January 1, 1995 until the    
Effective Time, no interest will be charged or paid on any intercompany account 
or on any borrowed funds (as defined in the Merger Agreement), except to the    
extent of the interest that would accrue during the period beginning on January 
1, 1995, and ending at the Effective Time on the Net Debt Amount at the         
interest rate provided in the Bank Facility.                                    

COVENANTS OF NHL, HLR AND RBL                                                   

The Merger Agreement also contains additional covenants of each party to the
effect that (i) NHL, HLR and RBL have agreed that (A) each party will use       
reasonable efforts to take, or cause to be taken, all actions, and to do, or    
cause to be done, and to assist and cooperate with the other parties in doing,  
all things necessary, proper or advisable to consummate and make effective, in  
the most expeditious manner practicable, the Merger and the other transactions  
contemplated by the Merger Agreement, subject to certain limitations set forth  
in the Merger Agreement and (B) each party will use all reasonable efforts to   
consult with each of the other parties before issuing any press release or      
making any public statement with respect to the Merger Agreement, (ii) HLR and  
RBL will use their good faith best efforts from and after the date of the       
Merger Agreement to assist NHL in obtaining the NHL Borrowings, and NHL will    
use its good faith best efforts from and after the date of the Merger Agreement 
to obtain the NHL Borrowings (it being understood and agreed by the parties to  
the Merger Agreement that none of the parties thereto will have any liability   
to any other party thereto or any other Person if the NHL Borrowings are not    
obtained), (iii) the officers and directors of the Surviving Corporation will   
be authorized to execute and deliver, in the name and on behalf of NHL or RBL,  
any deeds, bills of sale, assignments or assurances and to take and do, in the  
name of and on behalf of NHL or RBL, any other actions and things to vest,      
perfect or confirm of record or otherwise in the Surviving Corporation any and  
all right, title and interest in, to and under any of the rights, properties or 
assets of NHL acquired or to be acquired by the Surviving Corporation as a      
result of, or in connection with, the Merger, (iv) the certificate of           
incorporation and the bylaws of the Surviving Corporation will contain the      
provisions with respect to indemnification set forth in NHL's certificate of    
incorporation and bylaws on the date of the Merger Agreement and the Surviving  
Corporation will indemnify and hold harmless the present and former officers    
and directors of NHL and RBL in respect of acts or omissions occurring prior to 
the Effective Time to the maximum extent provided thereunder and (v) NHL, HLR   
and Roche will execute and deliver the Stockholder Agreement immediately prior  
to the Effective Time.                                                          

AGREEMENTS OF ROCHE                                                             

In the Merger Agreement, Roche agreed to cause to be delivered to NHL at or 
prior to the Effective Time an amount in cash equal to the Roche Warrant        
Consideration in payment of the aggregate purchase price payable in respect of  
the Roche Warrants. The Merger Agreement also contains representations and      
warranties by Roche to NHL as to (i) the corporate existence and power of       
Roche, (ii) the authorization of                                                

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the execution, delivery and performance of the Merger Agreement by Roche, (iii) 
the absence of the need for any action by, or filing with, any governmental     
body, agency or official with respect to the execution, delivery and            
performance of the Merger Agreement by Roche, other than compliance with any    
applicable requirements of the HSR Act, (iv) the absence of any contravention   
of the certificate of incorporation or the bylaws of Roche or, any violation of 
any applicable provision of any law, regulation, judgement, injunction, order   
or decree binding upon or applicable to Roche, any default or right of          
termination, cancelation or acceleration of any right or obligation of Roche or 
to a loss of any benefit to which Roche is entitled under any provision of any  
agreement, contract or other instrument binding upon Roche or any creation or   
imposition of any lien on any asset of Roche, in each case arising out of the   
execution, delivery and performance by Roche of the Merger Agreement, except in 
each case for contraventions, conflicts, violations, defaults, rights of        
termination, cancelation or acceleration, losses of benefits or creation or     
imposition of liens that would not be reasonably expected to have, individually 
or in the aggregate, a material adverse effect on the business, financial       
condition, assets, results of operations or prospects of Roche and its          
subsidiaries, taken as a whole. In addition, Roche represented and warranted    
that it has sufficient funds, investments and credit facilities available to it 
to pay the Roche Warrant Contribution and will, to the extent necessary, make   
funds available to HLR to enable HLR to satisfy its obligation to deposit the   
HLR Cash Contribution. Finally, Roche has agreed to use its best efforts to     
cause RBL and HLR to perform their obligations under the Merger Agreement.      

TAX MATTERS                                                                     

Tax Covenants. With respect to the filing and payment of any and all taxes, 
NHL, HLR and RBL have agreed that (i) the Surviving Corporation will promptly   
pay or cause prompt payment to be made to HLR of certain refunds of taxes and   
interest thereon received by the Surviving Corporation or any of its            
subsidiaries attributable to taxes paid by HLR, RBL or any subsidiary of RBL    
with respect to any tax period or any portion of any tax period ending on or    
before the date on which the Effective Time occurs (any such period, a "Pre-    
Merger Tax Period"), (ii) HLR will promptly indemnify the Surviving Corporation 
or any other member of the NHL Group (as defined under Section 1504(a) of the   
Code) (1) for all taxes of RBL and its subsidiaries for any Pre-Merger Tax      
Period, subject, in the case of taxes (other than Federal income taxes) for any 
Pre-Merger Tax Period for which no return has been filed at the Effective Time, 
to certain limitations set forth in the Merger Agreement, and (2) for all taxes 
of any member of the HLR Tax Group (other than RBL and its subsidiaries for any 
tax period that is not a Pre-Merger Tax Period (any such period, a "Post-Merger 
Tax Period") and, for any Post-Merger Tax Period, the Surviving Corporation and 
its subsidiaries) with respect to any Pre-Merger or Post-Merger Tax Period,     
(iii) in the event it is determined that the Surviving Corporation or any of    
its subsidiaries is a member of the HLR Tax Group for purposes of any income or 
franchise tax imposed by any state or local taxing jurisdiction, HLR and the    
Surviving Corporation will negotiate in good faith with each other and with the 
other members of the HLR Tax Group in an attempt to enter into an agreement     
regarding the allocation of liability and/or indemnification with respect to    
such tax among the member of the HLR Tax Group, (iv) all transfer, real estate  
gains, documentary, sales, use, stamp, registration and other such taxes and    
fees (including any penalties and interest) incurred in connection with the     
Merger Agreement will be borne and paid by the Surviving Corporation, (v) HLR   
and NHL will separately execute and deliver a letter dated as of the date on    
which the Effective Time occurs containing certain representations relating to  
the qualification of the Merger as a reorganization within the meaning of       
Section 368(a)(1) of the Code, (vi) NHL and HLR will not, and will not permit   
any of their respective subsidiaries to, take any action during specified       
periods that is reasonably likely to prevent the Merger from qualifying as a    
reorganization within the meaning of Section 368(a)(1) of the Code.             

Tax Sharing Agreements. With respect to any tax sharing agreements, NHL, HLR
and RBL have agreed that (i) any and all existing written or unwritten tax      
sharing agreements or arrangements, including agreements or arrangements based  
on past practices, binding RBL or any of its subsidiaries (each, a "Tax Sharing 
Agreement") between RBL or any subsidiary of RBL and any member of the HLR Tax  
Group will be terminated as of the date on which the Effective Time occurs,     
(ii) immediately prior to the Effective Time,                                   

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RBL will pay to HLR an amount equal to the Federal income taxes of RBL and its  
subsidiaries with respect to the Pre-Merger Tax Period that ends on the date of 
the Effective Time, and at such time as the HLR Tax Group prepares its Federal  
income tax return for such Pre-Merger Tax Period and also at such time as the   
HLR Tax Group prepares its Federal income tax return for its 1994 tax year, it  
will deliver to the Surviving Corporation pro forma returns (in each case, a    
"Pro Forma Return") for RBL and its subsidiaries which calculates,              
respectively, the amount of Federal income taxes that RBL and its subsidiaries  
would have paid with respect to such Pre-Merger Tax Period and such tax year    
had RBL timely filed its own consolidated Federal income tax return including   
its subsidiaries (with RBL as the common parent) for such Pre-Merger Tax Period 
and such tax year, respectively, which returns the Surviving Corporation will   
have an opportunity to review and question, subject to certain limitations set  
forth in the Merger Agreement, after which the respective Pro Forma Returns     
will become binding on the parties and HLR will promptly pay the Surviving      
Corporation, or the Surviving Corporation will promptly pay HLR, as             
appropriate, an amount equal to (1) the respective differences between (A) the  
sum of the liabilities shown on the respective Pro Forma Returns and (B) the    
respective sums of all payments previously made by RBL or its subsidiaries with 
respect thereto to HLR, any other member of the HLR Tax Group or the Internal   
Revenue Service, subject, in the case of the 1994 tax year, to certain          
provisions set forth in the Merger Agreement, and (2) the respective amounts of 
interest earned on such respective differences, which will accrue at a rate     
equal to the three-month London Interbank Offered Rate plus 0.5% from the       
Effective Time until the date the respective payments are made and (iii) the    
Surviving Corporation will prepare, or will cause to be prepared, and will      
deliver to HLR, each return with respect to state or local income, franchise,   
sales and use taxes for any Pre-Merger Tax Period for which no return has been  
filed (and is not yet due) as of the Effective Time and which relates, in whole 
or in part, to taxes with respect to which HLR may be required to indemnify the 
Surviving Corporation or any other member of the NHL Group, which return HLR    
will have an opportunity to review and question, subject to certain limitations 
set forth in the Merger Agreement, after which the Surviving Corporation or its 
subsidiary, as appropriate, will file such return with the appropriate taxation 
authority and pay the tax shown due thereon.                                    

Cooperation on Tax Matters. With respect to other tax matters, (i) HLR and  
the Surviving Corporation have agreed to furnish, or cause to be furnished, to  
each other, upon request, as promptly as practicable, such information          
(including access to books and records) and assistance relating to RBL and its  
subsidiaries as is reasonably necessary for the filing of any return, for the   
preparation for any audit, and for the prosecution or defense of any claim,     
suit or proceeding relating to any proposed adjustment, subject to certain      
conditions set forth in the Merger Agreement, (ii) HLR and the Surviving        
Corporation have agreed to retain, or cause to be retained, all books and       
records pertinent to RBL and its subsidiaries until the end of the fifth year   
after the Effective Time and (iii) the Surviving Corporation has agreed to give 
HLR reasonable notice prior to transferring, discarding or destroying any such  
books and records relating to tax matters and, if HLR so requests, the          
Surviving Corporation will allow HLR to take possession of such books and       
records at HLR's cost and expense.                                              

CONDITIONS TO THE MERGER                                                        

Conditions to the Obligations of Each Party. The obligations of NHL, HLR and
RBL to consummate the Merger are subject to the satisfaction or waiver, as of   
the Effective Time, of the following conditions: (i) the Merger Agreement, the  
Stockholder Agreement and any amendments to the Surviving Corporation's         
certificate of incorporation to be effected by the Merger and any amendments to 
the NHL Employee Stock Options contemplated by the Merger Agreement shall have  
been approved by the stockholders of NHL in accordance with the Delaware        
Corporation Law, (ii) any applicable waiting period under the HSR Act relating  
to the Merger will have expired or been terminated, (iii) no provision of any   
applicable law or regulation and no judgment, injunction, order or decree shall 
prohibit the consummation of the Merger, (iv) the Warrant Agreement shall have  
been executed and delivered by NHL and the Warrant Agent and such agreement     
shall be in full force and effect, and the Warrants shall have been approved    
for listing on the NYSE, (v) the Registration Statement shall have been         
declared effective, and no stop order suspending the                            

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effectiveness of the Registration Statement shall be in effect, and no          
proceedings for such purpose shall be pending before or threatened by the SEC,  
(vi) the Stockholder Agreement shall have been executed and delivered by HLR    
and NHL and shall be in full force and effect, (vii) NHL shall have obtained    
the NHL Borrowings, and (viii) there shall not be in effect any banking         
moratorium or suspension of payments in respect of banks in the United States   
or Switzerland, or any general suspension in trading in, or limitation on       
prices for, securities on the NYSE.                                             

Conditions to the Obligations of NHL. The obligations of NHL to consummate  
the Merger are subject to the satisfaction of the following further conditions: 
(i) HLR and RBL shall have performed in all material respects all of their      
respective obligations required to be performed by them under the Merger        
Agreement at or prior to the Effective Time, the representations and warranties 
of HLR and RBL set forth in the Merger Agreement that are qualified as to       
materiality shall be true and correct and the representations and warranties of 
HLR and RBL set forth therein that are not so qualified will be true and        
correct in all material respects, in each case as of the Effective Time, except 
to the extent that such representations and warranties speak only as of a       
particular earlier date, and NHL shall have received a certificate or           
certificates signed by such executive officers of HLR and RBL as reasonably     
requested by NHL to the foregoing effect, (ii) NHL shall have received all      
documents it may reasonably request relating to the existence of HLR or RBL and 
the authority of HLR or RBL for the Merger Agreement and the Stockholder        
Agreement, all in form and substance reasonably satisfactory to NHL, (iii) HLR  
shall have deposited the HLR Cash Contribution in trust with the Exchange Agent 
as contemplated by the Merger Agreement and Roche shall have paid the Roche     
Warrant Consideration to NHL, (iv) there shall be no NHL Adverse Condition, (v) 
NHL shall have received from its counsel an opinion to the effect that the      
Merger shall constitute a reorganization pursuant to Section 368(a)(1) of the   
Code, (vi) all actions by, or filings with, any governmental body, agency,      
official or authority described in the Merger Agreement as are required to be   
obtained and made by NHL will have been obtained and made by HLR and RBL and    
(vii) Roche shall have performed in all material respects its obligations under 
the Merger Agreement required to be performed at or prior to the Effective      
Time, the representations and warranties of Roche that are qualified as to      
materiality shall be true and correct and the representations and warranties of 
Roche set forth in that section that are not so qualified shall be true and     
correct in all material respects, in each case as of the Effective Time, and    
NHL shall have received a certificate or certificates signed by such executive  
officers of Roche as reasonably requested by NHL to the foregoing effect. As    
used herein, an "NHL Adverse Condition" means any order, decree, injunction of  
any court or governmental authority of competent jurisdiction that seeks to (i) 
prohibit or enjoin consummation of, materially impair or diminish the intended  
benefits to NHL's stockholders of, the transactions contemplated by the Merger  
Agreement or by the Warrant Agreement or (ii) restrain the ownership or         
operation by NHL or any of its affiliates or the Surviving Corporation of all   
or any material portion of the assets or business of either NHL or RBL or any   
subsidiary of either or compel NHL or any of its affiliates to dispose of all   
or any material portion of the business or assets of NHL or RBL or any          
subsidiary of either.                                                           

Conditions to the Obligations of HLR and RBL. The obligations of HLR and RBL
to consummate the Merger are subject to the satisfaction of the following       
further conditions: (i) NHL shall have performed in all material respects all   
of its obligations required to be performed by it under the Merger Agreement at 
or prior to the Effective Time, the representations and warranties of NHL set   
forth in the Merger Agreement that are qualified as to materiality shall be     
true and correct and the representations and warranties of NHL set forth        
therein that are not so qualified shall be true and correct in all material     
respects, in each case as of the Effective Time, except to the extent such      
representations speak only as of a particular earlier date, and HLR shall have  
received a certificate or certificates signed by such executive officers of NHL 
as reasonably requested by HLR to the foregoing effect, (ii) HLR shall have     
received all documents it may reasonably request relating to the existence of   
NHL and its subsidiaries and the authority of NHL for the Merger Agreement and  
the Stockholder Agreement, all in form and substance reasonably satisfactory to 
HLR, (iii) either the Committee on Foreign Investment in the United States      
shall have determined not to investigate the Merger under the Exon-Florio       
Amendment (whether by action or nonaction) or, if such Committee shall have     
determined to make such an investigation, such investigation shall have been    
completed and the President will have                                           

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determined (whether by action or nonaction) not to take any action under the    
Exon-Florio Amendment with respect to the transactions contemplated by the      
Merger Agreement, (iv) there shall be no HLR Adverse Condition, (v) all action  
by, or filings with, any governmental body, agency, official or authority       
described in the Merger Agreement as are required to be obtained and made by    
HLR and RBL will have been obtained and made by NHL, (vi) the NHL Cash          
Contribution and the Roche Warrant Consideration received by NHL pursuant to    
the Merger Agreement shall have been deposited with the Exchange Agent, (vii)   
HLR shall have received from counsel to NHL an opinion in form and substance    
reasonably satisfactory to HLR to the effect that the newly issued shares of    
NHL Common Stock have been duly authorized and, upon delivery to HLR at the     
Effective Time, will be validly issued, fully paid and nonassessable and that   
the Roche Warrants have been duly authorized and, upon payment of the Roche     
Warrant Consideration, shall be validly issued and (viii) RBL and HLR shall     
have received from their counsel an opinion to the effect that the Merger will  
constitute a reorganization pursuant to Section 368(a)(1) of the Code. As used  
herein, an "HLR Adverse Condition" means any order, decree, injunction of any   
court or governmental authority of competent jurisdiction that seeks to (i)     
prohibit or enjoin consummation of, or materially impair or diminish the        
intended benefits of, the transactions contemplated by the Merger Agreement,    
the Stockholder Agreement or the Warrant Agreement, (ii) restrain the ownership 
or operation by HLR or any of its affiliates of all or any material portion of  
the assets or business of the Surviving Corporation or any of its subsidiaries  
or compel HLR or any of its affiliates to dispose of all or any material        
portion of the business or assets of the Surviving Corporation or HLR or any of 
its affiliates, (iii) impose or confirm limitations on the ability of HLR       
effectively to exercise full rights and privileges of ownership of the shares   
of NHL Common Stock to be acquired by it, the Warrants or other NHL securities  
HLR or any of its affiliates may acquire except as limited by the Stockholder   
Agreement or (iv) require divestiture by HLR or any of its affiliates or any    
shares of NHL Common Stock to be acquired by it or other NHL securities.        

AMENDMENTS                                                                      

Any provision of the Merger Agreement may be amended or waived prior to the 
Effective Time if, and only if, such amendment or waiver is in writing and      
signed, in the case of an amendment, by NHL, HLR and RBL, or in the case of a   
waiver, by the party against whom the waiver is to be effective (except that    
after the adoption of the Merger Agreement by the stockholders of NHL, no such  
amendment or waiver will, without the further approval of such stockholders,    
alter or change the NHL Share Conversion, any term of the certificate of        
incorporation of the Surviving Corporation or any of the terms or conditions of 
the Merger Agreement, if such alteration or change would adversely affect the   
holders of any shares of NHL Common Stock).                                     

TERMINATION                                                                     

 Methods of Termination. The Merger Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any   
approval of the Merger Agreement by the stockholders of NHL)(i) by mutual       
written consent of NHL and HLR, (ii) by either NHL or HLR, if the Merger has    
not been consummated by September 1, 1995, (iii) (a) by either NHL or HLR, if   
any law or regulation exists that makes consummation of the Merger illegal or   
otherwise prohibited or if there is any judgment, injunction, order or decree   
(other than a temporary restraining order or a preliminary injunction) that     
enjoins consummation of the Merger, (b) by NHL if any NHL Adverse Condition     
exists, as determined by NHL in NHL's reasonable judgment or (c) by HLR if any  
RBL Adverse Condition exists, as determined by HLR in HLR's reasonable          
judgement, (iv) by NHL, in accordance with the provisions of the Merger         
Agreement described under "THE MERGER--Right of the NHL Board of Directors to   
Withdraw Recommendation Upon Receipt of a Superior Proposal", (v) by either HLR 
or NHL, if the stockholders of NHL fail to approve and adopt the Merger         
Agreement at the NHL Meeting, (vi) by HLR, if it is not in material breach of   
its obligations under the Merger Agreement, if the Board of Directors of NHL    
(a) withdraws its recommendation of the Merger or the Merger Agreement (or the  
transactions contemplated thereby) or (b) recommends or approves any            
Acquisition Proposal (other than an Acquisition Proposal made                   

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by HLR or a controlled affiliate of HLR) or (vii) by HLR or NHL, if HLR, RBL or 
NHL receives any communication from any HSR Authority that causes such party to 
reasonably believe that any such HSR Authority has authorized the institution   
under United States antitrust laws of litigation seeking an order, decree or    
injunction that, if entered, would (in the reasonable judgement of the party    
invoking such provision) be reasonably likely to constitute an NHL Adverse      
Condition, if NHL is the invoking party, or an HLR Adverse Condition, if HLR is 
the invoking party.                                                             

 Effect of Termination. Upon termination of the Merger Agreement in accordance
with its terms, the Merger Agreement will become void and of no effect, with no 
liability on the part of any party thereto, except for liability or damages     
resulting from a willful breach of the Merger Agreement and except that the     
provisions pertaining to the effect of termination of the Merger Agreement,     
confidentiality and the payment of fees and expenses will survive the           
termination of the Merger Agreement. See "THE MERGER--Certain Fees".            

THE WARRANT AGREEMENT 

The following is a summary of all material provisions of the Warrant        
Agreement, a form of which is included as Annex II to this Proxy                
Statement/Prospectus and is incorporated herein by reference. Such summary is   
qualified in its entirety by reference to the Warrant Agreement.                

ISSUANCE, EXERCISE AND REDEMPTION                                               

Issuance. The Warrant Agreement permits NHL to issue and deliver warrant    
certificates (the "Warrant Certificates"), in registered form only, to          
purchase, under certain circumstances, up to an aggregate of 23,000,000 shares  
(the "Warrant Shares"), subject to adjustment (as provided in the Warrant       
Agreement), of NHL Common Stock. The Warrant Certificates will initially be     
issued by the Warrant Agent at the time, in the denominations and to the        
Persons (as defined in the Warrant Agreement) so directed by NHL.               

In particular, NHL intends to make the Warrant Distribution to holders of   
record of NHL Common Stock as of the April 21, 1995 consisting of 0.16308 of a  
Warrant per share of NHL Common Stock. Upon declaration of the Warrant          
Distribution, NHL will execute and deliver to the Warrant Agent for             
countersignature Warrant Certificates representing the product of the number of 
outstanding shares of NHL Common Stock on April 21, 1995 and 0.16308. Based on  
the number of shares of NHL Common Stock outstanding on the NHL Record Date,    
NHL expects to issue approximately 13,823,657 Warrants in the Warrant           
Distribution. In addition, pursuant to the Merger Agreement NHL will issue      
8,325,000 Warrants for purchase by Roche.                                       

No certificates or scrip representing fractional Warrants will be issued to 
any holder (each, a "Holder") shown in the register maintained by the Warrant   
Agent (the "Warrant Register") in the Warrant Distribution. As promptly as      
practicable following April 21, 1995, the Warrant Agent will determine with     
respect to each Person entitled to receive Warrants pursuant to the Warrant     
Distribution the excess of the number of Warrants delivered to the Warrant      
Agent by NHL with respect to each such Person over the number of whole Warrants 
to be distributed with respect to such Person (such excess fraction of Warrant  
hereinafter referred to in connection with each such Person as a "Fractional    
Warrant"). As soon after April 21, 1995 as practicable, the Warrant Agent, as   
agent for Holders otherwise entitled to receive Fractional Warrants (each, a    
"Fractional Warrant Holder"), will aggregate and sell in normal transactions    
the Fractional Warrants for all Fractional Warrant Holders at then available    
prices on the NYSE or on the principal U.S. securities exchange on which shares 
of NHL Common Stock are traded, if any, or on the National Association of       
Securities Dealers, Inc.'s Automated Quotation System ("NASDAQ"), if shares of  
NHL Common Stock are quoted on NASDAQ. Until the net proceeds of such sale or   
sales (the "Fractional Warrant Proceeds") have been distributed to the          
Fractional Warrant Holders, the Warrant Agent will hold the Fractional Warrant  
Proceeds in trust for the Fractional Warrant Holders. The Warrant Agent will    
determine the portion of the net Fractional Warrant Proceeds to which each      
Fractional Warrant Holder will                                                  

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be entitled, if any, by multiplying the net Fractional Warrant Proceeds amount  
by a fraction, the numerator of which is the Fractional Warrant to which such   
Fractional Warrant Holder would otherwise be entitled and the denominator of    
which is the aggregate Fractional Warrants to which all Fractional Warrant      
Holders would otherwise be entitled. As soon as practicable after the           
determination of the amount of Fractional Warrant Proceeds, if any, to be paid, 
in cash, to each Fractional Warrant Holder in lieu of any Fractional Warrants,  
the Warrant Agent will make available such amounts, without interest, to each   
such Fractional Warrant Holder.                                                 

At or prior to the Effective Time, NHL will execute and deliver to the      
Warrant Agent for countersignature Warrant Certificates representing the Roche  
Warrants.                                                                       

Exercise and Redemption. Not earlier than 90 days nor later than 60 days    
prior to the Expiration Date, NHL will deliver to the Warrant Agent notice, in  
writing, which notice will be irrevocable, stating whether or not it has        
elected to redeem the Warrants on the Expiration Date. Promptly after receipt   
of NHL's notice, the Warrant Agent will mail notice to all Holders describing   
the exercise procedure set forth in the Warrant Agreement (which is summarized  
below) or stating that each Warrant will be redeemed for the Redemption Amount  
(which is described below) on the Expiration Date, as the case may be.          

Subject to the provisions of the Warrant Agreement, each Warrant will be    
exercisable only on the Expiration Date, prior to the Close of Business (as     
defined in the Warrant Agreement) on such date, and only if NHL has not duly    
redeemed the Warrants. Unless NHL has elected to effect a Redemption, in which  
case each Holder will be entitled to receive the Redemption Amount, the         
Warrants will expire at, and become null and void, and have no value, and no    
Person will have any rights as of the Close of Business on the Expiration Date, 
except Holders that have properly exercised Warrants in accordance with the     
terms of the Warrant Agreement will be entitled to receive Warrant Shares with  
respect to such Holders' Warrants.                                              

Each Warrant will entitle the Holder thereof to purchase from NHL one fully 
paid and non-assessable share of NHL Common Stock at the exercise price of      
$22.00 (subject to adjustments) upon (i) surrender to the Warrant Agent of the  
Warrant Certificate evidencing such Warrant and (ii) payment of the exercise    
price for the number of Warrant Shares in respect of which such Warrant is      
being exercised. Such surrender and payment (if applicable) may be made and     
will be accepted by the Warrant Agent at any time during the 45 day period      
immediately preceding the Close of Business (as defined in the Warrant          
Agreement) on the Expiration Date, but any Warrants so surrendered will not be  
deemed to be exercised until the Expiration Date. Payment of the Exercise Price 
must be made by a certified or official bank check payable to the order of the  
Warrant Agent for the account of NHL or by wire transfer of funds to an account 
designated by NHL for such purpose. The Warrants evidenced by a Warrant         
Certificate will be exercisable, at the election of the Holder thereof, either  
in their entirety or in part.                                                   

The Warrant Agreement provides that, upon the surrender of each Warrant     
Certificate and the payment of the per share exercise price, immediately        
following the Expiration Date, NHL will issue and cause its transfer agent for  
NHL Common Stock (the "Transfer Agent") to deliver with all reasonable dispatch 
to, or upon the written order of, the Holder and in such name or names as such  
Holder may designate, a certificate or certificates for the number of full      
Warrant Shares so purchased upon the exercise of such Warrant or Warrants       
together with cash in respect of any Fractional Warrant Share (as defined       
below) otherwise issuable upon such exercise.                                   

No certificates or scrip representing fractional Warrant Shares will be     
issued upon exercise of a Warrant. As promptly as practicable following the     
Expiration Date (if NHL has not elected to effect a Redemption), the Transfer   
Agent will determine with respect to each Holder entitled to receive Warrant    
Shares pursuant to the surrender of the Warrant Certificates the excess of the  
number of Warrant Shares delivered to the Transfer Agent by NHL over the        
aggregate number of whole Warrant Shares to be issued with respect to such      
Holder (such excess being hereinafter referred to in connection with each such  
Holder as a "Fractional Warrant Share"). As soon after the Expiration Date as   
practicable, the Transfer Agent, as agent for Holders                           

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otherwise entitled to receive Fractional Warrant Shares (each, a "Fractional    
Warrant Share Holder"), will aggregate and sell in normal transactions the      
Fractional Warrant Shares for all the Fractional Warrant Share Holders at then  
available prices on the NYSE. Until the net proceeds of such sale or sales (the 
"Fractional Warrant Share Proceeds") have been distributed to the Fractional    
Warrant Share Holders, the Transfer Agent will hold the Fractional Warrant      
Share Proceeds in trust for the Fractional Warrant Share Holders. The Transfer  
Agent will determine the portion of the net Fractional Warrant Share Proceeds   
to which each Fractional Warrant Share Holder will be entitled, if any, by      
multiplying the net Fractional Warrant Share Proceeds amount by a fraction, the 
numerator of which is the Fractional Warrant Share to which such Fractional     
Share Holder would otherwise be entitled and the denominator of which is the    
aggregate Fractional Warrant Shares to which all Fractional Warrant Share       
Holders would otherwise be entitled. As soon as practicable after the           
determination of the amount of the Fractional Warrant Share Proceeds, if any,   
to be paid, in cash, to each Fractional Warrant Share Holder in lieu of any     
Fractional Warrant Shares, the Transfer Agent will make available such amounts, 
without interest, to each such Fractional Warrant Share Holder.                 

The Warrant Agreement provides that, so long as NHL has timely delivered to 
the Warrant Agent written notice of its election to redeem the Warrants (as     
described above), NHL will have the right to redeem all, but not less than all, 
of the Warrants on the Expiration Date by payment in cash to each Holder as of  
such date of the Redemption Amount with respect to the Warrants held by such    
Holder (a "Redemption"). The Redemption Amount will be an amount equal to the   
excess, if any, of the Market Price of the NHL Common Stock over the Exercise   
Price of $22.00 (subject to adjustments). As used in the Warrant Agreement, the 
"Market Price" will be the average of the last sale price (or if no such sale   
takes place, the average of the closing bid and asked prices) on the NYSE of a  
share of NHL Common Stock over the 10 consecutive trading days commencing 15    
trading days and ending five trading days before the Expiration Date. If NHL    
has elected to redeem the Warrants, at or immediately prior to the Expiration   
Date NHL will cause to be transferred to the Warrant Agent an amount in         
immediately available funds equal to the aggregate Redemption Amount for all    
outstanding Warrants for payment by the Warrant Agent to the Holders as of the  
Expiration Date. If NHL has elected to redeem the Warrants but the aggregate    
Redemption Amount is zero or less than zero, no amount will be required to be   
paid by NHL in respect of the redemption of the Warrants, but the Warrants will 
nonetheless be deemed to have been redeemed.                                    

Transfer and Exchange of Warrants. The Warrant Agreement provides that the  
Warrant Agent will, from time to time, register the transfer of any outstanding 
Warrant Certificate in the Warrant Register, upon surrender of such Warrant     
Certificate, duly endorsed, and accompanied by a written instrument or          
instruments of transfer in a form satisfactory to the Warrant Agent, duly       
signed by the Holder or Holders thereof or by the duly appointed legal          
representative thereof or by a duly authorized attorney, such signature to be   
guaranteed by (i) a bank or trust company, (ii) a broker or dealer that is a    
member of the National Association of Securities Dealers or (iii) a member of a 
national securities exchange, and funds sufficient to pay any transfer taxes    
payable with respect to such transfer. Upon any such registration or transfer,  
a new Warrant Certificate will be issued to the transferee. Warrant             
Certificates may be exchanged at the option of the Holder, when surrendered to  
the Warrant Agent, for other Warrant Certificates of like tenor and             
representing in the aggregate a like number of Warrants.                        

Notwithstanding the preceding paragraph, the Warrant Agent will not be      
required to transfer or exchange any Warrant Certificate from and after the     
105th day preceding the scheduled Expiration Date, provided that, if in the     
written notice provided by NHL to the Warrant Agent pursuant to the Warrant     
Agreement with respect to whether NHL has elected to redeem the Warrants, NHL   
elects not to redeem the Warrants, then the Warrant Agent will be required to   
permit transfers or exchanges of Warrant Certificates from and after the date   
of mailing of the notice by the Warrant Agent pursuant to the Warrant Agreement 
to the Holders of Warrants with respect to the procedures for exercise of the   
Warrants until the 15th day preceding the Expiration Date.                      

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In addition, in connection with governmental approvals and stock exchange   
listings, NHL, from time to time, will use its best efforts (i) to obtain and   
keep effective any and all permits, consents and approvals of governmental      
agencies and authorities and to file such documents under Federal and state     
securities acts and laws, which may be or become requisite in connection with   
the issuance, sale, transfer and delivery of the Warrant Certificates, the      
exercise of the Warrants and the issuance, sale, transfer and delivery of the   
Warrant Shares issued upon exercise of Warrants, (ii) to have the Warrants      
listed on the NYSE (or on the principal United States securities exchange or    
exchanges on which the NHL Common Stock is listed, if any, or quoted on NASDAQ, 
if the NHL Common Stock is so quoted) and (iii) immediately upon the issuance   
of Warrant Shares and upon the exercise of the Warrants, to have such Warrant   
Shares listed on the NYSE (or on the principal United States securities         
exchange or exchanges on which the NHL Common Stock is listed, if any, or       
quoted on NASDAQ, if the NHL Common Stock is so quoted). NHL will cause the     
Warrants to be delisted (or cease to be quoted, as the case may be) effective   
as of the Close of Business on the Expiration Date.                             

Repurchase of Warrants. The Warrant Agreement provides that NHL and its     
subsidiaries will have the option, in their sole discretion, at any time or     
from time to time, to purchase Warrants (i) in the public market, (ii) by       
tender or exchange offer available to all Holders at any price or (iii) in      
private transactions at a price not more than 10% over the Market Price of the  
Warrants as of the closing date of each such transaction respectively. Warrants 
acquired by NHL or its subsidiaries will be canceled and will not be available  
for reissuance or resale.                                                       

 Cancelation of Warrants. If NHL has purchased or otherwise acquired Warrants,
NHL may deliver the Warrant Certificates representing such Warrants to the      
Warrant Agent to be canceled and retired. The Warrant Agent will cancel all     
Warrants so surrendered.                                                        

ANTI-DILUTION PROVISIONS                                                        

The exercise price, the number of Warrant Shares purchasable upon the       
exercise of each Warrant and the number of Warrants outstanding are each        
subject to adjustment from time to time upon the occurrence of certain events   
described in the Warrant Agreement (and summarized below).                      

Stock Dividends, Stock Splits, Combinations and Stock Reclassifications. If 
NHL (i) pays a dividend on its shares of capital stock (including NHL Common    
Stock) in shares of NHL Common Stock, (ii) subdivides its outstanding shares of 
NHL Common Stock, (iii) combines its outstanding shares of NHL Common Stock     
into a smaller number of shares of NHL Common Stock or (iv) issues any shares   
of its capital stock in a reclassification of the NHL Common Stock, in each     
case, other than the Merger pursuant to the Merger Agreement, the number of     
Warrant Shares purchasable upon exercise of each Warrant immediately prior      
thereto will be adjusted so that each Holder will be entitled, upon exercise,   
to receive the kind and number of Warrant Shares or other securities of NHL     
which such Holder would have owned or have been entitled to receive after the   
happening of any of the events described above, had such Warrant been exercised 
immediately prior to the happening of such event or any record date with        
respect thereto.                                                                

Rights, Options and Warrants. If NHL issues any rights, options or warrants 
to holders of outstanding shares of NHL Common Stock (other than pursuant to    
the Merger Agreement, the Warrant Agreement or stock option plans or similar    
plans approved by the Board of Directors of NHL), without payment of additional 
consideration by such holders, entitling them to subscribe for or purchase      
shares of NHL Common Stock at a price per share that is lower than the Market   
Price (calculated as of the applicable date of determination) per share of NHL  
Common Stock, the number of Warrant Shares thereafter purchasable upon the      
exercise of each Warrant will be determined by multiplying the number of        
Warrant Shares theretofore purchasable upon exercise of each Warrant by a       
fraction, the numerator of which will be the number of shares of NHL Common     
Stock outstanding on the record date for the issuance of such rights, options   
or warrants plus the number of additional shares of NHL Common Stock offered    
for subscription or purchase and the denominator of which will be the number of 
shares of NHL Common Stock outstanding on the record date                       

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for the issuance of such rights, options or warrants plus the number of shares  
which the aggregate offering price of the total number of shares of NHL Common  
Stock so offered would purchase at the Market Price per share of NHL Common     
Stock on the record date with respect thereto.                                  

Certain Distributions. If NHL distributes to all holders of shares of NHL   
Common Stock evidences of its indebtedness or assets, rights, options or        
warrants, or convertible or exchangeable securities containing the right to     
subscribe for or purchase shares of NHL Common Stock, then in each case the     
number of Warrant Shares thereafter purchasable upon the exercise of each       
Warrant will be determined by multiplying the number of Warrant Shares          
theretofore purchasable upon the exercise of each Warrant, by a fraction, the   
numerator of which will be the then current Market Price per share of NHL       
Common Stock on the date of such distribution and the denominator of which will 
be the then current Market Price per share of NHL Common Stock on the date of   
such distribution less the then fair value of the portion of the evidences of   
indebtedness or assets so distributed or of such subscription rights, options   
or warrants or convertible or exchangeable securities applicable to one share   
of NHL Common Stock.                                                            

Capital Reorganizations and Stock Reclassifications. In the event of any    
capital reorganization or any reclassification of NHL Common Stock except as    
otherwise provided in the Warrant Agreement, any Holder of Warrants, upon       
exercise thereof, will be entitled to receive, in lieu of the NHL Common Stock  
to which such Holder would have become entitled upon exercise immediately prior 
to such reorganization or reclassification, the shares or other securities or   
property of NHL that such Holder would have been entitled to receive at the     
same aggregate exercise price upon such reorganization or reclassification if   
such Holder's Warrants had been exercised immediately prior thereto.            

Consolidations, Mergers, Sales and Conveyances. In the event of any         
consolidation of NHL with, or merger (other than the Merger) of NHL into,       
another corporation or in case of any sale or conveyance to another corporation 
of the property of NHL as an entirety or substantially as an entirety, NHL or   
such successor or purchasing corporation, as the case may be, will execute with 
the Warrant Agent an agreement that each Holder will have the right thereafter, 
upon payment of the exercise price in effect immediately prior to such action,  
to purchase upon exercise of each Warrant the kind and amount of shares and     
other securities and property which such Holder would have owned or to which    
such Holder would have been entitled to receive after the happening of such     
consolidation, merger, sale or conveyance had such Warrant been exercised       
immediately prior to such action.                                               

WARRANT AGENT                                                                   

The Warrant Agreement provides that the Warrant Agent will undertake        
customary duties and obligations imposed by the Warrant Agreement upon the      
following terms and conditions, by which NHL and the Holders, by their          
acceptance of the Warrants, will be bound: (i) the statements contained in the  
Warrant Agreement and in the Warrant Certificates will be taken as statements   
of NHL, and the Warrant Agent will assume no responsibility for the correctness 
of any of the same, except such as describes the Warrant Agent or action taken  
or to be taken by it, and, except as otherwise provided in the Warrant          
Agreement, the Warrant Agent will assume no responsibility with respect to the  
execution, delivery or distribution of the Warrant Certificates, (ii) the       
Warrant Agent will not be responsible for any failure of NHL to comply with any 
of the covenants contained in the Warrant Agreement or in the Warrant           
Certificates, nor will it at any time be under any duty or responsibility to    
any Holder to make, or cause to be made, any adjustment in the exercise price   
or in the number of Warrant Shares issuable upon exercise of any Warrant        
(except as instructed by NHL) or to determine whether any facts exist which may 
require any such adjustments or the method employed in making any such          
adjustments, (iii) the Warrant Agent may consult at any time with counsel       
satisfactory to it, and the Warrant Agent will incur no liability or            
responsibility to NHL or any holder of any Warrant Certificate in respect of    
any action taken, suffered or omitted by it under the Warrant Agreement in good 
faith and in accordance with the opinion or the advice of such counsel, (iv)    
the Warrant Agent will incur no liability or responsibility to NHL, or to any   
Holder, for any action taken in reliance on any notice, resolution, waiver,     
consent, order, certificate or other paper, document or instrument              

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believed by it to be genuine and to have been signed, sent or presented by the  
proper party or parties, (v) NHL will promptly pay the Warrant Agent the        
compensation to be agreed upon with NHL for all services rendered by the        
Warrant Agent, to reimburse the Warrant Agent for its reasonable out-of-pocket  
expenses incurred without negligence, bad faith or breach of the Warrant        
Agreement on its part in connection with the services rendered by it under the  
Warrant Agreement and to indemnify the Warrant Agent for, and to hold it        
harmless against, any loss, liability or expense incurred without negligence,   
bad faith or breach of the Warrant Agreement on its part arising out of, or in  
connection with, its acting as such Warrant Agent, (vi) the Warrant Agent will  
be under no obligation to institute any action, suit or legal proceeding, or to 
take any action likely to involve expense, unless NHL or one or more Holders of 
Warrant Certificates will furnish the Warrant Agent with reasonable security    
and indemnity for any costs or expenses which may be incurred, (vii) the        
Warrant Agent and any stockholder, director, officer or employee of the Warrant 
Agent, may buy, sell or deal in any of the Warrants or other securities of NHL  
or become pecuniarily interested in any transaction in which NHL may be         
interested, or contract with or lend money to NHL or otherwise act as fully and 
freely as though they were not the Warrant Agent, or a stockholder, director,   
officer or employee of the Warrant Agent, as the case may be, (viii) the        
Warrant Agent will act solely as agent for NHL, and its duties will be          
determined solely by the provisions of the Warrant Agreement, (ix) NHL will     
perform, execute, acknowledge and deliver, or cause to be performed, executed,  
acknowledged and delivered, all such further and other acts, instruments and    
assurances as may reasonably be required by the Warrant Agent for the carrying  
out or performing of the provisions of the Warrant Agreement, (x) the Warrant   
Agent will not be under any responsibility in respect of the validity of the    
Warrant Agreement, the execution and delivery of the Warrant Agreement or in    
respect of the validity or execution of any Warrant Certificate, nor will the   
Warrant Agent by any act under the Warrant Agreement be deemed to make any      
representation as to the authorization or reservation of the Warrant Shares,    
any Warrant Certificate, whether the Warrant Shares will, when issued, be       
validly issued, fully paid and nonassessable or the exercise price or number of 
Warrant Shares issuable upon exercise of any Warrant, (xi) the Warrant Agent is 
authorized and directed to accept instructions with respect to the performance  
of its duties under the Warrant Agreement from the Chairman of the Board, the   
Chief Executive Officer, the President, any Vice President, the Treasurer, the  
Secretary or an Assistant Secretary of NHL and to apply to such officers for    
advice or instructions in connection with its duties and will not be liable for 
any action taken or suffered to be taken by it in good faith in accordance with 
instruction of any such officer or in good faith reliance upon any statement    
signed by any one of such officers of NHL with respect to any fact or matter    
which may be deemed to be conclusively proved and established by such signed    
statement.                                                                      

The Warrant Agreement provides that, if the Warrant Agent resigns or becomes
incapable of acting as Warrant Agent, or if the Board of Directors of NHL by    
resolution removes the Warrant Agent, NHL will appoint a successor to the       
Warrant Agent. If NHL fails to make such appointment within a period of 30 days 
after such resignation, incapacity or removal, any Holder may apply to any      
court of competent jurisdiction for the appointment of a successor to the       
Warrant Agent. Pending appointment of a successor to the Warrant Agent, either  
by NHL or by such court, the duties of the Warrant Agent will be carried out by 
NHL.                                                                            

CERTAIN MISCELLANEOUS PROVISIONS                                                

Termination. The Warrant Agreement will terminate immediately after (i) all 
Warrant Shares in respect of properly exercised Warrants have been issued (if   
NHL does not elect to effect a Redemption) or (ii) NHL has paid the Redemption  
Amount with respect to all Holders (if NHL elects to effect a Redemption),      
provided that the provisions pertaining to the terms and conditions under which 
the Warrant Agent has agreed to undertake the duties and obligations imposed by 
the Warrant Agreement survive such termination until such time that the         
obligations contemplated thereunder have been satisfied.                        

 Supplements and Amendments. NHL and the Warrant Agent may, from time to time,
supplement or amend the Warrant Agreement without the approval of the Holders   
to cure any ambiguity, manifest error or                                        

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other mistake, to correct any provision of the Warrant Agreement that may be    
defective or inconsistent with any other provisions of the Warrant Agreement or 
to make any other provisions in regard to matters or questions arising under    
the Warrant Agreement that NHL and the Warrant Agent may deem necessary or      
desirable and that will not adversely affect, alter or change the interest of   
the Holders.                                                                    

THE STOCKHOLDER AGREEMENT 

The following is a summary of all material provisions of the Stockholder    
Agreement, a form of which is included as Annex III to this Proxy               
Statement/Prospectus and is incorporated herein by reference. Such summary is   
qualified in its entirety by reference to the Stockholder Agreement.            

CORPORATE GOVERNANCE                                                            

Composition of the Board of Directors. Pursuant to the Stockholder Agreement
(subject to the exceptions provided therein), during the Initial Period the     
Board of Directors of the Surviving Corporation will be comprised of seven      
members, consisting of Mr. Maher (the current President and Chief Executive     
Officer of NHL), three HLR Directors, who will be Mr. Belingard (the Director   
General, Diagnostics Division and Executive Committee Member of F. Hoffmann-La  
Roche Ltd), Mr. Mac Mahon (a Senior Vice President of Roche and the President   
of Roche Diagnostics Group) and Dr. Powell (the President of RBL) (unless any   
such individual is unable to serve in such capacity, in which event the Board   
of Directors will elect as a director one or more substitute individuals        
designated by HLR prior to the Merger who is reasonably acceptable to a         
majority of the independent directors in office immediately prior to the        
Effective Time), and three independent directors (as defined in the Stockholder 
Agreement, which provides in general that such persons shall not be officers,   
employees or affiliates of the Surviving Corporation or HLR). The persons who   
will serve as the independent directors for the Initial Period are required to  
be mutually acceptable to a majority of the members of NHL's Board of Directors 
in office immediately prior to the Effective Time and to HLR. Following the     
Initial Period, the Board of Directors of the Surviving Corporation will        
(subject to specified exceptions) be comprised of seven members, consisting of  
three HLR Directors and four independent directors nominated by the Nominating  
Committee of the Board of Directors. The Nominating Committee will consist of   
one HLR Director and two independent directors. A quorum of the Nominating      
Committee will consist of all members of the committee, and the Nominating      
Committee will act by majority vote of the entire committee.                    

 Mr. Maher will serve as Chairman of the Board and Mr. Mac Mahon will serve as
Vice Chairman of the Board of the Surviving Corporation for the Initial Period. 
Following the Initial Period, Mr. Maher will resign his board and committee     
positions, Mr. Mac Mahon will become Chairman of the Board and the position of  
Vice Chairman will be eliminated.                                               

 If the percentage of the aggregate number of votes entitled to be voted in an
election of Directors of the Surviving Corporation by all outstanding           
securities having the right to vote generally in any election of Directors of   
the Surviving Corporation (the "Total Voting Power") that is controlled         
directly or indirectly by HLR and its affiliates (other than the Surviving      
Corporation and its subsidiaries) is less than 30% but at least 20%, HLR will   
have the right to designate for nomination two HLR Directors and if the HLR     
Group Interest is less than 20% but at least 10%, HLR will have the right to    
designate for nomination one HLR Director.                                      

Committees of the Board of Directors. The Stockholder Agreement provides    
that, the Board of Directors of the Surviving Corporation will establish,       
empower, maintain and elect the members of the following committees of the      
Board of Directors: (i) an Audit Committee, comprised solely of Independent     
Directors, (ii) a Nominating Committee, which will be composed of one HLR       
Director (designated by the majority of HLR Directors), and two independent     
directors (designated by the majority of independent directors), (iii) an       
employee benefits committee, comprised of HLR Directors and independent         
directors                                                                       

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(with the independent directors constituting a majority) and (iv) such other    
committees as the Board of Directors deems necessary or desirable to establish, 
empower and maintain, provided that such committees are approved by a Special   
Majority of the Board of Directors.                                             

Except as otherwise provided in the Stockholder Agreement or as agreed by a 
majority of the independent directors, the number of HLR Directors serving on   
each committee of the Board of Directors will be the same proportion of the     
total membership of such committee as the number of HLR Directors is of the     
entire Board of Directors, with a minimum of one member so long as HLR is       
entitled under the Stockholder Agreement to designate one HLR Director.         
Notwithstanding the previous sentence, if the HLR Group Interest is less than   
30% but more than 20%, the number of HLR Directors serving on each committee of 
the Board of Directors (other than the Audit Committee) will be two, if such    
committee has five or more total members or one, in all other cases. If the HLR 
Group Interest is less than 20% but more than 10%, the number of HLR Directors  
serving on each committee of the Board of Directors (other than the Audit       
Committee) will be one.                                                         

Management Committee. The Stockholder Agreement provides that the Surviving 
Corporation will establish a Management Committee, comprised of its President   
and Chief Executive Officer, who will be the Chairman of the Management         
Committee, its Chief Operating Officer, its Chief Administrative Officer, its   
Chief Financial Officer, its General Counsel, its Executive Vice President,     
Sales and Marketing, its Executive Vice President, Human Resources, the         
Chairman of the Board and the Vice Chairman of the Board, if any, of the        
Surviving Corporation and such other directors or executive officers as may be  
approved by a Special Majority of the Board of Directors of the Surviving       
Corporation. The Management Committee will have the responsibility, authority   
and duty to review and approve and oversee the implementation of certain        
operational and strategic plans proposed by the Operating Committee (referred   
to below) prior to consideration and approval by the Board of Directors and     
such other responsibilities, authority and duties as the Board (acting by       
Special Majority of the Board of Directors) may from time to time grant,        
subject to the other provisions of the Stockholder Agreement, the certificate   
of incorporation of the Surviving Corporation and the by-laws of the Surviving  
Corporation. Pursuant to the Stockholder Agreement, the location of the         
headquarters of the Surviving Corporation will be determined by the Management  
Committee.                                                                      

Approval Required for Certain Actions. The Stockholder Agreement provides   
that, so long as the HLR Group Interest is 30% or more, no action by the        
Surviving Corporation or any of its subsidiaries will be taken with respect to  
any of the following matters without the approval of a Special Majority of the  
Board of Directors: (i) the appointment of any of the Chairman of the Board,    
Chief Executive Officer, President, Secretary, Treasurer, the Chief             
Administrative Officer, General Counsel, Chief Financial Officer or Chief       
Operating Officer or other executive officer in any similar capacity of the     
Surviving Corporation or any of its subsidiaries, (ii) the approval of          
Strategic Plans and Annual Operating Plans referred to below in "Strategic and  
Operating Planning Process", (iii) any merger or consolidation of the Surviving 
Corporation or any of its subsidiaries with or into any Person other than the   
Surviving Corporation or any of its subsidiaries, (iv) any amendment to the     
certificate of incorporation or the bylaws of the Surviving Corporation or any  
adoption of, or amendment to, the certificate of incorporation or the bylaws of 
any subsidiary of the Surviving Corporation, (v) any acquisition of assets,     
business, operations or securities by the Surviving Corporation or any of its   
subsidiaries by merger or otherwise (whether in one transaction or a series of  
related transactions) which assets, business, operations or securities would    
constitute more than 10% of the fair market value of the total assets of the    
Surviving Corporation and its subsidiaries as of the end of the most recent     
fiscal quarter ending prior to such transaction (a "Substantial Part" of the    
Surviving Corporation), (vi) any sale, asset exchange, lease, exchange,         
mortgage, pledge, transfer or other disposition by merger or otherwise by the   
Surviving Corporation or any of its subsidiaries (in one transaction or a       
series of related transactions) of any of the subsidiaries or assets of the     
Surviving Corporation or any of its subsidiaries which constitutes a            
Substantial Part of the Surviving Corporation, (vii) the settling of any        
litigation, investigation or proceeding involving any governmental authority or 
where the amount to be paid in settlement is in excess of $5,000,000, (viii)    
any material transaction between the Surviving Corporation or any of its        
subsidiaries, on the one hand,                                                  

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and any stockholder or affiliate of the Surviving Corporation (other than any   
subsidiary of the Surviving Corporation and other than HLR and its affiliates), 
on the other hand (other than as specifically contemplated by the Sharing and   
Call Option Agreement), (ix) the issuance of any security of the Surviving      
Corporation or of any security of any subsidiary of the Surviving Corporation   
(other than as specifically contemplated by the Merger Agreement, the Warrants  
or existing employee stock options), (x) any capital expenditures individually  
in excess of $1,000,000 or in the aggregate in excess of $50,000,000 per annum  
or which represent in the aggregate 110% or more of the total amount provided   
for in certain plans for such year, (xi) any reclassification, recombination,   
split, subdivision or redemption, purchase or other acquisition, directly or    
indirectly, of any debt or Equity Securities or other capital stock of the      
Surviving Corporation, except as provided in the Merger Agreement and the       
Warrants, (xii) any change in the size or composition of the Board of           
Directors, any committee thereof or the Management Committee or any             
establishment of a new committee of the Board, (xiii) any incurrence,           
assumption or issuance by the Surviving Corporation or any of its subsidiaries  
of indebtedness other than indebtedness existing immediately after the          
Effective Time and any refinancings thereof and other indebtedness in an        
aggregate principal amount at any one time outstanding not to exceed            
$25,000,000, (xiv) any declaration of any dividend or any making of any other   
distribution with respect to, or any redemption, repurchase or other            
acquisition of, any class of securities of the Surviving Corporation or any of  
its subsidiaries, except as expressly otherwise provided in the Merger          
Agreement or pursuant to the Warrants, (xv) any proposal, or entry into, by the 
Surviving Corporation or any of its subsidiaries of any Discriminatory          
Transaction (as defined in the Stockholder Agreement), (xvi) any relocation of  
the headquarters of the Surviving Corporation, (xvii) any determination of      
compensation, benefits, perquisites and other incentives for executive officers 
(other than officers whose total compensation including employee stock options  
and similar incentives does not exceed $150,000 annually) and any approval or   
amendment of any plans or contracts in connection therewith, (xviii) any        
adoption or implementation of any takeover defense measures, including the      
institution, amendment or redemption by the Surviving Corporation or any of its 
subsidiaries of any stockholder rights plan or similar plan or device, or any   
change of control matters, (xix) any transaction involving, or any action by,   
the Surviving Corporation or any of its subsidiaries (A) leading to a           
circumstance in which any Person or 13D Group (as defined in the Stockholder    
Agreement) representing a percentage of Total Voting Power or any equity        
interest in the Surviving Corporation greater than 15% or (B) requiring the     
approval of holders of a majority of the securities having the right to vote    
generally in any election of Directors of the Surviving Corporation or Equity   
Securities and (xx) any change in the fiscal year or the accounting or tax      
principles, or policies with respect to the financial statements, records or    
affairs of the Surviving Corporation or any of its subsidiaries, except as      
required by GAAP or by law or (xxi) any dissolution of the Surviving            
Corporation or any of its subsidiaries, any adoption of a plan of liquidation   
of the Surviving Corporation of any of its subsidiaries or any action by the    
Surviving Corporation or any of its subsidiaries to commence any suit, case,    
proceeding or other action (A) under any existing or future law of any          
jurisdiction relating to bankruptcy, insolvency, reorganization or relief of    
debtors seeking to have an order for relief entered with respect to the         
Surviving Corporation or any of its subsidiaries, seeking to adjudicate the     
Surviving Corporation or any of its subsidiaries bankrupt or insolvent or       
seeking reorganization, arrangement, adjustment, winding up, liquidation,       
dissolution, composition or other relief with respect to the Surviving          
Corporation or any of its subsidiaries or (B) seeking appointment of a          
receiver, trustee custodian or other similar official for the Surviving         
Corporation or any of its subsidiaries or for all or any Substantial Part of    
the assets of the Surviving Corporation or any of its subsidiaries or making a  
general assignment for the benefit of the creditors of the Surviving            
Corporation or any of its subsidiaries.                                         

Strategic and Operating Planning Process. The Stockholder Agreement requires
that the President and Chief Executive Officer of the Surviving Corporation     
cause to be prepared and proposed to the Management Committee an Annual         
Operating Plan for each fiscal year (providing for an analysis of gross         
profits, summary of operating expenses, personnel levels, pricing, budgets for  
niche businesses, cash flows and capital expenditures) and a Strategic Plan for 
five-year periods (providing for an analysis of the business environment,       
business objectives and strategies, business revenues, financial forecasts,     
capital plans, acquisition and divestiture plans, business segment analysis and 
niche business plans), beginning with the period 1997-2001.                     

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Under the Stockholder Agreement, the Management Committee will be responsible   
for overseeing the implementation of the Initial Synergy Plan (as defined in    
the Stockholder Agreement) for the initial two-year period following the        
Effective Time. The Stockholder Agreement requires that the Annual Operating    
Plans and the Strategic Plans be approved by a Special Majority of the Board of 
Directors.                                                                      

ANTI-DILUTIVE RIGHTS                                                            

The Stockholder Agreement prohibits, subject to certain exceptions, the     
Surviving Corporation from issuing, selling or transferring any (i) common      
stock or other voting stock of the Surviving Corporation, (ii) any debt or      
equity securities of the Surviving Corporation convertible or exchangeable for  
common stock or voting stock of the Surviving Corporation or (iii) any options, 
rights or warrants issued by the Surviving Corporation to acquire common stock  
or other voting stock of the Surviving Corporation ("Equity Securities") to any 
Person unless HLR is offered in writing the right to purchase, at the same      
price and on the same terms proposed to be issued or sold, an amount of such    
Equity Securities (the "Maintenance Securities") as is necessary for the HLR    
Group to maintain the HLR Group Interest as it existed immediately prior to     
such issuance (the "Anti-Dilutive Rights"). If HLR does not deliver to the      
Surviving Corporation written notice of acceptance of any such offer within 20  
business days after HLR's receipt thereof, HLR will be deemed to have waived    
its right to purchase all or part of the Maintenance Securities as set forth in 
such offer, but HLR will retain its Anti-Dilutive Rights with respect to future 
offers.                                                                         

The Anti-Dilutive Rights will not apply to (i) the grant or exercise of     
options to purchase shares of stock of the Surviving Corporation, the issuance  
of shares of stock of the Surviving Corporation to employees of the Surviving   
Corporation or any of its subsidiaries (other than employees who are also       
employees of a stockholder, its affiliates or any subsidiary of a stockholder)  
or otherwise pursuant to any stock option or similar plan in existence on the   
date of the Stockholder Agreement or otherwise adopted by the Board of          
Directors after the date of the Stockholder Agreement, (ii) the issuance of the 
stock of the Surviving Corporation pursuant to the Warrants or of shares of the 
stock of the Surviving Corporation issuable upon exercise of any option,        
warrant, convertible security or other rights to purchase shares of stock of    
the Surviving Corporation which, in each case, has been issued in compliance    
with the terms of the provisions pertaining to the Anti-Dilutive Rights, (iii)  
the issuance of any securities pursuant to any stock split, stock dividend or   
other similar stock recapitalization or (iv) the issuance of shares of stock of 
the Surviving Corporation pursuant to any underwritten public offering of       
Equity Securities under an effective registration statement filed by the        
Surviving Corporation with the SEC in accordance with the Securities Act (such  
offering referred to as a "Public Offering"), provided that the action          
described in clauses (i), (iii) or (iv) above, as the case may be, has been     
approved (to the extent required) in accordance with the provisions of the      
Stockholder Agreement.                                                          

ACQUISITIONS AND TRANSFERS OF EQUITY SECURITIES                                 

Acquisitions of Additional Equity Securities. The Stockholder Agreement     
provides that, during the Initial Period, HLR will not, and will use its best   
efforts to cause each member of the HLR Group not to, directly or indirectly,   
purchase or otherwise acquire any Equity Securities of the Surviving            
Corporation if, after giving effect thereto, the HLR Group Interest would       
exceed 49.99%. Notwithstanding the foregoing, the Stockholder Agreement permits 
the HLR Group or one or more members thereof to acquire, directly or            
indirectly, by purchase or otherwise, Equity Securities resulting in the HLR    
Group Interest exceeding such limitation in the event (i) any Person or group   
makes an Acquisition Proposal, (ii) after the Effective Time, Mafco Holdings    
Inc. or any affiliate thereof acquires Equity Securities representing 1% or     
more of the Total Voting Power, (iii) any Person or group acquires beneficial   
ownership of Equity Securities representing 5% or more of Total Voting Power    
(10% or more in the case of beneficial ownership permitted to be reported on    
Schedule 13G under the Exchange Act), or (iv) there has been a material adverse 
change in the business, financial condition or operations of the Surviving      
Corporation for, or which would reasonably be expected to                       

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continue for, a sustained period and HLR has determined in good faith that the  
acquisition of additional Equity Securities is reasonably necessary to protect  
its investment in the Surviving Corporation.                                    

From the first anniversary of the Effective Time until the third anniversary
of the Effective Time, the Stockholder Agreement requires that HLR not, and use 
its best efforts to cause each member of the HLR Group not to, directly or      
indirectly, purchase or otherwise acquire, or propose or offer to purchase or   
acquire, any Equity Securities of the Surviving Corporation, whether by tender  
offer, market purchase, privately negotiated purchase, merger or otherwise,     
except that the HLR Group may acquire Equity Securities to the extent that,     
after giving effect thereto, the HLR Group Interest would not exceed 75%.       

However, the Stockholder Agreement permits the HLR Group to acquire Equity  
Securities, notwithstanding the fact that, after giving effect thereto, the HLR 
Group Interest would exceed 75%, if the HLR Group (or a member or affiliate     
thereof, as the case may be) offers, prior to consummating such purchase, to    
purchase all outstanding Equity Securities, and holders of Equity Securities    
representing more than 50% of the outstanding Equity Securities (excluding any  
Equity Securities held by the HLR Group) accept such offer, and the HLR Group   
(or a member or affiliate thereof, as the case may be) consummates such         
purchase.                                                                       

Transfers of Equity Securities. The Stockholder Agreement provides that HLR 
will not sell or otherwise transfer any Equity Securities, except pursuant to a 
Public Offering, Rule 144 or Rule 144A or any other transaction in compliance   
with the Securities Act, state securities laws and other applicable laws. HLR   
has agreed to cause any Person who acquires 30% of the Total Voting Power from  
HLR to agree to be bound by the provisions of the Stockholder Agreement         
whereupon such Person will become entitled to all of the rights and benefits of 
HLR under the Stockholder Agreement.                                            

REGISTRATION RIGHTS                                                             

 Demand Registrations. The Stockholder Agreement provides that, HLR may make a
written request to the Surviving Corporation for registration under the         
Securities Act of Registrable Securities (as defined in the Stockholder         
Agreement) (each, a "Demand Registration"). The obligations of the Surviving    
Corporation to register such Registrable Securities are subject to the          
following conditions: (i) the Registrable Securities requested to be registered 
must (unless reduced pursuant to the provisions of the section of the           
Stockholder Agreement entitled "Reduction of Offering"), constitute at least 2% 
of the equivalent outstanding Equity Securities or at least 5% of the           
Registrable Securities at such time, whichever amount is smaller, (ii) there    
shall not have been consummated more than one offering pursuant to a Demand     
Registration within the preceding 12 month period, (iii) if the HLR Group       
Interest is less than 30% but more than 20%, no more than three other Demand    
Registrations shall have been effected after the date on which the HLR Group    
Interest was reduced to less than 30%, if the HLR Group Interest is less than   
20% but more than 10%, no more than two other Demand Registrations shall have   
been effected after the date on which the HLR Group Interest was reduced to     
less than 20% and if the HLR Group Interest is less than 10%, no more than one  
other Demand Registration shall have been effected after the date on which the  
HLR Group Interest was reduced to less than 10%, (iv) HLR shall conform to all  
applicable requirements of the Securities Act and the Exchange Act with respect 
to the offering and sale of securities and advise each underwriter, broker or   
dealer through which any of the Registrable Securities are offered that the     
Registrable Securities are part of a distribution that is subject to the        
prospectus delivery requirements of the Securities Act and (v) HLR shall use    
all reasonable efforts to effect as wide a distribution of such Registrable     
Securities as is reasonably practicable, but in no event will any sale of       
Registrable Securities be made knowingly to any Person who beneficially owns 5% 
or more of the Total Voting Power.                                              

In addition, the Surviving Corporation's obligations pursuant to any Demand 
Registration will be suspended if (i) the fulfillment of such obligations would 
require the Surviving Corporation to make a disclosure that would, in the       
reasonable good faith and judgment of the Board of Directors, be materially     

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detrimental and premature, (ii) the Surviving Corporation has filed a           
registration statement with respect to Equity Securities to be distributed in a 
Public Offering and it is advised by its lead or managing underwriter that an   
offering by HLR of the Registrable Securities would materially adversely affect 
the distribution of such Equity Securities or (iii) the fulfillment of such     
obligations would require the Surviving Corporation to prepare audited          
financial statements not required to be prepared for the Surviving Corporation  
to comply with its obligations under the Exchange Act as of any date not        
coincident with the last day of any fiscal year of the Surviving Corporation.   
The obligations of the Surviving Corporation, however, will be reinstated (x)   
in the case of clause (i) above, upon the making of such disclosure (or, if     
earlier, when such disclosure would either be no longer necessary for the       
fulfillment of such obligations or no longer detrimental), (y) in the case of   
clause (ii) above, upon the conclusion of any period during which the Surviving 
Corporation would not, pursuant to the terms of its underwriting arrangements,  
be permitted to sell securities of the Surviving Corporation for its own        
account and (z) in the case of clause (iii) above, as soon as it would no       
longer be necessary to prepare such financial statements to comply with the     
Exchange Act.                                                                   

Piggyback Registration. The Stockholder Agreement provides that, if the     
Surviving Corporation proposes to file a registration statement under the       
Securities Act with respect to an offering of any securities of the Surviving   
Corporation for the Surviving Corporation's own account (other than a           
registration statement on Form S-4 or S-8 (or any substitute that may be        
adopted by the SEC) or the account of any holder of Equity Securities other     
than any member of the HLR Group (each, an "Other Holder") (other than Mafco or 
any of its Affiliates), then the Surviving Corporation will give written notice 
of such proposed filing to HLR as soon as practicable, and such notice will     
offer HLR the opportunity to register such number of shares of, or Warrants     
constituting, Registrable Securities as HLR may request on the same terms and   
conditions as those applicable to the securities of the Surviving Corporation   
or of the Other Holders in the offering (a "Piggyback Registration"). Upon the  
written request of HLR made within ten days after the receipt of notice from    
the Surviving Corporation, which request shall specify the amount and types of  
Registrable Securities intended to be issued or disposed of, the Surviving      
Corporation will use its best efforts, subject to certain conditions set forth  
in the Stockholder Agreement, to effect the registration under the Securities   
Act of all such Registrable Securities which the Surviving Corporation has been 
so requested to register by HLR, to the extent requisite to permit the          
disposition of such Registrable Securities to be so registered. In connection   
with any Demand Registration or any Piggyback Registration, the Surviving       
Corporation will pay all Registration Expenses (as defined in the Stockholder   
Agreement) of HLR and Roche.                                                    

Rule 144 and Rule 144A. The Surviving Corporation will agree to file        
necessary reports with the SEC and to take other action as reasonably requested 
by HLR to enable it to sell its the Surviving Corporation securities pursuant   
to Rule 144 under the Securities Act. If HLR desires to transfer any of its     
securities of the Surviving Corporation pursuant to Rule 144A, the Stockholder  
Agreement requires the Surviving Corporation to promptly, upon request by HLR,  
use its best efforts to facilitate the consummation of such Rule 144A           
transaction in accordance with the requirements of such rule and with such      
request and will take all necessary or appropriate actions in connection        
therewith. If the HLR Group Interest is less than 30%, then the Surviving       
Corporation will only be required to facilitate the consummation of such Rule   
144A transaction according to the following provisions: (i) if the HLR Group    
Interest is less than 30% but more than 20%, no more than three other Rule 144A 
transactions will have been effected after the date on which the HLR Group      
Interest was reduced to less than 30%, (ii) if the HLR Group Interest is less   
than 20% but more that 10%, no more than two other Rule 144A transactions will  
have been effected after the date on which the HLR Group Interest was reduced   
to less than 20% and (iii) if the HLR Group Interest is less than 10%, no more  
than one other Rule 144A transaction will have been effected after the date on  
which the HLR Group Interest was reduced to less than 10%. the Surviving        
Corporation has agreed to pay all expenses in connection with Rule 144A         
transactions by HLR to the same extent as the Surviving Corporation would be    
required to pay Registration Expenses.                                          

Information. In the Stockholder Agreement, the Surviving Corporation will   
agree to provide certain information to HLR on a periodic basis and as          
requested.                                                                      

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No Inconsistent Agreements. Under the Stockholder Agreement, the Surviving  
Corporation will agree that it will not enter into any agreements with respect  
to its securities which would be inconsistent with the rights granted to HLR,   
the HLR Group and the HLR Directors in the Stockholder Agreement.               

TERMINATION                                                                     

The provisions of the Stockholder Agreement will terminate if the HLR Group 
Interest is less than 30%, provided, however, that the provisions relating to   
the obligation of the Surviving Corporation to furnish certain information      
will not terminate until such time as the HLR Group Interest is less than 20%,  
certain provisions regarding Board and Board committee membership and           
amendment of the Surviving Corporation's Certificate of Incorporation and by-   
laws will not terminate until such time as the HLR Group Interest is less than  
10%, the registration rights will not terminate until such time as the HLR      
Group does not own any Registrable Securities (except the provisions relating   
to piggyback registrations, which will terminate at such time as the HLR Group  
Interest is less that 20%) and certain miscellaneous provisions will not        
terminate until all other provisions of the Stockholder Agreement have          
terminated. Furthermore, in the event that the HLR Group Interest exceeds 50%,  
the provisions pertaining to corporate governance will terminate, but will be   
reinstated, at the request of HLR, if the HLR Group Interest is later reduced   
below 50%.                                                                      

MANAGEMENT AND OPERATIONS AFTER THE MERGER  

DIRECTORS AND EXECUTIVE OFFICERS OF THE SURVIVING CORPORATION                   

The following table sets forth certain information as of December 31, 1994, 
concerning certain persons who are expected to serve as directors and           
executive officers of the Surviving Corporation as of the Effective Time. In    
addition, in accordance with the Merger Agreement and the Stockholder           
Agreement, it is also expected that three persons (mutually acceptable to a     
majority of the members of the NHL Board in office immediately preceding the    
Effective Time and to HLR) will be designated prior to the Effective Time to    
serve as independent directors (which the Stockholder Agreement generally       
defines as persons who are not officers, employees or affiliates of the         
Surviving Corporation or HLR) beginning immediately after the Effective Time.   
See "THE MERGER AGREEMENT--The Surviving Corporation" for a description of the  
provisions of the Merger Agreement relating to the appointment of the           
directors and executive officers of the Surviving Corporation.                  

                                                        [Enlarge/Download Table]

          NAME           AGE                         POSITION                        
          ----           ---                         --------                        
                                                                                     
James R. Maher..........  45 Chairman of the Board and Director                      
Thomas P. Mac Mahon.....  48 Vice Chairman of the Board and Director                 
Jean-Luc Belingard......  46 Director                                                
Dr. James B. Powell.....  56 Director, President and Chief Executive Officer         
Timothy J. Brodnik......  47 Executive Vice President, Sales and Marketing           
Haywood D. Cochrane,                                                                 
Jr. ....................  45 Executive Vice President, Chief Financial Officer       
David C. Flaugh.........  47 Executive Vice President, Chief Operating Officer       
John F. Markus..........  43 Executive Vice President, Corporate Compliance          
Bradford T. Smith.......  41 Executive Vice President, General Counsel and Secretary 
Ronald B. Sturgill......  58 Executive Vice President, Information Systems/Operations
David C. Weavil.........  43 Executive Vice President, Chief Administrative Officer  
Robert E. Whalen........  52 Executive Vice President, Human Resources               
Wesley R. Elingburg.....  38 Senior Vice President, Finance                          

James R. Maher. Mr. Maher has been President and Chief Executive Officer and
a Director of NHL since December 1992. Mr. Maher was Vice Chairman of The       
First Boston Corporation from 1990 to 1992                                      

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and Managing Director of The First Boston Corporation from 1982 to 1992. Mr.    
Maher also is a director of First Brands Corporation.                           

Thomas P. Mac Mahon. Mr. Mac Mahon has served as Senior Vice President of   
Roche since 1993 and President of Roche Diagnostics Group and a director and    
member of the Executive Committee of Roche since 1988. Prior to assuming the    
office of Senior Vice President of Roche, Mr. Mac Mahon served as Vice          
President from 1982 to 1988. In May 1994 Mr. Mac Mahon was appointed to serve   
one-year terms as director of RBL, HLR, Roche Diagnostic Systems, Inc., Roche   
Molecular Systems, Inc., Medlab of South Georgia, Inc., KCCL, Inc., Medical     
Laboratory Associates, Inc., and Sacramento Clinical Laboratory, Inc. As Senior 
Vice President of Roche and President of Roche Diagnostics Group, Mr. Mac Mahon 
is responsible for the management of all United States operations of the        
diagnostic businesses of Roche. Mr. Mac Mahon is also currently a member of the 
Worldwide Diagnostics Executive Committee of Roche Holding Ltd.                 

Jean-Luc Belingard. Mr. Belingard is Director General of the Diagnostics    
Division and member of the Executive Committee of F. Hoffmann-La Roche Ltd,     
Basel, Switzerland. He joined Hoffmann-La Roche in 1982, and held various       
positions prior to being named to his current positions in 1990. His current    
responsibilities include the management of the worldwide diagnostic business of 
Hoffmann-La Roche. Mr. Belingard is a director of Perkin-Elmer Corporation,     
Norwalk, Connecticut, a Foreign Trade Advisor to the French Government and a    
member of the Advisory Council of the Banque de France. He also serves as Vice  
President of the European Diagnostic Manufacturers Association.                 

Dr. James B. Powell. Dr. Powell has served as President of RBL since 1982.  
From 1979 through 1982, Dr. Powell served as President of Biomedical Reference  
Laboratories, a publicly-held company, which was acquired by HLR in 1982, and   
from 1969 through 1979 Dr. Powell served as President of Biomedical             
Laboratories, the privately-held predecessor of Biomedical Reference            
Laboratories. As President of RBL, Dr. Powell is responsible to the Board of    
Directors for supervision of the ongoing operations of RBL, including           
development and implementation of strategic and long-term plans. Dr. Powell is  
a medical doctor and became board certified in anatomic and clinical pathology  
in 1969.                                                                        

Timothy J. Brodnik. Mr. Brodnik joined NHL in 1971. He was appointed        
Executive Vice President of NHL in 1993 and was Senior Vice President from 1991 
to 1993 and Vice President-Division Manager commencing in 1979. Mr. Brodnik     
oversees NHL's sales operations and major regional laboratories in Florida and  
North Carolina.                                                                 

Haywood D. Cochrane, Jr. Mr. Cochrane has been an executive of NHL since the
Allied Acquisition. Mr. Cochrane was President, Chief Executive Officer and a   
director of Allied from its formation in 1989 until the Allied Acquisition. He  
had previously been employed since 1977 by RBL, and its predecessor company     
Biomedical Reference Laboratories, Inc. where he held a number of positions     
including most recently Senior Vice President and Chief Operating Officer. He   
also served as a Vice President of Roche. Mr. Cochrane also serves as a         
director of First Union National Bank of Tennessee and JDN Realty Corp.         

David C. Flaugh. Mr. Flaugh has been Chief Operating Officer and Senior     
Executive Vice President of NHL since 1993. He has been acting Chief Financial  
Officer and Treasurer of NHL since July 1994. Mr. Flaugh was Vice President-    
Managing Director, Chief Financial Officer and Treasurer of NHL from 1991 to    
1993. From 1988 to 1991, Mr. Flaugh was Vice President-Finance. From 1984 to    
1988, Mr. Flaugh was Vice President and Controller.                             

John F. Markus. Mr. Markus joined NHL in 1990. He was appointed Executive   
Vice President and Director of Compliance in 1993 and was Vice President-       
Managing Director from 1990 to 1993. Previously, Mr. Markus was an attorney in  
the law firm of Akin, Gump, Strauss, Hauer and Feld in Washington D.C. for more 
than five years and was a partner in such firm since 1989.                      

Bradford T. Smith. Mr. Smith has served as Assistant General Counsel of HLR,
Division Counsel of RBL, and Assistant Secretary and member of RBL's Senior     
Management Committee since 1988. As Division                                    

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Counsel of RBL, Mr. Smith established the on-site legal function at RBL's       
corporate headquarters in 1988 and since then his duties have included the      
general management of the RBL Law Department. He is also responsible for        
providing legal advice to RBL's management in connection with regulatory        
compliance, corporate law, litigation, antitrust, contracts, acquisitions and   
divestitures and the legal implications of major strategic, operational and     
policy issues. Mr. Smith has served as Assistant Secretary of HLR since 1989    
and as an Assistant Vice President of HLR during 1992 and 1993.                 

Ronald B Sturgill. Mr. Sturgill has served as Senior Vice President,        
Administration of RBL since 1987. From 1986 to 1987, he served as Senior Vice   
President, North-central Regional Operations of RBL. Mr. Sturgill served as     
RBL's Vice President of Laboratories and Human Resources from 1982 until 1986.  
Mr. Sturgill's responsibilities as Senior Vice President, Administration        
include the supervision of Information Systems, Human Resources, Sales Support  
and Training.                                                                   

David C. Weavil. Mr. Weavil has served as Senior Vice President and Chief   
Operating Officer of RBL since 1989. From 1988 through 1989, Mr. Weavil was     
Regional Senior Vice President-Mid-Atlantic of RBL. Prior to that, he served as 
Senior Vice President and Chief Financial Officer of RBL from 1982. Mr.         
Weavil's current responsibilities as Chief Operating Officer of RBL include the 
supervision of operating activities involving laboratory testing, sales,        
logistics and certain administrative activities.                                

Robert E. Whalen. Mr. Whalen joined NHL in 1976. He was named Executive Vice
President of NHL in 1993 and was Senior Vice President from 1991 to 1993 and    
Vice President-Administration commencing 1985. From 1979 to 1985, he was Vice   
President-Division Manager of NHL. Mr. Whalen oversees human resources,         
information systems, client service and major regional laboratories in          
California, Washington, Nevada and Utah.                                        

Wesley R. Elingburg. Mr. Elingburg has served as Senior Vice President--    
Finance and Treasurer of RBL since 1988 and Assistant Vice President of Roche   
since 1989. In such capacities, Mr. Elingburg has been responsible for the      
management of all financial functions of RBL, including financial reporting,    
analysis, strategic planning, budgeting, income tax, insurance, fleet           
administration, managed care and national accounts. Mr. Elingburg's specific    
responsibilities also include management of the RBL billing operation, and      
other specific finance areas such as general ledger and accounts payable.       

OPERATIONS AFTER THE MERGER                                                     

Headquarters of the Surviving Corporation. At the Effective Time, the       
headquarters of the Surviving Corporation will be located in Burlington, North  
Carolina. However, the Surviving Corporation's office in La Jolla, California,  
is not expected to be closed in connection with the Merger and certain          
executive officers of the Surviving Corporation are expected to be based there. 

 Expected Savings of Operating Costs. The Surviving Corporation is expected to
achieve substantial savings of operating costs through the consolidation of     
certain operations and the elimination of redundant expenses. Such savings      
would be realized over time as the consolidation is completed. The Surviving    
Corporation is expected to realize approximate annualized savings of between    
$80 million to $90 million within three years following the Merger. The         
synergies expected to be realized by the Surviving Corporation would be derived 
from several sources, including an expected $25 million of savings in           
corporate, general and administrative expenses including the consolidation of   
administrative staff. Combining the NHL sales force with the RBL sales force    
where duplicate territories exist is expected to add approximately $9 million   
of synergies. Operational savings are expected to result in approximately $55   
million of synergies. These include closing overlapping laboratories and other  
facilities and savings to be realized from additional buying power by the       
larger Surviving Corporation. It is also expected that the Surviving            
Corporation will realize approximately $5 million of savings relating to        
employee benefits as a result of expected changes to certain benefit            
arrangements. These estimated savings are anticipated to be partially offset by 
a loss of existing accounts during the conversion process in the amount of      
approximately $4 million. Realization of improvements in profitability is       
dependent, in part, on the extent to which the revenues of the constituent      
companies are maintained and will be influenced by many factors, including      
factors outside the control of the Surviving Corporation. There can be no       
assurance that the estimated cost savings described above will be realized or   
achieved in a timely manner or that improvements, if any, in profitability will 
be achieved or that such savings will not be offset by increases in other       
expenses. See "CERTAIN CONSIDERATIONS--Potential Difficulty of the Integration  
of NHL and RBL".                                                                

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RESTRUCTURING COSTS OF NHL                                                      

Restructuring costs of approximately $84 million are expected to be recorded
by the Surviving Corporation at the Effective Time in connection with the       
Merger. These costs will reflect the write-off of deferred financing costs      
related to the repayment of NHL's revolving credit facility and term loan       
facility entered into in connection with the Allied Acquisition Financing and   
the creation of reserves for severance and benefit costs, costs for office      
facilities expected to be closed, vacant space costs, systems conversion costs  
and other restructuring expenses of NHL associated with the Merger.             

LIQUIDITY AND CAPITAL RESOURCES AFTER THE MERGER                                

The aggregate cash consideration of approximately $474.7 million to be paid 
to stockholders of NHL in the Merger will be financed from three sources: the   
NHL Cash Contribution of approximately $288.0 million to be made out of the     
proceeds of borrowings by NHL in an equal amount, the HLR Cash Contribution in  
the amount of approximately $135.7 million and the Roche Warrant Consideration  
in the amount of approximately $51.0 million.                                   

NHL has obtained a commitment from Credit Suisse for a senior unsecured     
credit facility in an aggregate amount of $1.25 billion, which will include an  
$800.0 million amortizing senior term loan facility and a $450.0 million        
revolving credit facility, to refinance NHL's existing indebtedness and to      
finance the NHL Cash Contribution. The expected material terms and conditions   
of the credit facility are described under "PLAN OF FINANCING--Description of   
Bank Facility".                                                                 

In connection with the Merger, RBL expects that approximately $150.0 million
of its existing indebtedness will be assigned by RBL and HLR to another entity  
in the Roche Group (other than a subsidiary of RBL). Intercompany indebtedness  
of RBL of approximately $85.1 million is expected to be eliminated in           
connection with the Merger through an equity contribution by HLR. See "PLAN OF  
FINANCING--Description of Bank Facility".                                       

Based on the expected terms of the Credit Agreement, aggregate principal    
payments are expected to be approximately $16.7 million, $70.8 million, $112.5  
million, $150.0 million and $162.5 million, respectively, in the five fiscal    
years subsequent to the Merger. Interest payments under the Credit Agreement    
are estimated to be $50.0 million to $60.0 million in the 1995 period           
subsequent to the Merger. Such payments in the following four fiscal years are  
estimated to decline from approximately $85.0 million in 1996 to approximately  
$50.0 million in 1999. There can be no assurance, however, that the terms of    
the definitive Credit Agreement will not vary from these described above or     
that the interest payments made under the Credit Agreement (which will reflect  
fluctuating interest rates and outstanding principal amounts) will not vary     
significantly from these estimated above.                                       

The ability of the Surviving Corporation to meet its debt service           
requirements and operating cash needs will be dependent, in part, on the        
successful integration of NHL and RBL. The anticipated benefits of the Merger   
might not be achieved unless the operations of RBL are successfully combined    
with those of NHL in a timely manner. It is currently estimated that the        
integration of the operations of NHL and RBL could take up to three years to    
accomplish. See "CERTAIN CONSIDERATIONS--Potential Difficulty of the            
Integration of NHL and RBL".                                                    

 NHL expects that its cash needs for working capital, capital expenditures and
the cash costs of the restructuring and operations of the Surviving Corporation 
after the Merger will be met by its cash flow from operations and borrowings    
under the revolving credit facility. During the five fiscal years following the 
Merger, the Surviving Corporation is expected to have unused borrowing capacity 
under the Revolving Credit Facility of between $100.0 million and $225.0        
million per year. However, there can be no assurance that the Surviving         
Corporation's actual unused borrowing capacity will not vary significantly from 
the amounts estimated above.                                                    

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Subsequent to the Merger, the Surviving Corporation is expected to derive   
approximately 31% of its net sales from tests performed for beneficiaries of    
Medicare and Medicaid programs. During 1993, provisions were included in OBRA   
'93 that reduced Medicare reimbursement schedules by lowering payments under    
the fee schedule methodology from 88% to 84% of the 1984 national median,       
effective January 1, 1994, and from 84% to 80% of the national median,          
effective January 1, 1995. A further reduction in payments to 76% of the 1984   
national median will become effective on January 1, 1996. OBRA '93 also         
eliminated, for 1994 and 1995, the provision for annual fee schedule increases  
based upon the consumer price index.                                            

The health care industry is undergoing significant change as third party    
payors, such as Medicare and Medicaid and insurers, increase their efforts to   
control the cost of health care services. In an effort to address the problem   
of increasing health care costs, legislation has been proposed at both the      
Federal and state levels to further regulate health care delivery in general    
and clinical laboratories in particular and legislation has been enacted that   
reduces the amounts reimbursable to NHL and RBL and other independent clinical  
laboratories under Medicare and Medicaid. NHL and RBL cannot predict the effect 
health care reform, if enacted, or future changes in Federal, state and local   
regulations affecting governmental reimbursement for clinical laboratory        
testing may have on the Surviving Corporation's business, and there can be no   
assurance that any such reforms would not have a material adverse effect on the 
Surviving Corporation. See "CERTAIN CONSIDERATIONS--Limitations on Third Party  
Payor Reimbursement of Health Care Costs".                                      

It is expected that the Surviving Corporation's capital expenditures will be
approximately $80 to $90 million in fiscal year 1995 following the Merger and   
approximately $65 to $80 million in each of the four fiscal years thereafter in 
order to integrate NHL and RBL, accommodate expected growth, further automate   
laboratory processes and improve efficiency.                                    

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MARKET PRICES AND DIVIDENDS 

NHL Common Stock (symbol: NH) is listed for trading on the NYSE. The        
following table sets forth, for the periods indicated, the high and low sales   
prices per share of NHL Common Stock on the NYSE Composite Transactions Tape    
and the quarterly cash dividends per share paid by NHL on such shares. The      
common stock, no par value, of RBL is not publicly traded, and no comparative   
market price data is available.                                                 

                                                                [Download Table]

                                                      NHL            CASH   
                                                    COMMON         DIVIDENDS
                                                     STOCK         PER SHARE
                                                   ------------    OF COMMON
                                                   HIGH    LOW       STOCK  
                                                   ----    ----    ---------
                                                                            
1992                                                                        
  First Quarter..................................  $29 1/4 $24 1/4   $.07   
  Second Quarter.................................   25 1/2  18 7/8    .08   
  Third Quarter..................................   24 3/8   18       .08   
  Fourth Quarter.................................   25 1/8  15 5/8    .08   
1993                                                                        
  First Quarter..................................   18 1/4  12 7/8    .08   
  Second Quarter.................................   19 1/2  16 1/8    .08   
  Third Quarter..................................   18 1/2  14 1/2    .08   
  Fourth Quarter.................................   16 3/8   12       .08   
1994                                                                        
  First Quarter..................................   15 1/4  12 7/8    .08   
  Second Quarter.................................   13 3/4  10 5/8    --    
  Third Quarter..................................   13 3/8  10 7/8    --    
  Fourth Quarter.................................   15 3/4  11 3/8    --    
1995                                                                        
                                                     14                     
  First Quarter (through March 29, 1995).........   5/8     12 5/8    --    

The following table sets forth the last reported sales prices per share of  
the NHL Common Stock on the NYSE Composite Transactions Tape on December 13,    
1994, the last trading day before announcement of the Merger Agreement, and on  
March 29, 1995, the latest trading day for which information was practicably    
available before the printing of this Proxy Statement/Prospectus:               

                                                                [Download Table]

                                                                     NHL  
                                                                   COMMON 
                                                                    STOCK 
                                                                   -------
                                                                          
December 13, 1994................................................. $ 12.00
March 29, 1995.................................................... $14.625

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UNAUDITED PRO FORMA CONDENSED 

COMBINED CONSOLIDATED FINANCIAL INFORMATION 

 The unaudited pro forma condensed combined consolidated statement of earnings
of NHL for the year ended December 31, 1994 present the consolidated operating  
results for NHL as if the Allied Acquisition, the RBL Stand-Alone Adjustments   
and the Merger had all occurred as of January 1, 1994. The accompanying         
unaudited pro forma condensed combined consolidated balance sheet as of         
December 31, 1994 gives effect to these transactions as if they had all         
occurred on December 31, 1994.                                                  

 The unaudited pro forma condensed combined consolidated financial information
should be read in conjunction with the accompanying notes, the historical       
consolidated financial statements and notes thereto of NHL incorporated by      
reference herein, the historical consolidated financial statements and notes    
thereto of RBL included herein and the historical consolidated financial        
statements of Allied as of March 31, 1994 and for the three months then ended   
contained in Allied's Quarterly Report on Form 10-Q for the quarterly period    
ended March 31, 1994.                                                           

THE UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
ARE PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND ARE NOT NECESSARILY INDICATIVE 
OF THE RESULTS OF OPERATIONS OR FINANCIAL CONDITION THAT WOULD HAVE BEEN        
ACHIEVED HAD THE ALLIED ACQUISITION, THE RBL STAND-ALONE ADJUSTMENTS AND THE    
MERGER ACTUALLY OCCURRED AS OF THE DATES INDICATED OR OF THE FUTURE RESULTS OF  
OPERATIONS OR FINANCIAL CONDITION OF NHL. The pro forma adjustments are based   
upon available information and certain assumptions that NHL currently believes  
are reasonable in the circumstances. If these transactions are consummated,     
NHL's financial statements will reflect their effects only from the date each   
such transaction occurs. The pro forma adjustments are applied to the           
historical consolidated financial statements of NHL, RBL and Allied to account  
for the Allied Acquisition and the Merger using the purchase method of          
accounting. Under purchase accounting, the total purchase cost of Allied was    
allocated and for RBL will be allocated to the assets and liabilities acquired  
based on their relative fair values as of the dates the transactions are        
closed, with any excess of the total purchase price over the fair value of the  
tangible assets acquired less the fair value of the liabilities assumed         
recorded as intangible assets. The cost allocations will be based on appraisals 
and other studies, which are not yet completed. Accordingly, the final          
allocations will be different from the amounts reflected herein. Although the   
final allocations will differ, the pro forma condensed combined consolidated    
financial information reflects NHL management's best estimate based on          
currently available information. The pro forma condensed combined consolidated  
balance sheet data as of December 31, 1994 reflects the effect of a             
restructuring charge of approximately $84 million expected to be recorded by    
the Surviving Corporation at the Effective Time in connection with the Merger.  
The pro forma condensed combined consolidated statement of earnings data does   
not reflect the effect of this restructuring charge as it is not expected to    
have a continuing effect on the results of operations of the Surviving          
Corporation. See "MANAGEMENT AND OPERATIONS AFTER THE MERGER--Restructuring     
Costs of NHL".                                                                  

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PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF EARNINGS 

YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                HISTORICAL                  PRO FORMA ADJUSTMENTS                      
                          ------------------------  ---------------------------------------            
                                                                     ALLIED ACQUISITION                
                                                                       AND THE MERGER                  
                                                                   ------------------------            
                                                         RBL        FINANCING                          
                                                     STAND-ALONE       AND        PURCHASE    PRO FORMA
                          NHL(6)  ALLIED(6)  RBL    ADJUSTMENTS(1) ACQUISITIONS  ACCOUNTING   COMBINED 
                          ------  --------- ------  -------------- ------------  ----------   ---------
                                                                                                       
Net sales...............  $872.5    $90.3   $729.8                                            $1,692.6 
Cost of sales...........   597.0     62.2    498.0                                 $(4.1)(4)   1,153.1 
                          ------    -----   ------                                 -----      -------- 
  Gross profit..........   275.5     28.1    231.8                                   4.1         539.5 
Selling, general and                                                                                   
 administrative                                                                                        
 expenses...............   149.3     18.1    152.7      $(3.8)                       --          316.3 
Amortization of                                                                                        
 intangibles and                                                                                       
 other assets...........    16.3      1.7     13.9        --                        (2.4)(4)      29.5 
Gain on disposition of                                                                                 
 regional assets........     --      (0.7)     --         --                         --           (0.7)
                          ------    -----   ------      -----                      -----      -------- 
  Operating income......   109.9      9.0     65.2        3.8                        6.5         194.4 
Other income (expenses):                                                                               
  Litigation settlement                                                                                
   and related                                                                                         
   expenses.............   (21.0)     --       --         --                         --          (21.0)
  Other gains and                                                                                      
   expenses, net........     --       --       0.9        --                         --            0.9 
  Investment income.....     1.0      0.1      --         0.2                        --            1.3 
  Interest expense......   (34.5)    (1.0)   (15.5)      13.0         $(15.6)(2)                 (50.4)
                                                                         3.2 (3)                       
                          ------    -----   ------      -----         ------       -----      -------- 
  Earnings before income                                                                               
   taxes................    55.4      8.1     50.6       17.0          (12.4)        6.5         125.2 
Provision for income                                                                                   
 taxes..................    25.3      3.2     22.7        6.8           (5.7)(5)     1.9 (5)      54.2 
                          ------    -----   ------      -----         ------       -----      -------- 
  Net earnings..........  $ 30.1    $ 4.9   $ 27.9      $10.2         $ (6.7)      $ 4.6      $   71.0 
                          ======    =====   ======      =====         ======       =====      ======== 
Net earnings per common                                                                                
 share (7)..............  $ 0.36                                                              $   0.58 
                          ======                                                              ======== 
Weighted average common                                                                                
 shares                                                                                                
 outstanding (millions)                                                                                
 (7)....................    84.8                                                                 122.9 
                          ======                                                              ======== 

See accompanying Notes to Pro Forma Condensed Combined Consolidated Statement 
of Earnings 

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NOTES TO PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF EARNINGS
(DOLLARS IN MILLIONS) 

(1) Reflects the RBL Stand-Alone Adjustments, which represent adjustments to    
reflect RBL's financial position and results of operations as if it had 
   been a stand-alone entity, rather than a subsidiary of HLR. The adjustments
  primarily consist of eliminating certain intercompany charges for services
that RBL would no longer require from the Roche Group (net of the costs 
  that RBL would have incurred to obtain such services if it had been stand-
alone entity), eliminating certain debt which will be eliminated as a   
liability of RBL at or prior to the Merger and eliminating intercompany 
accounts, other than current trade payables.                            

(2) In June 1994, in connection with the Allied Acquisition, a subsidiary of    
NHL obtained the Allied Acquisition Financing (in an aggregate principal
  amount of $585.0 million) to refinance existing indebtedness of NHL and to
  finance the Allied Acquisition. The Allied Acquisition Financing, Allied's
7.375% Convertible Senior Subordinated Notes due 2006 (in an aggregate  
 principal amount of $24.0 million), all other outstanding indebtedness of
NHL and the indebtedness of RBL not assumed by HLR pursuant to the RBL  
Stand-Alone Adjustments (in an aggregate principal amount of $50.3) are 
 assumed, for the purpose of the Pro Forma Condensed Combined Consolidated
Statement of Earnings, to have been refinanced, pursuant to borrowings  
   under the Bank Facility, at the beginning of the applicable period. The pro
forma adjustment to interest expense (based on the interest rate        
assumptions shown below) reflects the following:                        

                                                                [Download Table]

                                                            YEAR ENDED    
                                                         DECEMBER 31, 1994
                                                         -----------------
                                                                          
Interest on indebtedness:                                                 
 Term Loan Facility.....................................      $(37.5)     
 Revolving Credit Facility..............................        (6.7)     
Facility fee on the Revolving Credit Facility...........        (0.6)     
Amortization of deferred financing costs................        (2.3)     
Less historical amounts on NHL indebtedness                               
 assumed to be repaid:                                                    
  Interest expense......................................        29.5      
  Commitment fees.......................................         0.5      
  Amortization of deferred financing costs..............         1.5      
                                                              ------      
                                                              $(15.6)     
                                                              ======      

In calculating interest expense, the interest rate assumptions were based on
the terms of the draft of the Credit Agreement. For the applicable periods, 
  such interest rates (which are subject to final acceptance by the lenders) are
  based on the Eurodollar Rate, as defined in the draft of the Credit Agreement,
plus 0.375% for the Term Loan Facility and 0.25% for the Revolving Credit   
Facility, as follows:                                                       

                                                                [Download Table]

                                                            YEAR ENDED    
                                                         DECEMBER 31, 1994
                                                         -----------------
                                                                          
Term Loan Facility......................................       4.682%     
Revolving Credit Facility...............................       4.557%     
Facility fee on the Revolving Credit Facility...........       0.125%     

An increase or decrease in the interest rate of one-quarter of one percent  
(0.25%) with respect to the pro forma debt capitalization of NHL would      
increase or decrease interest expense as follows:                           

                                                                [Download Table]

                                                            YEAR ENDED    
                                                         DECEMBER 31, 1994
                                                         -----------------
                                                                          
Term Loan Facility......................................       $2.0       
Revolving Credit Facility...............................        0.4       

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(3) Reflects the elimination of the interest expense attributable to $24.0 of   
Allied's 7.375% Convertible Senior Subordinated Notes due December 15,  
2006. In addition, reflects the elimination of interest expense         
 attributable to RBL debt not assumed by HLR of $50.3, which is assumed to
be refinanced with proceeds from the Term Loan Facility.                

(4) The Allied Acquisition was accounted for under the purchase method of       
   accounting. The Merger will also be accounted for under the purchase method
 of accounting. Pro forma purchase accounting adjustments, which take into
account the revaluation of the depreciable basis of the fixed assets of 
both entities, are provided below:                                      

                                                                [Download Table]

                                                              YEAR ENDED 
                                                             DECEMBER 31,
                                                                1994(A)  
                                                             ------------
                                                                         
Allied, RBL and NHL:                                                     
  Reduction in depreciation and amortization of leasehold                
   improvements expense.....................................    $(4.1)   
Allied:                                                                  
  Elimination of preacquisition intangible asset                         
   amortization.............................................     (1.7)   
  Allied Acquisition intangible asset amortization..........      2.9    
RBL:                                                                     
  Elimination of pre-Merger intangible asset amortization...    (13.9)   
  Merger intangible asset amortization......................     10.3    
                                                                -----    
                                                                $(6.5)   
                                                                =====    

For purposes of determining the pro forma amortization of intangible        
assets, NHL has estimated that the intangible assets of Allied consist of   
goodwill of $162.5 and other intangible assets of $51.9. The amortization   
periods for these assets are between 3 and 40 years. In addition, NHL has   
estimated that the intangible assets of RBL consist of goodwill of $257.2,  
customer lists of $73.4 and product technology of $3.0. The amortization    
periods for these assets are estimated to be 40 years, 25 years and 3       
years, respectively. The final cost allocations for both Allied and RBL     
will be based on appraisals and other studies which are not yet completed.  
--------                                                                    
(a) Reflects net increase (decrease) for Allied for the period from January 
1, 1994 to June 22, 1994.                                                   

(5) Reflects the change in the provision for income taxes as a result of the    
 pro forma adjustments set forth under the columns "Allied Acquisition and
the Merger". Such tax adjustments were based on the historical statutory
tax rates used for NHL's consolidated financial statements.             

(6) The data for NHL include Allied's results of operations from June 23, 1994  
through December 31, 1994. Data presented for Allied include results of 
operations through June 22, 1994.                                       

(7) Pro forma net earnings per common share is computed by dividing pro forma   
 net earnings by NHL's historical weighted average number of common shares
outstanding after giving effect to (a) the NHL Share Conversion, (b) the
   issuance of approximately 61,341,742 shares of NHL Common Stock at December
31, 1994 to HLR in connection with the Merger and (c) the issuance of   
  559,092 shares of NHL Common Stock at December 31, 1994 in connection with
the cancelation of all NHL Employee Stock Options.                      

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PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET 
DECEMBER 31, 1994 
(DOLLARS IN MILLIONS) 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                         PRO FORMA ADJUSTMENTS                                
                                           ------------------------------------------------------             
                            HISTORICAL                                THE MERGER                              
                          ---------------                 ---------------------------------------             
                                                RBL        FINANCING                      NHL                 
                                            STAND-ALONE       AND         PURCHASE       SHARE       PRO FORMA
                            NHL     RBL    ADJUSTMENTS(1) ACQUISITIONS   ACCOUNTING    CONVERSION    COMBINED 
                          -------- ------  -------------- ------------   ----------    ----------    ---------
                                                                                                              
         ASSETS                                                                                               
Current assets:                                                                                               
 Cash and cash                                                                                                
 equivalents............  $   26.8 $ 12.6     $  (6.3)       $135.7 (2)                 $  (5.8)(7)  $   33.1 
                                                              344.1 (9)                  (474.7)(6)           
                                                              (50.3)(3)                    51.0 (8)           
 Accounts receivable,                                                                                         
 net....................     205.4  159.8         --            --                          --          365.2 
 Inventories............      20.1   38.4         --            --                          --           58.5 
 Prepaid expenses and                                                                                         
 other..................       8.3   12.0         --            --                          --           20.3 
 Deferred income taxes..      29.4   12.8         --            --                          --           42.2 
 Income taxes                                                                                                 
 receivable.............       3.0    --          --            --                          --            3.0 
                          -------- ------     -------        ------                     -------      -------- 
 Total current assets...     293.0  235.6        (6.3)        429.5                      (429.5)        522.3 
Property, plant and                                                                                           
equipment, net..........     140.1  155.4         --          (24.1)(5)   $  (0.5)(4)       --          270.9 
Investment in                                                                                                 
subsidiary..............       --     --          --          539.6 (2)    (539.6)(4)       --            --  
Intangible assets, net..     551.9  109.0         --            --          224.6 (4)       --          885.5 
Other assets, net.......      27.7    4.1         --          (14.0)(5)       --            --           27.8 
                                                               10.0 (9)                                       
Deferred income taxes...       --     4.2         --            --            --            --            4.2 
                          -------- ------     -------        ------       -------       -------      -------- 
                          $1,012.7 $508.3     $  (6.3)       $941.0       $(315.5)      $(429.5)     $1,710.7 
                          ======== ======     =======        ======       =======       =======      ======== 
    LIABILITIES AND                                                                                           
  STOCKHOLDERS' EQUITY                                                                                        
Current liabilities:                                                                                          
 Current portion of debt                                                                                      
  and capital lease                                                                                           
  obligations...........  $   39.0 $235.3     $(235.1)       $ (0.2)(3)                              $   50.0 
                                                              (39.0)(9)                                       
                                                               50.0 (10)                                      
 Accounts payable.......      44.3   31.2         1.4           --                                       76.9 
 Accrued expenses and                                                                                         
 other..................      92.8   53.6       (19.4)        (26.6)(5)   $  24.0 (4)                   124.4 
 Current portion of                                                                                           
  accrued settlement                                                                                          
  expenses..............      26.7    --          --            --            --                         26.7 
                          -------- ------     -------        ------       -------                    -------- 
 Total current                                                                                                
 liabilities............     202.8  320.1      (253.1)        (15.8)         24.0                       278.0 
Revolving credit                                                                                              
facility................     213.0    --          --          (65.9)(9)       --                        147.1 
Long-term debt, less                                                                                          
current portion.........     341.0   50.1         --          459.0           --                        750.0 
                                                              (50.1)(3)                                       
                                                              (50.0)(10)                                      
Capital lease                                                                                                 
obligation..............       9.8    --          --                          --                          9.8 
Deferred income taxes...      20.6    --          --            --            --                         20.6 
Other liabilities.......      59.5   35.2         --           34.2 (5)      10.2(4)                    139.1 
Stockholders' equity:                                                                                         
 Preferred stock........       --     --          --            --            --                          --  
 Common stock...........       0.8    1.5         --            0.6 (2)      (1.5)(4)   $  (0.2)(6)       1.2 
 Additional paid-in                                                                                           
 capital................     153.5  228.8       226.4         674.7 (2)    (455.2)(4)    (474.5)(6)     398.9 
                                                                                           51.0 (8)           
                                                                                           (5.8)(7)           
Retained earnings.......      11.7 (127.4)       20.4         (45.7)(5)     107.0 (4)       --          (34.0)
                          -------- ------     -------        ------       -------       -------      -------- 
 Total stockholders'                                                                                          
 equity.................     166.0  102.9       246.8         629.6        (349.7)       (429.5)        366.1 
                          -------- ------     -------        ------       -------       -------      -------- 
                          $1,012.7 $508.3       $(6.3)       $941.0       $(315.5)      $(429.5)     $1,710.7 
                          ======== ======     =======        ======       =======       =======      ======== 

See accompanying Notes to Pro Forma Condensed Combined Consolidated Balance 
Sheet 

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NOTES TO PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)

(1) Reflects the RBL Stand-Alone Adjustments, which represent adjustments to  
 reflect RBL's financial position and results of operations as if it had
been a stand-alone entity, rather than a subsidiary of HLR. The       
adjustments primarily consist of eliminations of certain intercompany 
    charges for services that RBL would no longer require from HLR (net of the
   costs that RBL would have incurred to obtain such services if it had been
  a stand-alone entity), eliminating certain debt which will be eliminated
as a liability of RBL at or prior to the Merger and elimination of    
intercompany accounts, other than current trade payables.             
(2) Reflects the issuance in the Merger of 61,341,742 shares of NHL Common    
Stock at December 31, 1994 to HLR in exchange for all shares of common
  stock of RBL issued and outstanding. The fair market value of the shares
 of NHL Common Stock issued to HLR is based on the estimated fair market
value of NHL after giving effect to the transactions contemplated in  
connection with the Merger.                                           
(3) Reflects the repayment of $50.3 of remaining debt of RBL concurrent with  
   the Merger. This repayment will be made with proceeds of borrowings under
the Term Loan Facility.                                               
(4) Reflects the estimated allocation of the purchase price paid in the Merger
 to the net assets of RBL based upon the estimated fair market values of
such net assets.                                                      

                                                                [Download Table]
                                                                         
Estimated acquisition cost, net................................. $ 539.6 
 Less historical book value of net assets at December 31, 1994,          
 as adjusted....................................................  (349.7)
 Elimination of preacquisition intangibles......................   109.0 
 Write-down of property, plant & equipment......................     0.5 
 Other adjustments..............................................    34.2 
                                                                 ------- 
  Intangible Assets............................................. $ 333.6 
                                                                 ======= 

   NHL has estimated the value of the intangible assets acquired in the Merger
as follows: goodwill of $257.2, customer lists of $73.4 and product     
   technology of $3.0. The amortization periods for these assets are 40 years,
25 years and 3 years, respectively. The final cost allocations will be  
based on appraisals and other studies which are not yet completed.      
(5) Reflects restructuring costs of approximately $84.0 million ($45.7 million
   after-tax) which are expected to be recorded by the Surviving Corporation
at the Effective Time in connection with the Merger. These costs will 
 reflect the write-off by NHL of deferred financing costs related to the
    repayment of its existing revolving credit facility and term loan facility
  entered into in connection with the Allied Acquisition Financing and the
creation of reserves for severance and benefit costs, costs for office
  facilities expected to be closed, vacant space costs, systems conversion
   costs and other restructuring expenses of NHL associated with the Merger.
(6) Reflects the NHL Share Conversion and the issuance of 0.16308 Warrant per 
   share to purchase one share of NHL Common Stock at $22 per share (subject
to adjustments) in five years. The number of Warrants to be issued is 
    13,822,957 with an estimated value of $6.132 per Warrant (determined based
on the Roche Warrant Consideration).                                  
(7) Reflects the cancellation of all NHL Employee Stock Options for the Option
   Value Amount of which 40%, or approximately $5.8, is paid in cash and 60%
is paid in shares of NHL Common Stock, resulting in the issuance of an
additional 559,092 shares of NHL Common Stock at December 31, 1994.   
(8) Reflects the issuance of the Roche Warrants to Roche for approximately    
$51.0.                                                                
(9) Reflects borrowings of $147.1 under the Revolving Credit Facility and     
   $800.0 under the Term Loan Facility to repay an existing revolving credit
facility of $213.0 and an existing term loan of $380.0 entered into in
    connection with the Allied Acquisition Financing and borrowings to finance
   the NHL Cash Contribution. In addition, reflects the payment of estimated
financing fees and expenses of $10.0 which have been capitalized as   
   deferred financing costs and included in the caption "Other assets, net."
(10) Reflects the current portion of the Term Loan Facility in accordance with  
expected terms of the Bank Facility.                                  

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THE SHARING AND CALL OPTION AGREEMENT 

The following is a brief summary of all material provisions of the Sharing  
and Call Option Agreement. Such summary is qualified in its entirety by         
reference to the Sharing and Call Option Agreement.                             

SHARING PAYMENTS                                                                

 Definition of Sharing Payment. In the event that a termination fee has become
payable by NHL to HLR as described under "THE MERGER--Certain Fees", and NHCG   
sells, transfers, assigns or otherwise disposes of (including by conversion or  
exchange in a merger, exchange offer or the like) (any such action being a      
"transfer") any of the Stockholder Shares (as defined below), NHCG and Mafco    
Holdings Inc., jointly and severally, agree to pay to HLR an amount in cash (a  
"Sharing Payment") equal to the product of (i) the number of Stockholder Shares 
transferred by NHCG or any of the controlled affiliates of Mafco Holdings Inc.  
or NHCG and (ii) 50% of the excess, if any, of (A) the per share cash           
consideration or the per share fair market value, as the case may be, of any    
non-cash consideration received by NHCG and each such controlled affiliate as a 
result of such transfer over (B) $20.00 (as adjusted to give effect to any      
stock dividend, stock split, recapitalization, combination or exchange of       
shares, merger, consolidation, reorganization or other similar change or        
transaction by NHL).                                                            

For purposes of determining the amount of the Sharing Payment, the fair     
market value of any non-cash consideration, (i) consisting of securities listed 
on a national securities exchange or traded on the National Association of      
Securities Dealers, Inc.'s National Market System ("NASDAQ/NMS"), will be equal 
to the average closing price per share of such security as reported on such     
exchange or NASDAQ/NMS for the five trading days before the date of disposition 
by NHCG and (ii) consisting of consideration which is other than cash or        
securities listed on a national securities exchange or traded on the            
NASDAQ/NMS, will be determined by a nationally recognized independent           
investment banking firm (which firm will be mutually agreed upon by the         
parties) within 10 business days of the selection of such investment banking    
firm. If the parties are unable to agree within two business days after the     
date of disposition as to the investment banking firm, then Morgan Stanley and  
CS First Boston will jointly name a third investment banking firm whose fees    
and expenses will be borne equally by HLR, on the one hand, and NHCG, on the    
other hand.                                                                     

Timing of Sharing Payment. Any Sharing Payment required to be made pursuant 
to the Sharing and Call Option Agreement will be made two business days after   
the later of (i) the fifth trading day after settlement of any disposition of   
securities for cash or (ii) the date on which the investment banking firm       
delivers to the parties its determination of the per share value of any non-    
cash consideration received pursuant to any disposition, as applicable.         

SALE AND VOTING OF STOCKHOLDER SHARES PRIOR TO THE MERGER                       

Sale of Stockholder Shares. The Sharing and Call Option Agreement prohibits 
NHCG from transferring any of the 20,176,729 shares of NHL Common Stock,        
beneficially owned or owned of record by NHCG, Mafco Holdings Inc. and their    
respective affiliates on the date of the Sharing and Call Option Agreement and  
any additional shares of NHL Common Stock or rights to acquire voting           
securities of NHL acquired by NHCG, Mafco Holdings Inc. or any of their         
respective affiliates from and after the date of the Sharing and Call Option    
Agreement (collectively, the "Stockholder Shares") prior to the Effective Time, 
unless a termination fee has become payable by NHL to HLR as described under    
"THE MERGER--Certain Fees".                                                     

Voting of Stockholder Shares. The Sharing and Call Option Agreement requires
NHCG to, and requires NHCG and Mafco Holdings Inc. to cause their controlled    
affiliates which hold NHL Common Stock to, be present in person or by proxy at  
the NHL Meeting for the purpose of voting on the approval and adoption of the   
Merger Agreement, and to cause all of the Stockholder Shares to be voted in     
favor of the Merger and of the Merger Agreement.                                

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CALL RIGHTS                                                                     

Call Rights with Respect to Stockholder Shares. The Sharing and Call Option 
Agreement provides that at any time after the third anniversary of the          
Effective Time, HLR or any of its affiliates (such party, a "Purchaser") may    
exercise the right (the "Call Right"), which right may only be exercised once,  
to purchase all, but not less than all, the shares of NHL Common Stock then     
owned by NHCG, Mafco Holdings Inc. or any of their controlled affiliates. If    
Purchaser intends to exercise the Call Right, then, not less than 20 business   
days prior to the exercise thereof, Purchaser is required to so notify Mafco    
Holdings Inc. and NHCG of such intention, specifying in such notice (the "Call  
Notice") the date of such exercise (the "Exercise Date"). From and after the    
receipt of a Call Notice, the Sharing and Call Option Agreement prohibits NHCG, 
Mafco Holdings Inc. and any of their controlled affiliates from transferring    
any shares of NHL Common Stock that are owned by them except during any period  
expiring 15 business days prior to the Exercise Date.                           

The Sharing and Call Option Agreement provides that Purchaser will pay a    
price per share for the shares to be purchased equal to 102% of the average     
closing price per share of such security as reported on the principal national  
securities exchange on which such shares are listed, or if not so listed, as    
reported on NASDAQ/NMS, for the 30 trading days before the Exercise Date.       

COVENANTS                                                                       

The Sharing and Call Option Agreement requires NHCG and Mafco Holdings Inc. 
to comply with, and be bound by, the restrictions set forth in the section of   
the Merger Agreement described under "THE MERGER--No Solicitation" as if such   
restrictions were set forth in the Sharing and Call Option Agreement and to     
take all actions necessary to enable each of them and their affiliates to       
comply with the provisions of the Sharing and Call Option Agreement pertaining  
to the voting of Stockholder Shares and the Call Rights.                        

REGISTRATION RIGHTS                                                             

 NHL has agreed, pursuant to the Sharing and Call Option Agreement, to use its
best efforts to cause the Registration Statement to include a resale prospectus 
that would permit NHCG (or any pledgee of the Merger Shares (as defined below)  
under a bona fide pledge arrangement with NHCG) to sell shares of NHL Common    
Stock received by NHCG in the Merger (the "Merger Shares") and Warrants         
received by NHCG in the Warrant Distribution without restriction and, after the 
filing of the Registration Statement, will use its best efforts to prepare and  
file with the SEC such amendments and post-effective amendments to the          
Registration Statement as may be necessary to keep such Registration Statement  
continuously effective for a period ending on the third anniversary of the date 
of the Sharing and Call Option Agreement and during such period will use its    
best efforts to cause the resale prospectus to be supplemented by any required  
prospectus supplement. NHL has agreed to pay all of the Registration Expenses   
arising from exercise of the Registration Rights set forth in the Sharing and   
Call Option Agreement.                                                          

AMENDMENTS AND TERMINATION                                                      

The Sharing and Call Option Agreement may not be modified, amended, altered 
or supplemented, except upon the execution and delivery of a written agreement  
executed by the parties thereto. The Agreement will terminate on the earliest   
to occur of (i) the date on which NHCG, Mafco Holdings Inc. and their           
affiliates own no shares of NHL Common Stock except with respect to the         
obligation to make any Sharing Payment which has become due as a result of any  
transfer of shares of NHL Common Stock or (ii) the effective date of any        
termination of the Merger Agreement pursuant to any of the grounds for          
termination set forth therein except termination pursuant to the provisions     
described under "THE MERGER--Right of NHL Board of Directors to Withdraw        
Recommendation Upon Receipt of a Superior Proposal" or any termination by HLR   
if the Board of Directors of NHL has withdrawn its recommendation of the Merger 
or the Merger Agreement or has recommended or approved any other Acquisition    
Proposal. The registration rights provisions will terminate when NHCG, Mafco    
Holdings Inc. and their respective controlled affiliates own no shares of NHL   

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Common Stock that are subject to the registration requirements of the           
Securities Act, and the Sharing Payment provisions of the Sharing and Call      
Option Agreement will terminate 180 days after the effective date of any        
termination of the Merger Agreement pursuant to the provisions described under  
"THE MERGER--Right of NHL Board of Directors to Withdraw Recommendation Upon    
Receipt of a Superior Proposal" or any termination by HLR if the Board of       
Directors of NHL has withdrawn its recommendation of the Merger or the Merger   
Agreement or has recommended or approved any other Acquisition Proposal.        

OTHER MATTERS 

REGULATORY APPROVALS REQUIRED                                                   

The consummation of the Merger is subject to, among other approvals, the    
expiration or termination of the relevant waiting period under the HSR Act. The 
HSR Act notification and report forms were filed by NHL and RBL on January 3,   
1995. The waiting period under the HSR Act applicable to the Merger expired on  
February 2, 1995.                                                               

In addition, it is a condition to the obligations of HLR and RBL to         
consummate the Merger that CFIUS shall have determined not to investigate the   
Merger under the Exon-Florio Amendment (or any such investigation shall have    
been completed and the President shall have determined not to take any action   
with respect thereto). NHL and RBL filed a letter informing CFIUS of the Merger 
on February 6, 1995. CFIUS determined on March 8, 1995 that the Merger raises   
no issues of national security sufficient to warrant an investigation under the 
Exon-Florio Amendment and that action under the Exon-Florio Amendment had been  
concluded with respect to the Merger.                                           

NAME CHANGE AMENDMENT 

At the NHL Meeting, holders of NHL Common Stock will be asked to approve the
Name Change Amendment, a proposed amendment to Article FIRST of the NHL         
Certificate of Incorporation to change the name of the corporation to           
Laboratory Corporation of America Holdings at, and subject to the occurrence    
of, the Effective Time. The Board of Directors of NHL has unanimously approved  
the Name Change Amendment. Moreover, the Board of Directors of NHL unanimously  
recommends that the stockholders of NHL vote FOR the Name Change Amendment.     
Approval of the Name Change Amendment is not required for the consummation of   
the Merger.                                                                     

The NHL Board of Directors recommends the approval of the Name Change       
Amendment because it believes that the adoption of a new name will help convey  
to the analyst, investor and health care communities that the Merger involves   
the integration of NHL and RBL to create a new, larger, national clinical       
laboratory company with greater potential for growth. The NHL Board of          
Directors believes that the adoption of a new name is an appropriate method for 
recognizing the significant contribution that both NHL and RBL will make to the 
business of the Surviving Corporation.                                          

APPRAISAL RIGHTS

Record holders of NHL Common Stock are entitled to appraisal rights under   
Section 262 of the Delaware Corporation Law in connection with the Merger. The  
following discussion is not a complete statement of the law pertaining to       
appraisal rights under the Delaware Corporation Law and is qualified in its     
entirety by the full text of Section 262 which is reprinted in its entirety as  
Annex V to this Proxy                                                           

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Statement/Prospectus and is incorporated herein by reference. Except as set     
forth herein, stockholders of NHL will not be entitled to appraisal rights in   
connection with the Merger.                                                     

Section 262. Under the Delaware Corporation Law, record holders of shares of
NHL Common Stock who follow the procedures set forth in Section 262 and who     
have not voted in favor of the Merger will be entitled to have their shares of  
NHL Common Stock appraised by the Delaware Court of Chancery and to receive     
payment of the "fair value" of such shares, exclusive of any element of value   
arising from the accomplishment or expectation of the Merger, together with a   
fair rate of interest, as determined by such court.                             

Under Section 262, where a merger agreement is to be submitted for approval 
and adoption at a meeting of stockholders, as in the case of the NHL Meeting,   
not less than 20 days prior to the meeting, NHL must notify each of the holders 
of NHL Common Stock at the close of business on the NHL Record Date that such   
appraisal rights are available and include in each such notice a copy of        
Section 262. This Proxy Statement/Prospectus constitutes such notice. Any such  
stockholder who wishes to exercise appraisal rights should review the following 
discussion and Annex V carefully because failure to timely and properly comply  
with the procedures specified in Section 262 will result in the loss of         
appraisal rights under the Delaware Corporation Law.                            

A holder of shares of NHL Common Stock wishing to exercise appraisal rights 
must deliver to NHL, before the vote on the approval and adoption of the Merger 
Agreement at the NHL Meeting, a written demand for appraisal of such holder's   
shares of NHL Common Stock. In addition, a holder of shares of NHL Common Stock 
wishing to exercise appraisal rights must hold of record such shares on the     
date the written demand for appraisal is made and must continue to hold such    
shares through the Effective Time.                                              

Only a holder of record of shares of NHL Common Stock is entitled to assert 
appraisal rights for the shares of NHL Common Stock registered in that holder's 
name. A demand for appraisal should be executed by or on behalf of the holder   
of record fully and correctly, as the holder's name appears on the stock        
certificates.                                                                   

If the shares of NHL Common Stock are owned of record in a fiduciary        
capacity, such as by a trustee, guardian or custodian, execution of the demand  
should be made in that capacity, and if the shares of NHL Common Stock are      
owned of record by more than one person, as in a joint tenancy or tenancy in    
common, the demand should be executed by or on behalf of all joint owners. An   
authorized agent, including one or more joint owners, may execute a demand for  
appraisal on behalf of a holder of record; however, the agent must identify the 
record owner or owners and expressly disclose the fact that, in executing the   
demand, the agent is agent for such owner or owners. A record holder such as a  
broker who holds NHL Common Stock as nominee for several beneficial owners may  
exercise appraisal rights with respect to the NHL Common Stock held for one or  
more beneficial owners while not exercising such rights with respect to the NHL 
Common Stock held for other beneficial owners; in such case, the written demand 
should set forth the number of shares as to which appraisal is sought and where 
no number of shares is expressly mentioned the demand will be presumed to cover 
all NHL Common Stock held in the name of the record owner. Holders of NHL       
Common Stock who hold their shares in brokerage accounts or other nominee forms 
and who wish to exercise appraisal rights are urged to consult with their       
brokers to determine the appropriate procedures for the making of a demand for  
appraisal by such nominee. All written demands for appraisal of NHL Common      
Stock should be sent or delivered to James G. Richmond, Executive Vice          
President and General Counsel, National Health Laboratories Holdings Inc., 4225 
Executive Square, Suite 805, La Jolla, CA 92037 so as to be received before the 
vote on the approval and adoption of the Merger Agreement at the NHL Meeting.   

Within 10 days after the Effective Time, the Surviving Corporation must send
a notice as to the effectiveness of the Merger to each person who has satisfied 
the appropriate provisions of Section 262. Within 120 days after the Effective  
Time, but not thereafter, NHL, or any holder of shares of NHL Common Stock      
entitled to appraisal rights under Section 262 and who has complied with the    
foregoing procedures, may file                                                  

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a petition in the Delaware Court of Chancery demanding a determination of the   
fair value of such shares. NHL is not under any obligation, and has no present  
intention, to file a petition with respect to the appraisal of the fair value   
of the shares of NHL Common Stock. Accordingly, it is the obligation of the     
stockholders to initiate all necessary action to perfect their appraisal rights 
within the time prescribed in Section 262.                                      

Within 120 days after the Effective Time, any record holder of shares of NHL
Common Stock who has complied with the requirements for exercise of appraisal   
rights will be entitled, upon written request, to receive from NHL a statement  
setting forth the aggregate number of shares of the NHL Common Stock with       
respect to which demands for appraisal have been received and the aggregate     
number of holders of such shares. Such statements must be mailed within 10 days 
after a written request therefor has been received by NHL.                      

If a petition for an appraisal is timely filed, after a hearing on such     
petition, the Delaware Court of Chancery will determine the holders of shares   
of NHL Common Stock entitled to appraisal rights and will appraise the "fair    
value" of the shares of NHL Common Stock, exclusive of any element of value     
arising from the accomplishment or expectation of the Merger, together with a   
fair rate of interest, if any, to be paid upon the amount determined to be the  
fair value. Holders considering seeking appraisal should be aware that the fair 
value of their shares of NHL Common Stock as determined under Section 262 could 
be more than, the same as or less than the value of the Merger Consideration    
that they would otherwise receive, if they did not seek appraisal of their      
shares of NHL Common Stock. The Delaware Supreme Court has stated that "proof   
of value by any techniques or methods which are generally considered acceptable 
in the financial community and otherwise admissible in court" should be         
considered in the appraisal proceedings. In addition, Delaware courts have      
decided that the statutory appraisal remedy, depending on factual               
circumstances, may or may not be a dissenter's exclusive remedy. The Court will 
also determine the amount of interest, if any, to be paid upon the amounts to   
be received by persons whose shares of NHL Common Stock or have been appraised. 
The costs of the action may be determined by the Court and taxed upon the       
parties as the Court deems equitable. The Court may also order that all or a    
portion of the expenses incurred by any holder of shares of NHL Common Stock in 
connection with an appraisal, including, without limitation, reasonable         
attorneys' fees and the fees and expenses of experts utilized in the appraisal  
proceeding, be charged pro rata against the value of all of the shares of NHL   
Common Stock entitled to appraisal.                                             

Any holder of shares of NHL Common Stock who has duly demanded an appraisal 
in compliance with Section 262 will not, after the Effective Time, be entitled  
to vote the shares of NHL Common Stock subject to such demand for any purpose   
or be entitled to the payment of dividends or other distributions on those      
shares (except dividends or other distributions payable to holders of record of 
shares of NHL Common Stock as of a date prior to the Effective Time).           

If any holder of shares of NHL Common Stock who demands appraisal of shares 
under Section 262 fails to perfect, or effectively withdraws or loses, the      
right to appraisal, as provided in the Delaware Corporation Law, the shares of  
NHL Common Stock of such holder will be converted into Merger Consideration in  
accordance with the Merger Agreement. A holder of shares of NHL Common Stock    
will fail to perfect, or effectively lose, the right to appraisal if no         
petition for appraisal is filed within 120 days after the Effective Time. A     
holder may withdraw a demand for appraisal by delivering to NHL a written       
withdrawal of the demand for appraisal and acceptance of the Merger, except     
that any such attempt to withdraw made more than 60 days after the Effective    
Time will require the written approval of the Surviving Corporation.            

FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DELAWARE         
CORPORATION LAW FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH  
RIGHTS.                                                                         

 The foregoing is a summary of certain of the provisions of Section 262 of the
General Corporation Law of the State of Delaware and is qualified in its        
entirety by reference to the full text of such Section, a copy of which is      
included herewith as Annex V.                                                   

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SOLICITATION OF PROXIES 

NHL will bear the cost of the solicitation of proxies from its stockholders.
The solicitation is being made by mail, telephone, facsimile and personal       
interview. Arrangements will also be made with brokerage houses and other       
custodians, nominees and fiduciaries for the forwarding of solicitation         
material to the beneficial owners of shares held of record by such persons, and 
NHL will reimburse such custodians, nominees and fiduciaries for their          
reasonable out-of-pocket expenses in connection therewith. In addition,         
directors, officers and regular employees of NHL, and its subsidiaries may      
solicit proxies from stockholders of their respective companies, without        
additional compensation, except for out-of-pocket expenses in connection        
therewith.                                                                      

In addition, D. F. King & Co., Inc. will assist in the solicitation of      
proxies by NHL for a fee not to exceed $7,500, plus reasonable out-of-pocket    
expenses.                                                                       

STOCKHOLDER PROPOSALS 

Proposals of stockholders for inclusion in the proxy statement for the 1995 
annual meeting of NHL stockholders must be received by NHL on or before April   
13, 1995. Proposals should be mailed to National Health Laboratories Holdings   
Inc., 4225 Executive Square, Suite 805, La Jolla, CA 92037, Attention: General  
Counsel.                                                                        

NHL STOCKHOLDER LIST

A certified list of NHL stockholders entitled to be present and vote at the 
NHL Meeting will be available at the office of NHL's corporate secretary, La    
Jolla, CA, and at the office of NHL's transfer agent, American Stock Transfer & 
Trust Company, for inspection by any stockholder during normal business hours   
from March 11, 1995 to one day prior to the date of the NHL Meeting and at the  
NHL Meeting site on the day of the NHL Meeting.                                 

EXPERTS 

 The consolidated financial statements and schedule of NHL and subsidiaries as
of December 31, 1994 and 1993, and for each of the years in the three-year      
period ended December 31, 1994, have been incorporated by reference herein in   
reliance upon the report of KPMG Peat Marwick LLP, independent certified public 
accountants, incorporated by reference herein, and upon the authority of said   
firm as experts in accounting and auditing.                                     

The consolidated financial statements of RBL as of December 31, 1994 and    
1993, and for each of the three years in the period ended December 31, 1994     
included herein have been so included in reliance on the report of Price        
Waterhouse LLP, independent accountants, given on the authority of said firm as 
experts in accounting and auditing.                                             

Representatives of KPMG Peat Marwick LLP are expected to be present at the  
NHL Meeting. Such representatives are expected to be available to respond to    
appropriate questions.                                                          

LEGAL MATTERS 

The validity of the shares of NHL Common Stock offered hereby will be passed
upon for NHL by Cravath, Swaine & Moore, New York, New York.                    

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF RBL 

                                                                [Download Table]
                                                                               
                                                                           PAGE
                                                                           ----
Report of Independent Accountants.........................................  F-2
Consolidated Financial Statements                                              
  Consolidated Balance Sheet - December 31, 1993 and 1994.................  F-3
  Consolidated Statement of Income - Years Ended December 31, 1992, 1993,      
   and 1994...............................................................  F-4
  Consolidated Statement of Cash Flows - Years Ended December 31, 1992,        
   1993 and 1994..........................................................  F-5
  Notes to Consolidated Financial Statements - Years Ended December 31,        
   1992, 1993 and 1994....................................................  F-6

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REPORT OF INDEPENDENT ACCOUNTANTS 

                                                               February 15, 1995

TO THE BOARD OF DIRECTORS AND STOCKHOLDER OF                                    
ROCHE BIOMEDICAL LABORATORIES, INC.                                             

In our opinion, the accompanying consolidated balance sheet and the related 
consolidated statements of income and of cash flows present fairly, in all      
material respects, the financial position of Roche Biomedical Laboratories,     
Inc. and its subsidiaries ("RBL"--see definition in Note 1) at December 31,     
1993 and 1994, and the results of their operations and their cash flows for     
each of the three years in the period ended December 31, 1994, in conformity    
with generally accepted accounting principles. These financial statements are   
the responsibility of RBL's management; our responsibility is to express an     
opinion on these financial statements based on our audits. We conducted our     
audits of these statements in accordance with generally accepted auditing       
standards which 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, assessing the          
accounting principles used and significant estimates made by management, and    
evaluating the overall financial statement presentation. We believe that our    
audits provide a reasonable basis for the opinion expressed above.              

 As discussed in the accompanying Notes to the financial statements, effective
January 1, 1992, RBL adopted Statement of Financial Accounting Standards No.    
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."   

Price Waterhouse LLP                                                            

Morristown, New Jersey                                                          

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ROCHE BIOMEDICAL LABORATORIES, INC. 

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 1993 AND 1994
(DOLLARS IN THOUSANDS)

                                                                [Download Table]

                                                                1993     1994  
                                     ASSETS                   -------- --------
                                                                               
Current assets:                                                                
  Cash....................................................... $  7,717 $ 12,553
  Receivables, net...........................................  134,556  159,757
  Inventories, net...........................................   39,556   38,400
  Deferred income taxes......................................    8,458   12,782
  Other current assets.......................................    7,078   12,044
                                                              -------- --------
    Total current assets.....................................  197,365  235,536
                                                              -------- --------
Property, plant and equipment, net...........................  145,850  155,449
                                                              -------- --------
Other assets:                                                                  
  Goodwill and other intangibles, net........................  122,017  108,954
  Other assets...............................................    3,986    4,133
  Deferred income taxes......................................    5,227    4,214
                                                              -------- --------
    Total other assets.......................................  131,230  117,301
                                                              -------- --------
    Total assets............................................. $474,445 $508,286
                                                              ======== ========
                    LIABILITIES AND INVESTED CAPITAL OF HLR                    
Current liabilities:                                                           
  Accounts payable........................................... $ 37,839 $ 31,225
  Current installments of long-term debt.....................      114  235,284
  Accrued compensation.......................................   10,282   13,296
  Payable to affiliates, net.................................   14,559    4,167
  Other current liabilities..................................    7,367   11,042
  Income taxes payable.......................................   11,197   25,122
                                                              -------- --------
Total current liabilities....................................   81,358  320,136
Other liabilities:                                                             
  Long-term debt.............................................  285,372   50,088
  Other liabilities..........................................    8,796    6,393
  Postretirement benefits other than pensions................   23,911   28,722
                                                              -------- --------
    Total liabilities........................................  399,437  405,339
Invested capital of HLR (Note 10)............................   75,008  102,947
                                                              -------- --------
Commitments and contingencies (Notes 13 and 14)                                
    Total liabilities and invested capital of HLR............ $474,445 $508,286
                                                              ======== ========

See Notes to Consolidated Financial Statements. 

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ROCHE BIOMEDICAL LABORATORIES, INC. 

CONSOLIDATED STATEMENT OF INCOME

YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)

                                                                [Download Table]

                                                     1992      1993     1994   
                                                   --------  -------- -------- 
                                                                               
Net sales......................................... $667,372  $711,550 $729,807 
                                                   --------  -------- -------- 
Cost of sales.....................................  459,196   488,697  498,030 
Selling, general and administrative...............  134,554   150,346  152,738 
Amortization of goodwill and other intangibles....   13,055    13,151   13,863 
                                                   --------  -------- -------- 
    Income from operations........................   60,567    59,356   65,176 
Interest expense..................................   24,491    15,368   15,501 
Other expenses (income), net......................     (677)      803     (958)
                                                   --------  -------- -------- 
    Income before taxes...........................   36,753    43,185   50,633 
Income taxes......................................   16,646    19,709   22,694 
                                                   --------  -------- -------- 
    Income before cumulative effect of change in                               
     accounting principle.........................   20,107    23,476   27,939 
Cumulative effect of change in accounting for                                  
 postretirement benefits other than pensions, net                              
 (Note 12)........................................   (9,818)      --       --  
                                                   --------  -------- -------- 
    Net income.................................... $ 10,289  $ 23,476 $ 27,939 
                                                   ========  ======== ======== 

See Notes to Consolidated Financial Statements. 

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ROCHE BIOMEDICAL LABORATORIES, INC. 

CONSOLIDATED STATEMENT OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)

                                                                [Download Table]

                                                   1992       1993      1994   
                                                 ---------  --------  -------- 
                                                                               
Operating activities:                                                          
 Net income..................................... $  10,289  $ 23,476  $ 27,939 
 Adjustments to reconcile net income to net cash                               
  provided by operating activities                                             
  Depreciation and amortization.................    27,109    29,161    32,290 
  Provision for losses on receivables...........    24,017    30,725    29,897 
  Change in deferred income taxes...............    (6,960)     (643)   (3,311)
  Loss (gain) on disposal of assets.............       414     2,250      (883)
  Changes in assets and liabilities:                                           
   Receivables..................................    20,629   (29,123)  (55,098)
   Inventories..................................      (333)   (1,988)    1,156 
   Accounts payable.............................     6,820     9,563    (6,614)
   Income taxes payable.........................   (11,642)    2,922    13,925 
   Other assets and liabilities.................    50,120   (27,622)   (6,408)
                                                 ---------  --------  -------- 
    Net cash provided by operating activities...   120,463    38,721    32,893 
                                                 ---------  --------  -------- 
Investing activities:                                                          
 Cash used for acquisition......................   (74,600)      --        --  
 Purchases of intangible assets.................    (7,829)   (6,087)     (800)
 Purchases of property, plant and equipment,                                   
  net...........................................   (34,736)  (29,093)  (30,127)
 Proceeds from sale of property, plant and                                     
  equipment.....................................       --        --      2,984 
                                                 ---------  --------  -------- 
    Net cash (used in) investing activities.....  (117,165)  (35,180)  (27,943)
                                                 ---------  --------  -------- 
Financing activities:                                                          
 Repayments of debt.............................    (1,575)     (169)     (114)
                                                 ---------  --------  -------- 
    Net cash used in financing activities.......    (1,575)     (169)     (114)
                                                 ---------  --------  -------- 
    Increase in cash............................     1,723     3,372     4,836 
Cash at beginning of year.......................     2,622     4,345     7,717 
                                                 ---------  --------  -------- 
Cash at end of year............................. $   4,345  $  7,717  $ 12,553 
                                                 =========  ========  ======== 
Supplemental disclosures:                                                      
 Interest paid.................................. $  25,360  $ 16,216  $ 15,440 
 Income taxes paid..............................    21,410    13,769    13,182 

See Notes to Consolidated Financial Statements. 

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ROCHE BIOMEDICAL LABORATORIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 (DOLLARS IN THOUSANDS) 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   

Basis of Presentation                                                         

Roche Biomedical Laboratories, Inc. ("RBL") is a wholly owned subsidiary of 
HLR Holdings Inc. ("HLR") and is an indirect wholly owned subsidiary of Roche   
Holding Ltd. RBL has 100 shares of common stock issued and outstanding. The     
financial statements of RBL include the accounts of its wholly owned            
subsidiaries but do not include the assets, liabilities or results of           
operations of the Roche Image Analysis Systems division ("RIAS"), the ownership 
of which is expected to be transferred by RBL to an affiliate prior to the      
effective time of the merger of RBL with and into National Health Laboratories  
Holdings Inc. as described below in Note 2. All significant intercompany        
balances and transactions have been eliminated in consolidation. RBL provides   
clinical laboratory testing services to hospitals, laboratories and physicians  
and offers a comprehensive line of over 1,600 tests and procedures, all of      
which are performed in RBL's facilities, with a majority performed in RBL's 17  
major testing centers located primarily in the midwestern, eastern and southern 
United States.                                                                  

Revenue Recognition                                                           

Revenue is recognized when testing services are performed.                  

Inventories                                                                   

Inventories, which primarily consist of laboratory supplies, are stated at  
the lower of cost or market. Cost is determined by the first-in, first-out      
(FIFO) method.                                                                  

Property, Plant and Equipment and Depreciation                                

Property, plant and equipment are carried at cost, which includes interest  
costs attributable to and incurred during an asset's construction period. The   
costs of maintenance, repairs and minor equipment items are charged to          
operations. The costs of major renewals and betterments, which extend the       
useful lives of assets, are capitalized.                                        

Depreciation is computed using the straight-line method over the estimated  
useful lives or lease terms for financial reporting purposes which range from 3 
to 35 years. Accelerated methods are generally used for income tax purposes.    

Goodwill and Other Intangibles                                                

The excess of the cost over the fair value of net assets of purchased       
businesses is recorded as goodwill and is amortized using the straight-line     
method over periods not in excess of forty years. Other intangibles are being   
amortized using the straight-line method over their estimated useful lives or   
legal lives, whichever is shorter. Accumulated amortization of goodwill and     
other intangibles amounted to $123,302 and $137,165 at December 31, 1993 and    
1994, respectively.                                                             

At each balance sheet date, RBL reviews the recoverability of goodwill based
primarily on estimated future cash flows.                                       

Income Taxes                                                                  

RBL adopted Statement of Financial Accounting Standards (SFAS) No. 109,     
"Accounting for Income Taxes", effective January 1, 1992, which requires an     
asset and liability approach for accounting and reporting of income taxes. The  
adoption had no effect on RBL's results of operations for the year ended        
December 31, 1992. Prior to 1992, RBL used the SFAS No. 96 asset and liability  
approach that gave no recognition to future events other than the recovery of   
assets and settlement of liabilities at their carrying amounts.                 

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ROCHE BIOMEDICAL LABORATORIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 

YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 (DOLLARS IN THOUSANDS) 

RBL and HLR are members of a controlled group which files a consolidated    
Federal income tax return. Recorded income tax expenses and account balances    
have been computed as if RBL filed its own separate tax return. Federal income  
taxes payable reflect amounts which will be remitted to HLR.                    

Postretirement Benefits Other Than Pensions                                   

Effective January 1, 1992, RBL adopted the provisions of SFAS No. 106,      
"Employers' Accounting for Postretirement Benefits Other Than Pensions" ("SFAS  
No. 106"), which requires recognition of these costs on an accrual basis over   
the service lives of employees. Prior to 1992, these costs were accounted for   
on the cash basis.                                                              

2. AGREEMENT AND PLAN OF MERGER                                                 

On December 13, 1994, National Health Laboratories Holdings Inc. ("NHL"),   
HLR, RBL and Hoffmann-La Roche Inc. entered into an Agreement and Plan of       
Merger, pursuant to which RBL will be merged with and into NHL (the "Merger")   
whereupon the existence of RBL will cease and NHL will become the surviving     
corporation (the "Surviving Corporation"). All of the issued and outstanding    
stock of RBL will be converted in the Merger into common stock of NHL.          

After giving effect to the Merger, former shareholders of NHL and certain   
option holders will collectively hold a 50.1 percent interest and HLR will hold 
a 49.9 percent interest in the Surviving Corporation. Shares of the Surviving   
Corporation will be traded on the New York Stock Exchange, Inc. with            
approximately 122.9 million shares outstanding.                                 

3. ACQUISITION                                                                  

On February 11, 1992, RBL acquired all of the issued and outstanding shares 
of CompuChem Corporation. The purchase price consisted of $74,600 in cash for   
the shares and certain transaction costs. CompuChem was primarily engaged in    
the forensic drug testing business. The acquisition was accounted for as a      
purchase. Accordingly, the results of operations of the forensic drug testing   
business of the acquired company are included with those of RBL for periods     
subsequent to the date of acquisition. The acquisition resulted in $63,684 of   
goodwill and other intangibles which are being amortized over periods up to 40  
years.                                                                          

Unaudited pro forma results of operations for 1992 combining the operations 
of CompuChem Corporation as if it had been acquired at the beginning of the     
periods have not been presented as the difference between the pro forma and     
historical results is not significant.                                          

4. RELATED PARTY TRANSACTIONS                                                   

RBL purchased various materials and other products from affiliated companies
approximating $7,996 in 1992, $7,168 in 1993 and $6,936 in 1994. RBL also had   
sales to affiliated companies of $4,092 in 1992, $5,701 in 1993 and $8,089 in   
1994.                                                                           

Certain common expenses and expenses incremental and proportional to RBL's  
operations such as legal, treasury, data processing and managerial costs have   
been allocated to RBL and included in the accompanying statement of income. The 
allocations to RBL are based on various factors such as specific identification 
of costs and percentage of revenues. Interest is not charged on payables to or  
receivables from affiliated companies. HLR charged RBL $5,103 in 1992, $6,486   
in 1993 and $6,827 in 1994, for certain selling, general and administrative     
services.                                                                       

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ROCHE BIOMEDICAL LABORATORIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 

YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 (DOLLARS IN THOUSANDS) 

5. RECEIVABLES, NET                                                             

Receivables consisted of the following at December 31:                      

                                                                [Download Table]

                                                             1993     1994  
                                                           -------- --------
                                                                            
Trade receivables......................................... $159,167 $184,708
Other.....................................................    1,530    1,644
                                                           -------- --------
                                                            160,697  186,352
Less allowance for doubtful accounts......................   26,141   26,595
                                                           -------- --------
                                                           $134,556 $159,757
                                                           ======== ========

6. PROPERTY, PLANT AND EQUIPMENT, NET                                           

Property, plant and equipment consisted of the following at December 31:    

                                                                [Download Table]

                                                             1993     1994  
                                                           -------- --------
                                                                            
Land...................................................... $  6,538 $  6,289
Buildings.................................................   80,076   81,937
Machinery, equipment and furniture........................  123,011  140,420
Uncompleted capital projects..............................    9,635   11,091
                                                           -------- --------
                                                            219,260  239,737
Less accumulated depreciation.............................   73,410   84,288
                                                           -------- --------
                                                           $145,850 $155,449
                                                           ======== ========

Depreciation expense was $14,054 in 1992, $16,010 in 1993 and $18,427 in    
1994.                                                                           

7. GOODWILL AND OTHER INTANGIBLES, NET                                          

Goodwill and other intangibles consisted of the following at December 31:   

                                                                [Download Table]

                                                             1993     1994  
                                                           -------- --------
                                                                            
Goodwill.................................................. $ 92,752 $ 92,752
Customer lists............................................   75,550   76,201
Product technology........................................   55,033   55,033
Other.....................................................   21,984   22,133
                                                           -------- --------
                                                            245,319  246,119
Less accumulated amortization.............................  123,302  137,165
                                                           -------- --------
                                                           $122,017 $108,954
                                                           ======== ========

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ROCHE BIOMEDICAL LABORATORIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 

YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 (DOLLARS IN THOUSANDS) 
8. DEBT                                                                         

Debt consisted of the following at December 31:                             

                                                                [Download Table]

                                                             1993     1994  
                                                           -------- --------
                                                                            
Notes payable to a bank bearing interest at an average                      
 rate of 5.7%, due January 1995........................... $200,000 $200,000
Notes payable to affiliated company bearing interest at                     
 LIBOR (6.9% at December 31, 1994), payable upon demand...   33,699   33,699
Note payable to affiliated company bearing interest at                      
 11.5%, payable upon demand...............................   51,355   51,355
Other.....................................................      432      318
                                                           -------- --------
                                                            285,486  285,372
Less current installments of long-term debt...............      114  235,284
                                                           -------- --------
  Total long-term debt.................................... $285,372 $ 50,088
                                                           ======== ========

In December 1989, RBL entered into an unsecured credit agreement with a bank
for two term loans of $100,000 each. The credit agreement was initially amended 
to extend the maturity dates to December 1, 1993 and December 28, 1993 and was  
subsequently amended to extend the maturity dates to September 30, 1995.        

 The annual maturities of debt are: 1995--$235,284 and 1996--$50,088. The fair
value of RBL's debt at December 31, 1994 is estimated to be similar to the      
amounts reflected above.                                                        

In accordance with the terms of the Merger described in Note 2 above, it is 
anticipated that prior to the Merger, RBL's parent will remove from RBL's       
balance sheet notes payable to the bank in principal amounts totalling $150,000 
and all notes payable to affiliated companies, in principal amounts totalling   
$85,054. Accordingly, this debt is classified as current. The terms of the      
Merger also provide that the remaining notes payable to the bank in principal   
amounts totally $50,000 will be refinanced on a long-term basis by the          
Surviving Corporation.                                                          

9. INCOME TAXES                                                                 

The provision for income taxes is comprised of the following components:    

                                                                [Download Table]

                                                   1992     1993     1994   
                                                  -------  -------  ------- 
                                                                            
Current:                                                                    
  Federal........................................ $12,064  $16,590  $21,362 
  State..........................................   4,384    3,762    4,644 
Deferred:                                                                   
  Federal........................................   1,225     (683)  (2,636)
  State..........................................  (1,027)      40     (676)
                                                  -------  -------  ------- 
                                                   16,646   19,709   22,694 
Deferred tax effect of change in accounting for                             
 postretirement benefits other than pensions.....  (6,333)     --       --  
                                                  -------  -------  ------- 
                                                  $10,313  $19,709  $22,694 
                                                  =======  =======  ======= 

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ROCHE BIOMEDICAL LABORATORIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 

YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 (DOLLARS IN THOUSANDS) 
 A reconciliation of the Federal statutory rate to the effective rate follows:

                                                                [Download Table]

                                                           1992  1993  1994  
                                                           ----  ----  ----  
                                                                             
Taxes at Federal statutory rate........................... 34.0% 35.0% 35.0% 
State income taxes, net of Federal benefit................  5.2%  5.0%  5.1% 
Nondeductible goodwill amortization.......................  5.6%  5.2%  5.3% 
All other items, net......................................  0.5%  0.4% (0.6%)
                                                           ----  ----  ----  
  Total................................................... 45.3% 45.6% 44.8% 
                                                           ====  ====  ====  

The components of deferred income tax assets consist of the following at    
December 31:                                                                    

                                                                [Download Table]

                                                               1993    1994  
                                                              ------- -------
                                                                             
Deferred tax liabilities                                                     
  Property, plant and equipment basis differences............ $11,370 $13,904
  Other individually immaterial items........................   2,015   3,317
                                                              ------- -------
    Total deferred tax liabilities...........................  13,385  17,221
                                                              ------- -------
Deferred tax assets                                                          
  Postretirement benefits other than pensions................   9,764  11,598
  Sale of western sales territory laboratories...............   2,434   2,438
  Post employment benefits...................................   2,963   2,379
  Difference between book and tax basis of receivables.......   6,424   7,687
  Book amortization in excess of tax amortization............   2,683   4,188
  Other reserves in excess of tax deductions.................   2,034   5,095
  Other individually immaterial items........................     768     832
                                                              ------- -------
    Total deferred tax assets................................  27,070  34,217
                                                              ------- -------
                                                              $13,685 $16,996
                                                              ======= =======

10. INVESTED CAPITAL OF HLR                                                     

Changes in invested capital of HLR were as follows:                         

                                                                [Download Table]
                                                                            
Balance at December 31, 1991.......................................   31,356
Net income for the period..........................................   10,289
Amounts paid by HLR on behalf of RBL...............................    6,573
                                                                    --------
Balance at December 31, 1992.......................................   48,218
Net income for the period..........................................   23,476
Amounts paid by HLR on behalf of RBL...............................    3,314
                                                                    --------
Balance at December 31, 1993.......................................  $75,008
Net income for the period..........................................   27,939
                                                                    --------
Balance at December 31, 1994....................................... $102,947
                                                                    ========

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ROCHE BIOMEDICAL LABORATORIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 

YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 (DOLLARS IN THOUSANDS) 

11. PENSIONS                                                                    

RBL has defined benefit retirement plans covering, in the aggregate,        
substantially all employees. Under the terms of each plan, participants are     
entitled to receive monthly retirement benefits after satisfying specified      
eligibility requirements, or participants may elect certain optional forms of   
retirement benefits in accordance with the articles of the particular plan.     
Each of the plans provides retirement benefits based upon a participant's       
defined compensation during a specified period before retirement.               

The underlying plans' assets are primarily held in the Roche Retirement     
Plans' Master Trust. Such assets are invested principally in equity securities, 
bonds, real estate investment funds and contracts with insurance companies.     

RBL's funding policy is to contribute amounts determined in accordance with 
applicable regulations. The information which follows represents the            
aggregation of data for all defined benefit retirement plans.                   

Net periodic pension expense is comprised of the following components:      

                                                                [Download Table]

                                                   1992     1993     1994   
                                                  -------  -------  ------- 
                                                                            
Service cost--benefits earned during the year.... $ 3,268  $ 4,231  $ 5,175 
Interest cost on projected benefit obligation....   2,429    2,979    3,442 
Actual return on plan assets.....................    (412)  (1,281)   2,149 
Net amortization and deferral....................  (2,570)  (1,695)  (5,558)
                                                  -------  -------  ------- 
Net periodic pension cost........................ $ 2,715  $ 4,234  $ 5,208 
                                                  =======  =======  ======= 

The following table sets forth the funded status of RBL's retirement plans  
and the amounts recognized in RBL's balance sheet at December 31, 1993 and      
1994.                                                                           

                                                                [Download Table]

                                                           1993      1994   
                                                         --------  -------- 
                                                                            
Actuarial present value of benefit obligations:                             
  Accumulated benefit obligations, including vested                         
   benefits of $27,856 in 1993 and $27,388 in 1994...... $(34,100) $(33,251)
                                                         ========  ======== 
  Projected benefit obligations.........................  (47,038)  (45,746)
Plan assets at fair value...............................   35,146    40,010 
                                                         --------  -------- 
Plan assets less than projected benefit obligations.....  (11,892)   (5,736)
Unrecognized net loss...................................    5,981     2,279 
Unrecognized prior service cost.........................    1,840     1,295 
Unrecognized net assets.................................   (4,709)   (4,238)
                                                         --------  -------- 
Pension liability recognized in RBL's balance sheet..... $ (8,780) $ (6,400)
                                                         ========  ======== 

Assumptions used in the aforementioned information included:                

                                                                [Download Table]

                                                            1992  1993  1994 
                                                            ----  ----  ---- 
                                                                             
 Approximate annual rate of increase in compensation......  7.0%  5.9%  5.7% 
 Assumed discount rate....................................  8.5%  7.5%  8.75%
 Expected long-term rate of return on assets..............  8.5%  8.5%  8.5% 

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ROCHE BIOMEDICAL LABORATORIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 

YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 (DOLLARS IN THOUSANDS) 

12. OTHER POSTRETIREMENT BENEFITS                                               

RBL provides certain health and death benefits to its retirees. Current     
retirees are generally covered by the same health benefits provided to active   
employees, with the exception of those participants retiring on or after        
February 1, 1990 who are required to contribute toward retiree medical coverage 
based upon length of service. RBL is generally self-insured for these costs and 
has no plan assets. RBL's policy is to fund these benefits as claims are        
incurred.                                                                       

Effective January 1, 1992, RBL adopted the provisions of SFAS No. 106. RBL  
recognized the transition obligation of $16,151 on a before-tax basis (or       
$9,818 after a deferred tax benefit of $6,333) as a cumulative effect of an     
accounting change.                                                              

Net periodic postretirement benefits expense is comprised of the following  
components:                                                                     

                                                                [Download Table]

                                                         1992   1993   1994 
                                                        ------ ------ ------
                                                                            
Service cost--benefits earned during the year.......... $2,130 $2,842 $3,307
Interest cost on accumulated postretirement benefit                         
 obligation............................................  1,455  2,009  2,157
Net amortization and deferral..........................    --     105    112
                                                        ------ ------ ------
Net periodic postretirement benefit cost............... $3,585 $4,956 $5,576
                                                        ====== ====== ======

The following table sets forth the funded status of RBL's postretirement    
benefits plan and the amounts recognized in RBL's balance sheet as of December  
31, 1993 and 1994.                                                              

                                                                [Download Table]

                                                           1993      1994   
                                                         --------  -------- 
                                                                            
Accumulated postretirement benefit obligation........... $(27,623) $(27,552)
Unrecognized net loss (gain)............................    3,712    (1,170)
                                                         --------  -------- 
Accrued postretirement benefit obligation recognized in                     
 RBL's balance sheet.................................... $(23,911) $(28,722)
                                                         ========  ======== 

The assumption used to develop the obligation included a discount rate of   
8.6%, 7.6% and 8.85% for 1992, 1993 and 1994, respectively. For 1994, the       
health care cost trend rate was assumed to be 9.5%, declining gradually to 5.1% 
in year 2005, then remaining level to the year 2020 in which it declines to     
5.0%, and remaining level thereafter. For 1993, the assumed trend rate was 9.5% 
declining gradually to 5.0% in year 2005, and remaining level thereafter. The   
health care cost trend rate has a significant effect on the amounts reported.   
To illustrate, a one percentage point increase in the assumed health care cost  
trend rates would increase the accumulated postretirement benefit obligation as 
of December 31, 1993 and 1994 by approximately $5,470 and $7,670, respectively, 
and the total of the service and interest cost components of net periodic       
postretirement benefit cost for the years then ended by approximately $630 and  
$1,540, respectively.                                                           

In 1992, RBL established a qualified defined contribution savings plan      
available to substantially all employees, whereby RBL matches one-half of the   
first 6% of base compensation that a participant contributes. RBL's             
contributions under the plan approximated $1,386 in 1992, $3,185 in 1993 and    
$3,284 in 1994.                                                                 

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ROCHE BIOMEDICAL LABORATORIES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 

YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 (DOLLARS IN THOUSANDS) 

13. COMMITMENTS                                                                 

 RBL leases various office facilities, vehicles and EDP equipment. Such rental
expense amounted to $17,926 in 1992, $20,797 in 1993 and $22,545 in 1994.       

 Minimum future rental commitments under noncancelable operating leases having
an initial or remaining term in excess of one year as of December 31, 1994 are  
as follows:                                                                     

                                                                [Download Table]
                                                                            
1995................................................................ $19,483
1996................................................................  11,177
1997................................................................   8,308
1998................................................................   6,765
1999................................................................   5,492
Thereafter..........................................................  12,994
                                                                     -------
  Total minimum rental payments required............................ $64,219
                                                                     =======

The unexpended balance of authorized capital projects for plant construction
and purchases of equipment and other significant commitments aggregated $13,207 
at December 31, 1994                                                            

14. CONTINGENCIES                                                               

RBL is a defendant in various legal actions. In the opinion of management,  
the disposition of such actions will not have a material adverse effect on      
RBL's business operations or financial condition.                               

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                                                                         ANNEX I

AGREEMENT AND PLAN OF MERGER

DATED AS OF 

DECEMBER 13, 1994 

AMONG 

NATIONAL HEALTH LABORATORIES HOLDINGS INC., 

HLR HOLDINGS INC. 

AND 

ROCHE BIOMEDICAL LABORATORIES, INC. 

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TABLE OF CONTENTS/1/

ARTICLE 1 

THE MERGER

                                                                [Download Table]
                                                                               
                                                                           PAGE
                                                                           ----
SECTION 1.1.  The Merger.................................................   I-1
SECTION 1.2.  Conversion of Shares.......................................   I-2
SECTION 1.3.  Surrender and Payment......................................   I-3
SECTION 1.4.  Warrants...................................................   I-4
SECTION 1.5.  Stock Options..............................................   I-5

                                  ARTICLE 2                                    

                          THE SURVIVING CORPORATION                            

SECTION 2.1.  Certificate of Incorporation...............................   I-5
SECTION 2.2.  Bylaws.....................................................   I-5
SECTION 2.3.  Directors and Officers.....................................   I-6

                                  ARTICLE 3                                    

                    REPRESENTATIONS AND WARRANTIES OF NHL                      

SECTION 3.1.  Corporate Existence and Power..............................   I-6
SECTION 3.2.  Corporate Authorization....................................   I-6
SECTION 3.3.  Governmental Authorization.................................   I-6
SECTION 3.4.  Non-Contravention..........................................   I-7
SECTION 3.5.  Capitalization.............................................   I-7
SECTION 3.6.  Subsidiaries...............................................   I-7
SECTION 3.7.  SEC Filings................................................   I-8
SECTION 3.8.  Financial Statements.......................................   I-8
SECTION 3.9.  Disclosure Documents.......................................   I-9
SECTION 3.10. Absence of Certain Changes.................................   I-9
SECTION 3.11. No Undisclosed Material Liabilities........................  I-10
SECTION 3.12. Litigation.................................................  I-10
SECTION 3.13. Taxes......................................................  I-10
SECTION 3.14. ERISA......................................................  I-11
SECTION 3.15. Compliance with Laws; Permits..............................  I-13
SECTION 3.16. Finders' Fees..............................................  I-13
SECTION 3.17. Other Information..........................................  I-14
SECTION 3.18. Environmental Matters......................................  I-14
SECTION 3.19. Takeover Statutes..........................................  I-15
SECTION 3.20. Opinion of Financial Advisor...............................  I-15
SECTION 3.21. Vote Required..............................................  I-15

                                  ARTICLE 4                                    

                REPRESENTATIONS AND WARRANTIES OF HLR AND RBL                  

SECTION 4.1.  Corporate Existence and Power..............................  I-15
SECTION 4.2.  Corporate Authorization....................................  I-16
SECTION 4.3.  Governmental Authorization.................................  I-16

--------                                                                        
1 This Table of Contents is not a part of this Agreement.                       

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                                                                [Download Table]

                                                                          PAGE
                                                                          ----
                                                                              
SECTION 4.4.  Non-Contravention.........................................  I-16
SECTION 4.5.  Capitalization of RBL.....................................  I-16
SECTION 4.6.  Subsidiaries..............................................  I-17
SECTION 4.7.  Financial Statements......................................  I-17
SECTION 4.8.  Disclosure Documents......................................  I-17
SECTION 4.9.  Absence of Certain Changes................................  I-17
SECTION 4.10. No Undisclosed Material Liabilities.......................  I-18
SECTION 4.11. Litigation................................................  I-19
SECTION 4.12. Taxes.....................................................  I-19
SECTION 4.13. ERISA.....................................................  I-19
SECTION 4.14. Compliance with Laws; Permits.............................  I-21
SECTION 4.15. Finders' Fees.............................................  I-22
SECTION 4.16. Environmental Matters.....................................  I-22
SECTION 4.17. HLR Cash Consideration....................................  I-23
SECTION 4.18. Takeover Statutes.........................................  I-23
SECTION 4.19. Ownership of NHL Shares...................................  I-23

                                  ARTICLE 5                                   

                               COVENANTS OF NHL                               

SECTION 5.1.  Conduct of NHL............................................  I-23
SECTION 5.2.  Stockholder Meeting; Proxy Material; Registration               
              Statement; Stock Exchange Listing.........................  I-24
SECTION 5.3.  Access to Information; Confidentiality....................  I-24
SECTION 5.4.  Other Offers..............................................  I-25
SECTION 5.5.  Notices of Certain Events.................................  I-26
SECTION 5.6.  Tax Matters...............................................  I-26
SECTION 5.7.  Board Composition.........................................  I-27

                                  ARTICLE 6                                   

                           COVENANTS OF HLR AND RBL                           

SECTION 6.1.  Conduct of RBL............................................  I-27
SECTION 6.2.  Access to Information; Confidentiality....................  I-28
SECTION 6.3.  Voting of Shares..........................................  I-28
SECTION 6.4.  Notices of Certain Events.................................  I-29
SECTION 6.5.  Tax Matters...............................................  I-29
SECTION 6.6.  NHL Employment Agreements.................................  I-29
SECTION 6.7.  Certain Actions Regarding RBL.............................  I-29

                                  ARTICLE 7                                   

                        COVENANTS OF HLR, RBL AND NHL                         

SECTION 7.1.  Reasonable Efforts........................................  I-30
SECTION 7.2.  Cash Consideration........................................  I-30
SECTION 7.3.  Public Announcements......................................  I-30
SECTION 7.4.  Further Assurances........................................  I-30
SECTION 7.5.  HLR Stockholder Agreement.................................  I-31
SECTION 7.6.  Indemnification and Insurance.............................  I-31

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ARTICLE 8 

TAX MATTERS 

                                                                [Download Table]

                                        PAGE       
                                        ----       
                                                   
SECTION 8.1.  Definitions.............  I-31       
SECTION 8.2.  Tax Covenants...........  I-32       
SECTION 8.3.  Termination of Existing              
              Tax Sharing Agreements..  I-33       
SECTION 8.4.  Tax Sharing.............  I-33       
SECTION 8.5.  Cooperation on Tax                   
              Matters.................  I-35       

                                  ARTICLE 9        

                           CONDITIONS TO THE MERGER

SECTION 9.1.  Conditions to the                    
              Obligations of Each                  
              Party...................  I-35       
SECTION 9.2.  Conditions to the                    
              Obligations of HLR and               
              RBL.....................  I-36       
SECTION 9.3.  Conditions to the                    
              Obligations of NHL......  I-37       

                                  ARTICLE 10       

                                 TERMINATION       

SECTION 10.1. Termination.............  I-38       
SECTION 10.2. Effect of Termination...  I-38       

                                  ARTICLE 11       

                                MISCELLANEOUS      

SECTION 11.1. Notices.................  I-39       
SECTION 11.2. Survival of Agreements               
              and Representations and              
              Warranties..............  I-39       
SECTION 11.3. Amendments; No Waivers..  I-39       
SECTION 11.4. Fees and Expenses.......  I-40       
SECTION 11.5. Successors and Assigns..  I-40       
SECTION 11.6. Governing Law...........  I-40       
SECTION 11.7. Counterparts;                        
              Effectiveness...........  I-40       
SECTION 11.8. Certain Definitions.....  I-40       
SECTION 11.9. Agreements of Roche.....  I-41       

Exhibit A--Form of HLR Stockholder Agreement*                                   
Exhibit B--Form of NHL Representations Letter*                                  
Exhibit C--Form of HLR Representations Letter*                                  
Exhibit D--Form of RBL/HLR Tax Opinion*                                         
Exhibit E--Form of NHL Tax Opinion*                                             
--------                                                                        
* Not attached.                                                                 

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TABLE OF DEFINED TERMS(2) 

                                                                [Download Table]

TERM                                                               SECTION      
----                                                           ---------------- 
                                                                                
1933 Act......................................................              3.3 
1934 Act......................................................              3.3 
Acquisition Proposal..........................................    5.4(a)(ii)(B) 
Adjusted Option...............................................           1.5(b) 
Affiliate.....................................................          11.8(a) 
Anti-dilution Adjustment......................................           1.2(b) 
Borrowed Funds................................................           6.7(a) 
Cash Consideration............................................           1.2(a) 
Cash Consideration Fund.......................................           1.3(a) 
CERCLA........................................................     3.18(e)(iii) 
Certificates..................................................           1.3(b) 
Code.......................................................... Recitals, page 1 
Conversion Consideration......................................           1.2(a) 
Conversion Number.............................................           1.5(b) 
CS Commitment Letter..........................................              7.2 
Delaware Law.................................................. Recitals, page 1 
Dissenting Shares.............................................           1.2(e) 
Dissenting Stockholder........................................           1.2(e) 
Effective Time................................................           1.1(b) 
Employee Stock Options........................................           1.5(a) 
Environmental Laws............................................       3.18(e)(i) 
ERISA.........................................................          3.14(a) 
ERISA Affiliate...............................................      3.14(a)(ii) 
Exchange Agent................................................           1.3(a) 
Excess Shares.................................................       1.2(d)(ii) 
Exon-Florio...................................................              4.3 
Expiration Date...............................................            1.4(a)
Fractional Shares Fund........................................       1.2(d)(ii) 
GAAP..........................................................              3.8 
Hazardous Substances..........................................      3.18(e)(ii) 
HLR........................................................... Recitals, page 1 
HLR Adverse Condition.........................................       9.2(d)(iv) 
HLR Cash Consideration........................................           1.3(a) 
HLR Group.....................................................              8.1 
HLR-NHL Shares................................................           1.2(b) 
HLR Number....................................................           1.2(b) 
HLR Representations Letter....................................           8.2(i) 
HLR Stockholder Agreement..................................... Recitals, page 1 
HLR/RBL Post-Signing Returns..................................              6.5 
HSR Act.......................................................              3.3 
HSR Authority.................................................          10.1(g) 
IRS...........................................................          3.13(h) 
known to......................................................             11.8 
Liabilities...................................................             3.11 
Lien..........................................................              3.4 
Merger........................................................ Recitals, page 1 
MF & Co....................................................... Recitals, page 1 

--------                                                                        
(2) This Table of Defined Terms is not part of the Agreement.                   

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TERM                                                                SECTION     
----                                                            ----------------
                                                                                
Morgan Stanley.................................................             3.16
Multiemployer Plan.............................................       3.14(b)(i)
Net Debt Amount................................................           6.7(a)
NHCG........................................................... Recitals, page 1
NHL............................................................ Recitals, page 1
NHL Adverse Condition..........................................       9.3(d)(ii)
NHL Benefit Arrangements.......................................     3.14(e)(iii)
NHL Cash Consideration.........................................           1.3(a)
NHL Common Stock............................................... Recitals, page 1
NHL Disclosure Schedule........................................        Article 3
NHL Employee Plans.............................................      3.14(a)(ii)
NHL Environmental Liabilities..................................      3.18(d)(ii)
NHL Group......................................................              8.1
NHL Material Adverse Change....................................          3.10(a)
NHL Material Adverse Effect....................................              3.1
NHL Permits....................................................          3.15(b)
NHL Post-Signing Returns.......................................              5.6
NHL Preferred Stock............................................              3.5
NHL Proxy Statement............................................           3.9(a)
NHL Representations Letter.....................................           8.2(h)
NHL Retirement Plans...........................................      3.14(b)(ii)
NHL Returns....................................................          3.13(a)
NHL Securities.................................................              3.5
NHL Share......................................................           1.2(a)
NHL Share Conversion...........................................           1.2(a)
NHL Stockholder Meeting........................................              5.2
NHL Subsidiary Securities......................................       3.6(b)(ii)
NLRB...........................................................          3.14(h)
Notice of Superior Proposal....................................      5.4(b)(iii)
NYSE...........................................................       1.2(d)(ii)
Option Cash Amount.............................................       1.5(a)(ii)
Option Conversion Number.......................................           1.5(b)
Option Stock Amount............................................       1.5(a)(ii)
Option Value Amount............................................       1.5(a)(ii)
Person.........................................................          11.8(c)
Post-Merger Tax Period.........................................              8.1
Pre-Merger Tax Period..........................................              8.1
Pro Forma Balance Sheet........................................           6.7(a)
RIAS...........................................................              4.7
RBL............................................................ Recitals, page 1
RBL Balance Sheet..............................................              4.7
RBL Balance Sheet Date.........................................              4.7
RBL Benefit Arrangements.......................................     4.13(e)(iii)
RBL Disclosure Schedule........................................        Article 4
RBL Employee Plans.............................................   4.13(a)(ii)(B)
RBL Environmental Liabilities..................................      4.16(d)(ii)
RBL Financial Statements.......................................              4.7
RBL Material Adverse Change....................................           4.9(a)
RBL Material Adverse Effect....................................              4.1
RBL Permits....................................................          4.14(b)
RBL Retirement Plans...........................................      4.13(b)(ii)

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TERM                                                                SECTION     
----                                                            ----------------
                                                                                
RBL Returns....................................................          4.12(a)
RBL Subsidiary Securities......................................       4.6(b)(ii)
Registration Statement.........................................           3.9(a)
Release........................................................     3.18(e)(iii)
Released.......................................................     3.18(e)(iii)
Roche.......................................................... Recitals, page 1
Roche Warrant Consideration....................................           1.3(a)
Roche Warrants.................................................           1.3(a)
SEC............................................................              3.1
SEC Documents..................................................           3.7(a)
Share..........................................................           1.2(b)
Sharing and Call Option Agreement.............................. Recitals, page 1
Significant Subsidiary.........................................              3.1
Subsidiary.....................................................              3.1
Superior Proposal..............................................      5.4(b)(iii)
Surviving Corporation..........................................           1.1(a)
Tax............................................................             3.13
Tax Sharing Agreement..........................................              8.1
to the knowledge of............................................             11.8
Warrant........................................................           1.4(a)
Warrant Agreement..............................................           1.4(a)

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER dated as of December 13, 1994 among National   
Health Laboratories Holdings Inc., a Delaware corporation ("NHL" and for        
purposes of this Agreement references to NHL shall be deemed to include, as     
appropriate in the context, National Health Laboratories Inc., a Delaware       
corporation which is NHL's predecessor in interest), HLR Holdings Inc., a       
Delaware corporation ("HLR"), and Roche Biomedical Laboratories, Inc. a New     
Jersey corporation and a direct wholly-owned subsidiary of HLR ("RBL") and for  
the purposes of Sections 1.4(b) and 11.9, Hoffmann-La Roche Inc., a New Jersey  
corporation ("ROCHE").                                                          

 WHEREAS, the respective Boards of Directors of HLR, RBL and NHL have approved
the merger of RBL with and into NHL (the "MERGER") upon the terms and subject   
to the conditions of this Agreement and in accordance with the General          
Corporation Law of the State of Delaware ("DELAWARE LAW"); and                  

 WHEREAS, the Board of Directors of NHL has determined that the Merger is fair
to, and in the best interests of, the holders of NHL common stock, par value    
$0.01 per share ("NHL COMMON STOCK"), and has approved this Agreement, the      
Sharing and Call Option Agreement dated the date hereof among HLR, National     
Health Care Group, Inc. ("NHCG"), a Delaware corporation, which is a            
significant stockholder of NHL, and Mafco Holdings Inc., the ultimate parent    
company of NHCG (the "SHARING AND CALL OPTION AGREEMENT") and the HLR           
Stockholder Agreement to be entered into immediately prior to the Merger by HLR 
and NHL which agreement shall be substantially in the form of Exhibit A hereto  
(the "HLR STOCKHOLDER AGREEMENT") and the transactions contemplated hereby and  
thereby, and recommended approval and adoption of this Agreement and such       
transactions by the stockholders of NHL; and                                    

 WHEREAS, the Board of Directors of RBL has determined that the Merger is fair
to, and in the best interests of, RBL and HLR, and has approved this Agreement, 
and the transactions contemplated hereby and the Board of Directors of HLR has  
approved and adopted this Agreement and has approved the HLR Stockholder        
Agreement and the Sharing and Call Option Agreement and the transactions        
contemplated hereby and thereby; and                                            

WHEREAS, the parties intend that the Merger qualify as a reorganization     
within the meaning of Section 368(a)(i) of the Internal Revenue Code of 1986,   
as amended (the "Code"); and                                                    

 WHEREAS, in connection with the Merger, a portion of each share of NHL Common
Stock will be converted into the right to receive $5.60 in cash in a            
transaction constituting a redemption within the meaning of Section 317(b) of   
the Code; and                                                                   

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants  
and agreements contained herein, the parties hereto agree as follows:           

ARTICLE 1 

THE MERGER

 SECTION 1.1. THE MERGER. (a) Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Delaware Law, RBL shall be      
merged with and into NHL at the Effective Time (as defined in Section 1.1(b)),  
whereupon the separate existence of RBL shall cease, and NHL shall be the       
surviving corporation (the "SURVIVING CORPORATION").                            

(b) As soon as practicable after satisfaction or, to the extent permitted   
hereunder, waiver of all conditions to the Merger, NHL and RBL will file a      
certificate of merger, in the form required by and executed in accordance with  
Delaware Law, with the Secretary of State of the State of Delaware and make all 
other filings or recordings required by Delaware Law in connection with the     
Merger. The Merger shall become                                                 

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effective at such time as the certificate of merger is duly filed with the      
Secretary of State of the State of Delaware, which shall be as soon as          
practicable following the NHL Stockholder Meeting (as defined in Section 5.2    
hereof) (the "EFFECTIVE TIME").                                                 

(c) From and after the Effective Time, the Surviving Corporation shall      
possess all the rights, privileges, powers and franchises and be subject to all 
of the restrictions, disabilities and duties of NHL and RBL, all as provided    
under Delaware Law.                                                             

SECTION 1.2. CONVERSION OF SHARES. At the Effective Time:                   

(a) each share of NHL Common Stock (each an "NHL SHARE") issued and         
outstanding prior to the Effective Time (other than any NHL Shares held by RBL, 
HLR or any Subsidiary) (as defined in Section 3.1) shall, subject to Section    
1.2(d) be converted into (x) 0.72 of an NHL Share and (y) the right to receive  
$5.60 in cash without interest thereon (the "CASH CONSIDERATION" and, together  
with the NHL Shares to be issued pursuant to (x) above, the "CONVERSION         
CONSIDERATION"; such conversion is referred to herein as the "NHL SHARE         
CONVERSION");                                                                   

(b) all RBL common shares, no par value (each a "SHARE" and collectively the
"SHARES"), outstanding immediately prior to the Effective Time shall (except as 
provided in Section 1.2(c)) be converted into and become, in the aggregate, the 
HLR Number (as defined below) of NHL Shares, newly issued as contemplated by    
this Agreement (the "HLR-NHL SHARES"), each such HLR-NHL Share having the same  
rights, powers and privileges as an NHL Share outstanding immediately prior to  
the Effective Time. The "HLR NUMBER" shall be that number of NHL Shares as      
would, in the aggregate and after giving effect to the Merger (including        
issuance of the HLR-NHL Shares and the NHL Share Conversion) and the number of  
NHL Shares held by HLR or any Affiliate immediately prior to the Merger, equal  
49.9% of the total number of NHL Shares which would be outstanding immediately  
after the Effective Time (after giving effect to the issuance under such        
Section 1.5 of NHL Shares in respect of Employee Stock Options (as defined in   
Section 1.5(a)). If between the date of this Agreement and the Effective Time,  
the outstanding shares of NHL Common Stock shall have been changed into a       
different number of shares or a different class, by reason of any stock         
dividend, subdivision, reclassification, recapitalization, split, combination   
or exchange of shares, the HLR Number shall be correspondingly adjusted to      
reflect such stock dividend, subdivision, classification, recapitalization,     
split, combination or exchange of shares (any such adjustment being referred to 
herein as an "ANTI-DILUTION ADJUSTMENT"); and                                   

(c) each Share held by RBL, HLR or any Subsidiary thereof as treasury stock 
immediately prior to the Effective Time shall be canceled and no payment or     
issuance of a HLR-NHL Share shall be made with respect thereto;                 

(d) no certificates or scrip representing less than one share of NHL Common 
Stock shall be issued upon the surrender for exchange of Certificates pursuant  
to Section 1.2. In lieu of any such fractional share, each holder of a          
Certificate who would otherwise have been entitled to a fraction of a share of  
NHL Common Stock upon surrender of Certificates for exchange pursuant to        
Section 1.2 shall be paid upon such surrender cash (without interest) in an     
amount equal to such holder's proportionate interest in the net proceeds from   
the sale or sales in the open market by the Exchange Agent, (as defined in      
Section 1.3) on behalf of all such holders, of the aggregate fractional NHL     
Common Stock issued pursuant to this Section 1.2(d). As soon as practicable     
following the Effective Time, the Exchange Agent shall determine the excess of  
(i) the number of full shares of NHL Common Stock delivered to the Exchange     
Agent by NHL over (ii) the sum of the number of full shares of NHL Common Stock 
to be distributed to each holder of Certificates (such excess being herein      
called the "EXCESS SHARES"), and the Exchange Agent, as agent for the former    
holders of Certificates, shall sell the Excess Shares at the prevailing prices  
on the New York Stock Exchange, Inc. ("NYSE"). The sales of the Excess Shares   
by the Exchange Agent shall be executed on the NYSE through one or more member  
firms of the NYSE and shall be executed in round lots to the extent             
practicable. NHL shall pay all commissions, transfer taxes and other out-of-    
pocket transaction costs, including the expenses and compensation of the        
Exchange Agent, incurred in connection with such sale of Excess Shares. Until   
the net proceeds of such sale have been distributed to the holders of           
Certificates, the Exchange Agent will hold such                                 

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proceeds in trust for such former holders of Certificates (the "FRACTIONAL      
SHARES FUND"). As soon as practicable after the determination of the amount of  
cash to be paid to holders of certificates in lieu of any fractional interests, 
the Exchange Agent shall make available in accordance with this Agreement such  
amounts to such holders of Certificates;                                        

(e) notwithstanding anything in this Agreement, any issued and outstanding  
NHL Shares held by a person who objects to the Merger (a "DISSENTING            
STOCKHOLDER") and complies with all the provisions of Delaware Law concerning   
the right of holders NHL Shares to dissent from the Merger and require          
appraisal of their NHL Shares ("DISSENTING SHARES") shall not be converted as   
described in Section 1.2(a) but shall become the right to receive such          
consideration as may be determined to be due to such Dissenting Stockholder     
pursuant to Delaware Law. If, after the Effective Time, such Dissenting         
Stockholder withdraws his demand for appraisal or fails to perfect or otherwise 
loses his right to appraisal, in any case pursuant to Delaware Law, his NHL     
Shares shall be deemed to be converted as of the Effective Time into the        
Conversion Consideration. NHL shall give HLR (i) prompt notice of any demands   
for appraisal of NHL Shares received by NHL and (ii) the opportunity to         
participate in and direct all negotiations and proceedings with respect to any  
such demands. NHL shall not, without the prior written consent of HLR, make any 
payment with respect to, or settle, offer to settle or otherwise negotiate, any 
such demands.                                                                   

SECTION 1.3. SURRENDER AND PAYMENT. (a) Prior to the Effective Time, HLR and
NHL shall appoint a mutually acceptable bank or trust company as agent (the     
"EXCHANGE AGENT") for the purpose of exchanging certificates in connection with 
the NHL Share Conversion in accordance with the terms of this Agreement. At or  
prior to the Effective Time, HLR shall deposit in trust with the Exchange Agent 
$135,651,100 (the "HLR CASH CONSIDERATION"). At or prior to the Effective Time, 
Roche shall provide to NHL $51,048,900 (the "ROCHE WARRANT CONSIDERATION") in   
respect of Roche's purchase of 8,325,000 Warrants (as defined in Section        
1.4(a)) pursuant to Section 1.4(b) (the "ROCHE WARRANTS"). At or prior to the   
Effective Time, NHL shall, subject to Section 7.2, deposit in trust with the    
Exchange Agent (x) $288,000,000 (the "NHL CASH CONSIDERATION") and (y) the      
Roche Warrant Consideration received from Roche. The HLR Cash Consideration,    
the NHL Cash Consideration and the Roche Warrant Consideration are referred to  
collectively as (the "CASH CONSIDERATION FUND"). The Exchange Agent shall,      
pursuant to irrevocable instructions, deliver the Cash Consideration            
contemplated to be issued as part of the NHL Share Conversion out of the Cash   
Consideration Fund. The Cash Consideration Fund shall not be used for any other 
purpose.                                                                        

 (b) As soon as reasonably practicable after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail to each holder of record of  
a certificate or certificates which immediately prior to the Effective Time     
represented outstanding shares of NHL Shares (the "CERTIFICATES") (i) a letter  
of transmittal (which shall specify that delivery shall be effected, and risk   
of loss and title to the Certificates shall pass, only upon delivery of the     
Certificates to the Exchange Agent and shall be in such form and have such      
other provisions as NHL may reasonably specify) and (ii) instructions for use   
in effecting the surrender of the Certificates in exchange for certificates     
representing the NHL Shares and Cash Consideration into which such Certificates 
shall have been converted pursuant to the NHL Share Conversion. Upon surrender  
of a Certificate for cancellation to the Exchange Agent or to such other agent  
or agents as may be appointed by NHL, together with such letter of transmittal, 
duly executed, and such other documents as may reasonably be required by the    
Exchange Agent, the holder of such Certificate shall be entitled to receive in  
exchange therefor a certificate representing that number of NHL Shares and the  
Cash Consideration which such holder has the right to receive pursuant to the   
provisions of this Article 1 (and cash, if any, in lieu of fractional shares    
pursuant to Section 1.2(d)). In the event of a transfer of ownership of NHL     
Shares which is not registered in the transfer records of NHL, a certificate    
representing the proper number of shares of NHL Shares may be issued and the    
Cash Consideration may be paid (and cash, if any, in lieu of fractional shares) 
to a Person other than the Person in whose name the Certificate so surrendered  
is registered, if such Certificate shall be properly endorsed or otherwise be   
in proper form for transfer and the Person requesting such payment shall pay    
any transfer or other taxes required by reason of the issuance of NHL Shares    
and payment of Cash Consideration (and cash, if any, in lieu of fractional      
shares) to a Person other than the registered holder of such Certificate or     
establish to the satisfaction of HLR that such tax has been paid or is not      

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applicable. Until surrendered as contemplated by this Section 1.3, each         
Certificate shall be deemed at any time after the Effective Time to represent   
only the number of NHL Shares and the right to receive Cash Consideration (and  
cash, if any, in lieu of fractional shares) to which such holder is entitled    
pursuant to the NHL Share Conversion, and the holder of such Certificate shall  
cease to have any rights with respect to the number of NHL Shares represented   
by such Certificate immediately prior to the Effective Time in excess of the    
number of NHL Shares to which such holder is entitled pursuant to the NHL Share 
Conversion except as otherwise provided herein or by law. No interest will be   
paid or will accrue on any Conversion Consideration (or cash, if any, payable   
in lieu of fractional shares).                                                  

 (c) From and after the Effective Time, there shall be no further registration
of transfers of Certificates.                                                   

(d) The Cash Consideration Fund and the Fractional Shares Fund shall be     
invested by the Exchange Agent as directed by HLR in consultation with the      
Surviving Corporation (so long as such directions do not impair the rights of   
the holders of NHL Shares) in direct obligations of the United States of        
America, obligations for which the full faith and credit of the United States   
of America is pledged to provide for the payment of principal and interest,     
commercial paper rated of the highest quality by Moody's Investors Services,    
Inc. or Standard & Poor's Corporation or certificates of deposit issued by a    
commercial bank having combined capital, surplus and undivided profits          
aggregating at least $500,000,000 (provided that no such investment made prior  
to the thirtieth day after the Effective Time shall mature more than seven days 
after such investment is made), and any net earnings with respect thereto shall 
be paid to the Surviving Corporation as and when requested by the Surviving     
Corporation.                                                                    

 (e) Any portion of the Cash Consideration Fund and the Fractional Shares Fund
which remains undistributed six months after the Effective Time shall be        
delivered to the Surviving Corporation upon demand, and any holders of such NHL 
Shares who have not theretofore complied with this Article 1 shall thereafter   
look only to the Surviving Corporation for the Cash Consideration (and cash, if 
any, payable in lieu of fractional shares) to which they are entitled.          

(f) Neither HLR nor the Surviving Corporation shall be liable to any holder 
of NHL Shares for any such Cash Consideration (or cash, if any, payable in lieu 
of fractional shares) or any certificates for any NHL Shares delivered to a     
public official pursuant to any applicable abandoned property, escheat or       
similar law.                                                                    

(g) The Surviving Corporation shall be entitled to deduct and withhold from 
the Cash Consideration (and cash, if any, payable in lieu of fractional shares) 
otherwise payable pursuant to this Agreement to any holder of NHL Shares such   
amounts as the Surviving Corporation is required to deduct and withhold with    
respect to the making of such payment under the Code, or any provision of       
state, local or foreign tax law. To the extent that amounts are so withheld,    
such withheld amounts shall be treated for all purposes of this Agreement as    
having been paid to the holder of such NHL Shares in respect of which such      
deduction and withholding was made by the Surviving Corporation.                

SECTION 1.4. WARRANTS. (a) NHL currently intends to declare a dividend      
payable to holders of NHL Common Stock of record as of the third Business Day   
prior to the date of the NHL Stockholder Meeting, which dividend shall consist  
of .16308 of a warrant for each NHL Share outstanding on such date, each such   
Warrant (a "WARRANT" and together with the Roche Warrants, the "WARRANTS")      
representing the right to purchase one newly issued share of NHL Common Stock   
and which shall be in the form and have substantially the terms and conditions  
set forth in the Warrant Agreement to be entered into between NHL and a warrant 
agent, which Warrant Agreement shall be satisfactory to NHL and to Roche (the   
"WARRANT AGREEMENT"). The Warrant Agreement will contain customary terms and    
conditions and will provide, among other things, for the issuance of the        
Warrants to be dividended to holders of record of NHL Common Stock on the third 
Business Day preceding the date of the NHL Stockholder Meeting, for the         
issuance of the Roche Warrants, that each Warrant may be exercised on the fifth 
anniversary (the "EXPIRATION DATE") of issuance to purchase one share of Common 
Stock at a purchase price of $22.00 per share (subject to adjustments), and     
that NHL shall have the option, exercisable by notice 60 days prior to the      
Expiration Date, to redeem the Warrants on the Expiration Date for a cash       
redemption price per Warrant equal to the average closing price of the NHL      
Common Stock over a specified period prior to the Expiration Date minus the     
exercise price. It                                                              

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is understood and agreed by the parties hereto that the representations and     
warranties of NHL with respect to the Warrant Agreement set forth in Article 3  
hereof are based upon the assumption that the Warrant Agreement will conform to 
the description set forth in the preceding sentence.                            

(b) At or prior to the Effective Time, Roche shall cause to be delivered to 
NHL an amount in cash equal to the Roche Warrant Consideration in payment of    
the aggregate purchase price of $51,048,900 payable in respect of the Roche     
Warrants. In consideration of receipt of such payment, NHL shall issue and      
deliver to Roche pursuant to the Warrant Agreement a warrant certificate or     
certificates (in such denominations as requested by Roche) representing the     
Roche Warrants so purchased.                                                    

SECTION 1.5. STOCK OPTIONS. (a) Each employee stock option or right to      
acquire NHL Shares under NHL's 1988 and 1994 Stock Option Plans (such rights    
being referred to as "EMPLOYEE STOCK OPTIONS") outstanding on the date hereof   
shall be deemed fully vested and, immediately prior to the Effective Time, NHL  
shall use reasonable efforts, including with respect to obtaining consents, to  
cause each Employee Stock Option to be canceled and terminated in exchange for  
an amount in cash and NHL Shares (in the proportions set forth below) equal to  
the product of (i) the number of NHL Shares subject to such Employee Stock      
Option immediately prior to the Effective Time and (ii) the excess of (1)       
$18.50 over (2) the per share exercise price of such Employee Stock Option      
(such product, the "OPTION VALUE AMOUNT"). The Option Value Amount shall be     
payable at the Effective Time as follows: 40% of such amount (the "OPTION CASH  
AMOUNT") shall be payable in cash, and 60% of such amount (the "OPTION STOCK    
AMOUNT") shall be payable in the number of NHL Shares obtained by dividing the  
Option Stock Amount by $15.42; provided that any fractional share resulting     
from such calculation shall be paid in cash, with the value of a whole share    
for such purpose assumed to be $15.42. All amounts payable to this Section      
1.5(a) shall be subject to any required withholding of taxes and shall be paid  
without interest thereon.                                                       

(b) Notwithstanding the foregoing Section 1.5(a), the Employee Stock Options
with respect to which the requisite consents are not obtained shall not be      
canceled, but instead shall be immediately converted as of the Effective Time   
into the right ("ADJUSTED OPTION") to purchase the Option Conversion Number (as 
defined below) of NHL Shares. Each Adjusted Option will have substantially the  
same terms as the Employee Stock Option to which it is related, except that:    
(i) the Adjusted Option shall be deemed fully vested and (ii) the exercise      
price of an Adjusted Option shall be an amount equal to the exercise price of   
the Employee Stock Option related to such Adjusted Option as of the date of     
this Agreement divided by the Conversion Number (as defined below). The "OPTION 
CONVERSION NUMBER" for any Adjusted Option shall be equal to the number of NHL  
Shares purchasable pursuant to the Employee Stock Option related to such        
Adjusted Option as of the date of this Agreement multiplied by the Conversion   
Number. The "CONVERSION NUMBER" shall be a number equal to (i) the sum of (x)   
the product of (A) the average closing price of a share of NHL Common Stock on  
the NYSE Composite Tape for the period of five consecutive trading days         
beginning on the trading day following the date on which the Effective Time     
occurs (the "POST MERGER VALUE") and (B) 0.72 and (y) $6.60 divided by (ii) the 
Post Merger Value.                                                              

ARTICLE 2 

THE SURVIVING CORPORATION 

SECTION 2.1. CERTIFICATE OF INCORPORATION. The certificate of incorporation 
of NHL in effect at the Effective Time shall, except as may be amended to give  
effect, as necessary, to the provisions of this Agreement and the HLR           
Stockholder Agreement, be the certificate of incorporation of the Surviving     
Corporation until amended in accordance with applicable law.                    

 SECTION 2.2. BYLAWS. The bylaws of NHL in effect at the Effective Time shall,
except as may be amended to give effect, as necessary, to the provisions of     
this Agreement and the HLR Stockholder Agreement, be the bylaws of the          
Surviving Corporation until amended in accordance with applicable law.          

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SECTION 2.3. DIRECTORS AND OFFICERS. From and after the Effective Time, (i) 
the number of directors constituting the Board of Directors of NHL shall be     
seven and shall be comprised of three members designated by HLR and four        
persons who are mutually acceptable to NHL and HLR, until successors are duly   
elected or appointed and qualified in accordance with applicable law and the    
HLR Stockholder Agreement, and (ii) the executive officers of the Surviving     
Corporation shall be such Persons as are identified on a certificate delivered  
by HLR to NHL prior to the Effective Time, which certificate, upon the delivery 
thereof, shall be deemed to be incorporated into this Agreement for purposes    
hereof.                                                                         

ARTICLE 3 

REPRESENTATIONS AND WARRANTIES OF NHL 

NHL represents and warrants to RBL and HLR that, except as set forth on the 
disclosure schedule delivered by NHL to HLR prior to the execution of this      
Agreement (the "NHL DISCLOSURE SCHEDULE"):                                      

SECTION 3.1. CORPORATE EXISTENCE AND POWER. NHL is a corporation duly       
incorporated, validly existing and in good standing under the laws of the       
jurisdiction in which it is incorporated and has all corporate powers required  
to carry on its business as now being conducted. NHL is duly qualified to do    
business as a foreign corporation and is in good standing in each jurisdiction  
where the character of the property owned or leased by it or the nature of its  
activities makes such qualification necessary, except for those jurisdictions   
where the failure to be so qualified would not, individually or in the          
aggregate, have a material adverse effect on the business, financial condition, 
assets, results of operations or prospects of NHL and its Subsidiaries, taken   
as a whole (an "NHL MATERIAL ADVERSE EFFECT"), or NHL's ability to perform its  
obligations under this Agreement, the HLR Stockholder Agreement, the Warrant    
Agreement or the Sharing and Call Option Agreement. NHL has heretofore          
delivered to HLR true and complete copies of its certificate of incorporation   
and bylaws and the certificate of incorporation and bylaws of each of its       
Subsidiaries, in each case as currently in effect. For purposes of this         
Agreement, "SUBSIDIARY" of any Person means any entity of which securities or   
other ownership interests having ordinary voting power to elect a majority of   
the board of directors or other Persons performing similar functions are        
directly or indirectly owned by such Person. For purposes of this Agreement, a  
"SIGNIFICANT SUBSIDIARY" of a Person means any Subsidiary of such Person that   
constitutes a Significant Subsidiary within the meaning of Rule 1-02 of         
Regulation S-X of the Securities and Exchange Commission (the "SEC").           

 SECTION 3.2. CORPORATE AUTHORIZATION. The execution, delivery and performance
by NHL of this Agreement, the HLR Stockholder Agreement, the Warrant Agreement  
and the Sharing and Call Option Agreement, the consummation by NHL of the       
transactions contemplated hereby (including, without limitation, the Merger,    
the delivery of the Conversion Consideration, the issuance of the HLR-NHL       
Shares and of the Warrants and the NHL Common Stock issuable thereunder) and    
thereby are within NHL's corporate powers and, except for any required approval 
by NHL's stockholders in connection with the consummation of the Merger         
(including any amendments to NHL's certificate of incorporation as referred to  
in Section 2.1 and the treatment of the Employee Stock Options as referred to   
in Section 1.5) have been duly authorized by all necessary corporate action.    
Each of this Agreement and the Sharing and Call Option Agreement constitutes,   
and each of the HLR Stockholder Agreement, and the Warrant Agreement when       
executed and delivered by NHL, will constitute, a valid and binding agreement   
of NHL.                                                                         

SECTION 3.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and        
performance by NHL of this Agreement, the HLR Stockholder Agreement, the        
Warrant Agreement and the Sharing and Call Option Agreement, and the            
consummation by NHL of the transactions contemplated hereby (including, without 
limitation, the Merger, the delivery of the Conversion Consideration, the       
issuance of the HLR-NHL Shares and of the Warrants and the NHL Common Stock     
issuable thereunder) and thereby require no action by, or filing with, any      
governmental body, agency, official or authority other than (i) the filing of a 
certificate of merger in accordance with Delaware Law and any amendments to     
NHL's certificate of incorporation as                                           

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referred to in Section 2.1, (ii) compliance with any applicable requirements of 
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR  
ACT"), (iii) compliance with any applicable requirements of the Securities      
Exchange Act of 1934, as amended (the "1934 ACT"), (iv) compliance with any     
applicable requirements of the Securities Act of 1933, as amended (the "1933    
ACT"), (v) compliance with any applicable foreign or state securities or "blue  
sky" laws and (vi) such actions by or filings with governmental bodies,         
agencies, officials or authorities, the failure of which to obtain or make      
would not reasonably be expected to have, individually or in the aggregate (A)  
an NHL Material Adverse Effect, (B) impair the ability of NHL to perform its    
obligations under this Agreement, the HLR Stockholder Agreement, the Warrant    
Agreement or the Sharing and Call Option Agreement, or (C) prevent the          
consummation of any of the transactions contemplated by this Agreement, the HLR 
Stockholder Agreement, the Warrant Agreement or the Sharing and Call Option     
Agreement.                                                                      

SECTION 3.4. NON-CONTRAVENTION. The execution, delivery and performance by  
NHL of this Agreement, the HLR Stockholder Agreement, the Warrant Agreement and 
the Sharing and Call Option Agreement do not, and the consummation by NHL of    
the transactions contemplated hereby and thereby do not and will not (i)        
contravene or conflict with the certificate of incorporation (taking into       
account appropriate amendments contemplated by Section 2.1 hereof) or the       
bylaws of NHL or the organizational documents of any of its Subsidiaries, (ii)  
assuming compliance with the matters referred to in Section 3.3, contravene or  
conflict with or constitute a violation of any provision of any law,            
regulation, judgment, injunction, order or decree binding upon or applicable to 
NHL or any of its Subsidiaries, (iii) constitute a default under or give rise   
to a right of termination, cancellation or acceleration of any right or         
obligation of NHL or any of its Subsidiaries or to a loss of any benefit to     
which NHL or any of its Subsidiaries is entitled under any provision of any     
agreement, contract or other instrument binding upon NHL or any of its          
Subsidiaries or any license, franchise, permit or other similar authorization   
held by NHL or any of its Subsidiaries, or (iv) result in the creation or       
imposition of any Lien on any asset of NHL or any of its Subsidiaries, except,  
with respect to clauses (ii), (iii) and (iv) above, for contraventions,         
conflicts, defaults, rights of termination, cancellation or acceleration,       
losses of benefits and creation or imposition of Liens that would not           
reasonably be expected to have, individually or in the aggregate, an NHL        
Material Adverse Effect. For purposes of this Agreement, "LIEN" means, with     
respect to any asset, any mortgage, lien, pledge, charge, security interest or  
encumbrance of any kind in respect of such asset.                               

SECTION 3.5. CAPITALIZATION. The authorized capital stock of NHL consists of
10,000,000 shares of preferred stock, par value $0.10 per share ("NHL PREFERRED 
STOCK"), and 220,000,000 NHL Shares. As of December 12, 1994, (a) there were    
issued and outstanding 84,761,817 NHL Shares and no shares of NHL Preferred     
Stock, (b) no NHL Shares were held in NHL's treasury and (c) 1,756,507 NHL      
Shares were reserved for issuance upon exercise of outstanding Employee Stock   
Options (of which options to purchase an aggregate of 3,527,876 NHL Shares were 
vested and exercisable). All outstanding shares of capital stock of NHL are     
validly issued, fully paid and nonassessable and free and clear of any          
preemptive or similar rights. All shares of NHL Common Stock issuable as HLR-   
NHL Shares in the Merger and all shares of NHL Common Stock issuable upon       
exercise of the Warrants will be, upon issuance thereof, validly issued, fully  
paid and nonassessable and free of any preemptive or similar rights. Except as  
set forth in this Section 3.5, and except for the exercise or conversion of     
Employee Stock Options outstanding on December 12, 1994 there are outstanding   
(i) no shares of capital stock or other voting securities of NHL, (ii) no       
securities of NHL convertible into or exchangeable for shares of capital stock  
or voting securities of NHL and (iii) no options or other rights to acquire     
from NHL, and no obligation of NHL to issue, any capital stock, voting          
securities or securities convertible into or exchangeable for capital stock or  
other voting securities of NHL (the items in clauses (i), (ii) and (iii) above  
being referred to collectively as the "NHL SECURITIES"). There are no           
outstanding obligations of NHL or any of its Subsidiaries to repurchase, redeem 
or otherwise acquire any NHL Securities.                                        

SECTION 3.6. SUBSIDIARIES. (a) Each Subsidiary of NHL is a corporation duly 
incorporated, validly existing and in good standing under the laws of its       
jurisdiction of incorporation, has all corporate powers                         

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required to carry on its business as now being conducted and is duly qualified  
to do business as a foreign corporation and is in good standing in each         
jurisdiction where the character of the property owned or leased by it or the   
nature of its activities make such qualification necessary, except for those    
jurisdictions where failure to be so qualified would not, individually or in    
the aggregate, have an NHL Material Adverse Effect. NHL has delivered to HLR a  
list of all of NHL's Subsidiaries. There are no partnerships or joint venture   
arrangements or other business entities in which NHL or any Subsidiary of NHL   
owns an equity interest that is material to the business of NHL and its         
Subsidiaries, taken as a whole.                                                 

(b) All of the outstanding capital stock of each Subsidiary of NHL is owned 
by NHL, directly or indirectly, free and clear of any Lien and free of any      
other limitation or restriction (including any restriction on the right to      
vote, sell or otherwise dispose of such capital stock) other than any such      
limitations or restrictions imposed by statutes or regulations of general       
applicability. There are no outstanding (i) securities of NHL or any of its     
Subsidiaries convertible into or exchangeable for shares of capital stock or    
other voting securities of any of NHL's Subsidiaries, or (ii) options or other  
rights to acquire from NHL or any Subsidiary, and no other obligation of NHL or 
any Subsidiary of NHL to issue, any capital stock, voting securities of, or any 
securities convertible into or exchangeable for any capital stock or other      
voting securities of any Subsidiary of NHL (the items in clauses (i) and (ii)   
being referred to collectively as the "NHL SUBSIDIARY SECURITIES"). There are   
no outstanding obligations of NHL or any Subsidiary of NHL to repurchase,       
redeem or otherwise acquire any outstanding NHL Subsidiary Securities.          

(c) Neither NHL nor any Affiliate of NHL:                                   

(i) is currently engaged in the manufacture or production of drugs of   
abuse reagent products in the United States; or                             

(ii) owns presently (or has owned within the two-year period prior      
hereto):                                                                    

(A) any stock, share capital, equity or other interest in any       
concern, corporate or non-corporate, engaged in at the time of such     
acquisition, or within the two years preceding such acquisition engaged 
in, the manufacture or production of drugs of abuse reagent products in 
the United States; or                                                   

(B) any assets used or previously used (and still suitable for use) 
in the manufacture and production of drugs of abuse reagent products in 
the United States to which annual sales of $3,000,000 or more of drugs  
of abuse reagent products are or in the past have been attributable.    

SECTION 3.7. SEC FILINGS. (a) NHL has filed all required reports, forms, and
other documents with the SEC since January 1, 1992 (the "SEC DOCUMENTS"). As of 
their respective dates, the SEC Documents complied in all material respects     
with the requirements of the 1933 Act or the 1934 Act, as the case may be, and  
the rules and regulations of the SEC promulgated thereunder applicable to such  
SEC Documents, and none of the SEC Documents contained any untrue statement of  
a material fact or omitted to state a material fact necessary in order to make  
the statements therein, in light of the circumstances under which they were     
made, not misleading. Except to the extent that information contained in any    
SEC Document has been revised or superseded by a later-filed SEC Document filed 
and publicly available prior to the date hereof, none of the SEC Documents      
contains any untrue statement of a material fact or omits to state any material 
fact required to be stated therein or necessary in order to make the statements 
therein, in light of the circumstances under which they were made, not          
misleading.                                                                     

(b) No such registration statement referred to in Section 3.7(a), as amended
or supplemented, if applicable, filed pursuant to the 1933 Act as of the date   
such statement or amendment became effective contained any untrue statement of  
a material fact or omitted to state any material fact required to be stated     
therein or necessary to make the statements therein not misleading.             

SECTION 3.8. FINANCIAL STATEMENTS. The financial statements of NHL included 
in the SEC Documents comply as to form in all material respects with applicable 
accounting requirements and the published rules and regulations of the SEC with 
respect thereto, have been prepared in accordance with generally accepted       
accounting principles ("GAAP") (except, in the case of unaudited statements, as 
permitted                                                                       

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by Form 10-Q of the SEC) applied on a consistent basis during the periods       
involved (except as may be indicated in the notes thereto) and fairly present   
the consolidated financial position of NHL and its consolidated Subsidiaries as 
of the dates thereof and the consolidated results of their operations and cash  
flows for the periods then ended (subject, in the case of unaudited statements, 
to normal year-end audit adjustments).                                          

 SECTION 3.9. DISCLOSURE DOCUMENTS. (a) None of the information supplied or to
be supplied by NHL specifically for inclusion or incorporation by reference in  
(i) the registration statement on Form S-4 to be filed with the SEC by NHL in   
connection with the issuance of NHL Shares in the Merger (the "REGISTRATION     
STATEMENT", which Registration Statement will include a resale prospectus)      
will, at the time the Registration Statement is filed with the SEC, at any time 
it is amended or supplemented or at the time it becomes effective under the     
1933 Act, contain any untrue statement of a material fact or omit to state any  
material fact required to be stated therein or necessary to make the statements 
therein not misleading, or (ii) the proxy statement relating to the approval by 
the stockholders of NHL of the Merger and certain other matters, together with  
all other related proxy materials prepared in connection with the NHL           
Stockholder Meeting relating to the Merger (the "NHL PROXY STATEMENT") will, at 
the date the NHL Proxy Statement is first mailed to NHL's stockholders or at    
the time of the NHL Stockholder Meeting, contain any untrue statement of a      
material fact or omit to state any material fact necessary in order to make the 
statements therein, in light of the circumstances under which they were made,   
not misleading. The Registration Statement will comply as to form in all        
material respects with the requirements of the 1933 Act and the rules and       
regulations promulgated thereunder and the NHL Proxy Statement will comply as   
to form in all material respects with the requirements of the 1934 Act and the  
rules and regulations promulgated thereunder.                                   

(b) The representations and warranties contained in Sections 3.9(a) will not
apply to statements included in or omissions from the Registration Statement or 
the NHL Proxy Statement based upon information furnished to NHL by or on behalf 
of HLR or RBL specifically for use therein or information that is omitted by    
HLR or RBL.                                                                     

SECTION 3.10. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the SEC    
Documents, since December 31, 1993 NHL has conducted its business only in the   
ordinary course, and except as specifically contemplated by this Agreement      
there has not been:                                                             

(a) any material adverse change in the business, financial condition, assets
or results of operations of NHL and its Subsidiaries, taken as a whole, or any  
event, occurrence or development of or in a state of circumstances or facts     
(including, without limitation, any development of or in a state of facts or    
any change in the estimated or expected exposure arising or occurring after the 
date hereof relating to any litigation or investigation disclosed, or required  
to be disclosed, pursuant to Section 3.12 or Section 5.5 hereof or in any SEC   
Document referred to in Section 3.12) known to NHL or any Subsidiary of NHL     
which could reasonably be expected to result in such a material adverse change  
(an "NHL MATERIAL ADVERSE CHANGE");                                             

(b) any declaration, setting aside or payment of any dividend or other      
distribution with respect to any shares of capital stock of NHL, or any         
repurchase, redemption or other acquisition by NHL or any of its Subsidiaries   
of any outstanding shares of capital stock or other securities of, or other     
ownership interests in, NHL or any of its Subsidiaries;                         

(c) any amendment of any material term of any outstanding NHL Securities or 
any NHL Subsidiary Securities;                                                  

 (d) any incurrence, assumption or guarantee by NHL or any of its Subsidiaries
of any indebtedness for borrowed money other than in the ordinary course of     
business and in an amount not in excess of $25,000,000 and which is on terms    
consistent with past practices;                                                 

(e) any creation or assumption by NHL or any of its Subsidiaries of any Lien
on any material asset other than in the ordinary course of business consistent  
with past practices;                                                            

 (f) any making of any loan, advance or capital contributions to or investment
in any Person other than loans, advances or capital contributions to or         
investments in wholly-owned Subsidiaries made in the ordinary course of         
business consistent with past practices;                                        

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 (g) any damage, destruction or other casualty loss (whether or not covered by
insurance) affecting the business or assets of NHL or any of its Subsidiaries   
which, individually or in the aggregate, has had or would reasonably be         
expected to have an NHL Material Adverse Effect;                                

(h) any transaction or commitment made, or any contract or agreement entered
into, by NHL or any of its Subsidiaries relating to its assets or business      
(including the acquisition or disposition of any assets) or any relinquishment  
by NHL or any of its Subsidiaries of any contract or other right, in either     
case, material to NHL and its Subsidiaries taken as a whole, other than         
transactions and commitments in the ordinary course of business consistent with 
past practice;                                                                  

(i) any change in any method of accounting or accounting practice by NHL or 
any of its Subsidiaries, except for any such change required by reason of a     
concurrent change in GAAP or which is disclosed in the SEC Documents;           

(j) any (i) grant of any severance or termination pay other than pursuant to
existing contracts, plans or arrangements to any director, officer or employee  
of NHL or any of its Subsidiaries whose total annual compensation and bonus is  
in excess of $200,000, (ii) entering into of any employment, deferred           
compensation or other similar agreement (or any amendment to any such existing  
agreement) involving annual total compensation and bonus in excess of $200,000  
with any director, officer or employee of NHL or any of its Subsidiaries, (iii) 
any amendment or change that increases compensation or benefits payable under   
any existing severance or termination pay plans, policies or employment         
agreements which change or amendment is applicable to a class or classes of     
employees or officers covered thereby other than as expressly required therein  
or (iv) increase in compensation, bonus or other benefits payable to directors, 
officers or employees of NHL or any of its Subsidiaries, whose total annual     
compensation and bonus is in excess of $200,000, except as expressly required   
by any existing employment agreements, or pursuant to compensation plans and    
policies in effect December 31, 1993 or set forth on the NHL Disclosure         
Schedule; or                                                                    

(k) any labor dispute, other than routine individual grievances, or any     
activity or proceeding by a labor union or representative thereof to organize   
any employees of NHL or any of its Subsidiaries, which employees were not       
subject to a collective bargaining agreement prior to or on December 31, 1993,  
or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or    
with respect to such employees.                                                 

 SECTION 3.11. NO UNDISCLOSED MATERIAL LIABILITIES. Except as set forth in the
SEC Documents, neither NHL nor any of its Subsidiaries has any liabilities or   
obligations of any nature (whether accrued, absolute, contingent or otherwise)  
("LIABILITIES") required by GAAP to be set forth on a consolidated balance      
sheet of NHL and its consolidated Subsidiaries or in the notes thereto and      
neither NHL nor any of its Subsidiaries has, to the knowledge of NHL, incurred  
any Liabilities since December 31, 1993 which, whether or not required by GAAP  
to be set forth on such a consolidated balance sheet, when considered together  
with any corresponding asset resulting from the event which gave rise to such   
liability, individually or in the aggregate, have had or could reasonably be    
expected to have an NHL Material Adverse Effect.                                

SECTION 3.12. LITIGATION. Except as set forth in the SEC Documents, there is
no action, suit, investigation or proceeding pending, or to the knowledge of    
NHL threatened (or, to the knowledge of NHL or its Subsidiaries, any basis      
therefor), against NHL or any of its Subsidiaries or any of their respective    
properties before any court or arbitrator or any governmental body, agency or   
official that could reasonably be expected to (A) have an NHL Material Adverse  
Effect, (B) impair the ability of NHL to perform its obligations under this     
Agreement, the HLR Stockholder Agreement, the Warrant Agreement or the Sharing  
and Call Option Agreement or (C) prevent or materially delay the consummation   
of any of the transactions contemplated by this Agreement, the HLR Stockholder  
Agreement, the Warrant Agreement or the Sharing and Call Option Agreement.      

SECTION 3.13. TAXES. Except as set forth in the SEC Documents, (a) NHL, its 
Subsidiaries and the NHL Group (as defined in Section 8.1) have filed, been     
included in or sent, all material returns, declarations and reports and         
information returns and statements required to be filed or sent by or relating  
to any of them relating to any Taxes (as defined below) with respect to any     
material income, properties or operations of NHL,                               

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any of its Subsidiaries or the NHL Group prior to the Effective Time            
(collectively, "NHL RETURNS"), (b) as of the time of filing, the NHL Returns    
correctly reflected in all material respects the facts regarding the income,    
business, assets, operations, activities and status of NHL, its Subsidiaries    
and the NHL Group and any other information required to be shown therein, (c)   
NHL, its Subsidiaries and the NHL Group have timely paid or made provision for  
all material Taxes that have been shown as due and payable on the NHL Returns   
that have been filed, (d) NHL, its Subsidiaries and the NHL Group have made or  
will make provision for all material Taxes payable for any periods that end     
before the Effective Time for which no NHL Returns have yet been filed and for  
any periods that begin before the Effective Time and end after the Effective    
Time to the extent such Taxes are attributable to the portion of any such       
period ending at the Effective Time, (e) the charges, accruals and reserves for 
Taxes reflected on the books of NHL, its Subsidiaries and the NHL Group are     
adequate to cover the Tax liabilities accruing or payable by NHL, its           
Subsidiaries and the NHL Group in respect of periods prior to the date hereof,  
(f) none of NHL, any of its Subsidiaries or the NHL Group is delinquent in the  
payment of any material Taxes or has requested any extension of time within     
which to file or send any material NHL Return, which NHL Return has not since   
been filed or sent, (g) no material deficiency for any Taxes has been proposed, 
asserted or assessed in writing against NHL, any of its Subsidiaries or the NHL 
Group other than those Taxes being contested in good faith, (h) the federal     
income tax returns of the NHL Group have been examined by and settled with the  
Internal Revenue Service (the "IRS") for all years through 1984, (i) none of    
NHL, any of its Subsidiaries or the NHL Group has granted any extension of the  
limitation period applicable to any material Tax claims (which period has not   
since lapsed) other than those Taxes being contested in good faith, (j) none of 
NHL, any of its Subsidiaries or the NHL Group has any contractual obligations   
under any material Tax sharing agreement with any corporation which, as of the  
Effective Time, is not a member of the NHL Group, and (k) neither NHL nor any   
of its Subsidiaries has taken any action or has any knowledge of any fact or    
circumstance that is reasonably likely to prevent the Merger from qualifying as 
a reorganization within the meaning of Section 368(a)(1) of the Code.           

"TAX" or "TAXES" means with respect to any Person (i) any net income, gross 
income, gross receipts, sales, use, ad valorem, franchise, profits, license,    
withholding, payroll, employment, excise, severance, stamp, occupation,         
premium, property, value-added or windfall profit tax, custom duty or other     
tax, governmental fee or other like assessment or charge of any kind            
whatsoever, together with any interest and any penalty, addition to tax or      
additional amount imposed by any taxing authority (domestic or foreign) on such 
Person and (ii) any liability of such Person or any of its Subsidiaries for the 
payment of any amount of the type described in clause (i) as a result of being  
a member of an affiliated or combined group.                                    

SECTION 3.14. ERISA. (a) The NHL Disclosure Schedule identifies each        
"employee benefit plan", as defined in Section 3(3) of the Employee Retirement  
Income Security Act of 1974 ("ERISA"), which (i) is subject to any provision of 
ERISA and (ii) is maintained, administered or contributed to by NHL or any      
ERISA Affiliate (as defined below) and covers any employee or former employee   
of NHL or any Subsidiary of NHL or under which NHL or any ERISA Affiliate has   
any liability. Copies of such plans (and, if applicable, related trust          
agreements, group annuity contracts and summary plan descriptions) and all      
amendments thereto and written interpretations thereof have been furnished or   
made available upon request to HLR and RBL together with (x) the most recent    
annual report (Form 5500 including, if applicable, Schedule B thereto) prepared 
in connection with any such plan and (y) the most recent actuarial valuation    
report prepared in connection with any such plan. Such plans are referred to    
collectively herein as "NHL EMPLOYEE PLANS". For purposes of this Section,      
"ERISA AFFILIATE" of any Person means any other Person which, together with     
such Person, would be treated as a single employer under Section 414 of the     
Code.                                                                           

(b) Except as otherwise identified in the NHL Disclosure Schedule:          

(i) no NHL Employee Plan constitutes a "multiemployer plan", as defined 
in Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN"), and no NHL Employee     
Plan is maintained in connection with any trust described in Section        
501(c)(9) of the Code;                                                      

(ii) no NHL Employee Plans are subject to Title IV of ERISA (the "NHL   
RETIREMENT PLANS");                                                         

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(iii) as of December 31, 1993, the fair market value of the assets of   
each NHL Retirement Plan (excluding for these purposes any accrued but      
unpaid contributions) exceeded the accumulated benefit obligation, as       
determined in accordance with GAAP, under such NHL Retirement Plan;         

(iv) no "accumulated funding deficiency", as defined in Section 412 of  
the Code, has been incurred with respect to any NHL Retirement Plan,        
whether or not waived;                                                      

(v) no "reportable event", within the meaning of Section 4043 of ERISA, 
and no event described in Section 4041, 4042, 4062 or 4063 of ERISA has     
occurred in connection with any NHL Employee Plan, other than a "reportable 
event" that will not have an NHL Material Adverse Effect;                   

(vi) no condition exists and no event has occurred that could constitute
grounds for termination of any NHL Retirement Plan or, with respect to any  
NHL Employee Plan which is a Multiemployer Plan, presents a material risk   
of a complete or partial withdrawal under Title IV of ERISA;                

(vii) neither NHL nor any of its ERISA Affiliates has incurred any      
material liability under Title IV of ERISA arising in connection with the   
termination of, or complete or partial withdrawal from, any plan covered or 
previously covered by Title IV of ERISA;                                    

(viii) if a "complete withdrawal" by NHL and all of its ERISA Affiliates
were to occur as of the Effective Time with respect to all NHL Employee     
Plans which are Multiemployer Plans, neither NHL nor any ERISA Affiliate    
would incur any withdrawal liability under Title IV of ERISA;               

(ix) nothing done or omitted to be done and no transaction or holding of
any asset under or in connection with any NHL Employee Plan has made or     
will make NHL or any of its Subsidiaries, any officer or director of NHL or 
any of its Subsidiaries subject to any liability under Title I of ERISA or  
liable for any Tax pursuant to Section 4975 of the Code that could have an  
NHL Material Adverse Effect; and                                            

(x) neither NHL nor any of its ERISA Affiliates (A) has engaged in a    
transaction described in Section 4069 of ERISA that could subject NHL to    
material liability at any time after the date hereof or (B) has acted in a  
manner that could, or failed to act so as to, result in fines, penalties,   
taxes or related charges under (x) Section 502(c), (i) or (1) or ERISA, (y) 
Section 4071 of ERISA or (z) Chapter 43 of the Code, which penalties, taxes 
or related charges, individually or in the aggregate, would constitute a    
liability in a material amount.                                             

(c) Each NHL Employee Plan which is intended to be qualified under Section  
401(a) of the Code has received a favorable IRS determination letter to such    
effect and NHL knows of no event or circumstance occurring or existing since    
the date of such letter that would adversely affect such NHL Employee Plan's    
qualified status. NHL has furnished or made available upon request to HLR and   
RBL copies of the most recent IRS determination letters with respect to each    
such Plan. Each NHL Employee Plan has been maintained in substantial compliance 
with its terms and with the requirements prescribed by any and all statutes,    
orders, rules and regulations, including but not limited to ERISA and the Code, 
which are applicable to such Plan. There are no investigations by any           
governmental agency, termination proceedings or other claims (except claims for 
benefits payable in the normal operation of the NHL Employee Plans), suits or   
proceedings against or involving any NHL Employee Plan or asserting any rights  
to or claims for benefits under any NHL Employee Plan that could give rise to   
any material liability, and there are not any facts that could give rise to any 
material liability in the event of any such investigation, claim, suit or       
proceeding.                                                                     

(d) There is no contract, agreement, plan or arrangement covering any       
employee or former employee of NHL or any ERISA Affiliate that, individually or 
collectively, could give rise to the payment of any amount that would not be    
deductible pursuant to the terms of Section 280G of the Code. No employee of    
NHL or any of its Subsidiaries will be entitled to any additional benefits or   
any acceleration of the time of payment or vesting of any NHL benefits under    
any NHL Benefit Arrangements (as defined below in Section 3.14(e)) as a result  
of the transactions contemplated by this Agreement.                             

(e) NHL has furnished or made available upon request to RBL copies or       
descriptions of each employment, severance or other similar contract,           
arrangement or policy providing for annual compensation                         

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in excess of $200,000 and each plan or arrangement (written or oral) providing  
for insurance coverage (including any self-insured arrangements), workers'      
compensation, disability benefits, supplemental unemployment benefits, vacation 
benefits, retirement benefits or for deferred compensation, profit-sharing,     
bonuses, stock options, stock appreciation or other forms of incentive          
compensation or post-retirement insurance, compensation or benefits which (i)   
is not an Employee Plan, (ii) is entered into, maintained or contributed to, as 
the case may be, by NHL or any of its Subsidiaries and (iii) covers any         
employee or former employee of NHL or any of its Subsidiaries, to the extent    
existing on the date hereof. The above arrangements (whether or not existing as 
of the date hereof) are referred to collectively herein as the "NHL BENEFIT     
ARRANGEMENTS"). Each NHL Benefit Arrangement has been maintained in substantial 
compliance with its terms and with the requirements prescribed by any and all   
statutes, orders, rules and regulations that are applicable to such NHL Benefit 
Arrangement.                                                                    

(f) Except as disclosed in the NHL Disclosure Schedule, neither NHL nor any 
of its Subsidiaries has any current or projected liability in respect of post-  
employment or post-retirement health and medical benefits for retired or former 
employees of NHL and its Subsidiaries, except as required to avoid excise tax   
under Section 4980B of the Code; and no condition exists that would prevent NHL 
or any of its Subsidiaries from amending or terminating any NHL Employee Plan   
or NHL Benefit Arrangement providing health or medical benefits in respect of   
any active employee of NHL or any of its Subsidiaries other than limitations    
imposed under the terms of a collective bargaining agreement.                   

(g) Except as disclosed in the NHL Disclosure Schedule, there has been no   
amendment to, written interpretation or announcement (whether or not written)   
by NHL or any of its ERISA Affiliates relating to, or change in employee        
participation or coverage under, any NHL Employee Plan or NHL Benefit           
Arrangement which would increase materially the expense of maintaining such NHL 
Employee Plan or NHL Benefit Arrangement above the level of the expense         
incurred in respect thereof for the fiscal year ended on December 31, 1993      
(other than those that would not result in the representation and warranty set  
forth in Section 3.10(j) becoming untrue as of the Effective Time).             

(h) Neither NHL nor any of its Subsidiaries is a party to or subject to any 
collective bargaining or other labor union contracts applicable to persons      
employed by NHL or its Subsidiaries and no collective bargaining agreement is   
being negotiated by NHL or any of its Subsidiaries. As of the date of this      
Agreement, to the knowledge of NHL, neither NHL nor its Subsidiaries, nor their 
respective representatives or employees, has committed any unfair labor         
practices in connection with the operation of the respective businesses of NHL  
or its Subsidiaries, and there is no pending or threatened in writing charge or 
complaint against NHL or its Subsidiaries by the National Labor Relations Board 
(the "NLRB") or any comparable state agency, except where such unfair labor     
practice, charge or complaint would not have an NHL Material Adverse Effect.    

SECTION 3.15. COMPLIANCE WITH LAWS; PERMITS. (a) Except as set forth in the 
SEC Documents and except for violations which do not have and would not         
reasonably be expected to have, individually or in the aggregate, an NHL        
Material Adverse Effect, neither NHL nor any of its Subsidiaries is in          
violation of, or has violated, any applicable provisions of any laws, statutes, 
ordinances or regulations or any term of any judgment, decree, injunction or    
order outstanding against it.                                                   

(b) As of the date of this Agreement, each of NHL and each of its           
Subsidiaries is in possession of all franchises, grants, authorizations,        
licenses, permits, easements, variances, exemptions, consents, certificates,    
identification numbers, approvals and orders (collectively, the "NHL PERMITS")  
necessary to own, lease and operate its properties and to carry on its business 
as it is now being conducted, and there is no action, proceeding or             
investigation pending or, to the knowledge of NHL, threatened regarding         
suspension or cancellation of any of the NHL Permits, except where the failure  
to possess, or the suspension or cancellation of, such NHL Permits would not    
reasonably be expected to have, individually or in the aggregate, an NHL        
Material Adverse Effect.                                                        

SECTION 3.16. FINDERS' FEES. Except for Morgan Stanley & Co. Incorporated   
("MORGAN STANLEY"), whose fees in the amount previously disclosed to HLR will   
be paid by NHL, and as contemplated herein, there is no investment banker,      
broker, finder or other intermediary which has been retained by or is           

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authorized to act on behalf of, NHL or any of its Subsidiaries which might be   
entitled to any fee or commission from HLR or any of its Affiliates upon        
consummation of the transactions contemplated by this Agreement.                

SECTION 3.17. OTHER INFORMATION. NHL's projections and forward-looking      
information furnished by NHL to HLR were prepared in good faith and represent   
NHL's best estimate as of the date hereof as to the subject matter thereof;     
provided that NHL makes no representation or warranty as to the completeness or 
accuracy of the projections or forward-looking information furnished by NHL to  
HLR.                                                                            

SECTION 3.18. ENVIRONMENTAL MATTERS. Except as set forth in the SEC         
Documents:                                                                      

(a) (i) no notice, notification, notice of violation, demand, request for   
information, investigation (whether civil or criminal), citation, summons,      
complaint, order or other similar document has been received by, or, to the     
knowledge of NHL or any of its Subsidiaries, is pending or threatened by any    
Person against, NHL or any of its Subsidiaries, nor has any material penalty    
been assessed against NHL or any of its Subsidiaries in either case with        
respect to any (A) alleged violation of any Environmental Law or liability      
thereunder, (B) alleged failure to have any permit, certificate, license,       
approval, registration or authorization required under any Environmental Law,   
(C) generation, treatment, storage, recycling, transportation or disposal of    
any Hazardous Substance or (D) Release of any Hazardous Substance;              

(ii) no Hazardous Substance has been Released or is present at any      
property now owned, leased or operated by NHL or any of its Subsidiaries    
nor, to the knowledge of NHL, has any Hazardous Substance been Released at  
any property formerly owned, leased or operated by NHL, which Release or    
presence, individually or in the aggregate, could reasonably be expected to 
result in an NHL Material Adverse Effect;                                   

(iii) there are no NHL Environmental Liabilities that have had or may   
reasonably be expected to have, individually or in the aggregate, an NHL    
Material Adverse Effect; and                                                

(iv) there are no circumstances relating to the disposal of Hazardous   
Substances from any properties at the time they were owned, leased or       
operated by NHL that could give rise to liabilities under Environmental     
Laws which could reasonably be expected to result in, individually or in    
the aggregate, an NHL Material Adverse Effect.                              

 (b) There has been no environmental investigation, study, audit, test, review
or other analysis conducted since 1989 of which NHL has knowledge in relation   
to the current or prior business of NHL or any property or facility now or      
previously owned, leased or operated by NHL or any of its Subsidiaries the      
contents of which could reasonably be expected to result in an NHL Material     
Adverse Effect.                                                                 

(c) Neither NHL nor any of its Subsidiaries owns or leases any real property
or an industrial facility, or conducts any operations, in New Jersey or         
Connecticut.                                                                    

(d) For purposes of this Section 3.18, the following terms shall have the   
meanings set forth below:                                                       

 (i) "NHL" and "SUBSIDIARY" shall include any entity which is, in whole or
in part, a predecessor of NHL or any of its Subsidiaries.                   

(ii) "NHL ENVIRONMENTAL LIABILITIES" means any and all liabilities of or
relating to NHL and any of its Subsidiaries, whether vested or unvested,    
contingent or fixed, actual or potential, known or unknown, which (A) arise 
under or relate to matters covered by Environmental Laws and (B) arose from 
actions occurring or conditions existing on or prior to the Effective Time. 

(e) For purposes of this Section 3.18 and Section 4.16, the following terms 
shall have the meanings set forth below:                                        

(i) "ENVIRONMENTAL LAWS" means any and all federal, state, local and    
foreign statutes, laws, judicial decisions, regulations, ordinances, rules, 
judgments, orders, decrees, codes, injunctions, permits, licenses,          
agreements and governmental restrictions (whether now or hereinafter in     
effect), relating to human health, the environment or to emissions,         
discharges, Releases or threatened Releases of Hazardous                    

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Substances or wastes into the environment, including, without limitation,   
ambient air, surface water, ground water or land, or otherwise relating to  
the manufacture, processing, distribution, use, treatment, storage,         
disposal, transport or handling of Hazardous Substances or wastes or the    
investigation, clean-up, remediation or monitoring thereof.                 

(ii) "HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic,      
corrosive, infectious, mutagenic, carcinogenic or otherwise hazardous       
waste, material or substance, including petroleum, its derivatives, by-     
products and other hydrocarbons, or any substance having any constituent    
elements displaying any of the foregoing characteristics, including,        
without limitation, any substance which meets the definition of "hazardous  
substance" contained in 42 U.S.C. (S)9601(14).                              

(iii) "RELEASE" means any discharge, emission or release, including a   
Release as defined in the Comprehensive Environmental Response,             
Compensation and Liability Act of 1980, as amended ("CERCLA") at 42 U.S.C.  
(S)9601(22). The term "RELEASED" has a corresponding meaning.               

SECTION 3.19. TAKEOVER STATUTES. The Board of Directors of NHL has approved 
the HLR Stockholder Agreement, the Merger, the Warrants, the Sharing and Call   
Option Agreement and this Agreement, and such approval is sufficient to render  
inapplicable to the HLR Stockholder Agreement, the Merger, the Warrants, the    
Sharing and Call Option Agreement and this Agreement and the transactions       
contemplated or permitted thereby and hereby, the provisions of Section 203 of  
Delaware Law. To NHL's knowledge, no other state takeover statute or similar    
statute or regulation applicable to NHL applies or purports to apply to the HLR 
Stockholder Agreement, the Merger, the Warrants, the Sharing and Call Option    
Agreement or this Agreement, or any of the transactions contemplated thereby    
and hereby.                                                                     

SECTION 3.20. OPINION OF FINANCIAL ADVISOR. NHL has received the opinion of 
Morgan Stanley & Co. Incorporated dated the date of this Agreement to the       
effect that the aggregate consideration to be received by the stockholders of   
NHL in connection with the Merger, when taken together with the Warrants to be  
dividended to such stockholders, is fair, from a financial point of view, to    
such stockholders.                                                              

SECTION 3.21. VOTE REQUIRED. The affirmative vote of the holders of a       
majority of the outstanding shares of NHL Common Stock is the only vote of the  
holders of any class or series of NHL securities necessary to approve the       
Merger and the other transactions contemplated by this Agreement and any        
amendments to the certificate of incorporation of NHL as referred to in Section 
2.1.                                                                            

ARTICLE 4 

REPRESENTATIONS AND WARRANTIES OF HLR AND RBL 

HLR and RBL represent and warrant to NHL that, except as set forth on the   
disclosure schedule delivered by RBL to NHL prior to the execution of this      
Agreement (the "RBL DISCLOSURE SCHEDULE"):                                      

SECTION 4.1. CORPORATE EXISTENCE AND POWER. Each of HLR and RBL is a        
corporation duly incorporated, validly existing and in good standing under the  
laws of the jurisdiction in which it is incorporated and has all corporate      
powers required to carry on its business as now being conducted. Each of HLR    
and RBL is duly qualified to do business as a foreign corporation and is in     
good standing in each jurisdiction where the character of the property owned or 
leased by it or the nature of its activities makes such qualification           
necessary, except for those jurisdictions where the failure to be so qualified  
would not, individually or in the aggregate, have a material adverse effect on  
the business, financial condition, results of operations or prospects of RBL    
and its Subsidiaries, taken as a whole (a "RBL MATERIAL ADVERSE EFFECT"), or    
RBL's ability to perform its obligations hereunder or under the HLR Stockholder 
Agreement. RBL has heretofore delivered to NHL true and complete copies of its  
certificate of incorporation and bylaws and the certificate of incorporation    
and bylaws of each of its Subsidiaries, in each case as currently in effect.    

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 SECTION 4.2. CORPORATE AUTHORIZATION. The execution, delivery and performance
by each of HLR and RBL of this Agreement, the HLR Stockholder Agreement and the 
Sharing and Call Option Agreement and the consummation by HLR and RBL of the    
transactions contemplated hereby and thereby are within their respective        
corporate powers and, except for any required approval by HLR as RBL's sole     
stockholder in connection with the consummation of the Merger, have been duly   
authorized by all necessary corporate action. This Agreement constitutes a      
valid and binding agreement of each of HLR and RBL, and the HLR Stockholder     
Agreement when executed and delivered by HLR will constitute, a valid and       
binding agreement of HLR.                                                       

SECTION 4.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and        
performance by each of HLR and RBL of this Agreement and by HLR of each of the  
HLR Stockholder Agreement and the Sharing and Call Option Agreement and the     
consummation of the Merger by RBL and the other transactions contemplated       
hereby and thereby require no action by, or filing with, any governmental body, 
agency, official or authority other than (i) the filing of a certificate of     
merger in accordance with Delaware Law, (ii) compliance with any applicable     
requirements of the HSR Act, (iii) compliance with any applicable requirements  
of the 1933 Act, (iv) compliance with any applicable requirements of the 1934   
Act, (v) compliance with any applicable foreign or state securities or "blue    
sky" laws, (vi) the filing of a notice pursuant to Section 721 of the Defense   
Production Act of 1950 ("EXON-FLORIO"), and (vii) such actions by or filings    
with governmental bodies, agencies, officials or authorities, the failure of    
which to obtain or make would not reasonably be expected to have, individually  
or in the aggregate (A) a RBL Material Adverse Effect, (B) impair the ability   
of HLR or RBL to perform any of their respective obligations under this         
Agreement or impair HLR's ability to perform its obligations under the HLR      
Stockholder Agreement or the Sharing and Call Option Agreement or (C) prevent   
the consummation of any of the transactions contemplated by this Agreement, the 
HLR Stockholder Agreement or the Sharing and Call Option Agreement.             

SECTION 4.4. NON-CONTRAVENTION. The execution, delivery and performance by  
HLR and RBL of this Agreement and by HLR of the HLR Stockholder Agreement do    
not, and the consummation by HLR and RBL of the transactions contemplated       
hereby and thereby do not and will not (i) contravene or conflict with the      
certificate of incorporation or bylaws of HLR, RBL or any of RBL's              
Subsidiaries, (ii) assuming compliance with the matters referred to in Section  
4.3, contravene or conflict with or constitute a violation of any provision of  
any law, regulation, judgment, injunction, order or decree binding upon or      
applicable to HLR, RBL or any of RBL's Subsidiaries, (iii) constitute a default 
under or give rise to a right of termination, cancellation or acceleration of   
any right or obligation of HLR, RBL or any of RBL's Subsidiaries or to a loss   
of any benefit to which HLR, RBL or any of RBL's Subsidiaries is entitled under 
any provision of any agreement, contract or other instrument binding upon HLR,  
RBL or any of RBL's Subsidiaries or any license, franchise, permit or other     
similar authorization held by HLR, RBL or any of RBL's Subsidiaries or (iv)     
result in the creation or imposition of any Lien on any asset of HLR, RBL or    
any of RBL's Subsidiaries, except, with respect to clauses (ii), (iii) and (iv) 
above, for contraventions, conflicts, defaults, rights of termination,          
cancellation or acceleration, losses of benefits and creation or imposition of  
Liens that would not reasonably be expected to have, individually or in the     
aggregate, a RBL Material Adverse Effect.                                       

SECTION 4.5. CAPITALIZATION OF RBL. The authorized capital stock of RBL     
consists of 1000 shares of common stock, no par value per share, 100 shares of  
which are issued and outstanding and no shares of which are held in RBL's       
treasury. All of the issued and outstanding capital stock of RBL is validly     
issued, fully paid and nonassessable and is owned by HLR. Except for such       
common stock, there are outstanding (i) no shares of capital stock or other     
voting securities of RBL, (ii) no securities of RBL convertible into or         
exchangeable for shares of capital stock or voting securities of RBL and (iii)  
no options or other rights to acquire from RBL, and no obligation of RBL to     
issue, any capital stock, voting securities or securities convertible into or   
exchangeable for capital stock or voting securities of RBL. RBL has no          
liability or obligation in respect of the financing of the HLR Cash             
Consideration or the Roche Warrant Consideration.                               

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SECTION 4.6. SUBSIDIARIES. (a) Each Subsidiary of RBL is a corporation duly 
incorporated, validly existing and in good standing under the laws of its       
jurisdiction of incorporation, has all corporate powers required to carry on    
its business as now being conducted and is duly qualified to do business as a   
foreign corporation and is in good standing in each jurisdiction where the      
character of the property owned or leased by it or the nature of its activities 
make such qualification necessary, except for those jurisdictions where failure 
to be so qualified would not, individually or in the aggregate, have a RBL      
Material Adverse Effect. RBL has delivered to NHL a list of all of RBL's        
Subsidiaries. There are no partnerships or joint venture arrangements or other  
business entities in which RBL or any Subsidiary of RBL owns an equity interest 
that is material to the business of RBL and its Subsidiaries, taken as a whole. 

(b) All of the outstanding capital stock of each Subsidiary of RBL is owned 
by RBL, directly or indirectly, free and clear of any Lien and free of any      
other limitation or restriction (including any restriction on the right to      
vote, sell or otherwise dispose of such capital stock) other than any such      
limitations or restrictions imposed by statutes or regulations of general       
applicability. There are no outstanding (i) securities of RBL or any Subsidiary 
of RBL convertible into or exchangeable for shares of capital stock or other    
voting securities of any of RBL's Subsidiaries or (ii) options or other rights  
to acquire from RBL or any Subsidiary of RBL, and no other obligation of RBL or 
any Subsidiary of RBL to issue, any capital stock, voting securities of, or any 
securities convertible into or exchangeable for any capital stock or other      
voting securities of any of RBL's Subsidiaries (the items in clauses (i) and    
(ii) being referred to collectively as the "RBL SUBSIDIARY SECURITIES"). There  
are no outstanding obligations of RBL or any of its Subsidiaries to repurchase, 
redeem or otherwise acquire any outstanding RBL Subsidiary Securities.          

SECTION 4.7. FINANCIAL STATEMENTS. RBL has delivered to NHL the audited     
consolidated balance sheet of RBL as of each of December 31, 1993 and December  
31, 1992 and the audited statements of income and cash flows for each of the    
three fiscal years ended December 31, 1993, together with the notes thereto and 
the report of Price Waterhouse thereon and its unaudited interim financial      
statements for the nine months ended September 30, 1994 (the "RBL FINANCIAL     
STATEMENTS"). The RBL Financial Statements have been prepared in accordance     
with GAAP applied on a consistent basis during the periods involved (except as  
may be indicated in the notes thereto) and fairly present the consolidated      
financial position of RBL and its consolidated Subsidiaries, excluding Roche    
Image Analysis Systems ("RIAS"), as of the dates thereof and the consolidated   
results of their operations and cash flows for the periods then ended. For      
purposes of this Agreement, "RBL BALANCE SHEET" means the consolidated balance  
sheet of RBL as of December 31, 1993, and the notes thereto, contained in the   
RBL Financial Statements and "RBL BALANCE SHEET DATE" means December 31, 1993.  

 SECTION 4.8. DISCLOSURE DOCUMENTS. (a) None of the information supplied or to
be supplied by HLR or RBL specifically for inclusion or incorporation by        
reference in (i) the Registration Statement will, at the time the Registration  
Statement is filed with the SEC, at any time it is amended or supplemented or   
at the time it becomes effective under the 1933 Act, contain any untrue         
statement of a material fact or omit to state any material fact required to be  
stated therein or necessary to make the statements therein not misleading, or   
(ii) the NHL Proxy Statement will, at the date the NHL Proxy Statement is first 
mailed to NHL's stockholders or at the time of the NHL Stockholder Meeting,     
contain any untrue statement of a material fact or omit to state any material   
fact necessary in order to make the statements therein, in light of the         
circumstances under which they are made, not misleading.                        

SECTION 4.9. ABSENCE OF CERTAIN CHANGES. Since the RBL Balance Sheet Date,  
RBL and its Subsidiaries have in all material respects conducted their business 
in the ordinary course and, except as specifically contemplated by this         
Agreement, there has not been:                                                  

(a) any material adverse change in the business, financial condition, assets
or results of operations of RBL and its Subsidiaries, taken as a whole, or any  
event, occurrence or development of or in a state of circumstances or facts     
(including, without limitation, any development of or in a state of facts or    
any change in the estimated or expected exposure arising or occurring after the 
date hereof relating to any litigation or                                       

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investigation disclosed, or required to be disclosed, pursuant to Section 4.11  
or Section 6.4 or in any document referred to in Section 4.11) known to RBL or  
any Subsidiary of RBL which could reasonably be expected to result in such a    
material adverse change (a "RBL MATERIAL ADVERSE CHANGE");                      

(b) any declaration, setting aside or payment of any dividend or other      
distribution with respect to any shares of capital stock of RBL, or any         
repurchase, redemption or other acquisition by RBL or any of its Subsidiaries   
of any outstanding shares of capital stock or other securities of, or other     
ownership interests in, RBL or any of its Subsidiaries;                         

(c) any amendment of any material term of any outstanding RBL Securities or 
any RBL Subsidiary Securities;                                                  

 (d) any incurrence, assumption or guarantee by RBL or any of its Subsidiaries
of any indebtedness for borrowed money other than in the ordinary course of     
business and in an amount not in excess of $25,000,000 and which is on terms    
consistent with past practices;                                                 

(e) any creation or assumption by RBL or any of its Subsidiaries of any Lien
on any material asset other than in the ordinary course of business consistent  
with past practices;                                                            

 (f) any making of any loan, advance or capital contributions to or investment
in any Person other than loans, advances or capital contributions to or         
investments in wholly-owned Subsidiaries made in the ordinary course of         
business consistent with past practices;                                        

 (g) any damage, destruction or other casualty loss (whether or not covered by
insurance) affecting the business or assets of RBL or any of its Subsidiaries   
which, individually or in the aggregate, has had or would reasonably be         
expected to have a RBL Material Adverse Effect;                                 

(h) other than mergers or consolidations of one or more of its Subsidiaries 
into and with another Subsidiary or into RBL and activities in connection with  
the transfer of the business and assets of RIAS, any transaction or commitment  
made, or any contract or agreement entered into, by RBL or any of its           
Subsidiaries relating to its assets or business (including the acquisition or   
disposition of any assets) or any relinquishment by RBL or any of its           
Subsidiaries of any contract or other right, in either case, material to RBL    
and its Subsidiaries taken as a whole, other than transactions and commitments  
in the ordinary course of business consistent with past practice;               

(i) any change in any method of accounting or accounting practice by RBL or 
any of its Subsidiaries, except for any such change required by reason of a     
concurrent change in GAAP;                                                      

 (j) any (i) grant of any severance or termination pay (other than pursuant to
existing contracts, plans or arrangements), to any director, officer or         
employee of RBL or any of its Subsidiaries whose total annual compensation and  
bonus is in excess of $200,000, (ii) entering into of any employment, deferred  
compensation or other similar agreement (or any amendment to any such existing  
agreement) involving annual total compensation and bonus in excess of $200,000  
with any director, officer or employee of RBL or any of its Subsidiaries, (iii) 
any amendment or change that increases compensation or benefits payable under   
any existing severance or termination pay plans, policies or employment         
agreements which change or amendment is applicable to a class or classes of     
employees or officers covered thereby other than as expressly required therein  
or (iv) increase in compensation, bonus or other benefits payable to directors, 
officers or employees of RBL or any of its Subsidiaries, whose total annual     
compensation and bonus is in excess of $200,000, except as expressly required   
by any existing employment agreements or pursuant to compensation plans and     
policies in effect December 31, 1993 or set forth on the RBL Disclosure         
Schedule; or                                                                    

(k) any labor dispute, other than routine individual grievances, or any     
activity or proceeding by a labor union or representative thereof to organize   
any employees of RBL or any of its Subsidiaries, which employees were not       
subject to a collective bargaining agreement at the RBL Balance Sheet Date, or  
any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with  
respect to such employees.                                                      

 SECTION 4.10. NO UNDISCLOSED MATERIAL LIABILITIES. Except as set forth in the
RBL Financial Statements, neither RBL nor any of its subsidiaries has any       
Liabilities required by GAAP to be set forth on a                               

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consolidated balance sheet of RBL and its consolidated Subsidiaries or in the   
notes thereto and neither RBL nor any of its Subsidiaries has, to its           
knowledge, incurred any Liabilities since December 31, 1993 which, whether or   
not required by GAAP to be set forth on such a consolidated balance sheet, when 
considered together with any corresponding asset resulting from the event which 
gave rise to such liability, individually and in the aggregate, have had or     
could reasonably be expected to have an RBL Material Adverse Effect.            

SECTION 4.11. LITIGATION. Except as set forth in the RBL Financial          
Statements, there is no action, suit, investigation or proceeding pending, or   
to the knowledge of RBL or its Subsidiaries threatened (or, to the knowledge of 
RBL or its Subsidiaries, any basis therefor), against RBL or any of its         
Subsidiaries or any of their respective properties before any court or          
arbitrator or any governmental body, agency or official that could reasonably   
be expected to (A) have an RBL Material Adverse Effect, (B) impair the ability  
of RBL or HLR to perform their respective obligations under this Agreement or   
impair the ability of HLR to perform its obligations under the HLR Stockholder  
Agreement or the Sharing and Call Option Agreement or (C) prevent or materially 
delay the consummation of any of the transactions contemplated by this          
Agreement, the HLR Stockholder Agreement or the Sharing and Call Option         
Agreement.                                                                      

 SECTION 4.12. TAXES. Except as set forth in the RBL Financial Statements, (a)
RBL, its Subsidiaries and the HLR Group (as defined in Section ) have filed,    
been included in or sent, all material returns, declarations and reports and    
information returns and statements required to be filed or sent by or relating  
to any of them relating to any Taxes with respect to any material income,       
properties or operations of RBL, any of its Subsidiaries or the HLR Group prior 
to the Effective Time (collectively, "RBL RETURNS"), (b) as of the time of      
filing, the Returns correctly reflected in all material respects the facts      
regarding the income, business, assets, operations, activities and status of    
RBL, its Subsidiaries and the HLR Group and any other information required to   
be shown therein, (c) RBL, its Subsidiaries and the HLR Group have timely paid  
or made provision for all material Taxes that have been shown as due and        
payable on the RBL Returns that have been filed, (d) RBL, its Subsidiaries and  
the HLR Group have made or will make provision for all material Taxes payable   
for any periods that end before the Effective Time for which no RBL Returns     
have yet been filed and for any periods that begin before the Effective Time    
and end after the Effective Time to the extent such Taxes are attributable to   
the portion of any such period ending at the Effective Time, (e) the charges,   
accruals and reserves for Taxes reflected on the books of RBL, its Subsidiaries 
and the HLR Group are adequate to cover the Tax liabilities accruing or payable 
by RBL, its Subsidiaries and the HLR Group in respect of periods prior to the   
date hereof, (f) none of RBL, any of its Subsidiaries or the HLR Group is       
delinquent in the payment of any material Taxes or has requested any extension  
of time within which to file or send any material RBL Return, which RBL Return  
has not since been filed or sent, (g) no material deficiency for any Taxes has  
been proposed, asserted or assessed in writing against RBL, any of its          
Subsidiaries or the HLR Group other than those Taxes being contested in good    
faith, (h) the federal income tax returns of the HLR Group have been examined   
by and settled with the IRS for all years through 1989, (i) none of RBL, any of 
its Subsidiaries or the HLR Group has granted any extension of the limitation   
period applicable to any material Tax claims (which period has not since        
lapsed) other than those Taxes being contested in good faith, (j) none of RBL,  
any of its Subsidiaries or the HLR Group has any contractual obligations under  
any material Tax sharing agreement with any corporation which, as of the        
Effective Time, is not a member of the HLR Group, (k) none of HLR, RBL or its   
Subsidiaries has taken any action or has any knowledge of any fact or           
circumstance that is reasonably likely to prevent the Merger from qualifying as 
a reorganization within the meaning of Section 368(a)(1) of the Code, and (l)   
except as provided in Section 2.1, HLR has no current plan or intention to      
cause the Surviving Corporation to amend its certificate of incorporation.      

SECTION 4.13. ERISA. (a) The RBL Disclosure Schedule lists each "employee   
benefit plan", as defined in Section 3(3) of ERISA, which (i) is subject to any 
provision of ERISA and (ii)(A) is maintained, administered or contributed to by 
RBL or any ERISA Affiliate and covers any employee of RBL or any Subsidiary of  
RBL or under which RBL or any Subsidiary has any liability or (B) is            
maintained, administered or contributed to by RBL or any Subsidiary and covers  
any former employee of RBL or any Subsidiary or                                 

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under which RBL or any Subsidiary has any liability. Copies of such plans (and, 
if applicable, related trust agreements, group annuity contracts and summary    
plan descriptions) and all amendments thereto and written interpretations       
thereof have been furnished or made available upon request to NHL together with 
(x) the most recent annual report (Form 5500 including, if applicable, Schedule 
B thereto) prepared in connection with any such plan and (y) the most recent    
actuarial valuation report prepared in connection with any such plan. Such      
plans are referred to collectively herein as the "RBL EMPLOYEE PLANS".          

(b) Except as otherwise identified in the RBL Disclosure Schedule;          

(i) no RBL Employee Plan constitutes a Multiemployer Plan, and no RBL   
Employee Plan is maintained in connection with any trust described in       
Section 501(c)(9) of the Code;                                              

(ii) no RBL Employee Plans are subject to Title IV of ERISA (the "RBL   
RETIREMENT PLANS");                                                         

(iii) as of the RBL Balance Sheet Date, the fair market value of the    
assets of each RBL Retirement Plan (excluding for these purposes any        
accrued but unpaid contributions) exceeded the accumulated benefit          
obligation, as determined in accordance with GAAP under such RBL Retirement 
Plan;                                                                       

(iv) no "accumulated funding deficiency", as defined in Section 412 of  
the Code, has been incurred with respect to any RBL Retirement Plan,        
whether or not waived;                                                      

(v) no "reportable event", within the meaning of Section 4043 of ERISA, 
and no event described in Section 4041, 4042, 4062 or 4063 of ERISA has     
occurred in connection with any RBL Employee Plan, other than a "reportable 
event" that will not have a Material Adverse Effect;                        

(vi) no condition exists and no event has occurred that could constitute
grounds for termination of any RBL Retirement Plan or, with respect to any  
RBL Employee Plan which is a Multiemployer Plan, presents a material risk   
of a complete or partial withdrawal under Title IV of ERISA;                

(vii) neither RBL nor any of its ERISA Affiliates has incurred any      
material liability under Title IV of ERISA arising in connection with the   
termination of, or complete or partial withdrawal from, any plan covered or 
previously covered by Title IV of ERISA that would become a liability of    
RBL after the Effective Time;                                               

(viii) if a "complete withdrawal" by RBL and all of its ERISA Affiliates
were to occur as of the Effective Time with respect to all RBL Employee     
Plans which are Multiemployer Plans, neither RBL nor any ERISA Affiliate    
would incur any withdrawal liability under Title IV of ERISA that would     
become a liability of RBL after the Effective Time;                         

(ix) nothing done or omitted to be done and no transaction or holding of
any asset under or in connection with any RBL Employee Plan has made or     
will make RBL or any of its Subsidiaries, any officer or director of RBL or 
any of its Subsidiaries subject to any liability under Title I of ERISA or  
liable for any Tax pursuant to Section 4975 of the Code that could have a   
RBL Material Adverse Effect; and                                            

(x) neither RBL nor any of its ERISA Affiliates (A) has engaged in a    
transaction described in Section 4069 of ERISA that could subject RBL to    
material liability at any time after the date hereof or (B) has acted in a  
manner that could, or failed to act so as to, result in material fines,     
penalties, taxes or related charges under (x) Section 502(c), (i) or (1) or 
ERISA, (y) Section 4071 of ERISA or (z) Chapter 43 of the Code, which       
penalties, taxes or related charges, individually or in the aggregate,      
would constitute a liability in a material amount.                          

(c) Each RBL Employee Plan which is intended to be qualified under Section  
401(a) of the Code has received a favorable IRS determination letter to such    
effect and RBL knows of no event or circumstance occurring or existing since    
the date of such letter that would adversely affect such RBL Employee Plan's    
qualified status. RBL has furnished or made available upon request to NHL       
copies of the most recent IRS determination letters with respect to each such   
Plan. Each Employee Plan has been maintained in substantial compliance with its 
terms and with the requirements prescribed by any and all statutes, orders,     
rules and regulations, including but not limited to ERISA and the Code, which   
are applicable to such Plan. There are no investigations by any governmental    
agency, termination proceedings or other claims (except claims for              

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benefits payable in the normal operation of the RBL Employee Plans), suits or   
proceedings against or involving any RBL Employee Plan or asserting any rights  
to or claims for benefits under any RBL Employee Plan that could give rise to   
any material liability, and there are not any facts that could give rise to any 
material liability in the event of any such investigation, claim, suit or       
proceeding.                                                                     

(d) There is no contract, agreement, plan or arrangement covering any       
employee or former employee of RBL or any Subsidiary that, individually or      
collectively, could give rise to the payment of any amount that would not be    
deductible pursuant to the terms of Section 280G of the Code. No employee of    
NHL or any of its Subsidiaries will be entitled to any additional benefits or   
any acceleration of the time of payment or vesting of any RBL benefits under    
any RBL Benefit Arrangements (as defined below in Section 4.13(e)) as a result  
of the transactions contemplated by this Agreement.                             

(e) RBL has furnished or made available upon request to NHL copies or       
descriptions of each employment, severance or other similar contract,           
arrangement or policy providing for annual compensation in excess of $200,000   
and each plan or arrangement (written or oral) providing for insurance coverage 
(including any self-insured arrangements), workers' compensation, disability    
benefits, supplemental unemployment benefits, vacation benefits, retirement     
benefits or for deferred compensation, profit-sharing, bonuses, stock options,  
stock appreciation or other forms of incentive compensation or post-retirement  
insurance, compensation or benefits which (i) is not an Employee Plan, (ii) is  
entered into, maintained or contributed to, as the case may be, by RBL or any   
of its Subsidiaries and (iii) covers any employee or former employee of RBL or  
any of its Subsidiaries, to the extent existing on the date hereof. The above   
arrangements (whether or not existing as of the date hereof) are referred to    
collectively herein as the "RBL BENEFIT ARRANGEMENTS". Each RBL Benefit         
Arrangement has been maintained in substantial compliance with its terms and    
with the requirements prescribed by any and all statutes, orders, rules and     
regulations that are applicable to such RBL Benefit Arrangement.                

(f) Except as disclosed in the RBL Disclosure Schedule, neither RBL nor any 
of its Subsidiaries has any current or projected liability in respect of post-  
employment or post-retirement health and medical benefits for retired employees 
of RBL and its Subsidiaries, except as required to avoid excise Tax under       
Section 4980B of the Code; and no condition exists that would prevent RBL or    
any of its Subsidiaries from amending or terminating any RBL Employee Plan or   
RBL Benefit Arrangement providing health or medical benefits in respect of any  
active employee of RBL or any of its Subsidiaries other than limitations        
imposed under the terms of a collective bargaining agreement.                   

(g) Except as disclosed in the RBL Disclosure Schedule, there has been no   
amendment to, written interpretation or announcement (whether or not written)   
by RBL or any of its ERISA Affiliates relating to, or change in employee        
participation or coverage under, any RBL Employee Plan or RBL Benefit           
Arrangement which would increase materially the expense of maintaining such RBL 
Employee Plan or RBL Benefit Arrangement above the level of the expense         
incurred in respect thereof for the fiscal year ended on the RBL Balance Sheet  
Date (other than those that would not result in the representation and warranty 
set forth in Section 4.9(i) becoming untrue as of the Effective Time).          

(h) Neither RBL nor any of its Subsidiaries is a party to or subject to any 
collective bargaining or other labor union contracts applicable to Persons      
employed by RBL or its Subsidiaries and no collective bargaining agreement is   
being negotiated by RBL or any of its Subsidiaries. As of the date of this      
Agreement, to the knowledge of RBL, neither RBL nor its Subsidiaries, nor their 
respective representatives or employees, has committed any unfair labor         
practices in connection with the operation of the respective businesses of RBL  
or its Subsidiaries, and there is no pending or threatened in writing charge or 
complaint against RBL or its Subsidiaries by the NLRB or any comparable state   
agency, except where such unfair labor practice, charge or complaint would not  
have a RBL Material Adverse Effect.                                             

SECTION 4.14. COMPLIANCE WITH LAWS; PERMITS. (a) Except for violations which
do not have and would not reasonably be expected to have, individually or in    
the aggregate, a RBL Material Adverse Effect, neither RBL nor any of its        
Subsidiaries is in violation of, or has violated, any applicable provisions of  
any                                                                             

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laws, statutes, ordinances or regulations or any term of any judgment, decree,  
injunction or order outstanding against it.                                     

(b) As of the date of this Agreement, each of RBL and its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,        
easements, variances, exemptions, consents, certificates, identification        
numbers, approvals and orders (collectively, the "RBL PERMITS") necessary to    
own, lease and operate its properties and to carry on its business as it is now 
being conducted, and there is no action, proceeding or investigation pending    
or, to the knowledge of RBL, threatened regarding suspension or cancellation of 
any of the RBL Permits, except where the failure to possess, or the suspension  
or cancellation of, such RBL Permits would not have reasonably be expected to   
have, individually or in the aggregate, a RBL Material Adverse Effect.          

SECTION 4.15. FINDERS' FEES. Except for CS First Boston Corporation, whose  
fees will be paid by as referred to in Section 11.4 hereof and as contemplated  
herein, there is no investment banker, broker, finder or other intermediary     
which has been retained by or is authorized to act on behalf, of RBL or any of  
its Subsidiaries who might be entitled to any fee or commission from NHL or any 
of its Affiliates upon consummation of the transactions contemplated by this    
Agreement or any of the related agreements. The amount of the fees of CS First  
Boston Corporation have previously been disclosed to NHL.                       

 SECTION 4.16. ENVIRONMENTAL MATTERS. Except as set forth in the RBL Financial
Statements or in writing to NHL:                                                

(a) (i) no notice, notification, notice of violation, demand, request for   
information, investigation (whether civil or criminal), citation, summons,      
complaint, order or other similar document has been received by, or, to the     
knowledge of RBL or any of its Subsidiaries, is pending or threatened by any    
Person against, RBL or any of its Subsidiaries, nor has any material penalty    
been assessed against RBL or any of its Subsidiaries in either case with        
respect to any (A) alleged violation of any Environmental Law or liability      
thereunder, (B) alleged failure to have any permit, certificate, license,       
approval, registration or authorization required under any Environmental Law,   
(C) generation, treatment, storage, recycling, transportation or disposal of    
any Hazardous Substance or (D) Release of any Hazardous Substance;              

(ii) no Hazardous Substance has been Released or is present at any      
property now owned, leased or operated by RBL or any of its Subsidiaries    
nor, to the knowledge of RBL, has any Hazardous Substance been Released at  
any property formerly owned, leased or operated by RBL, which Release or    
presence, individually or in the aggregate, could reasonably be expected to 
result in a RBL Material Adverse Effect;                                    

(iii) there are no RBL Environmental Liabilities that have had or may   
reasonably be expected to have, individually or in the aggregate, a RBL     
Material Adverse Effect; and                                                

(iv) there are no circumstances relating to the disposal of Hazardous   
Substances from any properties at the time they were owned, leased or       
operated by RBL that could give rise to liabilities under Environmental     
Laws which could reasonably be expected to result, individually or in the   
aggregate, in a RBL Material Adverse Effect.                                

 (b) There has been no environmental investigation, study, audit, test, review
or other analysis conducted since 1989 of which RBL has knowledge in relation   
to the current or prior business of RBL or any property or facility now or      
previously owned, leased or operated by RBL or any of its Subsidiaries, the     
contents of which could reasonably be expected to result in a RBL Material      
Adverse Effect.                                                                 

(c) Neither RBL nor any of its Subsidiaries owns or leases any real property
or industrial facility, or conducts any operations, in New Jersey or            
Connecticut.                                                                    

(d) For purposes of this Section 4.16, the following terms shall have the   
meanings set forth below:                                                       

 (i) "RBL" and "SUBSIDIARY" shall include any entity which is, in whole or
in part, a predecessor of RBL or any of its Subsidiaries;                   

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(ii) "RBL ENVIRONMENTAL LIABILITIES" means any and all liabilities of or
relating to RBL and any of its Subsidiaries, whether vested or unvested,    
contingent or fixed, actual or potential, known or unknown, which (A) arise 
under or relate to matters covered by Environmental Laws and (B) arose from 
actions occurring or conditions existing on or prior to the Effective Time. 

SECTION 4.17. HLR CASH CONSIDERATION. HLR and its Affiliates have sufficient
funds, investments and credit facilities available to pay the HLR Cash          
Consideration.                                                                  

SECTION 4.18. TAKEOVER STATUTES. To the best of RBL's knowledge, no state   
takeover statute or similar statute or regulation applicable to RBL or HLR      
applies or purports to apply to the HLR Stockholder Agreement, the Merger, the  
Warrants, the Sharing and Call Option Agreement or this Agreement or any of the 
transactions contemplated thereby and hereby.                                   

SECTION  4.19. OWNERSHIP OF NHL SHARES. As of the date hereof, HLR, RBL and 
their Subsidiaries beneficially own, collectively, no more than 100 NHL Shares. 

ARTICLE 5 

COVENANTS OF NHL

NHL agrees that:                                                            

SECTION 5.1. CONDUCT OF NHL. From the date hereof until the Effective Time, 
NHL and its Subsidiaries shall in all material respects conduct their business  
in the ordinary course and shall use all reasonable efforts to preserve intact  
their business organizations and relationships with third parties and to keep   
available the services of their present officers and employees. Without         
limiting the generality of the foregoing, from the date hereof until the        
Effective Time:                                                                 

(a) NHL will not adopt or propose any change in its certificate of          
incorporation or bylaws, except as referred to in Section 2.1;                  

(b) Except as contemplated by this Agreement or as set forth on the NHL     
Disclosure Schedule, NHL will not, and will not permit any of its Subsidiaries  
to (i) enter into any contract, agreement, plan or arrangement covering any     
director, officer or employee of NHL or any of its Subsidiaries that provides   
for the making of any payments, the acceleration of vesting of any benefit or   
right or any other entitlement contingent upon (A) the Merger, the exercise by  
HLR of any of its rights under the HLR Stockholder Agreement or any acquisition 
by HLR of securities of NHL (whether by merger, tender offer, private or market 
purchases or otherwise) not prohibited by the HLR Stockholder Agreement or (B)  
the termination of employment after the occurrence of any such contingency if   
such payment, acceleration or entitlement would not have been provided but for  
such contingency or (ii) amend any existing contract, agreement, plan or        
arrangement to so provide;                                                      

 (c) Except for the Merger or as set forth on the NHL Disclosure Schedule, NHL
will not, and will not permit any Subsidiary of NHL to (i) adopt a plan of      
complete or partial liquidation, dissolution, merger, consolidation,            
restructuring, recapitalization or other reorganization or (ii) make any        
acquisition of any business or other material assets of any Person, whether by  
means of merger, consolidation or otherwise;                                    

(d) Except as set forth on the NHL Disclosure Schedule, NHL will not, and   
will not permit any Subsidiary of NHL to, sell, lease, license or otherwise     
dispose of any material assets or property except (i) pursuant to existing      
contracts or commitments or (ii) in the ordinary course of business consistent  
with past practice;                                                             

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(e) Except for (i) borrowings under existing credit facilities, replacements
therefor and refinancings thereof and (ii) borrowings in the ordinary course of 
business consistent with past practice, NHL will not, and will not permit any   
Subsidiary of NHL to, incur any indebtedness for borrowed money or guarantee    
any such indebtedness except for the financing contemplated by Section 7.2      
hereof;                                                                         

 (f) Except pursuant to outstanding Employee Stock Options and as contemplated
by this Agreement, NHL will not issue any NHL Securities; and                   

(g) NHL will not, and will not permit any of its Subsidiaries to, take any  
action that would result in (i) any of the representations and warranties of    
such party set forth in this Agreement that are qualified as to materiality     
becoming untrue, (ii) any of such representations and warranties that are not   
so qualified becoming untrue in any material respect or (iii) any of the        
conditions to the Merger set forth in Sections 9.1 or 9.2 not being satisfied.  

SECTION 5.2. STOCKHOLDER MEETING; PROXY MATERIAL; REGISTRATION STATEMENT;   
STOCK EXCHANGE LISTING. (a) NHL shall cause a meeting of its stockholders (the  
"NHL Stockholder Meeting") to be duly called and held as soon as reasonably     
practicable for the purpose of voting on the approval and adoption of this      
Agreement (and the approval of any amendments to NHL's certificate of           
incorporation as referred to in Section 2.1 and the treatment of the Employee   
Stock Options pursuant to Section 1.5). The Board of Directors of NHL shall,    
subject to their fiduciary duties as determined in good faith by the Board of   
Directors based on the advice of outside legal counsel, recommend approval and  
adoption of this Agreement (and approve any such amendments and such treatment  
of holders of Employee Stock Options. In connection with such meeting, NHL (i)  
will promptly prepare and file with the SEC, will use all reasonable efforts to 
have cleared by the SEC the NHL Proxy Statement, (ii) will, subject to the      
fiduciary duties of its Board of Directors, use all reasonable efforts to       
obtain the approval and adoption by NHL's stockholders of this Agreement (and   
approve any such amendments and such treatment) and (iii) will otherwise comply 
with all legal requirements applicable to such meeting.                         

 (b) As soon as practicable after resolving any comments of the SEC staff with
respect to the NHL Proxy Statement, NHL shall promptly prepare and file with    
the SEC the Registration Statement, in which the NHL Proxy Statement will be    
included as a prospectus. NHL shall use its best efforts to have the            
Registration Statement declared effective under the 1933 Act as promptly as     
practicable after such filing. NHL will use its best efforts to cause the NHL   
Proxy Statement to be mailed to its stockholders as promptly as practicable     
after the Registration Statement is declared effective under the 1933 Act. NHL  
shall also take any action (other than qualifying to do business in any         
jurisdiction in which it is not now so qualified) required to be taken under    
any applicable state securities laws in connection with the issuance of NHL     
Shares in the Merger. HLR and RBL shall furnish all information concerning the  
HLR and RBL as may be reasonably requested in connection with any action        
contemplated by this Section 5.2.                                               

(c) NHL shall use all reasonable efforts to cause the Warrants to be issued 
as contemplated hereby to be listed on the NYSE, subject to official notice of  
issuance and evidence of satisfactory distribution.                             

(d) Prior to the date on which the Warrants shall become exercisable, in    
accordance with their terms, NHL shall, if required by the Warrant Agreement    
and applicable law, prepare and file with the SEC a registration statement      
relating to the NHL Shares issuable upon exercise of the Warrants. NHL shall    
use its best efforts to cause the registration statement to be declared         
effective prior to the date the Warrants become exercisable.                    

SECTION 5.3. ACCESS TO INFORMATION; CONFIDENTIALITY.  (a) From the date     
hereof until the Effective Time, NHL will give HLR, RBL, their counsel,         
financial advisors, auditors and other authorized representatives reasonable    
access during normal business hours to the offices, properties, books and       
records of NHL and its Subsidiaries, will furnish to HLR, RBL and their         
counsel, financial advisors, auditors and other authorized representatives such 
financial and operating data and other information as such Persons may          
reasonably request and will instruct NHL's employees, counsel and financial     
advisors to cooperate with HLR and RBL in their investigation of NHL and its    
Subsidiaries, provided that no investigation pursuant to                        

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this Section shall affect any representation or warranty given by NHL to HLR    
and RBL hereunder and provided further that the foregoing shall not require     
NHL to permit any inspection, or to disclose any information, which in the      
reasonable judgment of NHL would result in the disclosure of any trade secrets  
of third parties or violate any obligation of NHL with respect to               
confidentiality if NHL shall have used reasonable efforts to obtain the         
consent of such third party to such inspection or disclosure. All requests for  
information made pursuant to this Section 5.3 shall be directed to an           
executive officer of NHL or such Person as may be designated by the Chief       
Executive Officer of NHL                                                        

(b) Prior to the Effective Time and after any termination of this Agreement,
NHL will hold, and will use its best efforts to cause its officers, directors,  
employees, counsel, financial advisors, auditors and other advisors and agents  
to hold, in confidence, unless compelled to disclose by judicial or             
administrative process or by other requirements of law, all confidential        
documents and information concerning HLR, RBL and RBL's Subsidiaries furnished  
to NHL in connection with the transactions contemplated by this Agreement,      
except to the extent that such information can be shown to have been (i)        
previously known by NHL on a nonconfidential basis or on a basis which permits  
use on a less restrictive basis than this Section 5.3(b), (ii) in the public    
domain through no fault of NHL or (iii) later lawfully acquired by NHL from     
sources other than RBL or HLR or their Affiliates, advisors or                  
representatives, provided that NHL may disclose such information to its         
officers, directors, employees, accountants, counsel, consultants, advisors     
and agents in connection with the transactions contemplated by this Agreement   
and to its lenders in connection with obtaining the financing for the           
transactions contemplated by this Agreement so long as such Persons are         
informed by NHL of the confidential nature of such information and are          
directed by NHL to treat such information confidentially. NHL's obligation to   
hold any such information in confidence shall be satisfied if it exercises the  
same care with respect to such information as it would take to preserve the     
confidentiality of its own similar information. If this Agreement is            
terminated, NHL will, and will use its best efforts to cause its officers,      
directors, employees, accountants, counsel, consultants, advisors and agents    
to, destroy or deliver to RBL or HLR, upon request, all documents and other     
materials, and all copies thereof, obtained by NHL or on its behalf from RBL    
or HLR in connection with this Agreement that are subject to such confidence.   

SECTION 5.4. OTHER OFFERS. (a) From the date hereof until the termination of
this Agreement in accordance with Section 10.1, NHL shall not, nor shall it     
permit any of its Subsidiaries to, nor shall it authorize or permit any         
officer, director or employee of, or any investment banker, attorney or other   
advisor or representative of NHL or any of its Subsidiaries to, directly or     
indirectly, (i) solicit, initiate or encourage the submission of any            
"Acquisition Proposal" (as defined below) or (ii) participate in any            
discussions or negotiations regarding, or furnish to any Person any             
information with respect to, or take any other action to facilitate any         
inquiries or the making of any proposal that constitutes, or may reasonably be  
expected to lead to, any Acquisition Proposal, provided, however, that to the   
extent required by the fiduciary obligations of the Board of Directors of NHL,  
as determined in good faith by the Board of Directors based on the advice of    
outside counsel, NHL may, (A) in response to an unsolicited request therefor,   
furnish information with respect to NHL to any Person pursuant to a customary   
confidentiality agreement (as determined by NHL's outside counsel) and discuss  
(1) such information (but not the terms of any possible Acquisition Proposal)   
and (2) the terms of this Section 5.4 with such Person and (B) upon receipt by  
NHL of an Acquisition Proposal, following delivery to HLR of the notice         
required pursuant to Section 5.4(c) , participate in negotiations regarding     
such Acquisition Proposal. Without limiting the foregoing, it is understood     
that any violation of the restrictions set forth in the preceding sentence by   
any officer, director or employee of NHL or any of its Subsidiaries or any      
investment banker, attorney or other advisor or representative of NHL or any    
of its Subsidiaries, whether or not such Person is purporting to act on behalf  
of NHL or any of its Subsidiaries or otherwise, shall be deemed to be a breach  
of this Section 5.4 by NHL. For purposes of this Agreement, "ACQUISITION        
PROPOSAL" means any proposal for a merger or other business combination         
involving NHL or any of its Subsidiaries or any proposal or offer to acquire    
in any manner, directly or indirectly, an equity interest in securities         
representing not less than 20% of the outstanding voting securities of, or      
assets representing not less than 10% of the annual revenues of NHL or any of   
its Subsidiaries, other than the transactions contemplated by this Agreement    
or the Sharing and Call Option Agreement.                                       

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 (b) Neither the Board of Directors of NHL nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to    
RBL or HLR, the approval or recommendation by such Board of Directors or any    
such committee of this Agreement or the Merger (or the other transactions       
contemplated hereby), (ii) approve or recommend, or propose to approve or       
recommend, any Acquisition Proposal or (iii) enter into any agreement with      
respect to any Acquisition Proposal. Notwithstanding the foregoing, in the      
event the Board of Directors of NHL receives an Acquisition Proposal that, in   
the exercise of its fiduciary obligations (as determined in good faith by the   
Board of Directors after reviewing the advice of outside counsel), it           
determines to be a Superior Proposal (as defined below), the Board of Directors 
may (subject to the following sentences) withdraw or modify its approval or     
recommendation of this Agreement or the Merger, approve or recommend any such   
Superior Proposal, enter into an agreement with respect to such Superior        
Proposal or terminate this Agreement, in each case at any time after the second 
business day following HLR's receipt of written notice (a "NOTICE OF SUPERIOR   
PROPOSAL") advising HLR that the Board of Directors has received a Superior     
Proposal, specifying the material terms and conditions of such Superior         
Proposal and identifying the Person making such Superior Proposal. For purposes 
of this Agreement, a "SUPERIOR PROPOSAL" means any bona fide Acquisition        
Proposal on terms which the Board of Directors of NHL determines in its good    
faith reasonable judgment (after reviewing the advice of a financial advisor of 
nationally recognized reputation) to be more favorable to NHL's stockholders    
than the Merger and the transactions contemplated hereby.                       

(c) In addition to the obligations of NHL set forth in Section 5.4(b) above,
NHL shall promptly advise HLR orally and in writing of any request for          
information or of any Acquisition Proposal, or any inquiry with respect to or   
which could lead to any Acquisition Proposal, the material terms and conditions 
of such request, Acquisition Proposal or inquiry, and the identity of the       
Person making any such Acquisition Proposal or inquiry. NHL will keep HLR fully 
informed of the status and details of any such request, Acquisition Proposal or 
inquiry.                                                                        

(d) NHL shall immediately cease and cause to be terminated all existing     
discussions and negotiations, if any, with any parties (other than RBL or HLR)  
conducted heretofore with respect to any Acquisition Proposal.                  

SECTION 5.5. NOTICES OF CERTAIN EVENTS. NHL shall promptly notify HLR of:   

(a) any notice or other communication from any Person alleging that the     
consent of such Person is or may be required in connection with the             
transactions contemplated by this Agreement;                                    

(b) any notice or other communication from any governmental or regulatory   
agency or authority in connection with the transactions contemplated by this    
Agreement; and                                                                  

(c) any actions, suits, claims, investigations or proceedings commenced or, 
to the best of its knowledge threatened against, relating to or involving or    
otherwise affecting NHL or any of its Subsidiaries which, if pending on the     
date of this Agreement, would have been required to have been disclosed         
pursuant to Section 3.12 or which relate to the consummation of the             
transactions contemplated by this Agreement, the HLR Stockholder Agreement, the 
Warrant Agreement or the Sharing and Call Option Agreement.                     

SECTION 5.6. TAX MATTERS. From the date hereof until the Effective Time, (i)
NHL and its Subsidiaries will file all material Tax returns, statements,        
reports and forms (collectively, the "NHL POST-SIGNING RETURNS") required to be 
filed with any taxing authority in accordance with all applicable laws, (ii)    
NHL and its Subsidiaries will timely pay all Taxes shown as due and payable on  
the NHL Post-Signing Returns that are so filed and as of the time of filing,    
the NHL Post-Signing Returns will correctly reflect the facts regarding the     
income, business, assets, operations, activities and the status of NHL and its  
Subsidiaries in all material respects, (iii) NHL and its Subsidiaries will make 
provision for all Taxes payable by NHL and its Subsidiaries for which no NHL    
Post-Signing Return is due prior to the Effective Time, and (iv) NHL and its    
Subsidiaries will promptly notify HLR of any action, suit, proceeding,          
investigation, audit or claim pending against or with respect to NHL or any of  
its Subsidiaries in respect of any Tax where there is a reasonable              

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possibility of a determination or decision which would reasonably be expected   
to have a significant adverse effect on NHL's Tax liabilities or other Tax      
attributes.                                                                     

SECTION 5.7. BOARD COMPOSITION. Prior to the Effective Time, the Board of   
Directors of NHL shall take all action as is necessary to make effective as of  
the Effective Time the resignations from the NHL Board of Directors of any      
Persons then serving on the Board of Directors who are not identified on the    
certificate delivered by HLR to NHL pursuant to Section 2.3 and to cause each   
of the persons designated to be directors in such certificate to be duly        
appointed to the Surviving Corporation's Board of Directors, in each case       
effective at the Effective Time.                                                

ARTICLE 6 

COVENANTS OF HLR AND RBL

HLR and RBL agree that:                                                     

SECTION 6.1. CONDUCT OF RBL. From the date hereof until the Effective Time, 
RBL and its Subsidiaries shall in all material respects conduct their business  
in the ordinary course and shall use all reasonable efforts to preserve intact  
their business organizations and relationships with third parties and to keep   
available the services of their present officers and employees. Without         
limiting the generality of the foregoing, from the date hereof until the        
Effective Time:                                                                 

(a) RBL will not adopt or propose any change in its certificate of          
incorporation or bylaws;                                                        

(b) Except as contemplated by this Agreement or as set forth on the RBL     
Disclosure Schedule, RBL will not, and will not permit any of its Subsidiaries  
to, (i) enter into any contract, agreement, plan or arrangement covering any    
director, officer or employee of RBL or any of its Subsidiaries that provides   
for the making of any payments, the acceleration of vesting of any benefit or   
right or any other entitlement contingent upon (A) the Merger or any            
acquisition by HLR of securities of NHL (whether by merger, tender offer,       
private or market purchases or otherwise) not prohibited by the HLR Stockholder 
Agreement or (B) the termination of employment after the occurrence of any such 
contingency if such payment, acceleration or entitlement would not have been    
provided but for such contingency or (ii) amend any existing contract,          
agreement, plan or arrangement to so provide;                                   

 (c) Except for the Merger or as set forth on the RBL Disclosure Schedule, RBL
will not, and will not permit any Subsidiary of RBL to (i) adopt a plan of      
complete or partial liquidation, dissolution, merger, consolidation,            
restructuring, recapitalization or other reorganization other than into or with 
RBL or any Subsidiary of RBL or (ii) make any acquisition of any business or    
other material assets of any Person, whether by means of merger, consolidation  
or otherwise;                                                                   

(d) Except as set forth on the RBL Disclosure Schedule, RBL will not, and   
will not permit any Subsidiary of RBL to, sell, lease, license or otherwise     
dispose of any material assets or property except (i) pursuant to existing      
contracts or commitments, (ii) in the ordinary course of business consistent    
with past practice, (iii) as NHL agrees in writing or (iv) that RBL or a        
Subsidiary thereof may dispose of or transfer that certain business known as    
RIAS the assets and liabilities of which have been disclosed in writing to NHL  
prior to the date hereof, and the proceeds of such disposition may be paid in a 
dividend or otherwise to HLR or any other Person;                               

(e) Except as set forth on the RBL Disclosure Schedule or as contemplated by
Section 6.7 hereof, RBL will not, and will not permit any Subsidiary of RBL to, 
declare, set aside, or apply any dividend or make any other distribution with   
respect to any shares of RBL capital stock;                                     

(f) Except for (i) borrowings under existing credit facilities, replacements
therefor and refinancings thereof and (ii) borrowings in the ordinary course of 
business consistent with past practice, RBL will not,                           

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and will not permit any Subsidiary of RBL to, incur any indebtedness for        
borrowed money or guarantee any such indebtedness;                              

(g) RBL will not issue any RBL Securities other than to HLR;                

(h) RBL will not, and will cause its Affiliates not to, directly or         
indirectly, acquire any NHL Shares prior to any termination fee becoming        
payable to HLR pursuant to Section hereof; and                                  

(i) RBL will not, and will not permit any of its Subsidiaries to, take any  
action that would result in (i) any of the representations and warranties of    
such party set forth in this Agreement that are qualified as to materiality     
becoming untrue, (ii) any of such representations and warranties that are not   
so qualified becoming untrue in any material respect or (iii) any of the        
conditions to the Merger set forth in Sections 9.1 or 9.3 not being satisfied.  

 SECTION 6.2. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) From the date hereof
until the Effective Time, HLR and RBL will give NHL, its counsel, financial     
advisors, auditors and other authorized representatives reasonable access       
during normal business hours to the offices, properties, books and records of   
RBL and its Subsidiaries, will furnish to NHL and its counsel, financial        
advisors, auditors and other authorized representatives such financial and      
operating data and other information as such Persons may reasonably request and 
will instruct RBL's employees, counsel and financial advisors to cooperate with 
NHL in its investigation of RBL and its Subsidiaries, provided that no          
investigation pursuant to this Section 6.2 shall affect any representation or   
warranty given by HLR or RBL to NHL hereunder and provided further that the     
foregoing shall not require RBL or HLR to permit any inspection, or to disclose 
any information, which in the reasonable judgment of RBL or HLR would result in 
the disclosure of any trade secrets of third parties or violate any obligation  
of RBL or HLR with respect to confidentiality if RBL or HLR, as the case may    
be, shall have used reasonable efforts to obtain the consent of such third      
party to such inspection or disclosure. All requests for information made       
pursuant to this Section 6.2 shall be directed to an executive officer of RBL   
or such Person as may be designated by the Chief Executive Officer of RBL.      

(b) Prior to the Effective Time and after any termination of this Agreement,
each of HLR and RBL will hold, and will use its best efforts to cause its       
officers, directors, employees, counsel, financial advisors, auditors and other 
advisors and agents to hold, in confidence, unless compelled to disclose by     
judicial or administrative process or by other requirements of law, all         
confidential documents and information concerning NHL and its Subsidiaries      
furnished to each of HLR and RBL in connection with the transactions            
contemplated by this Agreement, except to the extent that such information can  
be shown to have been (i) previously known by HLR or RBL on a nonconfidential   
basis or on a basis which permits use on terms less restrictive than this       
Section 6.2(b), (ii) in the public domain through no fault of each of HLR or    
RBL or (iii) later lawfully acquired by HLR or RBL from sources other than NHL  
or its Affiliates, advisors or representatives, provided that each of HLR and   
RBL may disclose such information to its officers, directors, employees,        
accountants, counsel, consultants, advisors and agents in connection with the   
transactions contemplated by this Agreement and to its lenders in connection    
with obtaining the financing for the transactions contemplated by this          
Agreement so long as such Persons are informed by each of HLR and RBL of the    
confidential nature of such information and are directed by each of HLR and RBL 
to treat such information confidentially. Each of HLR's and RBL's obligation to 
hold any such information in confidence shall be satisfied if it exercises the  
same care with respect to such information as it would take to preserve the     
confidentiality of its own similar information. If this Agreement is            
terminated, each of HLR and RBL will, and will use its best efforts to cause    
its officers, directors, employees, accountants, counsel, consultants, advisors 
and agents to, destroy or deliver to NHL, upon request, all documents and other 
materials, and all copies thereof, obtained by either of HLR and RBL or on its  
behalf from NHL in connection with this Agreement that are subject to such      
confidence.                                                                     

SECTION 6.3. VOTING OF SHARES. Each of HLR and RBL agrees to vote any NHL   
Shares beneficially owned by it in favor of adoption of this Agreement and the  
Merger (including any amendments to NHL's certificate of incorporation as       
referred to in Section 1.5 and the treatment of any Employee Stock Options      
pursuant to Section at the NHL Stockholder Meeting.                             

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SECTION 6.4. NOTICES OF CERTAIN EVENTS. RBL shall promptly notify NHL of:   

(a) any notice or other communication from any Person alleging that the     
consent of such Person is or may be required in connection with the             
transactions contemplated by this Agreement;                                    

(b) any notice or other communication from any governmental or regulatory   
agency or authority in connection with the transactions contemplated by this    
Agreement; and                                                                  

(c) any actions, suits, claims, investigations or proceedings commenced or, 
to the best of its knowledge threatened against, relating to or involving or    
otherwise affecting RBL or any of its Subsidiaries which, if pending on the     
date of this Agreement, would have been required to have been disclosed         
pursuant to Section 4.11 or which relate to the consummation of the             
transactions contemplated by this Agreement or the Sharing and Call Option      
Agreement.                                                                      

SECTION 6.5. TAX MATTERS. From the date hereof until the Effective Time, (i)
HLR/RBL and RBL's Subsidiaries will file all material Tax returns, statements,  
reports and forms (collectively, the "HLR/RBL POST-SIGNING RETURNS") required   
to be filed with any taxing authority in accordance with all applicable laws,   
(ii) HLR/RBL and RBL's Subsidiaries will timely pay all Taxes shown as due and  
payable on the respective HLR/RBL Post-Signing Returns that are so filed and as 
of the time of filing, the HLR/RBL Post-Signing Returns will correctly reflect  
the facts regarding the income, business, assets, operations, activities and    
the status of HLR/RBL and RBL's Subsidiaries in all material respects, (iii)    
HLR/RBL and RBL's Subsidiaries will make provision for all respective Taxes     
payable by HLR/RBL and RBL's Subsidiaries for which no HLR/RBL Post-Signing     
Return is due prior to the Effective Time and (iv) HLR/RBL and RBL's            
Subsidiaries will promptly notify NHL of any action, suit, proceeding,          
investigation, audit or claim pending against or with respect to HLR/RBL or any 
of RBL's Subsidiaries in respect of any Tax where there is a reasonable         
possibility of a determination or decision which would reasonably be expected   
to have a significant adverse effect on HLR/RBL's Tax liabilities or other Tax  
attributes.                                                                     

SECTION 6.6. NHL EMPLOYMENT AGREEMENTS. HLR will not and will use its best  
efforts to cause its Affiliates not to take any action to prevent NHL from      
honoring the financial terms of the existing employment agreements between NHL  
and its employees to the extent that copies of such agreements have been        
provided to HLR prior to the date hereof (or if not so provided, if such        
agreements were entered into after the date hereof and would not result in any  
of the representations and warranties of NHL hereunder becoming untrue at the   
Effective Time and which are otherwise entered into in compliance with this     
Agreement).                                                                     

SECTION 6.7. CERTAIN ACTIONS REGARDING RBL. (a) Prior to the Effective Time,
HLR and RBL will prepare a pro forma balance sheet for RBL and its Subsidiaries 
(excluding RIAS) as of December 31, 1994 (the "PRO FORMA BALANCE SHEET") to     
eliminate any outstanding intercompany account balances (other than current     
trade payables but including any intercompany balances with respect to Taxes)   
as of that date and to remove and eliminate as liabilities of RBL and any of    
its Subsidiaries indebtedness for borrowed money ("BORROWED FUNDS"), such that  
the aggregate liabilities of RBL and its Subsidiaries (excluding RIAS) for      
Borrowed Funds as of December 31, 1994, reduced by cash and cash equivalents as 
of that date, shall not exceed $44,000,000 (the "NET DEBT AMOUNT"). HLR and RBL 
will cause the assets and liabilities of RBL and its Subsidiaries at the        
Effective Time to be consistent with the amounts set forth in the Pro Forma     
Balance Sheet (other than intercompany account balances relating to federal     
income Taxes of RBL and its Subsidiaries for the Pre-Merger Tax Period (as      
defined in Section 8.1) that begins on January 1, 1995 and ends on the date on  
which the Effective Time occurs, which shall be settled in the manner provided  
in Section 8.4(a)), adjusted to give effect to the operations (on an arm's      
length basis) of RBL and its Subsidiaries since January 1, 1995.                

(b) From January 1, 1995 until the Effective Time, no interest will be      
charged or paid on any intercompany account or on any Borrowed Funds, except to 
the extent of the interest that would accrue during the period beginning on     
January 1, 1995 and ending at the Effective Time on the Net Debt Amount at the  
interest rate provided under the agreement with the Swiss Bank Corporation, or  
if any interest is paid during such period to a third party, HLR will repay to  
RBL the excess over the amount which would be payable at such Swiss Bank        
Corporation interest rate.                                                      

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ARTICLE 7 

COVENANTS OF HLR, RBL AND NHL 

The parties hereto agree that:                                              

 SECTION 7.1. REASONABLE EFFORTS. Upon the terms and subject to the conditions
set forth in this Agreement, each of the parties agrees to use reasonable       
efforts to take, or cause to be taken, all actions, and to do, or cause to be   
done, and to assist and cooperate with the other parties in doing, all things   
necessary, proper or advisable to consummate and make effective, in the most    
expeditious manner practicable, the Merger and the other transactions           
contemplated by this Agreement, including (i) the obtaining of all necessary    
actions or nonactions, waivers, consents and approvals from governmental        
entities and the making of all necessary registrations and filings (including   
filings with governmental entities, if any) and the taking of all reasonable    
steps as may be necessary to obtain an approval or waiver from, or to avoid an  
action or proceeding by, any governmental entity provided, however that in so   
doing none of HLR, RBL or their respective Affiliates shall be obligated to     
accept or be subject to an HLR Adverse Condition (as defined in Section 9.2(d)  
and NHL shall not be obligated to accept or be subject to an NHL Adverse        
Condition as defined in Section 9.3(d)), (ii) the obtaining of all necessary    
consents, approvals or waivers from third parties and (iii) the execution and   
delivery of any additional instruments necessary to consummate the transactions 
contemplated by, and to fully carry out the purposes of, this Agreement;        
provided that the foregoing shall not (a) require HLR to furnish, other than    
for RBL and RBL's Subsidiaries, financial statements prepared in accordance     
with United States GAAP or any reconciliation of financial statements with      
United States GAAP or (b) prohibit the Board of Directors of NHL from taking    
any action permitted by Section 5.4.                                            

SECTION 7.2. CASH CONSIDERATION. Each of HLR and RBL will use their good    
faith best efforts from and after the date hereof to assist NHL in NHL's        
effecting of the refinancing of NHL's existing indebtedness and obtaining new   
financing sufficient for NHL to pay the NHL Cash Consideration as contemplated  
hereby. NHL will use its good faith best efforts from and after the date hereof 
to effect the refinancing of NHL's existing indebtedness and to obtain new      
financing sufficient for NHL to pay the NHL Cash Consideration as contemplated  
hereby (and NHL will deposit the NHL Cash Consideration with the Exchange Agent 
as contemplated by Section 1.3 hereof), it being understood and agreed by the   
parties hereto that none of the parties hereto shall have any liability to any  
other party hereto or any other Person if such financing and refinancing,       
including sufficient financing for the NHL Cash Consideration, is not obtained  
by NHL and the parties have complied with the provisions of this Section 7.2.   
HLR will deposit the HLR Cash Consideration with the Exchange Agent as          
contemplated by Section 1.3.                                                    

Each of HLR and NHL acknowledge receipt of the Credit Suisse commitment     
letter to NHL dated December 13, 1994 relating to possible financing of the NHL 
Cash Consideration (the "CS COMMITMENT LETTER").                                

SECTION 7.3. PUBLIC ANNOUNCEMENTS. NHL, HLR and RBL will use all reasonable 
efforts to consult with each other before issuing any press release or making   
any public statement with respect to this Agreement and the transactions        
contemplated hereby or thereby and, except as may be required by applicable law 
or any listing agreement with any national securities exchange, will use all    
reasonable efforts not to issue any such press release or make any such public  
statement prior to such consultation and agreement among the parties with       
respect to the substance thereof.                                               

SECTION 7.4. FURTHER ASSURANCES. At and after the Effective Time, the       
officers and directors of the Surviving Corporation will be authorized to       
execute and deliver, in the name and on behalf of NHL or RBL, any deeds, bills  
of sale, assignments or assurances and to take and do, in the name and on       
behalf of NHL or RBL, any other actions and things to vest, perfect or confirm  
of record or otherwise in the Surviving Corporation any and all right, title    
and interest in, to and under any of the rights, properties or assets of NHL    
acquired or to be acquired by the Surviving Corporation as a result of, or in   
connection with, the Merger.                                                    

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 SECTION 7.5. HLR STOCKHOLDER AGREEMENT. HLR and NHL each agree to execute and
deliver the HLR Stockholder Agreement immediately prior to the Effective Time.  

SECTION 7.6. INDEMNIFICATION AND INSURANCE. (a) The certificate of          
incorporation and the bylaws of the Surviving Corporation shall contain the     
provisions with respect to indemnification set forth in NHL's certificate of    
incorporation and bylaws on the date of this Agreement, which provisions shall  
not be amended, repealed or otherwise modified for a period of six years from   
the Effective Time in any manner that would adversely affect the rights         
thereunder of individuals who on or prior to the Effective Time were directors, 
officers, employees or agents of NHL or RBL, unless such modification is        
required by law, and the Surviving Corporation shall indemnify and hold         
harmless the present and former officers and directors of NHL and RBL in        
respect of acts or omissions occurring prior to the Effective Time to the       
maximum extent provided thereunder; provided that such indemnification shall    
(to the maximum extent permitted by law) be mandatory rather than permissive    
except in instances involving wilful misconduct or bad faith and that the       
Surviving Corporation shall advance expenses, including attorneys' fees         
promptly on demand and delivery of any required undertaking. For six years      
after the Effective Time, the Surviving Corporation will cause to be maintained 
the current policies of officers' and directors' liability insurance in respect 
of acts or omissions occurring prior to the Effective Time covering each such   
Person currently covered by RBL's officers' and directors' liability insurance  
policy or NHL's officers' and directors' liability insurance policy or who      
becomes covered thereby prior to the Effective Time, provided that the          
Surviving Corporation may substitute therefor policies of at least the same     
coverage containing terms and conditions which in all material respects are no  
less favorable than those of the policies in effect on the date hereof for so   
long as such substitution does not result in gaps or lapses in coverage; and    
provided further that in satisfying its obligation under this Section, the      
Surviving Corporation shall not be obligated to pay premiums in excess of 200%  
of the aggregate amount per annum which RBL and NHL paid in their last full     
fiscal years, but provided further, that the Surviving Corporation shall be     
obligated to provide such coverage as may be obtained for such amount. The      
Surviving Corporation shall pay all expenses (including attorneys' fees) that   
may be incurred by any indemnified party in enforcing the indemnity and other   
obligations provided for in this Section 7.6. The obligations of the Surviving  
Corporation under this Section 7.6 shall not be terminated or modified in such  
manner as to adversely affect directors and officers to whom this Section 7.6   
applies without the consent of such director or officer. RBL's and NHL's        
directors and officers, present and former, and their heirs, executors and      
personal representatives to whom this Section 7.6 applies shall be third party  
beneficiaries of this Section.                                                  

ARTICLE 8 

TAX MATTERS 

SECTION 8.1. DEFINITIONS. The following terms, as used herein, have the     
following meanings:                                                             

 "HLR GROUP" means, with respect to federal income Taxes, the Affiliated group
of corporations (as defined in Section 1504(a) of the Code) of which HLR is a   
member and, with respect to state income or franchise Taxes, the consolidated,  
combined or unitary group of which HLR or any of its Affiliates is a member.    

 "NHL GROUP" means, with respect to federal income Taxes, the Affiliated group
of corporations (as defined in Section 1504(a) of the Code) of which NHL (or,   
after the Effective Time, the Surviving Corporation) is a member and, with      
respect to state income or franchise Taxes, the consolidated, combined or       
unitary group of which NHL or any of its Affiliates is a member.                

"POST-MERGER TAX PERIOD" means any Tax period that is not a Pre-Merger Tax  
Period.                                                                         

"PRE-MERGER TAX PERIOD" means any Tax period ending on or before the date on
which the Effective Time occurs, and the portions ending on such date of any    
Tax Period that includes (but does not end on) such day.                        

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"TAX SHARING AGREEMENT" means all existing written or unwritten Tax sharing 
agreements or arrangements, including agreements or arrangements based on past  
practices, binding RBL or any of its Subsidiaries.                              

SECTION 8.2. TAX COVENANTS. (a) The Surviving Corporation shall promptly pay
or shall cause prompt payment to be made to HLR of all refunds of Taxes and     
interest thereon received by the Surviving Corporation or any Subsidiary of the 
Surviving Corporation attributable to Taxes paid by HLR, RBL or any Subsidiary  
of RBL (or any predecessor of HLR or any Subsidiary of HLR) with respect to any 
Pre-Merger Tax Period, provided that (i) in the case of refunds attributable to 
RBL or any of its Subsidiaries relating to federal income Taxes for Pre-Merger  
Tax Periods with respect to which no return has been filed (and is not yet due) 
at the Effective Time, the Surviving Corporation shall be obligated to pay or   
cause prompt payment to be made to HLR of such refunds only to the extent that  
such refunds exceed the amount paid by RBL or the Surviving Corporation to HLR  
pursuant to Section 8.4(a) or (b), and (ii) the Surviving Corporation shall not 
be obligated to pay or cause to be paid to HLR any refunds with respect to      
Taxes (other than federal income Taxes) with respect to any Pre-Merger Tax      
Period with respect to which no return has been filed (and is not yet due) at   
the Effective Time.                                                             

(b) All transfer, real estate gains, documentary, sales, use, stamp,        
registration and other such Taxes and fees (including any penalties and         
interest) incurred in connection with this Agreement shall be borne and paid by 
the Surviving Corporation, and the Surviving Corporation will, at its own       
expense, file all necessary Tax returns and other documentation with respect to 
all such Taxes and fees, and, if required by applicable law, HLR will, and will 
cause its Subsidiaries to, join in the execution of any such Tax returns and    
other documentation.                                                            

(c) In the event that it is determined that the Surviving Corporation or any
of its Subsidiaries is a member of the HLR Group on a consolidated, combined or 
unitary basis for purposes of any income or franchise Tax imposed by any state  
or local taxing jurisdiction, HLR and the Surviving Corporation agree to        
negotiate in good faith with each other and with the other members of such HLR  
Group in an attempt to enter into an agreement regarding the allocation of      
liability for and/or indemnification with respect to such Tax among the members 
of such HLR Group on such basis as the parties may agree is appropriate and     
equitable.                                                                      

(d) (i) Neither NHL nor any of its Subsidiaries will take or permit any     
action prior to the Effective Time that is reasonably likely to prevent the     
Merger from qualifying as a reorganization within the meaning of Section        
368(a)(1) of the Code.                                                          

(ii) The Surviving Corporation shall promptly indemnify HLR or any other
member of the HLR Group for any liability for Taxes or loss arising as a    
result of the breach by NHL or any of its Subsidiaries of its obligations   
under Section 8.2(d)(i) the representation contained in Section 3.13(k) or  
the representations and covenants contained in the NHL Representations      
Letter (as defined in Section 8.2(h) (other than covenant (3) therein))     
that results in the Merger failing to qualify as a reorganization within    
the meaning of Section 368(a)(1) of the Code (or any comparable provision   
of state or local tax law).                                                 

(e) (i) During the period beginning on the date hereof and ending two years 
after the Effective Time, neither HLR nor any of its Subsidiaries will take or  
permit any action or, after the Effective Time, cause the Surviving Corporation 
or any of its Subsidiaries to take or permit any action, that is reasonably     
likely to prevent the Merger from qualifying as a reorganization within the     
meaning of Section 368(a)(1) of the Code.                                       

(ii) HLR shall promptly indemnify the Surviving Corporation or any other
member of the NHL Group for any liability for Taxes or loss arising as a    
result of the breach by HLR or any of its Subsidiaries of its obligations   
under Section 8.2(e)(i), the representation contained in Section 4.12(k) or 
the representations and covenants contained in the HLR Representations      
Letter (as defined in Section 8.2(i)) that results in the Merger failing to 
qualify as a reorganization within the meaning of Section 368(a)(1) of the  
Code (or any comparable provision of state or local tax law), or in the     
recognition of gain by RBL pursuant to Section 357(c) of the Code (or any   
other provision of state or local tax law).                                 

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(f) HLR shall promptly indemnify the Surviving Corporation or any other     
member of the NHL Group for (i) all Taxes of RBL and its Subsidiaries for any   
Pre-Merger Tax Period, but, with respect to Taxes (other than federal income    
taxes) for any Pre-Merger Tax Period with respect to which no return has been   
filed (and is not yet due) at the Effective Time, only to the extent in each    
case that such Tax exceeds the portion of the Tax shown as due on the return    
which includes such Pre-Merger Tax Period that is attributable to such Pre-     
Merger Tax Period; and (ii) all Taxes of any member of the HLR Group (other     
than RBL and its Subsidiaries, and for any Post-Merger Tax Period, the          
Surviving Corporation and its Subsidiaries) with respect to any Pre-Merger or   
Post-Merger Tax Period.                                                         

(g) None of the Surviving Corporation, any other member of the NHL Group,   
HLR, or any other member of the HLR Group shall settle or pay any claim for     
Taxes with respect to which the Surviving Corporation or HLR, as the case may   
be, is obligated to make any payment pursuant to Sections 8.2(d)(ii),           
8.2(e)(ii) or 8.2(f), without the consent of the Surviving Corporation or HLR,  
as the case may be, which consent shall not be unreasonably withheld.           

 (h) NHL agrees to execute and deliver a letter, dated as of the date on which
the Effective Time occurs, in the form set forth in Exhibit B hereto (the "NHL  
REPRESENTATIONS LETTER") to each of counsel for NHL and counsel for RBL and HLR 
prior to the Effective Time.                                                    

(i) HLR agrees to execute and deliver a letter, dated as the date on which  
the Effective Time occurs, in the form set forth in Exhibit C hereto (the "HLR  
REPRESENTATIONS LETTER") to each of counsel for NHL and counsel for RBL and HLR 
prior to the Effective Time.                                                    

SECTION 8.3. TERMINATION OF EXISTING TAX SHARING AGREEMENTS. Any and all    
existing Tax Sharing Agreements between RBL or any Subsidiary of RBL and any    
member of the HLR Group shall be terminated as of the date on which the         
Effective Time occurs. After such date neither RBL, any Subsidiary of RBL, HLR  
nor any Subsidiary of HLR shall have any further rights or liabilities          
thereunder. This Agreement shall be the sole Tax sharing agreement relating to  
RBL or any Subsidiary of RBL for all Pre-Merger and Post-Merger Tax Periods.    

SECTION 8.4. TAX SHARING. (a) (i) Immediately before the Effective Time, RBL
shall pay to HLR an amount equal to the federal income Taxes of RBL and its     
Subsidiaries with respect to the Pre-Merger Tax Period that ends on the date of 
the Effective Time. The amount of such payment in respect of such Taxes shall   
be based upon HLR's reasonable good faith estimates of the amounts of federal   
taxable income of RBL and its Subsidiaries (determined as if RBL and its        
Subsidiaries filed a consolidated federal income Tax return with RBL as the     
common parent) for such Pre-Merger Tax Period and an effective federal tax rate 
of 35%, and reduced by the amount of any payments on account of such Taxes      
previously paid by RBL or any of its Subsidiaries to HLR, any other member of   
the HLR Group (other than RBL and its Subsidiaries) or the IRS.                 

 (ii) At such time as the HLR Group prepares its federal income tax return
for such Pre-Merger Tax Period, it shall deliver to the Surviving           
Corporation a pro forma return (each a "Pro Forma Return") for RBL and its  
Subsidiaries which calculates the amount of federal income Taxes that RBL   
and its Subsidiaries would have paid with respect to such Pre-Merger Tax    
Period had RBL timely filed its own consolidated federal income Tax return  
including its Subsidiaries (with RBL as the common parent) for such Pre-    
Merger Tax Period. The Surviving Corporation shall have the right at its    
expense to review all work papers and procedures used to prepare such Pro   
Forma Return. Unless the Surviving Corporation timely objects as specified  
in this Section 8.4(a)(ii) such Pro Forma Return shall be binding on the    
parties without further adjustment. If the Surviving Corporation objects to 
any item on such Pro Forma Return, it shall notify HLR in writing that it   
so objects, specifying with particularity any such item and the factual or  
legal basis for its objection, within 10 days after delivery of such Pro    
Forma Return. If HLR and the Surviving Corporation are unable to reach      
agreement on such items within 20 days after HLR receives such notice, the  
disputed items shall be resolved by a nationally recognized accounting firm 
with no material relationship to the Surviving Corporation, HLR or any of   
their Affiliates, chosen within 5 days of the date upon which the need to   
retain such firm arises by and                                              

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mutually acceptable to both HLR and the Surviving Corporation. The costs    
and expenses of retaining such firm shall be borne equally by HLR and the   
Surviving Corporation. Upon resolution by such firm of all such items and   
adjustment of the Pro Forma Return to reflect such resolution, the Pro      
Forma Return shall be binding on the parties without further adjustment.    
Once the Pro Forma Return has become binding, HLR shall promptly pay the    
Surviving Corporation, or the Surviving Corporation shall promptly pay HLR, 
as appropriate, an amount equal to (A) the difference between (x) the sum   
of the liabilities shown on the Pro Forma Return and (y) the sum of all     
payments previously made by RBL (including any payment pursuant to Section  
8.4(a)(i)) or any Subsidiary with respect thereto to HLR, any other member  
of the HLR Group (other than RBL and its Subsidiaries) or the IRS, and (B)  
interest on such difference, which shall accrue at a rate equal to the      
three-month London Interbank Offered Rate plus 0.5% from the Effective Time 
until the date payment is made pursuant to this sentence.                   

(b) At such time as the HLR Group prepares its federal income tax return for
its 1994 tax year, it shall deliver to the Surviving Corporation a pro forma    
return (each a "Pro Forma Return") for RBL and its Subsidiaries which           
calculates the amount of federal income Taxes that RBL and its Subsidiaries     
would have paid with respect to such tax year had RBL timely filed its own      
consolidated federal income Tax return including its Subsidiaries (with RBL as  
the common parent) for such tax year. The Surviving Corporation shall have the  
right at its expense to review all work papers and procedures used to prepare   
such Pro Forma Return. Unless the Surviving Corporation timely objects as       
specified in this Section 8.4(b) such Pro Forma Return shall be binding on the  
parties without further adjustment. If the Surviving Corporation objects to any 
item on such Pro Forma Return, it shall notify HLR in writing that it so        
objects, specifying with particularity any such item and the factual or legal   
basis for its objection, within 10 days after delivery of such Pro Forma        
Return. If HLR and the Surviving Corporation are unable to reach agreement on   
such items within 20 days after HLR receives such notice, the disputed items    
shall be resolved by a nationally recognized accounting firm with no material   
relationship to the Surviving Corporation, HLR or any of their Affiliates,      
chosen within 5 days of the date upon which the need to retain such firm arises 
by and mutually acceptable to both HLR and the Surviving Corporation. The costs 
and expenses of retaining such firm shall be borne equally by HLR and the       
Surviving Corporation. Upon resolution by such firm of all such items and       
adjustment of the Pro Forma Return to reflect such resolution, the Pro Forma    
Return shall be binding on the parties without further adjustment. Once the Pro 
Forma Return has become binding, HLR shall promptly pay the Surviving           
Corporation, or the Surviving Corporation shall promptly pay HLR, as            
appropriate, an amount equal to (A) the difference between (x) the sum of the   
liabilities shown on the Pro Forma Return and (y) the sum of all payments       
previously made by RBL or any Subsidiary with respect thereto to HLR, any other 
member of the HLR Group (other than RBL and its Subsidiaries) or the IRS,       
provided that, where (x) exceeds (y), the Surviving Corporation shall be        
obligated to pay to HLR such difference only to the extent that it does not     
exceed the greatest amount of intercompany account balances in respect of such  
Taxes that, if in existence as of December 31, 1994, in addition to the other   
intercompany account balances existing as of that date and actually taken into  
account in formulating the Pro Forma Balance Sheet pursuant to Section 6.7(a),  
could have been eliminated by payment rather than capitalization in formulating 
such Pro Forma Balance Sheet, and (B) interest on the amount required to be     
paid pursuant to clause (A) (determined taking into account the proviso         
thereto), which shall accrue at a rate equal to the three-month London          
Interbank Offered Rate plus 0.5% from the Effective Time until the date payment 
is made pursuant to this sentence.                                              

(c) The Surviving Corporation shall prepare or cause to be prepared, and    
shall deliver to HLR, each return with respect to state or local income,        
franchise, sales and use Taxes for any Pre-Merger Tax Period for which no       
return has been filed (and is not yet due) as of the Effective Time and which   
relates, in whole or in part, to Taxes with respect to which HLR may be         
required to indemnify the Surviving Corporation or any other member of the N    
Co. Group at least 90 days prior to the due date for such return. HLR shall     
have the right at its expense to review all work papers and procedures used to  
prepare such return. Unless HLR timely objects as specified in this Section     
8.4(c), the Surviving Corporation or its Subsidiary, as appropriate, shall file 
such return without further adjustment with the appropriate taxation authority, 
and pay the Tax shown as due thereon. If HLR objects to any item on such        
return, it shall notify the Surviving Corporation in writing                    

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that it so objects, specifying with particularity any such item and the factual 
or legal basis for its objection, within 10 days after delivery of such return. 
If HLR and the Surviving Corporation are unable to reach agreement on such      
items within 20 days after the Surviving Corporation receives such notice, the  
disputed items shall be resolved by a nationally recognized accounting firm     
with no material relationship to the Surviving Corporation, HLR or any of their 
Affiliates, chosen within 5 days of the date upon which the need to retain such 
firm arises by and mutually acceptable to both HLR and the Surviving            
Corporation. The costs and expenses of retaining such firm shall be borne       
equally by HLR and the Surviving Corporation. Upon resolution by such firm of   
all such items and adjustment of the return to reflect such resolution, the     
Surviving Corporation or its Subsidiary, as appropriate, shall file such return 
without further adjustment with the appropriate taxation authority, and pay the 
Tax shown as due thereon.                                                       

SECTION 8.5. COOPERATION ON TAX MATTERS. The Surviving Corporation and HLR  
agree to furnish or cause to be furnished to each other, upon request, as       
promptly as practicable, such information (including access to books and        
records) and assistance relating to RBL and its Subsidiaries as is reasonably   
necessary for the filing of any return, for the preparation for any audit, and  
for the prosecution or defense of any claim, suit or proceeding relating to any 
proposed adjustment, provided that (i) HLR shall not be obligated to furnish or 
cause to be furnished any information with respect to Genentech, Inc. and any   
of its Subsidiaries, and (ii) in the case of information which also relates, in 
whole or in part, to members of the HLR Group other than RBL and its            
Subsidiaries, in order to ensure the confidentiality of the HLR Group's         
commercial or proprietary information to the maximum extent feasible HLR shall  
be obligated to furnish or to be caused to be furnished such information upon   
request only to an independent advisor with no material relationship to the     
Surviving Corporation, HLR or any of their Affiliates chosen by and mutually    
acceptable to both HLR and the Surviving Corporation. The Surviving Corporation 
and HLR agree to retain or cause to be retained all books and records pertinent 
to RBL and its Subsidiaries until the end of the fifth year after the Effective 
Time, and to abide by or cause the abidance with all record retention           
agreements entered into with any taxation authority, in the case of the         
Surviving Corporation, but only to the extent such agreements have been         
disclosed in writing to NHL prior to the date hereof. The Surviving Corporation 
agrees to give HLR reasonable notice prior to transferring, discarding or       
destroying any such books and records relating to Tax matters and, if HLR so    
requests, the Surviving Corporation shall allow HLR to take possession of such  
books and records at HLR's cost and expense. The Surviving Corporation and HLR  
shall cooperate with each other in the conduct of any audit or other            
proceedings involving RBL or any of its Subsidiaries for any Tax purposes and   
each shall execute and deliver such powers of attorney and other documents as   
are necessary to carry out the intent of this subsection.                       

ARTICLE 9 

CONDITIONS TO THE MERGER

 SECTION 9.1.  CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
NHL, HLR and RBL to consummate the Merger are subject to the satisfaction or    
waiver as of the Effective Time of the following conditions:                    

(a) this Agreement, the HLR Stockholder Agreement and any amendments to the 
Surviving Corporation's certificate of incorporation to be effected by the      
Merger and any amendments to the Employee Stock Options contemplated by Section 
1.5 shall have been approved by the stockholders of NHL in accordance with      
Delaware Law;                                                                   

(b) any applicable waiting period under the HSR Act relating to the Merger  
shall have expired or been terminated;                                          

(c) no provision of any applicable law or regulation and no judgment,       
injunction, order or decree shall prohibit the consummation of the Merger;      

(d) the Warrant Agreement shall have been executed and delivered by NHL and 
the warrant agent to be named therein and such agreement shall be in full force 
and effect and the Warrants shall have been approved for listing on the NYSE    
subject to official notice of issuance and satisfactory distribution;           

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 (e) the Registration Statement shall have been declared effective and no stop
order suspending the effectiveness of the Registration Statement shall be in    
effect and no proceedings for such purpose shall be pending before or           
threatened by the SEC;                                                          

(f) the HLR Stockholder Agreement shall have been executed and delivered by 
HLR and NHL and shall be in full force and effect;                              

 (g) NHL shall have obtained sufficient financing to effect the refinancing of
NHL's existing indebtedness, if required, and to pay for the NHL Cash           
Consideration on terms reasonably acceptable to HLR and NHL with financing      
obtained on the terms no less favorable than those referred to in the CS        
Commitment Letter being for this purpose deemed reasonably acceptable to HLR    
and NHL; and                                                                    

(h) there shall not be in effect any banking moratorium or suspension of    
payments in respect of banks in the United States or Switzerland, or any        
general suspension in trading in, or limitation on prices for, securities on    
the NYSE.                                                                       

 SECTION 9.2. CONDITIONS TO THE OBLIGATIONS OF HLR AND RBL. The obligations of
HLR and RBL to consummate the Merger are subject to the satisfaction of the     
following further conditions:                                                   

(a) (i) NHL shall have performed in all material respects all of its        
obligations hereunder required to be performed by it at or prior to the         
Effective Time, (ii) the representations and warranties of NHL set forth in     
Article 3 that are qualified as to materiality shall be true and correct and    
the representations and warranties of NHL set forth in Article 3 that are not   
so qualified shall be true and correct in all material respects, in each case   
as of the Effective Time as though made on and as of the Effective Time, except 
to the extent such representations and warranties speak only as of a particular 
earlier date, and (iii) HLR shall have received a certificate or certificates   
signed by such executive officers of NHL as reasonably requested by HLR to the  
foregoing effect;                                                               

(b) HLR shall have received all documents it may reasonably request relating
to the existence of NHL and its Subsidiaries and the authority of NHL for this  
Agreement and the HLR Stockholder Agreement, all in form and substance          
reasonably satisfactory to HLR;                                                 

 (c) either (i) the Committee on Foreign Investment in the United States shall
have determined not to investigate the Merger under Exon-Florio (either by      
action or nonaction) or (ii) if such Committee shall have determined to make    
such an investigation, such investigation shall have been completed and the     
President shall have determined (either by action or nonaction) not to take any 
action under Exon-Florio with respect to the transactions contemplated by this  
Agreement;                                                                      

(d) there shall be no order, decree, injunction of any court or governmental
authority of competent jurisdiction that would, and there shall not be          
threatened or pending by any governmental authority any litigation or           
investigation that seeks to, (i) prohibit or enjoin consummation of, or         
materially impair or diminish the intended benefits of, the transactions        
contemplated hereby, or by the HLR Stockholder Agreement or the Warrant         
Agreement, (ii) restrain the ownership or operation by HLR or any of its        
Affiliates of all or any material portion of the assets or business of the      
Surviving Corporation or any of its Subsidiaries or to compel HLR or any of its 
Affiliates to dispose of all or any material portion of the business or assets  
of the Surviving Corporation or HLR or any of its Affiliates, (iii) impose or   
confirm limitations on the ability of HLR effectively to exercise full rights   
and privileges of ownership of the HLR-NHL Shares, the Warrants or other NHL    
Securities HLR may acquire except as limited by the HLR Stockholder Agreement,  
including, without limitation, the right to exercise the Warrants or to vote    
any NHL Shares on all matters properly presented to the Surviving Corporation's 
stockholders, or (iv) require divestiture by HLR or any of its Affiliates or    
any NHL Shares or other NHL Securities (each such circumstance described in     
clauses (i) through (iv) being referred to herein as an "HLR ADVERSE            
CONDITION");                                                                    

(e) all action by, or filings with, any governmental body, agency, official 
or authority referred to in clauses (i) through (v) of Section 3.3 shall have   
been obtained and made;                                                         

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(f) the NHL Cash Consideration and the Roche Warrant Consideration received 
by NHL pursuant to Section 1.4(b) shall have been deposited with the Exchange   
Agent as contemplated by Section 1.3 hereof;                                    

(g) HLR shall have received from counsel to NHL an opinion in form and      
substance reasonably satisfactory to HLR to the effect that the HLR-NHL Shares  
have been duly authorized and upon delivery to HLR at the Effective Time will   
be validly issued, fully paid and nonassessable and that the Roche Warrants     
have been duly authorized and upon payment of the Roche Warrant Consideration   
will be validly issued; and                                                     

(h) RBL and HLR shall have received from their counsel an opinion           
substantially in the form attached as Exhibit D hereto to the effect that the   
Merger will constitute a reorganization pursuant to Section 368(a)(1) of the    
Code.                                                                           

SECTION 9.3. CONDITIONS TO THE OBLIGATIONS OF NHL. The obligations of NHL to
consummate the Merger are subject to the satisfaction of the following further  
conditions:                                                                     

(a) (i) HLR and RBL shall have performed in all material respects all of    
their respective obligations hereunder required to be performed by them at or   
prior to the Effective Time, (ii) the representations and warranties of HLR and 
RBL set forth in Article 4 that are qualified as to materiality shall be true   
and correct and the representations and warranties of HLR and RBL set forth in  
Article 4 that are not so qualified shall be true and correct in all material   
respects, in each case as of the Effective Time as though made on and as of the 
Effective Time, except to the extent such representations and warranties speak  
only as of a particular earlier date, and (iii) NHL shall have received a       
certificate or certificates signed by such executive officers of Roche as       
reasonably requested by NHL to the foregoing effect;                            

(b) NHL shall have received all documents it may reasonably request relating
to the existence of HLR or RBL and the authority of HLR or RBL for this         
Agreement and the HLR Stockholder Agreement, all in form and substance          
reasonably satisfactory to NHL;                                                 

(c) HLR shall have deposited the HLR Cash Consideration with the Exchange   
Agent as contemplated by Section 1.3 hereof and Roche shall have paid the Roche 
Warrant Consideration to NHL;                                                   

(d) there shall be no order, decree, injunction of any court or governmental
authority of competent jurisdiction that would, and there shall not be          
threatened or pending by any governmental authority any litigation that seeks   
to (i) prohibit or enjoin consummation of, or materially impair or diminish the 
intended benefits to NHL's stockholders of, the transactions contemplated       
hereby or by the Warrant Agreement or (ii) restrain the ownership or operation  
by NHL or any of its Affiliates or the Surviving Corporation of all or any      
material portion of the assets or business of either NHL or RBL or any          
Subsidiary of either or to compel NHL or any of its Affiliates to dispose of    
all or any material portion of the business or assets of NHL or RBL or any      
Subsidiary of either (each such circumstances described in clauses (i) and (ii) 
being referred to herein as an "NHL ADVERSE CONDITION");                        

(e) NHL shall have received from its counsel an opinion substantially in the
form attached as Exhibit E hereto to the effect that the Merger will constitute 
a reorganization pursuant to Section 368(a)(1) of the Code;                     

(f) all actions by, or filings with, any governmental body, agency, official
or authority referred to in clauses (i) through (v) of Section 4.3 shall have   
been obtained and made; and                                                     

(g) (i) Roche shall have performed in all material respects its obligations 
under Section 11.9 required to be performed at or prior to the Effective Time,  
(ii) the representations and warranties of Roche set forth in Section 11.9 that 
are qualified as to materiality shall be true and correct and the               
representations and warranties of Roche set forth in Section 11.9 that are not  
so qualified shall be true and correct in all material respects, in each case   
as of the Effective Time as though made on and as of the Effective Time, except 
to the extent such representations and warranties speak only as of a particular 
earlier date, and (iii) NHL shall have received a certificate or certificates   
signed by such executive officers of Roche as reasonably requested by NHL to    
the foregoing effect.                                                           

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ARTICLE 10

TERMINATION 

SECTION 10.1. TERMINATION. This Agreement may be terminated and the Merger  
may be abandoned at any time prior to the Effective Time (notwithstanding any   
approval of this Agreement by the stockholders of NHL):                         

(a) by mutual written consent of NHL and HLR;                               

 (b) by either NHL or HLR, if the Merger has not been consummated by September
1, 1995;                                                                        

(c) (i) by either NHL or HLR, if there shall be any law or regulation that  
makes consummation of the Merger illegal or otherwise prohibited or any         
judgment, injunction, order or decree (other than a temporary restraining order 
or a preliminary injunction) enjoining consummation of the Merger or (ii) by    
NHL if any such law or regulation or any judgment, injunction, order or decree, 
which, if applicable, would in NHL's reasonable judgment constitute an NHL      
Adverse Condition or (iii) by HLR, if any such law or regulation or any         
judgment, injunction, order or decree, which, if applicable, would in HLR's     
reasonable judgment constitute an HLR Adverse Condition;                        

(d) by NHL in accordance with Section 5.4;                                  

 (e) by either HLR or NHL, if the NHL Stockholder Meeting shall have been held
and the stockholders of NHL shall have failed to approve, in accordance with    
Delaware Law, this Agreement (including any amendments to the certificate of    
incorporation of the Surviving Corporation to be effected thereby, if any, as   
referred to in Section 2.1);                                                    

(f) by HLR, if it is not in material breach of its obligations under this   
Agreement, if the Board of Directors of NHL shall have (i) withdrawn its        
recommendation of the Merger or this Agreement (or the transactions             
contemplated hereby) or (ii) recommended or approved any Acquisition Proposal   
(other than an Acquisition Proposal made by HLR or a controlled Affiliate of    
HLR); or                                                                        

(g) by HLR or NHL if HLR, RBL or NHL shall have received any communication  
from the Department of Justice or Federal Trade Commission (each an "HSR        
AUTHORITY") (which communication shall be confirmed to the other parties by the 
HSR Authority) that causes such party to reasonably believe that any HSR        
Authority has authorized the institution under United States antitrust laws of  
litigation seeking an order, decree or injunction that, if entered, would (in   
the reasonable judgment of the party invoking this Section 10.1(g)), be         
reasonably likely to constitute an NHL Adverse Condition, if NHL is the         
invoking party, or an HLR Adverse Condition, if HLR is the invoking party.      

 SECTION 10.2. EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 10.1, this Agreement shall become void and of no effect with no      
liability on the part of any party hereto, except for liability or damages      
resulting from a wilful breach of this Agreement and except that the agreements 
contained in this Section 10.2 and in Sections 5.3(b), 6.2(b) and 11.4 shall    
survive the termination hereof.                                                 

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ARTICLE 11

MISCELLANEOUS 

SECTION 11.1. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and 
shall be given:                                                                 

if to HLR, to:     HLR Holdings Inc.                                        
1403 Foulk Road                       
Suite 102                             
P.O. Box 8985                         
Wilmington, Delaware 19899            
Attn.: William D. Johnston            

if to RBL, to:     Roche Biomedical Laboratories, Inc.                      
358 South Main Street                 
Burlington, North Carolina 27215      
Attn.: Bradford T. Smith, Esq.        

with a copy to:  Davis Polk & Wardwell                                  
450 Lexington Avenue                  
New York, New York 10017              
Attn: Peter R. Douglas, Esq.          
Telecopy: (212) 450-4800              

and                                                                             

if to NHL, to:     National Health Laboratories Holdings Inc.               
4225 Executive Square                 
La Jolla, California 92037            
Attn: James G. Richmond, Esq.         
Telecopy: (619) 658-6693              

with a copy to:  Cravath, Swaine & Moore                                
Worldwide Plaza                       
825 Eighth Avenue                     
New York, New York 10019              
Attn: Allen Finkelson, Esq.           
Telecopy: (212) 474-3700              

or such other address or telecopy number as such party may hereafter specify    
for the purpose by notice to the other parties hereto. Each such notice,        
request or other communication shall be effective (i) if given by telecopy,     
when such telecopy is transmitted to the telecopy number specified in this      
Section 11.1 and the appropriate confirmation of transmittal is received or     
(ii) if given by any other means, when delivered at the address specified in    
this Section 11.1.                                                              

SECTION 11.2. SURVIVAL OF AGREEMENTS AND REPRESENTATIONS AND                
WARRANTIES. Except for the representations, warranties and agreements contained 
in Articles 1.2, and 8 and Sections 3.13(k), 4.12(k), 7.4, 7.5, and 7.6, the    
NHL Representations Letter, the HLR Representations Letter, and this Section    
hereof, the representations and warranties and agreements contained herein and  
in any certificate or other writing delivered pursuant hereto (other than the   
HLR Stockholder Agreement) shall not survive the Effective Time.                

 SECTION 11.3. AMENDMENTS; NO WAIVERS. (a) Any provision of this Agreement may
be amended or waived prior to the Effective Time if, and only if, such          
amendment or waiver is in writing and signed, in                                

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the case of an amendment, by NHL, HLR and RBL or in the case of a waiver, by    
the party against whom the waiver is to be effective, provided that after the   
adoption of this Agreement by the stockholders of NHL, no such amendment or     
waiver shall, without the further approval of such stockholders, alter or       
change (i) the NHL Share Conversion, (ii) any term of the certificate of        
incorporation of the Surviving Corporation or (iii) any of the terms or         
conditions of this Agreement if such alteration or change would adversely       
affect the holders of any shares of capital stock of NHL.                       

(b)  No failure or delay by any party in exercising any right, power or     
privilege hereunder shall operate as a waiver thereof nor shall any single or   
partial exercise thereof preclude any other or further exercise thereof or the  
exercise of any other right, power or privilege. The rights and remedies herein 
provided shall be cumulative and not exclusive of any rights or remedies        
provided by law.                                                                

SECTION  11.4. FEES AND EXPENSES. (a) Except as otherwise provided in this  
Section 11.4, all costs and expenses incurred in connection with this Agreement 
shall be paid by the party incurring such cost or expense, provided however in  
the event RBL's legal and financial advisory fees and expenses exceed in the    
aggregate those of NHL, HLR or an Affiliate thereof (other than RBL or NHL or   
any of their respective Subsidiaries) shall pay such excess amount.             

(b) So long as each of HLR and RBL shall not have materially breached its   
obligations under this Agreement, NHL will pay HLR, in immediately available    
funds, the amounts referred to below, promptly after the termination of this    
Agreement (x) pursuant to clause (d) or (f)(i) of Section 10.1 if any Person or 
group (as defined in Section 13(d)(iii) of the 1934 Act) (other than HLR or an  
Affiliate of HLR) shall have made an Acquisition Proposal (excluding for this   
purpose any indication of interest that has not resulted in an offer or         
proposal) or become the beneficial owner (as defined in Rule 13d-3 promulgated  
under the 1934 Act) of at least 20% of the outstanding NHL Shares or (y)        
pursuant to clause (f)(ii) of Section 10.1. The amounts referred to in the      
preceding sentence are (A) a termination fee of $30,000,000 and (B) up to an    
additional $7,000,000 as reimbursement for expenses actually incurred by HLR    
and RBL in connection with this Agreement and the transactions contemplated     
hereby. For purposes of the foregoing, the reimbursement referred to in clause  
(B), above, shall be payable only if and to the extent HLR and RBL provide      
written statements to NHL that they have incurred such expenses and such back-  
up data as may be reasonably be requested.                                      

SECTION 11.5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their        
respective successors and assigns, provided that no party may assign, delegate  
or otherwise transfer any of its rights or obligations under this Agreement     
without the consent of the other parties hereto. Section 11.4(b) is intended to 
be for the benefit of and grant to HLR the rights specified therein, and HLR    
shall be entitled to enforce the covenants contained therein. Except as         
provided in the preceding sentence or in Section 7.6, this Agreement shall be   
binding upon and is solely for the benefit of each of the parties hereto and    
their respective successors and assigns, and nothing in this Agreement (other   
than Section 7.6) is intended to confer upon any other Person any rights or     
remedies of any nature whatsoever under or by reason of this Agreement.         

SECTION 11.6. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware.                          

SECTION 11.7. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in  
any number of counterparts, each of which shall be an original, with the same   
effect as if the signatures thereto and hereto were upon the same instrument.   
This Agreement shall become effective when each party hereto shall have         
received counterparts hereof signed by all of the other parties hereto.         

 SECTION 11.8. CERTAIN DEFINITIONS. For purposes of this Agreement the phrases
"TO THE KNOWLEDGE OF" or "KNOWN TO" mean with respect to such Person (x) in the 
case of NHL, or any of its Subsidiaries, actually known to any regional manager 
(which is a person in charge of an individual laboratory) of NHL or any         
Subsidiary or actually known to or which could reasonably be expected to be     
known by an executive of NHL more senior than a regional manager and (y) in the 
case of RBL, or any of its Subsidiaries, actually known to                      

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a subregional laboratory manager (which is a person in charge of a sub-regional 
laboratory) of RBL or any Subsidiary or actually known to or which could        
reasonably be expected to be known by an executive of RBL more senior than a    
sub-regional manager. Additionally, as used in this Agreement, the following    
terms have the following meanings:                                              

(a) "AFFILIATE" means, with respect to any Person, any other Person that    
directly or indirectly, through one or more intermediaries, controls, is        
controlled by or is under common control with such first Person.                

(b) "BUSINESS DAY" means any day except a Saturday, Sunday or other day on  
which commercial banking institutions in New York City are authorized by law or 
executive order to close.                                                       

(c) "PERSON" means an individual, a corporation, a partnership, an          
association, a trust or any other entity or organization, including a           
governmental or political subdivision or any agency or instrumentality thereof. 

SECTION 11.9. AGREEMENTS OF ROCHE. (a) Roche represents and warrants to NHL 
that: Roche is a corporation duly incorporated, validly existing and in good    
standing under the laws of the jurisdiction in which it is incorporated and has 
all corporate powers required to carry on its business as now being conducted.  
The execution, delivery and performance by Roche of this Agreement are within   
Roche's corporate powers and have been duly authorized by all necessary         
corporate action. This Agreement constitutes a valid and binding agreement of   
Roche. The execution, delivery and performance by Roche of this Agreement       
require no action by, or filing with, any governmental body, agency, official   
or authority other than compliance with any applicable requirements of the HSR  
Act. The execution, delivery and performance by Roche of this Agreement do not  
and will not (i) contravene or conflict with the certificate of incorporation   
or the bylaws of Roche or conflict with or constitute a violation of any        
provision of any law, regulation, judgment, injunction, order or decree binding 
upon or applicable to Roche, (ii) constitute a default under or give rise to a  
right of termination, cancellation or acceleration of any right or obligation   
of Roche or to a loss of any benefit to which Roche is entitled under any       
provision of any agreement, contract or other instrument binding upon Roche or  
(iii) result in the creation or imposition of any Lien on any asset of Roche,   
except in each case for contraventions, conflicts, violations, defaults, rights 
of termination, cancellation or acceleration, losses of benefits or creation or 
imposition of Liens that would not be reasonably expected to have, individually 
or in the aggregate, a material adverse effect on the business, financial       
condition, assets, results of operations or prospects of Roche and its          
Subsidiaries, taken as a whole.                                                 

(b) Roche agrees to use its best efforts to cause RBL and HLR to perform    
their obligations under this Agreement.                                         

(c) Roche and its Affiliates have sufficient funds, investments and credit  
facilities available to it to pay the Roche Warrant Consideration and will to   
the extent necessary make funds available to HLR to enable HLR to satisfy the   
obligation of HLR to deposit the HLR Cash Consideration pursuant to Section     
1.3.                                                                            

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first   
above written.                                                                  

                                NATIONAL HEALTH LABORATORIES
                   HOLDINGS INC.

                                        /s/ James R. Maher
                                         By: _________________________________
                              Name: James R. Maher
                                    Title: President and Chief
                           Executive Officer

                     HLR HOLDINGS INC.

                                         /s/ Bradford T. Smith
                                         By: _________________________________
                                 Name: Bradford T. Smith
                                    Title: Assistant Secretary

                                       ROCHE BIOMEDICAL LABORATORIES, INC.

                                         /s/ James B. Powell
                                         By: _________________________________
                               Name: James B. Powell
                          Title: President

                          HOFFMANN-LA ROCHE INC.

                                         /s/ Thomas P. Mac Mahon
                                         By: _________________________________
                                   Name: Thomas P. Mac Mahon
                                      Title: Senior Vice President

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                                                                        ANNEX II

WARRANT AGREEMENT 

DATED AS OF APRIL   , 1995      

BETWEEN 

NATIONAL HEALTH LABORATORIES HOLDINGS INC.

AND 

AMERICAN STOCK TRANSFER & TRUST COMPANY, AS WARRANT AGENT 

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TABLE OF CONTENTS(1)

                                                                [Download Table]

                                                                          PAGE 
                                                                          -----
                                  ARTICLE 1                                    

                                 DEFINITIONS                                   

                                                                               
SECTION 1.1  Definitions...............................................    II-1

                                  ARTICLE 2                                    

                            ISSUE, FORM, EXERCISE                              

SECTION 2.1  Amount Issued.............................................    II-2
SECTION 2.2  Initial Issuance..........................................    II-2
SECTION 2.3  Form of Warrant Certificate...............................    II-4
SECTION 2.4  Execution of Warrant Certificates.........................    II-4
SECTION 2.5  Notice to Holders with Respect to Exercise and Redemption.    II-4
SECTION 2.6  Exercise of Warrants......................................    II-4
SECTION 2.7  Redemption................................................    II-5
SECTION 2.8  Certain Action............................................    II-6
SECTION 2.9  No Voting Rights..........................................    II-6
SECTION 2.10 Warrant Shares to be Fully Paid and Nonassessable.........    II-6
SECTION 2.11 No Fractional Warrants....................................    II-6
SECTION 2.12 No Fractional Warrant Shares..............................    II-7

                                  ARTICLE 3                                    

           TRANSFER, EXCHANGE AND REPLACEMENT OF WARRANTS, LISTING             

SECTION 3.1  Ownership of Warrants.....................................    II-7
SECTION 3.2  Registration and Countersignature.........................    II-7
SECTION 3.3  Registration of Transfers and Exchanges...................    II-7
SECTION 3.4  Cancellation of Warrants..................................    II-8
SECTION 3.5  Payments of Taxes.........................................    II-8
SECTION 3.6  Mutilated or Missing Warrant Certificates.................    II-8
SECTION 3.7  Governmental Approvals and Stock Exchange Listing.........    II-8
SECTION 3.8  Transfer to Comply with the Securities Laws...............    II-9
SECTION 3.9  Company Option to Repurchase Warrants.....................    II-9

                                  ARTICLE 4                                    

                           ANTI-DILUTION PROVISIONS                            

SECTION 4.1  Adjustment of Exercise Price and Number of Shares                 
             Purchasable or Number of Warrants.........................    II-9
             Stock Dividends, Stock Splits, Combinations and Stock             
SECTION 4.2  Reclassifications.........................................    II-9
SECTION 4.3  Rights, Options and Warrants..............................    II-9
SECTION 4.4  Certain Distributions.....................................   II-10
SECTION 4.5  Capital Reorganizations and Reclassifications.............   II-10
SECTION 4.6  Consolidations, Mergers, Sales and Conveyances............   II-10
SECTION 4.7  Adjustment Rules..........................................   II-11
SECTION 4.8  Notice to Holders with Respect to Adjustments.............   II-12

                                  ARTICLE 5                                    

                                WARRANT AGENT                                  

SECTION 5.1  Appointment of Warrant Agent..............................   II-12
SECTION 5.2  Warrant Agent.............................................   II-12
SECTION 5.3  Change of Warrant Agent...................................   II-14
SECTION 5.4  Merger, Consolidation or Change of Name of Warrant Agent..   II-14

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                                                                [Download Table]

                                                                          PAGE 
                                                                          -----
                                  ARTICLE 6                                    

                                MISCELLANEOUS                                  
                                                                               
SECTION 6.1 Notices.....................................................  II-15
SECTION 6.2 Supplements and Amendments..................................  II-15
SECTION 6.3 Termination.................................................  II-15
SECTION 6.4 Governing Law...............................................  II-16
SECTION 6.5 Persons Benefiting..........................................  II-16
SECTION 6.6 Counterparts................................................  II-16
SECTION 6.7 Headings....................................................  II-16

--------                                                                        
(1) This Table of Contents is not a part of the Agreement.                      

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WARRANT AGREEMENT 

THIS WARRANT AGREEMENT (the "AGREEMENT") is dated as of April   , 1995      
between National Health Laboratories Holdings Inc., a Delaware corporation (the 
"COMPANY"), and American Stock Transfer & Trust Company as warrant agent (the   
"WARRANT AGENT").                                                               

 WHEREAS, as described in the succeeding two recitals, the Company proposes to
issue and deliver its warrant certificates (the "WARRANT CERTIFICATES")         
evidencing Common Stock Purchase Warrants (the "WARRANTS") to purchase, under   
certain circumstances, up to an aggregate of 23,000,000 shares (the "WARRANT    
SHARES"), subject to adjustment, of its Common Stock (as defined below);        

WHEREAS, the Company currently intends to declare a dividend to holders of  
record of Common Stock as of April 21, 1995 (the "WARRANT DISTRIBUTION RECORD   
DATE") of 0.16308 of a Warrant per share of Common Stock which dividend shall   
be paid April 24, 1995 (the "WARRANT DISTRIBUTION");                            

WHEREAS, the Company intends to issue and sell on the terms and subject to  
the conditions set forth in the Merger Agreement (as defined below) and herein  
to Hoffmann-La Roche Inc. ("ROCHE") 8,325,000 Warrants (the "ROCHE WARRANTS")   
for an aggregate purchase price of $51,048,900;                                 

WHEREAS, each Warrant shall entitle the registered holder thereof, on the   
terms and conditions hereof, to acquire from the Company one share of Common    
Stock, subject to adjustment; and                                               

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

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

ARTICLE 1 

DEFINITIONS 

 SECTION 1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following respective meanings:                                         

"BUSINESS DAY" means any day except a Saturday, Sunday or other day on which
commercial banking institutions in New York City are authorized by law or       
executive order to close.                                                       

"CLOSE OF BUSINESS" means 5:00 P.M. New York City time.                     

"CLOSING PRICE" means, with respect to the Warrants or shares of Common     
Stock, for any day the last sale price, regular way, or, if no such sale takes  
place on such day, the average of the closing bid and asked prices, regular     
way, for such day, in either case as reported in the principal consolidated     
transaction reporting system with respect to securities listed or admitted to   
trading on the NYSE or, if the Warrants or shares of Common Stock, as the case  
may be, are not listed or admitted to trading on such exchange, as reported on  
the principal consolidated transaction reporting system with respect to         
securities listed on the principal national securities exchange on which the    
Warrants or shares of Common Stock, respectively, are listed or admitted to     
trading, or if the Warrants or shares of Common Stock, as the case may be, are  
not listed or admitted to trading on any national securities exchange, as       
reported on NASDAQ/NMS or, if the Warrants or shares of Common Stock, as the    
case may be, are not listed or admitted to trading on NASDAQ/NMS, as reported   
on NASDAQ.                                                                      

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"COMMON STOCK" means the common stock, par value $0.01 per share, of the    
Company.                                                                        

 "COMPANY" has the meaning set forth in the preamble to this Warrant Agreement
and its successors and assigns.                                                 

"EXERCISE PRICE" means the purchase price per share of Common Stock to be   
paid upon the exercise of each Warrant in accordance with the terms hereof,     
which price shall be $22.00 per share, subject to adjustment from time to time  
pursuant to Article 4 hereof.                                                   

"EXPIRATION DATE" means April 28, 2000, or such other date as may be        
determined pursuant to Section 2.7 hereof.                                      

"FRACTIONAL WARRANT" has the meaning set forth in Section 2.11 hereof.      

 "FRACTIONAL WARRANT HOLDER" has the meaning set forth in Section 2.11 hereof.

"FRACTIONAL WARRANT PROCEEDS" has the meaning set forth in Section 2.11     
hereof.                                                                         

"FRACTIONAL WARRANT SHARE" has the meaning set forth in Section 2.12 hereof.

"FRACTIONAL WARRANT SHARE HOLDER" has the meaning set forth in Section 2.12 
hereof.                                                                         

 "FRACTIONAL WARRANT SHARE PROCEEDS" has the meaning set forth in Section 2.12
hereof.                                                                         

"HOLDER" means, at any time, a registered holder as shown in the Warrant    
Register of a Warrant outstanding at such time.                                 

 "MARKET DISRUPTION EVENT" means one of the following events, circumstances or
causes: (i) the suspension of or an imposition of a material limitation on      
trading in shares generally or (ii) any outbreak or escalation of hostilities   
or other national or international calamity or crisis.                          

 "MARKET PRICE" as at any date of determination means the average of the daily
Closing Prices of a share of Common Stock over the Valuation Period applicable  
to such date of determination.                                                  

"MERGER AGREEMENT" means the Agreement and Plan of Merger dated as of       
December 13, 1994, among the Company, HLR Holdings Inc., Roche Biomedical       
Laboratories, Inc. and, for the purposes stated therein, Roche.                 

"NASD" means the National Association of Securities Dealers, Inc.           

"NASDAQ" means the NASD Automated Quotation System.                         

"NASDAQ/NMS" means the NASDAQ--National Market System or its successor.     

"NHL STOCKHOLDER MEETING" shall have the meaning ascribed thereto in the    
Merger Agreement.                                                               

"NYSE" means the New York Stock Exchange, Inc.                              

"PERSON" means an individual, a partnership, a corporation, a joint venture,
a trust, an incorporated or unincorporated organization, a government or any    
department or agency thereof.                                                   

"REDEMPTION" has the meaning set forth in Section 2.7 hereof.               

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 "REDEMPTION AMOUNT" means, in respect of any Warrant, the amount equal to the
excess (if any) of the Market Price for the Valuation Period applicable to the  
Expiration Date over the Exercise Price.                                        

"ROCHE" has the meaning set forth in the recitals of this Agreement.        

"SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.                                         

"TRADING DAY" means any day on which either the Warrants or shares of Common
Stock, as the case may be, are traded on the applicable securities exchange or  
in the applicable securities market.                                            

"TRANSFER AGENT" has the meaning set forth in Section 2.6(c) hereof.        

"VALUATION PERIOD" for any computation of Market Price shall mean the 10    
consecutive Trading Days (each, a "VALUATION DATE") commencing 15 Trading Days  
and ending five Trading Days before the applicable date as of which the Market  
Price is being determined.                                                      

"WARRANT AGENT" means the warrant agent named in the preamble of this       
Agreement or the successor or successors of such Warrant Agent appointed in     
accordance with the terms hereof.                                               

"WARRANT AGENT OFFICE" means the office or agency maintained by the Warrant 
Agent in New York, New York (or such other offices or agencies as may be        
designated by the Warrant Agent) for the purpose of exchanging, transferring    
and exercising the Warrants.                                                    

"WARRANT CERTIFICATE" has the meaning set forth in the recitals of this     
Agreement.                                                                      

"WARRANT DISTRIBUTION" has the meaning set forth in the recitals of this    
Agreement                                                                       

"WARRANT DISTRIBUTION RECORD DATE" has the meaning set forth in the recitals
hereof.                                                                         

"WARRANT REGISTER" means the register maintained by the Warrant Agent in    
which the issue, transfer and cancellation of the Warrants are registered.      

"WARRANTS" has the meaning set forth in the recitals of this Agreement.     

"WARRANT SHARE" has the meaning set forth in the recitals of this Agreement.

All references herein to "DAYS" shall mean calendar days unless otherwise   
specified. All terms defined in this Agreement in the singular shall have a     
comparable meaning in the plural and vice versa.                                

ARTICLE 2 

ISSUE, FORM, EXERCISE 

SECTION 2.1 AMOUNT ISSUED. Subject to the other provisions of this Agreement
(including Article 4), Warrants to purchase no more than 23,000,000 Warrant     
Shares may be issued and delivered hereunder.                                   

SECTION 2.2 INITIAL ISSUANCE. Warrant Certificates representing the Warrants
shall be initially issued by the Warrant Agent at the time, in the              
denominations and to the Persons so directed by the Company. Upon the           
declaration of the Warrant Distribution, the Company shall execute and deliver  
to the Warrant Agent for countersignature Warrant Certificates representing a   
number of Warrants equal to the product of (x) the number of outstanding shares 
of Common Stock on the Warrant Distribution Record Date and (y) 0.16308. At or  
prior to the Effective Time (as defined in the Merger Agreement) the Company    
shall execute and deliver to the Warrant Agent for countersignature Warrant     
Certificates representing the Roche Warrants.                                   

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 SECTION 2.3 FORM OF WARRANT CERTIFICATE. The Warrant Certificates shall be in
registered form only. The Warrant Certificates and the forms of election to     
exercise Warrants and of assignment to be printed on the reverse side thereof   
shall be in substantially the form set forth in Exhibit A hereto together with  
such appropriate insertions, omissions, substitutions and other variations as   
are required or permitted by this Agreement, and may have such letters, numbers 
or other marks of identification and such legends or endorsements placed        
thereon as may be required to comply with any law or with any rules made        
pursuant thereto or with any rules of any securities exchange or as may,        
consistently herewith, be determined by the officers executing such Warrants,   
as evidenced by their execution of the Warrants.                                

 SECTION 2.4 EXECUTION OF WARRANT CERTIFICATES. (a) Warrant Certificates shall
be signed on behalf of the Company by the Chairman of its Board of Directors,   
its Chief Executive Officer, its President, a Vice President or its Treasurer   
and attested by its Secretary or Assistant Secretary, under its corporate seal. 
Each such signature upon the Warrant Certificates may be in the form of a       
facsimile signature of the current or any future Chairman of the Board, Chief   
Executive Officer, President, Vice President, Treasurer, Secretary or Assistant 
Secretary and may be imprinted or otherwise reproduced on the Warrant           
Certificates and for that purpose the Company may adopt and use the facsimile   
signature of any person who shall have been Chairman of the Board, Chief        
Executive Officer, President, Vice President, Treasurer, Secretary or Assistant 
Secretary, notwithstanding the fact that at the time the Warrant Certificates   
shall be countersigned and delivered or disposed of such person shall have      
ceased to hold such office. The seal of the Company may be in the form of a     
facsimile thereof and may be impressed, affixed, imprinted or otherwise         
reproduced on the Warrant Certificates.                                         

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

SECTION 2.5 NOTICE TO HOLDERS WITH RESPECT TO EXERCISE AND REDEMPTION. Not  
earlier than 90 days nor later than 60 days prior to the Expiration Date, the   
Company shall deliver to the Warrant Agent notice in writing, which notice      
shall be irrevocable, stating whether or not it shall have elected to redeem    
the Warrants on the Expiration Date in accordance with Section 2.7. Promptly    
after receipt of the Company's notice, the Warrant Agent shall mail a notice to 
all Holders at the addresses set forth on the Warrant Register to the effect    
that (as applicable) each outstanding Warrant shall be redeemed for the         
Redemption Amount on the Expiration Date or that such Warrants shall not be     
redeemed and describing the exercise procedure set forth in Section 2.6 (which  
notice shall include the statement that the Warrants will terminate and become  
void as of the Close of Business on the Expiration Date and that failure by a   
Holder to comply with the exercise procedures will result in the forfeiture of  
such Holder's rights with respect to such Holder's Warrants).                   

SECTION 2.6 EXERCISE OF WARRANTS. (a) Subject to the provisions of this     
Agreement, each Warrant shall be exercisable only prior to the Close of         
Business on the Expiration Date and only if the Company shall not have duly     
elected to effect a Redemption pursuant to Section 2.7. The Warrants shall      
expire at and become null and void and have no value and no Person shall have   
any rights thereto as of the Close of Business on the Expiration Date,          
provided, however, that, notwithstanding such expiration, Holders that have     
properly exercised Warrants in accordance with this Section 2.6 shall be        
entitled to receive Warrant Shares with respect to such Holders' Warrants as    
provided in subsection (b) unless the Company shall have elected to effect a    
Redemption pursuant to Section 2.7, in which case each Holder shall be entitled 
to received the Redemption Amount as described in Section 2.7.                  

(b) Subject to Section 2.7, for each Warrant held, the Holder thereof shall 
have the right to purchase from the Company (and the Company shall issue and    
sell to such Holder) one fully paid and non-assessable                          

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share of Common Stock at the Exercise Price (in each case subject to adjustment 
as hereinafter provided) upon (i) surrender to the Warrant Agent, at a Warrant  
Agent Office of the Warrant Certificate evidencing such Warrant, with the form  
of election to exercise on the reverse thereof properly completed and signed by 
the Holder or Holders thereof or by the duly appointed legal representative     
thereof or by a duly authorized attorney, and (ii) payment of the Exercise      
Price for the number of Warrant Shares in respect of which such Warrant is      
being exercised. Such surrender and payment (if applicable) may be made and     
shall be accepted by the Warrant Agent at any time during the 45 day period     
immediately preceding the Close of Business on the Expiration Date, but any     
Warrants so surrendered shall not be deemed to be exercised until the           
Expiration Date. Payment of the Exercise Price shall be made by a certified or  
official bank check payable to the order of the Warrant Agent for the account   
of the Company or by wire transfer of funds to an account designated by the     
Company for such purpose. The Warrants evidenced by a Warrant Certificate shall 
be exercisable, at the election of the Holder thereof, either in their entirety 
or in part. Except as expressly provided to the contrary in Article 4, no       
adjustments shall be made for any cash dividends or other cash distributions on 
Warrant Shares issuable upon the exercise of a Warrant.                         

(c) Upon the surrender of each Warrant Certificate in accordance with       
subsection (b) above and payment of the per share Exercise Price (and an amount 
representing any transfer taxes payable with respect to the issuance of the     
relevant Warrant Shares) immediately following the Expiration Date, the Company 
shall issue and cause its transfer agent for the Common Stock ("TRANSFER        
AGENT") to deliver with all reasonable dispatch to or upon the written order of 
the Holder and in such name or names as such Holder may designate, a            
certificate or certificates for the number of full Warrant Shares so purchased  
upon the exercise of such Warrant or Warrants together with cash as provided in 
Section 2.12 in respect of any Fractional Warrant Share (as defined below)      
otherwise issuable upon such exercise. Such certificate or certificates shall   
be deemed to have been issued and any person so designated to be named therein  
shall be deemed to have become a holder of record of such Warrant Shares as of  
the Expiration Date; provided, however, that if, at such date, the transfer     
books for the Warrant Shares shall be closed, the certificates for the Warrant  
Shares in respect of which such Warrants are then exercised shall be issuable   
as of the date on which such books shall next be opened and until such date     
Holders shall be under no duty to deliver any certificates for such Warrant     
Shares; provided further, however, that such transfer books, unless otherwise   
required by law, shall not be closed at any one time for a period longer than   
20 calendar days.                                                               

SECTION 2.7 REDEMPTION. (a) Notwithstanding Section 2.6, the Company shall  
have the right to redeem all, but not less than all, of the Warrants on the     
Expiration Date by payment to each Holder as of the Expiration Date in cash of  
the Redemption Amount with respect to the Warrants held by such Holder as of    
the Expiration Date (a "REDEMPTION"), but only if the Company shall have timely 
delivered to the Warrant Agent the notice of its election to redeem the         
Warrants referred to in Section 2.5. If the Company has elected to redeem the   
Warrants as herein provided, at or immediately prior to the Expiration Date,    
the Company shall cause to be transferred to the Warrant Agent an amount in     
immediately available funds equal to the aggregate Redemption Amount for all    
outstanding Warrants for payment by the Warrant Agent to the Holders as of the  
Expiration Date in respect of the Warrants held as of the Expiration Date. If   
the Company shall have duly elected to redeem the Warrants but the aggregate    
Redemption Amount is zero or less than zero, no amount shall be required to be  
paid by the Company in respect of the redemption of the Warrants but the        
Warrants shall nonetheless be deemed to have been redeemed.                     

(b) If the Company has duly elected to redeem the Warrants and the Company  
determines in its sole discretion that a Market Disruption Event has occurred   
and is continuing on any day that but for the occurrence of a Market Disruption 
Event would have been a Valuation Date with respect to the determination of the 
Redemption Amount, then such day shall not be deemed to be a Valuation Date and 
the Valuation Date shall instead be deemed to be the next Trading Day on which  
the Company determines that no Market Disruption Event is continuing and the    
Valuation Period shall be extended accordingly. If the Valuation Period shall   
have been so extended, then the Expiration Date for purposes of the Redemption  
shall be deemed to be the fifth Trading Day after the end of the Valuation      
Period as so extended. In the event that the Company determines that a Market   
Disruption Event has occurred, the Company shall give telephonic notice         
(promptly confirmed in writing) of such event to the Warrant Agent.             

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SECTION 2.8 CERTAIN ACTION. Before taking any action that would cause an    
adjustment pursuant to Article 4 reducing the Exercise Price below the then par 
value (if any) of the Warrant Shares issuable upon exercise of the Warrants,    
the Company will take any corporate action that may, in the opinion of its      
counsel, be necessary in order that the Company may validly and legally issue   
fully paid and nonassessable Warrant Shares at the Exercise Price as so         
adjusted.                                                                       

SECTION 2.9 NO VOTING RIGHTS. Prior to the exercise of the Warrants and the 
issuance of Warrant Shares in respect thereof, no Holder, as such, shall be     
entitled to any rights of a stockholder of the Company including, without       
limitation, the right to receive dividends or subscription rights, the right to 
vote, to consent, to exercise any preemptive right, to receive any notice of    
meetings of stockholders for the election of directors of the Company or any    
other matter or to receive any notice of any proceedings of the Company, except 
as may be specifically provided for herein.                                     

SECTION 2.10 WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. The Company 
covenants that all Warrant Shares issued upon exercise of the Warrants will,    
upon payment of the applicable Exercise Price, delivery of properly completed   
forms of election to exercise and issuance of such Warrant Shares in accordance 
with the terms of this Agreement, be fully paid and nonassessable and free from 
all liens, charges and security interests created by or imposed upon the        
Company with respect to the issuance and holding thereof. The Company shall no  
less than 50 days prior to the Expiration Date (unless the Company shall have   
elected to effect a Redemption pursuant to Section 2.7) at all times thereafter 
until issuance of Warrant Shares in accordance herewith keep reserved out of    
its authorized shares of Common Stock a number of shares of Common Stock        
sufficient to provide for the exercise of all outstanding Warrants.             

SECTION 2.11 NO FRACTIONAL WARRANTS. (a) No certificates or scrip           
representing fractional Warrants shall be issued to any Holder in the Warrant   
Distribution. As promptly as practicable following the Warrant Distribution     
Record Date, the Warrant Agent shall determine with respect to each Person      
entitled to receive Warrants pursuant to the Warrant Distribution the excess of 
(x) the number of Warrants delivered to the Warrant Agent by the Company        
pursuant to Section 2.2 with respect to each such Person over (y) the number of 
whole Warrants to be distributed with respect to such Person (such excess       
fraction of a Warrant being hereinafter referred to in connection with each     
such Person as a "FRACTIONAL WARRANT"). As soon after the Warrant Distribution  
Record Date as practicable, the Warrant Agent, as agent for Holders otherwise   
entitled to receive Fractional Warrants (each, a "FRACTIONAL WARRANT HOLDER"),  
shall aggregate and sell in normal transactions the Fractional Warrants for all 
Fractional Warrant Holders at then available prices on the NYSE. Until the net  
proceeds of such sale or sales (the "FRACTIONAL WARRANT PROCEEDS") have been    
distributed to the Fractional Warrant Holders, the Warrant Agent shall hold the 
Fractional Warrant Proceeds in trust for the Fractional Warrant Holders. The    
Company shall pay, and deduct from the Fractional Warrant Proceeds, all         
commissions, transfer taxes and other out-of-pocket transaction costs,          
including the expenses and compensation of the Warrant Agent, incurred in       
connection with such sale of the Fractional Warrants. The Warrant Agent shall   
determine the portion of the net Fractional Warrant Proceeds to which each      
Fractional Warrant Holder shall be entitled, if any, by multiplying the net     
Fractional Warrant Proceeds amount by a fraction, the numerator of which is the 
Fractional Warrant to which such Fractional Warrant Holder would otherwise be   
entitled and the denominator of which is the aggregate Fractional Warrants to   
which all Fractional Warrant Holders would otherwise be entitled. As soon as    
practicable after the determination of the amount of Fractional Warrant         
Proceeds, if any, to be paid in cash to each Fractional Warrant Holder in lieu  
of any Fractional Warrants, the Warrant Agent shall make available such         
amounts, without interest, to each such Fractional Warrant Holder.              

(b) If Warrants are to be issued Holders pursuant to Section 4.7(h), the    
Company and the Warrant Agent shall, prior to such issuance, establish a        
procedure corresponding to the procedure described in subsection (a) above such 
that Holders that would otherwise receive Fractional Warrants shall instead     
receive the appropriate amount of the Fractional Warrant Proceeds thereof.      

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SECTION 2.12 NO FRACTIONAL WARRANT SHARES. Notwithstanding any adjustment   
pursuant to Article 4 in the number of Warrant Shares purchasable upon the      
exercise of a Warrant, no certificates or scrip representing fractional Warrant 
Shares shall be issued upon exercise of a Warrant. As promptly as practicable   
following the Expiration Date, if the Company shall not have elected to effect  
a Redemption pursuant to Section 2.7, the Transfer Agent shall determine the    
excess of (x) the number of Warrant Shares delivered to the Transfer Agent by   
the Company with respect to each Holder pursuant to Section 2.6 over (y) the    
aggregate number of whole Warrant Shares to be issued with respect to such      
Holder (such excess being hereinafter referred to in connection with each such  
Holder as the "FRACTIONAL WARRANT SHARE"). As soon after the Expiration Date as 
practicable, the Transfer Agent, as agent for Holders otherwise entitled to     
receive Fractional Warrant Shares (each, a "FRACTIONAL WARRANT SHARE HOLDER"),  
unless the Company has elected to effect a Redemption pursuant to Section 2.7,  
shall aggregate and sell in normal transactions the Fractional Warrant Shares   
for all the Fractional Warrant Share Holders at then available prices on the    
NYSE or on the principal United States securities exchange on which the Common  
Stock is listed, if any, or on NASDAQ, if the Common Stock is quoted on NASDAQ. 
Until the net proceeds of such sale or sales (the "FRACTIONAL WARRANT SHARE     
PROCEEDS") have been distributed to such Holders, the Transfer Agent will hold  
the Fractional Warrant Share Proceeds in trust for the Fractional Warrant Share 
Holders. The Company shall pay, and deduct from the Fractional Warrant Share    
Proceeds, all commissions, transfer taxes and other out-of-pocket transaction   
costs, including the expenses and compensation of the Transfer Agent, incurred  
in connection with such sale of the Fractional Warrant Shares. The Transfer     
Agent shall determine the portion of the net Fractional Warrant Share Proceeds  
to which each Fractional Warrant Share Holder shall be entitled, if any, by     
multiplying the net Fractional Warrant Share Proceeds amount by a fraction, the 
numerator of which is the Fractional Warrant Share to which such Fractional     
Warrant Share Holder would otherwise be entitled and the denominator of which   
is the aggregate amount of Fractional Warrant Shares to which all such          
Fractional Warrant Share Holders would otherwise be entitled. As soon as        
practicable after the determination of the amount of the net Fractional Warrant 
Share Proceeds, if any, to be paid in cash to each such Fractional Warrant      
Share Holder in lieu of its Fractional Warrant Share, the Transfer Agent shall  
make available such amounts, without interest, to each such Fractional Warrant  
Share Holder.                                                                   

ARTICLE 3 

TRANSFER, EXCHANGE AND REPLACEMENT OF WARRANTS, LISTING 

 SECTION 3.1 OWNERSHIP OF WARRANTS. The Company and the Warrant Agent may deem
and treat any Holder as the absolute owner for all purposes, notwithstanding    
any notation of ownership or other writing on the relevant Warrant Certificate  
made by anyone, and shall not be affected by any notice to the contrary until   
due presentation of such Warrant Certificate for registration and transfer as   
provided in this Article 3.                                                     

SECTION 3.2 REGISTRATION AND COUNTERSIGNATURE. Warrant Certificates shall be
countersigned manually or by facsimile and dated the date of countersignature   
by the Warrant Agent and shall not be valid for any purpose unless so           
countersigned. The Warrant Certificates shall be numbered and shall be          
registered in the Warrant Register. The countersignature of the Warrant Agent   
shall be that of a duly authorized employee of the Warrant Agent.               

SECTION 3.3 REGISTRATION OF TRANSFERS AND EXCHANGES. (a) The Warrant Agent  
shall from time to time register the transfer of any outstanding Warrant        
Certificate in the Warrant Register, upon surrender of such Warrant             
Certificate, duly endorsed, and accompanied by a written instrument or          
instruments of transfer in a form satisfactory to the Warrant Agent, duly       
signed by the Holder or Holders thereof or by the duly appointed legal          
representative thereof or by a duly authorized attorney, such signature to be   
guaranteed by (i) a bank or trust company, (ii) a broker or dealer that is a    
member of the NASD or (iii) a member of a national securities exchange, and     
funds sufficient to pay any transfer taxes payable with respect to such         
transfer. Upon any such registration or transfer, a new Warrant Certificate     
shall be issued to the transferee.                                              

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(b) Warrant Certificates may be exchanged at the option of the holder or    
holders thereof, when surrendered to the Warrant Agent at a Warrant Agent       
Office, or at the offices of any successor Warrant Agent as provided in Section 
5.3 hereof, for another Warrant Certificate or other Warrant Certificates of    
like tenor and representing in the aggregate a like number of Warrants.         

 (c) Notwithstanding paragraphs (a) and (b) above, the Warrant Agent shall not
be required to transfer or exchange any Warrant Certificate from and after the  
105th day preceding the scheduled Expiration Date provided that if, in the      
notice provided by the Company pursuant to Section 2.5, the Company shall not   
have elected to redeem the Warrants, then the Warrant Agent shall permit        
transfers or exchanges of Warrant Certificates from and after the mailing of    
the notice to Holders referred to in Section 2.5 but shall not be required to   
transfer or exchange any Warrant Certificate from and after the 15th day        
preceding the Expiration Date.                                                  

SECTION 3.4 CANCELLATION OF WARRANTS. If the Company shall purchase or      
otherwise acquire Warrants, the Company may deliver the Warrant Certificates    
representing such Warrants to the Warrant Agent to be canceled by it and        
retired. The Warrant Agent shall cancel all Warrant Certificates so             
surrendered.                                                                    

SECTION 3.5 PAYMENTS OF TAXES. The Company will pay any documentary stamp   
taxes attributable to the initial issuance of Warrants and of Warrant Shares    
upon the exercise of Warrants; provided, that the Company shall not be required 
to pay any tax or taxes which may be payable in respect of any transfer         
involved in the issue of any Warrant Certificates or any certificates for       
Warrant Shares in a name other than the registered holder of a Warrant          
Certificate surrendered upon the exercise of a Warrant, and the Company shall   
not be required to issue or deliver such certificates unless or until the       
person or persons requesting the issuance thereof shall have paid to the        
Company the amount of such tax or shall have established to the satisfaction of 
the Company that such tax has been paid.                                        

SECTION 3.6 MUTILATED OR MISSING WARRANT CERTIFICATES. (a) If (i) any       
mutilated Warrant Certificate is surrendered to the Warrant Agent or (ii) the   
Company and the Warrant Agent receive evidence to their satisfaction of the     
destruction, loss or theft of any Warrant Certificate, and there is delivered   
to the Company and the Warrant Agent such security or indemnity as may be       
reasonably required by them to hold each of them harmless with respect thereto, 
then, in the absence of notice to the Company or the Warrant Agent that such    
Warrant Certificate has been acquired by a bona fide purchaser, the Company     
shall execute and upon its written request the Warrant Agent shall countersign  
and deliver, in exchange for any such mutilated Warrant Certificate or in lieu  
of any such destroyed, lost or stolen Warrant Certificate, a new Warrant        
Certificate of like tenor and for a like aggregate number of Warrants.          

(b) Upon the issuance of any new Warrant Certificate under this Section 3.6 
the Company may require the payment of a sum sufficient to cover any tax or     
other governmental charge that may be imposed in relation thereto and other     
expenses (including the reasonable fees and expenses of the Warrant Agent and   
of counsel to the Company) in connection therewith.                             

(c) Every new Warrant Certificate executed and delivered pursuant to this   
Section 3.6 in lieu of any destroyed, lost or stolen Warrant Certificate shall  
constitute an original contractual obligation of the Company, whether or not    
the destroyed, lost or stolen Warrant Certificate shall be at any time          
enforceable by anyone, and shall be entitled to the benefits of this Warrant    
Agreement equally and proportionately with any and all other Warrant            
Certificates duly executed and delivered hereunder.                             

SECTION 3.7 GOVERNMENTAL APPROVALS AND STOCK EXCHANGE LISTING. The Company  
from time to time will use its best efforts (a) to obtain and keep effective    
any and all permits, consents and approvals of governmental agencies and        
authorities and to file such documents under federal and state securities acts  
and laws, which may be or become requisite in connection with the issuance,     
sale, transfer and delivery of the Warrant Certificates, the exercise of the    
Warrants and the issuance, sale, transfer and delivery of the Warrant Shares    
issued upon exercise of Warrants (including, without limitation, causing a      
registration statement under                                                    

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the Securities Act in respect of the Warrant Shares to be filed and declared    
effective but, subject to the Company's other contractual obligations, not      
including maintaining an effective registration statement for purposes of       
resale of Warrant Shares), provided, however, if any such permits, consents,    
approvals or documents are not so obtained or effective, the Company will       
immediately notify the Warrant Agent; (b) to have the Warrants listed on the    
NYSE or on the principal United States securities exchange on which the Common  
Stock is listed, if any, or quoted on NASDAQ if the Common Stock is so quoted;  
and (c) immediately upon the issuance of Warrant Shares upon exercise of        
Warrants, to have such Warrant Shares listed on the NYSE or on the principal    
United States securities exchange or exchanges on which the Common Stock is     
listed, if any, or quoted on NASDAQ if the Common Stock is so quoted. The       
Company shall cause the Warrants to be delisted on the NYSE or cease to be      
quoted, as the case may be, effective as of the Close of Business on the        
Expiration Date. Notwithstanding anything in this Agreement to the contrary, in 
no event shall a Holder be entitled to exercise a Warrant unless a registration 
statement filed under the Securities Act in respect of the Warrant Shares is    
then effective (unless in the opinion of counsel to the Company an exemption    
from the registration requirements is available under the Securities Act at the 
time of such exercise).                                                         

 SECTION 3.8 TRANSFER TO COMPLY WITH THE SECURITIES LAWS. Neither the Warrants
nor any of the Warrant Shares, nor any interest in either, may be sold,         
assigned, pledged, hypothecated, encumbered or in any other manner transferred  
or disposed of, in whole or in part, except in compliance with applicable       
United States federal and state securities laws and the terms and conditions    
hereof and thereof.                                                             

SECTION 3.9 COMPANY OPTION TO REPURCHASE WARRANTS. The Company and its      
subsidiaries shall have the option, in their sole discretion, at any time or    
from time to time, to purchase Warrants (i) in the public market, (ii) by       
tender or exchange offer available to all Holders at any price or (iii) in      
private transactions at a price not more than ten percent (10%) over the Market 
Price of the Warrants as of closing date of each such transaction respectively. 
Warrants acquired by the Company or its subsidiaries shall be canceled and      
shall not be available for reissuance or resale.                                

ARTICLE 4 

ANTI-DILUTION PROVISIONS

SECTION 4.1 ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES PURCHASABLE OR
NUMBER OF WARRANTS. The Exercise Price, the number of Warrant Shares            
purchasable upon the exercise of each Warrant and the number of Warrants        
outstanding are subject to adjustment from time to time upon the occurrence of  
the events enumerated in this Article 4.                                        

SECTION 4.2 STOCK DIVIDENDS, STOCK SPLITS, COMBINATIONS AND STOCK           
RECLASSIFICATIONS. If the Company shall (i) pay a dividend on its shares of     
capital stock (including Common Stock) in shares of Common Stock, (ii)          
subdivide its outstanding shares of Common Stock, (iii) combine its outstanding 
shares of Common Stock into a smaller number of shares of Common Stock or (iv)  
issue any shares of its capital stock in a reclassification of the Common Stock 
(including any such reclassification in connection with a consolidation or      
merger in which the Company is the continuing corporation), in each case, other 
than the Merger pursuant to the Merger Agreement, the number of Warrant Shares  
purchasable upon exercise of each Warrant immediately prior thereto shall be    
adjusted so that each Holder shall be entitled upon exercise to receive the     
kind and number of Warrant Shares or other securities of the Company which such 
Holder would have owned or have been entitled to receive after the happening of 
any of the events described above, had such Warrant been exercised immediately  
prior to the happening of such event or any record date with respect thereto.   
An adjustment made pursuant to this Section 4.2 shall become effective          
immediately after the effective date of such event retroactive to the record    
date, if any, for such event.                                                   

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SECTION 4.3 RIGHTS, OPTIONS AND WARRANTS. If the Company shall issue any    
rights, options or warrants to holders of its outstanding Common Stock (other   
than pursuant hereto, pursuant to stock option plans or similar plans approved  
by the Board of Directors of the Company or pursuant to the Merger Agreement),  
without payment of additional consideration by such holders, entitling them     
(for a period expiring within 45 days after the record date mentioned below) to 
subscribe for or purchase shares of Common Stock at a price per share that is   
lower than the Market Price per share of Common Stock at the record date        
mentioned below, the number of Warrant Shares thereafter purchasable upon the   
exercise of each Warrant shall be determined by multiplying the number of       
Warrant Shares theretofore purchasable upon exercise of each Warrant by a       
fraction, of which the numerator shall be (i) the number of shares of Common    
Stock outstanding on the record date for the issuance of such rights, options   
or warrants plus the number of additional shares of Common Stock offered for    
subscription or purchase, and of which the denominator shall be (ii) the number 
of shares of Common Stock outstanding on the record date for the issuance of    
such rights, options or warrants plus the number of shares which the aggregate  
offering price of the total number of shares of Common Stock so offered would   
purchase at the Market Price per share of Common Stock at such record date.     
Such adjustment shall be made whenever such rights, options or warrants are     
issued, and shall become effective immediately on the date of issuance          
retroactive to the record date for the determination of stockholders entitled   
to receive such rights, options or warrants.                                    

SECTION 4.4 CERTAIN DISTRIBUTIONS. If the Company shall distribute to all   
holders of its shares of Common Stock evidences of its indebtedness or assets   
(excluding cash dividends or distributions payable out of consolidated earnings 
or earned surplus and dividends or distributions referred to in Section 4.2) or 
rights, options or warrants or convertible or exchangeable securities           
containing the right to subscribe for or purchase shares of Common Stock        
(excluding those referred to in Section 4.3), then in each case the number of   
Warrant Shares thereafter purchasable upon the exercise of each Warrant shall   
be determined by multiplying the number of Warrant Shares theretofore           
purchasable upon the exercise of each Warrant, by a fraction, of which the      
numerator shall be (i) the then current Market Price per share of Common Stock  
on the date of such distribution, and of which the denominator shall be (ii)    
the then current Market Price per share of Common Stock on the date of such     
distribution, less the then fair value (as determined in good faith by the      
Board of Directors of the Company, whose determination shall be conclusive and  
shall be evidenced by a resolution filed with the Warrant Agent) of the portion 
of the assets or evidences of indebtedness so distributed or of such            
subscription rights, options or warrants or convertible or exchangeable         
securities applicable to one share of Common Stock. Such adjustment shall be    
made whenever any such distribution is made, and shall become effective on the  
date of distribution retroactive to the record date for the determination of    
stockholders entitled to receive such distribution.                             

 SECTION 4.5 CAPITAL REORGANIZATIONS AND STOCK RECLASSIFICATIONS. In the event
of any capital reorganization or any reclassification of the Common Stock       
(except as provided in Section 4.2, 4.3, 4.4 or 4.6), any Holder of Warrants    
upon exercise thereof shall be entitled to receive, in lieu of the Common Stock 
to which such Holder would have become entitled upon exercise immediately prior 
to such reorganization or reclassification, the shares (of any class or         
classes) or other securities or property of the Company that such Holder would  
have been entitled to receive at the same aggregate Exercise Price upon such    
reorganization or reclassification if such Holder's Warrants had been exercised 
immediately prior thereto; and in any such case, appropriate provision (as      
determined in good faith by the Board of Directors of the Company, whose        
determination shall be conclusive and shall be evidenced by a resolution filed  
with the Warrant Agent) shall be made for the application of this Article 4     
with respect to the rights and interests thereafter of the Holders (including   
the allocation of the adjusted Exercise Price between or among shares of        
classes of capital stock), to the end that this Article 4 (including the        
adjustments of the number of shares of Common Stock or other securities         
purchasable and the Exercise Price thereof) shall thereafter be reflected, as   
nearly as reasonably practicable, in all subsequent exercises of the Warrants   
for any shares or securities or other property thereafter deliverable upon the  
exercise of the Warrants.                                                       

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SECTION 4.6 CONSOLIDATIONS, MERGERS, SALES AND CONVEYANCES. In case of any  
consolidation of the Company with or merger of the Company into another         
corporation or in case of any sale or conveyance to another corporation of the  
property of the Company as an entirety or substantially as an entirety, the     
Company or such successor or purchasing corporation, as the case may be, shall  
execute with the Warrant Agent an agreement that each Holder shall have the     
right thereafter upon payment of the Exercise Price in effect immediately prior 
to such action to purchase upon exercise of each Warrant the kind and amount of 
shares and other securities and property which such holder would have owned or  
have been entitled to receive after the happening of such consolidation,        
merger, sale or conveyance had such Warrant been exercised immediately prior to 
such action. The Company shall mail by first-class mail, postage prepaid, to    
each Holder, notice of the exception of any such agreement. Such agreement      
shall provide for adjustments, which shall be as nearly equivalent as may be    
practicable to the adjustments provided for in this Article 4. The provisions   
of this Section 4.6 shall similarly apply to successive consolidations,         
mergers, sales or conveyances. The Warrant Agent shall be under no duty or      
responsibility to determine the correctness of any provisions contained in any  
such agreement relating either to the kind or amount of shares of stock or      
other securities or property receivable upon exercise of Warrants or with       
respect to the method employed and provided therein for any adjustments and     
shall be entitled to rely upon the provisions contained in any such agreement.  

 SECTION 4.7 ADJUSTMENT RULES. (a) For the purposes of adjustments required by
Section 4.2 and Section 4.3, the shares of Common Stock that the holder of any  
rights, options, warrants or convertible or exchangeable securities shall be    
entitled to subscribe for or purchase shall be deemed to be issued and          
outstanding as of the date of sale, issuance or distribution of such securities 
and the consideration, if any, received by the Company therefor shall be deemed 
to be the consideration received by the Company for such securities, plus the   
consideration or premiums stated in such securities to be paid for the shares   
of Common Stock covered thereby.                                                

(b) Except for adjustments required by Section 4.6, no adjustment in the    
number of Warrant Shares purchasable hereunder shall be required unless such    
adjustment would require an increase or decrease of at least one percent in the 
number of Warrant Shares purchasable upon the exercise of each Warrant;         
provided, however, that any adjustments which by reason of this Section 4.7(b)  
are not required to be made shall be carried forward and taken into account in  
any subsequent adjustment. All calculations shall be made to the nearest cent   
and to the nearest one-hundredth of a share, as the case may be.                

(c) Whenever the number of Warrant Shares purchasable upon the exercise of  
each Warrant is adjusted as herein provided (whether or not the Company then or 
thereafter elects to issue additional Warrants in substitution for an           
adjustment in the number of Warrant Shares as provided in Section 4.7(h)), the  
Exercise Price payable upon exercise of each Warrant shall be adjusted by       
multiplying such Exercise Price immediately prior to such adjustment by a       
fraction, of which the numerator shall be the number of Warrant Shares          
purchasable upon the exercise of each Warrant immediately prior to such         
adjustment, and of which the denominator shall be the number of Warrant Shares  
so purchasable immediately thereafter, provided, however, that the Exercise     
Price shall not be reduced below par unless the Company has taken action        
pursuant to Section 2.8.                                                        

(d) For the purpose of this Article 4, the term "SHARES OF COMMON STOCK"    
shall mean (i) the class of stock designated as the Common Stock of the Company 
at the date of this Agreement, or (ii) any other class of stock resulting from  
successive changes or reclassification of such shares consisting solely of      
changes in par value, or from par value to no par value, or from no par value   
to par value. If at any time, as a result of an adjustment made pursuant to     
Section 4.2 or Section 4.5 above, the holders of Warrants shall become entitled 
to purchase any shares of the Company other than shares of Common Stock,        
thereafter the number of such other shares so purchasable upon exercise of each 
Warrant and the Exercise Price with respect to such shares shall be subject to  
adjustment from time to time in a manner and on terms as nearly equivalent as   
practicable to the provisions with respect to the Warrant Shares contained in   
Section 4.2 through Section 4.5 and subsections (a), (b) and (c) of this        
Section 4.7, inclusive, above, and the provisions of Sections 3.2, 3.5, 3.7 and 
4.9, with respect to the Warrant Shares, shall apply on like terms to any such  
other shares.                                                                   

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 (e) Except as provided in Sections 4.2, 4.3 and 4.4, no adjustment in respect
of any dividends shall be made during the term of a Warrant or upon the         
exercise of a Warrant.                                                          

(f) Irrespective of any adjustments in the Exercise Price or the number or  
kind of shares purchasable upon the exercise of the Warrants, Warrants          
theretofore or thereafter issued may continue to express the same price and     
number and kind of shares as are stated in the Warrants initially issuable      
pursuant to this Agreement.                                                     

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

 (h) The Company may elect, on or after the date of any adjustment required by
Section 4.2 through Section 4.5, to adjust the number of Warrants in            
substitution for an adjustment in the number of Warrant Shares purchasable upon 
the exercise of a Warrant. Each of the Warrants outstanding after such          
adjustment of the number of Warrants shall be exercisable for the same number   
of Warrant Shares as immediately prior to such adjustment. Each Warrant held of 
record prior to such adjustment of the number of Warrants shall become that     
number of Warrants (calculated to the nearest hundredth) obtained by dividing   
the Exercise Price in effect prior to adjustment of the Exercise Price by the   
Exercise Price in effect after adjustment of the Exercise Price. The Company    
shall notify the Holders in the same manner as provided in Section 4.8, of its  
election to adjust the number of Warrants, indicating the record date for the   
adjustment, and, if known at the time, the amount of the adjustment to be made. 
This record date may be the date on which the Exercise Price is adjusted or any 
date thereafter. Upon each adjustment of the number of Warrants pursuant to     
this Section 4.7(h) the Company shall, as promptly as practicable, cause to be  
distributed to Holders as of such record date Warrant Certificates evidencing,  
subject to Sections 2.8 and 2.11, the additional Warrants to which such holders 
shall be entitled as a result of such adjustment, or, at the option of the      
Company, shall cause to be distributed to such holders of record in             
substitution and replacement for the Warrant Certificates held by such holders  
prior to the date of adjustment, and upon surrender thereof, if required by the 
Company, new Warrant Certificates evidencing all the Warrants to be issued,     
executed and registered in the manner specified in Sections 3.2 and 3.3 (and    
which may bear, at the option of the Company, the adjusted Exercise Price) and  
shall be registered in the names of the Holders on the record date specified in 
the notice.                                                                     

SECTION 4.8 NOTICE TO HOLDERS WITH RESPECT TO ADJUSTMENTS. Not more than 30 
days following the record date or effective date, as the case may be, of any    
adjustment or readjustment pursuant to this Article 4, the Company shall        
forthwith file in the custody of its Secretary or an Assistant Secretary at its 
principal executive office and with the Warrant Agent, an officers' certificate 
showing the adjusted number of Warrant Shares purchasable upon exercise of the  
Warrants, the additional number of Warrants to be issued for each outstanding   
Warrant or the adjusted Exercise Price, as the case may be, determined as       
herein provided, setting forth in reasonable detail the facts requiring such    
adjustment and the manner of computing such adjustment. Each such officers'     
certificate shall be signed by the Chairman, President or Chief Financial       
Officer of the Company and by the Secretary or any Assistant Secretary of the   
Company. Each such officers' certificate shall be made available at the Warrant 
Agent Office all reasonable times for inspection by the Holder or any Holder of 
a Warrant and then upon written request of a Holder the Warrant Agent shall     
mail a copy of such certificate by first-class mail to such Holder.             

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ARTICLE 5 

WARRANT AGENT 

SECTION 5.1 APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the   
Warrant Agent to act as agent for the Company in accordance with the            
instructions hereinafter in this Agreement set forth; and the Warrant Agent     
hereby accepts such appointment, upon the terms and conditions hereinafter set  
forth.                                                                          

SECTION 5.2 WARRANT AGENT. (a) The Warrant Agent undertakes the duties and  
obligations imposed by this Agreement upon the following terms and conditions,  
by all of which the Company and the Holders, by their acceptance of the         
Warrants, shall be bound:                                                       

 (i) The statements contained herein and in the Warrant Certificates shall
be taken as statements of the Company, and the Warrant Agent assumes no     
responsibility for the correctness of any of the same except such as        
describes the Warrant Agent or action taken or to be taken by it. Except as 
herein otherwise provided, the Warrant Agent assumes no responsibility with 
respect to the execution, delivery or distribution of the Warrant           
Certificates.                                                               

(ii) The Warrant Agent shall not be responsible for any failure of the  
Company to comply with any of the covenants contained in this Agreement or  
in the Warrant Certificates to be complied with by the Company nor shall it 
at any time be under any duty or responsibility to any Holder to make or    
cause to be made any adjustment in the Exercise Price or in the number of   
Warrant Shares issuable upon exercise of any Warrant (except as instructed  
by the Company), or to determine whether any facts exist which may require  
any such adjustments, or with respect to the nature or extent of or method  
employed in making any such adjustments when made.                          

 (iii) The Warrant Agent may consult at any time with counsel satisfactory
to it (who may be counsel for the Company) and the Warrant Agent shall      
incur no liability or responsibility to the Company or any holder of any    
Warrant Certificate in respect of any action taken, suffered or omitted by  
it hereunder in good faith and in accordance with the opinion or the advice 
of such counsel.                                                            

(iv) The Warrant Agent shall incur no liability or responsibility to the
Company or to any Holder for any action taken in reliance on any notice,    
resolution, waiver, consent, order, certificate or other paper, document or 
instrument believed by it to be genuine and to have been signed, sent or    
presented by the proper party or parties.                                   

 (v) The Company agrees promptly to pay the Warrant Agent the compensation
to be agreed upon with the Company for all services rendered by the Warrant 
Agent and to reimburse the Warrant Agent for its reasonable out-of-pocket   
expenses (including attorneys' fees and expenses) incurred by the Warrant   
Agent without negligence, bad faith or breach of this Agreement on its part 
in connection with the services rendered by it hereunder. The Company also  
agrees to indemnify the Warrant Agent for, and to hold it harmless against, 
any loss, liability or expense (including reasonable attorneys' fees and    
expenses) incurred without negligence, bad faith or breach of this          
Agreement on the part of the Warrant Agent, arising out of or in connection 
with its acting as such Warrant Agent hereunder, as well as the reasonable  
costs and expenses of defending against any claim of liability in the       
premises. The obligations of the Company under this Section 5.2 shall       
survive the termination of this Agreement.                                  

(vi) The Warrant Agent shall be under no obligation to institute any    
action, suit or legal proceeding or to take any other action likely to      
involve expense unless the Company or one or more registered holders of     
Warrant Certificates shall furnish the Warrant Agent with reasonable        
security and indemnity for any costs or expenses which may be incurred. All 
rights of action under this Agreement or under any of the Warrants may be   
enforced by the Warrant Agent without the possession of any of the Warrant  
Certificates or the production thereof at any trial or other proceeding     
relative thereto, and any such action, suit or proceeding instituted by the 
Warrant Agent shall be brought in its name as Warrant Agent, and any        
recovery or judgment shall be for the ratable benefit of the Holders, as    
their respective rights or interests may appear.                            

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(vii) The Warrant Agent, and any stockholder, director, officer or      
employee thereof, may buy, sell or deal in any of the Warrants or other     
securities of the Company or become pecuniarily interested in any           
transaction in which the Company may be interested, or contract with or     
lend money to the Company or otherwise act as fully and freely as though    
they were not the Warrant Agent under this Agreement, or a stockholder,     
director, officer or employee of the Warrant Agent, as the case may be.     
Nothing herein shall preclude the Warrant Agent from acting in any other    
capacity for the Company or for any other legal entity.                     

(viii) The Warrant Agent shall act hereunder solely as agent for the    
Company, and its duties shall be determined solely by the provisions        
hereof. The Warrant Agent shall not be liable for anything which it may do  
or refrain from doing in connection with this Agreement except for its own  
negligence or bad faith.                                                    

(ix) The Company agrees that it will perform, execute, acknowledge and  
deliver or cause to be performed, executed, acknowledged and delivered all  
such further and other acts, instruments and assurances as may reasonably   
be required by the Warrant Agent for the carrying out or performing of the  
provisions of this Agreement.                                               

 (x) The Warrant Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except 
the due execution hereof by the Warrant Agent) or in respect of the         
validity or execution of any Warrant Certificate (except its                
countersignature thereof), nor shall the Warrant Agent by any act hereunder 
be deemed to make any representation or warrant as to the authorization or  
reservation of the Warrant Shares to be issued pursuant to this Agreement   
or any Warrant Certificate or as to whether the Warrant Shares will when    
issued be validly issued, fully paid and nonassessable or as to the         
Exercise Price or the number of Warrant Shares issuable upon exercise of    
any Warrant.                                                                

(xi) The Warrant Agent is hereby authorized and directed to accept      
instructions with respect to the performance of its duties hereunder from   
the Chairman of the Board, the Chief Executive Officer, the President, any  
Vice President, the Treasurer, the Secretary or an Assistant Secretary of   
the Company, and to apply to such officers for advice or instructions in    
connection with its duties, and shall not be liable for any action taken or 
suffered to be taken by it in good faith in accordance with instruction of  
any such officer or in good faith reliance upon any statement signed by any 
one of such officers of the Company with respect to any fact or matter      
(unless other evidence in respect thereof is herein specifically            
prescribed) which may be deemed to be conclusively proved and established   
by such signed statement.                                                   

SECTION 5.3 CHANGE OF WARRANT AGENT. If the Warrant Agent shall resign (such
resignation to become effective not earlier than 60 days after the giving of    
written notice thereof to the Company and the Holders) or shall become          
incapable of acting as Warrant Agent or if the Board of Directors of the        
Company shall by resolution remove the Warrant Agent (such removal to become    
effective not earlier than 30 days after the filing of a certified copy of such 
resolution with the Warrant Agent and the giving of written notice of such      
removal to the registered holders of Warrant Certificates), the Company shall   
appoint a successor to the Warrant Agent. If the Company shall fail to make     
such appointment within a period of 30 days after such removal or after it has  
been so notified in writing of such resignation or incapacity by the Warrant    
Agent, then any Holder may apply to any court of competent jurisdiction for the 
appointment of a successor to the Warrant Agent. Pending appointment of a       
successor to the Warrant Agent, either by the Company or by such a court, the   
duties of the Warrant Agent shall be carried out by the Company. Any successor  
Warrant Agent, whether appointed by the Company or by such a court, shall be a  
bank or trust company, in good standing, incorporated under the laws of any     
state or of the United States of America. As soon as practicable after          
appointment of the successor Warrant Agent, the Company shall cause written     
notice of the change in the Warrant Agent to be given to each of the Holders at 
such Holder's address appearing on the Warrant Register. After appointment, the 
successor Warrant Agent shall be vested with the same powers, rights, duties    
and responsibilities as if it had been originally named as Warrant Agent        
without further act or deed. The former Warrant Agent shall deliver and         
transfer to the successor Warrant Agent any property at the time held by it     
hereunder and execute and deliver, at the expense of the Company, any further   
assurance,                                                                      

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conveyance, act or deed necessary for the purpose. Failure to give any notice   
provided for in this Section 5.3 or any defect therein, shall not affect the    
legality or validity of the removal of the Warrant Agent or the appointment of  
a successor Warrant Agent, as the case may be.                                  

 SECTION 5.4 MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT. (a) Any
corporation into which the Warrant Agent may be merged or converted or with     
which it may be consolidated, or any corporation resulting from any merger,     
conversion or consolidation to which the Warrant Agent shall be a party, or any 
corporation succeeding to the shareholder services business of the Warrant      
Agent, shall be the successor to the Warrant Agent hereunder without the        
execution or filing of any paper or any further act on the part of any of the   
parties hereto, provided that such corporation would be eligible for            
appointment as a successor Warrant Agent under the provisions of Section 5.3.   
If at the time such successor to the Warrant Agent shall succeed under this     
Agreement, any of the Warrant Certificates shall have been countersigned but    
not delivered, any such successor to the Warrant Agent may adopt the            
countersignature of the original Warrant Agent, and if at that time any of the  
Warrant Certificates shall not have been countersigned, any successor to the    
Warrant Agent may countersign such Warrant Certificates either in the name of   
the predecessor Warrant Agent or in the name of the successor Warrant Agent;    
and in all such cases such Warrant Certificates shall have the full force       
provided in the Warrant Certificates and in this Agreement.                     

 (b) If at any time the name of the Warrant Agent shall be changed and at such
time any of the Warrant Certificates shall have been countersigned but not      
delivered, the Warrant Agent whose name has changed may adopt the               
countersignature under its prior name; and if at that time any of the Warrant   
Certificates shall not have been countersigned, the Warrant Agent may           
countersign such Warrant Certificates either in its prior name or in its        
changed name; and in all such cases such Warrant Certificates shall have the    
full force provided in the Warrant Certificates and in this Agreement.          

ARTICLE 6 

MISCELLANEOUS 

SECTION 6.1 NOTICES. (a) Except as otherwise provided in Section 6.1(b) any 
notice, demand or delivery authorized by this Warrant Agreement shall be        
sufficiently given or made when mailed if sent by first-class mail, postage     
prepaid, addressed to any Holder of a Warrant at such Holder's address shown on 
the Warrant Register and to the parties as follows:                             

If to the Company:                                                              

National Health Laboratories Holdings Inc.                                      
4225 Executive Square                                                           
Suite 805                                                                       
La Jolla, CA 92037                                                              
Attention: General Counsel                                                      

If to the Warrant Agent:                                                        

American Stock Transfer & Trust Company                                         
6201 Fifteenth Avenue                                                           
Brooklyn, NY 11219                                                              
Attention: Joseph Wolf                                                          

or such other address as shall have been furnished to the party giving or       
making such notice, demand or delivery.                                         

(b) Any notice required to be given by the Company to the Holders shall be  
made by mailing by registered mail, return receipt requested, to the Holders at 
their respective addresses shown on the Warrant                                 

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Register. The Company hereby irrevocably authorizes the Warrant Agent, in the   
name and at the expense of the Company, to mail any such notice upon receipt    
thereof from the Company. Any notice that is mailed in the manner herein        
provided shall be presumed to have been duly given when mailed.                 

 SECTION 6.2 SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant Agent may
from time to time supplement or amend this Agreement without the approval of    
any Holders in order to cure any ambiguity, manifest error or other mistake in  
this Agreement, or to correct or supplement any provision contained herein that 
may be defective or inconsistent with any other provision herein, or to make    
any other provisions in regard to matters or questions arising hereunder that   
the Company and the Warrant Agent may deem necessary or desirable and that      
shall not adversely affect, alter or change the interest of the Holders.        

 SECTION 6.3 TERMINATION. This Agreement shall terminate immediately after (i)
the Company has paid the Redemption Amount with respect to all Holders in the   
case of a Redemption or (ii) all Warrant Shares in respect of properly          
exercised Warrants have been issued in the case the Company does not elect to   
effect a Redemption pursuant to Section 2.7, provided, that the provisions of   
Section 5.2 shall survive such termination until such time that the obligations 
contemplated thereunder have been performed.                                    

 SECTION 6.4 GOVERNING LAW. This Agreement and each Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of  
New York and for all purposes shall be governed by and construed in accordance  
with the internal laws of such State.                                           

SECTION 6.5 PERSONS BENEFITING. This Warrant Agreement shall be binding upon
and inure to the benefit of the Company and the Warrant Agent, and their        
respective successors, assigns, beneficiaries, executors and administrators,    
and the Holders of the Warrants. Nothing in this Warrant Agreement is intended  
or shall be construed to confer upon any person, other than the Company, the    
Warrant Agent and the Holders of the Warrants, any right, remedy or claim under 
or by reason of this Warrant Agreement or any part hereof.                      

SECTION 6.6 COUNTERPARTS. This Agreement may be executed in any number of   
counterparts and each of such counterparts shall for all purposes be deemed to  
be an original, and such counterparts shall together constitute but one and the 
same instrument.                                                                

SECTION 6.7 HEADINGS. The headings of sections of this Agreement have been  
inserted for convenience of reference only, are not to be considered a part     
hereof and shall in no way modify or restrict any of the terms or provisions    
hereof.                                                                         

IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to
be executed and delivered as of the day and year first above written.           

                                NATIONAL HEALTH LABORATORIES
                       HOLDINGS INC.

                                         By __________________________________

              Title:

ATTEST:                                                                         

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

                                   AMERICAN STOCK TRANSFER & TRUST
             COMPANY

                                         By __________________________________

              Title:

ATTEST:                                                                         

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

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                                                                       EXHIBIT A

[FORM OF FACE OF WARRANT CERTIFICATE] 

VOID AFTER APRIL 28, 2000     

CERTIFICATE NUMBER                                            NUMBER OF WARRANTS

                                                                           CUSIP

NATIONAL HEALTH LABORATORIES HOLDINGS INC.

WARRANTS TO ACQUIRE COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF 
NATIONAL HEALTH LABORATORIES HOLDINGS INC.

This Warrant Certificate certifies that            or registered assigns, is
the registered holder (the "HOLDER") of the number of warrants set forth above  
(each, a "WARRANT") issued by National Health Laboratories Holdings Inc., a     
Delaware corporation (the "COMPANY"), subject to the terms and conditions set   
forth herein and in the Warrant Agreement referred to on the reverse side       
hereof. Each Warrant entitles the Holder thereof to purchase from the Company   
one fully paid and nonassessable share (a "WARRANT SHARES") of common stock,    
$0.01 par value (the "COMMON STOCK"), of the Company at the initial exercise    
price per share of $22.00 (the "EXERCISE PRICE"), payable in lawful money of    
the United States of America, subject to adjustment as described below. The     
Warrants evidenced by this Certificate expire at the Close of Business on April 
28, 2000 (the "EXPIRATION DATE"), unless such date is extended at the option of 
the Company as set forth in the Warrant Agreement referred to on the reverse    
side hereof.                                                                    

Subject to the terms and conditions set forth herein and in the Warrant     
Agreement referred to on the reverse hereof, a Warrant may be exercised upon    
proper surrender of this Warrant Certificate and payment of the aggregate       
Exercise Price to American Stock Transfer & Trust Company (the "WARRANT AGENT") 
at         or such other of its offices notified to Warrant Holders (the        
"WARRANT AGENT OFFICE").                                                        

The number of Warrants, Exercise Price and the number of Warrant Shares     
purchasable upon exercise of a Warrant are subject to adjustment upon the       
occurrence of certain events as set forth in Article 4 of the Warrant Agreement 
referred to on the reverse side hereof.                                         

Upon notice to the Warrant Agent in accordance with the Warrant Agreement,  
the Company may at its sole option elect to redeem all but not less than all of 
the Warrants on the Expiration Date by payment of an amount in cash in respect  
of each Warrant equal to the Redemption Amount (as defined in the Warrant       
Agreement). If the Company shall have duly elected to redeem the Warrants but   
the aggregate Redemption Amount is zero or less than zero, no amount shall be   
required to be paid by the Company in respect of the redemption of the Warrants 
but the Warrants shall nonetheless be deemed to have been redeemed.             

A Warrant may only be exercised prior to the Close of Business on the       
Expiration Date and only if the Company shall not have elected to redeem the    
Warrants (provided that the Warrant Agent will accept surrenders of Warrant     
Certificates and payments of the Exercise Price in respect of Warrants to be    
exercised during the 45-day period preceding the Expiration Date, but such      
Warrants will not be deemed to have been exercised until the Expiration Date).  
As of the Close of Business on the Expiration Date, the Warrants will become    
wholly void and of no value.                                                    

This Warrant Certificate shall be governed by and construed in accordance   
with the internal laws of the State of New York.                                

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS WARRANT          
CERTIFICATE SET FORTH ON THE REVERSE SIDE. SUCH FURTHER PROVISIONS SHALL FOR    
ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.      

This Warrant Certificate shall not be valid unless countersigned by the     
Warrant Agent.                                                                  

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 IN WITNESS WHEREOF, the Company has caused this Certificate to be executed by
its duly authorized officer, and the corporate seal hereunto affixed.           

Dated:                                                                      

                                NATIONAL HEALTH LABORATORIES
                   HOLDINGS INC.

                                         By __________________________________

      Title:

[Corporate Seal of National Health                                              
Laboratories Holdings Inc.]                                                   

ATTEST:                                                                         

By __________________________________                                           

Countersigned:                                                                  
AMERICAN STOCK TRANSFER & TRUST                                                 
COMPANY, AS WARRANT AGENT                                                     

By __________________________________                                           

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[FORM OF REVERSE OF WARRANT CERTIFICATE]

NATIONAL HEALTH LABORATORIES HOLDINGS INC.

THIS WARRANT CERTIFICATE IS ISSUED UNDER AND IN ACCORDANCE WITH A WARRANT   
AGREEMENT, DATED AS OF APRIL   , 1995 BETWEEN THE COMPANY AND THE WARRANT AGENT 
(THE "WARRANT AGREEMENT"), AND IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED 
IN THE WARRANT AGREEMENT. THE WARRANT AGREEMENT IS HEREBY INCORPORATED BY       
REFERENCE IN AND MADE A PART OF THIS INSTRUMENT AND IS HEREBY REFERRED TO FOR A 
DESCRIPTION OF THE RIGHTS, LIMITATION OF RIGHTS, OBLIGATIONS, DUTIES AND        
IMMUNITIES THEREUNDER OF THE WARRANT AGENT, THE COMPANY AND THE HOLDERS. A COPY 
OF THE WARRANT AGREEMENT MAY BE INSPECTED AT THE WARRANT AGENT OFFICE AND IS    
AVAILABLE UPON WRITTEN REQUEST ADDRESSED TO THE WARRANT AGENT AT THE WARRANT    
AGENT OFFICE. ALL TERMS USED HEREIN THAT ARE DEFINED IN THE WARRANT AGREEMENT   
HAVE THE MEANINGS ASSIGNED TO THEM THEREIN.                                     

Warrants may be exercised to purchase Warrant Shares from the Company on the
Expiration Date, at the Exercise Price set forth on the face hereof, subject to 
adjustment as described in the Warrant Agreement, but only if the Company shall 
not have elected to redeem the Warrants as described below. The registered      
Holder of the Warrants evidenced by this Warrant Certificate may exercise such  
Warrants by surrendering to the Warrant Agent the Warrant Certificate, with the 
form of election to exercise set forth hereon properly completed and executed,  
together with payment of the aggregate Exercise Price, in lawful money of the   
United States of America, and any applicable transfer taxes, to the Warrant     
Agent at the Warrant Agent Office. Although such surrender and payment will be  
accepted during the 45-day period preceding the Expiration Date, Warrants will  
not be deemed to have been exercised until the Expiration Date.                 

No adjustment shall be made for any cash dividends on any Warrant Shares    
issuable upon exercise of this Warrant.                                         

 Upon notice to the Warrant Agent, the Company may at its sole option elect to
redeem all but not less than all Warrants on the Expiration Date by payment of  
an amount in cash in respect of each Warrant equal to the Redemption Amount (as 
defined in the Warrant Agreement). If the Company shall have duly elected to    
redeem the Warrants but the aggregate Redemption Amount is zero or less than    
zero, no amount shall be required to be paid by the Company in respect of the   
redemption of the Warrants but the Warrants shall nonetheless be deemed to have 
been redeemed.                                                                  

Warrants shall expire at and become null and void and have no value and no  
Person shall have any rights thereto as of the Close of Business on the         
Expiration Date, provided, however, that, notwithstanding such expiration,      
Holders that have properly exercised Warrants in accordance herewith and with   
the Warrant Agreement shall be entitled to receive Warrant Shares with respect  
to such Holders' Warrants unless the Company shall have elected to redeem the   
Warrants as described below, in which case each Holder shall be entitled to     
receive the Redemption Amount.                                                  

No certificates or scrip representing fractional Warrant Shares shall be    
issued upon exercise of a Warrant. As promptly as practicable following the     
Expiration Date, if the Company shall not have elected to redeem the Warrants,  
the Company shall pay to each Holder otherwise entitled to receive fractional   
Warrant Shares, if any, a cash amount in lieu of such fractional Warrant Shares 
which shall be equal to the proceeds from the sale of such Holder's fractional  
Warrant Shares, without interest thereon and after deduction of all             
commissions, transfer taxes and other out-of-pocket transaction costs,          
including the expenses and compensation of the Transfer Agent, incurred in      
connection with such sale of the fractional Warrant Shares.                     

 Warrant Certificates, when surrendered at the Warrant Agent Office thereof in
person or by a legal representative or attorney duly authorized in writing, may 
be exchanged, in the manner and subject to the                                  

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limitations provided in the Warrant Agreement, but without payment of any       
service charge, for another Warrant Certificate or Warrant Certificates of like 
tenor evidencing a Warrant to purchase in the aggregate a like number of        
Warrant Shares.                                                                 

A new Warrant Certificate or Warrant Certificates of like tenor and         
evidencing a Warrant or Warrants to purchase in the aggregate a like number of  
Warrant Shares shall be issued to a transferee designated by a Holder upon      
surrender of a Warrant Certificate, duly endorsed, and accompanied by a written 
instrument or instruments of transfer in a form satisfactory to the Warrant     
Agent, duly signed by the Holder or Holders or by the duly appointed legal      
representative thereof or by a duly authorized attorney, such signature to be   
guaranteed by (i) a bank or trust company, (ii) a broker or dealer that is a    
member of the National Association of Securities Dealers, Inc. or (iii) a       
member of a national securities exchange, and funds sufficient to pay any       
transfer taxes payable on such transfer.                                        

Notwithstanding the foregoing, the Warrant Agent shall not be required to   
transfer or exchange any Warrant Certificate from and after the 105th day       
preceding the scheduled Expiration Date provided that if, in the notice         
provided by the Company pursuant to Section 2.5 of the Warrant Agreement, the   
Company shall not have elected to redeem the Warrants, then the Warrant Agent   
shall permit transfers or exchanges of Warrant Certificates from and after the  
mailing of the notice to Holders referred to in Section 2.5 of the Warrant      
Agreement but shall not be required to transfer or exchange any Warrant         
Certificate from and after the 15th day preceding the Expiration Date.          

The Company and its subsidiaries shall have the option, in their sole       
discretion, at any time or from time to time, to purchase Warrants (i) in the   
public market, (ii) by tender or exchange offer available to all Holders at any 
price or (iii) in private transactions at a price not more than ten percent     
(10%) over the Market Price (as defined in the Warrant Agreement) of the        
Warrants as of the closing date of each such transaction respectively. Warrants 
acquired by the Company or its subsidiaries shall be canceled and shall not be  
available for reissuance or resale.                                             

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

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FORM OF ELECTION TO EXERCISE

(TO BE EXECUTED UPON EXERCISE OF WARRANT) 

The undersigned hereby irrevocably elects to exercise the right represented 
by this Warrant Certificate to receive        shares of Common Stock and        
herewith tenders payment for such shares to the order of              in the    
amount of $       in lawful money of the United States of America by certified  
or official bank check or by wire transfer in accordance with the terms hereof  
(which amount includes $       in payment of applicable transfer taxes, if      
any.) The undersigned requests that a certificate for such shares be registered 
in the name of              whose address is                   and that such    
shares be delivered to              whose address is                   and that 
such Warrant Certificate is delivered to              whose address is          
.                                         

Dated:          , 19                      Signature: __________________________ 

                                  Note: The above signature must
                                       correspond with the name as written
                                upon the face of the Warrant
                                   Certificate in every particular
                                        without alteration or enlargement or
                          any change whatsoever.

             Signature
                                         Guaranteed: _________________________

 The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full          
according to applicable laws or regulations:                                    

UNIF GIFT MIN ACT-              under Uniform Gift to Minors Act                
            (custodian) (partner)                         (citation)

TEN COM - as tenants in common                                                  
TEN ENT - as tenants by the entireties                                          
JT TEN - as joint tenants and not as tenants                                    

Additional abbreviations may also be used though not in the above list. 

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FORM OF ASSIGNMENT

(TO BE EXECUTED BY REGISTERED HOLDER UPON ASSIGNMENT OF THE WARRANT)

FOR VALUE RECEIVED, the undersigned registered Holder hereby sells, assigns,
and transfers unto              whose address is                      the       
Warrants represented by this Warrant Certificate, together with all right,      
title and interest therein, and does hereby irrevocably constitute and appoint  
             attorney, to transfer the within Warrant Certificate on the books
of the Warrant Agent, with full power of substitution.                          

Dated:          , 19                      Signature: __________________________ 

                                  Note: The above signature must
                                       correspond with the name as written
                                upon the face of the Warrant
                                   Certificate in every particular
                                        without alteration or enlargement or
                          any change whatsoever.

             Signature
                                         Guaranteed: _________________________

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                                                                       ANNEX III

STOCKHOLDER AGREEMENT 

DATED AS OF APRIL   , 1995

AMONG 

HLR HOLDINGS INC.,

HOFFMANN-LA ROCHE INC.

AND 

NATIONAL HEALTH LABORATORIES HOLDINGS INC.

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                                          PAGE 
                                                                         ------
                                  ARTICLE 1                                    

                                 DEFINITIONS                                   

                                                                               
1.1.  Definitions......................................................   III-1

                                  ARTICLE 2                                    

                             CORPORATE GOVERNANCE                              

2.1.  Composition of the Board of Directors............................   III-5
2.2.  Solicitation and Voting of Shares................................   III-7
2.3.  Committees of the Board of Directors.............................   III-7
2.4.  Management Committee.............................................   III-8
2.5.  Notice for Board and Committee Meetings..........................   III-9
2.6.  Vacancies on Board Committees and the Management Committee.......   III-9
2.7.  Approval Required for Certain Actions............................   III-9
2.8.  Enforcement of this Agreement....................................  III-11
2.9.  Certificate of Incorporation and Bylaws..........................  III-11
2.10. Governance of Company Subsidiaries...............................  III-11
2.11. Strategic Planning Process.......................................  III-11
2.12. Operating Planning Processes.....................................  III-12
2.13. Headquarters of the Company......................................  III-12

                                  ARTICLE 3                                    

                             ANTI-DILUTIVE RIGHTS                              

3.1.  Anti-dilutive Rights.............................................  III-12

                                  ARTICLE 4                                    

                 ACQUISITIONS OF ADDITIONAL EQUITY SECURITIES                  

4.1.  Limitation on Additional Acquisitions............................  III-13

                                  ARTICLE 5                                    

                        TRANSFERS OF EQUITY SECURITIES                         

5.1.  Transfers of Equity Securities...................................  III-13

                                  ARTICLE 6                                    

                             REGISTRATION RIGHTS                               

6.1.  Demand Registration..............................................  III-14
6.2.  Conditions to Demand Registrations...............................  III-14
6.3.  Additional Conditions to Demand Offerings........................  III-15
6.4.  Piggyback Registration...........................................  III-15
6.5.  Reduction of Offering............................................  III-15
6.6.  Filings; Registration Procedures.................................  III-16
6.7.  Registration Expenses............................................  III-18
6.8.  Indemnification by the Company...................................  III-18
6.9.  Indemnification by the Investor..................................  III-18
6.10. Conduct of Indemnification Proceedings...........................  III-18
6.11. Contribution.....................................................  III-19

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                                                                [Download Table]

                                                                          PAGE 
                                                                         ------
                                  ARTICLE 7                                    

                          FURNISHING OF INFORMATION                            

                                                                               
7.1.  Furnishing of Information........................................  III-20

                                  ARTICLE 8                                    

                                  COVENANTS                                    
8.1.  Rule 144 and Rule 144A...........................................  III-21
8.2.  No Inconsistent Agreements.......................................  III-21

                                  ARTICLE 9                                    

                                MISCELLANEOUS                                  

9.1.  Notices..........................................................  III-22
9.2.  Amendments; Waivers..............................................  III-22
9.3.  Severability.....................................................  III-22
9.4.  Entire Agreement.................................................  III-23
9.5.  Successors and Assigns...........................................  III-23
9.6.  Parties in Interest..............................................  III-23
9.7.  Counterparts; Effectiveness......................................  III-23
9.8.  Governing Law....................................................  III-23
9.9.  Specific Performance.............................................  III-23
9.10. Termination......................................................  III-23
9.11. Waiver of Jury Trial.............................................  III-24

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STOCKHOLDER AGREEMENT 

STOCKHOLDER AGREEMENT dated as of April  , 1995 among HLR Holdings Inc., a  
Delaware corporation ("HLR" or the "INVESTOR"), Hoffmann-La Roche Inc., a New   
Jersey corporation (the "ROCHE HOLDER" and, for purposes of Articles 6 and 8,   
the Roche Holder shall be deemed to be, together with HLR, the "INVESTOR"), and 
National Health Laboratories Holdings Inc., a Delaware corporation (the         
"COMPANY").                                                                     

 WHEREAS, the Company, the Investor and Roche Biomedical Laboratories, Inc., a
wholly-owned subsidiary of the Investor ("RBL"), entered into an Agreement and  
Plan of Merger dated as of December 13, 1994 (the "MERGER AGREEMENT") pursuant  
to which among other things (i) RBL is being merged with and into the Company   
(the "MERGER"), (ii) all of the issued and outstanding stock of RBL (except for 
shares held by RBL in its treasury) is being converted in the Merger into       
shares of Common Stock (as defined below) of the Company, (iii) Roche Holder is 
purchasing certain warrants (the "ROCHE WARRANTS") from the Company at the      
Effective Time and (iv) shares of the Company's Common Stock are being          
converted in the Merger into the Conversion Consideration (as defined in the    
Merger Agreement), all upon the terms and subject to the conditions set forth   
in the Merger Agreement; and                                                    

WHEREAS, the Investor, the Company, Mafco Holdings Inc., a Delaware         
corporation ("MAFCO") and National Health Care Group, Inc., a Delaware          
corporation ("NHCG") and a significant stockholder of the Company, have entered 
into the Sharing and Call Option Agreement dated as of December 13, 1994        
providing, among other things, certain rights and obligations with respect to   
the Company's Common Stock held by NHCG (the "SHARING AND CALL OPTION           
AGREEMENT"); and                                                                

WHEREAS, in connection with the Merger, the Investor, Roche Holder and the  
Company desire to set forth certain agreements and understandings regarding the 
Investor's and Roche Holder's interests in the Company;                         

 NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
agreements contained herein, the Investor, Roche Holder and the Company hereby  
agree as follows:                                                               

ARTICLE 1 

DEFINITIONS 

SECTION 1.1. DEFINITIONS.  Capitalized terms used and not defined herein    
shall have the meanings assigned to them in the Merger Agreement. As used in    
this Agreement, the following terms shall have the following meanings:          

"AFFILIATE" means, with respect to any Person, any other Person directly or 
indirectly controlling, controlled by, or under common control with such        
Person, provided that no member of the Investor Group shall be deemed an        
Affiliate of any other stockholder solely by reason of any investment in the    
Company. For the purpose of this definition, the term "control" (including with 
correlative meanings, the terms "controlling", "controlled by" and "under       
common control with"), as used with respect to any Person, shall mean the       
possession, directly or indirectly, of the power to direct or cause the         
direction of the management and policies of such Person, whether through the    
ownership of voting securities or by contract or otherwise.                     

"ANNUAL OPERATING PLAN" means, for any year, the operating plan of the      
Company and its Subsidiaries which plan shall provide for an analysis of gross  
profits, summary of operating expenses, personnel levels, pricing, budgets for  
niche businesses, cash flows, capital expenditures and return on funds          
assigned, and shall be consistent with the then applicable Strategic Plan or    
the Initial Synergy Plan (as applicable) of the Company.                        

"ANTI-DILUTIVE RIGHTS" has the meaning set forth in Section 3.1(a) hereof.  

"ASSOCIATE" has the same meaning as in Rule 12b-2 promulgated under the     
Exchange Act as in effect on the date hereof.                                   

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"AUDIT COMMITTEE" means the Audit Committee of the Board of Directors       
described in Section 2.3(a)(i) hereof.                                          

"BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the Company 
except where the context requires otherwise.                                    

"BUSINESS DAY" means any day except a Saturday, Sunday or other day on which
commercial banking institutions in New York City are authorized by law or       
executive order to close.                                                       

"BY-LAWS" means the by-laws of the Company, as amended from time to time in 
accordance herewith.                                                            

"CERTIFICATE OF INCORPORATION" means the certificate of incorporation of the
Company, as amended from time to time in accordance herewith.                   

"COMMON STOCK" means the common stock of the Company, par value $.01 per    
share.                                                                          

"COMPANY" has the meaning set forth in the recitals of this Agreement.      

"DEMAND REGISTRATION" has the meaning described in Section 6.1(a) hereof.   

"DIRECTOR" means a member of the Board of Directors.                        

"DISCRIMINATORY TRANSACTION" means any transaction or other corporate action
(other than those imposed pursuant to the express terms of this Agreement and   
other than those imposed with identical effect on all stockholders) which would 
(x) impose limitations on the legal rights of the Investor or any of its        
Affiliates or Associates as a stockholder of the Company, including, without    
limitation, any action which would impose restrictions based upon the size of   
security holding, nationality of a securityholder, the business in which a      
securityholder is engaged or other considerations applicable to the Investor    
and not to stockholders generally, (y) deny any benefit to the Investor or any  
of its Affiliates or Associates, proportionately as a holder of any class of    
Voting Stock, that is made available to other holders of any class of Voting    
Stock or (z) otherwise materially adversely discriminate against the Investor,  
its Affiliates or its Associates as stockholders of the Company.                

 "EFFECTIVENESS OF THIS AGREEMENT" means the Effective Time (as defined in the
Merger Agreement).                                                              

"EMPLOYEE BENEFITS COMMITTEE" means the Employee Benefits Committee of the  
Board of Directors described in Section 2.3(a)(iii) hereof.                     

"EQUITY SECURITY" means (i) any Common Stock or other Voting Stock, (ii) any
debt or equity securities of the Company convertible into or exchangeable for   
Common Stock or other Voting Stock or (iii) any options, rights or warrants     
(including the Warrants and any similar securities) issued by the Company to    
acquire Common Stock or other Voting Stock.                                     

 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.                                   

 "GAAP" means generally accepted accounting principles in effect in the United
States.                                                                         

"HLR" has the meaning set forth in the recitals of this Agreement.          

"INDEBTEDNESS" of any Person means, without duplication, (i) all obligations
of such Person for borrowed money, (ii) all obligations of such Person under    
conditional sale or other title retention agreements relating to property or    
assets purchased by such Person, (iii) all obligations of such Person issued or 
assumed as the deferred purchase price of property or services, (iv) all        
Indebtedness of others secured by (or for which the holder of such Indebtedness 
has an existing right, contingent or otherwise, to be secured by) any lien on   
property owned or acquired by such Person, whether or not the obligations       
secured thereby have been                                                       

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assumed, (v) all guarantees by such Person of Indebtedness of others, (vi) all  
obligations of such Person in respect to interest rate protection agreements,   
foreign currency exchange agreements or other interest or exchange rate hedging 
arrangements, in each case other than those entered into primarily as a hedge,  
and (vii) all capital lease obligations of such Person.                         

"INDEMNIFIED PARTY" has the meaning set forth in Section 6.10 hereof.       

"INDEMNIFYING PARTY" has the meaning set forth in Section 6.10 hereof.      

"INDEPENDENT DIRECTOR" means a Director of the Company who is none of (i) an
officer, employee, Affiliate or Associate of the Company or an officer,         
employee or director of any Affiliate or Associate of the Company, (ii) an      
officer, employee, director, Affiliate or Associate of the Investor or (iii) an 
Investor Director.                                                              

"INITIAL PERIOD" has the meaning set forth in Section 2.1(b) hereof.        

"INITIAL SYNERGY PLAN" means the Strategic Plan applicable to the initial   
two-year period following the Effectiveness of this Agreement.                  

"INSPECTORS" has the meaning set forth in Section 6.6(h) hereof.            

"INVESTOR" has the meaning set forth in the recitals of this Agreement.     

"INVESTOR DIRECTOR" means a Director who has been designated for such       
position by the Investor in accordance with Section 2.1(b) hereof.              

"INVESTOR GROUP" means the Investor and its Affiliates (other than the      
Company and its Subsidiaries).                                                  

"INVESTOR GROUP INTEREST" means the percentage of Total Voting Power,       
determined on the basis of the number of shares of Voting Stock actually        
outstanding, that is controlled, directly or indirectly, by the Investor and    
its Affiliates (other than the Company and its Subsidiaries).                   

"MAINTENANCE SECURITIES" has the meaning set forth in Section 3.1(a) hereof.

"MANAGEMENT COMMITTEE" means the Management Committee of the Company as     
described in Section 2.4 hereof.                                                

"MARKET PURCHASE" means an acquisition of Equity Securities that is within  
the definition of "Rule 10b-18 purchase" under Rule 10b-18(a)(3) promulgated    
under the Exchange Act as in effect on the date hereof that satisfies the       
conditions of Rule 10b-18(b).                                                   

"MERGER" has the meaning set forth in the recitals of this Agreement.       

"MERGER AGREEMENT" has the meaning set forth in the recitals of this        
Agreement.                                                                      

"NOMINATING COMMITTEE" means the Nominating Committee of the Board of       
Directors as described in Section 2.3(a)(ii) hereof.                            

"OTHER HOLDERS" means holders of Equity Securities other than any member of 
the Investor Group.                                                             

"PERSON" means an individual, a partnership, a joint venture, a corporation,
a trust, an incorporated or unincorporated organization, a government or any    
department or agency thereof.                                                   

"PIGGYBACK REGISTRATION" has the meaning set forth in Section 6.4 hereof.   

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"PUBLIC OFFERING" means an underwritten public offering of Equity Securities
pursuant to an effective Registration Statement under the Securities Act.       

"RBL" has the meaning set forth in the recitals of this Agreement.          

"RECORDS" has the meaning set forth in Section 6.6(h) hereof.               

"REGISTRABLE SECURITIES" means Equity Securities (including any Common Stock
or other Voting Stock issuable upon any conversion or exercise of any Equity    
Securities which are convertible securities) held by the Investor Group which   
are Restricted Securities until (i) a registration statement covering such      
securities has been declared effective by the SEC and such securities have been 
disposed of pursuant to such effective registration statement, (ii) such        
securities are sold under circumstances in which all of the applicable          
conditions of Rule 144 (or any similar provisions then in force) are met, or    
such securities may be sold pursuant to Rule 144(k) or (iii) such securities    
are otherwise transferred, the Company has delivered a new certificate or other 
evidence of ownership for such securities not bearing a legend restricting      
transfer of such securities and such securities may be resold without           
subsequent registration under the Securities Act.                               

 "REGISTRATION EXPENSES" means (i) all registration and filing fees, (ii) fees
and expenses of compliance with securities or blue sky laws (including          
reasonable fees and disbursements of counsel in connection with blue sky        
qualifications of the securities registered), (iii) printing expenses, (iv)     
internal expenses of the Issuer (including, without limitation, all salaries    
and expenses of its officers and employees performing legal or accounting       
duties), (v) reasonable fees and disbursements of counsel for the Company and   
customary fees and expenses for independent certified public accountants        
retained by the Company (including the expenses of any comfort letters or costs 
associated with the delivery by independent certified public accountants of a   
comfort letter or comfort letters), (vi) the reasonable fees and expenses of    
any special experts retained by the Company in connection with such             
registration, (vii) reasonable fees and expenses of one counsel for the         
Investor selected by the Investor, (viii) fees and expenses in connection with  
any review of underwriting arrangements by the National Association of          
Securities Dealers, Inc. including fees and expenses of any "qualified          
independent underwriter" and (ix) fees and disbursements of underwriters        
customarily paid by issuers or sellers of securities; but shall not include any 
underwriting fees, discounts or commissions attributable to the sale of         
Registrable Securities, or any out-of-pocket expenses (except as set forth in   
clause (vii) above) of the Investor (or the agents who manage their accounts)   
or any fees and expenses of underwriter's counsel.                              

"REGISTRATION STATEMENT" means a registration statement filed by the Company
with the SEC in accordance with the Securities Act.                             

"RESTRICTED SECURITIES" means any Equity Securities which are restricted    
securities within the meaning of Rule 144(a)(3) (or any successor provision)    
promulgated under the Securities Act.                                           

"ROCHE HOLDER" has the meaning set forth in the recitals of this Agreement. 

 "ROCHE WARRANTS" has the meaning set forth in the recitals of this Agreement.

"RULE 144" and "RULE 144A" means Rule 144 and Rule 144A, as amended,        
respectively (or any successor provisions), promulgated under the Securities    
Act.                                                                            

"SEC" means the Securities and Exchange Commission.                         

"SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.                                         

 "SHARING AND CALL OPTION AGREEMENT" has the meaning set forth in the recitals
of this Agreement.                                                              

"SPECIAL MAJORITY VOTE OF THE BOARD" means approval by a majority of the    
entire Board of Directors, which majority includes a majority of all Investor   
Directors and at least one Independent Director.                                

 "STRATEGIC PLAN" means the strategic plan of the Company and its Subsidiaries
which sets forth the strategic direction for the Company and its Subsidiaries   
and their businesses (by strategic business units) for                          

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a period of five fiscal years and which provides for, among other things: an    
analysis of the business environment, business objectives and strategies,       
business revenues, financial forecasts, capital plans, acquisition and          
divestiture plans, if any, business segment analysis, and niche business plans. 

"STRATEGIC REVIEW" means a review and process that determines whether the   
Strategic Plan is still valid, reviews progress to date, updates key elements   
of the Strategic Plan, if deemed necessary, and proposes modifications in       
objectives and strategies if deemed necessary. Such process shall include a     
review of (i) whether assumptions (including, as to market factors,             
competition, regulation, patents, etc.) are still valid; (ii) whether           
objectives are still realistic; (iii) whether strategies and programs are on    
track; (iv) whether resource assessments are still valid; and (v) and updated   
outlook (financial and nonfinancial) if material deviations are expected.       

"SUBSIDIARY" has the same meaning as in Rule 12b-2 promulgated under the    
Exchange Act, as in effect on the date hereof.                                  

A "SUBSTANTIAL PART" of any Person means, as of any date of determination,  
more than 10% of the fair market value of the total assets of such Person and   
its Subsidiaries as of the end of such Person's most recent fiscal quarter      
ending prior to such date of determination.                                     

"13D GROUP" means any group of Persons formed for the purpose of acquiring, 
holding, voting or disposing of Voting Stock which would be required under      
Section 13(d) of the Exchange Act, and the rules and regulations thereunder (as 
in effect, and based on legal interpretations thereof existing, on the date     
hereof), to file a statement on Schedule 13D with the SEC as a "person" within  
the meaning of Section 13(d)(3) of the Exchange Act if such group beneficially  
owned Voting Stock representing more than 5% of any class of Voting Stock then  
outstanding.                                                                    

 "TOTAL VOTING POWER" means the aggregate number of votes entitled to be voted
in an election of Directors of the Company by all of the outstanding Voting     
Stock.                                                                          

"VOTING POWER" means the ability to vote or to control, directly or         
indirectly, by proxy or otherwise, the voting of any Voting Stock in the        
election of Directors.                                                          

"VOTING STOCK" means securities having the right to vote generally in any   
election of Directors of the Company.                                           

"WARRANT AGREEMENT" means the agreement between the Company and the warrant 
agent designated therein pursuant to which warrants, including the Roche        
Warrants, are being issued as contemplated by the Merger Agreement.             

"WARRANT SHARES" means Common Stock issued upon exercise of the Warrants.   

"WARRANTS" means the warrants issued pursuant to the Warrant Agreement,     
including the Roche Warrants.                                                   

All terms defined in this Agreement in the singular shall have a comparable 
meaning when used in the plural, and vice versa. For the purpose of this        
Agreement, the phrases "TO THE KNOWLEDGE OF" or "KNOWN TO" mean, with respect   
to any Person, (i) known to any officer or senior manager of such Person or any 
Subsidiary of such Person or (ii) could reasonably be expected to be known to   
any such officer or senior manager.                                             

ARTICLE 2 

CORPORATE GOVERNANCE

SECTION 2.1. COMPOSITION OF THE BOARD OF DIRECTORS. In consideration of the 
Investor's interest in the Company following consummation of the Merger, the    
composition of the Board of Directors shall be                                  

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determined as provided in this Article 2. The composition of the Board of       
Directors and the manner of selecting members thereof shall be as follows:      

(a) At and after the Effectiveness of this Agreement, the Board of Directors
shall be comprised of seven Directors. The number of Directors comprising the   
Board may be changed only with the approval of the Board in accordance with     
Section 2.7.                                                                    

(b) Immediately upon the Effectiveness of this Agreement, the Company,      
through its Board of Directors, shall cause to be duly appointed to its Board   
three individuals designated prior to the Merger by the Investor to the         
Company, which individuals shall include Mr. Jean-Luc Belingard, Mr. Thomas P.  
Mac Mahon and Dr. James Powell (unless any such individual is unable to serve   
in such capacity, in which event the Board shall duly elect as a Director one   
or more substitute individuals designated by the Investor prior to the Merger), 
provided that any individual so designated other than the aforementioned        
Persons shall be reasonably acceptable to a majority of the Independent         
Directors in office immediately prior to the Effectiveness of this Agreement.   
(Each individual designated by the Investor to be a Director pursuant to the    
terms of this Agreement shall be referred to herein as an "INVESTOR DIRECTOR"   
and all such Persons shall be referred to herein as the "INVESTOR DIRECTORS".)  
For a period commencing at the Effectiveness of this Agreement and ending at    
the first anniversary thereof (the "INITIAL PERIOD"), Mr. James R. Maher shall  
(unless he is unwilling or unable to serve) be a Director and shall be elected  
by the Board of Directors to serve as Chairman of the Board for such Initial    
Period. During the Initial Period, Mr. Mac Mahon shall be elected by the Board  
of Directors to serve as Vice Chairman of the Board. Following the Initial      
Period (or at such earlier time as Mr. Maher shall die, resign, retire or be    
disqualified or removed from office), (i) Mr. Maher shall resign his positions  
and not stand for reelection as a Director or as a member of any committee of   
the Board or of the Management Committee (if he is then serving on any such     
committee) and (ii) Mr. Mac Mahon shall be elected by the Board of Directors to 
serve as the Chairman of the Board. The position of Vice Chairman will be       
eliminated after the Initial Period. During the Initial Period, the remaining   
three Directors shall be Independent Directors and shall be Persons mutually    
acceptable to the Investor and a majority of the members of the Board of        
Directors in office immediately prior to the Effectiveness of this Agreement    
and may include one or more Persons who were Independent Directors prior to the 
Effective Time, such Persons to serve in each case until the expiration of the  
term of his respective election (or any earlier termination, resignation or     
removal).                                                                       

(c) Except as otherwise provided in Section 2.1(b) with respect to the      
Initial Period, at all times from and after the Effectiveness of this           
Agreement, the Directors shall be nominated as follows (it being understood     
that such nomination shall include any nomination of any incumbent Director for 
reelection to the Board of Directors):                                          

(i) the Investor shall have the right to designate three Investor       
Directors, each of whom shall be nominated for Director by the Nominating   
Committee; and                                                              

(ii) the Nominating Committee shall nominate the remaining Directors,   
each of whom (A) shall have an outstanding reputation for personal          
integrity and distinguished achievement in areas relevant to the Company    
(in applying the foregoing criteria the Nominating Committee shall be       
guided by the quality of the individuals currently serving as Directors of  
the Company) and (B) shall qualify as an Independent Director.              

The composition of the Board of Directors may be changed only with the approval 
of the Board in accordance with Section 2.7.                                    

(d) If (i) at any time the Investor Group Interest is less than 30% but at  
least 20%, the Investor shall have the right to designate for nomination two    
Investor Directors and (ii) at any time the Investor Group Interest shall be    
less than 20% but at least 10%, the Investor shall have the right to designate  
for nomination one Investor Director.                                           

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(e) If at any time when Mr. Mac Mahon (or any successor) shall be serving as
Chairman of the Board, he (or such successor) dies, resigns, retires, is        
disqualified or is removed from office, such position shall be filled by the    
Board in accordance with Section 2.7.                                           

(f) The Investor and the Nominating Committee, respectively, shall have the 
right to designate any replacement for a Director designated for nomination or  
nominated in accordance with this Section 2.1 by the Investor or the Nominating 
Committee, respectively, upon the death, resignation, retirement,               
disqualification or removal from office for other cause of such Director. Such  
replacement for any Independent Director shall also be an Independent Director  
conforming to the standard set forth in Section 2.1(c)(ii). The Board of        
Directors shall duly appoint as a Director each Person so designated to fill a  
vacancy on the Board.                                                           

(g) Without limiting the generality of Section 2.1(c), in the event that at 
any time after the Effectiveness of this Agreement the number of Investor       
Directors on the Board of Directors differs from the number that the Investor   
has the right (and desire) to designate, (i) if the number of Investor          
Directors exceeds such number, the Investor shall promptly take all appropriate 
action to cause to resign that number of the Investor Directors as is required  
to make the remaining number of such Investor Directors conform to the          
provisions of this Agreement or (ii) if the number of Investor Directors        
otherwise is less than such number, the Board shall take all necessary action   
to create sufficient vacancies on the Board to permit the Investor to designate 
the full number of Investor Directors which it is entitled (and desires) to     
designate pursuant to the provisions of this Agreement (such action may include 
but need not be limited to seeking the resignation or removal of Directors or,  
at the request of the Investor and/or calling a special meeting of the          
shareholders of the Company for the purpose of removing Directors to create     
such vacancies to the extent permitted by applicable law). Upon the creation of 
any vacancy pursuant to the preceding sentence, the Investor shall designate    
the Person to fill any such vacancy in accordance with the provisions of this   
Agreement and the Board of Directors shall elect each Person so designated.     

SECTION 2.2. SOLICITATION AND VOTING OF SHARES. (a) With respect to each    
meeting of stockholders of the Company at which Directors are to be elected,    
the Company shall use its best efforts to solicit from the stockholders of the  
Company eligible to vote in the election of Directors proxies in favor of the   
nominees selected in accordance with Section 2.1.                               

(b) In any election of Directors or any meeting of the stockholders of the  
Company called expressly for the removal of Directors, so long as the Board of  
Directors includes (and will include after any such election or removal) the    
number of Investor Directors (and the proportion of the entire Board the        
Investor is entitled (and desires) to designate as nominees for Investor        
Directors hereunder) contemplated by Section 2.1, the Investor shall be, and    
shall use its best efforts to cause its Affiliates to be, present for purposes  
of establishing a quorum, and shall vote all of their shares of Voting Stock    
(i) in favor of any nominee or Director selected in accordance with Section     
2.1, (ii) in favor of removal of any Director as contemplated by Section        
2.1(g), and (iii) against the removal of any Director designated in accordance  
with Section 2.1 other than (A) for cause and (B) pursuant to Section 2.1(g).   
In any other matter submitted to a vote of the stockholders of the Company, the 
Investor Group may vote any or all of its shares of Voting Stock and other      
Equity Securities in its sole discretion unless such matter was approved by the 
Investor or a majority of the Investor Directors in accordance with Section     
2.7, in which case the Investor shall, and shall use its best efforts to cause  
its Affiliates to, vote all of their Voting Stock and any other Equity          
Securities in favor of such matter.                                             

(c) The Investor agrees that it will, and will use its best efforts to cause
its Affiliates (other than the Company and its Subsidiaries) to, take all       
action as a stockholder of the Company or as is otherwise reasonably within its 
control, as necessary to effect the provisions of this Agreement.               

 SECTION 2.3. COMMITTEES OF THE BOARD OF DIRECTORS. (a) Subject to the general
oversight and authority of the full Board of Directors, the Board of Directors  
shall establish, empower, maintain and elect                                    

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the members of the following committees of the Board of Directors at all times  
while this Agreement is in effect:                                              

(i) an Audit Committee, comprised solely of Independent Directors;      

(ii) a Nominating Committee which shall, subject to Section 2.1, be     
responsible for recommending the nomination of Directors and be comprised   
and conduct itself as follows:                                              

(A) after the Effectiveness of this Agreement, the Nominating       
Committee shall be composed of two Independent Directors and one        
Investor Director;                                                      

(B) a majority of the Independent Directors shall designate the     
Independent Directors who shall serve on the Nominating Committee and a 
majority of the Investor Directors shall designate the Investor         
Director who shall serve on the Nominating Committee;                   

(C) a quorum of the Nominating Committee required for any action    
thereby shall require the attendance of all members thereof; and        

 (D) the Nominating Committee shall act by majority vote of the entire
Nominating Committee;                                                   

(iii) an Employee Benefits Committee, responsible, among other things,  
for (A) recommending to the Board of Directors, for approval by a majority  
of the Board of Directors (subject to Section 2.7), (I) the adoption and    
amendment of all employee benefit plans and arrangements and (II) the       
engagement of, terms of any employment agreements and arrangements with and 
termination of employment of, all Persons who are or would be designated by 
the Company as "officers" for purposes of Section 16 of the Exchange Act    
(such Persons being referred to herein as "SECTION 16 OFFICERS") and (B)    
granting under and administering the Company's stock option incentive plans 
with respect to the participation therein of Section 16 Officers, which     
committee shall be comprised solely of Investor Director(s) and Independent 
Directors (with Independent Directors constituting a majority), who         
constitute "DISINTERESTED PERSONS" (as such term is defined in Rule 16b-    
3(c) under the Exchange Act), and the Chairman of which committee shall,    
subject to Section 2.1(b), be Mr. Jean-Luc Belingard until his successor is 
duly elected; and                                                           

(iv) such other committees as the Board of Directors deems necessary or 
desirable to establish, empower and maintain, provided that such committees 
are approved by a Special Majority Vote of the Board and are established in 
compliance with the terms of this Agreement.                                

 (b) Except as otherwise provided in this Agreement or as agreed by a majority
of the Independent Directors and the Investor Directors, the number of Investor 
Directors serving on each committee of the Board of Directors shall be the same 
proportion of the total membership of such committee as the number of Investor  
Directors is of the entire Board of Directors, with a minimum of one member so  
long as the Investor is entitled hereunder to designate one Investor Director.  
Any members of any committee which are Investor Directors shall, in the event   
of any vacancy in such membership, be replaced by a majority of the Investor    
Directors.                                                                      

(c) If the Investor Group Interest shall be less than 30% but more than 20%,
the number of Investor Directors serving on each committee of the Board of      
Directors (other than the Audit Committee) shall be (x) two, if such committee  
shall have five or more total members, or (y) one, in all other cases. If the   
Investor Group Interest shall be less than 20% but more than 10%, the number of 
Investor Directors serving on each committee of the Board of Directors (other   
than the Audit Committee) shall be one. Any members of any committee which are  
Investor Directors shall, in the event of any vacancy in such membership, be    
replaced by a majority of the Investor Directors.                               

 SECTION 2.4. MANAGEMENT COMMITTEE. (a) Immediately after the Effectiveness of
this Agreement, the Company shall establish a Management Committee, which shall 
be comprised and conduct itself as follows:                                     

(i) the Management Committee shall be comprised of (A) the President and
Chief Executive Officer of the Company, who shall serve as the Chairman of  
the Management Committee, (B) the Chief                                     

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Operating Officer of the Company, (C) the Chief Financial Officer of the    
Company, (D) the Chief Administrative Officer of the Company, (E) the       
General Counsel for the Company, (F) the Executive Vice President, Sales    
and Marketing of the Company, (G) the Executive Vice President, Human       
Resources of the Company, (H) the Chairman of the Board and (I) the Vice    
Chairman of the Board, if any, and may include other Board members or       
executive officers of the Company, in each case in accordance with Section  
2.7; and                                                                    

(ii) the Management Committee shall act by a consensus of the members   
thereof, provided that such consensus includes the approval of the Chairman 
of the Management Committee.                                                

(b) The Management Committee shall have the following responsibilities,     
authority and duties, and such other responsibilities, authority and duties as  
the Board (acting by Special Majority Vote of the Board) may from time to time  
grant, subject to the other provisions of this Agreement, the Certificate of    
Incorporation and the By-laws:                                                  

(i) review and approval of the Strategic Plan prior to consideration and
approval by the Board in accordance with Section 2.7;                       

(ii) review and approval of the Annual Operating Plan and annual        
operating budget of the Company prior to consideration and approval of the  
Board in accordance with Section 2.7; and                                   

(iii) overseeing the implementation of the Initial Synergy Plan,        
including the attainment of the synergy goals of such Plan and the          
integration of the businesses of RBL and its Subsidiaries (prior to the     
Merger) and the Company.                                                    

(c) Meetings of the Management Committee shall be conducted at least six    
times per year or more often as determined by the Chairman of the Management    
Committee, in his discretion.                                                   

SECTION 2.5. NOTICE FOR BOARD AND COMMITTEE MEETINGS. (a) No action by the  
Board of Directors or any committee of the Board of Directors shall be valid    
unless taken at a meeting for which seven days prior notice has been duly given 
or waived by the Directors or the members of such committee, as the case may    
be. Such notice shall include a description of the general nature of the        
business to be transacted at the meeting, and no other business may be          
transacted at such meeting unless all Directors or members of the committee as  
the case may be, are present and consent to the consideration of such other     
business.                                                                       

(b) In the case of committee meetings, any committee member unable to       
participate in Person at any meeting shall be given the opportunity to          
participate by telephone.                                                       

(c) Each of the committees established by the Board of Directors pursuant to
Section 2.3 and the Management Committee established pursuant to Section 2.4    
shall establish and adopt such other rules and procedures for its operation and 
governance (consistent with the terms of this Agreement and the Company's       
Certificate of Incorporation and By-laws) as it shall determine appropriate and 
may seek such consultation and advice as to matters within its purview as it    
shall require.                                                                  

SECTION 2.6. VACANCIES ON BOARD COMMITTEES AND THE MANAGEMENT COMMITTEE. In 
the event that any Investor Director or Independent Director ceases to serve on 
any committee of the Board of Directors or on the Management Committee, the     
majority of the Investor Directors and the majority of the Independent          
Directors shall designate, respectively, a replacement member. If after a       
reasonable time, no successor to such Director is designated in accordance with 
the terms hereof to serve on such committee, the number of members of such      
committee may be reduced if such reduction does not (and no such reduction is   
intended to) result in a change of the relative authorities within such         
committee among the Investor Directors (taken as a group) and the Independent   
Directors (taken as a group).                                                   

SECTION 2.7. APPROVAL REQUIRED FOR CERTAIN ACTIONS. (a) So long as the      
Investor Group Interest shall be 30% or more, no action by the Company or any   
Subsidiary (including but not limited to any action by their respective boards  
of directors or any committee thereof) shall be taken with respect to any of    
the                                                                             

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following matters without the approval of the Board which approval shall be by  
a Special Majority Vote of the Board:                                           

(i) the appointment of any of the Chairman of the Board, Chief Executive
Officer, President, Secretary, Treasurer, General Counsel, Chief Financial  
Officer, Chief Operating Officer or Chief Administrative Officer or other   
executive officer in any similar capacity of the Company or any Subsidiary  
thereof (and the election of any directors to the board of directors of any 
such Subsidiary);                                                           

(ii) the approval of each Strategic Plan and each Annual Operating Plan 
developed subsequent to the Effectiveness of this Agreement and any         
material amendment to, modification of, or deviation from, the Initial      
Synergy Plan or any other Strategic Plan;                                   

(iii) any merger or consolidation of the Company or any of its          
Subsidiaries with or into any Person other than the Company or any of its   
Subsidiaries;                                                               

(iv) any amendment to the Certificate of Incorporation or By-laws or any
adoption of or amendment to the certificate of incorporation or by-laws of  
any Subsidiary of the Company;                                              

(v) any acquisition of assets, business, operations or securities by the
Company or any Subsidiary thereof by merger or otherwise (whether in one    
transaction or a series of related transactions) which assets, business,    
operations or securities would constitute a Substantial Part of the Company 
measured prior to such transaction;                                         

(vi) any sale, asset exchange, lease, exchange, mortgage, pledge,       
transfer or other disposition by merger or otherwise by the Company or any  
of its Subsidiaries (in one transaction or a series of related              
transactions) of any Subsidiary of the Company or assets of the Company or  
any Subsidiary thereof which constitutes a Substantial Part of the Company; 

(vii) the settling of any litigation, investigation or proceeding       
involving (A) any governmental authority or (B) any amount proposed to be   
paid in settlement is in excess of $5,000,000;                              

(viii) any material transaction between (x) the Company or any of its   
Subsidiaries, on the one hand, and (y) any stockholder or Affiliate of the  
Company (other than any Subsidiary of the Company and other than the        
Investor and its Affiliates), on the other hand (other than as specifically 
contemplated by the Sharing and Call Option Agreement);                     

(ix) the issuance of any security of the Company or any Subsidiaries of 
the Company (other than as specifically contemplated by the Merger          
Agreement or the Warrant Agreement or pursuant to the exercise of existing  
employee stock options);                                                    

(x) capital expenditures individually in excess of $1,000,000 or in the 
aggregate in excess of $50,000,000 per annum or which represent in the      
aggregate 110% or more of the total amount provided for in the Annual       
Operating Plan for such year;                                               

(xi) a reclassification, combination, split, subdivision or redemption, 
purchase or other acquisition, directly or indirectly, of any debt or       
equity securities or other capital stock of the Company except as provided  
in the Merger Agreement and the Warrant Agreement;                          

(xii) any change in the size or composition of the Board of Directors or
any committee thereof or of the Management Committee or the establishment   
of a new committee of the Board;                                            

(xiii) any incurrence, assumption or issuance by the Company or any of  
its Subsidiaries of Indebtedness other than (x) Indebtedness existing       
immediately after the Effective Time) and any refinancings thereof and (y)  
other Indebtedness in an aggregate principal amount at any one time         
outstanding not to exceed $25,000,000;                                      

(xiv) the declaration of any dividend or the making of any other        
distribution with respect to, or the redemption, repurchase or other        
acquisition of, any class of securities of the Company or any of its        
Subsidiaries, except as expressly otherwise provided in the Merger          
Agreement or the Warrant Agreement;                                         

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 (xv) the proposal or entry into by the Company or any of its Subsidiaries
of any Discriminatory Transaction;                                          

(xvi) any relocation of the headquarters of the Company;                

 (xvii) the determination of compensation, benefits, perquisites and other
incentives for executive officers (other than officers whose total          
compensation including employee stock options and similar incentives does   
not exceed $150,000 annually) and the approval or amendment of any plans or 
contracts in connection therewith;                                          

(xviii) the adoption or implementation of any takeover defense measures,
including the institution, amendment or redemption by the Company or any of 
its Subsidiaries of any stockholder rights plan or similar plan or device,  
or any change of control matters (including change of control provisions in 
agreements to which the Company or any Subsidiary thereof is a party);      

(xix) any transaction involving or any action by the Company or any     
Subsidiary (A) leading to a circumstance in which any Person or 13D Group   
(other than the Investor and/or its Affiliates) shall beneficially own      
Equity Securities representing a percentage of Total Voting Power, or any   
equity interest in the Company greater than 15% or (B) requiring the        
approval of holders of a majority of the Voting Stock or Equity Securities; 

(xx) any change in the fiscal year or the accounting or tax principles, 
or policies with respect to the financial statements, records or affairs of 
the Company or any Subsidiary, except as required by GAAP or by law; or     

(xxi) the dissolution of the Company or any of its Subsidiaries thereof;
the adoption of a plan of liquidation of the Company or any Subsidiaries;   
or any action by the Company or any of its Subsidiaries to commence any     
suit, case, proceeding or other action (A) under any existing or future law 
of any jurisdiction relating to bankruptcy, insolvency, reorganization or   
relief of debtors seeking to have an order for relief entered with respect  
to the Company or any of its Subsidiaries, or seeking to adjudicate the     
Company or any of its Subsidiaries a bankrupt or insolvent, or seeking      
reorganization, arrangement, adjustment, winding up, liquidation,           
dissolution, composition or other relief with respect to the Company or any 
of its Subsidiaries or (B) seeking appointment of a receiver, trustee,      
custodian or other similar official for the Company or any of its           
Subsidiaries thereof, or for all or any Substantial Part of the Company or  
any of its Subsidiaries thereof, or making a general assignment for the     
benefit of the creditors of the Company or any of its Subsidiaries thereof. 

SECTION 2.8. ENFORCEMENT OF THIS AGREEMENT. A majority of the Independent   
Directors shall have full and complete authority on behalf of the Company to    
enforce the terms of this Agreement.                                            

SECTION 2.9. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company and the  
Investor shall take or cause to be taken all lawful action necessary to ensure  
at all times that the Company's Certificate of Incorporation and By-laws are    
not at any time inconsistent with the provisions of this Agreement. Not later   
than the Effectiveness of this Agreement, the Board of Directors shall amend    
the Company's By-laws to reflect the provisions of this Article 2 . At the      
Investor's request the Board of Directors shall adopt (and if necessary submit  
and recommend for approval by stockholders) such other amendments to the        
Company's Certificate of Incorporation or By-laws as may be reasonably          
necessary to implement the provisions of this Agreement.                        

SECTION 2.10. GOVERNANCE OF COMPANY SUBSIDIARIES. The governance of each    
Subsidiary of the Company shall be conducted in a manner consistent with the    
governance of the Company as provided in this Agreement. In particular, a       
Subsidiary shall not take or agree to take any action which, if taken by the    
Company would require approval of the Investor or a Special Majority Vote of    
the Board pursuant to the terms of this Agreement, unless such action is first  
approved by the Investor or a Special Majority Vote of the Board, as the case   
may be. The Board of Directors shall select the Persons who from time to time   
shall be elected as the directors of the Company's Subsidiaries subject to      
Section 2.7.                                                                    

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SECTION 2.11. STRATEGIC PLANNING PROCESS. (a) The parties have cooperated in
preparing the Initial Synergy Plan. The President and Chief Executive Officer   
of the Company shall, on an annual basis, cause to be prepared and proposed to  
the Management Committee, a Strategic Plan covering a five-year period          
beginning with the period 1997-2001. Each year the Strategic Plan shall be      
proposed to the Management Committee not later than May 1st. In connection with 
the preparation of each Strategic Plan, the President and Chief Executive       
Officer shall confer on a reasonable basis with the Management Committee and    
the Board of Directors.                                                         

(b) From time to time, at the request of the President and Chief Executive  
Officer, and at least once a year during the fourth and fifth fiscal years of a 
Strategic Plan and prior to the budgeting process for the following year, the   
President and Chief Executive Officer will hold a Strategic Review with the     
Management Committee of the Company and, in light of such review, the           
Management Committee of the Company may propose to the Board of Directors       
revisions or updates to the Strategic Plan in light of changed circumstance.    

(c) Any proposed Strategic Plan or any revisions or updates to the current  
Strategic Plan will require approval of the Board of Directors, subject to      
Section 2.7.                                                                    

 SECTION 2.12. OPERATING PLANNING PROCESSES. The President and Chief Executive
Officer will be responsible for the preparation, on an annual basis, of a       
proposed Annual Operating Plan for each fiscal year which shall be consistent   
with the then applicable Initial Synergy Plan or Strategic Plan, as the case    
may be, and shall be submitted to the Management Committee not later than two   
months before the beginning of such fiscal year. The financial and operating    
performance goals in each Annual Operating Plan shall be determined by          
reference to the applicable Strategic Plan, taking into account such factors as 
the President and Chief Executive Officer determines are appropriate. Any       
proposed Annual Operating Plan will require approval of the Board of Directors, 
subject to Section 2.7.                                                         

SECTION 2.13. HEADQUARTERS OF THE COMPANY. As of the Effective Time, the    
headquarters of the Company shall be the location designated by the Management  
Committee in accordance with Section 2.4(a).                                    

ARTICLE 3 

ANTI-DILUTIVE RIGHTS

SECTION 3.1. ANTI-DILUTIVE RIGHTS. (a) Except as provided in Section 3.1(c) 
below, the Company shall not issue, sell or transfer any Equity Securities to   
any Person unless the Investor is offered in writing the right to purchase, at  
the same price and on the same terms proposed to be issued and sold, an amount  
of such Equity Securities (the "MAINTENANCE SECURITIES") as is necessary for    
the Investor Group to maintain the Investor Group Interest as it existed        
immediately prior to such issuance (the "ANTI-DILUTIVE RIGHTS"). The Investor   
shall have the right, during the period specified in Section 3.1(b) to accept   
the offer for any or all of the Maintenance Securities.                         

(b) If the Investor does not deliver to the Company written notice of       
acceptance of any offer made pursuant to Section 3.1(a) within 20 Business Days 
after the Investor's receipt of such offer, the Investor shall be deemed to     
have waived its right to purchase all or any part of its Maintenance Securities 
as set forth in such offer but the Investor shall retain its rights under this  
Article 3 with respect to future offers.                                        

 (c) The Anti-dilutive Rights set forth above shall not apply to (i) the grant
or exercise of options to purchase Common Stock or the issuance of shares of    
Common Stock to employees of the Company or any of its Subsidiaries (other than 
employees who are also employees of a stockholder, their Affiliates or any      
subsidiary of a stockholder) or otherwise pursuant to a stock option or similar 
plan in existence on the date hereof or otherwise adopted by the Board of       
Directors hereafter, (ii) the issuance of Warrant Shares, or of shares of       
Common Stock issuable upon exercise of any option, warrant, convertible         
security or other rights                                                        

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to purchase or subscribe for Common Stock which, in each case, had been issued  
in compliance with Section 3.1(a) or Section 3.1(c)(i), (iii) securities issued 
pursuant to any stock split, stock dividend or other similar stock              
recapitalization, or (iv) shares of Common Stock issued pursuant to any Public  
Offering, provided that the action referred to in clause (i), (iii) or (iv) of  
this Section 3.1(c) as the case may be, shall have been approved (to the extent 
required) in accordance with the provisions of this Agreement.                  

(d) A closing for the purchase of Maintenance Securities pursuant to this   
Section 3.1(d) shall occur on the later of (i) the date on which such public or 
private issuance occurs and (ii) such date as may be agreed to by the Investor  
and the Company, at a time and place specified by the Investor in a notice      
provided to the Company at least ten (10) days prior to such specified closing  
date. In connection with such closing, the Company and the Investor shall       
provide such customary closing certificates and opinions as the Investor or the 
Company, as appropriate, shall reasonably request.                              

ARTICLE 4 

ACQUISITIONS OF ADDITIONAL EQUITY SECURITIES      

SECTION 4.1. LIMITATION ON ADDITIONAL ACQUISITIONS. (a) From the            
Effectiveness of this Agreement until the first anniversary thereof, the        
Investor shall not, and shall use its best efforts to cause each member of the  
Investor Group not to, directly or indirectly, purchase or otherwise acquire    
any Equity Securities of the Company if, after giving effect thereto, the       
Investor Group Interest would exceed 49.99%. Notwithstanding the foregoing, the 
Investor Group or one or more members thereof may acquire, directly or          
indirectly, by purchase or otherwise, Equity Securities resulting in the        
Investor Group Interest exceeding such limitation in the event (i) any Person   
or Group makes an Acquisition Proposal (as defined in the Merger Agreement);    
(ii) Mafco or any Affiliate thereof shall after the Effective Time acquire      
Equity Securities representing 1% or more of the Total Voting Power; (iii) any  
Person or Group acquires beneficial ownership of Equity Securities representing 
5% or more of Total Voting Power (10% or more in the case of beneficial         
ownership permitted to be reported on Schedule 13G under the Exchange Act); or  
(iv) there shall have been a material adverse change in the business, financial 
condition or operations of the Company for, or which would reasonably be        
expected to continue for, a sustained period and the Investor shall have        
determined in good faith that the acquisition of additional Equity Securities   
is reasonably necessary to protect its investment in the Company.               

(b) From the first anniversary of the Effectiveness of this Agreement until 
the third anniversary of the Effectiveness of this Agreement, the Investor      
shall not and shall use its best efforts to cause each member of the Investor   
Group not to, directly or indirectly, purchase or otherwise acquire, or propose 
or offer to purchase or acquire, any Equity Securities of the Company, whether  
by tender offer, Market Purchase, privately negotiated purchase, merger or      
otherwise, except that the Investor Group may acquire Equity Securities to the  
extent that after giving effect thereto, the Investor Group Interest would not  
exceed 75%.                                                                     

(c) Anything to the contrary notwithstanding in Section 4.1(a) or (b), the  
Investor Group may acquire Equity Securities, notwithstanding the fact that,    
after giving effect thereto, the Investor Group Interest would exceed 75%, if   
the Investor Group (or a member or Affiliate thereof, as the case may be)       
offers, prior to consummating such purchase, to purchase all outstanding Equity 
Securities and holders of Equity Securities representing more than 50% of the   
outstanding Equity Securities (excluding any Equity Securities held by the      
Investor Group) accept such offer and the Investor Group ( or a member or       
Affiliate thereof, as the case may be) consummates such purchase.               

ARTICLE 5 

TRANSFERS OF EQUITY SECURITIES

SECTION 5.1. TRANSFERS OF EQUITY SECURITIES. The Investor agrees not to sell
or otherwise transfer any Equity Securities except pursuant to (x) Section 9.5  
hereof and (y) (i) a Public Offering in accordance                              

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with Article 6, (ii) Rule 144 or Rule 144A, or (iii) any other transaction in   
compliance with the Securities Act, state securities laws and other applicable  
laws.                                                                           

ARTICLE 6 

REGISTRATION RIGHTS 

SECTION 6.1. DEMAND REGISTRATION. (a) From and after the Effectiveness of   
this Agreement, the Investor may make a written request to the Company for      
registration under the Securities Act of Registrable Securities subject to the  
conditions set forth in Section 6.2 and Section 6.3 hereof (a "DEMAND           
REGISTRATION"). Such request will specify the number of shares of or warrants   
constituting Registrable Securities proposed to be sold and will also specify   
the intended method of disposition thereof. Following the Investor's request,   
the Company will use its best efforts to effect, as expeditiously as possible,  
the registration under the Securities Act of the Registrable Securities which   
the Company has been so requested to register by the Investor so as to permit   
the disposition (in accordance with the intended methods thereof as aforesaid)  
of such Registrable Securities.                                                 

(b) If the Investor so elects, the offering of such Registrable Securities  
pursuant to such Demand Registration shall be in the form of Public Offering.   
The Investor shall select the managing underwriters and any additional          
investment bankers and managers to be used in connection with a Demand          
Registration pursuant to a Public Offering, provided that such managing         
underwriters shall be of national standing and any additional investment        
bankers or managers must be reasonably satisfactory to the Company.             

SECTION 6.2. CONDITIONS TO DEMAND REGISTRATIONS. The obligations of the     
Company to take the actions contemplated by Section 6.1 with respect to an      
offering of Registrable Securities shall be subject to the following            
conditions:                                                                     

(a) the Registrable Securities requested to be registered shall (unless     
reduced pursuant to Section 6.5) constitute at least 2% of the equivalent       
outstanding Equity Securities or at least 5% of the Registrable Securities at   
such time, whichever amount is smaller;                                         

(b) there shall not have been consummated more than one offering pursuant to
a Demand Registration within the preceding 12 month period;                     

(c) (x) if the Investor Group Interest shall be less than 30% but more than 
20%, no more than three other Demand Registrations shall have been effected     
after the date on which the Investor Group Interest was reduced to less than    
30%, (y) if the Investor Group Interest shall be less than 20% but more than    
10%, no more than two other Demand Registrations shall have been effected after 
the date on which the Investor Group Interest was reduced to less than 20% and  
(z) if the Investor Group Interest shall be less than 10%, no more than one     
other Demand Registration shall have been effected after the date on which the  
Investor Group Interest was reduced to less than 10%;                           

(d) the Investor shall conform to all applicable requirements of the        
Securities Act and the Exchange Act with respect to the offering and sale of    
securities and shall advise each underwriter, broker or dealer through which    
any of the Registrable Securities are offered that the Registrable Securities   
are part of a distribution that is subject to the prospectus delivery           
requirements of the Securities Act; and                                         

(e) the Investor shall use all reasonable efforts to effect as wide a       
distribution of such Registrable Securities as is reasonably practicable, and   
in no event shall any sale of Registrable Securities be made knowingly to any   
Person who beneficially owns 5% or more of the Total Voting Power (including    
such Person's Affiliates and any Person which to the knowledge of the Investor  
is, or who, after giving effect to such sale, would be part of any 13D Group).  

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SECTION 6.3. ADDITIONAL CONDITIONS TO DEMAND OFFERINGS. Notwithstanding the 
provisions of Sections 6.1 and 6.2, the Company's obligations pursuant to       
Section 6.1 shall be suspended if (a) the fulfillment of such obligations would 
require the Company to make a disclosure that would, in the reasonable good     
faith judgment of the Company's Board of Directors, be materially detrimental   
to the Company and premature, (b) the Company has filed a Registration          
Statement with respect to Equity Securities to be distributed in a Public       
Offering and it is advised by its lead or managing underwriter that an offering 
by the Investor of the Registrable Securities would materially adversely affect 
the distribution of such Equity Securities or (c) the fulfillment of such       
obligations would require the Company to prepare audited financial statements   
not required to be prepared for the Company to comply with its obligations      
under the Exchange Act as of any date not coincident with the last day of any   
fiscal year of the Company. Such obligations of the Company shall be reinstated 
(x) in the case of clause (a) above, upon the making of such disclosure by the  
Company (or, if earlier, when such disclosure would either no longer be         
necessary for the fulfillment of such obligations or no longer be detrimental), 
(y) in the case of clause (b) above, upon the conclusion of any period during   
which the Company would not, pursuant to the terms of its underwriting          
arrangements, be permitted to sell securities of the Company for its own        
account and (z) in the case of clause (c) above, as soon as it would no longer  
be necessary to prepare such financial statements to comply with the Exchange   
Act.                                                                            

SECTION 6.4. PIGGYBACK REGISTRATION. If the Company proposes to file a      
Registration Statement under the Securities Act with respect to an offering of  
any securities of the Company (a) for the Company's own account (other than a   
Registration Statement on Form S-4 or S-8 (or any substitute form that may be   
adopted by the SEC) or (b) the account of any Other Holder (other than Mafco or 
any of its Affiliates), then the Company shall give written notice of such      
proposed filing to the Investor as soon as practicable (but in no event less    
than 20 Business Days before the anticipated filing date), and such notice      
shall offer the Investor the opportunity to register such number of shares of   
(or Warrants constituting) Registrable Securities as the Investor may request   
on the same terms and conditions as those applicable to the Securities of the   
Company or of the Other Holders in the offering (a "PIGGYBACK REGISTRATION").   
Upon the written request of the Investor made within ten days after the receipt 
of notice from the Company (which request shall specify the amount and types of 
Registrable Securities intended to be issued or disposed of), the Company will  
use its best efforts to effect the registration under the Securities Act of all 
such Registrable Securities which the Company has been so requested to register 
by such Investor, to the extent requisite to permit the disposition of such     
Registrable Securities to be so registered, provided that (i) if such           
registration involves a Public Offering, the Investor must sell its Registrable 
Securities to the underwriters on the same terms and conditions as apply to the 
Company and (ii) if, at any time after giving written notice of its intention   
to register any securities of the Company pursuant to this Section 6.4 and      
prior to the effective date of the Registration Statement filed in connection   
with such registration, the Company shall determine for any reason not to       
register such securities, the Company shall give written notice to the Investor 
and, thereupon, shall be relieved of its obligation to register any Registrable 
Securities in connection with such registration (without prejudice, however, to 
rights of the Investor under Section 6.1 hereof). No registration effected      
under this Section 6.4 shall relieve the Company of its obligations to effect   
any Demand Registration to the extent required by Section 6.1 hereof.           

SECTION 6.5. REDUCTION OF OFFERING. Notwithstanding anything contained      
herein, if the managing underwriter of an offering described in Section 6.1 or  
Section 6.4 delivers a written opinion to the Company advising that (a) the     
size of the offering that the Investor, the Company and any Other Holders       
intend to make or (b) the combination of securities that the Investor, the      
Company and such Other Holders intend to include in such offering are such that 
the success of the offering would be materially and adversely affected, then    
(A) if the size of the offering is the basis of such underwriter's opinion, the 
amount of Registrable Securities to be offered for the account of the Investor  
shall be reduced to the extent necessary to reduce the total amount of          
securities to be included in such offering to the amount recommended by such    
managing underwriter, provided that (x) in the case of a Demand Registration,   
the amount of Registrable Securities to be offered for the account of the       
Investor shall be reduced only after the amount of securities to be offered for 
the account of the Company and such Other Holders has been reduced to zero, and 
(y) in the case of a Piggyback Registration, if securities are being offered    
for the account of Other Holders, then the proportion                           

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by which the amount of such Registrable Securities intended to be offered for   
the account of the Investor is reduced shall not exceed the proportion by which 
the amount of such securities intended to be offered for the account of such    
Other Holders is reduced; and (B) if the combination of securities to be        
offered is the basis of such underwriter's opinion, (x) the Registrable         
Securities to be included in such offering shall be reduced as described in     
clause (A) above (subject to the proviso in clause (A)), and (y) in the case of 
a Piggyback Registration, if the actions described in sub-clause (x) of this    
clause (B) would, in the judgment of the managing underwriter, be insufficient  
substantially to eliminate the adverse effect that inclusion of the Registrable 
Securities requested to be included would have on such offering, such           
Registrable Securities will be excluded from such offering.                     

 SECTION 6.6. FILINGS; REGISTRATION PROCEDURES. Whenever the Investor requests
that any Registrable Securities be registered pursuant to Section 6.1 hereof,   
the Company will use its reasonable efforts to effect the registration of such  
Registrable Securities as promptly as is practicable, and in connection with    
any such request:                                                               

(a) The Company will as expeditiously as possible prepare and file with the 
SEC a Registration Statement on any form for which the Company then qualifies   
and which counsel for the Company shall deem appropriate and available for the  
sale of the Registrable Securities to be registered thereunder in accordance    
with the intended method of distribution thereof. A registration will not count 
as a Demand Registration until a Registration Statement shall have become       
effective under the Securities Act and remained effective for at least 270 days 
(or such shorter period in which all Registrable Securities of the Investor     
included in such registration have actually been sold thereunder), provided     
that, if after any Registration Statement requested pursuant to Section 6.1     
becomes effective, such Registration Statement is interfered with by any stop   
order, injunction or other order or requirement of the Commission or other      
governmental agency or court solely due to the actions or omissions to act of   
the Company, such registration shall not be considered a Demand Registration.   

(b) The Company will, if requested, prior to filing such Registration       
Statement or any amendment or supplement thereto, furnish to the Investor and   
each applicable managing underwriter, if any, copies thereof, and thereafter    
furnish to the Investor and each such underwriter such number of copies of such 
Registration Statement, amendment and supplement thereto (in each case          
including all exhibits thereto and documents incorporated by reference therein) 
and the prospectus included in such Registration Statement (including each      
preliminary prospectus) as the Investor or each such underwriter may reasonably 
request in order to facilitate the sale of the Registrable Securities.          

(c) The Company will use all reasonable efforts to cause the Registerable   
Securities to be registered with or approved by such other governmental         
agencies or authorities as may be necessary by virtue of the business and       
operations of the Company to enable the Investor to consummate the disposition  
of such Registrable Securities.                                                 

(d) After the filing of the Registration Statement, the Company will (i)    
prepare and file with the SEC such amendments and post-effective amendments to  
the registration statement as may be necessary to keep such registration        
statement effective for a reasonable period not to exceed 270 days; cause the   
related prospectus to be supplemented by any required prospectus supplement,    
and as so supplemented to be filed pursuant to Rule 424 under the Securities    
Act, and (ii) comply with the provisions of the Securities Act with respect to  
the disposition of all securities covered by such registration statement during 
the applicable period in accordance with the intended methods of disposition by 
the sellers thereof set forth in such registration statement or supplement to   
such prospectus and promptly notify the Investor of any stop order issued or,   
to the Company's knowledge, threatened to be issued by the SEC and take all     
reasonable actions required to prevent the entry of such stop order or to       
remove it if entered.                                                           

 (e) The Company will endeavor to qualify the Registrable Securities for offer
and sale under such other securities or blue sky laws of such jurisdictions in  
the United States as the Investor reasonably requests,                          

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provided that the Company will not be required to (i) qualify generally to do   
business in any jurisdiction where it would not otherwise be required to        
qualify but for this Section 6.6(e), (ii) subject itself to taxation in any     
such jurisdiction or (iii) consent to general service of process in any such    
jurisdiction.                                                                   

(f) The Company will as promptly as is practicable notify the Investor, at  
any time when a prospectus relating to the sale of the Registrable Securities   
is required by law to be delivered in connection with sales by an underwriter   
or dealer, of the occurrence of any event requiring the preparation of a        
supplement or amendment to such prospectus so that, as thereafter delivered to  
the purchasers of such Registrable Securities, such prospectus will not contain 
an untrue statement of a material fact or omit to state any material fact       
required to be stated therein or necessary to make the statements therein, in   
the light of the circumstances under which they were made, not misleading, and  
promptly make available to the Investor and to the underwriters, if any such    
supplement or amendment. The Investor agrees that, upon receipt of any notice   
from the Company of the occurrence of any event of the kind described in the    
preceding sentence, the Investor will forthwith discontinue the offer and sale  
of Registrable Securities pursuant to the Registration Statement covering such  
Registrable Securities until receipt by the Investor and the underwriters, if   
any, of the copies of such supplemented or amended prospectus and, if so        
directed by the Company, the Investor will deliver to the Company all copies,   
other than permanent file copies then in the Investor's possession, of the most 
recent prospectus covering such Registrable Securities at the time of receipt   
of such notice. In the event the Company shall give such notice, the Company    
shall extend the period during which such Registration Statement shall be       
maintained effective as provided in Section 6.6(a) hereof by the number of days 
during the period from and including the date of the giving of such notice to   
the date when the Company shall make available to the Investor such             
supplemented or amended prospectus.                                             

(g) The Company will enter into customary agreements (including an          
underwriting agreement in customary form) and take such other actions as are    
reasonably required in order to expedite or facilitate the sale of the          
Registrable Securities covered by a Registration Statement in accordance        
herewith.                                                                       

(h) The Company shall make available for inspection by the Investor, any    
underwriter participating in any disposition pursuant to such registration, and 
any attorney, accountant or other agent retained by the Investor or any such    
underwriter (collectively, the "INSPECTORS"), all financial and other records,  
pertinent corporate documents and properties of the Company (collectively, the  
"RECORDS") as shall be reasonably necessary to enable them to exercise their    
due diligence responsibility, and cause the officers, directors and employees   
of the Company to supply all information reasonably requested by any such       
Inspector in connection with such registration, provided that (i) records and   
information obtained hereunder shall be used by such Persons only to exercise   
their due diligence responsibility and (ii) records or information which the    
Company determines, in good faith, to be confidential shall not be disclosed by 
the Inspectors unless (x) the disclosure of such Records or information is      
necessary to avoid or correct a misstatement or omission in the Registration    
Statement or (y) the release of such Records or information is ordered pursuant 
to a subpoena or other order from a court or governmental authority of          
competent jurisdiction. The Investor shall use reasonable efforts, prior to any 
such disclosure, to inform the Company that such disclosure is necessary to     
avoid or correct a misstatement or omission in the Registration Statement. The  
Investor further agrees that it will, upon learning that disclosure of such     
Records or information is sought in a court or governmental authority, give     
notice to the Company and allow the Company, at the expense of the Company, to  
undertake appropriate action to prevent disclosure of the Records or            
information deemed confidential; the Investor agrees that information obtained  
by it as a result of such inspections shall be deemed confidential and shall    
not be used by it as the basis for any market transactions in the securities of 
the Company or its Affiliates unless and until such information is made         
generally available to the public.                                              

 (i) The Company will furnish to the Investor and to each underwriter, if any,
a signed counterpart, addressed to the Investor or such underwriter, if any, of 
(i) an opinion or opinions of counsel to the Company and (ii) a comfort letter  
or comfort letters from the Company's independent public accountants, each in   
customary form and covering such matters of the type customarily covered by     
opinions or comfort letters, as the case may be, as the Investor or the         
managing underwriter reasonably requests.                                       

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(j) The Company will make generally available to its security holders, as   
soon as reasonably practicable, an earnings statement covering a period of 12   
months, beginning within three months after the effective date of the           
Registration Statement, which earnings statement shall satisfy the provisions   
of Section 11(a) of the Securities Act.                                         

 (k) The Company will use its reasonable efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar securities 
issued by the Company are then listed.                                          

(l) The Company may require the Investor promptly to furnish in writing to  
the Company such information regarding the Investor, the plan of distribution   
of the Registrable Securities and other information as the Company may from     
time to time reasonably request or as may be legally required in connection     
with such registration.                                                         

SECTION 6.7. REGISTRATION EXPENSES. In connection with any Demand           
Registration or any Piggyback Registration, the Company shall pay the           
Registration Expenses.                                                          

 SECTION 6.8. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify,
to the fullest extent permitted by law, the Investor and directors, officers    
and controlling Persons of the Investor (within the meaning of either Section   
15 of the Securities Act or Section 20 of the Exchange Act) against any and all 
losses, claims, damages, liabilities and expenses (including attorneys' fees)   
caused by any untrue or alleged untrue statement of material fact contained in  
any Registration Statement or prospectus (each as amended and or supplemented,  
if the Company shall have furnished any amendments or supplements thereto) or   
preliminary prospectus relating to the Registrable Securities, or any omission  
or alleged omission to state therein a material fact required to be stated      
therein or necessary to make the statements therein (in the case of a           
prospectus, in the light of the circumstances under which they were made) not   
misleading, provided that the Company shall not be required to indemnify the    
Investor or the officers, directors or controlling Persons of the Investor for  
any losses, claims, damages, liabilities or expenses resulting from any such    
untrue statement or omission if such untrue statement or omission is made in    
reliance on and conformity with any information with respect to the Investor    
furnished to the Company by the Investor expressly for use therein, and further 
provided that the foregoing indemnity agreement with respect to any preliminary 
prospectus shall not inure to the benefit of the Investor if a copy of the most 
current at the time of the delivery of the Registrable Securities prospectus    
was not provided to purchaser and such current prospectus would have cured the  
defect giving rise to such loss, claim, damage or liability. In connection with 
an underwritten offering, the Company will indemnify any underwriter thereof,   
the officers and directors of such underwriter, and each Person who controls    
such underwriter (within the meaning of either Section 15 of the Securities Act 
or Section 20 of the Exchange Act) to the same extent as provided above with    
respect to the indemnification of the Investor, provided that such underwriter  
agrees to indemnify the Company to the same extent as provided below with       
respect to the indemnification of the Company by the Investor.                  

SECTION 6.9. INDEMNIFICATION BY THE INVESTOR. In connection with any        
registration in which the Investor is participating, the Investor will furnish  
to the Company in writing such information and affidavits with respect to the   
Investor as the Company reasonably requests for use in connection with any such 
registration, prospectus, or preliminary prospectus and agrees to indemnify the 
Company, its directors, its officers who sign the Registration Statement and    
each Person, if any, who controls the Company (within the meaning of either     
Section 15 of the Securities Act or of Section 20 of the Exchange Act) to the   
same extent as the foregoing indemnity from the Company to the Investor, but    
only with respect to information relating to the Investor furnished to the      
Company in writing by the Investor expressly for use in the Registration        
Statement, the prospectus, any amendment or supplement thereto, or any          
preliminary prospectus.                                                         

SECTION 6.10. CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any proceeding
(including any governmental investigation) shall be instituted involving any    
Person in respect of which indemnity may be sought pursuant to Section 6.8 or   
Section 6.9, such Person (the "INDEMNIFIED PARTY") shall promptly notify the    
Person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in  
writing and the                                                                 

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Indemnifying Party, upon request of the Indemnified Party, shall retain counsel 
reasonably satisfactory to the Indemnified Party to represent the Indemnified   
Party and any others the Indemnifying Party may designate in such proceeding    
and shall pay the fees and disbursements of such counsel related to such        
proceeding. In any such proceeding, any Indemnified Party shall have the right  
to retain its own counsel, but the fees and expenses of such counsel shall be   
at the expense of such Indemnified Party unless (i) the Indemnifying Party and  
the Indemnified Party shall have mutually agreed to the retention of such       
counsel or (ii) the named parties to any such proceeding (including any         
impleaded parties) include both the Indemnifying Party and the Indemnified      
Party and the Indemnified Party shall have been advised by counsel that         
representation of both parties by the same counsel would be inappropriate due   
to actual or potential differing interests between them. It is understood that  
the Indemnifying Party shall not, in connection with any proceeding or related  
proceedings in the same jurisdiction, be liable for the fees and expenses of    
more than one separate firm (in addition to any local counsel) at any time for  
all such Indemnified Parties, and that all such fees and expenses shall be      
reimbursed as they are incurred. In the case of any such separate firm for the  
Indemnified Parties, such firm shall be designated in writing by the            
Indemnified Parties. The Indemnifying Party shall not be liable for any         
settlement of any proceeding effected without its written consent, but if       
settled with such consent or if there be a final judgment for the plaintiff,    
the Indemnifying Party agrees to indemnify the Indemnified Party from and       
against any loss or liability by reason of such settlement or judgment.         
Notwithstanding the foregoing sentence, if at any time an Indemnified Party     
shall have requested an Indemnifying Party to reimburse the Indemnified Party   
for fees and expenses of counsel as contemplated by the third sentence of this  
Section 6.10, the Indemnifying Party agrees that it shall be liable for any     
settlement of any proceeding effected without its written consent if (A) such   
settlement is entered into more than 30 days after receipt by such Indemnifying 
Party of the aforesaid request and (B) such Indemnifying Party shall not have   
reimbursed the Indemnified Party in accordance with such request or reasonably  
objected in writing, on the basis of the standards set forth herein, to the     
propriety of such reimbursement prior to the date of such settlement. No        
Indemnifying Party shall, without the prior written consent of the Indemnified  
Party, effect any settlement of any pending or threatened proceeding in respect 
of which any Indemnified Party is or could have been a party and indemnity      
could have been sought hereunder by such Indemnified Party, unless such         
settlement includes an unconditional release of such Indemnified Party from all 
liability on claims that are the subject matter of such proceeding.             

SECTION 6.11. CONTRIBUTION. (a) If the indemnification provided for in this 
Article 6 from the Indemnifying Party is unavailable to an Indemnified Party    
hereunder in respect of any losses, claims, damages, liabilities or expenses    
referred to in this Article 6, then the Indemnifying Party, in lieu of          
indemnifying such Indemnified Party, shall contribute to the amount paid or     
payable by such Indemnified Party as a result of such losses, claims, damages,  
liabilities or expenses (i) in such proportion as is appropriate to reflect the 
relative benefits received by the Company, the Investor and the underwriters    
from the offering of the securities, or (ii) if the allocation provided by      
clause (i) above is not permitted by applicable law, in such proportion as is   
appropriate to reflect not only the relative benefits referred to in clause (i) 
but also the relative fault of the Company, the Investor and the underwriters   
in connection with the statements or omissions that resulted in such losses,    
claims, damages or liabilities, as well as any other relevant equitable         
considerations. The relative benefits received by the Company, the Investor and 
the underwriters shall be deemed to be in the same respective proportions as    
the total proceeds from the offering (net of underwriting discounts and         
commissions but before deducting expenses) received by each of the Company and  
the Investor Group and the total underwriting discounts and commissions         
received by the underwriters, in each case as set forth in the table on the     
cover of the prospectus, bear to the aggregate public offering price of the     
securities. The relative fault of the Company, the Investor and the             
underwriters shall be determined by reference to, among other things, whether   
any action in question, including any untrue or alleged untrue statement of a   
material fact or omission or alleged omission to state a material fact, has     
been made by, or relates to information supplied by, each such party and the    
parties' relative intent, knowledge, access to information and opportunity to   
correct or prevent such action. The amount paid or payable by a party as a      
result of the losses, claims, damages, liabilities and expenses referred to     
above shall be deemed to include, subject to the limitations set forth in       
Section 6.10, any legal or other fees or expenses reasonably incurred by such   
party in connection with any investigation or proceeding.                       

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(b) The parties hereto agree that it would not be just and equitable if     
contribution pursuant to this Section 6.11 were determined by pro rata          
allocation (even if the underwriters were treated as one entity for such        
purpose) or by any other method of allocation which does not take into account  
the equitable considerations referred to in the immediately preceding Section   
6.11(a). Notwithstanding the provisions of this Article 6, no underwriter shall 
be required to contribute any amount in excess of the amount by which the total 
price at which the Equity Securities underwritten by it and distributed to the  
public were offered to the public exceeds the amount of any damages which such  
underwriter has otherwise been required to pay by reason of such untrue or      
alleged untrue statement or omission or alleged omission, and the Investor      
shall not be required to contribute any amount in excess of the amount by which 
the net proceeds of the offering (before deducting expenses) received by the    
Investor Group exceeds the amount of any damages which the Investor has         
otherwise been required to pay by reason of such untrue or alleged untrue       
statement or omission or alleged omission. No Person guilty of fraudulent       
misrepresentation (within the meaning of Section 11(f) of the Securities Act)   
shall be entitled to contribution from any Person who was not guilty of such    
fraudulent misrepresentation.                                                   

(c) If indemnification is available under this Article 6, the Indemnifying  
Party shall indemnify each Indemnified Party to the full extent provided in     
Sections 6.8 and 6.9 without regard to the relative fault of said Indemnifying  
Party or Indemnified Party or any other equitable consideration provided for in 
this Section 6.11.                                                              

ARTICLE 7 

FURNISHING OF INFORMATION 

SECTION 7.1. FURNISHING OF INFORMATION. (a) The Company will furnish or make
available to the Investor any documents filed by the Company pursuant to        
Section 13, 14 and 15(d) of the Exchange Act (or successor provisions) and all  
annual, quarterly or other reports furnished to the Company's public security   
holders and all such other information concerning the Company and its           
Subsidiaries as the Investor may reasonably request.                            

(b) From and after the Effectiveness of this Agreement, the Company shall   
furnish to the Investor:                                                        

(i) within 60 days after the end of each fiscal year, its consolidated  
balance sheet and related statements of income and changes in financial     
position, showing the financial condition of the Company and its            
consolidated Subsidiaries as of the close of such fiscal year and the       
results of its operations and the operations of such Subsidiaries during    
such year, all audited by the Company's independent public accountants of   
recognized international standing and accompanied by an opinion of such     
accountants (which shall not be qualified in any material respect) to the   
effect that such consolidated financial statements fairly present the       
financial condition and results of operations of the Company on a           
consolidated basis in accordance with GAAP consistently applied; and        

(ii) within 30 days after the end of each of the first three fiscal     
quarters of each fiscal year, its consolidated balance sheet and related    
statements of income and changes in financial position, showing the         
financial condition of the Company and its consolidated Subsidiaries as of  
the close of such fiscal quarter and the results of its operations and the  
operations of such Subsidiaries during such fiscal quarter and the then     
elapsed portion of the fiscal year, all certified by one of the senior      
financial officers as fairly presenting the financial condition and results 
of operations of the Company on a consolidated basis in accordance with     
GAAP consistently applied, subject to normal year-end audit adjustments.    

(c) At the request of the Investor, at such time as the Investor is required
to include the financial results of the Company in the Investor's financial     
statements, the Company shall cooperate with and assist the Investor in the     
translation of the financial statements referred to in Subsection (a) above in  
order to conform such financial statements to international accounting          
standards.                                                                      

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(d) The Company shall deliver to the Investor, within a reasonable period of
time after receipt of a request from the Investor, the statement required by    
Treasury Department Regulation Section 1.897-2(h)(1) (relating to the Company's 
and each of its Subsidiaries' status as a United States Real Property Holding   
Corporation) without regard to whether the Company's Equity Securities are      
publicly traded at the time such statement is requested.                        

ARTICLE 8 

COVENANTS 

SECTION 8.1. RULE 144 AND RULE 144A. (a) The Company covenants that it will 
file the reports required to be filed by it under the Securities Act and the    
Exchange Act and the rules and regulations adopted by the SEC thereunder, and   
it will take such further action as the Investor may reasonably request, all to 
the extent required from time to time to enable the Investor to sell Shares     
without registration under the Securities Act within the limitation of the      
exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may  
be amended from time to time, or (ii) any similar rule or regulation hereafter  
adopted by the SEC. Upon the request of the Investor, the Company will deliver  
to the Investor a written statement as to whether it has complied with such     
reporting requirements.                                                         

(b) If the Investor desires to transfer any of its securities of the Company
pursuant to Rule 144A, the Company will promptly, upon request by the Investor, 
use its best efforts to facilitate the consummation of such Rule 144A           
transaction in accordance with the requirements of such Rule and with such      
request and shall take all necessary or appropriate actions in connection       
therewith, including but not limited to (i) preparing of an offering memorandum 
with respect to such transaction containing information customarily included in 
connection with Rule 144A transactions of the type contemplated by the request, 
(ii) taking the actions, to the extent requested by the Investor, referred to   
in Section 6.6(e), (h) and (i) and (iii) conducting "road show" presentations   
as reasonably requested by such Investor. Notwithstanding the previous          
sentence, if the Investor Group Interest shall be less than 30%, the Company    
will only be required to facilitate the consummation of such Rule 144A          
transaction as follows: (x) if the Investor Group Interest shall be less than   
30% but more than 20%, no more than three other Rule 144A transactions shall    
have been effected after the date on which the Investor Group Interest was      
reduced to less than 30%, (y) if the Investor Group Interest shall be less than 
20% but more than 10%, no more than two other Rule 144A transactions shall have 
been effected after the date on which the Investor Group Interest was reduced   
to less than 20% and (z) if the Investor Group Interest shall be less than 10%, 
no more than one other Rule 144A transaction shall have been effected after the 
date on which the Investor Group Interest was reduced to less than 10%. The     
Company shall pay all expenses in connection with any Rule 144A transaction     
pursuant hereto to the same extent the Company would be obligated to pay        
Registration Expenses in connection with a Demand or Piggyback Registration     
pursuant to Section 6.7.                                                        

SECTION 8.2. NO INCONSISTENT AGREEMENTS. The Company is not bound by any    
agreement and will not hereafter enter into any agreement, with respect to its  
securities which conflicts or is inconsistent with the rights granted to the    
Investor, the Investor Group or Investor Directors.                             

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ARTICLE 9 

MISCELLANEOUS 

SECTION 9.1. NOTICES. All notices, requests and other communications to any 
party hereunder shall be in writing (including by telecopy or similar writing)  
and shall be given:                                                             

                                                                [Download Table]
                                                
if to the Investor, to:                         
      HLR Holdings Inc.                         
      1403 Foulk Road                           
      Suite 102                                 
      P.O. Box 8985                             
      Wilmington, Delaware 19899                
if to the Roche Holder, to:                     
      Hoffmann-La Roche Inc.                    
      340 Kingsland Street                      
      Nutley, New Jersey 07110                  
      Attention: General Counsel                
with a copy to:                                 
      Davis Polk & Wardwell                     
      450 Lexington Avenue                      
      New York, New York 10017                  
      Attention: Peter R. Douglas, Esq.         
      Telecopy: (212) 450-4800                  
if to the Company, to:                          
      National Health Laboratories Holdings Inc.
      Attention: General Counsel                

if to Directors, to their respective business addresses with a copy to the  
Investor and to the Company,                                                    

or such other address or telecopy number as such party may hereafter specify    
for the purpose by notice to each the other party hereto. Each such notice,     
request or other communication shall be effective (a) if given by telecopy,     
when such telecopy is transmitted to the telecopy number specified in this      
Section and the appropriate confirmation is received or (b) if given by any     
other means, when delivered at the address specified in this Section.           

SECTION 9.2. AMENDMENTS; WAIVERS. (a) Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and   
signed, in the case of an amendment, by the Investor and the Company, or in the 
case of a waiver, by the party against whom the waiver is to be effective,      
provided that no such amendment or waiver by the Company shall be effective     
without the approval of a majority of the Independent Directors.                

(b) No failure or delay by any party in exercising any right, power or      
privilege hereunder shall operate as a waiver thereof nor shall any single or   
partial exercise thereof preclude any other or further exercise thereof or the  
exercise of any other right, power or privilege. The rights and remedies herein 
provided shall be cumulative and not exclusive of any rights or remedies        
provided by law.                                                                

SECTION 9.3. SEVERABILITY. If any provision of this Agreement or the        
application thereof to either party or set of circumstances shall, in any       
jurisdiction and to any extent, be finally held invalid or                      

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unenforceable, such term or provision shall only be ineffective as to such      
jurisdiction, and only to the extent of such invalidity or unenforceability,    
without invalidating or rendering unenforceable any other terms or provisions   
of this Agreement or under any other circumstances, and the parties shall       
negotiate in good faith a substitute provision which comes as close as possible 
to the invalidated or unenforceable term or provision, and which puts each      
party in a position as nearly comparable as possible to the position it would   
have been in but for the finding of invalidity or unenforceability, while       
remaining valid and enforceable.                                                

SECTION 9.4. ENTIRE AGREEMENT. The Merger Agreement, this Agreement, and the
agreements contemplated hereby and thereby constitute the entire agreement      
among the parties hereto with respect to the subject matter hereof and thereof  
and supersede all prior agreements and undertakings, both written and oral,     
between the parties with respect to the subject matter hereof.                  

SECTION 9.5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall 
be binding upon and inure to the benefit of the parties hereto and their        
respective successors and assigns, provided that no party may assign, delegate  
or otherwise transfer all or any of its rights or obligations under this        
Agreement without the consent of the other party hereto, except that the        
Investor may assign, delegate or otherwise transfer all or any of its rights or 
obligations under this Agreement to any other member of the Investor Group      
without the consent of the Company, provided that such member agrees in writing 
to be bound by the provisions hereof. The Investor shall cause any Person who   
shall have acquired 30% of the Total Voting Power from the Investor to agree in 
writing to assume the obligations of the Investor hereunder and to be bound by  
the provisions hereof whereupon such Person shall become entitled to all of the 
rights and benefits accruing to the Investor hereunder.                         

SECTION  9.6. PARTIES IN INTEREST. This Agreement shall be binding upon and 
inure solely to the benefit of each party hereto and each Person who becomes a  
party hereto or bound by the terms of this Agreement, and nothing in this       
Agreement, express or implied, is intended to or shall confer upon any other    
Person, other than the parties hereto and their respective permitted successors 
and assigns, any right, benefit or remedy of any nature or kind whatsoever      
under or by reason of this Agreement.                                           

 SECTION 9.7. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same       
effect as if the signatures thereto and hereto were upon the same instrument.   
This Agreement shall become effective upon the Effectiveness of this Agreement. 

SECTION 9.8. GOVERNING LAW. This Agreement shall be governed by, and        
construed in accordance with, the laws of the State of Delaware applicable to   
contracts executed and to be fully performed in that State. All actions and     
proceedings arising out of or relating to this Agreement shall be brought by    
the parties and heard and determined only in a Delaware state court or a        
federal court sitting in that State and the parties hereto consent to           
jurisdiction before and waive any objections of venue to the Delaware Chancery  
Court.                                                                          

SECTION 9.9. SPECIFIC PERFORMANCE. The Company and the Investor each        
acknowledge and agree that the Investor's and the Company's respective remedies 
at law for a breach or threatened breach of any of the provisions of this       
Agreement would be inadequate and, in recognition of that fact, each agrees     
that, in the event of a breach or threatened breach by the Company or the       
Investor of the provisions of this Agreement, in addition to any remedies at    
law, the Investor and the Company, respectively, without posting any bond shall 
be entitled to obtain equitable relief in the form of specific performance, a   
temporary restraining order, a temporary or permanent injunction or any other   
equitable remedy which may then be available.                                   

SECTION 9.10. TERMINATION. Except as provided below, the provisions of this 
Agreement shall terminate if the Investor Group Interest shall be less than     
30%, provided, however, that (x) the provisions of Sections 2.1(a), 2.1(d),     
2.1(f) (insofar as it relates to the replacement of an Investor Director),      
2.1(g), 2.2, 2.3(b), 2.3(c), 2.6 (insofar as it relates to the replacement of   
an Investor Director) and 2.9 (insofar as the first                             

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sentence thereof) shall not terminate unless the Investor Group Interest shall  
be less than 10%, (y) the provisions of Articles 6 and 8 shall not terminate    
until such time as the Investor Group does not own any Registrable Securities   
(except for Section 6.4, which shall terminate if the Investor Group Interest   
shall be less than 20%) and (z) Article 7 shall not terminate unless the        
Investor Group Interest shall be less than 20%. Article 1 and Article 9 shall   
not terminate unless as set forth above all other provisions of this Agreement  
shall have terminated. In the event that the Investor Group Interest shall be   
greater than 50%, then the provisions of Article 2 shall terminate but shall be 
reinstated, at the request of the Investor, if the Investor Group Interest      
shall later be 50% or lower.                                                    

SECTION 9.11. WAIVER OF JURY TRIAL. Each of the parties hereto hereby       
irrevocably waives all right to trial by jury in any action, proceeding or      
counterclaim (whether based on contract, tort or otherwise) arising out of or   
relating to this Agreement or the actions of any of them in the negotiation,    
administration, performance and enforcement thereof.                            

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first   
above written.                                                                  

                     HLR HOLDINGS INC.

                                         By: _________________________________
             Name:
              Title:

                          HOFFMANN-LA ROCHE INC.

                                         By: _________________________________
             Name:
              Title:

                                NATIONAL HEALTH LABORATORIES
                   HOLDINGS INC.

                                         By: _________________________________
             Name:
              Title:

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                                                                        ANNEX IV
[LETTERHEAD]

                                                               December 14, 1994

Board of Directors                                                              
National Health Laboratories Holdings Inc.                                      
4225 Executive Square                                                           
Suite 805                                                                       
La Jolla, CA 92037                                                              

Ladies and Gentlemen:                                                           

We understand that National Health Laboratories Holdings Inc. ("NHL" or the 
"Company"), HLR Holdings Inc. ("HLR"), and Roche Biomedical Laboratories, Inc.  
("RBL"), have entered into an Agreement and Plan of Merger, dated as of         
December 13, 1994 (the "Merger Agreement"), which provides, among other things, 
for the merger of RBL with and into NHL (the "Merger"). NHL will be the         
surviving corporation, in which HLR will hold a 49.9% stake and existing NHL    
shareholders will hold a 50.1% stake. Pursuant to the Merger, the holders of    
all the issued and outstanding shares of common stock, par value $.01 per share 
(the "Common Stock") of NHL, other than shares held in treasury or held by HLR  
or any affiliate of HLR or as to which dissenters' rights have been perfected,  
shall be converted into (i) 0.72 shares of NHL; and (ii) the right to receive   
$5.60 in cash. Such conversion is referred to herein collectively as the "NHL   
Share Conversion". The terms and conditions of the NHL Share Conversion and of  
the Merger are more fully set forth in the Merger Agreement. It is also         
contemplated that NHL will declare a dividend prior to the effective date of    
the Merger of a fraction of an NHL warrant which is intended to have a value of 
$1.00 per share.                                                                

You have asked for our opinion as to whether the consideration, in the      
aggregate, to be received by the holders of shares of NHL Common Stock, when    
considered together with the fraction of a warrant to be distributed to such    
holders prior to the Merger, is fair from a financial point of view to such     
holders.                                                                        

For purposes of the opinion set forth herein, we have:                      

                                                        [Enlarge/Download Table]
                                                                                       
(i)    analyzed certain publicly available financial statements and other information  
       of the Company;                                                                 
(ii)   analyzed certain internal financial statements and other financial and operating
       data concerning the Company prepared by the management of the Company;          
(iii)  analyzed certain financial projections prepared by the management of the        
       Company;                                                                        
(iv)   discussed the past and current operations and financial condition and the       
       prospects of the Company with senior executives of the Company;                 
(v)    reviewed the reported prices and trading activity for the Common Stock;         
(vi)   compared the financial performance of the Company and the prices and trading    
       activity of the Common Stock with that of certain other comparable publicly-    
       traded companies and their securities;                                          

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                                                        [Enlarge/Download Table]
                                                                                        
(vii)   reviewed the financial terms, to the extent publicly available, of certain      
        comparable acquisition transactions;                                            
(viii)  analyzed certain internal financial statements and other financial and operating
        data concerning RBL prepared by the management of RBL;                          
(ix)    discussed the past and current operations and financial condition and the       
        prospects of RBL with senior executives of RBL;                                 
(x)     participated in discussions and negotiations among representatives of the       
        Company and HLR and their financial and legal advisors;                         
(xi)    discussed with managements of both NHL and RBL certain cost savings and         
        synergies expected to be derived from the Merger;                               
(xii)   reviewed the Merger Agreement and certain related documents; and                
(xiii)  performed such other analyses as we have deemed appropriate.                    

We have assumed and relied upon, without independent verification, the      
accuracy and completeness of the information reviewed by us for the purposes of 
this opinion. With respect to the financial projections, we have assumed that   
they have been reasonably prepared on bases reflecting the best currently       
available estimates and judgments of the future financial performance of the    
Company. We have also relied upon the assumptions of managements of NHL and RBL 
regarding certain cost savings and synergies that are expected to result from   
the Merger. We have not made any independent valuation or appraisal of the      
assets or liabilities of the Company, nor have we been furnished with any such  
appraisals. Our opinion is necessarily based on economic, market and other      
conditions as in effect on, and the information made available to us as of, the 
date hereof.                                                                    

We would also like to note that we have not reviewed or been provided with  
any unaudited or other financial information of RBL for any period prior to     
1993.                                                                           

In arriving at our opinion, we were not authorized to actively solicit      
interest from any party with respect to a transaction with the Company. We did  
consider, however, certain unsolicited proposals made to the Company by certain 
parties other than HLR.                                                         

We have acted as financial advisor to the Board of Directors of the Company 
in connection with this transaction and will receive a fee for our services. In 
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided    
financial advisory and financing services for the Company and have received     
fees for the rendering of these services.                                       

Based on the foregoing, we are of the opinion on the date hereof that the   
consideration, in the aggregate, to be received by the holders of shares of NHL 
Common Stock pursuant to the Merger Agreement, when considered together with    
the fraction of a warrant to be distributed to such holders prior to the        
Merger, is fair from a financial point of view to such holders.                 

                     Very truly yours,

                                     MORGAN STANLEY & CO. INCORPORATED

                                         By: _________________________________
                                           Charles R. Cory
                                           Managing Director

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                                                                         ANNEX V

DELAWARE GENERAL CORPORATION LAW

SECTION 262. APPRAISAL RIGHTS                                                   

(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this        
section with respect to such shares, who continuously holds such shares through 
the effective date of the merger or consolidation, who has otherwise complied   
with subsection (d) of this section and who has neither voted in favor of the   
merger or consolidation nor consented thereto in writing pursuant to (S) 228 of 
this title shall be entitled to an appraisal by the Court of Chancery of the    
fair value of his shares of stock under the circumstances described in          
subsections (b) and (c) of this section. As used in this section, the word      
"stockholder" means a holder of record of stock in a stock corporation and also 
a member of record of a nonstock corporation; the words "stock" and "share"     
mean and include what is ordinarily meant by those words and also membership or 
membership interest of a member of a nonstock corporation, and the words        
"depository receipt" mean a receipt or other instrument issued by a depository  
representing an interest in one or more shares, or fractions thereof, solely of 
stock of a corporation, which stock is deposited with the depository.           

 (b) Appraisal rights shall be available for the shares of any class or series
of stock of a constituent corporation in a merger or consolidation to be        
effected pursuant to (S)(S) 251, 252, 254, 257, 258, 263 or 264 of this title:  

(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,   
or depository receipts in respect thereof, at the record date fixed to      
determine the stockholders entitled to receive notice of and to vote at the 
meeting of stockholders to act upon the agreement of merger or              
consolidation, were either (i) listed on a national securities exchange or  
designated as a national market system security on an interdealer quotation 
system by the National Association of Securities Dealers, Inc., or (ii)     
held of record by more than 2,000 holders; and further provided that no     
appraisal rights shall be available for any shares of stock of the          
constituent corporation surviving a merger if the merger did not require    
for its approval the vote of the holders of the surviving corporation as    
provided in subsection (f) of (S) 251 of this title.                        

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights  
under this section shall be available for the shares of any class or series 
of stock of a constituent corporation if the holders thereof are required   
by the terms of an agreement of merger or consolidation pursuant to (S)(S)  
251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock 
anything except:                                                            

a. Shares of stock of the corporation surviving or resulting from   
such merger or consolidation, or depository receipts in respect         
thereof;                                                                

 b. Shares of stock of any other corporation or depository receipts in
respect thereof which shares of stock or depository receipts at the     
effective date of the merger or consolidation will be either listed on  
a national securities exchange shares of stock or depository receipts   
or held of record by more than 2,000 stockholders;                      

c. Cash in lieu of fractional shares or fractional depository       
receipts described in the foregoing subparagraphs a. and b. of this     
paragraph; or                                                           

d. Any combination of the shares of stock, depository receipts and  
cash in lieu of fractional shares or fractional depository receipts     
described in the foregoing subparagraphs a., b. and c. of this          
paragraph.                                                              

(3) In the event all of the stock of a subsidiary Delaware corporation  
party to a merger effected under (S) 253 of this title is not owned by the  
parent corporation immediately prior to the merger, appraisal rights shall  
be available for the shares of the subsidiary Delaware corporation.         

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(c) Any corporation may provide in its certificate of incorporation that    
appraisal rights under this section shall be available for the shares of any    
class or series of its stock as a result of an amendment to its certificate of  
incorporation, any merger or consolidation in which the corporation is a        
constituent corporation or the sale of all or substantially all of the assets   
of the corporation. If the certificate of incorporation contains such a         
provision, the procedures of this section, including those set forth in         
subsections (d) and (e) of this section, shall apply as nearly as is            
practicable.                                                                    

(d) Appraisal rights shall be perfected as follows:                         

(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of 
stockholders, the corporation, not less than 20 days prior to the meeting,  
shall notify each of its stockholders who was such on the record date for   
such meeting with respect to shares for which appraisal rights are          
available pursuant to subsections (b) or (c) hereof, that appraisal rights  
are available for any or all of the shares of the constituent corporations, 
and shall include in such notice a copy of this section. Each stockholder   
electing to demand the appraisal of his shares shall deliver to the         
corporation, before the taking of the vote on the merger or consolidation,  
a written demand for appraisal of his shares. Such demand will be           
sufficient if it reasonably informs the corporation of the identity of the  
stockholder and that the stockholder intends thereby to demand the          
appraisal of his shares. A proxy or vote against the merger or              
consolidation shall not constitute such a demand. A stockholder electing to 
take such action must do so by a separate written demand as herein          
provided. Within 10 days after the effective date of such merger or         
consolidation, the surviving or resulting corporation shall notify each     
stockholder of each constituent corporation who has complied with this      
subsection and has not voted in favor of or consented to the merger or      
consolidation of the date that the merger or consolidation has become       
effective; or                                                               

(2) If the merger or consolidation was approved pursuant to (S) 228 or  
253 of this title, the surviving or resulting corporation, either before    
the effective date of the merger or consolidation or within 10 days         
thereafter, shall notify each of the stockholders entitled to appraisal     
rights of the effective date of the merger or consolidation and that        
appraisal rights are available for any or all of the shares of the          
constituent corporation, and shall include in such notice a copy of this    
section. The notice shall be sent by certified or registered mail, return   
receipt requested, addressed to the stockholder at his address as it        
appears on the records of the corporation. Any stockholder entitled to      
appraisal rights may, within 20 days after the date of mailing of the       
notice, demand in writing from the surviving or resulting corporation the   
appraisal of his shares. Such demand will be sufficient if it reasonably    
informs the corporation of the identity of the stockholder and that the     
stockholder intends thereby to demand the appraisal of his shares.          

(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with 
subsections (a) and (d) hereof and who is otherwise entitled to appraisal       
rights, may file a petition in the Court or Chancery demanding a determination  
of the value of the stock of all such stockholders. Notwithstanding the         
foregoing, at any time within 60 days after the effective date of the merger or 
consolidation, any stockholder shall have the right to withdraw his demand for  
appraisal and to accept the terms offered upon the merger or consolidation.     
Within 120 days after the effective date of the merger or consolidation, any    
stockholder who has complied with the requirements of subsections (a) and (d)   
hereof, upon written request, shall be entitled to receive from the corporation 
surviving the merger or resulting from the consolidation a statement setting    
forth the aggregate number of shares not voted in favor of the merger or        
consolidation and with respect to which demands for appraisal have been         
received and the aggregate number of holders of such shares. Such written       
statement shall be mailed to the stockholder within 10 days after his written   
request for such a statement is received by the surviving or resulting          
corporation or within 10 days after expiration of the period for delivery of    
demands for appraisal under subsection (d) hereof, whichever is later.          

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(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall  
within 20 days after such service file in the office of the Register in         
Chancery in which the petition was filed a duly verified list containing the    
names and addresses of all stockholders who have demanded payment for their     
shares and with whom agreements as to the value of their shares have not been   
reached by the surviving or resulting corporation. If the petition shall be     
filed by the surviving or resulting corporation, the petition shall be          
accompanied by such a duly verified list. The Register in Chancery, if so       
ordered by the Court, shall give notice of the time and place fixed for the     
hearing of such petition by registered or certified mail to the surviving or    
resulting corporation and to the stockholders shown on the list at the          
addresses therein stated. Such notice shall also be given by one or more        
publications at least one week before the day of the hearing, in a newspaper of 
general circulation published in the City of Wilmington, Delaware or such       
publication as the Court deems advisable. The forms of the notices by mail and  
by publication shall be approved by the Court, and the costs thereof shall be   
borne by the surviving or resulting corporation.                                

(g) At the hearing on such petition, the Court shall determine the          
stockholders who have complied with this section and who have become entitled   
to appraisal rights. The Court may require the stockholders who have demanded   
an appraisal for their shares and who hold stock represented by certificates to 
submit their certificates of stock to the Register in Chancery for notation     
thereon of the pendency of the appraisal proceedings; and if any stockholder    
fails to comply with such direction, the Court may dismiss the proceedings as   
to such stockholder.                                                            

(h) After determining the stockholders entitled to an appraisal, the Court  
shall appraise the shares, determining their fair value exclusive of any        
element of value arising from the accomplishment or expectation of the merger   
or consolidation, together with a fair rate of interest, if any, to be paid     
upon the amount determined to be the fair value. In determining such fair       
value, the Court shall take into account all relevant factors. In determining   
the fair rate of interest, the Court may consider all relevant factors,         
including the rate of interest which the surviving or resulting corporation     
would have had to pay to borrow money during the pendency of the proceeding.    
Upon application by the surviving or resulting corporation or by any            
stockholder entitled to participate in the appraisal proceeding, the Court may, 
in its discretion, permit discovery or other pretrial proceedings and may       
proceed to trial upon the appraisal prior to the final determination of the     
stockholder entitled to an appraisal. Any stockholder whose name appears on the 
list filed by the surviving or resulting corporation pursuant to subsection (f) 
of this section and who has submitted his certificates of stock to the Register 
in Chancery, if such is required, may participate fully in all proceedings      
until it is finally determined that he is not entitled to appraisal rights      
under this section.                                                             

(i) The Court shall direct the payment of the fair value of the shares,     
together with interest, if any, by the surviving or resulting corporation to    
the stockholders entitled thereto. Interest may be simple or compound, as the   
Court may direct. Payment shall be so made to each such stockholder, in the     
case of holders of uncertificated stock forthwith, and the case of holders of   
shares represented by certificates upon the surrender to the corporation of the 
certificates representing such stock. The Court's decree may be enforced as     
other degrees in the Court of Chancery may be enforced, whether such surviving  
or resulting corporation be a corporation of this State or of any state.        

 (j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon application 
of a stockholder, the Court may order all or a portion of the expenses incurred 
by any stockholder in connection with the appraisal proceeding, including,      
without limitation, reasonable attorney's fees and the fees and expenses of     
experts, to be charged pro rata against the value of all the shares entitled to 
an appraisal.                                                                   

(k) From and after the effective date of the merger or consolidation, no    
stockholder who has demanded his appraisal rights as provided in subsection (d) 
of this section shall be entitled to vote such stock for any purpose or to      
receive payment of dividends or other distributions on the stock (except        
dividends or other                                                              

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distributions payable to stockholders of record at a date which is prior to the 
effective date of the merger or consolidation); provided, however, that if no   
petition for an appraisal shall be filed within the time provided in subsection 
(e) of this section, or if such stockholder shall deliver to the surviving or   
resulting corporation a written withdrawal of his demand for an appraisal and   
an acceptance of the merger or consolidation, either within 60 days after the   
effective date of the merger or consolidation as provided in subsection (e) of  
this section or thereafter with the written approval of the corporation, then   
the right of such stockholder to an appraisal shall cease. Notwithstanding the  
foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed  
as to any stockholder without the approval of the Court, and such approval may  
be conditioned upon such terms as the Court deems just.                         

(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to   
the merger or consolidation shall have the status of authorized and unissued    
shares of the surviving or resulting corporation.                               

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NATIONAL HEALTH LABORATORIES HOLDINGS INC.

STOCKHOLDER'S PROXY SOLICITED BY THE BOARD OF DIRECTORS OF NATIONAL HEALTH
LABORATORIES HOLDINGS INC.

To: National Health Laboratories Holdings Inc.                              

 I appoint James R. Maher, David C. Flaugh and James G. Richmond, individually
and together, as my proxies, with power of substitution, to vote all of my      
National Health Laboratories Holdings Inc. common stock at the Special Meeting  
of stockholders of National Health Laboratories Holdings Inc. to be held at the 
Sheraton New York Hotel, 811 Seventh Avenue, New York, NY 10019, on April 28,   
1995, at 9:00 a.m., New York City Time, and at any adjournment or postponement  
of the meeting.                                                                 

MY PROXIES WILL VOTE THE SHARES REPRESENTED BY THIS PROXY AS DIRECTED ON THE
OTHER SIDE OF THIS CARD, BUT IN THE ABSENCE OF ANY INSTRUCTIONS FROM ME, MY     
PROXIES WILL VOTE "FOR" ITEM 1 AND "FOR" ITEM 2. MY PROXIES MAY VOTE ACCORDING  
TO THEIR DISCRETION ON ANY OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE      
MEETING. I MAY REVOKE THIS PROXY PRIOR TO ITS EXERCISE.                         

Please sign and date the other side of this card. 
(Please fill in the appropriate boxes on the other side)                    

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(Continued from the other side)                                             

NATIONAL HEALTH LABORATORIES HOLDINGS INC.

PLEASE MARK YOUR CHOICES LIKE THIS [X] IN BLUE OR BLACK INK 

ACCOUNT NUMBER COMMON 

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ITEM NO. 1 AND ITEM NO. 2 
Item No. 1. Approval and adoption of the Agreement and Plan of Merger dated as  
of December 13, 1994, among National Health Laboratories Holdings Inc., HLR     
Holdings Inc., Roche Biomedical Laboratories, Inc. and Hoffmann-La Roche Inc.   
FOR [_]                   AGAINST [_]            ABSTAIN [_]        

Item No. 2. Approval of the proposal to amend Article FIRST of the Certificate  
of Incorporation of National Health Laboratories Holdings Inc. to change the    
name of National Health Laboratories Holdings Inc. to Laboratory Corporation of 
America Holdings upon the effectiveness of National Health Laboratories         
Holdings Inc.'s proposed merger with Roche Biomedical Laboratories, Inc.        
FOR [_]                   AGAINST [_]            ABSTAIN [_]        
Date: April   , 1995                                                            

X                                                                               
-------------------------------------                                           
Signature                                                                       

X                                                                               
-------------------------------------                                           
Signature                                                                       

Please sign exactly as name(s) appear(s) to the left. If acting as an executor, 
administrator, trustee, guardian, etc., you should so indicate in signing. If   
the stockholder is a corporation, please sign the full corporate name, by duly  
authorized officer. If shares are held jointly, each stockholder named should   
sign. Date and promptly return this card in the envelope provided.