PE CORP, S-4/A, 1999-01-29

PE CORP
S-4/A, 1999-01-29
LABORATORY ANALYTICAL INSTRUMENTS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 29, 1999

REGISTRATION NO. 333-67797

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1 TO
FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

PE CORPORATION
(FORMERLY KNOWN AS THE PERKIN-ELMER CORPORATION)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 3826 06--1534213
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF CLASSIFICATION CODE NUMBER) IDENTIFICATION
INCORPORATION OR ORGANIZATION) NO.)
</TABLE>

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

PE CORPORATION
761 MAIN AVENUE
NORWALK, CT 06859-0001
(203) 762-1000

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

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

WILLIAM B. SAWCH
761 MAIN AVENUE
NORWALK, CT 06859-0001
(203) 761-2900
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
------------------------------
WITH COPIES TO:

RAYMOND W. WAGNER FRANCIS J. MORISON
SIMPSON THACHER & BARTLETT DAVIS POLK & WARDWELL
425 LEXINGTON AVENUE 450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10017

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
----------------------------------

If any of the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
----------------------------------

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
----------------------------------

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
----------------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE OFFERING PRICE
<S> <C> <C> <C>
PE Corporation-PE Biosystems Group Common Stock, par
value $.01 per share (1).............................. N/A N/A N/A
Rights to Purchase Series A Participating Junior
Preferred Stock, par value $.01 per share (2)......... N/A N/A N/A
PE Corporation-Celera Genomics Group Common Stock, par
value $.01 per share (1)(3)........................... N/A N/A $333,667,000
Rights to Purchase Series B Participating Junior
Preferred Stock, par value $.01 per share (2)......... N/A N/A N/A

TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
PE Corporation-PE Biosystems Group Common Stock, par
value $.01 per share (1).............................. N/A
Rights to Purchase Series A Participating Junior
Preferred Stock, par value $.01 per share (2)......... N/A
PE Corporation-Celera Genomics Group Common Stock, par
value $.01 per share (1)(3)........................... $92,800
Rights to Purchase Series B Participating Junior
Preferred Stock, par value $.01 per share (2)......... N/A
</TABLE>

(1) If the Recapitalization Proposal described herein is approved by the
shareholders and the reincorporation merger (the "Merger") of The
Perkin-Elmer Corporation, a New York corporation ("Perkin-Elmer New York"),
with a subsidiary of PE Corporation, a Delaware corporation ("PE Delaware"),
becomes effective, each share of the Common Stock, par value $1.00 per
share, of Perkin-Elmer New York (the "Existing Common Stock"), outstanding
at the effective time (the "Effective Time") of the Merger will be converted
into one share of PE Corporation-PE Biosystems Common Stock, par value $.01
per share ("PE Biosystems Stock"), and .5 of a share (the "Ratio") of PE
Corporation-Celera Genomics Group Common Stock, par value $.01 per share
("Celera Genomics Stock"). The number of shares of PE Biosystems Stock being
registered is equal to the number of shares of Existing Common Stock
outstanding at the Effective Time, and the number of shares of Celera
Genomics Stock being registered is equal to the Ratio times the number of
shares of Existing Common Stock outstanding at the Effective Time. In
accordance with Rule 457(o) under the Securities Act of 1933, as amended
(the "Securities Act"), the number of shares being registered is not
included in the table.

(2) Prior to the occurrence of certain events, the rights to purchase Series A
Participating Junior Preferred Stock, par value $.01 per share, and the
rights to purchase Series B Participating Junior Preferred Stock, par value
$.01 per share (collectively, the "Rights"), will not be evidenced
separately from the related PE Biosystems Stock or Celera Genomics Stock.
The value, if any, of the Rights is reflected in the market price of the
related PE Biosystems Stock or Celera Genomics Stock. Accordingly, no
separate fee is paid.

(3) Based upon the book value of Perkin-Elmer New York's historical interests in
the Celera Genomics Group of $333,667,000 as of September 30, 1998.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>

SUBJECT TO COMPLETION, DATED JANUARY 29, 1999

PROXY STATEMENT OF

THE PERKIN-ELMER CORPORATION

SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD AT 10 A.M., EASTERN TIME, ON , 1999

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

PROSPECTUS OF

PE CORPORATION

<TABLE>
<S> <C>
PE BIOSYSTEMS GROUP CELERA GENOMICS GROUP
COMMON STOCK COMMON STOCK
</TABLE>

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

TO OUR SHAREHOLDERS

You are invited to attend a special meeting of our shareholders, to be held
on , 1999, in our auditorium, at 50 Danbury Road, Wilton, Connecticut
06897.

At the special meeting, you will be asked to consider and adopt a
recapitalization proposal recommended by our board of directors. We propose to
create two new classes of common stock called "PE Biosystems Stock" and "Celera
Genomics Stock." PE Biosystems Stock is intended to reflect separately the
performance of our established PE Biosystems' life sciences business and to
benefit from the earnings growth and cash flows provided by it. Celera Genomics
Stock is intended to reflect separately the performance of our Celera Genomics
business and to benefit from the anticipated success and progress of its
research and development efforts rather than near-term earnings since it is
expected to incur significant losses during its start-up period.

If shareholders approve the recapitalization, each share of your existing
common stock will be

converted into one share of PE Biosystems Stock and .5 of a share of Celera
Genomics Stock.

We will also change our state of incorporation from New York to Delaware and
change our name to PE Corporation as part of this recapitalization. We expect
this recapitalization to be tax-free to you and us.

We will list the PE Biosystems Stock on the New York Stock Exchange and the
Pacific Stock Exchange under the symbol "PEB." We will list the Celera Genomics
Stock on these stock exchanges under the symbol "CRA".

At the special meeting, you will also be asked to consider and approve
related proposals to adopt separate new stock incentive plans for each business
group.

Our board of directors unanimously recommends that you vote in favor of the
recapitalization and each of the related proposals. This proxy statement and
prospectus provides you with detailed information about the recapitalization and
related proposals. We encourage you to read this entire document carefully.

Tony L. White
Chairman of the Board, President
and Chief Executive Officer

THE RECAPITALIZATION AND RELATED PROPOSALS INVOLVE CERTAIN RISKS. PLEASE READ
THE "RISK FACTORS" BEGINNING ON PAGE 12.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROXY STATEMENT AND PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This proxy statement and prospectus is dated , 1999 and is first being
mailed to shareholders on , 1999.

<PAGE>
WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference room at 450 Fifth Street,
N.W. Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room.

The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this proxy statement, and information that we file later with
the SEC will automatically update and supersede this information.

We incorporate by reference our documents listed below and any future
filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until the special meeting:

- Annual Report on Form 10-K for the fiscal year ended June 30, 1998 of The
Perkin-Elmer Corporation;

- Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 of
The Perkin-Elmer Corporation; and

- Current Reports on Form 8-K, filed July 10 and September 24, 1998 of The
Perkin-Elmer Corporation.

You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:

c/o The Perkin-Elmer Corporation
761 Main Avenue
Norwalk, Connecticut 06859
Attention: Secretary
Telephone: 1-203-762-1000

TO OBTAIN TIMELY DELIVERY, YOU MUST MAKE THIS REQUEST NO LATER THAN FIVE
BUSINESS DAYS BEFORE , 1999, THE DATE OF THE SPECIAL MEETING.

You should rely only on the information incorporated by reference or
provided in this proxy statement. We have not authorized anyone else to provide
you with different information. You should not assume that the information in
this proxy statement is accurate as of any date other than the date on the front
of this document.

<PAGE>
[LOGO]

NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
TO BE HELD ON , 1999

, 1999

Notice is hereby given that a special meeting of our shareholders will be
held in our auditorium at 50 Danbury Road, Wilton, Connecticut. The special
meeting will commence at 10:00 a.m., eastern time, and will be held for the
following purposes and to transact such other business as may properly come
before the meeting or any adjournment or adjournments thereof:

1. To consider and act upon a proposal to adopt an agreement and plan of
merger under which:

- We will merge with a subsidiary of PE Corporation, a Delaware corporation
newly formed by us for this purpose, and

- each outstanding share of our existing common stock will be converted
into one share of that Delaware corporation's PE Biosystems Stock and .5
of a share of that Delaware corporation's Celera Genomics Stock;

2. To consider and act upon a proposal to adopt the PE Corporation/PE
Biosystems Group 1999 Stock Incentive Plan; and

3. To consider and act upon a proposal to adopt the PE Corporation/Celera
Genomics Group 1999 Stock Incentive Plan.

Information relating to the three proposals is contained in the attached
proxy statement and prospectus.

Your board of directors has fixed the close of business on , 1999
as the record date for the determination of shareholders entitled to notice of
and to vote at the special meeting. Only the shareholders of record at the close
of business on that date will be entitled to vote at the meeting. A list of
those shareholders will be available for inspection before or at the meeting at
the request of a shareholder. The transfer books of our company will not be
closed.

By order of the board
of directors,

William B. Sawch
SECRETARY
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Questions and Answers About the Recapitalization
Proposal...................................... 1
Proxy Statement Summary......................... 3
The Perkin-Elmer Corporation Selected Financial
Information................................... 9
PE Biosystems Group Selected Financial
Information................................... 10
Celera Genomics Group Selected Financial
Information................................... 11
Special Note Regarding Forward-Looking
Statements.................................... 12
Risk Factors.................................... 12
Information About the Special Meeting and
Voting........................................ 26
Date, Time and Place of Meeting............. 26
Record Date................................. 26
Proposals to be Considered at the Meeting... 26
Vote Required to Approve the Proposals...... 26
Quorum...................................... 26
Procedures for Voting by Proxy.............. 26
Proposal 1--The Recapitalization Proposal....... 27
Description of the Recapitalization......... 27
Background of and Reasons for the
Recapitalization Proposal................. 27
Recommendation of the Board of Directors.... 30
Management and Allocation Policies.......... 30
Dividend Policy............................. 36
Description of PE Biosystems Stock and
Celera Genomics Stock..................... 37
Celera Genomics Designated Shares........... 45
Rights Agreement............................ 45
Comparison of Shareholder Rights............ 47
Certain Anti-Takeover Provisions of Delaware
Law and the New Certificate of
Incorporation, the New By-laws and the New
Rights Agreement.......................... 53
United States Federal Income Tax
Considerations............................ 53
Stock Exchange Listings..................... 55
Exchange Procedures......................... 55
Stock Transfer Agent and Registrar.......... 55
Financial Advisors.......................... 55
Effect on Existing Options and Warrants..... 55
Options for Celera Genomics Stock to be
Issued upon the Recapitalization.......... 56
No Dissenters' Rights....................... 56
The Perkin-Elmer Corporation --
Management's Discussion and Analysis.......... 57
PE Biosystems Group -- Business................. 70
PE Biosystems Group --
Management's Discussion and Analysis.......... 81
Celera Genomics Group -- Business............... 94
Celera Genomics Group --
Management's Discussion and Analysis.......... 115
Proposals 2 and 3--Adoption of PE Corporation/PE
Biosystems Group 1999 Stock Incentive Plan and
PE Corporation/Celera Genomics Group 1999
Stock Incentive Plan.......................... 121
Price Range and Dividends on Existing Common
Stock......................................... 128
Information About Stockholder Proposals......... 128
Expenses of Solicitation........................ 129
Legal Opinions.................................. 129
Experts......................................... 129

Index to Financial Statements................... F-1
The Perkin-Elmer Corporation -- Accountants
Report and Financial Statements............... F-2
PE Biosystems Group -- Accountants Report and
Financial Statements.......................... F-33
Celera Genomics Group -- Accountants Report and
Financial Statements.......................... F-66
</TABLE>

<TABLE>
<S> <C>
Annex I: Agreement and Plan of Merger
Annex II: New Certificate of Incorporation
Annex III: PE Biosystems Group 1999 Stock
Incentive Plan
Annex IV: Celera Genomics Group 1999
Stock Incentive Plan
</TABLE>

i
<PAGE>

QUESTIONS AND ANSWERS
ABOUT THE RECAPITALIZATION PROPOSAL

IF YOU HAVE ANY QUESTIONS RELATING TO THE MATTERS DISCUSSED IN THIS
DOCUMENT, PLEASE CALL OUR INVESTOR RELATIONS DEPARTMENT AT (203) 761-5400.

<TABLE>
<S> <C>
Q. WHY AM I RECEIVING THIS PROXY
STATEMENT?

A. We are distributing this proxy
statement and prospectus to you in
connection with a recapitalization
proposal that would create two new
classes of common stock. As part of
this transaction, we will also
change our state of incorporation
from New York to Delaware and change
our name to "PE Corporation." We are
also distributing this proxy
statement in connection with related
proposals to adopt two new stock
incentive plans. We have scheduled a
special meeting of our shareholders
so that you may consider and vote on
these proposals.

Q. WHAT ARE THE NEW COMMON STOCKS?

A. The new common stocks consist of the
PE Biosystems Stock and the Celera
Genomics Stock. We refer to the PE
Biosystems Stock and the Celera
Genomics Stock together as the
"common stock."
</TABLE>

<TABLE>
<S> <C> <C>
- The PE Biosystems Stock is
intended to reflect the separate
performance of our established
PE Biosystems' life sciences
business. We refer to this
business as the "PE Biosystems
Group."

- The Celera Genomics Stock is
intended to reflect the separate
performance of our Celera
Genomics business. We refer to
this business as the "Celera
Genomics Group."
</TABLE>

<TABLE>
<S> <C>
Investors commonly refer to this
type of common stock as "tracking
stock," "targeted stock" or "letter
stock," because the stock is
intended to "track" or "target" the
separate performance of a group of
assets or a division of a company.
However, the PE Biosystems Group and
the Celera Genomics Group are not
separate legal entities. Holders of
PE Biosystems Stock and Celera
Genomics Stock will be stockholders
of a single company. As a result,
they will continue to be subject to
all of the risks of an investment in
our company and all of its
businesses, assets and liabilities.
The assets we attribute to one Group
could be subject to the liabilities
of the other Group.

Q. HOW WILL I BENEFIT FROM THE
RECAPITALIZATION PROPOSAL?

A. Our recapitalization proposal is
designed to separate the performance
of our new Celera Genomics business
from the rest of our company and to
charge the managers of each business
Group with the responsibility of
maximizing the returns from their
businesses. We expect holders of PE
Biosystems Stock to benefit from the
earnings growth and cash flows
provided by our established PE
Biosystems' life sciences business.
We expect holders of Celera Genomics
Stock to benefit from the
anticipated success and progress of
Celera Genomics' research and
development efforts rather than
near-term earnings since Celera
Genomics is expected to incur
significant losses during its
start-up period.

The creation of two classes of
common stock should enhance both the
autonomy and synergies of the Groups
by allowing each Group to focus on
its own identity, business strategy,
financial model and culture, but at
the same time also allow it to
capitalize on relationships with the
other Group.

You will be able to separately value
the PE Biosystems Stock and the
Celera Genomics Stock. You will be
able to
</TABLE>

1
<PAGE>

<TABLE>
<S> <C>
invest in either or both stocks
depending on your investment
objectives.

Q. WHAT KIND OF FINANCIAL INFORMATION
WILL I RECEIVE IN THE FUTURE?

A. You will continue to receive our
consolidated financial information
for our company as a whole. In
addition, you will receive separate
operating results and other business
and financial information for both
the PE Biosystems Group and the
Celera Genomics Group.

Q. WHAT WILL MY EXISTING SHARES
REPRESENT IF EVERYTHING TAKES PLACE
AS PROPOSED?

A. Each share of our existing common
stock will be converted into one
share of PE Biosystems Stock and .5
of a share of Celera Genomics Stock.

Q. WHY ARE WE BECOMING A DELAWARE
CORPORATION?

A. No New York corporation has adopted
"targeted" or "tracking" stock. A
number of other large corporations
with similar capital structures,
such as Tele-communications, Inc.
and USX Corporation, are also
incorporated in Delaware. By
becoming a Delaware corporation, we
will be able to benefit from
Delaware's comprehensive and
well-developed corporate laws. We
believe that Delaware law will offer
clearer guidance with respect to
legal issues that may arise as a
result of the existence of separate
classes of common stock.

Q. WILL THE RECAPITALIZATION PROPOSAL
RESULT IN A CHANGE OF CONTROL OF OUR
COMPANY?

A. No.

Q. WILL THE RECAPITALIZATION PROPOSAL
RESULT IN A SPIN-OFF?

A. No. This proposal will not result in
a distribution or spin-off of our
assets or liabilities. Holders of PE
Biosystems Stock and Celera Genomics
Stock will continue to be
stockholders of a single company and
subject to all risks associated with
an investment in our company and all
of our businesses, assets and
liabilities.

Q. WHAT HAPPENS TO MY FUTURE DIVIDENDS?

A. We currently intend to pay a
quarterly dividend of $.17 per share
on the PE Biosystems Stock, the same
rate we now pay on our existing
common stock. We currently do not
anticipate paying dividends on
Celera Genomics Stock in the
foreseeable future.

Q. WHAT IF I HAVE ADDITIONAL QUESTIONS?

A. If you have any questions prior to
the special meeting, please call our
Investor Relations Department at
(203) 761-5400.
</TABLE>

2
<PAGE>
PROXY STATEMENT SUMMARY

THIS SUMMARY, TOGETHER WITH THE "QUESTIONS AND ANSWERS" ON THE PRECEDING
PAGES, HIGHLIGHTS IMPORTANT SELECTED INFORMATION FROM THIS DOCUMENT. TO
UNDERSTAND THE RECAPITALIZATION FULLY AND FOR A MORE COMPLETE DESCRIPTION OF THE
LEGAL TERMS OF THE RECAPITALIZATION, YOU SHOULD READ CAREFULLY THIS ENTIRE
DOCUMENT AND THE DOCUMENTS WE HAVE REFERRED YOU TO. WE HAVE INCLUDED PAGE
REFERENCES PARENTHETICALLY TO DIRECT YOU TO A MORE COMPLETE DESCRIPTION OF THE
TOPICS PRESENTED IN THIS SUMMARY.

THE COMPANY

Our businesses are the PE Biosystems Group and the Celera Genomics Group.
Our principal executive offices are located at 761 Main Avenue, Norwalk,
Connecticut 06859, and our telephone number is (203) 762-1000.

PE BIOSYSTEMS GROUP (PAGE 70)

The PE Biosystems Group is principally comprised of our established PE
Biosystems' life sciences and Analytical Instruments businesses.

PE Biosystems is a diversified leader in the life sciences industry. It is
engaged in:

- research, development, manufacture, sale and support of instrument
systems, reagents and software; and

- related consulting and contract research and development services.

In its Analytical Instruments business, the PE Biosystems Group develops,
manufactures, markets, sells and services analytical instruments used in a
variety of markets. In January 1999, we decided to pursue the sale of the
Analytical Instruments business.

For the fiscal year ended June 30, 1998, the PE Biosystems Group had net
revenues of $940.1 million and income from continuing operations of $28.5
million. Its total assets at September 30, 1998 were $1.2 billion.

CELERA GENOMICS GROUP (PAGE 94)

The Celera Genomics Group is principally comprised of our new Celera
Genomics business. The Celera Genomics Group is engaged in:

- generation, sale and support of genomic information and related
information management and analysis software;

- discovery, validation and licensing of proprietary gene products, genetic
markers and information concerning genetic variability; and

- related consulting and contract research and development services.

For the fiscal year ended June 30, 1998, the Celera Genomics Group had net
revenues of $4.2 million and net losses of $12.8 million. Its total assets at
September 30, 1998 were $342.6 million.

THE SPECIAL MEETING

PROPOSALS TO BE CONSIDERED AT THE MEETING
(PAGE 26)

You are asked to consider and vote upon the following proposals at the
special meeting:

- Proposal 1: The recapitalization proposal.

- Proposal 2: A proposal to adopt the PE Biosystems Group 1999 Stock
Incentive Plan to provide for the granting of stock awards and options in
PE Biosystems Stock.

- Proposal 3: A proposal to adopt the Celera Genomics Group 1999 Stock
Incentive Plan to provide for the granting of stock awards and options in
Celera Genomics Stock.

If Proposal 1 is approved, we will implement it whether or not Proposals 2 or 3
are approved. If Proposal 1 is not approved, we will not implement Proposals 2
and 3.

VOTE REQUIRED TO APPROVE THE PROPOSALS (PAGE 26)

The following shareholder votes are required for approval of the proposals:

- Proposal 1: The favorable vote of the holders of two-thirds of the
outstanding shares of our existing common stock.

3
<PAGE>

- Proposals 2 and 3: The favorable vote of the holders of a majority of the
votes cast at the special meeting.

Our directors and executive officers beneficially own approximately 2% of
the outstanding shares of our existing common stock.

COMPARISON OF EXISTING COMMON STOCK WITH PE BIOSYSTEMS STOCK AND CELERA GENOMICS
STOCK (PAGE 37)

We have set forth in the table a comparison of our existing common stock and
the PE Biosystems Stock and Celera Genomics Stock. You should keep in mind that
you will remain stockholders of a single company. The PE Biosystems Group and
the Celera Genomics Group are not separate legal entities. As a result, you will
continue to be subject to all of the risks associated with an investment in our
company and all of our businesses, assets and liabilities. Financial effects
from one Group that affect our consolidated results of operations or financial
condition could, if significant, affect the results of operations or financial
condition of the other Group.

<TABLE>
<CAPTION>
EXISTING THE RECAPITALIZATION PROPOSAL
COMMON --------------------------------------------------------
STOCK PE BIOSYSTEMS STOCK CELERA GENOMICS STOCK
------------------------ --------------------------- ---------------------------
<S> <C> <C> <C>
DIVIDENDS: Our quarterly dividend We currently intend to pay We currently do not intend
rate is currently $.17 dividends on the PE to pay dividends on the
per share of existing Biosystems Stock at an Celera Genomics Stock.
common stock. initial quarterly rate of
$.17 per share.

We pay dividends on our We will pay dividends on We will pay dividends on
existing common stock at the PE Biosystems Stock at the Celera Genomics Stock
the discretion of our the discretion of our board at the discretion of our
board of directors based of directors based board of directors based
primarily upon the primarily upon the primarily upon the
financial condition, financial condition, financial condition,
results of operations results of operations and results of operations and
and business business requirements of business requirements of
requirements of our the PE Biosystems Group and the Celera Genomics Group
company. Dividends can our company as a whole. and our company as a whole.
not exceed our assets Dividends can not exceed Dividends can not exceed
from which we can the lesser of (1) our funds the lesser of (1) our funds
legally pay dividends from which we can legally from which we can legally
under New York law. pay dividends under pay dividends under
Delaware law and (2) an Delaware law and (2) an
amount similar to the funds amount similar to the funds
from which the PE from which the Celera
Biosystems Group could Genomics Group could
legally pay dividends under legally pay dividends under
Delaware law if it were a Delaware law if it were a
separate corporation. separate corporation.
</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
EXISTING THE RECAPITALIZATION PROPOSAL
COMMON --------------------------------------------------------
STOCK PE BIOSYSTEMS STOCK CELERA GENOMICS STOCK
------------------------ --------------------------- ---------------------------
<S> <C> <C> <C>
VOTING RIGHTS: One vote per share. The PE Biosystems Stock Each share of Celera
will have one vote per Genomics Stock will have a
share. variable vote equal to the
ratio of the average market
values of one share of
Celera Genomics Stock to
one share of PE Biosystems
Stock calculated over a
20-day period prior to each
record date for a
stockholders' meeting or
consent. Accordingly, a
share of Celera Genomics
Stock may have more than,
less than or exactly one
vote per share.

The holders of PE The holders of Celera
Biosystems Stock and Celera Genomics Stock and PE
Genomics Stock will Biosystems Stock will
generally vote together as generally vote together as
a single class. In limited a single class. In limited
circumstances, holders of circumstances, holders of
one or both classes of one or both classes of
common stock may be common stock may be
entitled under Delaware law entitled under Delaware law
or under stock exchange or under stock exchange
regulations to vote as a regulations to vote as a
separate class. separate class.

RIGHTS ON SALE OF ALL OR None. If we sell all or If we sell all or
SUBSTANTIALLY ALL ASSETS substantially all of the substantially all of the
OF A GROUP: properties and assets properties and assets
attributed to the PE attributed to the Celera
Biosystems Group, we must Genomics Group, we must
either (1) distribute either (1) distribute
through a dividend or through a dividend or
redemption to holders of PE redemption to holders of
Biosystems Stock an amount Celera Genomics Stock an
equal to the net proceeds amount equal to the net
of the sale, or (2) convert proceeds of the sale, or
each share of PE Biosystems (2) convert each share of
Stock into a number of Celera Genomics Stock into
shares of Celera Genomics a number of shares of PE
Stock at a 10% premium. We Biosystems Stock at a 10%
will not be required to premium. We will not be
distribute the net proceeds required to distribute the
or convert the PE net proceeds or convert the
Biosystems Stock if we Celera Genomics Stock if we
receive in the sale receive in the sale
primarily equity securities primarily equity securities
of the acquiror or its of the acquiror or its
parent and it is primarily
</TABLE>

5
<PAGE>

CONVERSION AT OPTION OF None. We may, at any time, We may, at any time,
COMPANY: convert each share of PE convert each share of
Biosystems Stock into a Celera Genomics Stock into
number of shares of Celera a number of shares of PE
Genomics Stock at a 10% Biosystems Stock at a 10%
premium. premium.

REDEMPTION IN EXCHANGE FOR None. We may redeem the PE We may redeem the Celera
STOCK OF SUBSIDIARY: Biosystems Stock for all of Genomics Stock for all of
the shares of the common the shares of the common
stock of one or more of our stock of one or more of our
wholly owned subsidiaries wholly owned subsidiaries
that hold all of the assets that hold all of the assets
and liabilities attributed and liabilities attributed
to the PE Biosystems Group. to the Celera Genomics
Group.

LIQUIDATION: If we are liquidated, If we are liquidated, If we are liquidated,
holders of our existing holders of PE Biosystems holders of Celera Genomics
common stock will be Stock will be entitled to a Stock will be entitled to a
entitled to receive our portion of any assets portion of any assets
net assets remaining for remaining for distribution remaining for distribution
distribution to holders to holders of common stock to holders of common stock
of common stock. on a per share basis in on a per share basis in
proportion to the proportion to the
liquidation units per share liquidation units per share
of PE Biosystems Stock. of Celera Genomics Stock.
Each share of PE Biosystems Each share of Celera
Stock will have one Genomics Stock will have a
liquidation unit. number of liquidation units
equal to the ratio of the
average market values of
one share of Celera
Genomics Stock to one share
of PE Biosystems Stock.
This ratio will be
determined approximately
two months after the
recapitalization.

GOVERNING LAW: New York Delaware Delaware
</TABLE>

6
<PAGE>

RISK FACTORS (PAGE 12)

When evaluating the recapitalization proposal, you should be aware that
there are many risks, including:

- the risks associated with an investment in a single company and all of
our businesses, assets and liabilities;

- limited separate stockholder rights granted to holders of each class of
common stock;

- risks associated with the relative voting power of the two classes of
common stock which will fluctuate based on their relative average market
values;

- the lack of legal precedent with respect to the fiduciary duties of the
board of directors of a company having two classes of common stock, the
rights of which are defined by reference to separate businesses of the
company;

- the potential for stockholders of each class of common stock to have
diverging or conflicting interests;

- the ability of our board of directors to change management and allocation
policies without stockholder approval;

- the ability to transfer funds between the Groups;

- the ability of our board of directors to allocate financing costs between
Groups that do not reflect the separate borrowing costs of the Groups;

- the possibility that the Celera Genomics Group could be charged a greater
portion of the total corporate tax liability;

- limits on consideration to be received upon disposition of assets of a
Group;

- the effects of our capital structure and variable vote per share on
potential acquisitions of a Group or class of common stock;

- decisions that affect market values of a class of common stock could
affect stockholder rights;

- no assurances as to the market price or liquidity of the PE Biosystems
Stock or Celera Genomics Stock following the recapitalization;

- antitakeover considerations could prevent stockholders from profiting
from an increase in the market value of their shares; and

- the lack of legal precedent with respect to the tax treatment of the
recapitalization and the common stock.

MANAGEMENT AND ALLOCATION POLICIES (PAGE 30)

We have established policies designed to accomplish the fundamental
objective of the recapitalization proposal, which is to separate the business
and operations of the Celera Genomics Group from those of the PE Biosystems
Group and to operate each Group on a stand-alone basis. These policies establish
guidelines to help us allocate debt, corporate overhead, interest, taxes and
other shared activities between the two Groups on an objective basis and, except
as referred to below, to ensure that transactions between the PE Biosystems
Group and the Celera Genomics Group are made on terms that approximate terms
that could be obtained from unaffiliated third parties.

Our inter-group policies include:

- the centralized management of most financial activities;

- the allocation of indebtedness and preferred stock between Groups or
entirely to one Group;

- the accounting for transfers of cash or other property from one Group to
the other Group;

- the financial effects of issuances of additional PE Biosystems Stock or
Celera Genomics Stock;

- the free access to our technology and know-how, other than products and

7
<PAGE>

services, between Groups, subject to certain exceptions;

- transfers of assets between Groups at fair value, including sales of
products and services between Groups on terms that would be available
from third parties in commercial transactions, subject to certain
exceptions;

- the allocation of corporate opportunities in the best interests of our
company; and

- the requirement that Groups not engage in each other's principal
businesses, subject to an exception for joint transactions with each
other and with third parties, but permitting indirect competition in
certain situations.

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS (PAGE 53)

We have been advised by our counsel that no gain or loss will be recognized
by us or you for federal income tax purposes as a result of the
recapitalization, except for any cash received by you instead of fractional
shares of Celera Genomics Stock. However, there are no court decisions or other
authorities bearing directly on transactions similar to the recapitalization
proposal. In addition, the Internal Revenue Service has announced that it will
not issue rulings on the characterization of stock with characteristics similar
to the PE Biosystems Stock and the Celera Genomics Stock. Therefore, the tax
treatment of the recapitalization is subject to some uncertainty.

NO DISSENTERS' RIGHTS

You will not have dissenters' or appraisal rights under New York law if the
recapitalization proposal is implemented.

NO REGULATORY APPROVALS

No state or federal regulatory approvals are required for the
recapitalization.

RECOMMENDATION OF THE BOARD OF DIRECTORS

YOUR BOARD OF DIRECTORS HAS CAREFULLY CONSIDERED EACH PROPOSAL AND BELIEVES
THAT THE APPROVAL OF THESE PROPOSALS BY THE SHAREHOLDERS IS IN THE BEST
INTERESTS OF OUR COMPANY AND OUR SHAREHOLDERS. YOUR BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT YOU APPROVE EACH OF THESE PROPOSALS.

8
<PAGE>

THE PERKIN-ELMER CORPORATION SELECTED FINANCIAL INFORMATION

This summary of financial information of our company for the fiscal years
1994 to 1998 and for the three months ended September 30, 1997 and 1998 should
be read along with the audited and unaudited financial statements contained in
this proxy statement. Such financial information, other than for fiscal years
1994 and 1995, was taken from these financial statements. The financial
statements for those fiscal year periods are audited. The condensed financial
statements for those three month periods are unaudited and we believe that they
fairly present our financial position and results of operations and cash flows
for those periods.

A number of items affect the comparability of the information presented
below. Results included net before-tax restructuring and other merger costs of
$17.5 million for fiscal 1996, $48.1 million for fiscal 1998 and $.9 million for
the three months ended September 30, 1998. Before-tax gains related to
investments were $20.8 million for fiscal 1995, $11.7 million for fiscal 1996,
$64.9 million for fiscal 1997 and $1.6 million for fiscal 1998. Other special
items affecting comparability included acquired research and development charges
of $14.7 million for fiscal 1994, $33.9 million for fiscal 1996, $26.8 million
for fiscal 1997 and $28.9 million for fiscal 1998 and before-tax charges for the
impairment of assets of $9.9 million for fiscal 1996 and $.7 million for fiscal
1997.

OTHER INFORMATION
Cash and short-term
investments............................... $ 50,605 $ 103,826 $ 121,145 $ 217,222 $ 84,091 $ 175,683 $ 71,848
Working capital............................. 171,068 256,607 229,639 354,742 287,991 345,066 291,945
Capital expenditures........................ 28,088 33,891 28,198 58,057 71,820 24,610 24,328
Total assets................................ 823,476 797,970 809,856 1,006,793 1,135,276 1,006,229 1,180,286
Long-term debt.............................. 61,500 64,524 33,694 59,152 33,726 57,010 29,650
Total debt.................................. 145,052 123,224 89,801 89,068 45,825 89,064 88,444
Shareholders' equity........................ 364,123 369,807 373,727 504,270 564,248 519,644 579,988
Book value per share........................ 8.04 8.17 7.90 10.43 11.44 10.74 11.71
</TABLE>

9
<PAGE>

PE BIOSYSTEMS GROUP SELECTED FINANCIAL INFORMATION

This summary of financial information of the PE Biosystems Group for the
fiscal years 1994 to 1998 and for the three months ended September 30, 1997 and
1998 should be read along with the audited and unaudited combined financial
statements contained in this proxy statement. Such information, other than for
fiscal years 1994 and 1995, was taken from these financial statements. The
combined financial statements for those fiscal year periods are audited. The
combined financial statements for those three month periods are unaudited and we
believe that they fairly present the financial position and results of
operations and cash flows of the PE Biosystems Group for those periods.

A number of items affect the comparability of the information presented
below. Results included net before-tax restructuring and other merger costs of
$17.5 million for fiscal 1996, $48.1 million for fiscal 1998 and $.9 million for
the three months ended September 30, 1998. Before-tax gains related to
investments were $20.8 million for fiscal 1995, $11.7 million for fiscal 1996,
$64.9 million for fiscal 1997 and $1.6 million for fiscal 1998. Other special
items affecting comparability included acquired research and development charges
of $31.8 million for fiscal 1996 and $28.9 million for fiscal 1998 and
before-tax charges for the impairment of assets of $9.9 million for fiscal 1996
and $.7 million for fiscal 1997.

Historical per share information is omitted because PE Biosystems Stock was
not part of the capital structure for the periods presented. However, pro forma
earnings per share, reflecting PE Biosystems Stock issued under the
recapitalization proposal, is presented for fiscal 1998 and the three months
ended September 30, 1998.

OTHER INFORMATION
Cash and short-term
investments................... $ 50,605 $ 103,826 $ 121,145 $ 217,222 $ 84,091 $ 175,683 $ 71,848
Working capital................. 171,068 256,607 226,414 355,163 289,151 347,627 (40,221)
Capital expenditures............ 28,088 33,891 27,125 57,646 68,172 23,862 22,089
Total assets.................... 823,476 797,970 809,856 1,003,810 1,128,937 1,006,229 1,169,634
Long-term debt.................. 61,500 64,524 33,694 59,152 33,726 57,010 29,650
Note payable to the Celera
Genomics Group................ -- -- -- -- -- -- 330,000
Total allocated debt............ 145,052 123,224 89,801 89,068 45,825 89,064 88,444
Group equity.................... 364,123 369,807 373,116 507,734 565,507 522,092 246,321
</TABLE>

10
<PAGE>
CELERA GENOMICS GROUP SELECTED FINANCIAL INFORMATION

This summary of financial information of the Celera Genomics Group for the
1996, 1997 and 1998 fiscal years and for the three months ended September 30,
1997 and 1998 was taken from and should be read along with the audited and
unaudited combined financial statements contained in this proxy statement. There
is no selected financial information for fiscal 1994 and 1995 since the Celera
Genomics Group commenced business in fiscal 1996.

The combined financial statements for those fiscal year periods are audited.
The combined financial statements for those three month periods are unaudited
and we believe that they fairly present the financial position and results of
operations and cash flows of the Celera Genomics Group for those periods.

Results included acquired research and development charges of $2.1 million
for fiscal 1996 and $26.8 million for fiscal 1997 which affect the comparability
of the information presented for the periods.

Historical per share information is omitted from the Combined Statements of
Operations because Celera Genomics Stock was not part of the capital structure
for the periods presented. However, pro forma loss per share, reflecting Celera
Genomics Stock issued under the recapitalization proposal, is presented for
fiscal 1998 and the three months ended September 30, 1998.

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED
FOR THE YEARS ENDED JUNE 30, SEPTEMBER 30,
------------------------------- --------------------
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE
AMOUNTS) 1996 1997 1998 1997 1998
- ---------------------------------------------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
FINANCIAL OPERATIONS
Net revenues.................................. $ 159 $ 903 $ 4,211 $ 613 $ 3,916
Loss from operations before special items..... (805) (5,301) (12,793) (1,412) (3,609)
Special items................................. (2,066) (26,801) -- -- --
Net loss...................................... (2,871) (32,102) (12,793) (1,412) (3,609)
Unaudited pro forma net loss per share
Basic....................................... $ (.53) $ (.15)
Diluted..................................... $ (.53) $ (.15)

OTHER INFORMATION
Cash and short-term investments............... $ -- $ -- $ -- $ -- $ --
Working capital............................... (340) (421) (1,160) 24 332,166
Capital expenditures.......................... 1,073 411 3,648 748 2,239
Total assets.................................. 977 2,983 6,339 3,911 342,596
Long-term debt................................ -- -- -- -- --
Total debt.................................... -- -- -- -- --
Group equity (deficit)........................ 611 (3,464) (1,259) (2,448) 333,667
</TABLE>

11
<PAGE>
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS

Many of the statements under the captions "Proxy Statement Summary--The
Recapitalization Proposal," "Risk Factors," "PE Biosystems Group--Management's
Discussion and Analysis," "Celera Genomics Group--Business" and "Celera Genomics
Group--Management's Discussion and Analysis" are forward looking. These may be
identified by the use of forward-looking words or phrases such as "believe,"
"expect," "anticipate," "should," "planned," "estimated," and "potential," among
others. These forward-looking statements are based on our current expectations.
The private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for such forward-looking statements.

In order to comply with the terms of the safe harbor, we note that a variety
of factors that we discuss in detail below under "Risk Factors" could cause our
actual results and experience to differ materially from the anticipated results
or other expectations expressed in such forward looking statements.

RISK FACTORS

The risk factors included through page 20 discuss risks arising from a
capital structure with two separate classes of common stock. Beginning on page
21, we discuss risks which are specific to a particular Group.

YOU WILL REMAIN STOCKHOLDERS OF ONE COMPANY; FINANCIAL EFFECTS ON ONE GROUP
COULD AFFECT THE OTHER

Holders of PE Biosystems Stock and Celera Genomics Stock will be
stockholders of a single company. The PE Biosystems Group and the Celera
Genomics Group are not separate legal entities. As a result, stockholders will
continue to be subject to all of the risks of an investment in our company and
all of our businesses, assets and liabilities. The issuance of the PE Biosystems
Stock and the Celera Genomics Stock and the allocation of assets and liabilities
and stockholders' equity between the PE Biosystems Group and the Celera Genomics
Group will not result in a distribution or spin-off to stockholders of any of
our assets or liabilities and will not affect ownership of our assets or
responsibility for our liabilities or those of our subsidiaries. The assets we
attribute to one Group could be subject to the liabilities of the other Group,
whether such liabilities arise from lawsuits, contracts or indebtedness that we
attribute to the other Group. If we are unable to satisfy one Group's
liabilities out of the assets we attribute to it, we may be required to satisfy
those liabilities with assets we have attributed to the other Group.

Financial effects from one Group that affect our consolidated results of
operations or financial condition could, if significant, affect the results of
operations or financial condition of the other Group and the market price of the
common stock relating to the other Group. In addition, net losses of either
Group and dividends or distributions on, or repurchases of, either class of
common stock or repurchases of certain preferred stock will reduce the funds we
can pay as dividends on each class of common stock under Delaware law. For these
reasons, you should read our consolidated financial information with the
financial information we provide for each Group.

LIMITED SEPARATE STOCKHOLDER RIGHTS

Holders of PE Biosystems Stock and Celera Genomics Stock will have only the
rights customarily held by common stockholders. They will have only the
following rights related to their corresponding Group:

- certain rights with regard to dividends and liquidation;

- requirements for a mandatory dividend, redemption or conversion upon the
disposition of all or substantially all of the assets of their
corresponding Group; and

- a right to vote on matters as a separate voting class in the limited
circumstances provided under Delaware law, by stock exchange rules or as
determined by our board of directors.

We will not hold separate meetings for holders of PE Biosystems Stock and
Celera Genomics Stock.

12
<PAGE>
LIMITS ON VOTING POWER

GROUP COMMON STOCK WITH MAJORITY OF VOTING POWER CAN CONTROL OUTCOME

The holders of PE Biosystems Stock and Celera Genomics Stock will vote
together as a single class, except in limited circumstances. If a separate vote
on a matter by the holders of either the PE Biosystems Stock or the Celera
Genomics Stock is not required under Delaware law or by stock exchange rules,
and if the board of directors does not require a separate vote, either class of
common stock that is entitled to more than the number of votes required to
approve such matter could control the outcome of such vote--even if the matter
involves a divergence or conflict of the interests of the holders of the PE
Biosystems Stock and the Celera Genomics Stock. In addition, if the holders of
common stock having a majority of the voting power of all shares of common stock
outstanding approve a merger, the terms of which did not require separate class
voting under stock exchange rules, then the merger could be consummated--even if
the holders of a majority of either class of common stock were to vote against
the merger.

GROUP COMMON STOCK WITH LESS THAN MAJORITY VOTING POWER CAN BLOCK ACTION IF
CLASS VOTE IS REQUIRED

If Delaware law, stock exchange rules or our board of directors requires a
separate vote on a matter by the holders of either the PE Biosystems Stock or
the Celera Genomics Stock, those holders could prevent approval of the matter,
even if the holders of a majority of the total number of votes cast or entitled
to be cast, voting together as a class, were to vote in favor of it.

VOTING POWER OF GROUP COMMON STOCK WILL FLUCTUATE

The relative voting power per share of PE Biosystems Stock and Celera
Genomics Stock will fluctuate based on the market values of the two classes of
common stock. The provision providing for variable voting power is
disadvantageous to the holders of PE Biosystems Stock or Celera Genomics Stock
to the extent that the market value of such class of common stock decreases
compared to the other, and is advantageous to the holders of PE Biosystems Stock
or Celera Genomics Stock to the extent the market value of such class of common
stock increases compared to the other. Many factors could affect the market
value of either or both classes of common stock. See "--No Assurances as to
Market Price or Liquidity--Many Factors May Affect Market Prices."

PE BIOSYSTEMS STOCK INITIALLY WILL HAVE MAJORITY OF VOTING POWER

We expect that initially the PE Biosystems Stock will have a substantial
majority of the voting power of our company because the aggregate market value
of the outstanding shares of PE Biosystems Stock is expected initially to be
substantially greater than the aggregate market value of the outstanding shares
of Celera Genomics Stock.

FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS AND OFFICERS: NO DEFINITIVE PRECEDENT
UNDER DELAWARE LAW

We are not aware of any legal precedent under Delaware law involving the
fiduciary duties of directors and officers of corporations having two classes of
common stock, or separate classes or series of capital stock, the rights of
which, like the PE Biosystems Stock and Celera Genomics Stock, are defined by
reference to separate businesses of the corporation. Stockholders may not have
any remedies if any action or decision of our directors or officers has a
disadvantageous effect on the PE Biosystems Stock or the Celera Genomics Stock
compared to the other class of common stock.

Principles of Delaware law established in cases involving differing
treatment of two classes of capital stock or two groups of holders of the same
class of capital stock provide that a board of directors owes an equal duty to
all stockholders regardless of class or series. Under these principles of
Delaware law and the related principle known as the "business judgment rule,"
absent abuse of discretion, a good faith business decision made by a
disinterested and adequately informed board of directors, board of directors'
committee or officer with respect to any matter having different effects on
holders of PE Biosystems Stock and holders of Celera Genomics Stock would be a
defense to any challenge to such determination made by or on

13
<PAGE>

behalf of the holders of either class of common stock.

STOCK OWNERSHIP OF DIRECTORS AND OFFICERS COULD CREATE CONFLICTS OF INTEREST

Our directors and officers will initially own more shares, including shares
subject to stock options, of the Celera Genomics Group than the PE Biosystems
Group. As a policy, our board of directors will periodically monitor the
ownership of shares of PE Biosystems Stock and shares of Celera Genomics Stock
by our directors and senior officers and our option grants to them so that their
interests are generally aligned with the two classes of common stock and with
their duty to act in the best interests of our company and our stockholders as a
whole. However, because the actual value of their interests in the PE Biosystems
Stock and Celera Genomics Stock is anticipated to vary significantly, it is
possible that they could favor one Group over the other due to their stock and
option holdings. See "Proposal 1--The Recapitalization Proposal--Management and
Allocation Policies--Common Stock Ownership of Directors and Senior Officers."

NUMEROUS POTENTIAL CONFLICTING INTERESTS BETWEEN CLASSES OF COMMON STOCK

The existence of separate classes of common stock could give rise to
occasions when the interests of the holders of PE Biosystems Stock or Celera
Genomics Stock diverge or conflict. Examples include determinations by our
directors or officers to:

- pay or omit the payment of dividends on PE Biosystems Stock or Celera
Genomics Stock;

- allocate consideration to be received by holders of each of the classes
of common stock in connection with a merger or consolidation involving
our company;

- convert one class of common stock into shares of the other;

- approve certain dispositions of the assets of either Group;

- allocate the proceeds of future issuances of Celera Genomics Stock either
to the Celera Genomics Group or the PE Biosystems Group, to the extent
the PE Biosystems Group has an equity interest in the Celera Genomics
Group;

- allocate corporate opportunities between the Groups;

- permit or prevent indirect competition between the Groups; or

- make other operational and financial decisions with respect to one Group
that could be considered detrimental to the other Group.

When making decisions with regard to matters that create potential diverging
or conflicting interests, our directors and officers will act in accordance with
their fiduciary duties, the terms of the new certificate of incorporation, and,
to the extent applicable, the management and allocation policies described in
"Proposal 1--The Recapitalization Proposal--Management and Allocation Policies."

Each of the potential conflicts of interest listed above is discussed below.

NO ASSURANCE OF PAYMENT OF DIVIDENDS

Our board of directors has adopted a dividend policy to initially pay a
quarterly dividend of $.17 on the PE Biosystems Stock and no dividend on the
Celera Genomics Stock. Determinations as to future dividends on the PE
Biosystems Stock and the Celera Genomics Stock will be based primarily on the
financial condition, results of operations and business requirements of the
relevant Group and our company as a whole. Subject to the limitations referred
to below, our board of directors has the authority to declare and pay dividends
on the PE Biosystems Stock and the Celera Genomics Stock in any amount and
could, in its sole discretion, declare and pay dividends exclusively on the PE
Biosystems Stock, exclusively on the Celera Genomics Stock, or on both, in equal
or unequal amounts. Our board of directors will not be required to consider the
amount of dividends previously declared on each class, the respective voting or
liquidation rights of each class or any other factor.

In addition, Delaware law and the new certificate of incorporation impose
limitations on the amount of dividends which may be paid on each class of common
stock. Any net losses of

14
<PAGE>

either Group, dividends and distributions on either class of common stock or our
preferred stock, and any repurchases of PE Biosystems Stock, Celera Genomics
Stock or certain preferred stock, will reduce the amount of the future dividends
which may be paid under these limitations. See "Proposal 1--The Recapitalization
Proposal--Dividend Policy" and "--Description of PE Biosystems Stock and Celera
Genomics Stock--Dividends."

ALLOCATION OF PROCEEDS OF MERGERS OR CONSOLIDATIONS

The recapitalization proposal does not contain any provisions governing how
consideration to be received by holders of common stock in connection with a
merger or consolidation involving our company is to be allocated among holders
of each class of common stock. Our board of directors will determine the
percentage of the consideration to be allocated to holders of each class of
common stock in any such transaction. Such percentage may be materially more or
less than that which might have been allocated to such holders had our board of
directors chosen a different method of allocation.

OPTIONAL CONVERSION OF CLASSES OF COMMON STOCK

Our board of directors could, in its sole discretion and without stockholder
approval, determine to convert shares of Celera Genomics Stock into shares of PE
Biosystems Stock, or vice versa, at a 10% premium. We could make such
determination at a time when either or both classes of common stock may be
considered to be overvalued or undervalued. Any such conversion would dilute the
interests in our company of the holders of the class of common stock being
issued in the conversion.

Any such conversion would preclude holders of both classes of common stock
from retaining their investment in a security that is intended to reflect
separately the performance of the relevant Group. It would also give holders of
shares of the class of common stock converted a greater or lesser premium than
any premium that might be paid by a third-party buyer of all or substantially
all of the assets of the Group whose stock is converted.

We cannot predict the impact on the market prices of the PE Biosystems Stock
or the Celera Genomics Stock of our ability to convert one class of common stock
or the effect that the exercise by us of our conversion right would have on the
market price of the PE Biosystems Stock or Celera Genomics Stock at the time we
announce it.

In determining whether to convert one class of common stock into the other
class, our board of directors will act in accordance with its good faith
business judgment that the conversion is in the best interests of our company
and all of our stockholders as a whole. See "Proposal 1--The Recapitalization
Proposal--Description of PE Biosystems Stock and Celera Genomics
Stock--Conversion and Redemption."

DISPOSITIONS OF GROUP ASSETS

Our board of directors could, in its sole discretion and without stockholder
approval, approve sales and other dispositions of any amount of assets of either
Group that represent less than substantially all of the assets of our company.

The new certificate of incorporation contains provisions that may require
us, if a disposition of all or substantially all of the properties and assets of
either Group occurs, to:

- distribute to holders of the class of common stock relating to the Group
subject to such disposition an amount equal to the net proceeds of such
disposition, or

- convert the outstanding shares of such common stock into shares of the
class of common stock relating to the other Group at a 10% premium.

The terms of the common stock do not require our board of directors to select
the option that would bring the highest value to the holders of common stock
relating to the Group subject to such disposition or with the smallest effect on
the common stock relating to the other Group. Our board of directors would
select an option based on its good faith business judgment that such option is
in the best interests of our company and all of our stockholders as a whole. See
"Proposal 1--The Recapitalization Proposal--Description of PE Biosystems Stock

15
<PAGE>

and Celera Genomics Stock--Conversion and Redemption."

ALLOCATION OF PROCEEDS UPON ISSUANCE OF CELERA GENOMICS STOCK

If and to the extent the PE Biosystems Group has an equity interest in the
Celera Genomics Group in the form of "Celera Genomics Designated Shares" at the
time of any sale of Celera Genomics Stock, our board of directors could allocate
all of the proceeds of that sale to either the PE Biosystems Group or the Celera
Genomics Group or between the Groups. Any such decision could favor one Group
over the other Group. For example, the decision to obtain funds for one Group
may adversely affect the other Group's ability to obtain funds to finance its
growth strategies. See "Proposal 1--The Recapitalization Proposal-- Celera
Genomics Designated Shares."

ALLOCATION OF CORPORATE OPPORTUNITIES

Our board of directors may be required to allocate corporate opportunities
between the Groups. In some cases, our directors could determine that a
corporate opportunity, such as a business that we are acquiring, should be
shared by the Groups. Any such decisions could favor one Group at the expense of
the other. Our board of directors will make these decisions in its good faith
business judgment that such allocation is in the best interests of our company
and all of our stockholders as a whole. See "Proposal 1--The Recapitalization
Proposal-- Management and Allocation Policies--Review of Corporate
Opportunities."

COMPETITION BETWEEN GROUPS

Our board of directors has adopted a policy that neither the PE Biosystems
Group nor the Celera Genomics Group will engage in the principal businesses of
the other, except for certain joint transactions with each other and third
parties. However, with the approval of our Chief Executive Officer or, in
appropriate circumstances, our board of directors, the Groups may engage in
indirect competition in their principal businesses from time to time. This
competition could involve, for example:

- the Celera Genomics Group selling its products to a third party for use
in the third party's products which compete with the PE Biosystems
Group's products;

- the PE Biosystems Group's inclusion of a third party's products, rather
than the Celera Genomics Group's products, in the PE Biosystems Group's
products; or

- a Group licensing technology to a third party that is a competitor of the
other Group.

Our Chief Executive Officer or our board of directors will permit indirect
competition between the Groups based on his or its good faith business judgment
that such competition is in the best interests of our company and all of our
stockholders as a whole. In addition, the Groups may compete in a business that
is not a principal business of the other Group. See "The Recapitalization
Proposal--Management and Allocation Proposals--Competition Between Groups."

OTHER OPERATIONAL AND FINANCIAL DECISIONS WHICH MAY FAVOR ONE GROUP OVER THE
OTHER

Our board of directors or our senior officers will review other operational
and financial matters affecting the PE Biosystems Group and the Celera Genomics
Group, including the allocation of financing resources and capital, technology
and know-how and corporate overhead, taxes, debt, interest and other matters.
Any decision of our board of directors or our senior officers in these matters
could favor one Group at the expense of the other. All such decisions will be
made in their good faith business judgment and in accordance with procedures and
policies adopted by our board of directors from time to time. For further
discussion of potential divergences or conflicts of interests, see "--Fiduciary
Duties of the Board of Directors and Officers; No Definitive Precedent Under
Delaware Law," "--Funds May Be Transferred Between Groups and Accounted For in a
Number of Ways," "--Potential Costs and Detriments Relating to Ways of
Allocating Debt and Preferred Stock," and "Proposal 1-- The Recapitalization
Proposal--Management and Allocation Policies."

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MANAGEMENT AND ALLOCATION POLICIES SUBJECT TO CHANGE WITHOUT STOCKHOLDER
APPROVAL

Our board of directors may modify or rescind our policies with respect to
the allocation of corporate overhead, taxes, debt, interest and other matters,
or may adopt additional policies, in its sole discretion without stockholder
approval. However, our board of directors has no present intention to do so. A
decision to modify or rescind these policies, or adopt additional policies could
have different effects on holders of PE Biosystems Stock and holders of Celera
Genomics Stock or could result in a benefit or detriment to one class of
stockholders compared to the other class. Our board of directors will make any
such decision in accordance with its good faith business judgment that the
decision is in the best interests of our company and all of our stockholders as
a whole.

FUNDS MAY BE TRANSFERRED BETWEEN GROUPS AND ACCOUNTED FOR IN A NUMBER OF WAYS

We anticipate that we will transfer cash and other property between Groups
to finance their business activities. We will account for those transfers in one
of the following ways:

- as a reallocation of pooled debt or preferred stock;

- as a short-term or long-term loan between Groups or as a repayment of a
previous borrowing;

- as an increase or decrease in the PE Biosystems Group's equity interest
in the Celera Genomics Group; or

- as a sale of assets between Groups.

Our board of directors has not adopted specific criteria for determining
when we will transfer cash or other property as a loan or repayment, an increase
or decrease in equity interest or a sale of assets. Our board of directors
expects to make these determinations, either in specific instances or by setting
generally applicable policies, after considering the financing requirements and
objectives of the receiving Group, the investment objectives of the transferring
Group and the availability, cost and time associated with alternative financing
sources, prevailing interest rates and general economic conditions. See
"Proposal 1--The Recapitalization Proposal--Management and Allocation
Policies--Financing Activities."

POTENTIAL COSTS AND DETRIMENTS RELATING TO WAYS OF ALLOCATING DEBT AND PREFERRED
STOCK

We will allocate a portion of our pooled debt and preferred stock to each
Group, and we will charge the related interest or dividend expense to each
Group, based on the weighted average interest or dividend rate of this debt or
preferred stock, calculated on a quarterly basis. Changes in the amount and the
weighted average interest rate of our pooled debt will increase or decrease the
interest expense charged to each Group for its debt. In addition, each Group
will receive a "benefit" to the extent the weighted average cost is lower, or a
"detriment" to the extent the weighted average cost is higher, than the market
rate for a hypothetical borrowing by such Group if such Group were a stand-alone
corporation. At September 30, 1998, the total debt of our Company allocated to
the PE Biosystems Group was $88.4 million and the Celera Genomics Group had no
debt.

We may also allocate debt and preferred stock in its entirety to a
particular Group in circumstances that our board of directors determines. When
we do so, that debt will bear interest at a rate that we determine. If we
allocate preferred stock in its entirety to one Group, we will charge the
dividend cost in a similar manner. If the interest or dividend cost is higher
than actual cost, the other Group will receive a credit for an amount equal to
the difference as compensation for use of our credit capacity.

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<PAGE>
If we decide a transfer of cash or other property from one Group to another
should be accounted for as a loan, we will decide the terms of such loan,
including interest rate, payment maturity and payment schedule and redemption
and prepayment terms. The Group receiving the funds would receive a "benefit" to
the extent the rate determined is lower, or a "detriment" to the extent the rate
we determine is higher, than the market rate that the receiving Group would
incur for a hypothetical borrowing for that purpose if it were a stand-alone
corporation.

We cannot assure you that any terms that we fix for debt we allocate
entirely to one Group or for inter-Group loans will approximate those that could
have been obtained by the borrowing Group if it were a stand-alone corporation.

EQUITY CONTRIBUTIONS TO BE REFLECTED AS AN INCREASE IN CELERA GENOMICS
DESIGNATED SHARES

We will determine the number of Celera Genomics Designated Shares resulting
from a future equity contribution by the PE Biosystems Group to the Celera
Genomics Group or any repurchase by the Celera Genomics Group of Celera Genomics
Designated Shares using the average market value of the Celera Genomics Stock
during a 20-day period prior to the transfer of cash or other property between
the Groups. We could decide to make such a transfer at a time when the Celera
Genomics Stock may be considered to be overvalued or undervalued. See "Proposal
1--The Recapitalization Proposal--Celera Genomics Designated Shares."

PE BIOSYSTEMS GROUP MAY USE TAX BENEFITS GENERATED BY THE CELERA GENOMICS GROUP

Our management and allocation policies provide that tax benefits generated
but not used by the Celera Genomics Group may be used by the PE Biosystems
Group. The aggregate amount reimbursed to the Celera Genomics Group for such use
may not exceed $75 million. All subsequent tax benefits in excess of this amount
will not be credited to the Celera Genomics Group and the Celera Genomics Group
will not be reimbursed for those tax benefits, unless the Celera Genomics Group
can use those tax benefits. Accordingly, any tax benefits that can not be used
by the Celera Genomics Group will not be carried forward to reduce its future
taxes. This could result in the Celera Genomics Group being charged a greater
portion of the total corporate tax liability and reporting lower net income
after taxes in the future than would have been the case if the Celera Genomics
Group had retained its tax benefits.

LIMITS ON CONSIDERATION TO BE RECEIVED UPON DISPOSITION OF ASSETS OF A GROUP

The new certificate of incorporation provides that if a disposition of all
or substantially all of the properties and assets of either Group occurs, we
must, subject to certain exceptions:

- distribute through a dividend or redemption to holders of the class of
common stock relating to such Group an amount equal to the net proceeds
of such disposition or

- convert at a 10% premium such common stock into shares of the class of
common stock relating to the other Group.

If the Group subject to the disposition were a separate, independent company and
its shares were acquired by another person, certain costs of that disposition,
including corporate level taxes, might not be payable in connection with that
acquisition. As a result, stockholders of the separate, independent company
might receive a greater amount than the net proceeds that would be received by
holders of the class of common stock relating to that Group if the assets of
such Group were sold. In addition, we can not assure you that the net proceeds
per share of the common stock relating to that Group will be equal to or more
than the market value per share of such common stock prior to or after
announcement of a disposition. See "Proposal 1--The Recapitalization
Proposal--Description of PE Biosystems Stock and Celera Genomics
Stock--Conversion and Redemption--Mandatory

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Dividend on or Redemption or Conversion of Common Stock."

EFFECTS OF OUR CAPITAL STRUCTURE AND VARIABLE VOTE PER SHARE ON POTENTIAL
ACQUISITIONS OF A GROUP OR A CLASS OF COMMON STOCK

A potential acquiror could acquire control of our company by acquiring
shares of common stock having a majority of the voting power of all shares of
common stock outstanding. Such a majority could be obtained by acquiring a
sufficient number of shares of both classes of common stock or, if one class of
common stock has a majority of such voting power, only shares of that class. We
expect that initially the PE Biosystems Stock will have a substantial majority
of the voting power. As a result, initially, it might be possible for an
acquiror to obtain control of our company by purchasing only shares of PE
Biosystems Stock. See "Proposal 1--The Recapitalization Proposal-- Description
of PE Biosystems Stock and Celera Genomics Stock--Voting Rights."

DECISIONS BY DIRECTORS AND OFFICERS THAT AFFECT MARKET VALUES COULD AFFECT
STOCKHOLDER RIGHTS

The relative voting power per share of the PE Biosystems Stock and the
Celera Genomics Stock and the number of shares of one class of common stock
issuable upon the conversion of the other class of common stock will vary
depending upon the relative market values of the PE Biosystems Stock and the
Celera Genomics Stock. The market value of either or both classes of common
stock could be affected by market reaction to decisions by our board of
directors or our management that investors perceive to affect differently one
class of common stock compared to the other. These decisions could involve
changes to our management and allocation policies, transfers of assets between
Groups, allocations of corporate opportunities and financing resources between
Groups and changes in dividend policies.

NO ASSURANCES AS TO MARKET PRICE OR LIQUIDITY

NO PRIOR MARKET

Because there has been no prior market for the Celera Genomics Stock or the
PE Biosystems Stock, we can not assure you of their market prices or liquidity
following the recapitalization. If an active market does develop, we can not
assure you that it will be maintained. Until an orderly market does develop for
the PE Biosystems Stock and the Celera Genomics Stock, their respective trading
prices may fluctuate significantly.

MARKET VALUE OF PE BIOSYSTEMS STOCK AND CELERA GENOMICS STOCK RECEIVED IN
THE RECAPITALIZATION MAY NOT EQUAL OR EXCEED MARKET VALUE OF EXISTING
COMMON STOCK

We can not assure you that the combined market values of a share of PE
Biosystems Stock and the .5 of a share of Celera Genomics Stock received in the
recapitalization will equal or exceed the market value of a share of our
existing common stock prior to the recapitalization.

MANY FACTORS MAY AFFECT MARKET PRICES

The market prices of the PE Biosystems Stock and the Celera Genomics Stock
will be determined in the trading markets. Many factors could affect the market
price of the PE Biosystems Stock or the Celera Genomics Stock. These factors
include:

- our consolidated results, as well as the respective performances of the
PE Biosystems Group and the Celera Genomics Group;

- investors' and analysts' expectations for our company as a whole and for
each of the PE Biosystems Group and the Celera Genomics Group;

- trading volume, share issuances and repurchases;

- the amount and level of research analyst coverage;

- board of directors' and management decisions described under "--Decisions

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<PAGE>

by Directors and Officers that Affect Market Values Could Affect
Stockholders Rights;"

- certain terms of the PE Biosystems Stock or the Celera Genomics Stock,
including the respective redemption and conversion rights applicable upon
the disposition of substantially all the assets of a Group and our
ability to convert shares of one class of common stock into shares of the
other class of common stock; and

- general economic and market conditions.

INVESTORS MAY NOT VALUE COMMON STOCK BASED ON GROUP FINANCIAL INFORMATION
AND POLICIES

We can not assure you that investors will value the PE Biosystems Stock and
the Celera Genomics Stock based on the reported financial results and prospects
of the separate Groups or the dividend policies established by our board of
directors with respect to such Groups.

ADVERSE EFFECT ON MARKET PRICE OF COMMON STOCK NOT INCLUDED IN STOCK MARKET
INDICES

We do not anticipate that the Celera Genomics Stock initially will be
included in any stock market index. As a result, holders of a substantial number
of shares of our existing common stock that are required to own only stocks
included in such an index will be required to sell immediately Celera Genomics
Stock received by them in the recapitalization. Further, we can not assure you
that the PE Biosystems Stock will continue to be included in any particular
index. Not being included in a particular index in the case of the PE Biosystems
Stock or any index in the case of the Celera Genomics Stock could adversely
affect the market price of that class of common stock.

PROVISIONS WHICH COULD HAVE ANTITAKEOVER EFFECTS

Our stockholder rights plan and the existence of the two classes of common
stock could, under certain circumstances, prevent stockholders from profiting
from an increase in the market value of their shares as a result of a change in
control of our company by delaying or preventing such change in control. Rights
under our rights plan to purchase stock will cause substantial dilution to a
person or group that attempts to acquire our company on terms not approved by
our board of directors and, therefore, deter hostile takeover attempts. In
addition, the existence of two classes of common stock could present
complexities and could, in certain circumstances, pose obstacles, financial and
otherwise, to an acquiring person. See "-- Effects of Our Capital Structure and
Variable Vote per Share on Potential Acquisitions of a Group or Class of Common
Stock." We could, in the sole discretion of our board of directors and without
stockholder approval, exercise the right to convert the shares of one class of
common stock into shares of the other at a 10% premium over their respective
average market values. This conversion could result in additional dilution to
persons seeking control of our company.

Although our board of directors has no present intention of doing so, it
could issue shares of preferred stock or common stock that could be used to
create voting or other impediments or to discourage persons seeking to gain
control of our company and could also be privately placed with purchasers
favorable to our board of directors in opposing such action. In addition,
certain provisions of the Delaware law, the new certificate of incorporation and
the new by-laws may also deter hostile takeover attempts. See "Proposal 1--The
Recapitalization Proposal--Rights Agreement" and "--Certain Anti-Takeover
Provisions of Delaware Law and the New Certificate of Incorporation, the New
By-laws and Rights Agreement."

LACK OF LEGAL PRECEDENT REGARDING THE TAX TREATMENT OF THE COMMON STOCK

We have been advised by our counsel that no income, gain or loss will be
recognized by you or us for federal income tax purposes as a result of the
recapitalization proposal, except for any cash received instead of fractional
shares of Celera Genomics Stock. However, there are no

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<PAGE>

court decisions or other authorities bearing directly on the effect of the
features of the PE Biosystems Stock and the Celera Genomics Stock. In addition,
the Internal Revenue Service has announced that it will not issue rulings on the
characterization of stock with characteristics similar to the PE Biosystems
Stock and the Celera Genomics Stock. It is possible, therefore, that the
Internal Revenue Service could assert that the receipt of the PE Biosystems
Stock or the Celera Genomics Stock as well as the subsequent exchange of such
common stock could be taxable to you and to us. See "Proposal 1--The
Recapitalization Proposal-- United States Federal Income Tax Considerations."

FACTORS RELATING TO THE PE BIOSYSTEMS GROUP

DEPENDENCE ON NEW PRODUCTS

A significant portion of the net revenues for the PE Biosystems Group each
year is derived from products that did not exist in the prior year. The PE
Biosystems Group's future success will depend on its ability to continually
improve its current products and to develop and introduce, on a timely and cost
effective basis, new products that address the evolving needs of its customers.
The PE Biosystems Group's products are based on complex technology which is
subject to rapid change as new technologies are developed and introduced in the
marketplace. Unanticipated difficulties or delays in replacing existing products
with new products could adversely affect the PE Biosystems Group's future
operating results.

SALES DEPENDENT ON CUSTOMERS' CAPITAL SPENDING POLICIES AND GOVERNMENT
SPONSORED RESEARCH

A significant portion of the PE Biosystems Group's instrument products are
capital purchases for its customers. The PE Biosystems Group's customers include
pharmaceutical, environmental, research and chemical companies, and the capital
spending policies of these companies can have a significant effect on the demand
for the PE Biosystems Group's products. These policies are based on a wide
variety of factors, including the resources available to make purchases, the
spending priorities among various types of research equipment and policies
regarding capital expenditures during recessionary periods. Any decrease in
capital spending or change in spending policies of these companies could
significantly reduce the demand for its products.

In addition, a substantial portion of the PE Biosystems Group's sales are to
customers at universities or research laboratories whose funding is dependent on
both the level and timing of funding from government sources. As a result, the
timing and amount of revenues from these sources may vary significantly due to
factors that can be difficult to forecast. Although research funding has
increased during the past several years, grants have, in the past, been frozen
for extended periods or otherwise become unavailable to various institutions,
sometimes without advance notice. Budgetary pressures, particularly in the
United States and Japan, may result in reduced allocations to government
agencies that fund research and development activities. If government funding
necessary to purchase the PE Biosystems Group's products were to become
unavailable to researchers for any extended period of time or if overall
research funding were to decrease, the business of the PE Biosystems Group could
be adversely affected.

CLAIMS FOR PATENT INFRINGEMENT

The PE Biosystems Group's products are based on complex, rapidly-developing
technologies. These products could be developed without knowledge of previously
filed but unpublished patent applications that cover some aspect of these
technologies. In addition, there are relatively few decided court cases
interpreting the scope of patent claims in these technologies. There can be no
assurance that the PE Biosystems Group will not be made a party to litigation
regarding intellectual property matters in the future. The PE Biosystems Group
has from time to time been notified that it may be infringing certain patents
and other intellectual property rights of others. It may be necessary or
desirable in the future to obtain licenses relating to one or more products or
relating to current or future technologies, and

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<PAGE>

there can be no assurance that the PE Biosystems Group will be able to obtain
these licenses or other rights on commercially reasonable terms.

SIGNIFICANT OVERSEAS OPERATIONS

Approximately 52% of the PE Biosystems Group's net revenues during the
fiscal year ended June 30, 1998 were derived from sales to customers outside of
the United States. The majority of these sales were based on the relevant
customer's local currency. As a result, the PE Biosystems Group's reported and
anticipated operating results and cash flows are subject to fluctuations due to
material changes in foreign currency exchange rates that are beyond the PE
Biosystems Group's control. International sales and operations may also be
adversely affected by many factors, including the imposition of governmental
controls, export license requirements, restrictions on the export of critical
technology, political and economic instability, trade restrictions, changes in
tariffs and taxes, difficulties in staffing and managing international
operations and general economic conditions.

FUTURE GROWTH STRATEGY

The future growth of the PE Biosystems Group depends in part on its ability
to acquire complementary technologies through acquisitions and investments.
Since January 1, 1996, the PE Biosystems Group has acquired a number of
companies, including PerSeptive Biosystems, Inc., Molecular Informatics, Inc.
and Tropix, Inc., and made investments in others. The consolidation of
employees, operations and marketing and distribution methods presents
significant managerial challenges. For example, the PE Biosystems Group may
encounter operational difficulties in the integration of manufacturing or other
facilities. In addition, technological advances resulting from the integration
of technologies may not be achieved as successfully or rapidly as anticipated,
if at all.

YEAR 2000

In fiscal 1997, we initiated a world-wide program to assess the expected
impact of the Year 2000 date recognition problem on our existing computer
systems; non-information technology systems, including embedded and
process-control systems; product offerings; and significant suppliers. Portions
of this program are not expected to be completed before December 31, 1999. If we
are not successful in implementing our Year 2000 compliance plan, or there are
delays in and/or increased costs associated with implementing those changes, the
Year 2000 problem could have a material adverse effect on the PE Biosystems
Group's results of operations and financial condition. In addition, we have not
fully determined the likely impact of third parties' compliance efforts on the
PE Biosystems Group's interface systems and business.

EARTHQUAKES

A significant portion of the PE Biosystems Group's operations is located
near major California earthquake faults. The ultimate impact of earthquakes on
the PE Biosystems Group, significant suppliers and the general infrastructure is
unknown, but operating results could be materially affected in the event of a
major earthquake.

FACTORS RELATING TO THE CELERA GENOMICS GROUP

EARLY STAGE OF OPERATIONS

The Celera Genomics Group plans to begin sequencing the DROSOPHILA (fruit
fly) genome in early 1999 and does not expect its sequencing operations to reach
projected operational levels until Spring 1999, when it expects to begin
sequencing the human genome. As a new business, the Celera Genomics Group faces
significant challenges in simultaneously launching and integrating its
operations, pursuing key scientific goals and attracting customers for its
information products and services.

NO PRECEDENT FOR CELERA GENOMICS'
BUSINESS PLAN

No organization has ever attempted to combine in one business organization
all of the Celera Genomics Group's businesses. The creation of a genomics
database targeted at a wide variety of customers, from pharmaceutical

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<PAGE>
companies to university researchers, has a number of risks, including pricing
and volume issues, technology and access concerns, computer security, pursuit of
key scientific goals and protection of intellectual property. As a result, the
creation of a business that includes all of the Celera Genomics Group's
businesses has unique risks.

NEED TO MANAGE RAPID GROWTH

The Celera Genomics Group expects to grow significantly, from approximately
160 employees at September 30, 1998 to over 370 in April 1999. This growth will
require substantial effort to hire new employees and train and integrate them in
the Celera Genomics Group's business and to develop and implement management
information systems, financial controls and facility plans. In addition, the
Celera Genomics Group will be required to create a sales and marketing
organization and develop customer support resources as sales of its information
products increase. The Celera Genomics Group's inability to manage growth
effectively would have a material adverse effect on its future operating
results.

UNCERTAINTY OF SUCCESSFUL INTEGRATION
OF GENSCOPE AND AGGEN

The success of the Celera Genomics Group depends in part on its ability to
integrate the businesses of GenScope and AgGen, which were previously operated
by the PE Biosystems Group. In particular, we believe that coordinating the
separate scientific research efforts will be a challenge to the Celera Genomics
Group. In addition, integrating the operations of geographically distant
facilities may lead to unexpected disruptions and costs.

UNCERTAINTY OF SEQUENCING STRATEGY

Some genomic scientists have criticized the Celera Genomics Group's
sequencing strategy, known as "whole genome shotgun sequencing", as having
limitations when applied on a large scale in sequencing the human genome. Others
have stated that the human genome cannot be sequenced using whole genome shotgun
sequencing. Although scientists at The Institute for Genomic Research have used
the whole genome shotgun strategy to sequence the genomes of other organisms,
the strategy has not been used to sequence a genome with the size and complexity
of the human genome. Failure to sequence or assemble the human genome in a
timely manner may have a material adverse effect on the Celera Genomics Group's
ability to satisfy customer requirements and achieve its business goals.

UNCERTAINTY OF SUCCESSFUL OPERATION OF NEW SEQUENCERS

The Celera Genomics Group's success is heavily dependent on the successful
operation of the PE Biosystems Group's new DNA sequencer. The Celera Genomics
Group plans to use more than 200 of the new DNA sequencers on a full-time basis,
a scale of operation never before attempted. Failure of the DNA sequencers to
perform at expected levels, or failure of the Celera Genomics Group to integrate
successfully its DNA sequencers in its laboratory, would materially adversely
affect the Celera Genomics Group's ability to sequence at the rate required to
complete the human genome on a timely basis, to meet milestones in contracts
with customers and to perform research services effectively.

UNCERTAINTY OF SEQUENCING OPERATIONS

The successful operation of the sequencing facility at the levels required
for successful business operations will also be dependent on the integration of
materials, technology and operations necessary to support sequencing at the rate
and levels expected. Sequencing requires a significant amount of laboratory
preparation, organization and training of personnel, integration of technology
and proper maintenance of the equipment. In addition, sequencing requires that
adequate quantities of materials are available on a timely basis. The Celera
Genomics Group depends on the PE Biosystems Group for several critical materials
required for sequencing. For certain of these materials, the PE Biosystems Group
is the sole supplier, and for other materials the Celera Genomics Group believes
that the PE Biosystems Group provides the highest quality materials available.
Any interruption in the availability of materials could adversely affect and, in
some cases, shut down sequencing operations.

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UNCERTAINTY OF VALUE OF POLYMORPHISM
DATA

The Celera Genomics Group believes that the polymorphisms it discovers will
add considerable value to its integrated information system. Polymorphism data
reveals information about genetic variability between individuals. Its use in
the testing of new drugs and the diagnosis of disease, however, is largely
untested. Although there has been some early success in linking certain
polymorphisms to susceptibility to disease and outcomes of drug therapy,
pharmaceutical companies are not yet certain how polymorphism data can be used,
or if it can be used on a cost-effective basis, in clinical trials or in drug
development. Furthermore, public acceptance of the use of polymorphism data is
uncertain. Current and future patient privacy and health care laws and
regulations issued by the U.S. Food and Drug Administration may also limit the
use of this data.

The ability of the Celera Genomics Group to protect its intellectual
property rights will affect its polymorphism program. Such protection is
uncertain due to the uncertainty of patent law relating to genomics in general
and the novelty of this particular aspect of genomics. In addition, the Celera
Genomics Group will be dependent on new technology, including technology
provided by the PE Biosystems Group, to make the use of polymorphism information
cost-effective so as to make it marketable to the public. This technology is
still in early stages of development and its application to this area remains
uncertain.

INITIAL RELIANCE ON PHARMACEUTICAL INDUSTRY

The Celera Genomics Group believes that for the next few years it will
derive a significant portion of its revenues from fees paid by pharmaceutical
companies and larger biotechnology companies for its information products and
services. The Celera Genomics Group has also had preliminary discussions with
certain universities and similar research organizations about becoming
customers, but expects this market to develop at a slower rate. The number of
subscribers for the Celera Genomics Group's products during this period may be
limited due to their nature and price. Pharmaceutical and biotechnology
companies could decide not to subscribe to some or all of the Celera Genomics
Group's information products or services, or could decide to conduct their own
polymorphism discovery and analysis or work with the Celera Genomics Group's
competitors.

ANTICIPATED FUTURE LOSSES; UNCERTAINTY
OF OPERATING RESULTS

The Celera Genomics Group has earned small amounts of revenues to date and
expects that it will continue to incur net operating losses at least through
2001. The Celera Genomics Group has a small number of customers, the revenues
from which will offset only a small portion of its expenses. In order to meet
its business plan, the Celera Genomics Group will require additional customers
in the next few years. In addition, even if the Celera Genomics Group is able to
enter into contracts with additional customers, those contracts may be subject
to milestones that may not be achieved. As a result, there is a high degree of
uncertainty that the Celera Genomics Group will be able to achieve profitable
operations.

HIGHLY DEPENDENT ON KEY EMPLOYEES

The Celera Genomics Group is highly dependent on the principal members of
its scientific and management staff, particularly Dr. Venter, its President. For
the sequencing and assembly of the human genome, the Celera Genomics Group
believes the following members of its staff are essential: Dr. Venter; Dr. Mark
Adams, Vice President for Genome Programs; and Drs. Eugene Myers and Granger
Sutton, who are responsible for assembling the genome. Additional members of its
medical, scientific and bioinformatics staff are important to the development of
information, tools and services required for implementation of its business
plan, including Dr. Sam Broder, Executive Vice President and Chief Medical
Officer.

The Celera Genomics Group does not have employment agreements or non-compete
agreements with any of its employees. It also does not maintain key man life
insurance on any

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of them. The loss of any of these persons could have a material adverse effect
on the Celera Genomics Group's ability to achieve its goals, particularly the
completion of its information products.

Product development and commercialization will require additional employees
in such areas as software and bioinformatics development and customer support.
The inability to acquire such services or develop such expertise could have a
material adverse effect on the Celera Genomics Group.

UNCERTAIN PROTECTION OF INTELLECTUAL
PROPERTY AND PROPRIETARY RIGHTS

The Celera Genomics Group's ability to compete and to achieve profitability
may be affected by its ability to protect its proprietary technology and
intellectual property. While Celera Genomics will be primarily dependent on
revenues from access fees to its discovery and information system, obtaining
patent protection may also be important to its business. Patent law affecting
Celera Genomics' business, particularly gene sequences and polymorphisms, is
uncertain.

Moreover, the Celera Genomics Group may be dependent on protecting, through
copyright law or otherwise, its databases to prevent other organizations from
taking information from databases and copying and reselling it. Copyright law
currently provides uncertain protection to organizations like the Celera
Genomics Group that seek to prevent others from reselling their data. Changes in
copyright and patent law could expand or reduce the extent to which the Celera
Genomics Group and its customers are able to protect their intellectual
property.

ADVERSE EFFECT OF PUBLIC DISCLOSURE OF
GENOMIC SEQUENCE DATA

The Celera Genomics Group has committed to make available to the public
basic human sequence data. The release of sequence data could undermine the
ability of the Celera Genomics Group and its customers to obtain intellectual
property protection. Customers may conclude that uncertainties of such
protection decrease the value of the Celera Genomics Group's information
products and services and, as a result, it may not be able to charge fees
sufficient to allow it to achieve profitability.

HIGHLY COMPETITIVE BUSINESS

A number of companies, institutions and government-financed entities are
engaged in various genomics initiatives. At least two other companies, Genset,
S.A. and Incyte Pharmaceuticals, Inc., have announced their intention to market
to the pharmaceutical industry products and services similar to those being
offered by the Celera Genomics Group. Additional competitors may attempt to
compete with the Celera Genomics Group in the future, including companies that
may seek to resell publicly available genomic data.

YEAR 2000

In fiscal 1997, we initiated a world-wide program to assess the expected
impact of the Year 2000 date recognition problem on our existing computer
systems; non-information technology systems, including embedded and
process-control systems; product offerings; and significant suppliers. Portions
of this program are not expected to be completed before December 31, 1999. If we
are not successful in implementing our Year 2000 compliance plan, or there are
delays in and/or increased costs associated with implementing those changes, the
Year 2000 problem could have a material adverse effect on the Celera Genomics
Group's results of operations and financial condition. In addition, we have not
fully determined the likely impact of third parties' compliance efforts on the
Celera Genomics Group's interface systems and business.

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<PAGE>
INFORMATION ABOUT THE SPECIAL MEETING AND VOTING

DATE, TIME AND PLACE OF MEETING

We are providing this proxy statement to you in connection with the
solicitation of proxies by our board of directors for use at the special
meeting. The special meeting will be held on , 1999, at 10:00 a.m.,
eastern time, in our auditorium at 50 Danbury Road, Wilton, Connecticut. This
proxy statement is first being mailed to our shareholders on or about ,
1999.

RECORD DATE

We have established , 1999 as the record date for the special meeting.
Only holders of record of shares of our existing common stock at the close of
business on this date will be eligible to vote at the special meeting.

PROPOSALS TO BE CONSIDERED AT THE MEETING

You will be asked to consider and vote on the three proposals described in
this proxy statement.

If the recapitalization proposal is approved, we will implement it whether
or not either of the two related stock incentive plan proposals are approved. If
the recapitalization proposal is not approved, we will not implement the other
proposals.

We do not expect that any other matter will be brought before the special
meeting. If, however, other matters are properly presented, the individuals
named on your proxy card will vote in accordance with their judgment with
respect to those matters.

VOTE REQUIRED TO APPROVE THE PROPOSALS

The recapitalization proposal will require the favorable vote of the holders
of two-thirds of the outstanding shares of existing common stock. As a result,
abstentions and broker non-votes on the recapitalization proposal will have the
same effect as negative votes. Broker non-votes occur when a broker returns a
proxy but does not have authority to vote on a particular proposal.

Each of the related stock incentive plan proposals will be decided by the
favorable vote of a majority of the votes cast at the special meeting. As a
result, abstentions and broker non-votes will not affect the outcome on these
two proposals.

Each outstanding share of existing common stock is entitled to one vote on
each proposal. As of January 25, 1999, the most recent practicable date prior to
the date of this proxy statement, we had issued and outstanding 50,316,445
shares of existing common stock. The shares of existing common stock held in our
treasury will not be entitled to vote or counted in determining the number of
outstanding shares.

Our directors and executive officers beneficially own approximately 2% of
the outstanding shares of our existing common stock.

QUORUM

In order to carry on the business of the special meeting, we must have a
quorum. This means a majority of the outstanding shares of our existing common
stock must be represented in person or by proxy at the special meeting.
Abstentions and broker non-votes will count for quorum purposes.

PROCEDURE FOR VOTING BY PROXY

If you properly fill in your proxy card and send it to us in time to vote,
your shares will be voted as you have directed. If you sign the proxy card but
do not make specific choices, the individuals named on your proxy card will vote
your shares in favor of approval and adoption of each proposal. If you mark
"abstain" on your proxy card, your shares will be counted as present for
purposes of determining the presence of a quorum. If necessary, unless you have
indicated on your proxy card that you wish to vote against one or more of the
proposals, the individuals named on your proxy card may vote in favor of a
proposal to adjourn the special meeting to a later date in order to solicit and
obtain sufficient votes for any of the proposals.

A PROXY CARD IS ENCLOSED FOR YOUR USE. TO VOTE WITHOUT ATTENDING THE SPECIAL
MEETING IN PERSON, YOU SHOULD COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN
THE ACCOMPANYING

26
<PAGE>
ENVELOPE, WHICH IS POSTAGE-PAID IF MAILED IN THE UNITED STATES.

If you have completed and returned a proxy card, you can still vote in
person at the special meeting. You may revoke your proxy before it is voted by
submitting a new proxy card with a later date; by voting in person at the
special meeting; or by filing with the Secretary of our company a written
revocation of proxy. Attendance at the special meeting will not of itself
constitute revocation of a proxy.

PROPOSAL 1--THE RECAPITALIZATION PROPOSAL

DESCRIPTION OF THE RECAPITALIZATION

You are being asked to consider and approve the recapitalization under
which:

- our existing company will merge with a subsidiary of PE Corporation, a
Delaware corporation newly formed by us for the purpose of implementing
the recapitalization; and

- each outstanding share of our existing common stock will be automatically
converted in the merger into one share of PE Biosystems Stock of PE
Corporation and .5 of a share of Celera Genomics Stock of PE Corporation.

Your vote approving the recapitalization will also constitute adoption of the
agreement and plan of merger governing the merger. Accordingly, you should
carefully read the agreement and plan of merger, which is attached to this proxy
statement as Annex I.

If the recapitalization is implemented, our existing company will become a
wholly owned subsidiary of PE Corporation, which will initially own no assets
other than our existing company. In addition, your rights as shareholders will
cease to be governed by the New York Business Corporation Law and our existing
certificate of incorporation and existing by-laws. Instead, your rights as
stockholders will be governed by the Delaware General Corporation Law and a new
certificate of incorporation of PE Corporation which is attached as Annex II and
new by-laws of PE Corporation which have been filed with the SEC. The new
certificate of incorporation also contains the terms of the PE Biosystems Stock
and the Celera Genomics Stock. Accordingly, you should also carefully read the
new certificate of incorporation.

IF THE RECAPITALIZATION PROPOSAL IS NOT APPROVED, THE RECAPITALIZATION WILL
NOT BE CONSUMMATED AND OUR EXISTING COMMON STOCK WILL NOT BE CONVERTED INTO PE
BIOSYSTEMS STOCK AND CELERA GENOMICS STOCK.

If the recapitalization proposal is approved, we plan to implement the
recapitalization by filing a certificate of merger with the Secretary of State
of New York. We presently anticipate that this filing will be made as soon as
possible after the special meeting. No state or federal regulatory approvals are
required for the consummation of the recapitalization.

Our board of directors may terminate the agreement and plan of merger and
not implement the recapitalization proposal for any reason at any time prior to
the effective time of the recapitalization, either before or after shareholder
approval. In addition, the agreement and plan of merger may be amended prior to
the effective time of the recapitalization. However, the agreement and plan of
merger may not be amended after the recapitalization has been approved if, in
the judgment of our board of directors, the amendment would have a material
adverse effect on the rights of our shareholders.

BACKGROUND OF AND REASONS FOR THE RECAPITALIZATION PROPOSAL

Our board of directors approved the recapitalization proposal following its
review of various alternatives for enhancing the overall return to our
shareholders, advancing our financial and strategic objectives and creating
flexibility for our future growth.

The recapitalization proposal is designed to separate the performance of our
Celera Genomics business from the rest of our company and to charge the managers
of each Group with the responsibility of maximizing the returns from their
businesses. Holders of PE Biosystems Stock are expected to benefit from the
earnings growth and cash flow provided by our PE Biosystems' life sciences
business. Holders of Celera

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<PAGE>
Genomics Stock are expected to benefit from the anticipated success and progress
of Celera Genomics' research and development efforts rather than near-term
earnings since Celera Genomics is expected to incur significant losses during
its start-up period.

The recapitalization proposal is consistent with our efforts to maximize
shareholder value by focusing our business on accelerated discovery and enabling
technology in the life sciences sector. In connection with this objective, we
have announced the following key initiatives since June 30, 1997:

- In November 1997, we acquired Molecular Informatics, a pioneer in the
bioinformatics industry, and have combined it with PE Nelson, our own
informatics division, to create PE Informatics, a software-focused
business that provides genomic and other data management products
directed toward drug discovery and research;

- In January 1998, we announced the completion of our acquisition of
Perseptive Biosystems, a publicly-traded company with fiscal 1997
revenues of $96 million, furthering our commitment to provide the
expanding pharmaceutical marketplace with a fully integrated platform to
compress the time and cost of new drug discovery and development;

- In May 1998, we signed letters of intent with Dr. Venter and The
Institute for Genomics Research to form our Celera Genomics subsidiary
with a strategy to complete the sequencing of the human genome by
December 31, 2001, enabling our company to potentially become the
definitive source for biomedical and genomics information; and

- In January 1999, we announced a decision to pursue the sale of the
Analytical Instruments business, thereby completing the redefinition of
our company.

At a meeting held on August 20, 1998, our board of directors considered a
variety of proposals to increase the overall value of our existing common stock
to our shareholders. Our board of directors evaluated alternatives available to
us in view of its strategic objective of financing the near-term business plan
of the newly formed Celera Genomics unit. Our board of directors expects Celera
Genomics to incur significant losses during its start-up period due to the
considerable research and development expenditures required by the human genome
sequencing project. Our board of directors had extensive discussions with our
senior financial and legal officers, as well as representatives of Morgan
Stanley & Co. Incorporated ("Morgan Stanley Dean Witter"), one of our financial
advisors. Among the alternatives which they considered were:

- the preservation of our current equity and operating structure;

- the creation of two classes of common stock to reflect separately the
results of our established PE Biosystems' life sciences and Analytical
Instruments businesses and our new Celera Genomics business;

- an initial public offering of common stock of Celera Genomics and the
spin-off of the balance of that company to holders of existing common
stock; and

- the formation of a subsidiary which would develop Celera Genomics's
technology and license it to our company and the spin-off of this
subsidiary to holders of existing common stock ("R&D Spin-off").

Our board of directors used several criteria to contrast the benefits and
drawbacks of these transaction alternatives to our shareholders including: (1)
tax efficiency; (2) capital markets acceptance; (3) likelihood of success; (4)
flexibility to provide equity incentives for Celera Genomics' employees; (5)
ability of Celera Genomics to raise equity capital in the future; (6)
maintenance of control by our board of directors over both Groups; and (7)
long-term maximization of our initial investment in Celera Genomics.

Our board of directors concluded that an initial public offering and
spin-off of our Celera Genomics subsidiary would not be feasible at this time
because Celera Genomics does not

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<PAGE>

have the access to capital and the full complement of resources to be an
independent public company. These include audit, legal, public relations and
tax, services which could easily be supplied by our company. These transactions
would also limit our board of directors' ability to guide the PE Biosystems and
Celera Genomics' relationship and the access by PE Biosystems and Celera
Genomics to the technology of the other.

Our board of directors concluded that an R&D Spin-off would not provide a
vehicle for either raising equity capital or providing true equity incentives to
Celera Genomics' employees. An R&D Spin-off also would limit our board of
directors' ability to guide the PE Biosystems and Celera Genomics' relationship
and the access by PE Biosystems and Celera Genomics to the technology of the
other.

On November 19, 1998, our board of directors confirmed its prior conclusions
concerning alternatives available to our company and identified the following as
the advantages of the recapitalization proposal:

- The creation of two classes of common stock intended to reflect
separately the performance of the PE Biosystems Group and the Celera
Genomics Group should increase shareholder value by more specifically
tracking the earnings, cash flows and investment results of each Group.
The PE Biosystems Stock should continue to be valued in the market based
on growth in earnings and cash flows. We believe that the Celera Genomics
Stock will not be valued on earnings since the Celera Genomics Group is
expected to incur significant losses during its start-up period. Instead,
Celera Genomics' valuation will be based on the success of its research
and development efforts and progress in meeting its business plan. As a
result, we expect that holders of PE Biosystems Stock and Celera Genomics
Stock will be distinct investor groups;

- The creation of two classes of common stock should enhance the autonomy
of the Groups by allowing each Group and its management to focus on that
Group's own identity, business strategy, financial model and culture and
to structure employee incentives which are tied directly to the share
performance of that Group;

- The recapitalization proposal, in contrast to other alternatives, will
retain for us the advantages of doing business as a single company and
allow each Group to capitalize on relationships with the other Group. As
part of one company, each Group will be in a position to benefit from
cost savings and synergies with the other compared to the costs each
Group would incur if it operated separately. As part of a single
organization, we expect to incur significant savings in corporate
overhead expenses while preserving the benefits of tax consolidation,
credit availability and a shared strategic vision;

- The recapitalization proposal, in contrast to other alternatives, permits
our board of directors to review technology sharing arrangements between
the PE Biosystems Group and the Celera Genomics Group. This should allow
for the shortest path to commercialization of new technologies either
into instrument systems and reagents sold by the PE Biosystems Group to
its customers or through information and related discovery services
provided by the Celera Genomics Group to its pharmaceutical partners;

- The financial and strategic flexibility, after the recapitalization for
us to raise capital for the PE Biosystems Group and the Celera Genomics
Group and to engage in mergers, acquisitions, strategic investments,
capital restructurings and other transactions affecting either the PE
Biosystems Group or the Celera Genomics Group will be enhanced as a
result of the availability of two different equity securities. In the
ordinary course of business, our board of directors may consider such
transactions from time to

29
<PAGE>
time but it has no current plans or intentions with respect to any
specific transaction; and

- The implementation of the recapitalization proposal is not expected to be
taxable to us or you, except for cash received instead of fractional
shares of Celera Genomics Stock. See "--United States Federal Income Tax
Considerations."

Our board of directors also considered the following potential disadvantages
of the recapitalization proposal:

- The recapitalization proposal requires a complex capital structure that
may not be well-understood by investors and thus could inhibit the
efficient valuation of either or both classes of common stock;

- There is limited experience with the use of targeted stock by companies
having a business unit with an established history of earnings and
another business unit in the start-up stage;

- The potential diverging or conflicting interests of the two Groups and
the issues that could arise in resolving any conflicts; see "Risk
Factors--Numerous Potential Conflicting Interests Between Classes of
Common Stock" and "--Management and Allocation Policies Subject to Change
Without Stockholder Approval;"

- Investors in PE Biosystems Stock and Celera Genomics Stock will be
exposed to the risks of our consolidated businesses and liabilities
because both Groups remain legally a part of our company; see "Risk
Factors--You Will Remain Stockholders of One Company; Financial Effects
on One Group Could Affect the Other" and "--Management and Allocation
Policies Subject to Change Without Stockholder Approval;"

- The market values of PE Biosystems Stock and Celera Genomics Stock could
be affected by market reaction to decisions by our board of directors and
management that investors perceive to affect differently one class of
common stock compared to the other, such as decisions regarding the
allocation of assets, expenses, liabilities and corporate opportunities
and financing resources between the Groups; and

- The possible inability to use the pooling method of accounting in
connection with future acquisitions using Celera Genomics Stock, and the
possible inability or increased difficulty of receiving a ruling from the
Internal Revenue Service in connection with a proposed acquisition to be
effected using either PE Biosystems Stock or Celera Genomics Stock.

Our board of directors determined that on balance the potential advantages
of the recapitalization proposal outweigh the potential disadvantages and
concluded that the recapitalization proposal is in the best interests of our
company and our shareholders.

On January 21, 1999, our board of directors unanimously approved the
agreement and plan of merger implementing the recapitalization and the calling
of the special meeting.

RECOMMENDATION OF THE BOARD OF DIRECTORS

Our board of directors has carefully considered the recapitalization
proposal and believes that the approval of the recapitalization proposal by the
shareholders is in the best interests of our company and our shareholders. OUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU APPROVE THE RECAPITALIZATION
PROPOSAL.

MANAGEMENT AND ALLOCATION POLICIES

Because the PE Biosystems Group and the Celera Genomics Group will each be a
part of a single company, we have carefully considered a number of issues with
respect to the financing of the PE Biosystems Group and the Celera Genomics
Group, competition between Groups, inter-Group business transactions, access to
technology and know-how, corporate opportunities and the allocation of debt,
corporate overhead, interest, taxes and other charges between the two Groups.
Our board of directors and management have established

30
<PAGE>

policies to accomplish the fundamental objective of the recapitalization
proposal, which is to separate the business and operations of the Celera
Genomics Group from those of the PE Biosystems Group and to operate each Group
on a stand-alone basis. These policies establish guidelines to help us to
allocate costs and charges between the two Groups on an objective basis and,
except as described below, to ensure that transactions between the PE Biosystems
Group and the Celera Genomics Group are made on terms that approximate the terms
that could be obtained from unaffiliated third parties.

POLICIES SUBJECT TO CHANGE WITHOUT STOCKHOLDER APPROVAL

We have summarized our management and allocation policies as we expect them
to be effective upon the recapitalization. We are not requesting shareholder
approval of these policies.

Our board of directors may modify or rescind these policies, or may adopt
additional policies, in its sole discretion without stockholder approval.
However, our board of directors has no present plans to do so. A board of
directors' decision to modify or rescind such policies, or adopt additional
policies could have different effects upon holders of PE Biosystems Stock and
holders of Celera Genomics Stock or could result in a benefit or detriment to
one class of stockholders compared to the other class. Our board of directors
would make any such decision in accordance with its good faith business judgment
that such decision is in the best interests of our company and all of our
stockholders as a whole. See "Risk Factors-- Numerous Potential Conflicting
Interests Between Classes of Common Stock."

FIDUCIARY AND MANAGEMENT RESPONSIBILITIES

Because the PE Biosystems Group and the Celera Genomics Group will continue
to be a part of a single company, our directors and officers will have the same
fiduciary duties to holders of the PE Biosystems Stock and the Celera Genomics
Stock that they currently have to the holders of our existing common stock.
Under Delaware law, absent an abuse of discretion, a director or officer will be
deemed to have satisfied his of her fiduciary duties to our company and our
stockholders if that person is disinterested and acts in accordance with his or
her good faith business judgment in the interests of our company and all of our
stockholders as a whole. Our board of directors and our chief executive officer,
in establishing policies with regard to intracompany matters such as business
transactions between Groups and allocations of assets, liabilities, debt,
corporate overhead, taxes, interest, corporate opportunities and other matters,
will consider various factors and information which could benefit or cause
detriment to the stockholders of the respective Groups and will make
determinations in the best interests of our company and all of our stockholders
as a whole.

Because the recapitalization will result in no change in our corporate
structure, Tony L. White, the Chairman of the Board of Directors, President and
Chief Executive Officer, will have the same duties and responsibilities for the
management of our assets and businesses which comprise the PE Biosystems Group
and the Celera Genomics Group following the recapitalization as he has now. The
individuals named below will hold the positions listed next to their names and
will continue to have the same general responsibilities that they had prior to
the recapitalization. The costs attributable to their responsibilities will be
allocated as discussed below under "--Financial Statements; Allocation
Matters--Corporate Overhead and Administrative Shared Services."

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<PAGE>

<TABLE>
<CAPTION>
OFFICER POSITION
- ------------------------ ----------------------------
<S> <C>
Tony L. White Chairman, President and
Chief Executive Officer

Noubar B. Afeyan, Ph.D. Senior Vice President and
Chief Business Officer

Manuel A. Baez Senior Vice President and
Senior Vice President of
the PE Biosystems Group

Michael W. Hunkapiller, Senior Vice President and
Ph.D. President of the PE
Biosystems Group

William B. Sawch Senior Vice President,
General Counsel and
Secretary

J. Craig Venter, Ph.D. Senior Vice President and
President of the Celera
Genomics Group

Dennis L. Winger Senior Vice President and
Chief Financial Officer
</TABLE>

We refer to the individuals with these positions as "senior officers" in this
proxy statement.

Our chief executive officer, with the approval of our board of directors,
has designated separate management teams for each of the PE Biosystems Group and
the Celera Genomics Group to ensure that the efforts of each team of managers
are focused on the business and operations for which they have responsibility.
These individuals are named in "PE Biosystems Group--Business-- Management" and
"Celera Genomics Group-- Business--Scientific Staff and Management."

COMMON STOCK OWNERSHIP OF DIRECTORS AND SENIOR OFFICERS

As a policy, our board of directors will periodically monitor the ownership
of shares of PE Biosystems Stock and shares of Celera Genomics Stock by our
directors and senior officers and our option grants to them so that their
interests are generally aligned with the two classes of common stock and with
their duty to act in the best interests of our company and our stockholders as a
whole. However, because of the anticipated differences in trading values between
the PE Biosystems Stock and the Celera Genomics Stock, the actual value of their
interests in the PE Biosystems Stock and Celera Genomics Stock will vary
significantly. Accordingly, it is possible that directors or senior officers
could favor one Group over the other due to their stock and option holdings. See
"Risk Factors--Stock Ownership of Directors and Officers Could Create Conflicts
of Interest."

FINANCING ACTIVITIES

We will continue to manage most financial activities on a centralized basis.
These activities include the investment of surplus cash, the issuance and
repayment of short-term and long-term debt and the issuance and repurchase of
any preferred stock. If we transfer cash or other property allocated to one
Group to the other Group, we will account for such transfer in one of the
following ways, as determined by our board of directors:

- - As a reallocation of "pooled" debt or preferred stock, as described under
"Company Debt and Preferred Stock" below;

- - As a short-term or long-term loan from one Group to the other, or as a
repayment of a previous borrowing, as described under "Inter-Group Loans"
below;

- - As an increase or decrease in the number of Celera Genomics Designated
Shares, as described under "Future Equity Contributions to be Reflected as
Celera Genomics Designated Shares" below; or

- - As a sale of assets between the two Groups.

Our board of directors has not adopted specific criteria to determine which
of the foregoing will be applied to a particular transfer of cash or property
from one Group to the other. Our board of directors will make these
determinations, either in specific instances or by setting applicable policies
generally, in the exercise of its business judgment based on all

32
<PAGE>

relevant circumstances, including the financing needs and objectives of the
receiving Group, the investment objectives of the transferring Group, the
availability, cost and time associated with alternative financing sources,
prevailing interest rates and general economic conditions. We will make all
transfers of material assets from one Group to the other on a fair value basis
for the foregoing purposes, as determined by our board of directors. See
"--Transfers of Assets Between Groups."

Although we may allocate our debt and preferred stock between Groups, the
debt and preferred stock will remain our obligations and all of our stockholders
will be subject to the risks associated with those obligations. See "Risk
Factors--Factors Relating to Common Stock-- You Will Remain Stockholders of One
Company; Financial Effects on One Group Could Affect the Other."

COMPANY DEBT AND PREFERRED STOCK. We will allocate our debt between the
Groups or, if we so determine, in its entirety to a particular Group. We will
allocate preferred stock, if issued, in a similar manner. We refer to such debt
and preferred stock as being "pooled."

Cash allocated to one Group that is used to repay pooled debt or redeem
pooled preferred stock will decrease such Group's allocated portion of the
pooled debt or preferred stock. Cash or other property allocated to one Group
that is transferred to the other Group will, if so determined by our board of
directors, decrease the transferring Group's allocated portion of the pooled
debt or preferred stock and, correspondingly, increase the recipient Group's
allocated portion of the pooled debt or preferred stock.

Pooled debt will bear interest for Group financial statement purposes at a
rate equal to the weighted average interest rate of the debt calculated on a
quarterly basis and applied to the average pooled debt balance during the
period. Preferred stock, if issued and if pooled in a manner similar to the
pooled debt, will bear dividends for Group financial statement purposes at a
rate based on the weighted average dividend rate of the preferred stock
similarly calculated and applied. Any expense related to increases in pooled
debt or preferred stock will be reflected in the weighted average interest or
dividend rate of such pooled debt or preferred stock as a whole.

If we allocate debt for a particular financing in its entirety to one Group,
that debt will bear interest for Group financial statement purposes at the rate
that we determine. If we allocate preferred stock in its entirety to one Group,
we will charge the dividend cost to that Group in a similar manner. If the
interest or dividend cost is higher than our actual cost, the other Group will
receive a credit for an amount equal to the difference as compensation for the
use of our credit capacity. Any expense related to debt or preferred stock that
is allocated in its entirety to a Group will be allocated in whole to that
Group.

INTER-GROUP LOANS. Cash or other property that we allocate to one Group
that is transferred to the other Group, could, if so determined by our board of
directors, be accounted for either as a short-term loan or as a long-term loan.
Short-term loans will bear interest at a rate equal to the weighted average
interest rate of our pooled debt. If we do not have any pooled debt, our board
of directors will determine the rate of interest for such loan. Our board of
directors will establish the terms on which long-term loans between the Groups
will be made, including interest rate, amortization schedule, maturity and
redemption terms.

FUTURE EQUITY CONTRIBUTIONS TO BE REFLECTED AS CELERA GENOMICS DESIGNATED
SHARES. Cash or other property that we allocate to the PE Biosystems Group that
is contributed as additional equity to the Celera Genomics Group will increase
the number of Celera Genomics Designated Shares. Cash or other property that we
allocate to the Celera Genomics Group that is transferred to the PE Biosystems
Group will, if so determined by our board of directors, decrease the number of
Celera Genomics Designated Shares.

EQUITY ISSUANCES AND REPURCHASES AND DIVIDENDS. We will reflect all
financial effects of issuances and repurchases of shares of PE Biosystems Stock
or shares of Celera Genomics

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<PAGE>

Stock entirely in the financial statements of that Group except as described in
the next sentence. We will reflect all financial effects of issuances of
additional shares of Celera Genomics Stock, which have been reflected as a
reduction in the number of Celera Genomics Designated Shares, entirely in the
financial statements of the PE Biosystems Group. We will reflect financial
effects of dividends or other distributions on, and purchases of, shares of PE
Biosystems Stock or Celera Genomics Stock entirely in the respective financial
statements of the PE Biosystems Group and the Celera Genomics Group.

COMPETITION BETWEEN GROUPS

Neither the PE Biosystems Group nor the Celera Genomics Group will engage in
each other's principal businesses, except for joint transactions with each
other. Joint transactions may include joint ventures or other collaborative
arrangements to develop, market, sell and support new products and services.
Third parties may also participate in such joint transactions. See "--Transfers
of Assets Between Groups-- Joint Transactions." The terms of any joint
transactions will be determined by our chief executive officer or, in
appropriate circumstances, our board of directors.

Our chief executive officer or, in appropriate circumstances, our board of
directors will make decisions whether to permit indirect competition between the
Groups. Indirect competition could occur if and when:

- one Group uses products of third parties in that Group's products rather
than using the other Group's products;

- a third party uses a product of one Group in the third party's products
which compete with the other Group's products; or

- a Group licenses technology allocated to that Group to a third party that
is a competitor of the other Group.

See "Risk Factors--Numerous Potential Conflicting Interests Between Classes of
Common Stock-- Competition Between Groups."

The Groups may compete in a business which is not a principal business of
the other Group.

TRANSFERS OF ASSETS BETWEEN GROUPS

The new certificate of incorporation permits the transfer of assets between
Groups. Our board of directors has determined that all such transfers will be
made at fair value, as determined by our board of directors, except as described
below. The consideration for such transfers may be paid by one Group to the
other in cash or other consideration, as determined by our board of directors.

Our board of directors has adopted specific policies for the sale of
products and services between Groups and joint transactions with each other and
third parties as set forth below.

SALES OF PRODUCTS AND SERVICES BETWEEN GROUPS. A Group will sell products
or services to the other Group on terms that would be available from third
parties in commercial transactions. If terms for such transactions are not
available from a third party, the purchasing Group will (1) pay for such
products at fair value as determined by our board of directors and (2) pay for
such services at fair value, as determined by our board of directors, or at the
cost, including overhead, of the selling Group.

JOINT TRANSACTIONS. The Groups may from time to time engage in transactions
jointly, including with third parties, as described under "--Competition Between
Groups." Research and development and other services performed by one Group for
a joint venture or other collaborative arrangement will be charged at fair value
as determined by our board of directors.

ACCESS TO TECHNOLOGY AND KNOW-HOW

Each Group will have free access to all of our technology and know-how,
excluding products and services of the other Group, that may be useful in that
Group's business, subject to obligations and limitations applicable to our
company and to such exceptions that our board of directors may determine. The
Groups will consult with each other on a regular basis

34
<PAGE>
concerning technology issues that affect both Groups.

REVIEW OF CORPORATE OPPORTUNITIES

Our board of directors will review any matter which involves the allocation
of a corporate opportunity to either the PE Biosystems Group or the Celera
Genomics Group or in part to the PE Biosystems Group and in part to the Celera
Genomics Group. In accordance with Delaware law, our board of directors will
make its determination with regard to the allocation of any such opportunity and
the benefit of such opportunity in accordance with their good faith business
judgment of the best interests of our company and all of our stockholders as a
whole. Among the factors that our board of directors may consider in making this
allocation is whether a particular corporate opportunity is principally related
to the business of the PE Biosystems Group or the Celera Genomics Group; whether
one Group, because of its managerial or operational expertise, will be better
positioned to undertake the corporate opportunity; and existing contractual
agreements and restrictions.

FINANCIAL STATEMENTS; ALLOCATION MATTERS

We will prepare financial statements in accordance with generally accepted
accounting principles, consistently applied, for the PE Biosystems Group and the
Celera Genomics Group, and these financial statements, taken together, will
comprise all of the accounts included in our corresponding consolidated
financial statements. The financial statements of each of the PE Biosystems
Group and the Celera Genomics Group will reflect the financial condition,
results of operations and cash flows of the businesses included therein.

Group financial statements will also include allocated portions of our debt,
interest, corporate overhead and costs of administrative shared services and
taxes. We will make these allocations for the purpose of preparing each Group's
financial statements; however, holders of PE Biosystems Stock and Celera
Genomics Stock will continue to be subject to all of the risks associated with
an investment in our company and all of our businesses, assets and liabilities.
See "Risk Factors--You Will Remain Stockholders of One Company; Financial
Effects on One Group Could Affect the Other" and the historical financial
statements for the PE Biosystems Group and the Celera Genomics Group included in
this proxy statement.

In addition to allocating debt and interest as described above under
"--Financing Activities" and assets as described above under "Transfers of
Assets Between Groups," our board of directors has adopted the following
allocation policies, each of which is reflected in the combined financial
statements of the respective Groups included in this proxy statement:

- CORPORATE OVERHEAD AND ADMINISTRATIVE SHARED SERVICES. We will allocate a
portion of our corporate overhead to the PE Biosystems Group and the
Celera Genomics Group based upon the use of services by that Group.
Corporate overhead includes costs of our executive management, human
resources, legal, accounting and auditing, tax, treasury, strategic
planning and environmental services functions. We will allocate in a
similar manner a portion of our costs of administrative shared services,
such as information technology services. Where determinations based on
use alone are not practical, we will use other methods and criteria that
we believe are equitable and provide a reasonable estimate of the cost
attributable to the Groups.

- TAXES. We will determine the federal income taxes of our company and our
subsidiaries which own assets allocated between the Groups on a
consolidated basis. We will allocate consolidated federal income tax
provisions and related tax payments or refunds between the Groups based
principally on the taxable income and tax credits directly attributable
to each Group. Such allocations will reflect each Group's contribution,
whether positive or negative, to our company's consolidated

35
<PAGE>

federal taxable income and the consolidated federal tax liability and tax
credit position. We will credit tax benefits that can not be used by the
Group generating those benefits but can be used on a consolidated basis
to the Group that generated such benefits. Inter-Group transactions will
be treated as taxed as if each Group was a stand-alone company. Tax
benefits generated by the Celera Genomics Group commencing July 1, 1998,
which can then be utilized on a consolidated basis, will be credited to
the Celera Genomics Group up to a maximum amount of $75 million.

Had the Groups filed separate tax returns, the provision for income taxes
and net income for each Group would not have differed from the amounts
reported in the Groups' statements of income for the year ended June 30,
1998 or for the three-month periods ended September 30, 1997 and 1998.
However, the amounts of current and deferred taxes and taxes payable or
refundable allocated to each Group in these historical financial
statements may differ from those that would have been allocated to each
Group had they filed separate income tax returns.

Depending on the tax laws of the respective jurisdictions, we calculate
state and local income taxes on either a consolidated or combined basis
or on a separate corporation basis. We will allocate state income tax
provisions and related tax payments or refunds determined on a
consolidated or combined basis between the Groups based on their
respective contributions to such consolidated or combined state taxable
incomes. We will allocate state and local income tax provisions and
related tax payments which we determine on a separate corporation basis
between the Groups in a manner designed to reflect the respective
contributions of the Groups to the corporation's separate state or local
taxable income.

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

DIVIDEND POLICY

We currently pay a quarterly dividend of $.17 per share on our existing
common stock, or a total of $.68 per share per year. We initially intend to pay
the same quarterly dividend of $.17 per share on the PE Biosystems Stock. We do
not anticipate paying dividends on the Celera Genomics Stock for the foreseeable
future. Under the recapitalization proposal and Delaware law, our board of
directors would not be required to pay dividends in accordance with the
foregoing dividend policies. We do not believe that the recapitalization
proposal will adversely affect our ability to pay cash dividends on the PE
Biosystems Stock.

In making its dividend decisions regarding the PE Biosystems Stock and the
Celera Genomics Stock, our board of directors will rely on the respective
financial statements of the PE Biosystems Group and the Celera Genomics Group.
See the historical financial statements of the PE Biosystems Group and the
Celera Genomics Group included in this proxy statement. The method of
calculating net income (loss) per share for the PE Biosystems Stock and the
Celera Genomics Stock is set forth in the new certificate of incorporation in
Annex II under the definitions of PE Corporation Earnings (Loss) Attributable to
the PE Biosystems Group and PE Corporation Earnings (Loss) Attributable to the
Celera Genomics Group. We encourage you to carefully read these definitions.

Our board of directors does not currently intend to change the
above-described dividend policy but reserves the right to do so at any time
based primarily on the financial condition, results of operations and business
requirements of the respective Groups and of our company as a whole. Future
dividends on the PE Biosystems Stock and Celera Genomics Stock will be payable
when, as and if declared by our board of directors out of the lesser of (1) all
funds of our company legally available therefor and (2) the amount calculated
under the definition of that

36
<PAGE>

Group's Available Dividend Amount contained in the new certificate of
incorporation in Annex II. We encourage you to carefully read these definitions.
Each Group's Available Dividend Amount is intended to be similar to the amount
that would be legally available for the payment of dividends on the stock for
that Group under Delaware law if that Group were a separate company. See
"--Description of PE Biosystems Stock and Celera Genomics Stock-- Dividends."

DESCRIPTION OF PE BIOSYSTEMS STOCK AND CELERA GENOMICS STOCK

We have summarized below the material terms of the PE Biosystems Stock and
the Celera Genomics Stock. The summary is not complete. We encourage you to read
the new certificate of incorporation which is attached as Annex II.

AUTHORIZED AND OUTSTANDING SHARES

Our existing certificate of incorporation authorizes us to issue 181,000,000
shares of stock, consisting of 180,000,000 shares of common stock, par value
$1.00 per share, and 1,000,000 shares of preferred stock, par value $1.00 per
share. Our board of directors may issue shares of preferred stock in series,
without shareholder approval. As of January 25, 1999, 50,316,445 shares of
existing common stock and no shares of preferred stock were issued and
outstanding.

The new certificate of incorporation will authorize us to issue 735,000,000
shares of stock as follows: 500,000,000 shares of a class of common stock,
designated as PE Corporation-- PE Biosystems Group Common Stock (the "PE
Biosystems Stock"), 225,000,000 shares of a class of common stock, designated as
PE Corporation--Celera Genomics Group Common Stock (the "Celera Genomics
Stock"), and 10,000,000 shares of preferred stock. Shares of each class of stock
will have a par value of $.01 per share. We will be able to issue shares of
preferred stock in series, without stockholder approval. Of the 10,000,000
authorized shares of preferred stock, our board of directors has designated a
total of 80,000 shares of two series of participating junior preferred stock in
connection with our new stockholder rights plan. See "--Rights Agreement."

As a result of the recapitalization, assuming the number of shares of
existing common stock then outstanding is the same as the number outstanding on
January 25, 1999, 50,316,445 shares of PE Biosystems Stock and 25,158,222 shares
of the Celera Genomics Stock will be issued and outstanding.

REASONS FOR INCREASE IN AUTHORIZED COMMON STOCK

The increase in authorized shares is necessary in order to implement the
various aspects of the recapitalization proposal. The authorization of at least
50,316,445 shares of PE Biosystems Stock and at least 25,158,222 shares of
Celera Genomics Stock is needed for the recapitalization to occur. Further, as
described under "--Conversion and Redemption," our board of directors has the
right to convert one class of common stock into the other at a 10% premium. The
number of shares issuable in a conversion will vary based on the relative market
values of the two classes of common stock and the number of outstanding shares
of common stock being converted.

Our board of directors may also pay a share dividend in one class of common
stock on that class of common stock. If the PE Biosystems Group is entitled to
Celera Genomics Designated Shares, our board of directors may also declare a
share dividend in shares of Celera Genomics Stock on the PE Biosystems Stock. If
our board of directors determines that a conversion or a stock dividend is in
the best interests of our company, but at that time sufficient authorized shares
of common stock are not available, our stockholders would be required to approve
an amendment to the new certificate of incorporation.

Our board of directors believes that an increase in the number of authorized
shares of common stock at this time is in the best interests of our company so
that we have available the number of shares needed for a possible future
conversion, dividends, acquisitions, capital raising, our new stockholder rights
plan and employee benefit plans.

37
<PAGE>

Other than the issuance of shares under our employee benefit plans or our
outstanding warrants and the issuance of options for Celera Genomics Stock
discussed under "--Options for Celera Genomics Stock to be Issued upon the
Recapitalization," we have no present understanding or agreement for the
issuance of any additional shares of PE Biosystems Stock or Celera Genomics
Stock. Although our board of directors has no present intention of doing so, the
additional shares that would be authorized for issuance if the recapitalization
is implemented could be issued in one or more transactions that would make a
takeover of our company more difficult and, therefore, less likely, even though
a takeover might be financially beneficial to our company and our stockholders.
See "--Certain Anti-Takeover Provisions of Delaware Law and the New Certificate
of Incorporation, the New By-laws and the New Rights Agreement." We have no
knowledge of any person or entity that intends to seek a controlling interest in
our company or to make a takeover proposal.

We may issue the authorized but unissued shares of PE Biosystems Stock and
Celera Genomics Stock for any proper corporate purpose, which could include any
of the purposes set forth above. We will not solicit the approval of our
stockholders for the issuance of additional authorized shares of PE Biosystems
Stock or Celera Genomics Stock unless our board of directors believes that
approval is advisable or is required by stock exchange regulations or Delaware
law. See "--Voting Rights."

DIVIDENDS

Dividends on the PE Biosystems Stock and the Celera Genomics Stock will be
subject to similar limitations as dividends on our existing common stock.
Dividends on our existing common stock are limited to legally available assets
of our company under New York law and subject to the prior payment of dividends
on any outstanding shares of preferred stock. See "-- Comparison of Shareholders
Rights-- Dividends."

Dividends on the PE Biosystems Stock and dividends on the Celera Genomics
Stock will be limited to an amount not greater than the Available Dividend
Amount for the relevant Group.

Delaware law limits the amount of distributions on capital stock to our
legally available funds, which are determined on the basis of our entire
company, and not only the respective Groups. As a result, the amount of legally
available funds will reflect the amount of any net losses of each Group, any
distributions on PE Biosystems Stock, Celera Genomics Stock or any preferred
stock and any repurchases of PE Biosystems Stock, Celera Genomics Stock or
certain preferred stock. Dividend payments on the PE Biosystems Stock and on the
Celera Genomics Stock could be precluded because legally available funds are not
available under Delaware law, even though the Available Dividend Amount test for
the particular relevant Group was met. We can not assure you that there will be
an Available Dividend Amount for either Group.

Subject to the prior payment of dividends on any outstanding shares of
preferred stock and the limitations described above, our board of directors will
be able, in its sole discretion, to declare and pay dividends exclusively on the
PE Biosystems Stock, exclusively on the Celera Genomics Stock or on both, in
equal or unequal amounts. In making its dividend decisions, our board of
directors will not be required to take into account the relative Available
Dividend Amounts for the two Groups, the amount of prior dividends declared on
either class, the respective voting or liquidation rights of either class or any
other factor.

CONVERSION AND REDEMPTION

Our existing certificate of incorporation currently does not provide for
either mandatory or optional conversion or redemption of our existing common
stock. The recapitalization proposal will permit the conversion or redemption of
the PE Biosystems Stock and the Celera Genomics Stock as described below.

MANDATORY DIVIDEND, REDEMPTION OR CONVERSION OF COMMON STOCK IF DISPOSITION
OF

38
<PAGE>
GROUP ASSETS OCCURS. If we sell, transfer, assign or otherwise dispose of, in
one transaction or a series of related transactions, all or substantially all of
the properties and assets attributed to either Group (a "Disposition"), we are
required, except as described below, to:

- pay a dividend in cash and/or securities or other property to the holders
of shares of the class of common stock relating to the Group subject to
the Disposition having a fair value equal to the Net Proceeds of the
Disposition; or

- (A) if the Disposition involves all, but not merely substantially all, of
such properties and assets, redeem all outstanding shares of common stock
relating to that Group in exchange for cash and/or securities or other
property having a fair value equal to the Net Proceeds of the
Disposition; or

(B) if the Disposition involves substantially all, but not all, of such
properties and assets, redeem that number of whole shares of the class of
common stock relating to that Group as have in the aggregate an average
market value, during the period of ten consecutive trading days beginning
on the 26th trading day immediately succeeding the consummation date,
closest to the Net Proceeds of the Disposition; and the redemption price
will be cash and/or securities or other property having a fair value
equal to such Net Proceeds; or

- convert each outstanding share of such class of common stock into a
number of shares of common stock relating to the other Group equal to
110% of the ratio of the average market value of one share of common
stock relating to the Group subject to the Disposition to the average
market value of one share of common stock relating to the other Group
during the 10-trading day period beginning on the 26th trading day
following the Disposition date.

We may only pay a dividend or redeem shares of common stock as set forth above
if we have legally available funds under Delaware law and the amount to be paid
to holders is less than or equal to the Available Dividend Amount for the Group.
We are required to pay such dividend or complete such redemption or conversion
on or prior to the 95th trading day following the Disposition.

For purposes of determining whether a Disposition has occurred,
"substantially all of the properties and assets" attributed to either Group
means a portion of such properties and assets:

- that represents at least 80% of the then fair value of the properties and
assets attributed to that Group; or

- from which were derived at least 80% of the aggregate revenues of that
Group for the immediately preceding twelve fiscal quarterly periods.

The "Net Proceeds" of a Disposition means an amount equal to what remains of
the gross proceeds of the Disposition after any payment of, or reasonable
provision is made as determined by our board of directors for:

- any taxes payable by us, or which would have been payable but for the
utilization of tax benefits attributable to the Group not subject to the
Disposition, in respect of the Disposition or in respect of any resulting
dividend or redemption;

- any transaction costs, including, without limitation, any legal,
investment banking and accounting fees and expenses; and

- any liabilities of or attributed to the Group subject to the Disposition,
including, without limitation, any liabilities for deferred taxes, any
indemnity or guarantee obligations incurred in connection with the
Disposition or otherwise, any liabilities for future purchase price
adjustments and any preferential amounts plus any accumulated and unpaid
dividends in respect of the preferred stock attributed to that Group.

We may elect to pay the dividend or redemption price in connection with a
Disposition either in the same form as the proceeds of the Disposition were
received or in any other combination of cash, securities or

39
<PAGE>

other property that our board of directors or, in the case of securities that
have not been publicly traded for a period of at least 15 months, an independent
investment banking firm, determines will have an aggregate market value of not
less than the fair value of the Net Proceeds.

THE FOLLOWING ILLUSTRATION DEMONSTRATES THE PROVISIONS REQUIRING A MANDATORY
DIVIDEND, REDEMPTION OR CONVERSION IF A DISPOSITION OCCURS. If (1) 100 million
shares of PE Biosystems Stock and 50 million shares of Celera Genomics Stock
were outstanding, (2) the Net Proceeds of the Disposition of substantially all,
but not all, of the assets of the Celera Genomics Group equals $500 million, (3)
the average market value of the Celera Genomics Stock during the 10-trading day
valuation period was $15 per share and (4) the average market value of the PE
Biosystems Stock during the same valuation period was $80 per share, then we
could do any of the following:

(1) pay a dividend to the holders of shares of Celera Genomics Stock equal to:

<TABLE>
<CAPTION>
Net Proceeds
- --------------------------- =
Number of Outstanding Shares
of Celera Genomics Stock

<C> <C> <S>
$500 million
-------------- =
50 million shares $10 per share
</TABLE>

(2) redeem for $15 per share a number of shares of Celera Genomics Stock equal
to:

<TABLE>
<C> <C> <S>
Net Proceeds
- ----------------------
Average Market Value
of Celera Genomics =
Stock

$500 million
-----------
$15 per share = 33,333,333
shares
</TABLE>

(3) convert each outstanding share of Celera Genomics Stock into a number of
shares of PE Biosystems Stock equal to:

<TABLE>
<S> <C> <C> <C> <C>
Average Market Value
of Celera Genomics Stock
1.1 X ---------------------- =
Average Market Value
of PE Biosystems Stock

$15 per share
1.1 X ----------- = .20625
$80 per share shares
</TABLE>

EXCEPTIONS TO THE DIVIDEND, REDEMPTION OR CONVERSION REQUIREMENT IF A
DISPOSITION OCCURS. We are not required to take any of the above actions if the
Disposition is:

- of all or substantially all of our properties and assets in one
transaction or a series of related transactions in connection with our
dissolution, liquidation or winding up and the distribution of our assets
to stockholders;

- on a pro rata basis, such as in a spin-off, to the holders of all
outstanding shares of the class of common stock relating to the Group
subject to the Disposition;

- made to any person or entity controlled by our company, as determined by
our board of directors; or

- in connection with a Related Business Transaction.

A "Related Business Transaction" means any Disposition of all or
substantially all of the properties and assets attributed to either Group in a
transaction or series of related transactions that results in our receiving for
such properties and assets primarily equity securities of any entity which:

- acquires such properties or assets or succeeds to the business conducted
with such properties or assets or controls such acquiror or successor;
and

- is primarily engaged or proposes to engage primarily in one or more
businesses similar or complementary to the businesses conducted by that
Group

40
<PAGE>

prior to the Disposition, as determined by our board of directors.

The purpose of the Related Business Transaction exception is to enable us
technically to "dispose" of properties or assets of a Group to other entities
engaged or proposing to engage in businesses similar or complementary to those
of that Group without requiring a dividend on, or a conversion or redemption of,
the class of common stock of that Group, so long as we hold an equity interest
in that entity. A joint venture in which we own a direct or indirect equity
interest is an example of such an acquiror. We are not required to control that
entity, whether by ownership or contract provisions.

NOTICES IF DISPOSITION OF GROUP ASSETS OCCURS. Not later than the 20th
trading day after the consummation of a Disposition, we will announce publicly
by press release:

- the estimated Net Proceeds of the Disposition;

- the number of shares outstanding of the class of common stock relating to
the Group subject to the Disposition; and

- the number of shares of such class of common stock into or for which
convertible securities are then convertible, exchangeable or exercisable
and the conversion, exchange or exercise price thereof.

Not earlier than the 36th trading day and not later than the 40th trading
day after the consummation of the Disposition, we will announce publicly by
press release whether we will pay a dividend or redeem shares of common stock
with the Net Proceeds of the Disposition or convert the shares of common stock
of the Group subject to the Disposition into the other class of common stock.

We are required to cause to be mailed to each holder of shares of the class
of common stock relating to the Group subject to the Disposition the additional
notices and other information required by the new certificate of incorporation.

CONVERSION OF COMMON STOCK AT OPTION OF THE COMPANY AT ANY TIME. Our board
of directors may at any time convert each share of PE Biosystems Stock into a
number of shares of Celera Genomics Stock equal to 110% of the ratio of the
average market values of the PE Biosystems Stock to the Celera Genomics Stock
over a 20-trading day period. Conversely, our board of directors may also at any
time convert each share of Celera Genomics Stock into a number of shares of PE
Biosystems Stock equal to 110% of the ratio of the average market values of the
Celera Genomics Stock to the PE Biosystems Stock over a 20-trading day period.
We will calculate the ratio as of the fifth trading day prior to the date we
mail the conversion notice to holders.

These provisions allow us the flexibility to recapitalize the two classes of
common stock into one class of common stock that would, after such
recapitalization, represent an equity interest in all of our businesses. The
optional conversion or redemption could be exercised at any future time if our
board of directors determines that, under the facts and circumstances then
existing, an equity structure consisting of two classes of common stock was no
longer in the best interests of all of our stockholders. Such exchange could be
exercised, however, at a time that is disadvantageous to the holders of one of
the classes of common stock. See "Risk Factors--Fiduciary Duties of the Board of
Directors; No Definitive Precedent under Delaware Law" and "--Numerous Potential
Conflicting Interests Between Classes of Common Stock."

Many factors could affect the market values of the PE Biosystems Stock or
the Celera Genomics Stock, including our results of operations and those of each
of the Groups, trading volume and general economic and market conditions. Market
values could also be affected by decisions by our board of directors or our
management that investors perceive to affect differently one class of common
stock compared to the other. These decisions could include changes to our
management and allocation policies, transfers of assets between Groups,
allocations of corporate opportunities and financing resources between the
Groups and changes in dividend policies.

41
<PAGE>

THE FOLLOWING ILLUSTRATION DEMONSTRATES THE CALCULATION OF THE NUMBER OF
SHARES ISSUABLE UPON CONVERSION OF ONE CLASS OF COMMON STOCK INTO SHARES OF THE
OTHER CLASS AT THE OPTION OF OUR COMPANY. If (1) 50 million shares of Celera
Genomics Stock and 100 million shares of PE Biosystems Stock were outstanding
immediately prior to a conversion, (2) the average market value of one share of
the Celera Genomics Stock over the 20-trading day valuation period was $15, and
(3) the average market value of one share of PE Biosystems Stock over the same
valuation period was $80, then each share of Celera Genomics Stock could be
converted into .20625 shares of PE Biosystems Stock based on the following
calculation:

<TABLE>
<S> <C> <C> <C> <C>
$15 .20625
1.1 X --- = shares
$80
</TABLE>

REDEMPTION IN EXCHANGE FOR STOCK OF SUBSIDIARY. Our board of directors may
redeem on a pro rata basis all of the outstanding shares of PE Biosystems Stock
or Celera Genomics Stock for shares of the common stock of one or more of our
wholly-owned subsidiaries which own all of the assets and liabilities attributed
to the relevant Group. If at the time of any such redemption of PE Biosystems
Stock, the PE Biosystems Group is entitled to Celera Genomics Designated Shares,
we will also issue an equal number of shares of Celera Genomics Stock either to
(1) the holders of the PE Biosystems Stock or (2) one or more of those PE
Biosystems Group subsidiaries. We may redeem shares of common stock for
subsidiary stock only if we have legally available funds under Delaware law.

These provisions are intended to give us increased flexibility with respect
to spinning-off the assets of one of the Groups by transferring the assets of
that Group to one or more wholly-owned subsidiaries and redeeming the shares of
common stock related to that Group in exchange for stock of such subsidiary or
subsidiaries. As a result of any such redemption, holders of each class of
common stock would hold securities of separate legal entities operating in
distinct lines of business. Such a redemption could be authorized by our board
of directors at any time in the future if it determines that, under the facts
and circumstances then existing, an equity structure comprised of the PE
Biosystems Stock and the Celera Genomics Stock is no longer in the best
interests of all of our stockholders as a whole.

SELECTION OF SHARES FOR REDEMPTION. If less than all of the outstanding
shares of a class of common stock are to be redeemed, we will redeem such shares
proportionately from among the holders of outstanding shares of such common
stock or by such method as may be determined by our board of directors to be
equitable.

FRACTIONAL INTERESTS; TRANSFER TAXES. We will not be required to issue
fractional shares of any capital stock or any fractional securities to any
holder of either class of common stock upon any conversion, redemption, dividend
or other distribution described above. If a fraction is not issued to a holder,
we will pay cash instead of such fraction.

We will pay all documentary, stamp or similar issue or transfer taxes that
may be payable in respect of the issue or delivery of any shares of capital
stock and/or other securities on conversion or redemption of shares.

VOTING RIGHTS

Currently, holders of our existing common stock have one vote per share on
all matters submitted to shareholders.

Under the new certificate of incorporation the entire voting power of the
stockholders of the company will be vested in the holders of common stock, who
will be entitled to vote on any matter on which the holders of stock of our
company are, by law or by the provisions of the new certificate of incorporation
or the new by-laws, entitled to vote, except as otherwise provided by law, by
the terms of any outstanding preferred stock or by any provision of the new
certificate of incorporation restricting the power to vote on a specified matter
to other stockholders.

Holders of common stock will vote as a single class on each matter on which
holders of common stock are generally entitled to vote.

42
<PAGE>

On all matters as to which both classes of common stock will vote together
as a single class:

- each share of PE Biosystems Stock will have one vote; and

- each share of Celera Genomics Stock will have a number of votes equal to
the quotient of the average market value of a share of Celera Genomics
Stock over the 20-trading day period ending on the 10th trading day prior
to the record date for determining the holders of common stock entitled
to vote, divided by the average market value of a share of PE Biosystems
Stock over the same period.

Accordingly, the relative per share voting rights of the PE Biosystems Stock
and the Celera Genomics Stock will fluctuate depending on changes in the
relative market values of shares of such classes of common stock.

We expect that, upon completion of the recapitalization, the PE Biosystems
Stock will have a substantial majority of the voting power since the aggregate
market value of the outstanding shares of PE Biosystems Stock will be
substantially greater than the aggregate market value of the outstanding shares
of Celera Genomics Stock.

We will set forth the number of outstanding shares of PE Biosystems Stock
and Celera Genomics Stock in our Annual Report on Form 10-K and our Quarterly
Reports on Form 10-Q filed under the Securities Exchange Act of 1934. We will
disclose in any proxy statement for a stockholders' meeting the number of
outstanding shares and per share voting rights of the PE Biosystems Stock and
the Celera Genomics Stock.

If shares of only one class of common stock are outstanding, each share of
that class will have one vote. If either class of common stock is entitled to
vote as a separate class with respect to any matter, each share of that class
will, for purpose of such vote, have one vote on such matter.

Fluctuations in the relative voting rights of the PE Biosystems Stock and
the Celera Genomics Stock could influence an investor interested in acquiring
and maintaining a fixed percentage of the voting power of our company to acquire
such percentage of both classes of common stock, and would limit the ability of
investors in one class to acquire for the same consideration relatively more or
less votes per share than investors in the other class.

The holders of PE Biosystems Stock and Celera Genomics Stock will not have
any rights to vote separately as a class on any matter coming before
stockholders of our company, except for certain limited class voting rights
provided under Delaware law. In addition to the approval of the holders of a
majority of the voting power of all shares of common stock voting together as a
single class, the approval of a majority of the outstanding shares of the PE
Biosystems Stock or the Celera Genomics Stock, voting as a separate class, would
be required under Delaware law to approve any amendment to the new certificate
of incorporation that would change the par value of the shares of the class or
alter or change the powers, preferences or special rights of the shares of such
class so as to affect them adversely. As permitted by Delaware law, the new
certificate of incorporation will provide that an amendment to the new
certificate of incorporation that increases or decreases the number of
authorized shares of PE Biosystems Stock or Celera Genomics Stock will only
require the approval of the holders of a majority of the voting power of all
shares of common stock, voting together as a single class, and will not require
the approval of the holders of the class of common stock affected by such
amendment, voting as a separate class.

THE FOLLOWING ILLUSTRATION DEMONSTRATES THE CALCULATION OF THE NUMBER OF
VOTES EACH SHARE OF CELERA GENOMICS STOCK WOULD BE ENTITLED ON ALL MATTERS ON
WHICH HOLDERS OF PE BIOSYSTEMS STOCK AND CELERA GENOMICS STOCK VOTE AS A SINGLE
CLASS. If the average market value for the 20-trading day valuation period was
$15 for the Celera Genomics Stock and $80 for the PE Biosystems Stock, each
share of PE Biosystems Stock would have one vote and each share of Celera

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Genomics Stock would have 0.188 votes based on the following calculation:

<TABLE>
<S> <C> <C>
$15
- --- = 0.188
$80 votes
</TABLE>

Assuming 100 million shares of PE Biosystems Stock and 50 million shares of
Celera Genomics Stock were outstanding, the shares of PE Biosystems Stock would
represent approximately 91.4% of our total voting power and the shares of Celera
Genomics Stock would represent approximately 8.6% of our total voting power.

LIQUIDATION

Currently, in the event of a liquidation, dissolution or termination of our
company, after payment, or provision for payment, of our debts and other
liabilities and the payment of full preferential amounts to which the holders of
any preferred stock are entitled, holders of existing common stock are entitled
to share equally in the remaining net assets of our company.

Under the new certificate of incorporation, in the event of our dissolution,
liquidation or winding up, after payment or provision for payment of the debts
and other liabilities and full preferential amounts to which holders of any
preferred stock are entitled, regardless of the Group to which such shares of
preferred stock were attributed, the holders of PE Biosystems Stock and Celera
Genomics Stock will be entitled to receive our assets remaining for distribution
to holders of common stock on a per share basis in proportion to the liquidation
units per share of such class.

Each share of PE Biosystems Stock will have one liquidation unit. Each share
of Celera Genomics Stock will have a number of liquidation units equal to the
quotient of the average market value of a share of Celera Genomics Stock over
the 20-trading day period ending on the 40th trading day after the effective
date of the recapitalization, divided by the average market value of a share of
PE Biosystems Stock over the same period.

After the number of liquidation units to which each share of Celera Genomics
Stock is entitled has been calculated in accordance with this formula, that
number will not be changed without the approval of holders of the class of
common stock adversely affected except as described below. As a result, after
the date of the calculation of the number of liquidation units to which the
Celera Genomics Stock is entitled the liquidation rights of the holders of the
respective classes of common stock may not bear any relationship to the relative
market values or the relative voting rights of the two classes. We consider that
liquidation is a remote contingency, and our financial advisors believe that, in
general, these liquidation provisions are immaterial to trading in the PE
Biosystems Stock and the Celera Genomics Stock.

No holder of PE Biosystems Stock will have any special right to receive
specific assets of the PE Biosystems Group and no holder of Celera Genomics
Stock will have any special right to receive specific assets of the Celera
Genomics Group in the case of a dissolution, liquidation or winding up of our
company.

If we subdivide or combine the outstanding shares of either class of common
stock or declare a dividend or other distribution of shares of either class of
common stock to holders of such class of common stock, the number of liquidation
units of either class of common stock will be appropriately adjusted, as
determined by our board of directors, to avoid any dilution in the aggregate,
relative liquidation rights of any class of common stock.

Neither a merger nor consolidation of our company into or with any other
corporation, nor any sale, transfer or lease of all or any part of the assets of
our company, will, alone, be deemed a liquidation or winding up of our company,
or cause the dissolution of our company, for purposes of these liquidation
provisions.

DETERMINATIONS BY THE BOARD OF DIRECTORS

Any determinations made in good faith by our board of directors under any
provision described under "Description of PE Biosystems Stock and Celera
Genomics Stock," and any determinations with respect to any Group or the rights
of holders of shares of either class of common stock, will be final and binding
on all of our stockholders, subject to the rights of stockholders under
applicable Delaware law and under the federal securities laws.

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PREEMPTIVE RIGHTS

Neither the holders of the PE Biosystems Stock nor the holders of the Celera
Genomics Stock will have any preemptive rights or any rights to convert their
shares into any other securities of the company.

CELERA GENOMICS DESIGNATED SHARES

The PE Biosystems Group may hold in the future an equity interest in the
Celera Genomics Group in the form of "Celera Genomics Designated Shares" as a
result of contributions of cash or property to the Celera Genomics Group
described in the next paragraph. Celera Genomics Designated Shares are
authorized shares of Celera Genomics Stock that are not issued and outstanding,
but which our board of directors, pursuant to the management and allocation
policies, may from time to time issue without allocating the proceeds or other
benefits of such issuance to the Celera Genomics Group. The shares of Celera
Genomics Stock that are issuable with respect to the Celera Genomics Designated
Shares are not outstanding shares of Celera Genomics Stock, are not eligible to
receive dividends and can not be voted.

The number of Celera Genomics Designated Shares will initially be zero but
from time to time will be:

- increased by a number equal to the quotient obtained by dividing (1) the
fair value of all cash or other property that we allocate to the PE
Biosystems Group that is contributed to the Celera Genomics Group by (2)
the average market value of Celera Genomics Stock over the 20-trading day
period immediately prior to the date of contribution;

- decreased by a number equal to the quotient obtained by dividing (1) the
fair value of all cash or other property that we allocate to the Celera
Genomics Group that is transferred to the PE Biosystems Group to reduce
the number of Celera Genomics Designated Shares by (2) the average market
value of Celera Genomics Stock over the 20-trading day period immediately
prior to the date of transfer;

- decreased by the number of newly issued shares of Celera Genomics Stock,
the proceeds of which have been allocated to the PE Biosystems Group, or
issued as a dividend or distribution or by reclassification, exchange or
otherwise to holders of PE Biosystems Stock; and

- adjusted as appropriate to reflect subdivisions and combinations of the
Celera Genomics Stock and dividends or distributions of shares of Celera
Genomics Stock to holders of Celera Genomics Stock and other
reclassifications of Celera Genomics Stock.

RIGHTS AGREEMENT

We have issued Participating Preferred Stock Purchase Rights (the "Existing
Rights") to all holders of our existing common stock under a rights agreement
dated as of April 30, 1989 between our company and The First National Bank of
Boston, as Rights Agent. Each Existing Right entitles the holder to purchase
shares of participating preferred stock under conditions described in the
existing rights agreement. The Existing Rights expire on April 30, 1999. If the
recapitalization proposal is implemented, we will amend the existing rights
agreement so as not to apply to the recapitalization.

Pursuant to the recapitalization, our board of directors has determined to
issue under a new rights agreement, substantially similar to the existing rights
agreement:

- one right for each share of PE Biosystems Stock (a "PE Biosystems
Right"), which will allow holders to purchase shares of a newly
designated Series A participating junior preferred stock of our company
if a "Distribution Date" occurs; and

- issue one right for each share of Celera Genomics Stock (a "Celera
Genomics Right"), which will allow holders to purchase shares of a newly
designated Series B participating junior preferred stock of our company
if a "Distribution Date" occurs.

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We refer to the PE Biosystems Rights and the Celera Genomics Rights as the
"Rights." The new rights agreement contains provisions designed to, among other
things:

- reflect our new equity structure;

- reset the prices at which rights issued under the new rights agreement
may be exercised for shares of participating preferred stock; and

- reflect our reincorporation in Delaware.

A "Distribution Date" will occur upon the earlier of:

- the tenth day after a public announcement that a person or group of
affiliated or associated persons other than us or our employee benefit
plans (an "Acquiring Person") has acquired beneficial ownership of (1)
15% or more of the shares of PE Biosystems Stock then outstanding or (2)
15% or more of the shares of Celera Genomics Stock then outstanding; or

- the tenth business day or a later day determined by our board of
directors following the commencement of a tender or exchange offer that
would result in such person or group beneficially owning such number of
shares.

Until the Distribution Date, the Rights will be transferred only with the common
stock.

Following the Distribution Date, holders of Rights will be entitled to
purchase from our company:

- in the case of a PE Biosystems Right, one one-thousandth of a share of
Series A participating junior preferred stock at a purchase price of
$425, subject to adjustment (the "Series A Purchase Price"); and

- in the case of a Celera Genomics Right, one one-thousandth of a share of
Series B participating junior preferred stock at a purchase price of
$125, subject to adjustment (the "Series B Purchase Price").

An Existing Right entitles the holder to purchase one one-hundredth of a share
of participating preferred stock at a purchase price of $90 upon the occurrence
of a distribution date under the existing rights agreement. In adopting the new
rights agreement, our board of directors determined that $90 would not represent
the long term value of a share of PE Biosystems Stock or Celera Genomics Stock.

If any person or group becomes an Acquiring Person:

- a PE Biosystems Right will entitle its holder to purchase, at the Series
A Purchase Price, a number of shares of PE Biosystems Stock with a market
value equal to twice the Series A Purchase Price; and

- a Celera Genomics Right will entitle its holder to purchase, at the
Series B Purchase Price, a number of shares of Celera Genomics Stock with
a market value equal to twice the Series B Purchase Price.

In certain circumstances after the Rights have been triggered, we may
exchange the Rights, other than Rights owned by an Acquiring Person, at an
exchange ratio of one share of PE Biosystems Stock per PE Biosystems Right and
one share of Celera Genomics Stock per Celera Genomics Right.

If, following the time a person becomes an Acquiring Person:

- our company is acquired in a merger or other business combination
transaction and our company is not the surviving corporation;

- any person consolidates or merges with our company and all or part of the
common stock is converted or exchanged for securities, cash or property
of any other person; or

- 50% or more of our company's assets or earnings power is sold or
transferred,

each PE Biosystems Right and each Celera Genomics Right will entitle its holder
to purchase, for the Series A Purchase Price or Series B Purchase Price, a
number of shares of common stock of the surviving entity in any such merger,
consolidation or other business combination or the purchaser in any such sale or
transfer with a market value equal to twice the

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Series A Purchase Price or Series B Purchase Price.

The Rights will expire on the tenth anniversary of the adoption of the new
rights agreement (the "Expiration Date"), unless we extend or terminate them as
described below.

At any time until the earlier of (1) the time a person becomes an Acquiring
Person or (2) the Expiration Date, our board of directors may redeem all of the
Rights at a price of $.01 per Right. On the redemption date, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive this price.

A holder of a Right will not have any rights as a stockholder of our
company, including the right to vote or to receive dividends, until a Right is
exercised.

At any time prior to the time that any person becomes an Acquiring Person,
we may, without the approval of any holders of Rights, supplement or amend any
provision of the new rights agreement in any manner, whether or not such
supplement or amendment is adverse to any holders of the Rights. From and after
the time a person becomes an Acquiring Person, we may, without the approval of
any holders of Rights, supplement or amend the new rights agreement (1) to cure
any ambiguity, (2) to correct or supplement any provision that may be defective
or inconsistent, or (3) in any manner that we may deem necessary or desirable
and which does not adversely affect the interests of the holders of Rights,
other than an Acquiring Person.

The new rights agreement contains provisions designed to prevent the
inadvertent triggering of the Rights. For example, it gives a person who has
inadvertently acquired (1) 15% or more of the shares of PE Biosystems Stock then
outstanding or (2) 15% or more of the shares of Celera Genomics Stock then
outstanding and does not have any intention of changing or influencing the
control of our company the opportunity to sell a sufficient number of shares so
that such acquisition would not trigger the Rights. In addition, the Rights will
not be triggered and a divestiture of shares will not be required by our
repurchase of shares of common stock outstanding which could raise the
proportion of shares held by a person to over the applicable 15% threshold.
However, any person who exceeds such threshold as a result of stock repurchases
by our company will trigger the Rights if such person subsequently acquires any
additional shares of common stock.

We have filed a copy of the form of the new rights agreement with the SEC as
an exhibit to the registration statement of which this proxy statement is a
part. Upon request, we will provide you with a copy of the new rights agreement
free of charge.

COMPARISON OF SHAREHOLDER RIGHTS

Following the recapitalization, your rights as shareholders will cease to be
governed by the New York Business Corporation Law ("NYBCL"), the existing
certificate of incorporation and the existing by-laws. Instead, your rights will
be governed by the Delaware General Corporation Law ("DGCL"), the new
certificate of incorporation and the new by-laws.

The following discussion summarizes all material differences between your
rights as a shareholder of our company as a New York corporation and your rights
as a stockholder of our company as a Delaware corporation. Except as described
below, the material provisions of the new certificate of incorporation and the
new by-laws are substantially similar to those of the existing certificate of
incorporation and the existing by-laws. For additional information regarding the
specific rights relating to the PE Biosystems Stock and Celera Genomics Stock,
you should read "--Description of PE Biosystems Stock and Celera Genomics
Stock."

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AMENDMENTS TO CERTIFICATE OF INCORPORATION

Under the NYBCL and the DGCL, our board of directors must propose an
amendment to the certificate of incorporation and then a majority of all
outstanding shares entitled to vote must approve it. Under the NYBCL, a separate
vote of a class or series of capital stock is required for amendments which
exclude or limit the voting rights of such stock, provide for a conversion of
such stock into another class or series, change the conversion rights of such
stock, or authorize shares which have preferences in any respect superior to
that stock. Under the DGCL and the new certificate of incorporation, amendments
which make changes regarding the capital stock by increasing or decreasing the
par value or otherwise adversely affecting the rights of such class must be
approved by a majority vote of each class or series of stock affected, even if
such stock would not otherwise have voting rights.

AMENDMENTS TO BY-LAWS

Under the NYBCL and the existing by-laws, either the affirmative vote of the
holders of a majority of the outstanding shares entitled to vote or the
affirmative vote of a majority of the members of our board of directors can
amend or repeal our by-laws. Under the DGCL, the new certificate of
incorporation and the new by-laws, either the affirmative vote of the holders of
shares having a majority of the votes cast affirmatively or negatively and
present in person or by proxy at the meeting or the affirmative vote of a
majority of the members of our board of directors can amend or repeal our
by-laws.

VOTE REQUIRED FOR MERGER AND CERTAIN OTHER TRANSACTIONS

Under the NYBCL, our board of directors must adopt a plan of merger or
consolidation or share exchange or approve a sale, lease, exchange or other
disposition of all of our assets. The holders of two-thirds of all shares
entitled to vote must then adopt the plan.

Under the DGCL, our board of directors must approve an agreement of merger
or a sale, lease or exchange of all or substantially all of our company's
assets. The holders of a majority of the outstanding shares entitled to vote
must then adopt that board of directors action. The DGCL does not have a share
exchange provision.

SHAREHOLDER APPROVAL OF STOCK PLANS

Under the NYBCL, the issuance of stock options or similar incentives to
directors, officers or employees must be authorized by a majority of the votes
cast at a shareholders' meeting by the shareholders entitled to vote thereon.

The DGCL does not have a similar requirement.

NUMBER OF DIRECTORS

Under the existing certificate of incorporation and existing by-laws, the
number of directors will not be less than three and not more than 15. The
existing by-laws and new by-laws provide that our board of directors or a by-law
amendment may fix the number of directors.

Under the new certificate of incorporation and new by-laws, the number of
directors will not be less than three and not more than 13. The new certificate
of incorporation provides that the number of directors will be fixed by
resolution of our board of directors.

REMOVAL OF DIRECTORS

The NYBCL provides that any director may be removed for cause by a vote of
the shareholders entitled to vote. The NYBCL further allows an action to obtain
a judgment removing a director for cause to be brought by the attorney-general
or by holders of 10% of the outstanding shares, whether or not entitled to vote.
The existing by-laws also provide that a director may be removed for cause by a
vote of a majority of our board of directors. In addition, under the NYBCL and
the existing by-laws, shareholders may remove any director with or without cause
by the vote of a majority of the outstanding shares entitled to vote at a
special meeting called for that purpose.

Under the DGCL and the new certificate of incorporation, stockholders may
remove any

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director with or without cause by the vote of the holders of shares entitled to
cast a majority of the votes entitled to be cast by all outstanding shares
entitled to vote at an election of directors.

FILLING NEWLY CREATED DIRECTORSHIPS AND VACANCIES

Under the NYBCL and the existing by-laws, a majority of the directors then
in office, even if less than a quorum, may fill vacancies in our board of
directors resulting from any reason other than the removal of a director without
cause, including vacancies resulting from newly created directorships. Only a
vote of the shareholders may fill vacancies resulting from the removal of a
director by shareholders without cause.

Under the DGCL and the new by-laws, a majority of directors then in office,
even if less than a quorum, may fill vacancies and newly created directorships.

CUMULATIVE VOTING

Under the NYBCL and the existing certificate of incorporation, as well as
the DGCL and the new certificate of incorporation, stockholders will not have
cumulative voting in electing directors.

LIMITATION ON DIRECTOR'S LIABILITY

As permitted by both the NYBCL and the DGCL, both the existing certificate
of incorporation and the new certificate of incorporation eliminate or limit the
personal liability of a director to our company or our stockholders for money
damages based on his or her breach of fiduciary duty. A director's liability is
not eliminated or limited, however, for any breach of the director's duty of
loyalty to our company or our stockholders, for acts or omissions not in good
faith, which is the Delaware standard, or in bad faith, which is the New York
standard, or which involve intentional misconduct or a knowing violation of law,
or for any transaction from which he or she derived an improper personal
benefit, or for liability arising under the DGCL relating to unlawful payment of
dividends or unlawful stock purchase or redemption.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The existing by-laws provide that we will indemnify any director, officer or
employee against any damage, judgment, settlement, penalty, fine, cost or
expense, including attorneys' fees, incurred in connection with any legal
proceeding, except where their acts or omissions:

- were in breach of their duty of loyalty to our company or our
shareholders;

- were in bad faith or involved intentional misconduct or a knowing
violation of law; or

- resulted in their receipt of an improper personal benefit.

The new by-laws generally provide that we will indemnify any director or
officer to the fullest extent authorized by the DGCL against any expense,
liability and loss, including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement.

The existing by-laws and the new by-laws generally provide that we will also
pay reasonable expenses of the indemnified director, officer or employee in
advance of the final disposition of the proceeding to the fullest extent
permitted by law.

SPECIAL MEETINGS OF STOCKHOLDERS

Under the NYBCL and the existing by-laws, as well as the DGCL, the new
certificate of incorporation and the new by-laws, only our board of directors or
the chairman, president or secretary of our company may call a special meeting
of the stockholders.

ACTION BY WRITTEN CONSENT OF STOCKHOLDERS

Under the NYBCL, any action required or permitted to be taken at a
shareholders' meeting may be taken without a meeting if all of the shareholders
entitled to vote consent to the action in writing.

Under the DGCL, unless the certificate of incorporation states otherwise,
stockholders may take action with the written consent of the

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holders who would need to vote in favor of the action in a meeting at which all
shares entitled to vote were present. The new certificate of incorporation
provides that, in order to be effective, written consent of all of the
stockholders entitled to vote must be obtained.

STOCKHOLDER PROPOSALS AND NOMINATIONS

The existing by-laws provide that any shareholder may present a proposal for
action at an annual or special meeting of shareholders only if such proposal has
been submitted in writing to our company and received by the secretary of our
company at least 60 days, but not more than 90 days, before such annual or
special meeting. If the date of the meeting is first publicly announced or
disclosed in writing to the shareholders less than 70 days before the meeting,
however, such notice may be given not more than ten days after that announcement
or writing. To be considered at all, however, such proposal must be an
appropriate subject of shareholder action. In addition, such shareholder must
provide certain specified information regarding his or her share ownership and
interest in such proposal.

The new by-laws provide that any stockholder may present a nomination for a
directorship or a proposal for action at an annual meeting of stockholders only
if such nomination or proposal has been delivered in writing to the secretary of
our company not less than 45 or more than 75 days prior to the first anniversary
of the date on which our company first mailed proxy materials for the preceding
year's annual meeting of stockholders. If the date of the annual meeting is
advanced to more than 30 days prior to, or delayed by more than 30 days after,
the anniversary of the preceding year's annual meeting, notice by the
stockholder must be so delivered not later than the close of business on the
later of the 90th day prior to the date of the annual meeting or the tenth day
following the day on which public announcement of the date of such meeting is
first made. The notice must contain certain information regarding the proposal
or nomination as well as certain specified information regarding the stockholder
giving the notice and his or her interest in such proposal, as well as a
statement whether such stockholder intends to solicit proxies. In addition, any
stockholder proposal must be an appropriate subject of stockholder action.

BUSINESS COMBINATIONS FOLLOWING A CHANGE IN CONTROL

Under Section 912 of the NYBCL, an "interested shareholder" is defined as a
holder of 20% or more of the outstanding voting stock. An interested shareholder
may engage in a business combination transaction, such as a merger,
consolidation or sale of substantially all the assets of the corporation, with
our company only if:

- our board of directors approved the transaction before such shareholder
became an interested shareholder;

- the holders of a majority of the outstanding voting stock held by all
disinterested shareholders approve the transaction after a five-year
waiting period; or

- following the five-year waiting period, the transaction satisfies certain
fair price provisions.

Under Section 203 of the DGCL, an "interested stockholder" is defined as a
holder of 15% or more of the outstanding voting stock. An interested stockholder
may engage in a business combination transaction with our company only if:

- our board of directors approved the transaction before such stockholder
became an interested stockholder or approved the transaction in which
such stockholder became an interested stockholder;

- the interested stockholder acquired at least 85% of the voting stock in
the transaction in which it became an interested stockholder; or

- our board of directors and the holders of shares entitled to cast
two-thirds of the votes entitled to be cast by all of the outstanding
voting shares held by all

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disinterested stockholders approve the transaction.

TRANSACTIONS WITH CONTROL PERSONS; GREENMAIL

The existing certificate of incorporation prevents transactions between our
company and a holder of one percent or more of the voting power of our company
unless the transaction (1) is approved by a majority of disinterested directors
or two-thirds of the voting power of shares held by disinterested shareholders
or (2) satisfies specified fair price criteria. The new certificate of
incorporation does not include provisions restricting transactions between our
company and significant stockholders. However, as described under "--Business
Combinations Following a Change in Control," Section 203 of the DGCL limits the
ability of a 15% or more holder of the outstanding voting stock to engage in a
business combination transaction with our company.

Under the existing certificate of incorporation and the existing by-laws, we
are prevented from purchasing shares of common stock from a 1% holder at a price
above the average price paid by the 1% holder for such shares over the previous
two years unless the purchase is approved by at least a majority of
disinterested shares. The new certificate of incorporation and the new by-laws
do not contain provisions limiting our ability to repurchase shares of common
stock from stockholders.

DISSENTERS' RIGHTS

Under the NYBCL, a shareholder who complies with prescribed statutory
procedures is entitled to dissent and obtain payment of the fair value of its
shares in the event of consummation of:

- a plan of merger or consolidation upon which the shareholder is entitled
to vote, unless the corporation is the surviving corporation or its
shares are listed on a national securities exchange or quoted as a
national market system security;

- a plan of share exchange to which the corporation is a party as the
corporation whose shares will be acquired; or

- a sale, lease, exchange or other disposition of all, or substantially
all, of the corporation's property if a shareholder vote is required for
such disposition.

Generally, stockholders of a Delaware corporation who object to certain
mergers or a consolidation of the corporation are entitled to appraisal rights,
requiring the surviving corporation to pay the fair value of the dissenting
shares. There are, however, no statutory rights of appraisal with respect to
stockholders of a Delaware corporation whose shares of stock are either (1)
listed on a national securities exchange or designated as a national market
system security on an inter-dealer quotation system by the National Association
of Securities Dealers, Inc. or (2) held of record by more than 2,000
stockholders. However, appraisal rights will be available to holders of shares
if they are the required by the merger terms to accept anything other than
shares of the survivor, listed or quoted shares or cash in lieu of fractional
shares. In addition, no appraisal rights are available for any shares of stock
of a surviving corporation in a merger if the merger did not require the
approval of the stockholders of such corporation. Further, Delaware law does not
provide appraisal rights to stockholders who dissent from the sale of all or
substantially all of the corporation's assets unless the certificate of
incorporation provides otherwise. The new certificate of incorporation will not
provide for appraisal rights upon the sale of all or substantially all of our
assets.

The meaning of "fair value" in payment for shares upon exercise of
dissenters' rights is different under the NYBCL and the DGCL. The DGCL provides
that "fair value" does not include any element of value arising from the
completion or expectation of the transaction. The NYBCL mandates that the court
should consider the nature of the transaction, its effect on the corporation and
its shareholders, and the concepts and methods of valuation then

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customary in the relevant financial and securities markets.

RESTRICTIONS ON DIVIDENDS

Under the NYBCL, a dividend may be paid on common stock, out of surplus,
which is defined as the excess of net assets over stated capital, only, unless,
after payment of the dividend, we are insolvent or would be rendered insolvent.

Under the DGCL, a dividend may be paid on common stock out of either
surplus, which is defined as the excess of net assets over capital, or if no
surplus exists, out of net profits for the fiscal year in which the dividend is
declared and/ or the preceding fiscal year. Dividends may not be paid out of net
profits if our capital is less than the aggregate amount of the capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. The payment of dividends on the PE
Biosystems Stock and the Celera Genomics Stock will also be restricted by
provisions in the new certificate of incorporation. See "--Description of PE
Biosystems Stock and Celera Genomics Stock."

RESTRICTIONS ON STOCK REPURCHASES

Under the NYBCL, we may not purchase or redeem shares if we are insolvent or
would be rendered insolvent.

Under the DGCL, we may not purchase or redeem shares when our capital is
impaired or when such purchase or redemption would cause any impairment of our
capital, except that (1) we may purchase or redeem out of capital any shares
which are entitled to a preference over another class or series of its stock or
(2) if no shares entitled to a preference are outstanding, we may purchase or
redeem shares out of capital. We also may not purchase any shares which are
redeemable at our option for more than the price at which they are then
redeemable.

TRANSACTIONS WITH DIRECTORS

Under the NYBCL, certain contracts or transactions in which a director has
an interest are not void or voidable solely by reason of that interest if the
contract or transaction:

- is approved by the shareholders or by a majority of the disinterested
directors if the material facts are disclosed in good faith or known; or

- was fair and reasonable to the corporation at the time of approval.

However, the NYBCL prohibits the corporation from making loans to a director
unless the loans are authorized by vote of its shareholders.

The DGCL contains provisions regarding transactions with directors that are
substantially similar to those of the NYBCL. However, the DGCL provides that we
may make loans or provide guarantees for our officers, including those who are
also directors, if our board of directors reasonably expects that such action
will benefit our company.

STOCKHOLDER INSPECTION OF CORPORATE RECORDS

Under the NYBCL, a shareholder who has been a shareholder of record for at
least six months, or who holds at least 5% of any class of outstanding shares,
is entitled to inspect our stock ledger, minutes of shareholders' meetings,
records of all actions taken by shareholders without a meeting, and certain
financial statements.

Under the DGCL, any stockholder may inspect for any proper purpose our stock
ledger, list of stockholders and other books and records, and may make copies or
extracts from them.

PREEMPTIVE RIGHTS

As permitted by the NYBCL, the existing certificate of incorporation
provides that shareholders do not have preemptive rights.

Under the DGCL, stockholders do not have preemptive rights unless
specifically granted in the certificate of incorporation. The new certificate of
incorporation will not grant preemptive rights.

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<PAGE>
CERTAIN ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW AND THE NEW CERTIFICATE OF
INCORPORATION, THE NEW BY-LAWS AND THE NEW RIGHTS AGREEMENT

The following discussion concerns certain provisions of the new certificate
of incorporation, the new by-laws, and the new rights agreement that could be
viewed as having the effect of discouraging an attempt to obtain control of our
company. These provisions are similar in many respects to those currently
applicable to our company. Since this is only a summary, you should also
carefully read the discussion of the rights of our stockholders under Delaware
law and New York law under "--Comparison of Shareholder Rights."

DELAWARE LAW

SECTION 203 OF DGCL. Under certain circumstances, Section 203 of the DGCL,
which is summarized under "--Comparison of Shareholder Rights," limits the
ability of an "interested stockholder" to effect various business combinations
with our company for a three-year period following the time that such
stockholder became an interested stockholder.

SPECIAL MEETINGS. Under the DGCL, unless the certificate of incorporation
or the by-laws provide otherwise, stockholders are not permitted to call a
special meeting of stockholders. The new certificate of incorporation and the
new by-laws do not permit stockholders to call a special meeting.

CERTIFICATE OF INCORPORATION AND BY-LAWS

AUTHORIZED SHARES. The new certificate of incorporation will provide that
we may from time to time issue shares of preferred stock in one or more series,
the terms of which will be determined by our board of directors, and common
stock of either class. We will not solicit approval of our stockholders unless
our board of directors believes that approval is advisable or is required by
stock exchange regulations or Delaware law. This could enable our board of
directors to issue shares to persons friendly to current management which could
render more difficult or discourage an attempt to obtain control of our company
by means of a merger, tender offer, proxy contest or otherwise, and thereby
protect the continuity of our company's management. Such additional shares also
could be used to dilute the stock ownership of persons seeking to obtain control
of our company.

STOCKHOLDER ACTION BY WRITTEN CONSENT. The new certificate of incorporation
provides that stockholders may act by written consent only if the written
consent of all stockholders entitled to vote is obtained. Therefore, as a
practical matter, stockholders seeking to obtain control of our company may only
take actions at an annual or special meeting of stockholders.

STOCKHOLDER PROPOSALS AND NOMINATIONS. As summarized under "--Comparison of
Shareholder Rights--Stockholder Proposals and Nominations," the new by-laws
provide an advance notice procedure for stockholders to bring business before an
annual meeting of stockholders or to nominate directors for election at an
annual or special meeting. These procedural requirements could have the effect
of delaying or preventing the submission of certain matters proposed by any
stockholder to a vote of the stockholders.

RIGHTS AGREEMENT

As described under "--Rights Agreement," the new rights agreement will
permit disinterested stockholders to acquire additional shares of our company or
of an acquiring company at a substantial discount in the event of certain
described changes in control. The new rights agreement is intended to discourage
anyone from buying shares of common stock having more than 15% of the voting
power of all outstanding shares without board of directors' approval.

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a summary of the principal United States federal
income tax consequences of the implementation of the recapitalization proposal.
The discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Department regulations, published positions of the Internal
Revenue Service, and court decisions now in

53
<PAGE>

effect, all of which are subject to change. In particular, Congress could enact
legislation affecting the treatment of stock with characteristics similar to the
PE Biosystems Stock and the Celera Genomics Stock, or the Treasury Department
could issue regulations that change current law. Any future legislation or
regulations could apply retroactively to the implementation of the
recapitalization proposal.

This discussion addresses only those of you who hold your existing common
stock and would hold your PE Biosystems Stock and Celera Genomics Stock as a
capital asset. This discussion does not discuss all aspects of United States
federal income taxation that may be relevant to you in light of your particular
tax circumstances. This discussion does not apply to you if you are a tax-exempt
organization, S corporation or other pass-through entity, mutual fund, small
business investment company, regulated investment company, insurance company or
other financial institution, broker-dealer or are otherwise subject to special
treatment under the federal income tax laws. This discussion also does not apply
to those of you who hold your existing common stock as part of a straddle,
hedging or conversion transaction. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR WITH
REGARD TO THE APPLICATION OF THE FEDERAL INCOME TAX LAWS, AS WELL AS TO THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS TO WHICH YOU
MAY BE SUBJECT.

TAX IMPLICATIONS TO YOU OF THE IMPLEMENTATION OF THE RECAPITALIZATION
PROPOSAL

In the opinion of Simpson Thacher & Bartlett, counsel to our company, the
implementation of the recapitalization proposal will, except to the extent
described below, be tax-free to you. This means that:

- You will not recognize any income, gain or loss on the exchange of your
existing common stock for shares of PE Biosystems Stock and Celera
Genomics Stock;

- You will recognize capital gain or loss on any cash received in lieu of
fractional shares of Celera Genomics Stock equal to the difference
between the amount of cash received and the basis allocated to such
fractional shares;

- Your basis in the existing common stock held immediately before the
implementation of the recapitalization proposal will be allocated between
the PE Biosystems Stock and the Celera Genomics Stock received, including
any fractional shares deemed received, in proportion to the fair market
value of such PE Biosystems Stock and Celera Genomics Stock on the date
of the distribution;

- Your holding period of the PE Biosystems Stock and the Celera Genomics
Stock will include the holding period of the existing common stock; and

- Any gain or loss recognized upon a subsequent sale or exchange of either
the PE Biosystems Stock or the Celera Genomics Stock will be capital gain
or loss.

TAX IMPLICATIONS TO YOU OF A CONVERSION OF
PE BIOSYSTEMS STOCK OR CELERA
GENOMICS STOCK

Simpson Thacher & Bartlett has advised that if we exercise any of our
options to convert one class of common stock into the other class of common
stock, that conversion will be tax-free to you. You will have a carryover
adjusted tax basis in the shares of common stock that you receive and generally
a holding period that includes the holding period of the common stock you
surrendered in the exchange.

NO INTERNAL REVENUE SERVICE RULING

No ruling has been sought from the Internal Revenue Service. The Internal
Revenue Service has announced that it will not issue any advance rulings on the
classification of an instrument that has certain voting and liquidation rights
in an issuing corporation but whose dividend rights are determined by reference
to the earnings of a segregated portion of the issuing corporation's assets,
including assets held by a subsidiary.

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<PAGE>

Simpson Thacher & Bartlett's opinion is not binding on the Internal Revenue
Service. In addition, there are no court decisions or other authorities that
bear directly on the effect of the features of the PE Biosystems Stock and
Celera Genomics Stock. It is possible, therefore, that the Internal Revenue
Service could assert that the receipt of the PE Biosystems Stock or the Celera
Genomics Stock as well as the subsequent exchange of the PE Biosystems Stock and
Celera Genomics Stock could be taxable to you and to us. Simpson Thacher &
Bartlett, however, is of the opinion that the Internal Revenue Service would not
prevail in such an assertion.

STOCK EXCHANGE LISTINGS

We will list the PE Biosystems Stock on the New York Stock Exchange and the
Pacific Stock Exchange under the symbol "PEB." We will list the Celera Genomics
Stock on such exchanges under the symbol "CRA." See "Risk Factors-- No
Assurances as to Market Price."

EXCHANGE PROCEDURES

Upon consummation of the recapitalization, your stock certificates for our
existing common stock will represent shares of PE Biosystems Stock. Shortly
after the recapitalization, you will be mailed stock certificates representing
your shares of Celera Genomics Stock. You will also receive instructions on how
you may, at your option, exchange your existing stock certificates for new
certificates representing your PE Biosystems Stock.

STOCK TRANSFER AGENT AND REGISTRAR

Our existing transfer agent, BankBoston, N.A. will act as the registrar and
transfer agent for both the PE Biosystems Stock and the Celera Genomics Stock.

FINANCIAL ADVISORS

Morgan Stanley Dean Witter is acting as our sole advisor with respect to the
structuring of the recapitalization proposal. We have agreed to pay Morgan
Stanley Dean Witter a fee of $2,750,000.

In addition, we have engaged Bear Stearns & Company, Inc. ("Bear Stearns")
and SG Cowen Securities Corporation ("SG Cowen") as financial advisors. We have
agreed to pay Bear Stearns a fee of $1,000,000 and SG Cowen a fee of $750,000.

We have also agreed to reimburse these advisors for their reasonable
out-of-pocket expenses, including the fees and expenses of their lawyers, and to
indemnify them against liabilities under the Securities Act and certain other
liabilities.

EFFECT ON EXISTING OPTIONS AND WARRANTS

If the recapitalization is implemented, each outstanding stock option under
our existing stock option plans will be converted into separately exercisable
options to acquire one share of PE Biosystems Stock and .5 of a share of Celera
Genomics Stock. The exercise price for the resulting PE Biosystems Stock options
and Celera Genomics Stock options will be calculated by multiplying the exercise
price under such existing stock option by a fraction, the numerator of which is
the average of the high and low price of the applicable class of common stock
underlying such option on the first date such stocks are traded, regular way,
after the recapitalization, and the denominator of which is the sum of such
prices for the PE Biosystems Stock and the Celera Genomics Stock.

If the recapitalization is implemented, pursuant to the terms of the Class F
and Class G warrants to purchase shares of existing common stock, each such
warrant will become exercisable for a number of shares of PE Biosystems Stock
and a number of shares of Celera Genomics Stock equal to the numbers of shares
which the holder of such warrant would receive in the recapitalization had such
warrant been exercised immediately prior to the recapitalization. The warrants
will not be separately exercisable into solely PE Biosystems Stock or solely
Celera Genomics Stock. The exercise price and expiration date of each warrant
will not be affected by the recapitalization.

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<PAGE>

OPTIONS FOR CELERA GENOMICS STOCK TO BE ISSUED UPON THE RECAPITALIZATION

In connection with the recapitalization, we have granted, pursuant to the
new Celera Genomics Stock incentive plan described under "Proposals 2 and 3--The
PE Corporation/PE Biosystems Group 1999 Stock Incentive Plan and The PE
Corporation/Celera Genomics Group 1999 Stock Incentive Plan," options to
purchase a total of 3,613,931 shares of Celera Genomics Stock to certain
executive officers and directors of our company and employees of the Celera
Genomics Group. These options include options to purchase 1,421,585 shares of
Celera Genomics Stock granted to Dr. Venter in recognition of his contributions
to the organization of the Celera Genomics Group and his continuing efforts
towards its future success.

We also expect to issue options to purchase 5% of the outstanding shares of
Celera Genomics Stock to The Institute of Genomics Research for its agreement
not to compete with the Celera Genomics Group and other consideration. These
options, which will not be granted under our stock incentive plan, are expected
to have a ten-year term and to be immediately exercisable.

NO DISSENTERS' RIGHTS

Under the NYBCL, shareholders who dissent from the recapitalization proposal
will not have appraisal rights.

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<PAGE>

THE PERKIN-ELMER CORPORATION --
MANAGEMENT'S DISCUSSION AND ANALYSIS

MANAGEMENT'S DISCUSSION OF CONTINUING OPERATIONS

You should read this discussion with our consolidated financial statements.
Historical results and percentage relationships are not necessarily indicative
of operating results for any future periods.

Throughout the following discussion of operations we refer to the impact on
our reported results of the movement in foreign currency exchange rates from one
reporting period to another as "foreign currency translation."

DISCONTINUED OPERATIONS

On January 21, 1999, we announced a plan to sell our Analytical Instruments
business. We expect to complete the plan within a year, although we cannot
assure you that the sale will occur within that time period. Accordingly, we
have reclassified amounts previously reported and stated them as discontinued
operations. We expect to recognize a gain on disposal. However, the actual
results could differ significantly depending on the transaction costs incurred
and the amount realized upon the sale of the business. See Note 15 to the
consolidated financial statements.

EVENTS IMPACTING COMPARABILITY

ACQUISITIONS AND INVESTMENTS. On January 22, 1998, we acquired PerSeptive
Biosystems, Inc. The acquisition has been accounted for as a pooling of
interests and, accordingly, our financial results have been restated to include
the combined operations. See Note 2 to the consolidated financial statements.

We acquired Molecular Informatics, Inc. and a 14.5% interest, and
approximately 52% of the voting rights, in Tecan AG during the second quarter of
fiscal 1998, and GenScope, Inc. during the third quarter of fiscal 1997. The
results of operations for the above acquisitions, each of which was accounted
for as a purchase, have been included in the consolidated financial statements
since the date of each respective acquisition. A discussion of our significant
acquisitions and investments is provided in Note 2 to the consolidated financial
statements.

RESTRUCTURING AND OTHER MERGER COSTS. We incurred merger-related period
costs of $.9 million in the first quarter of fiscal 1999 in connection with the
integration of PerSeptive into our company. During fiscal 1998, we recorded
$48.1 million of before-tax charges, or $.87 per diluted share after-tax, for
restructuring and other merger costs to integrate PerSeptive into our company.
The charge included $4.1 million of inventory-related write-offs, recorded in
cost of sales, associated with the rationalization of certain product lines. The
objectives of the integration plan are to lower PerSeptive's cost structure by
reducing excess manufacturing capacity, achieve broader worldwide distribution
of PerSeptive's products, and combining sales, marketing, and administrative
functions.

In fiscal 1996, a before-tax charge of $17.5 million, or $.38 per diluted
share after-tax, was recorded by PerSeptive for restructuring actions and other
related costs. A discussion of our restructuring programs is provided in Note 10
to the consolidated financial statements.

ACQUIRED RESEARCH AND DEVELOPMENT. During fiscal 1998, 1997, and 1996, we
recorded charges for purchased in-process research and development in connection
with certain acquisitions. The charges recorded in fiscal 1998, 1997, and 1996
were $28.9 million, $26.8 million, and $33.9 million, or $.57, $.54, and $.72
per diluted share after-tax, respectively. See Note 2 to the consolidated
financial statements.

In fiscal 1998 we expensed $28.9 million of the Molecular Informatics
acquisition cost as in-process research and development, representing 53.6% of
the purchase price. This amount was attributed and supported by a discounted
probable cash flow analysis on a project by project basis.

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<PAGE>

sequencing instruments; 6% to GA SFDB, a client-side add-on product to several
existing gene sequencing instruments; 38% to BioMERGE, a client-server
management and integration system that organizes proprietary, public and
third-party results in a single relational database for the drug discovery and
genomic research markets; 9% to BioCLINIC, a client-server management and
integration system that organizes proprietary, public and third-party results
generated from DNA and protein sequence analysis in a single database for the
clinical trials phase of drug development; and 37% to SDK, an open architecture
software platform from which all of Molecular Informatics' future software
applications are expected to be derived.

At the date of the acquisition, management expected to complete the majority
of these projects and commence generating significant revenues in fiscal 1999 at
an additional research and development cost of approximately $6.9 million. We
attributed $11.8 million of the purchase price to core technology and existing
products, primarily related to the BioMERGE product. We applied a risk-adjusted
discount to the projects' cash flows of 20% for existing technology and 23% for
in-process technology. The significant risks associated with these products
include the limited operating history of Molecular Informatics, uncertainties
surrounding market acceptance of such in-process products, competitive threats
from other bioinformatics companies and other risks. Management is primarily
responsible for estimating the fair value of such existing and in-process
technology.

During the third quarter of fiscal 1997, we acquired GenScope, Inc., for
$26.8 million. GenScope, founded in 1995, represented a development stage
venture with no operating history and effectively no revenues (limited R&D
contract services only). Its sole material asset is a cross license for gene
expression technology still under development and, at acquisition date, was not
commercially viable. GenScope's limited balance sheet, consisting of assets of
approximately $.2 million, had yet to deliver commercial value. Accordingly, we
recorded a charge of $25.4 million attributable to the in-process technology
purchased. The acquisition represented the purchase of development stage
technology, not at the time considered commercially viable in the health care
applications that our company intends to pursue. Our intent was to first develop
the technology into a set of molecular screening tools for use in the
enhancement of pharmaceutical product development. We allocated $1.4 million of
the purchase price to technology rights attributable to GenScope's AFLP gene
expression technology. AFLP is an enhancement of the polymerase chain reaction
("PCR") process that allows selective analysis of any portion of genetic
material without the specific, prior sequence information normally required for
PCR. Of the $25.4 million expensed as in-process research and development, $5.5
million represented a contingent liability due on the issuance of a process
patent for technology under development.

IMPAIRMENT OF ASSETS. Cost of sales for fiscal 1997 included $.7 million,
or $.01 per diluted share after-tax, for the write-down of certain impaired
assets. The fiscal 1997 charge was a result of adopting Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." In fiscal 1996,
we recorded a before-tax cost of sales charge of $9.9 million, or $.21 per
diluted share after-tax, for the impairment of certain production assets
associated with the realignment of the product offerings of PerSeptive. See Note
1 to the consolidated financial statements.

GAIN ON INVESTMENTS. The first quarter of fiscal 1998 included a before-tax
gain of $.8 million, or $.02 per diluted share after-tax, related to the release
of contingencies on a minority equity investment. Fiscal 1998, 1997, and 1996
included before-tax gains of $1.6 million, $64.9 million, and $11.7 million,
respectively, related to the sale and release of contingencies on minority
equity investments. The fiscal 1998, 1997, and 1996 after-tax gains per diluted
share were $.03, $1.15, and $.19, respectively. See Note 2 to the consolidated
financial statements.

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<PAGE>

RESULTS OF CONTINUING OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1998 COMPARED WITH SEPTEMBER 30, 1997

We reported net income from continuing operations of $17.9 million, or $.36
per diluted share, for the first quarter of fiscal 1999 compared with net income
from continuing operations of $17.5 million, or $.35 per diluted share, for the
first quarter of fiscal 1998. Excluding the $.9 million of merger-related costs
incurred in the first quarter of fiscal 1999, net income for the quarter
increased 5.9% compared with the prior year. The effects of foreign currency
translation reduced fiscal 1999 first quarter net income by approximately $2
million, or $.04 per diluted share. Excluding the merger-related costs and the
effects of currency translation, net income for the first quarter of fiscal 1999
increased approximately 16.4% compared with the first quarter of fiscal 1998.

Net revenues were $254.7 million for the first quarter of fiscal 1999
compared with $194.7 million for the first quarter of fiscal 1998, an increase
of 30.8%. Excluding the results of Tecan, which were not included in the first
quarter of the prior year, revenues increased 16.7%. The effects of foreign
currency translation decreased net revenues by approximately $5 million, or 3%,
in the quarter compared with the prior year, as the U.S. dollar remained strong
against most Far Eastern currencies. Excluding Tecan and the negative effects of
currency translation, revenues increased 19% compared with the prior year,
primarily reflecting the continued growth in the genetic analysis and polymerase
chain reaction ("PCR") product offerings. In particular, revenues for reagents
that support our genetic analysis systems increased 81%. Increased contract and
licensing revenues of $5.4 million also contributed to the year-to-year growth.

Geographically, excluding Tecan, revenues and orders were particularly
strong in the United States and Europe, as revenues increased 24.5% and 18.6%
over the prior year, partly as a result of higher product demand from
pharmaceutical research companies. Revenues in Latin America and other markets
increased 34.2%, while revenues in the Far East declined 9.4% compared with the
prior year. Excluding Tecan and the negative effects of currency translation,
revenues in the Far East would have increased approximately 6% compared with the
prior year.

We introduced several significant new products and systems during the first
quarter. Among these introductions were the ultra high-throughput ABI
PRISM-Registered Trademark- 3700 DNA Analyzer. Shipments of the system to
early-access customers and the Celera Genomics Group are expected to begin
during the second quarter of fiscal 1999. Other significant new instrument
systems and services introduced during the quarter included: several applied
genetic analysis kits, including one for HIV profiling; high-throughput drug
discovery screening services through Tropix; and FMAT, a new bioassay system to
detect cells in vitro for drug discovery, which was developed in collaboration
with Biometric Imaging, Inc. These products began generating revenues late in
the quarter and we expect these products to contribute to revenues over the
remainder of fiscal 1999.

Gross margin as a percentage of net revenues was 55.5% in the first quarter
of fiscal 1999 compared with 51.6% in the first quarter of fiscal 1998. This was
primarily the result of a change in product mix. Higher unit sales of reagents
to support genetic analysis systems and increased royalty and contract licensing
revenues were the primary contributors. Continued growth in instrument sales of
higher margin genetic analysis product offerings was also a factor.

Selling, general and administrative expenses were $77.5 million in the first
quarter of fiscal 1999 compared with $59.5 million in the first quarter of
fiscal 1998. The 30.2% increase in expenses, or 16.4% excluding Tecan, was due
to higher planned marketing costs and expenses associated with establishing
facilities and staff for the Celera Genomics Group. As a percentage of net
revenues, SG&A expense was approximately 31% in both fiscal periods.

Research, development and engineering expenses of $35.6 million increased
61.9% over the prior year from $22.0 million. Excluding Tecan, R&D expenses
increased 47.5% compared with the prior year. R&D investments were increased to
a higher level in the quarter, in part to support new product launches in fiscal
1999 and to accelerate new product

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development. Comparative increases in these expenses should moderate over future
quarters. As a percentage of net revenues, our R&D expenses increased to 14.0%
compared with 11.3% for the prior year.

We incurred merger-related costs of $.9 million in the first quarter of
fiscal 1999 for training, relocation, and communication in connection with the
integration of PerSeptive into our company. See Note 10 to the consolidated
financial statements. We expect to incur additional merger-related period costs
of $5.5 million to $7.5 million through the remaining quarters of fiscal 1999.

Operating income increased to $27.5 million for the first quarter of fiscal
1999 compared with $19.0 million for the prior year. Excluding Tecan, the
merger-related costs of $.9 million, and the effects of currency translation,
operating income increased 39% compared with the prior year, benefiting from the
higher gross margin. Operating expenses for the first quarter of fiscal 1999
included $3.6 million of incremental costs associated with Celera Genomics. The
effects of currency translation decreased operating income by approximately $3
million compared with the prior year.

Interest expense was $.8 million for the first quarter of fiscal 1999
compared with $1.3 million for the prior year. This decrease was primarily due
to the refinancing of PerSeptive's 8 1/4% Convertible Subordinated Notes Due
2001 together with slightly lower outstanding debt balances and lower average
interest rates. Interest income was $.5 million for the first quarter of fiscal
1999 compared with $2.4 million for the prior year, primarily because of lower
cash balances, as well as from lower interest rates.

Other income, net for the first quarter of fiscal 1999 was $1.7 million,
primarily related to a legal settlement, compared with other income, net of $.4
million for the prior year.

Our effective tax rate was 26% for the first quarter of fiscal 1999 compared
with 25% for the prior year. Excluding Tecan in fiscal 1999, the effective
income tax rate was 26%.

Minority interest expense of $3.1 million was recognized in the first
quarter of fiscal 1999 relating to our company's 14.5% financial interest in
Tecan.

RESULTS OF CONTINUING OPERATIONS--1998 COMPARED WITH 1997

We reported net income from continuing operations of $15.7 million, or $.31
per diluted share, for fiscal 1998, compared with net income from continuing
operations of $102.5 million, or $2.07 per diluted share, for fiscal 1997. On a
comparable basis, excluding the special items previously described, net income
increased 17.3% to $86.4 million for fiscal 1998 compared with $73.7 million for
fiscal 1997, and earnings per diluted share increased 21.1% to $1.78 for fiscal
1998 from $1.47 for fiscal 1997. Excluding the effects of currency translation
and special items, earnings per diluted share would have increased approximately
39% compared with the prior year.

Net revenues were $944.3 million for fiscal 1998, compared with $768.4
million for fiscal 1997, an increase of 22.9%. Excluding Tecan, revenues
increased 16.3% compared with the prior year. The effects of currency
translation decreased net revenues by approximately $33 million, or 4%, compared
with the prior year, as the U.S. dollar strengthened against most European and
Far Eastern currencies. On a worldwide basis, excluding Tecan and the effects of
currency translation, revenues would have increased approximately 21% compared
with the prior year. Increased demand for genetic analysis, liquid
chromatography/mass spectrometry ("LC/MS"), and PCR product lines was the
primary contributor.

All geographic markets reported increased revenues over the prior year.
Excluding Tecan, net revenues in the United States, Europe, and the Far East
increased 24.9%, 10.7%, and 4.6%, respectively. Before the effects of currency
translation, and excluding Tecan, revenues in Europe and the Far East would have
increased approximately 18% and 14%, respectively, compared with the prior year.
We believe slower Japanese government funding in the second half of fiscal 1998
and the lack of a supplemental budget, which added to fiscal 1997 revenues,
contributed to a lower growth rate of only 3% in the Japanese market.

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Gross margin as a percentage of net revenues was 53.8% for fiscal 1998
compared with 52.9% for fiscal 1997. Fiscal 1998 gross margin included $4.1
million of inventory-related write-offs associated with the rationalization of
certain product lines in connection with the acquisition of PerSeptive, and
fiscal 1997 included a charge of $.7 million for the write-down of certain
impaired assets. Excluding the special items, fiscal 1998 gross margin increased
to 54.3% of revenues compared with 53.0% for fiscal 1997. Benefits realized from
the sale of higher-margin genetic analysis products and increased royalty
revenues in the United States, more than offset the negative effects of currency
translation.

SG&A expenses were $283.4 million for fiscal 1998 compared with $229.9
million for the prior year. The 23.3% increase in expenses, or 16.5% excluding
Tecan, was due to higher planned worldwide selling and marketing expenses,
commensurate with the substantially higher revenue and order growth. Before the
effects of currency translation and Tecan, SG&A expenses increased approximately
19% compared with the prior year. As a percentage of net revenues, SG&A expenses
remained essentially unchanged from the prior year at 30%.

R&D expenses of $111.7 million increased 37.5% over the prior year. R&D
spending increased 42.9%, or 35.9% excluding Tecan, over the prior year as we
continued our product development efforts and preparation for new product
launches. As a percentage of net revenues, our R&D expenses increased to 11.8%
compared with 10.6% for the prior year.

During fiscal 1998, we recorded $48.1 million of charges for restructuring
and other merger costs to integrate PerSeptive into our company following the
acquisition. See Note 10 to the consolidated financial statements. The
objectives of the integration plan are to lower PerSeptive's cost structure by
reducing excess manufacturing capacity, achieve broader worldwide distribution
of PerSeptive's products, and combine sales, marketing, and administrative
functions. The charge included: $33.9 million for restructuring the combined
operations; $8.6 million for transaction costs; and $4.1 million of
inventory-related write-offs, recorded in cost of sales, associated with the
rationalization of certain product lines. Additional non-recurring acquisition
costs of $1.5 million for training, relocation, and communication costs were
recognized as period expenses in the third and fourth quarters and were
classified as other merger-related costs. We expect to incur an additional $6.5
million to $8.5 million of acquisition-related costs for training, relocation,
and communication in fiscal 1999. These costs will be recognized as period
expenses when incurred and will be classified as other merger costs.

The $33.9 million restructuring charge includes $13.8 million for
severance-related costs and workforce reductions of approximately 170 employees,
consisting of 114 employees in production labor and 56 employees in sales and
administrative support. The remaining $20.1 million represents facility
consolidation and asset-related write-offs and includes: $11.7 million for
contract and lease terminations and facility related expenses in connection with
the reduction of excess manufacturing capacity; $3.2 million for dealer
termination payments, sales office consolidations, and consolidation of sales
and administrative support functions; and $5.2 million for the write-off of
certain tangible and intangible assets and the termination of certain
contractual obligations. These restructuring actions are expected to be
substantially completed by the end of fiscal 1999. Transaction costs of $8.6
million include acquisition-related investment banking and professional fees. As
of June 30, 1998, approximately 12 employees were separated under the plan and
the actions are proceeding as planned.

Fiscal 1998 included $28.9 million of purchased in-process research and
development associated with the acquisition of Molecular Informatics. In fiscal
1997, we recorded a charge of $26.8 million primarily for in-process research
and development related to the acquisition of GenScope.

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OPERATING INCOME

<TABLE>
<CAPTION>
(DOLLAR
AMOUNTS IN
MILLIONS)
-----------
<S> <C>
1997
Operating income before special items...... $ 95.7
Acquired R&D............................... (26.8)
Impairment of assets....................... (.7)
-----------
Operating income......................... $ 68.2
-----------
-----------

1998
Operating income before special items...... $ 117.6
Restructuring and other merger costs....... (48.1)
Acquired R&D............................... (28.9)
-----------
Operating income......................... $ 40.6
-----------
-----------
</TABLE>

Operating income decreased to $40.6 million for fiscal 1998 compared with
$68.2 million for fiscal 1997. Excluding the special charges for restructuring
and other merger costs, acquired research and development, and the impairment of
assets, operating income increased $21.9 million, or 22.9%, primarily as a
result of increased volume and improved margins. Excluding Tecan, operating
income before special items increased 14.9% compared with the prior year. Before
the effects of currency translation and excluding Tecan, fiscal 1998 operating
income before special items increased 32.8% compared with the prior year.
Geographically, excluding Tecan, fiscal 1998 operating income before special
items increased 29.7% in the United States, 20.1% in the Far East, and 8.0% in
Europe compared with fiscal 1997. A 23.5% increase in operating income from
higher-margin sequencing and mapping systems was the primary contributor. As a
percentage of net revenues, operating income before special items remained
essentially unchanged compared with the prior year.

In fiscal 1998 and 1997, we recorded gains of $1.6 million and $64.9
million, respectively, on the sale and release of contingencies on minority
equity investments. See Note 2 to the consolidated financial statements.

Interest expense was $4.9 million for fiscal 1998 compared with $5.9 million
for the prior year. This decrease was primarily due to the refinancing of the
PerSeptive Notes together with slightly lower outstanding debt balances and
lower average interest rates. Interest income was $5.9 million for fiscal 1998
compared with $8.8 million for the prior year, primarily because of lower cash
balances resulting from the use of cash to fund our continued investments and
acquisitions, as well as from lower interest rates.

Other income, net for fiscal 1998 of $3.1 million, primarily related to the
sale of certain operating and non-operating assets, compared with other income,
net of $1.9 million for the prior year.

Our effective tax rate was 54% for fiscal 1998 and 26% for fiscal 1997.
Excluding Tecan in fiscal 1998, and special items in fiscal 1998 and fiscal
1997, the effective income tax rate was 24% for fiscal 1998 compared with 27%
for fiscal 1997. Increased earnings in low tax jurisdictions reduced our rate
for fiscal 1998. An analysis of the differences between the federal statutory
income tax rate and the effective rate is provided in Note 4 to the consolidated
financial statements.

Minority interest expense of $5.6 million was recognized in fiscal 1998
relating to our company's 14.5% financial interest in Tecan. See Note 2 to the
consolidated financial statements.

RESULTS OF CONTINUING OPERATIONS--1997 COMPARED WITH 1996

We reported net income from continuing operations of $102.5 million, or
$2.07 per diluted share, for fiscal 1997 compared with net income from
continuing operations of $1.3 million, or $.03 per diluted share, for fiscal
1996. On a comparable basis, excluding the special items previously described,
net income and earnings per diluted share increased 37.6% and 27.8%,
respectively.

Net revenues for fiscal 1997 were $768.4 million, an increase of 19.6% over
the $642.2 million reported for fiscal 1996. The effects of currency rate
movements decreased net revenues by approximately $25 million, or 4%, as the
U.S. dollar strengthened against the Japanese Yen and certain European
currencies.

All geographic markets experienced revenue growth for fiscal 1997. Net
revenues in the United States, Europe, and the Far East increased 20.2%, 22.0%,
and 16.3%, respectively. Increased demand for genetic analysis, LC/MS, and the
PCR product lines was the primary

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contributor. Excluding currency effects, revenues in Europe and the Far East
would have increased approximately 26% and 29%, respectively.

Gross margin as a percentage of net revenues was 52.9% for fiscal 1997
compared with 50.5% for fiscal 1996. Excluding the $.7 million and $9.9 million
charges for impaired assets, recorded in cost of sales, for fiscal 1997 and
1996, respectively, gross margin was 53.0% compared with 52.0%. The improved
gross margin was the result of the overall unit volume increase and product mix.

SG&A expenses were $229.9 million for fiscal 1997 compared with $188.3
million for fiscal 1996, an increase of 22.1%, reflecting a 16% increase in
worldwide marketing expenses, commensurate with the growth in revenues, and
increased costs for our restricted stock and performance-based compensation
programs. The total expense for the restricted stock and performance-based
programs was $20.4 million and $7.9 million for fiscal 1997 and 1996,
respectively. As a percentage of net revenues, our SG&A expenses remained
essentially unchanged at approximately 30% for both fiscal 1997 and fiscal 1996.

R&D expenses were $81.2 million for fiscal 1997 compared with $62.4 million
for fiscal 1996. R&D spending increased 30.1% over the prior year as we
continued our product development efforts for the bioresearch markets. As a
percentage of net revenues, R&D expenses increased to 10.6% for fiscal 1997
compared with 9.7% for fiscal 1996.

OPERATING INCOME

<TABLE>
<CAPTION>
(DOLLAR
AMOUNTS IN
MILLIONS)
-----------
<S> <C>
1996
Operating income before special items...... $ 83.3
Restructuring.............................. (17.5)
Acquired R&D............................... (33.9)
Impairment of assets....................... (9.9)
-----------
Operating income......................... $ 22.0
-----------
-----------

1997
Operating income before special items...... $ 95.7
Acquired R&D............................... (26.8)
Impairment of assets....................... (.7)
-----------
Operating income......................... $ 68.2
-----------
-----------
</TABLE>

Operating income for fiscal 1997 was $68.2 million compared with $22.0
million for fiscal 1996. Fiscal 1997 and 1996 included charges of $26.8 million
and $33.9 million, respectively, for acquired research and development related
to acquisitions. We incurred a charge of $.7 million in fiscal 1997 and $9.9
million in fiscal 1996 for impairment of assets. Fiscal 1996 also included a
restructuring charge of $17.5 million for restructuring actions and other
related costs associated with PerSeptive. On a comparable basis, excluding
special items in both years, operating income increased 14.9% compared with the
prior year as a result of increased volume and improved gross margins.

All geographic markets contributed to the improved operating income before
special items. An increase in operating income from high-margin sequencing
systems was the primary contributor. The strongest growth was in Europe, where
fiscal 1997 operating income before special items increased 29.8% compared with
fiscal 1996. Excluding currency translation effects, operating income before
special items would have increased approximately 28%. As a percentage of net
revenues, operating income before special items decreased to 12.5% for fiscal
1997 from 13.0% for fiscal 1996.

In fiscal 1997 and 1996, we recorded before-tax gains of $64.9 million and
$11.7 million, respectively, on the sale and release of contingencies on
minority equity investments.

Interest expense was $5.9 million for fiscal 1997 compared with $8.4 million
for fiscal 1996. Lower average borrowing levels for fiscal 1997 and lower
weighted average interest rates on short-term debt accounted for the reduction
in interest costs. As a result of maintaining higher cash and cash equivalent
balances, interest income increased by $3.5 million to $8.8 million for fiscal
1997.

Other income, net was $1.9 million for fiscal 1997 compared with other
expense, net of $2.1 million for fiscal 1996. The fiscal 1997 amount consisted
primarily of a fourth quarter gain on the sale of real estate.

The effective income tax rate for fiscal 1997 was 26%. Fiscal 1996 incurred
a provision of

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$27.3 million on before-tax income of $28.6 million. Special items affected both
years. The charges for acquired research and development were not deductible for
tax purposes. In addition, the fiscal 1996 charge for restructuring and the
fiscal 1997 charge for impairment of assets were only partially deductible and
no tax benefit was recognized for PerSeptive's fiscal 1996 net operating loss,
which resulted in a significant increase in the tax rate for the fiscal year.

In the fourth quarter of fiscal 1997, we reduced our deferred tax valuation
allowance, resulting in the recognition of a $50.0 million deferred tax benefit.
The benefit resulting from the valuation allowance release was substantially
offset by a fourth quarter accrual for tax costs related to gains on foreign
reorganizations.

MARKET RISK

We operate internationally, with manufacturing and distribution facilities
in various countries throughout the world. For the first quarter of fiscal 1999
and for fiscal 1998, we derived approximately 47% and 52%, respectively, of its
revenues from countries outside of the United States. Results continue to be
affected by market risk, including fluctuations in foreign currency exchange
rates and changes in economic conditions in foreign markets.

Our risk management strategy utilizes derivative financial instruments,
including forwards, swaps, purchased options, and synthetic forward contracts to
hedge certain foreign currency and interest rate exposures, with the intent of
offsetting losses and gains that occur on the underlying exposures with gains
and losses on the derivatives. We do not use derivative financial instruments
for trading or other speculative purposes, nor is our company a party to
leveraged derivatives. At September 30, 1998 and June 30, 1998, outstanding
hedge contracts covered approximately 80% of the estimated foreign currency
exposures related to cross-currency cash flows to be realized for the next
twelve months. The outstanding hedges were a combination of forward, option, and
synthetic forward contracts maturing in the next twelve months.

We performed a sensitivity analysis as of September 30, 1998 and June 30,
1998. We assumed a hypothetical adverse change of 10% in year-end exchange rates
and a weakening of the U.S. dollar was assumed. We calculated a hypothetical
loss of $4.1 million in future cash flows by comparing the difference between
the change in market value of both the foreign currency contracts outstanding
and the underlying exposures being hedged assuming the 10% adverse change in
year-end rates. Actual gains and losses in the future could, however, differ
materially from this analysis, based on changes in the timing and amount of
foreign currency exchange rate movements and our actual exposures and hedges.

Interest rate swaps are used to hedge underlying debt obligations. In fiscal
1997, we executed an interest rate swap in conjunction with its entering into a
five-year Japanese Yen debt obligation. Under the terms of the swap agreement,
we pay a fixed rate of interest at 2.1% and receives a floating LIBOR interest
rate. At September 30, 1998 and June 30, 1998, the notional amount of
indebtedness covered by the interest rate swap was Yen 3.8 billion, which was
$28.0 million at September 30, 1998 and $27.0 million at June 30, 1998. The
maturity date of the swap coincides with the maturity of the Yen loan in March
2002.

A change in interest rates would have no impact on our reported interest
expense and related cash payments because the floating rate debt and fixed rate
swap contract have the same maturity and are based on the same rate index.

MANAGEMENT'S DISCUSSION OF FINANCIAL RESOURCES AND LIQUIDITY

The following discussion of financial resources and liquidity focuses on the
Consolidated Statements of Financial Position and the Consolidated Statements of
Cash Flows.

Cash and cash equivalent of continuing operations were $71.8 million at
September 30, 1998, $82.9 million at June 30, 1998, and $213.0 million at June
30, 1997, with total debt of continuing operations of $88.4 million at September
30, 1998, $45.8 million at June 30, 1998, and $89.1 million at June 30, 1997.
Working capital was $291.9 million at

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<PAGE>
September 30, 1998, $288.0 million at June 30, 1998, and $354.7 million at June
30, 1997. Debt to total capitalization increased to 13% at September 30, 1998
from 8% at June 30, 1998, as a result of an increase in loans payable to fund
current operating requirements. Debt to total capitalization was 15% at June 30,
1997.

SIGNIFICANT CHANGES IN THE CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION

At September 30, 1998 accounts receivable of $240.0 million increased 5%
from the June 30, 1998 balance of $229.0 million. The inventory balance
increased by $22.1 million from June 30, 1998, to support the continued growth
in orders.

Accounts receivable and inventory balances increased from June 30, 1997 to
June 30, 1998 by $50.1 million and $25.9 million, respectively. Excluding Tecan,
accounts receivable and inventory balances increased by $28.6 million and $16.2
million, respectively, from June 30, 1997 to June 30, 1998, reflecting the
growth in revenues and orders.

We reduced our total deferred tax asset and related valuation allowance from
$124.3 million and $69.7 million at June 30, 1997 to $115.5 million and $62.8
million at June 30, 1998. The valuation allowance relates primarily to foreign
and domestic tax loss carryforwards, domestic tax credit carryforwards and other
domestic deferred tax assets. A portion of the valuation allowance is
attributable to tax loss and credit carryforwards and other deferred tax assets
which we acquired as part of the purchase of PerSeptive in fiscal 1998. In
evaluating our need for a valuation allowance, we considered all available
positive and negative evidence, including historical information supplemented by
information about future years. The following factors significantly influenced
our conclusion regarding the need for a valuation allowance including: (1) the
historical profitability of our domestic Analytical Instruments Operations, (2)
the limitation under the Internal Revenue Code on the amount of annual
utilization of domestic loss carryforwards and credits of PerSeptive, (3) the
long-term nature of a significant portion of the remaining domestic tax asset
and (iv) the various expiration dates of the foreign loss carryforwards. We
evaluate the need for the valuation allowance periodically for each taxpaying
component in each tax jurisdiction.

Other long-term assets increased by $5.8 million at September 30, 1998 to
$247.6 million from $241.8 million at June 30, 1998. Other long-term assets
increased to $241.8 million at June 30, 1998 from $156.8 million at June 30,
1997. The change included $70.9 million of intangible assets associated with the
acquisition of Tecan and Molecular Informatics, $11.5 million of minority equity
investments, and a $10.2 million increase in prepaid pension asset, partially
offset by the sale of certain non-operating assets.

Total short-term and long-term borrowings were $45.8 million at June 30,
1998 compared with $89.1 million at June 30, 1997. The decrease was due in part
to the redemption of PerSeptive's 8 1/4% Convertible Subordinated Notes Due 2001
on March 23, 1998. The redemption price was $1,055.81 per $1,000 principal
amount of the PerSeptive Notes, which represented the redemption premium and
aggregate principal plus accrued and unpaid interest to the redemption date. The
aggregate outstanding principal amount of the PerSeptive Notes was $27.2 million
at March 23, 1998. A total of $26.1 million was paid in cash, representing $24.7
million of principal and $1.4 million of accrued interest and premium relating
to the PerSeptive Notes. Additionally, $2.5 million of the principal amount of
the PerSeptive Notes was converted by the holders thereof into 35,557 shares of
our existing common stock.

Accounts payable decreased $23.1 million to $96.5 million at September 30,
1998 from $119.6 million at June 30, 1998 reflecting payments for higher
purchases made during the fourth quarter of fiscal 1998. Accounts payable
increased $34.0 million to $119.6 million at June 30, 1998 from $85.6 million at
June 30, 1997. The increase resulted from higher purchases to support production
and operating requirements.

At September 30, 1998 and June 30, 1998, $49.2 million and $43.8 million,
respectively, of minority interest was recognized in connection with Tecan.

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<PAGE>
STATEMENTS OF CASH FLOWS

Net cash used by operating activities from continuing operations was $22.5
million for the first three months of fiscal 1999 compared with $17.1 million
for the same period in fiscal 1998. For the first three months of fiscal 1999,
higher payments to suppliers were partially offset by lower accounts receivable
and prepaid expenses, primarily from the collection of non-trade receivables.

Operating activities from continuing operations generated $68.1 million of
cash in fiscal 1998 compared with $73.4 million in fiscal 1997 and $45.0 million
in fiscal 1996. In fiscal 1998, higher income-related cash flow was more than
offset by a net increase in operating assets and liabilities reflecting the
continued growth.

Net cash used by investing activities from continuing operations was $9.5
million for the first three months of fiscal 1999 compared with $16.9 million
for the first three months of fiscal 1998. In the first quarter of fiscal 1999,
we generated $14.3 million in net cash proceeds from the sale of certain
non-operating assets, compared with $13.9 million in the prior year from the
sale of certain non-operating assets and the collection of a note receivable.
For the first three months of fiscal 1999 cash proceeds were more than offset by
capital expenditures of $23.8 million, which included $1.3 million related to
improvement of our information technology infrastructure, and $17.5 million for
the acquisition of a corporate airplane. For the first three months of fiscal
1998 cash proceeds were more than offset by capital expenditures of $23.5
million, primarily related to improvement of our information technology
infrastructure, and $7.2 million related to various investments and
collaborations.

In fiscal 1998 net cash used by investing activities from continuing
operations was $129.3 million compared with net cash provided by investing
activities from continuing operations of $24.7 million in fiscal 1997. During
fiscal 1998, we generated $19.5 million in net cash proceeds from the sale of
assets and $9.7 million from the collection of a note receivable. The proceeds
were more than offset by $60.5 million of capital expenditures, which included
$33.8 million as part of the strategic program to improve our information
technology infrastructure, and $98.0 million for acquisitions and investments,
primarily Tecan and Molecular Informatics. See Note 2 to the consolidated
financial statements.

For fiscal 1997, we generated $99.7 million in net cash proceeds from the
sale of our equity interests in Etec Systems, Inc. and Millennium
Pharmaceuticals, Inc. and from the sale of certain other non-operating assets.
These proceeds were partially offset by the $27.7 million used for acquisitions,
primarily related to GenScope, and $52.3 million for capital expenditures, which
included $9.5 million for information technology infrastructure improvements and
$12.1 million for the acquisition of a corporate airplane. See Note 2 to the
consolidated financial statements for a discussion of our acquisitions.

In fiscal 1996, $119.2 million of cash was used for acquisitions and $23.5
million was used for capital expenditures. This was partially offset by $102.3
million of cash proceeds generated from the sale of minority equity investments
and non-operating assets.

Net cash provided by financing activities was $36.5 million in the first
quarter of fiscal 1999 compared with a net cash use of $.2 million in the prior
period. In the first quarter of fiscal 1999, we received $6.4 million in
proceeds from employee stock option plan exercises compared with $2.9 million in
the prior period. Loans payable increased $43.8 million in the first quarter of
fiscal 1999 compared with an increase of $4.3 million for the prior year.

In fiscal 1998 net cash used by financing activities was $37.7 million
compared with $15.9 million for fiscal 1997, and $22.2 million for fiscal 1996.
During fiscal 1998, proceeds from employee stock plan exercises were $33.6
million. This was more than offset by shareholder dividend payments and the
redemption of the PerSeptive Notes.

During fiscal 1997, we generated $1.8 million from the sale of equity put
warrants and $33.6 million in proceeds from employee stock plan exercises,
compared with $65.0 million from employee stock plan exercises in fiscal 1996.
See Note 7 to the consolidated financial

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<PAGE>

statements. This was more than offset by shareholder dividends of approximately
$29 million for both fiscal 1997 and 1996, and for the purchase of common stock
for treasury. During fiscal 1997, .4 million shares were repurchased at a cost
of $25.1 million, compared with .8 million shares at a cost of $41.0 million in
fiscal 1996. Common stock purchases for treasury were made in support of our
various stock plans. No shares were repurchased during fiscal 1998.

As previously mentioned, we recorded before-tax restructuring charges and
other merger costs of $48.1 million and $17.5 million in fiscal 1998 and 1996,
respectively, in the results from continuing operations. During fiscal 1998, we
made cash payments of $11.9 million for obligations related to restructuring
plans and other merger costs. Liabilities remaining at June 30, 1998 were $22.5
million for the fiscal 1998 plan. See Note 10 to the consolidated financial
statements for a discussion of our restructuring actions. The funding for the
remaining restructuring liabilities will be from current cash balances and funds
generated from operating activities.

We believe our cash and short-term investments, funds generated from
operating activities, and available borrowing facilities are sufficient to
provide for our anticipated financing needs over the next two years. At June 30,
1998, we had unused credit facilities totaling $343 million.

IMPACT OF INFLATION AND CHANGING PRICES

Inflation and changing prices are continually monitored. Our attempts to
minimize the impact of inflation by improving productivity and efficiency
through continual review of both manufacturing capacity and operating expense
levels. When operating costs and manufacturing costs increase, we attempt to
recover such costs by increasing, over time, the selling price of its products
and services. We believe the effects of inflation have been appropriately
managed and therefore have not had a material impact on its historic operations
and resulting financial position.

YEAR 2000

In fiscal 1997, we initiated a worldwide program to assess the expected
impact of the Year 2000 date recognition problem on our existing internal
computer systems; our non-information technology systems, including embedded and
process-control systems; our product offerings; and our significant suppliers.
The purpose of this program is to ensure the event does not have a material
adverse effect on our business operations.

Regarding our existing internal computer systems, the program involves a mix
of purchasing new systems and modifying existing systems, with the emphasis on
replacement of applications developed in-house. Replacement projects are
currently underway, and are anticipated to be substantially completed for all
business-critical systems worldwide by December 31, 1999. The program includes
replacement of applications that, for reasons other than Year 2000
noncompliance, had been previously selected for replacement. The replacement
projects, which began in fiscal 1997, are expected to offer improved
functionality and commonality over current systems, while at the same time
addressing the Year 2000 problem.

With respect to our current product offerings, the program involves
performing an inventory of current products, assessing their compliance status,
and constructing a remediation plan where appropriate. Significant progress has
been made in each of these three phases and we expect our current product
offerings to be Year 2000 compliant by December 31, 1999. A substantial portion
of our current product offerings are Year 2000 compliant.

The program also addresses the Year 2000 compliance efforts of our
significant suppliers, vendors, and third-party interface systems. As part of
this analysis, we are seeking written assurances from these suppliers, vendors,
and third parties that they will be Year 2000 compliant. While we have begun
such efforts, there can be no assurance that the systems of other companies with
which we deal, or on which our systems rely will be timely converted, or that
any such failure to convert by another company could not have a material adverse
effect on our company. We have not fully

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<PAGE>

determined the extent to which our interface systems may be impacted by third
parties' systems, which may not be Year 2000 compliant.

Our preliminary estimate of the total cost for this multi-year program
covering 3-4 years is approximately $150 million. This includes amounts
previously budgeted for information technology infrastructure improvements and
estimates of remediation costs on components not yet fully assessed. Incremental
spending has not been and is not expected to be material because most Year 2000
compliance costs will be met with amounts that are normally budgeted for
procurement and maintenance of our information systems, production and
facilities equipment. The redirection of spending to implement Year 2000
compliance plans may in some instances delay productivity improvements.

We have also engaged a consulting firm to provide periodic assessments of
our company's Year 2000 project plans and progress. Because of the importance of
addressing the Year 2000 problem, we have created a Year 2000 business
continuity planning team to review and develop, by April 1999, business
contingency plans to address any issues that may not be corrected by
implementation of our Year 2000 compliance plan in a timely manner. If we are
not successful in implementing our Year 2000 compliance plan, or there are
delays in and/or increased costs associated with implementing such changes, the
Year 2000 problem could have a material adverse effect on our consolidated
results of operations and financial condition.

At this stage of the process, we believe that it is difficult to
specifically identify the cause of the most reasonable worst case Year 2000
scenario. A reasonable worst case Year 2000 scenario would be the failure of
significant suppliers and vendors to have corrected their own Year 2000 issues
which could cause disruption of our operations and have a material adverse
effect on our financial condition. The impact of such disruption cannot be
estimated at this time. In the event we believe that any of our significant
suppliers or vendors are unlikely to be able to resolve their own Year 2000
issues, our contingency plan would include seeking additional sources of supply.

EURO CONVERSION

A single currency called the euro was introduced in Europe on January 1,
1999. Eleven of the fifteen member countries of the European Union agreed to
adopt the euro as their common legal currency on that date. Fixed conversion
rates between these participating countries' existing currencies (the "legacy
currencies") and the euro were established as of that date. The legacy
currencies are scheduled to remain legal tender as denominations of the euro
until at least January 1, 2002, but not later than July 1, 2002. During this
transition period, parties may settle transactions using either the euro or a
participating country's legal currency.

We are currently evaluating the impact of the euro conversion on our
computer and financial systems, business processes, market risk, and price
competition. We do not expect this conversion to have a material impact on our
results of operations, financial position or cash flows.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The provisions of the statement
require the recognition of all derivatives as either assets or liabilities in
the statement of financial position and the measurement of those instruments at
fair value. The accounting for changes in the fair value of a derivative depends
on the intended use of the derivative and the resulting designation. We are
required to implement the statement in the first quarter of fiscal 2000. We are
currently analyzing the statement to determine the impact, if any, on the
consolidated financial statements.

The FASB issued the following Statement of Financial Accounting Standards,
which will become effective for our fiscal 1999 annual financial statements:
SFAS No. 132, "Employers' Disclosures about Pensions and other Postretirement
Benefits," which requires additional disclosures relating to a company's pension
and postretirement benefit plans; and SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information," which

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<PAGE>

requires certain financial and descriptive information about a company's
reportable operating segments. The adoption of these new accounting standards
may require additional disclosures but should not have a material effect, if
any, on our consolidated financial statements.

We continue to apply APB No. 25 in accounting for our stock based
compensation plans. Accordingly, no compensation expense has been recognized for
these plans, as all options have been issued at fair value. The effect of
accounting for such plans at fair value, under SFAS No. 123, "Accounting for
Stock Based Compensation," would be to decrease fiscal 1998 net income by $31
million and diluted earnings per share by $.61. The method used to determine the
fair value is the Black-Scholes options pricing model. Accordingly, changes in
dividend yield, volatility, interest risks and option life could have a material
effect on the fair value. See Note 8 to the consolidated financial statements
for a more detailed discussion regarding the accounting for stock-based
compensation at fair value.

OUTLOOK

Continuing operations are expected to continue to grow and maintain
profitability for fiscal 1999 on the strength of robust demand and several new
products. Excluding Tecan, orders for products increased by 35% over the first
quarter a year ago, and the backlog in orders for the first quarter was $124
million compared with $102 million at the end of fiscal 1998. Orders were
particularly strong for genetic analysis systems, sequence detection systems,
and products for applied markets, such as forensics, that are driven by
molecular biology-based reagents. We also began taking orders for the ABI
PRISM-Registered Trademark- 3700 DNA Analyzer, which was introduced late in the
quarter. Excluding orders from the Celera Genomics Group, orders were accepted
for more than 70 units of the 3700 in the first two weeks following its
introduction. Shipments of the 3700 DNA Analyzer to early-access customers and
Celera Genomics are expected to begin during the second quarter. Other
significant new instrument systems and services introduced during the quarter
include: several applied genetic analysis kits, including one for HIV profiling;
high-throughput drug discovery screening services through Tropix; and FMAT, a
new bioassay system to detect cells in vitro for drug discovery, which was
developed in collaboration with Biometric Imaging, Inc. These products began
generating revenues late in the quarter and are expected to contribute to
revenues over the balance of the year.

We are on schedule in establishing operations at the Celera Genomics Group.
About 50 employees were employed as of September 30, 1998 and construction is
under way on laboratories and related facilities. A strategic alliance has been
formed with Compaq Computer Corporation for integrated hardware, software,
networking, and support services. During the quarter, we announced that, subject
to shareholder and final board of directors approval, it plans to distribute a
new class of common stock intended to track the separate performance of the
Celera Genomics Group. We believe a number of objectives relate to this targeted
stock structure including: allowing each business autonomy while capitalizing on
the synergies of its sister business; accommodating investor interests by
creating an equity that closely monitors the performance of a focused business;
providing an efficient acquisition currency; and maintaining the financial
benefits of a single organization, such as tax efficiency and credit
availability. We also intend to begin segment reporting of the Celera Genomics
Group in the second quarter of this fiscal year.

On January 21, 1999, we announced a decision to pursue a sale of our
Analytical Instruments business, which has been classified as discontinued
operations.

We remain concerned about adverse currency effects because approximately 52%
of our revenues were derived from regions outside the United States for the
three months ended September 30, 1998. Recently, the U.S. dollar has weakened,
which should moderate the effects of currency translation for fiscal 1999. If
currency rates are maintained at current levels, the negative effects of
currency translation may be eliminated by the third quarter of this fiscal year.

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PE BIOSYSTEMS GROUP --
BUSINESS

The PE Biosystems Group consists of our established PE Biosystems' life
sciences and Analytical Instruments businesses.

PE Biosystems is a leader in the life sciences industry. It is engaged in:
(1) research, development, manufacture, sale and support of instrument systems,
reagents and software; and (2) related consulting and contract research and
development services.

In its Analytical Instruments business, the PE Biosystems Group develops,
manufactures, markets, sells and services analytical instruments used in a
variety of markets.

The PE Biosystems Group's products are used in the pharmaceutical,
biotechnology, environmental testing, food, human identification, agriculture
and chemical manufacturing industries. Universities, government agencies and
other non-profit organizations engaged in research activities also use the PE
Biosystems Group's products.

On September 8, 1998, we announced that we had retained an investment
banking firm to explore strategic alternatives for Analytical Instruments. As a
result of this review, on January 21, 1999, we announced our decision to pursue
the sale of the business.

PE BIOSYSTEMS

GENERAL

PE Biosystems is a world leader in the development, manufacture, sale and
service of instrument systems and associated consumable products for life
science research and related applications. Its products are used for the
synthesis, amplification, purification, isolation, analysis and sequencing of
nucleic acids, proteins and other biological molecules. For the fiscal year
ended June 30, 1998, PE Biosystems had net revenues of $940.1 million and
operating income, before special items, of $130.4 million.

PE Biosystems consists of four operating units and a shared service
organization consisting of human resources, finance, sales, marketing
communications, manufacturing, legal, quality control and advanced research. It
also receives from our company general and administrative services, such as
executive management, human resources, legal, accounting and auditing, tax,
treasury, strategic planning and environmental services. The operating units
that make up PE Biosystems are Applied Biosystems, PerSeptive Biosystems, PE
Informatics and Tropix. Each unit is responsible for the development and
marketing of products within its particular area of business. The operating
units serve substantially the same customer base but have little overlap in
their product offerings. As a result, PE Biosystems is able to enhance the
operating efficiency of these units through cross-selling and reduced
administrative costs.

PE Biosystems has an installed base of approximately 50,000 instrument
systems in approximately 100 countries. Approximately 54% of PE Biosystems'
sales in fiscal year 1998 was derived from sales of instruments, while the
remaining 46% was derived from sales of reagents, service and software.

OVERVIEW OF THE LIFE SCIENCES MARKET

All living organisms contain four basic biomolecules: nucleic acids, which
include deoxyribonucleic acid ("DNA") and ribonucleic acid ("RNA"); proteins;
carbohydrates; and lipids. Biomolecules are typically much larger and more
complex than common molecules. These structural differences make the analysis of
biomolecules significantly more complex than the analysis of smaller compounds.

Although all of these biomolecules are critical for a cell to function
normally, historically, key advances in therapeutics have come from an
understanding of proteins or DNA. DNA molecules provide instructions that
ultimately control the synthesis of proteins within a cell. DNA molecules
consist of long chains of chemical subunits, called nucleotides. There are four
nucleotides -- adenine, cytosine, guanine, and thymine -- often abbreviated with
their first letters A, C, G, and T. DNA molecules consist of two long chains of
nucleotides bound together to form a double helix. Genes are individual segments
of these DNA molecules that carry the specific information necessary to
construct particular proteins. Genes may contain from several dozen to tens of
thousands of nucleotides. The entire collection of DNA in an organism, called
the genome, may contain

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between 4 million nucleotides for simple bacteria and 3.5 billion base pairs of
nucleotides or more for human beings.

Increasingly, and principally driven by the "biotechnology revolution,"
researchers are developing an understanding of and focusing on DNA's role in
human disease. An increased appreciation of how DNA ultimately determines the
functions of living organisms has generated a worldwide effort to identify and
sequence genes of many organisms, including the estimated 50,000 to 150,000
genes that make up the human genome.

Individual research efforts generally fall into two broad categories,
sequencing and sizing. In sequencing procedures, the goal is to determine the
exact order of the individual nucleotides in a DNA strand so that this
information can be related to the genetic activity influenced by that piece of
DNA. In DNA sizing, a particular fragment of a DNA molecule, isolated from a
specific sample, is tested to determine whether it contains a particular
category of size or nucleotide order. This testing does not seek to determine
the complete structure of the segment, but rather merely tries to determine if
the particular piece is a certain length or contains a specific short sequence.

Genetic research is expected to increase in the near future in part because
of a need by the pharmaceutical and biotechnology industries to accelerate their
drug discovery and development efforts. This need has also created a demand for
increased automation and efficiency in pharmaceutical and biotechnology
laboratories. PE Biosystems' products address this need by combining the
detection capabilities of bioanalytical instruments with advances in automation.

PRODUCTS AND SERVICES

APPLIED BIOSYSTEMS. Applied Biosystems ("AB"), the genetic analysis and
genomics technology unit of PE Biosystems, develops, markets and services
instrument systems for nucleic acid synthesis, Polymerase Chain Reaction
("PCR"), DNA sequencing, genetic analysis and cellular detection. These products
and services are used in both research and commercial applications for
purifying, analyzing, synthesizing, sequencing and amplifying genetic material.

AB's products can be broadly classified into the following categories:

- PCR PRODUCTS. PCR is a process in which a short strand of DNA is
duplicated, or "amplified," so that it can be more readily detected and
analyzed. AB's PCR amplification instruments, otherwise known as thermal
cyclers, are well regarded in the industry and have a reputation for
innovative features and reliability. PCR products include 24, 48 and 96
sample amplification systems, several combination thermal cyclers and PCR
detection systems, various reagents and software. AB recently released a
dual 384 sample thermal cycler which is expected to complement its Model
3700 DNA Analyzer and fill a significant market need for laboratories
involved in high volume genomic research.

The Sequence Detection Systems product line, introduced in 1996, uses a
unique PCR reagent discovered by the Roche Group and developed by AB,
TaqMan-Registered Trademark-, to quantitatively detect PCR products
during the thermal cycling process. This product line, which includes the
Model 7700, has been widely accepted in the pharmaceutical discovery
research market.

- GENETIC ANALYSIS. Genetic analysis primarily uses electrophoresis
techniques for separating molecules based on their differential mobility
in an electric field. AB's genetic analysis products generally perform
both DNA sequencing and fragment analysis.

DNA sequencing is used to determine the exact order of nucleotides that
make up a strand of DNA. Typically, fluorescent tags are used to generate
labeled products, each with a different colored tag. The tagged fragments
are run through an electrophoresis gel and are detected at the bottom of
the gel. DNA fragment analyzers are then used to determine the size,
quantity or pattern of DNA fragments. Fragment analysis applications
include gene mapping and forensic typing, using microsatellite markers,
single-strand

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conformation polymorphism analysis to screen for unknown mutations within
genes, and oligonucleotide (synthetic nucleotide) ligation assay analysis
to detect known mutations within certain genes.

AB's DNA sequencing products include a sequencer expandable to 96
capillaries (Model 377), a one capillary sequencer (Model 310),
sequencing reagents and analysis software. These products have been used
by researchers to analyze DNA fragments in genetic linkage studies and
for comparative sequencing in human diagnostic and food contamination
applications.

A newly developed product, the Model 3700 DNA Analyzer, is first
scheduled for shipment during the last quarter of calendar year 1998.
This product is designed to enable applications requiring tens of
thousands of samples produced weekly by combining proven capillary
electrophoresis hardware and separation polymer chemistry with new
detection technology and automation. It will be the principal instrument
used by the Celera Genomics Group for its sequencing projects.

- DNA SYNTHESIS. DNA synthesizers produce synthetic DNA for genetic
analysis. The synthetic DNA is used for PCR and DNA sequencing primers
and is also used in drug discovery applications. AB currently markets
several models of synthesizers and supporting reagents. It also provides
custom synthesis, in which oligonucleotides are made-to-order and shipped
to customers.

- PNA. AB has an exclusive license to manufacture and sell peptide nucleic
acid ("PNA") for molecular biology research and various other
applications. PNA is a synthetic copy of a DNA molecule with a modified
uncharged peptide-like "backbone." The unique chemical structure of PNA
enhances its affinity and specificity as a DNA or RNA probe.

- APPLIED MARKETS. AB has formed product development and marketing groups
to develop products and services specially designed for individual
markets. The focus of these groups is in the food and environmental
testing and human identification (mainly forensic) markets.

The Microbial ID Group is principally responsible for development and
marketing of products for food and environmental testing markets. This
group has developed the MicoSeq 18S Ribosomal RNA Sequencing Kit to
sequence microbial ribosomal RNA to determine the source of a microbial
contamination. This kit is compatible with all of AB's sequencing
instruments. Additional kits using the TaqMan-Registered Trademark-
technology and Sequence Detection Systems instrument platforms are also
under development by this group.

The Human Identification Group develops systems that are used by crime
laboratories and other agencies to identify individuals based on their
DNA. These systems are most often used in cases of violent crime where
DNA found at the crime scene is matched with DNA from suspects, and there
is growing potential for DNA databases of known criminals. The systems
are also used in the identification of human remains at disaster sites.

- HUMAN DIAGNOSTICS. AB has a license from the Roche Group to use PCR
techniques in the development and marketing of products for human
diagnostics based on fluorescent sequencing. Products developed for human
diagnostics fall into the following general categories: immunology;
genetic disease carrier identification; infectious disease; and cancer.
The group expects to develop tests based on this technology to support
HLA typing in bone marrow transplants and for HIV resistance diagnosis.
Tests have also been developed for carrier identification for cystic
fibrosis, fragile X syndrome,

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and loss of heterozygosity associated with specific forms of colorectal
cancer.

- CELLULAR DETECTION SYSTEMS. Through its strategic alliance with Biometric
Imaging, Inc., AB is co-developing a fluorometric microvolume assay
technology system. This instrument system uses proprietary scanning
technology to detect and measure fluorescence associated with objects as
small as a single cell. This system is expected to satisfy market needs
in pharmaceutical development for a cell-based, high throughput screening
system.

PERSEPTIVE BIOSYSTEMS. PerSeptive Biosystems ("PB" or "PerSeptive")
develops, manufactures and markets proprietary consumable products and
instrument systems for the purification, analysis and synthesis of proteins and
related molecules. The study of the role of proteins, which are the mediators of
most chemical reactions within a cell, in the evolution of a disease, or in
evaluating a drug's ability to modulate the disease by binding to those specific
proteins, is a crucial step in understanding the ways diseases develop in the
body. PerSeptive's products are used in the life science markets to reduce the
time and cost required for the discovery, development and manufacture of
pharmaceutical products.

PB's products can be broadly classified into the following categories:

- MASS SPECTROMETRY. PerSeptive's mass spectrometry products are used for
the analysis of both large molecules such as proteins and small molecules
including those that might be used as drugs. These systems may be sold
and used on a stand alone basis or coupled with a liquid chromatograph
("LC/MS"). LC/MS systems are able to separate and analyze the components
of complex mixtures. All mass spectrometry systems include an ionization
source which creates charged molecules and a mass separation component
which separates these charged molecules on the basis of their mass.

Until recently, mass spectrometry was not very useful for the analysis of
large molecules of biological importance such as proteins because the
classical methods for creating ions caused these complex molecules to
disintegrate into many small pieces. This resulted in the destruction of
the information about the original large molecule. The mass separation
component was also problematic because it was not possible to distinguish
between large molecules of nearly the same mass. The PE Biosystems Group
believes that its Matrix-Assisted, Laser Desorption Ionization
Time-of-Flight ("MALDI-TOF") technology overcomes those deficiencies for
proteins and many other large molecules of biological importance.

PerSeptive has one of the largest market shares of installed MALDI-TOF
instruments, primarily due to its instrument performance and software.
Since MALDI-TOF instruments do not include a separation device such as a
liquid chromatograph, mixtures are often separated before analysis. This
is often accomplished with PerSeptive's purification products such as the
Integral 100Q, an integrated separation device which gives rapid
separation of proteins or other large molecules. MALDI-TOF instruments
are expected to be critical in the expanding field of proteomics, or
large scale studies of many proteins at one time.

Mass spectrometry systems are also used to identify and quantify smaller
molecules and are especially important for the measurement of drugs and
their metabolites, which are compounds resulting from the body's acting
upon the drug, in bodily fluids such as blood or urine. This information
is required for FDA and other regulatory approvals of drugs. This
application is very demanding because the amounts of the drugs and their
metabolites are very low and the mixtures are very complex. In order to
analyze this mixture, scientists use LC/MS/MS systems, which consist of a
liquid chromatograph which separates the components of the mixture,
usually

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an extract of blood or urine, and two mass separation components in
tandem. The use of a general mass separation device followed by a second,
more specific device allows the detection to be more specific, so there
are fewer potential interferences. For these instruments, it is important
to get as much of the sample as possible to become charged so that
sensitivity will be maximized. This is done with components which have
been developed and refined by Perkin-Elmer Sciex ("PE Sciex"), a joint
venture between our company and MDS Health Group Limited. PE Sciex has
also developed the MS/MS portion of the instrument which creates the
sensitivity and specificity required for this demanding application. The
PE Biosystems Group believes that it has the largest market share in
instruments for the analysis of drugs and their metabolites in clinical
trials and that its instruments have the highest sensitivity of any
systems of this type.

The PE Biosystems Group also believes that there is the potential for
significant synergy between the various types of mass spectrometry
technologies available within PerSeptive. For example, the Time-of-Flight
("TOF") mass separation component can be used with PE Sciex ion source to
create systems which will give more accurate mass measurements and
therefore more specific identification of unknown compounds. Similarly,
the PE Sciex mass separation device can be used in tandem with the TOF
mass separation device to achieve more specificity.

- PURIFICATION. As the human genome is sequenced and becomes known, the
information obtained will be used to study the expression profiles of
genes (proteins). Consequently, tens of thousands of proteins will need
to be purified and characterized because these proteins may be used as
drug targets or as therapeutics. PerSeptive's purification products can
be incorporated readily into any stage of the development process of a
pharmaceutical product and offer productivity advantages over
conventional counterparts. Companies using conventional purification
technology usually make several significant changes in materials,
equipment and processes in moving from the development stage to
commercial manufacture. As a result, an integrated line of purification
products should enhance productivity by reducing or eliminating these
costly and time-consuming changes. Moreover, because the U.S. Food and
Drug Administration ("FDA") must approve significant changes in
manufacturing processes, an integrated line of purification products may
simplify and expedite the process of obtaining FDA approvals.

PerSeptive's patented Perfusion Chromatography technology, which uses
proprietary flow-through particles, and BioCad-Registered Trademark-
Chromatography workstation reduce the time necessary for the purification
and analysis of biomolecules. This technology separates biomolecules 10
to 1000 times faster than conventional liquid chromatography or
high-pressure liquid chromatography (HPLC) without compromising
resolution or capacity. PerSeptive's Vision-TM- Workstation is the first
robotic-equipped HPLC platform introduced to the life science markets
that allows for the separation of proteins followed by analysis of the
fractions collected in an unattended operation. Together, the automated
platform and flow-through particles are designed to increase throughput
and efficiency for the purification of biomolecules.

- PROTEIN SEQUENCING AND SYNTHESIS. Protein sequencers provide information
about the amino acids that make up a given protein by chemically
disassembling the protein and analyzing its components. PerSeptive's
Procise-Registered Trademark- Protein Sequencing System uses Edman
protein sequencing to disassemble a protein one amino acid at a time to
render the sequence of that protein.

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Synthetically produced peptides are used in understanding antibody
reactions and as potential drugs or drug analogs. PerSeptive's
Solaris-TM- 530 is an automated chemical synthesis system that assembles
organic compounds for screening or analysis. PerSeptive's Pioneer-TM-
Peptide Synthesis system is designed to assemble amino acids for the
synthesis of peptides, peptide analogs, and small proteins. PerSeptive
also manufactures and sells proprietary reagents and fine chemicals for
use with these and other products.

PE INFORMATICS. PE Informatics, the information management unit of PE
Biosystems, develops, markets and distributes bioinformatics software for the
pharmaceutical, biotechnology and agrochemical industries. PE Informatics
provides a comprehensive software system researchers can use to manage and
analyze genomic data. Its products include software for science professionals
who analyze gene sequences in an effort to discover and develop drugs and
perform clinical trials. These products are necessary to meet the need for
software and services to manage, integrate and analyze the vast amounts of
information related to bioscience discovery processes.

Bioinformatics is a new science that enables researchers to transform
massive amounts of data into an organized knowledge database. PE Informatics'
customers are typically attempting breakthroughs in gene mapping, drug
discovery, drug development and molecular diagnostics, and its products provide
the vehicles for transforming raw data into the organized body of knowledge that
enables those breakthrough discoveries. The business is dedicated to the
development of infrastructure software for genome data collection and
management, gene mapping, drug discovery and clinical and diagnostic genetic
research.

PE Informatics currently provides genomic data management products for both
discovery and development.

Discovery oriented products include: BioMerge-TM-, a product that allows
research groups to store, retrieve and analyze genetic information; BioLIMS-TM-,
a product that manages automated DNA sequencing for AB's products; and
SQL*GT-TM-, a product for sample tracking and sample management for high
throughput laboratories.

Development-oriented products include: SQL*Lims-Registered Trademark-, a
product designed to optimize information processing and provide information
management tools for the analytical laboratory; and TurboChrom-TM-Client/Server
Chromatography Data System which delivers distributed computing resources across
an entire organization, while managing key data processes centrally.

TROPIX. Tropix develops, manufactures and markets chemiluminescent
substrates and related products for the life science markets. Chemiluminescent
technology is used in life science research and commercial applications
including drug discovery and development, clinical diagnostics, gene function
study, molecular biology and immunology research. Tropix also licenses its
technology to companies selling bioanalytical and clinical diagnostic tests.

Chemiluminescence is the conversion of chemical energy stored within a
molecule into light. Chemiluminescent enzyme substrates are used that emit light
in the presence of a target substance that is "labeled" or connected to an
enzyme.

Tropix's products include reagents and chemiluminescent plate readers which
measure light emitted by a sample. Tropix also operates a facility devoted to
drug discovery services for the pharmaceutical, biotech and agricultural
markets. The services offered by this facility include custom assay development
using proprietary technologies and high throughput drug screening with an
initial capacity of 100,000 tests per day.

ANALYTICAL INSTRUMENTS.

GENERAL

Analytical Instruments is a world leader in the development, manufacture,
marketing, sales and service of analytical instrument systems. For the fiscal
year ended June 30, 1998, Analytical Instruments had net revenues of $586.8
million and operating income of $53.9 million.

Analytical chemistry is the science of experimentally determining the
elemental, chemical and physical characteristics that make up a particular
sample. Analytical instruments

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are the tools used to perform analytical chemistry. These systems detect,
identify and measure changes in properties of solids, liquids and gases. For
example, certain types of analytical instruments are targeted toward determining
chemical composition; others are used to study molecular structure; and still
others measure physical characteristics. Analytical instruments are also used
for testing and analysis applications, both inside and outside of laboratories.

The principal markets for Analytical Instruments' products and services
include: agricultural analysis, automotive industries, petrochemical industries,
clinical, and biological analysis industries, environmental testing and
monitoring, materials research, food quality management, pharmaceutical and
semiconductors.

PRODUCTS

Analytical Instruments' products tend to vary significantly in terms of
their technologies, test methodologies, applications, performance and cost.
Moreover, there is rarely any overlap of instruments across categories of
inorganic elements, organic compounds or attribute levels. That is, an
instrument can be applied for use in analyzing elements, compounds or
attributes, but typically not more than one of these applications.

Analytical Instruments' products can be broadly classified into four
categories:

- CHROMATOGRAPHY. Chromatography instruments are designed to analyze
complex mixtures by first separating them into their components and then
measuring them quantitatively. Analytical Instruments offers two types of
chromatography products: liquid and gas.

- INORGANIC ANALYSIS. These instruments are intended for analysis of
inorganic elements such as lead, mercury, arsenic or gold in a wide variety of
samples from oils and water to geological materials. Analytical Instruments
offers three types of inorganic analysis products: atomic absorption
spectrometers; inductively coupled plasma optical emission spectrometers; and
inductively coupled plasma/mass spectrometers. These inductively coupled plasma/
mass spectrometers are provided by PE Sciex.

- ORGANIC ANALYSIS. These instruments are designed to provide qualitative
and quantitative information for molecular and organic compounds in the broadest
range of samples. Analytical Instruments' organic analysis products include:
infrared and near infrared spectrometers; thermal analyzers; ultraviolet,
visible and near infrared spectrometers; fluorescence spectrometers; analytical
balances; and polarimeters.

- LABORATORY INFORMATION MANAGEMENT SYSTEMS. These systems provide data
handling and data management for analytical laboratories.

JOINT VENTURE

The PE Biosystems Group is engaged in the manufacture and sale of mass
spectrometry instrument systems through PE Sciex, a joint venture between our
company and MDS Health Group Limited. Both PE Biosystems and Analytical
Instruments sell these products.

MARKETING AND DISTRIBUTION

The markets for PE Biosystems products and services span the spectrum of the
life sciences industry, including basic human disease research, genetic
analysis, pharmaceutical drug discovery, development and manufacturing, human
identification, agriculture and food and environmental testing. Each of these
markets has unique requirements and expectations that PE Biosystems seeks to
address in its product offerings. PE Biosystems' customers are continually
searching for processes and systems that can perform tests faster, more
efficiently, and at lower costs. PE Biosystems believes that its focus on
automated and high throughput systems enables it to respond to this need.

The size and growth of PE Biosystems' markets are influenced by a number of
factors, including:

- technological innovation in bioanalytical practice;

- government funding for basic and disease-related research, such as in
heart disease, AIDS and cancer;

- application of biotechnology in basic agriculture processes;

- increased awareness of biological contamination in food and the
environment; and

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- research and development spending by biotechnology and pharmaceutical
companies.

PE Biosystems and Analytical Instruments use similar marketing and
distribution practices. In the United States, PE Biosystems and Analytical
Instruments market the largest portion of their products directly through their
own sales and distribution organizations, although certain products are marketed
through independent distributors and sales representatives. Sales to major
markets outside of the United States are generally made by the PE Biosystems
Group's foreign based sales and service staff, although some sales are made
directly from the United States to foreign customers. In some foreign countries,
sales are made through various representative and distributorship arrangements.
The PE Biosystems Group owns or leases sales and service offices in strategic
regional locations in the United States and in foreign countries through its
foreign sales subsidiaries and distribution operations. None of the PE
Biosystems Group's products are distributed through retail outlets.

RAW MATERIALS

There are no specialized raw materials that are particularly essential to
the operation of the PE Biosystems Group's business. The PE Biosystems Group's
manufacturing operations require a wide variety of raw materials, electronic and
mechanical components, chemical and biochemical materials, and other supplies,
some of which are occasionally found to be in short supply. The PE Biosystems
Group has multiple commercial sources for most components and supplies, but it
is dependent on single sources for a limited number of such items, in which case
the PE Biosystems Group normally secures long-term supply contracts. In some
cases, if a supplier discontinues a product, it could temporarily interrupt the
business of PE Biosystems.

PATENTS, LICENSES, AND FRANCHISES

The PE Biosystems Group has pursued a policy of seeking patent protection in
the United States and other countries for developments, improvements, and
inventions originating within its organization that are incorporated in the PE
Biosystems Group's products or that fall within its fields of interest. Some
licenses under patents have been granted to, and received from, other entities.
The PE Biosystems Group has certain rights from the Roche Group under patents
relating to PCR, one of which expires in 2004. The PE Biosystems Group also has
rights under a patent issued to the California Institute of Technology relating
to DNA sequencing which expires in 2009. In the PE Biosystems Group's opinion,
no other single patent or license, or group of patents or licenses, or any
franchise, is material to its business as a whole or to either PE Biosystems or
Analytical Instruments.

From time to time, the PE Biosystems Group has asserted that various
competitors and others are infringing its patents; and similarly, from time to
time, others have asserted that the PE Biosystems Group was infringing patents
owned by them. In most cases, these claims are settled by mutual agreement on a
satisfactory basis and result in the granting of licenses by or to the PE
Biosystems Group.

The PE Biosystems Group has also established a successful licensing program,
providing industry access to its intellectual property.

BACKLOG

The PE Biosystems Group's total recorded backlog on June 30, 1998 was $208.6
million, consisting of $119.3 million for PE Biosystems and $89.3 million for
Analytical Instruments. On June 30, 1997, the PE Biosystems Group's total
recorded backlog was $176.4 million, consisting of $86.3 million for PE
Biosystems and $90.1 million for Analytical Instruments. It is the PE Biosystems
Group's general policy to include in backlog only purchase orders or production
releases that have firm delivery dates within one year. Recorded backlog may not
result in sales because of cancellation or other factors. It is anticipated that
all orders included in the current backlog will be delivered before the close of
fiscal year 1999.

COMPETITION

The industry segments in which the PE Biosystems Group operates are highly
competitive and are characterized by the application of advanced technology. A
number of the PE Biosystems Group's competitors are well-known manufacturers
with a high degree of

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technical proficiency. In addition, competition is intensified by the
ever-changing nature of the technologies in the industries in which the PE
Biosystems Group is engaged.

PE Biosystems' principal competition comes from specialized manufacturers
that have strengths in narrow segments of the life science markets. In the
analytical instruments markets, there are numerous companies that specialize in,
and a number of larger companies that devote a significant portion of their
resources to, the development, manufacture and sale of products that compete
with those manufactured or sold by Analytical Instruments. PE Biosystems and
Analytical Instruments compete principally in terms of the breadth and quality
of their product offerings, and their service and distribution capabilities.
While the absence of reliable statistics makes it difficult to determine the PE
Biosystems Group's relative market position in its industry segments, the PE
Biosystems Group is confident it is one of the principal manufacturers in its
fields, marketing a broad line of analytical instruments and life science
systems.

RESEARCH, DEVELOPMENT AND ENGINEERING

The PE Biosystems Group is actively engaged in basic and applied research,
development and engineering programs designed to develop new products and to
improve existing products. The PE Biosystems Group spent $62.2 million in fiscal
1996, $78.1 million in fiscal 1997, and $104.2 million in fiscal 1998 on
company-sponsored research, development and engineering activities.

The PE Biosystems Group's new products originate from four sources: internal
research and development programs; external collaborative efforts with
individuals in academic institutions and technology companies; devices or
techniques that are generated in customers' laboratories; and business and
technology acquisitions.

Research and development projects at PE Biosystems include the development
of improved electrophoresis techniques for DNA analysis, real-time PCR for
nucleic acid quantification, innovative approaches to cellular analysis, sample
preparation, information technologies, and mass spectroscopy.

MANAGEMENT

The senior management of the PE Biosystems Group will consist of the
following individuals:

<TABLE>
<CAPTION>
OFFICER RESPONSIBILITIES
- ------------------------------- -------------------------
<S> <C>
Michael W. Hunkapiller, Ph.D. President
Manuel A. Baez Group Senior Vice
President and
President, Analytical
Instruments

Irena Y. Bronstein, Ph.D. Group Vice President and
General Manager, Tropix

Elaine J. Heron, Ph.D. Group Vice President and
General Manager, AB
Robert C. Jones Group Vice President and
General Manager, PE
Informatics
Joseph E. Malandrakis Group Vice President and
General Manager, PB
</TABLE>

MICHAEL W. HUNKAPILLER, PH.D. has served as Senior Vice President of our
company and President of PE Biosystems since June 1998. He joined the research
and development department of Applied Biosystems, Inc. ("ABI"), the predecessor
to AB, in 1983 and has served in various operational and managerial positions,
including President of AB from October 1997 to June 1998 and General Manager of
AB from June 1995 to October 1997.

MANUEL A. BAEZ has served as Senior Vice President of our company and
President of Analytical Instruments since June 1996. Prior to joining our
company, he was employed by Baxter International Inc., a manufacturer of health
care products and instruments, for 22 years, most recently as Executive Vice
President.

IRENA Y. BRONSTEIN, PH.D. has served as Division Vice President and
President and General Manager of Tropix since June 1998. She founded Tropix and
served as its Chairman and Chief Scientific Officer from its inception in 1986
to 1990 when she was named Chief Executive Officer. Dr. Bronstein held that
position until our company acquired Tropix in May 1996. Prior to founding
Tropix, she was employed by Polaroid Corporation where she held a number of
scientific and management positions including director of biotechnology.

ELAINE J. HERON, PH.D. has served as Vice President of our company since
October 1996 and General Manager of AB since July 1998.

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She previously served as Division Vice President, Worldwide Sales and Marketing
from December 1995 to July 1998. Dr. Heron served as Vice President of Marketing
at Affymetrix, Inc., a supplier of genetic analysis equipment, for the year
prior to this appointment, and previously served as Director of Marketing for AB
and ABI from 1990 to 1994.

ROBERT C. JONES has served as Division Vice President and General Manager of
PE Informatics since June 1998. He joined ABI in 1984 and has served in various
operational and managerial positions, including Vice President, PCR Business
Unit of AB from 1994 to 1998.

JOSEPH E. MALANDRAKIS has served as Vice President of our company since 1993
and General Manager of PB since June 1998. He joined our company in 1973 and
served in various operational and management positions, including Vice President
of Manufacturing for our company and General Manager of the Inorganic Analysis
Division of Analytical Instruments.

EMPLOYEES

As of September 30, 1998, the PE Biosystems Group employed approximately
7,000 persons worldwide. None of the PE Biosystems Group's United States
employees is subject to collective bargaining agreements.

PROPERTIES

The PE Biosystems Group owns or leases various facilities for manufacturing,
research and development and administrative purposes. All of these facilities
are maintained in good working order and, except for those held for sale or
lease, are used in the ordinary course of business.

The following is a list of facilities owned or leased by the PE Biosystems
Group.

<TABLE>
<CAPTION>
PE BIOSYSTEMS
<S> <C>
OWNED OR
LEASED
(EXPIRATION
LOCATION (APPROXIMATE DATE(S) OF
FLOOR AREA IN SQ. FT.) LEASES)
- -------------------------- ----------------
Leased
Foster City, CA (543,000)* (1999-2007)
San Jose, CA (81,000) Owned
Bedford, MA (28,000) Leased (2000)
Framingham, MA (196,000) Leased (2009)
Leased
Santa Fe, NM (14,000) (1998-2005)
Houston, TX (21,000) Leased (1999)
Warrington, England
(22,000) Owned
Singapore (30,000) Leased (1999)
</TABLE>

<TABLE>
<CAPTION>
ANALYTICAL INSTRUMENTS
<S> <C>
OWNED OR
LEASED
(EXPIRATION
LOCATION (APPROXIMATE FLOOR DATE(S) OF
AREA IN SQ. FT.) LEASES)
- --------------------------------- -------------
Irvine, CA (22,000) Owned
Norwalk, CT (402,000) Owned
Wilton, CT (221,000) Owned
Beaconsfield, England (70,000) Owned
Beaconsfield, England (8,000) Leased (2005)
Llantrisant, Wales (113,000) Leased**
Meersburg, Germany (24,000) Leased (2001)
Ueberlingen, Germany (53,000) Owned
Ueberlingen, Germany (121,000) Leased (2001)
</TABLE>

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

* Consists of three principal facilities totaling 330,000 square feet, and
additional facilities totaling 213,000 square feet.

** Leased on a month-to-month basis as the facility is being closed.

The PE Biosystems Group also leases space in several industrial centers for
use as regional sales and service offices, technical demonstration centers and
warehouses. The PE Biosystems Group also owns undeveloped land in Vacaville,
California, and Ueberlingen, Germany.

In addition to the properties used in its operations, the PE Biosystems
Group owns a 42,000 square foot facility in Wilton, Connecticut leased to a
third party on a long-term basis.

ENVIRONMENTAL MATTERS

We are subject to federal, state and local laws and regulations regulating
the discharge of materials into the environment, or otherwise relating to the
protection of the environment, in

79
<PAGE>

those jurisdictions where the PE Biosystems Group operates or maintains
facilities. The PE Biosystems Group believes any liability and compliance with
all environmental regulations will have no material effect on its business, and
no material capital expenditures are expected for environmental control.

LEGAL PROCEEDINGS

We have been named as a defendant in various legal actions arising from the
conduct of the PE Biosystems Group's normal business activities. Although the
amount of any liability that might arise with respect to any of these matters
cannot be accurately predicted, the resulting liability, if any, will not, in
the opinion of management of the PE Biosystems Group, have a material adverse
effect on the financial statements of the PE Biosystems Group.

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<PAGE>

PE BIOSYSTEMS GROUP --
MANAGEMENT'S DISCUSSION AND ANALYSIS

MANAGEMENT'S DISCUSSION OF CONTINUING OPERATIONS

You should read this discussion with our combined financial statements and
the consolidated financial statements. Historical results and percentage
relationships are not necessarily indicative of operating results for any future
periods.

DISCONTINUED OPERATIONS

On January 21, 1999, we announced a plan to sell our Analytical Instruments
business. We expect to complete the plan within a year, although we cannot
assure you that the sale will occur within that time period. Accordingly, we
have reclassified amounts previously reported and stated them separately as
discontinued operations. We expect to recognize a gain on disposal. However, the
actual results could differ significantly depending on the transaction costs
incurred and the amount realized upon the sale of the business. See Note 15 to
the PE Biosystems Group combined financial statements.

EVENTS IMPACTING COMPARABILITY

ACQUISITIONS AND INVESTMENTS. On January 22, 1998, we acquired PerSeptive.
The acquisition has been accounted for as a pooling of interests and,
accordingly, the PE Biosystems Group's financial results have been restated to
include the combined operations.

We acquired Molecular Informatics and a 14.5% interest, and approximately
52% of the voting rights, in Tecan during the second quarter of fiscal 1998. The
results of operations for the above acquisitions, each of which was accounted
for as a purchase, have been included in the combined financial statements since
the date of each respective acquisition. A discussion of significant
acquisitions and investments is provided in Note 2 to the PE Biosystems Group
combined financial statements.

RESTRUCTURING AND OTHER MERGER COSTS. The PE Biosystems Group incurred
merger-related period costs of $.9 million in the first quarter of fiscal 1999
in connection with the integration of PerSeptive into the PE Biosystems Group.
During fiscal 1998, $48.1 million of before-tax charges were recorded for
restructuring and other merger costs to integrate PerSeptive into the PE
Biosystems Group. The charge included $4.1 million of inventory-related
write-offs, recorded in cost of sales, associated with the rationalization of
certain product lines. The objectives of the integration plan are to lower
PerSeptive's cost structure by reducing excess manufacturing capacity, achieve
broader worldwide distribution of PerSeptive's products, and combining sales,
marketing, and administrative functions.

In fiscal 1996, a before-tax charge of $17.5 million, was recorded by
PerSeptive for restructuring actions and other related costs. A discussion of
the PE Biosystems Group's restructuring programs is provided in Note 10 to the
PE Biosystems Group combined financial statements.

ACQUIRED RESEARCH AND DEVELOPMENT. During fiscal 1998 and 1996, the PE
Biosystems Group recorded charges for purchased in-process research and
development in connection with certain acquisitions. The charges recorded in
fiscal 1998 and 1996 were $28.9 million and $31.8 million, respectively. See
Note 2 to the PE Biosystems Group combined financial statements.

In fiscal 1998, we expensed $28.9 million of the Molecular Informatics
acquisition cost as in-process research and development, representing 53.6% of
the purchase price. This amount was attributed and supported by a discounted
probable cash flow analysis on a project by project basis.

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<PAGE>

We attributed approximately 10% of the in-process research and development
value to BioLIMS, a software system that manages data, initiates analysis
programs, and captures the results in a centralized, relational database for
sequencing instruments; 6% to GA SFDB, a client-side add-on product to several
existing gene sequencing instruments; 38% to BioMERGE, a client-server
management and integration system that organizes proprietary, public and
third-party results in a single relational database for the drug discovery and
genomic research markets; 9% to BioCLINIC, a client-server management and
integration system that organizes proprietary, public and third-party results
generated from DNA and protein sequence analysis in a single database for the
clinical trials phase of drug development; and 37% to SDK, an open architecture
software platform from which all of Molecular Informatics' future software
applications are expected to be derived.

At the date of the acquisition, management expected to complete the majority
of these projects and commence generating significant revenues in fiscal 1999 at
an additional research and development cost of approximately $6.9 million. We
attributed $11.8 million of the purchase price to core technology and existing
products, primarily related to the BioMERGE product. We applied a risk-adjusted
discount to the project's cash flows of 20% for existing technology and 23% for
in-process technology. The significant risks associated with these products
include the limited operating history of Molecular Informatics, uncertainties
surrounding the market acceptance of such in-process products, competitive
threats from other bioinformatics companies and other risks. Management is
primarily responsible for estimating the fair value of such existing and in-
process technology.

IMPAIRMENT OF ASSETS. Cost of sales for fiscal 1997 included $.7 million
for the write-down of certain impaired assets. The fiscal 1997 charge was a
result of adopting SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of." In fiscal 1996, the PE
Biosystems Group recorded a before-tax cost of sales charge of $9.9 million for
the impairment of certain production assets associated with the realignment of
the product offerings of PerSeptive. See Note 1 to the PE Biosystems Group
combined financial statements.

GAIN ON INVESTMENTS. The first quarter of fiscal 1998 included a before-tax
gain of $.8 million related to the release of contingencies on a minority equity
investment. Fiscal 1998, 1997, and 1996 included before-tax gains of $1.6
million, $64.9 million, and $11.7 million, respectively, related to the sale and
release of contingencies on minority equity investments, respectively. See Note
2 to the PE Biosystems Group combined financial statements.

RESULTS OF CONTINUING OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1998 COMPARED WITH SEPTEMBER 30, 1997

The PE Biosystems Group reported net income from continuing operations of
$21.5 million for the first quarter of fiscal 1999 compared with net income from
continuing operations of $19.0 million for the first quarter of fiscal 1998.
Excluding the $.9 million of merger-related costs incurred in the first quarter
of fiscal 1999, net income for the quarter increased 17.5% compared with the
prior year. The effects of foreign currency translation reduced fiscal 1999
first quarter net income by approximately $2 million. Excluding the merger-
related costs and the effects of currency translation, net income for the first
quarter of fiscal 1999 increased approximately 28% compared with the first
quarter of fiscal 1998.

Net revenues were $251.2 million for the first quarter of fiscal 1999
compared with $194.1 million for the first quarter of fiscal 1998, an increase
of 29.4%. Excluding the results of Tecan, which were not included in the first
quarter of the prior year, revenues increased 15.2%. The effects of foreign
currency translation decreased net revenues by approximately $5 million, or 3%,
in the quarter compared with the prior year, as the U.S. dollar remained strong
against most Far Eastern currencies. Excluding Tecan and the negative effects of
currency translation, revenues

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<PAGE>

increased approximately 18% compared with the prior, primarily reflecting the
continued growth in the genetic analysis and polymerase chain reaction ("PCR")
product offerings. In particular, revenues for reagents that support our genetic
analysis systems increased 81%. Increased contract and licensing revenues of
$5.4 million also contributed to the year-to-year growth.

Geographically, excluding Tecan, revenues and orders were particularly
strong in the United States and Europe, as revenues increased 21.3% and 18.6%
over the prior year, partly as a result of higher product demand from
pharmaceutical research companies. Revenues in Latin America and other markets
increased 34.2%, while revenues in the Far East declined 9.4% compared with the
prior year. Excluding Tecan and the negative effects of currency translation,
revenues in the Far East would have increased approximately 6% compared with the
prior year.

The PE Biosystems Group introduced several significant new products and
systems during the first quarter. Among these introductions were the ultra
high-throughput ABI PRISM-Registered Trademark- 3700 DNA Analyzer. The PE
Biosystems Group expects shipments of the system to early-access customers and
the Celera Genomics Group to begin during the second quarter of fiscal 1999.
Other significant new instrument systems and services introduced during the
quarter included: several applied genetic analysis kits, including one for HIV
profiling; high-throughput drug discovery screening services through Tropix; and
FMAT, a new bioassay system to detect cells in vitro for drug discovery, which
was developed in collaboration with Biometric Imaging, Inc. These products began
generating revenues late in the quarter and the PE Biosystems Group expects
these products to contribute to revenues over the remainder of fiscal 1999.

Gross margin as a percentage of net revenues was 55.3% in the first quarter
of fiscal 1999 compared with 51.7% in the first quarter of fiscal 1998. This was
primarily the result of a change in product mix. Higher unit sales of reagents
to support genetic analysis systems and increased contract and licensing
revenues were the primary contributors. Continued growth in instrument sales of
higher margin genetic analysis product offerings was also a factor.

Selling, general and administrative expenses were $72.7 million in the first
quarter of fiscal 1999 compared with $58.6 million in the first quarter of
fiscal 1998. The 23.9% increase in expenses, or 9.9% excluding Tecan, was due to
higher planned marketing costs. As a percentage of net revenues, SG&A expense
decreased to 29.0% compared with 30.2% in the prior year.

Research, development and engineering expenses of $32.3 million increased
51.4% over the prior year from $21.3 million. Excluding Tecan, R&D expenses
increased 36.6% compared with the prior year. R&D investments were increased to
a higher level in the quarter, in part to support new product launches in fiscal
1999 and to accelerate new product development. Comparative increases in these
expenses should moderate over future quarters. As a percentage of net revenues,
the PE Biosystems Group's R&D expenses increased to 12.9% compared with 11.0%
for the prior year.

The PE Biosystems Group incurred merger-related costs of $.9 million in the
first quarter of fiscal 1999 for training, relocation, and communication in
connection with the integration of PerSeptive into the PE Biosystems Group. See
Note 10 to the PE Biosystems Group combined financial statements. We expect to
incur additional merger-related period costs of $5.5 million to $7.5 million
through the remaining quarters of fiscal 1999.

Operating income increased to $33.1 million for the first quarter of fiscal
1999 compared with $20.4 million for the prior year. Excluding Tecan, the
merger-related costs of $.9 million, and the effects of currency translation,
operating income increased 56.9% compared with the prior year, benefiting from
the higher gross margin. The effects of currency translation decreased operating
income by approximately $3 million compared with the prior year.

Interest expense was $.8 million for the first quarter of fiscal 1999
compared with $1.3 million for the prior year. This decrease was primarily due
to the refinancing of PerSeptive's 8 1/4%

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<PAGE>

Convertible Subordinated Notes Due 2001 together with slightly lower outstanding
debt balances and lower average interest rates. Interest income was $.5 million
for the first quarter of fiscal 1999 compared with $2.4 million for the prior
year, primarily because of lower cash balances, as well as from lower interest
rates.

Other income, net for the first quarter of fiscal 1999 was $1.7 million,
primarily related to a legal settlement, compared with other income, net of $.4
million for the prior year.

The effective income tax rate was 28% for the first quarter of fiscal 1999
and 26% for fiscal 1998. Excluding Tecan in the first quarter of fiscal 1999,
the effective income tax rate was 26%.

Minority interest expense of $3.1 million was recognized in the first
quarter of fiscal 1999 relating to our company's 14.5% financial interest in
Tecan.

RESULTS OF CONTINUING OPERATIONS--1998 COMPARED WITH 1997

The PE Biosystems Group reported net income from continuing operations of
$28.5 million for fiscal 1998, compared with net income from continuing
operations of $134.6 million for fiscal 1997. On a comparable basis, excluding
the special items previously described, net income increased 25.6% to $99.2
million for fiscal 1998 compared with $79.0 million for fiscal 1997.

Net revenues were $940.1 million for fiscal 1998, compared with $767.5
million for fiscal 1997, an increase of 22.5%. Excluding Tecan, revenues
increased 15.9% compared with the prior year. The effects of currency
translation decreased net revenues by approximately $33 million, or 4%, compared
with the prior year, as the U.S. dollar strengthened against most European and
Far Eastern currencies. On a worldwide basis, excluding Tecan and the effects of
currency translation, revenues would have increased approximately 20% compared
with the prior year. Increased demand for genetic analysis, liquid
chromatography/mass spectrometry ("LC/MS"), and polymerase chain reaction
("PCR") product lines was the primary contributor.

All geographic markets reported increased revenues over the prior year.
Excluding Tecan, net revenues in the United States, Europe, and the Far East
increased 24.0%, 10.7%, and 4.6%, respectively. Before the effects of currency
translation, and excluding Tecan, revenues in Europe and the Far East would have
increased approximately 18% and 14%, respectively, compared with the prior year.
The PE Biosystems Group believes slower Japanese government funding in the
second half of fiscal 1998 and the lack of a supplemental budget, which added to
fiscal 1997 revenues, contributed to a lower growth rate of only 3% in the
Japanese market.

Gross margin as a percentage of net revenues was 54.1% for fiscal 1998
compared with 52.9% for fiscal 1997. Fiscal 1998 gross margin included $4.1
million of inventory-related write-offs associated with the rationalization of
certain product lines in connection with the acquisition of PerSeptive, and
fiscal 1997 included a charge of $.7 million for the write-down of certain other
assets. Excluding the special items, fiscal 1998 gross margin increased to 54.4%
of revenues compared with 53.0% for fiscal 1997. Benefits realized from the sale
of higher-margin genetic analysis products and increased royalty revenues in the
United States, more than offset the negative effects of currency translation.

SG&A expenses were $276.7 million for fiscal 1998 compared with $227.7
million for the prior year. The 21.5% increase in expenses, or 14.7% excluding
Tecan, was due to higher planned worldwide selling and marketing expenses
commensurate with the substantially higher revenue and order growth. Before the
effects of currency translation and Tecan, SG&A expenses increased 17.7%
compared with the prior year. As a percentage of net revenues, SG&A expenses for
the PE Biosystems Group decreased to 29.4% compared with 29.7% in the prior
year.

R&D expenses of $105.5 million increased 35.0% over the prior year, or 27.7%
excluding Tecan. R&D spending increased 40.6%, or

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<PAGE>

33.3% excluding Tecan, over the prior year as the PE Biosystems Group continued
its product development efforts and preparation for new product launches. As a
percentage of net revenues, the PE Biosystems Group's R&D expenses increased to
11.2% compared with 10.2% for the prior year.

During fiscal 1998, $48.1 million of charges were recorded for restructuring
and other merger costs to integrate PerSeptive into the PE Biosystems Group
following the acquisition. See Note 10 to the PE Biosystems Group combined
financial statements. The objectives of the integration plan are to lower
PerSeptive's cost structure by reducing excess manufacturing capacity, achieve
broader worldwide distribution of PerSeptive's products, and combine sales,
marketing, and administrative functions. The charge included: $33.9 million for
restructuring the combined operations; $8.6 million for transaction costs; and
$4.1 million of inventory-related write-offs, recorded in cost of sales,
associated with the rationalization of certain product lines. Additional
non-recurring acquisition costs of $1.5 million for training, relocation, and
communication costs were recognized as period expenses in the third and fourth
quarters and were classified as other merger-related costs. The PE Biosystems
Group expects to incur an additional $6.5 million to $8.5 million of
acquisition-related costs for training, relocation, and communication in fiscal
1999. These costs will be recognized as period expenses when incurred and will
be classified as other merger-related costs.

Fiscal 1998 included $28.9 million of purchased in-process research and
development associated with the acquisition of Molecular Informatics.

<TABLE>
<CAPTION>
OPERATING INCOME
<S> <C>
(DOLLAR AMOUNTS
IN MILLIONS)
-------------------
1997
Operating income before special
items.............................. $ 101.0
Impairment of assets................. (.7)
------
Operating income................... $ 100.3
------
------

1998
Operating income before special
items.............................. $ 130.4
Restructuring and other merger
costs.............................. (48.1)
Acquired R&D......................... (28.9)
------
Operating income................... $ 53.4
------
------
</TABLE>

Operating income decreased to $53.4 million for fiscal 1998 compared with
$100.3 million for fiscal 1997. Excluding the special charges for restructuring
and other merger costs, acquired research and development, and the impairment of
assets, operating income increased $29.4 million, or 29.1%, primarily as a
result of increased volume and improved margins. A 23.5% increase in operating
income from higher-margin sequencing and mapping systems was the primary
contributor. Excluding Tecan, operating income before special items increased
21.6% compared with the prior year. Before the effects of currency translation
and excluding Tecan, fiscal 1998 operating income increased 38.5% compared with
the prior year. Geographically, excluding Tecan, fiscal 1998 operating income
before special items increased 48.0% in the United States, 20.1% in the Far
East, and 8.0% in Europe compared with fiscal 1997. As a percentage of net
revenues, operating income

85
<PAGE>

before special items increased to 13.9% in fiscal 1998 compared with 13.2% for
the prior year.

In fiscal 1998 and 1997, the PE Biosystems Group recorded gains of $1.6
million and $64.9 million, respectively, on the sale and release of
contingencies on minority equity investments. See Note 2 to the PE Biosystems
Group combined financial statements.

Interest expense was $4.9 million for fiscal 1998 compared with $5.9 million
for the prior year. This decrease was primarily due to the refinancing of the
PerSeptive Notes together with slightly lower outstanding debt balances and
lower average interest rates. Interest income was $5.9 million for fiscal 1998
compared with $8.8 million for the prior year, primarily because of lower cash
balances resulting from the use of cash to fund the PE Biosystems Group's
continued investments and acquisitions, as well as from lower interest rates.

Other income, net for fiscal 1998 of $3.1 million, primarily related to the
sale of certain operating and non-operating assets, compared with other income,
net of $1.9 million for the prior year.

Our effective income tax rate was 42% for fiscal 1998 and 21% for fiscal
1997. Excluding Tecan in fiscal 1998, and special items in fiscal 1998 and
fiscal 1997, the effective income tax rate was 21% for fiscal 1998 compared with
25% for fiscal 1997. Increased earnings in low tax jurisdictions reduced our tax
rate for fiscal 1998. An analysis of the differences between the federal
statutory income tax rate and the effective rate is provided in Note 4 to the PE
Biosystems Group combined financial statements.

Minority interest expense of $5.6 million was recognized in fiscal 1998
relating to our company's 14.5% financial interest in Tecan. See Note 2 to the
PE Biosystems Group combined financial statements.

RESULTS OF CONTINUING OPERATIONS--1997 COMPARED WITH 1996

The PE Biosystems Group reported net income of $134.6 million from
continuing operations for fiscal 1997 compared with net income of $4.2 million
from continuing operations for fiscal 1996. On a comparable basis, excluding the
special items previously described, net income increased 45.3%.

Net revenues for fiscal 1997 were $767.5 million, an increase of 19.5% over
the $642.1 million reported for fiscal 1996. The effects of currency rate
movements decreased net revenues by approximately $25 million, or 4%, as the
U.S. dollar strengthened against the Japanese Yen and certain European
currencies.

All geographic markets experienced revenue growth for fiscal 1997. Net
revenues in the United States, Europe, and the Far East increased 20.0%, 22.0%,
and 16.3%, respectively. Increased demand for genetic analysis, LC/MS, and the
PCR product lines was the primary contributor. Excluding currency effects,
revenues in Europe and the Far East would have increased approximately 26% and
29%, respectively.

SG&A expenses were $227.7 million for fiscal 1997 compared with $187.6
million for fiscal 1996, an increase of 21.3%, reflecting a 16% increase in
worldwide marketing expenses, commensurate with the growth in revenues, and
increased costs for our company's restricted stock and performance-based
compensation programs. The total expense for the restricted stock and
performance-based programs was $20.4 million and $7.9 million for fiscal 1997
and 1996, respectively. As a percentage of net revenues, SG&A expenses for the
PE Biosystems Group remained essentially unchanged at approximately 30% for both
fiscal 1997 and fiscal 1996.

R&D expenses were $78.1 million for fiscal 1997 compared with $62.2 million
for fiscal 1996. R&D spending increased 25.6% over the prior

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<PAGE>

year as the PE Biosystems Group continued its product development efforts for
the bioresearch markets. As a percentage of net revenues, R&D expenses increased
to 10.2% for fiscal 1997 compared with 9.7% for fiscal 1996.

<TABLE>
<CAPTION>
OPERATING INCOME
<S> <C>
(DOLLAR AMOUNTS
IN MILLIONS)
-------------------
1996
Operating income before special
items.............................. $ 84.1
Restructuring........................ (17.5)
Acquired R&D......................... (31.8)
Impairment of assets................. (9.9)
------
Operating income................... $ 24.9
------
------
1997
Operating income before special
items.............................. $ 101.0
Impairment of assets................. (.7)
------
Operating income................... $ 100.3
------
------
</TABLE>

Operating income for fiscal 1997 was $100.3 million compared with $24.9
million for fiscal 1996. We incurred a charge of $.7 million in fiscal 1997 and
$9.9 million in fiscal 1996 for impairment of assets. Fiscal 1996 included a
charge of $31.8 million for acquired research and development related to
acquisitions. Fiscal 1996 also included a charge of $17.5 million for
restructuring actions and other related costs associated with PerSeptive. On a
comparable basis, excluding special items in both years, operating income
increased 20.1% compared with the prior year as a result of increased volume and
improved margins, primarily from high-margin sequencing systems.

All geographic markets contributed to the improved operating income before
special items. The strongest growth was in Europe, where fiscal 1997 operating
income before special items increased 29.8% compared with fiscal 1996. Excluding
currency translation effects, operating income before special items would have
increased approximately 33%. As a percentage of net revenues, operating income
before special items remained essentially unchanged at 13.1% for both fiscal
1997 and fiscal 1996.

In fiscal 1997 and 1996, the PE Biosystems Group recorded before-tax gains
of $64.9 million and $11.7 million, respectively, on the sale and release of
contingencies on minority equity investments.

The effective income tax rate for fiscal 1997 was 21%. Fiscal 1996 incurred
a provision of $27.3 million on before-tax income of $31.5 million. Special
items affected both years. The charges for acquired research and development
were not deductible for tax purposes. Additionally, the fiscal 1996 charge for
restructuring and the fiscal 1997 charge for impairment of assets were only
partially deductible, and no tax benefit was recognized for PerSeptive's fiscal
1996 net operating loss, which resulted in a significant increase in the tax
rate for the fiscal year.

In the fourth quarter of fiscal 1997, we reduced our deferred tax valuation
allowance, resulting in the recognition of a $50.0 million dollar deferred tax
benefit. The benefit resulting from the valuation allowance release was
substantially offset by a fourth quarter accrual for tax costs related to gains
on foreign reorganizations.

MARKET RISK

The PE Biosystems Group operates internationally, with manufacturing and
distribution facilities in various countries throughout the world. For the first
quarter of fiscal 1999 and for fiscal 1998, the PE Biosystems Group derived
approximately 47% and 52%, respectively, of its revenues from countries outside
of the United States. Results continue to be affected by market risk, including
fluctuations in foreign currency exchange rates and changes in economic
conditions in foreign markets.

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The PE Biosystems Group's risk management strategy utilizes derivative
financial instruments, including forwards, swaps, purchased options, and
synthetic forward contracts to hedge certain foreign currency and interest rate
exposures, with the intent of offsetting losses and gains that occur on the
underlying exposures with gains and losses on the derivatives. The PE Biosystems
Group does not use derivative financial instruments for trading or other
speculative purposes, nor is the PE Biosystems Group a party to leveraged
derivatives. At September 30, 1998 and June 30, 1998, outstanding hedge
contracts covered approximately 80% of the estimated foreign currency exposures
related to cross-currency cash flows to be realized for the next twelve months.
The outstanding hedges were a combination of forward, option, and synthetic
forward contracts maturing in the next twelve months.

The PE Biosystems Group performed a sensitivity analysis as of September 30,
1998 and June 30, 1998. We assumed a hypothetical adverse change of 10% in
foreign currency exchange rates and a weakening of the U.S. dollar. We
calculated a hypothetical loss of $4.1 million in future cash flows by comparing
the difference between the change in market value of both the foreign currency
contracts outstanding and the underlying exposures being hedged assuming the 10%
adverse change in year-end rates. Actual gains and losses in the future could,
however, differ materially from this analysis, based on changes in the timing
and amount of foreign currency exchange rate movements and the PE Biosystems
Group's actual exposures and hedges.

Interest rate swaps are used to hedge underlying debt obligations. In fiscal
1997, our company executed an interest rate swap allocated to the PE Biosystems
Group in conjunction with its entering into a five-year Japanese Yen debt
obligation. Under the terms of the swap agreement, our company pays a fixed rate
of interest at 2.1% and receives a floating LIBOR interest rate. At June 30,
1998, the notional amount of indebtedness covered by the interest rate swap was
Yen 3.8 billion or $27.0 million. The maturity date of the swap coincides with
the maturity of the Yen loan in March 2002.

MANAGEMENT'S DISCUSSION OF FINANCIAL RESOURCES AND LIQUIDITY

The following discussion of financial resources and liquidity focuses on the
Combined Statements of Financial Position and the Combined Statements of Cash
Flows.

As the results of the Celera Genomics Group were not significant for any of
the periods presented, all historical cash and debt balances of our company have
been allocated to the PE Biosystems Group. Cash and cash equivalents of
continuing operations were $71.8 million at September 30, 1998, $82.9 million at
June 30, 1998, and $213.0 million at June 30, 1997, with total debt of
continuing operations of $88.4 million at September 30, 1998, $45.8 million at
June 30, 1998, and $89.1 million at June 30, 1997. Working capital deficit was
$40.2 million at September 30, 1998. Excluding the note payable to the Celera
Genomics Group, working capital was $289.8 million at September 30, 1998.
Working capital was $289.2 million at June 30, 1998, and $355.1 million at June
30, 1997. Debt to total capitalization increased to 13% at September 30, 1998
from 7% at June 30, 1998, as a result of an increase in loans payable to fund
current operating requirements. At September 30, 1998, including the note
payable, debt to total capitalization increased to 63%. Debt to total
capitalization was 15% at June 30, 1997.

The initial capitalization of the Celera Genomics Group has been accounted
for as an equity contribution from the PE Biosystems Group. This equity
contribution is reflected in the combined financial statements as a $330 million
short-term note payable to the Celera Genomics Group. The note payable will not
result in the PE Biosystems Group holding an equity interest in the Celera
Genomics Group. The note is expected to be paid with the

88
<PAGE>

proceeds from the sale of our Analytical Instruments business. Accordingly, no
interest will be ascribed to the note.

In addition, our board of directors has adopted a financing policy, included
in Note 1 to the PE Biosystems Group combined financial statements, which will
permit the PE Biosystems Group to make loans to the Celera Genomics Group and
make equity contributions to the Celera Genomics Group in exchange for Celera
Genomics Designated Shares.

SIGNIFICANT CHANGES IN THE COMBINED
STATEMENTS OF FINANCIAL POSITION

At September 30, 1998 accounts receivable of $236.8 million increased 4%
from the June 30, 1998 balance of $228.2 million. The inventory balance
increased by $22.1 million from June 30, 1998, to support the continued growth
in orders.

Accounts receivable and inventory balances increased from June 30, 1997 to
June 30, 1998 by $49.7 million and $25.9 million, respectively. Excluding Tecan,
accounts receivable and inventory balances increased by $28.3 million and $25.9
million, from June 30, 1997 to June 30, 1998 reflecting the growth in PE
Biosystems.

We reduced our total deferred tax asset and related valuation allowance from
$124.3 million and $69.7 million at June 30, 1997 to $115.5 million and $62.8
million at June 30, 1998. The valuation allowance relates primarily to foreign
and domestic tax loss carryforwards, domestic tax credit carryforwards and other
domestic deferred tax assets. A portion of the valuation allowance is
attributable to tax loss and credit carryforwards and other deferred tax assets
which we acquired as part of the purchase of PerSeptive in fiscal 1998. In
evaluating our need for a valuation allowance, we considered all available
positive and negative evidence, including historical information supplemented by
information about future years. We evaluate the need for the valuation allowance
periodically for each tax-paying component in each tax jurisdiction. The
following factors significantly influenced our conclusion regarding the need for
a valuation allowance included: (1) the historical profitability of our domestic
Analytical Instruments operations (2) the limitation under the Internal Revenue
Code on the amount of annual utilization of domestic loss carryforwards and
credits of PerSeptive, (3) as the long-term nature of a significant portion of
the remaining domestic tax asset and (4) the various expiration dates of the
foreign loss carryforwards.

Other long-term assets increased by $5.8 million at September 30, 1998 to
$246.4 million from $240.6 million at June 30, 1998. Other long-term assets
increased to $240.6 million at June 30, 1998 from $155.4 million at June 30,
1997. The change included $70.9 million of intangible assets associated with the
acquisition of Tecan and Molecular Informatics, $11.5 million of minority equity
investments, and a $10.2 million increase in prepaid pension asset, partially
offset by the sale of certain non-operating assets.

At September 30, 1998, total debt increased to $418.4 million as a result of
the allocation of the $330 million note payable to the Celera Genomics Group.
Total short-term and long-term borrowings were $45.8 million at June 30, 1998
compared with $89.1 million at June 30, 1997. The decrease was due in part to
the redemption of PerSeptive's 8 1/4% Convertible Subordinated Notes Due 2001 on
March 23, 1998. The redemption price was $1,055.81 per $1,000 principal amount
of the PerSeptive Notes, which represented the redemption premium and aggregate
principal plus accrued and unpaid interest to the redemption date. The aggregate
outstanding principal amount of the PerSeptive Notes was $27.2 million at March
23, 1998. A total of $26.1 million was paid in cash, representing $24.7 million
of principal and $1.4 million of accrued interest and premium relating to the
PerSeptive Notes. Additionally, $2.5 million of the principal amount of the
PerSeptive Notes was converted by the holders thereof into 35,557 shares of the
existing common stock.

Accounts payable decreased $22.9 million to $96.1 million at September 30,
1998 from $119.1 million at June 30, 1998 reflecting payments for higher
purchases made during the fourth quarter of fiscal 1998. Accounts payable
increased $33.7 million to $119.1 million at June 30, 1998 from $85.4 million at
June 30, 1997. The increase resulted from higher

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purchases to support production and operating requirements.

At September 30, 1998 and June 30, 1998, $49.2 million and $43.8 million,
respectively, of minority interest was recognized in connection with Tecan.

COMBINED STATEMENTS OF CASH FLOWS

Net cash used by operating activities from continuing operations was $16.2
million for the first three months of fiscal 1999 compared with $15.5 million
for the same period in fiscal 1998. For the first three months of fiscal 1999,
lower net income-related cash flow and higher payments to suppliers were
partially offset by lower accounts receivable and prepaid expenses, primarily
from the collection of non-trade receivables. Operating activities from
continuing operations generated $79.4 million of cash in fiscal 1998 compared
with $78.4 million in fiscal 1997 and $45.3 million in fiscal 1996. In fiscal
1998, higher income-related cash flow was more than offset by a net increase in
operating assets and liabilities reflecting the continued growth.

Net cash used by investing activities from continuing operations was $7.3
million for the first three months of fiscal 1999 compared with $16.2 million
for the first three months of fiscal 1998. In the first quarter of fiscal 1999,
the PE Biosystems Group generated $14.3 million in net cash proceeds from the
sale of certain non-operating assets, compared with $13.9 million in the prior
year from the sale of certain non-operating assets and the collection of a note
receivable. For the first three months of fiscal 1999 cash proceeds were more
than offset by capital expenditures of $21.6 million, which included $33.8
million related to improvement of the PE Biosystems Group's information
technology infrastructure, and $17.5 million for the acquisition of an airplane.
For the first three months of fiscal 1998 cash proceeds were more than offset by
capital expenditures of $22.8 million, primarily related to improvement of the
PE Biosystems Group's information technology infrastructure, and $7.2 million
related to various investments and collaborations.

In fiscal 1998, net cash used by investing activities from continuing
operations was $125.7 million compared with net cash provided by investing
activities from continuing operations of $47.8 million in fiscal 1997. During
fiscal 1998, the PE Biosystems Group generated $19.5 million in net cash
proceeds from the sale of assets and $9.7 million from the collection of a note
receivable. The proceeds were more than offset by $56.8 million of capital
expenditures, which included $33.7 million as part of the strategic program to
improve our company's information technology infrastructure, and $98.0 million
for acquisitions and investments, primarily Tecan and Molecular Informatics. See
Note 2 to the PE Biosystems Group combined financial statements for a discussion
of our restructuring actions.

For fiscal 1997, the PE Biosystems Group generated $99.7 million in net cash
proceeds from the sale of our company's equity interests in Etec Systems, Inc.
and Millennium Pharmaceuticals, Inc. and from the sale of certain other
non-operating assets. These proceeds were partially offset by $5.0 million used
for acquisitions and $51.9 million for capital expenditures which included $9.5
million for information technology infrastructure improvements and $12.1 million
for the acquisition of an airplane. See Note 2 to the PE Biosystems Group
combined financial statements for a discussion of our restructuring actions.

In fiscal 1996, $117.1 million of cash was used for acquisitions and $22.4
million was used for capital expenditures. This was partially offset by $102.3
million of cash proceeds generated from the sale of minority equity investments
and non-operating assets.

Net cash provided by financing activities was $28.0 million in the first
quarter of fiscal 1999 compared with a net cash use of $2.7 million in the prior
period. In the first quarter of fiscal 1999, the PE Biosystems Group received
$6.4 million in proceeds from employee stock option plan exercises compared with
$2.9 million in the prior period. Loans payable increased $43.8 million in the
first quarter of fiscal 1999 compared with an increase of $4.3 million for the
prior year.

In fiscal 1998 net cash used by financing activities was $52.7 million
compared with

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$43.9 million for fiscal 1997, and $25.7 million for fiscal 1996.

During fiscal 1998, proceeds from employee stock plan exercises were $33.6
million. This was more than offset by shareholder dividend payments and the
redemption of the PerSeptive Notes.

During fiscal 1997, our company generated $1.8 million from the sale of
equity put warrants and $33.6 million in proceeds from employee stock plan
exercises, compared with $65.0 million from employee stock plan exercises in
fiscal 1996. This was more than offset by shareholder dividends of approximately
$29 million for both fiscal 1997 and 1996, and for the purchase of common stock
for treasury. During fiscal 1997, .4 million shares were repurchased at a cost
of $25.1 million, compared with .8 million shares at a cost of $41.0 million in
fiscal 1996. Common Stock purchases for treasury were made in support of our
company's various stock plans. No shares were repurchased during fiscal 1998.

As previously mentioned, the PE Biosystems Group recorded before-tax
restructuring charges and other merger costs of $48.1 million and $17.5 million
in fiscal 1998 and 1996, respectively, in the results for continuing operations.
During fiscal 1998, the PE Biosystems Group made cash payments of $11.9 million
for obligations related to restructuring plans and other merger costs.
Liabilities remaining at June 30, 1998 were $26.9 million for the fiscal 1998
plan. See Note 10 to the PE Biosystems Group combined financial statements. The
funding for the remaining restructuring liabilities will be from current cash
balances and funds generated from operating activities.

The PE Biosystems Group believes its cash and short-term investments, funds
generated from operating activities, and available borrowing facilities are
sufficient to provide for its anticipated financing needs over the next two
years. At June 30, 1998, our company had unused credit facilities totaling $343
million.

IMPACT OF INFLATION AND CHANGING PRICES

Inflation and changing prices are continually monitored. The PE Biosystems
Group attempts to minimize the impact of inflation by improving productivity and
efficiency through continual review of both manufacturing capacity and operating
expense levels. When operating costs and manufacturing costs increase, the PE
Biosystems Group attempts to recover such costs by increasing, over time, the
selling price of its products and services. The PE Biosystems Group believes the
effects of inflation have been appropriately managed and therefore have not had
a material impact on its historic operations and resulting financial position.

YEAR 2000

In fiscal 1997, our company initiated a worldwide program to assess the
expected impact of the Year 2000 date recognition problem on our existing
internal computer systems; our non-information technology systems, including
embedded and process control systems; our product offerings; and our significant
suppliers. The purpose of this program is to ensure the event does not have a
material adverse effect on our company's business operations.

The operations of the PE Biosystems Group are included within this program.
At this time, our company is not able to determine the relative resources
required to implement this program in the PE Biosystems Group. However, our
company believes that a substantial portion of the resources required was
allocated to the PE Biosystems Group.

Regarding our company's existing internal computer systems, the program
involves a mix of purchasing new systems and modifying existing systems, with
the emphasis on replacement of applications developed in-house. Replacement
projects are currently underway, and are anticipated to be substantially
completed for all business-critical systems worldwide by December 31, 1999. The
program includes replacement of applications that, for reasons other than Year
2000 noncompliance, had been previously selected for replacement. The
replacement projects, which began in fiscal 1997, are expected to offer improved
functionality and commonality over current systems, while at the same time
addressing the Year 2000 problem.

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With respect to our company's current product offerings, the program
involves performing an inventory of current products, assessing their compliance
status, and constructing a remediation plan where appropriate. Significant
progress has been made in each of these three phases and our company expects the
PE Biosystems Group's current product offerings to be Year 2000 compliant by
December 31, 1999. A substantial portion of the PE Biosystems Group's current
product offerings are Year 2000 compliant.

The program also addresses the Year 2000 compliance efforts of our company's
significant suppliers, vendors, and third-party interface systems. As part of
this analysis, our company is seeking written assurances from these suppliers,
vendors, and third parties that they will be Year 2000 compliant. While our
company has begun such efforts, there can be no assurance that the systems of
other companies with which our company deals, or on which our company's systems
rely will be timely converted, or that any such failure to convert by another
company could not have a material adverse effect on our company. Our company has
not fully determined the extent to which our company's interface systems may be
impacted by third parties' systems, which may not be Year 2000 compliant.

Our company's preliminary estimate of the total cost for this multi-year
program covering 3-4 years is approximately $150 million. This includes amounts
previously budgeted for information technology infrastructure improvements and
estimates of remediation costs on components not yet fully assessed. Incremental
spending has not been and is not expected to be material because most Year 2000
compliance costs will be met with amounts that are normally budgeted for
procurement and maintenance of our company's information systems, production and
facilities equipment. The redirection of spending to implement Year 2000
compliance plans may in some instances delay productivity improvements.

Our company has also engaged a consulting firm to provide periodic
assessments of our company's Year 2000 project plans and progress. Because of
the importance of addressing the Year 2000 problem, our company has created a
Year 2000 business continuity planning team to review and develop, by April
1999, business contingency plans to address any issues that may not be corrected
by implementation of our company's Year 2000 compliance plan in a timely manner.
If our company is not successful in implementing its Year 2000 compliance plan,
or there are delays in and/or increased costs associated with implementing such
changes, the Year 2000 problem could have a material adverse effect on our
company's consolidated results of operations and financial condition.

At this stage of the process, our company believes that it is difficult to
specifically identify the cause of the most reasonable worst case Year 2000
scenario. A reasonable worst case Year 2000 scenario would be the failure of
significant suppliers and vendors to have corrected their own Year 2000 issues
which could cause disruption of our company's operations and have a material
adverse effect on our company's financial condition. The impact of such
disruption cannot be estimated at this time. In the event our company believes
that any of its significant suppliers or vendors are unlikely to be able to
resolve their own Year 2000 issues, our company's contingency plan would include
seeking additional sources of supply.

EURO CONVERSION

The PE Biosystems Group is currently evaluating the impact of the euro
conversion on its computer and financial systems, business processes, market
risk, and price competition. The PE Biosystems Group does not expect this
conversion to have a material impact on its

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results of operations, financial position, or cash flows.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The provisions of the statement
require the recognition of all derivatives as either assets or liabilities in
the statement of financial position and the measurement of those instruments at
fair value. The accounting for changes in the fair value of a derivative depends
on the intended use of the derivative and the resulting designation. The PE
Biosystems Group is required to implement the statement in the first quarter of
fiscal 2000. The PE Biosystems Group is currently analyzing the statement to
determine the impact, if any, on its combined financial statements.

The FASB issued the following Statement of Financial Accounting Standards,
which will become effective for the PE Biosystems Group's fiscal 1999 annual
financial statements: SFAS No. 132, "Employers' Disclosures about Pensions and
other Postretirement Benefits," which requires additional disclosures relating
to a company's pension and postretirement benefit plans; and SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information," which
requires certain financial and descriptive information about a company's
reportable operating segments. The adoption of these new accounting standards
may require additional disclosures but should not have a material effect, if
any, on the combined financial statements of the PE Biosystems Group.

We continue to apply APB No. 25 in accounting for our stock based
compensation plans. Accordingly, no compensation expense has been recognized for
these plans, as all options have been issued at fair value. The effect of
accounting for such plans at fair value, under SFAS No. 123, "Accounting for
Stock Based Compensation," would be to decrease fiscal 1998 net income by $31
million and diluted earnings per share by $.61. The method used to determine the
fair value is the Black-Scholes options pricing model. Accordingly, changes in
dividend yield, volatility, interests risks and option life could have a
material effect on the fair value. See Note 8 to the PE Biosystems Group
combined financial statements for a more detailed discussion regarding the
accounting for stock-based compensation at fair value.

OUTLOOK

Continuing operations are expected to continue to grow and maintain
profitability for fiscal 1999 on the strength of robust demand and several new
products. Excluding Tecan, orders for products increased by 35% over the first
quarter a year ago, and the backlog in orders for the first quarter was $124
million compared with $102 million at the end of fiscal 1998. Orders were
particularly strong for genetic analysis systems, sequence detection systems,
and products for applied markets, such as forensics, that are driven by
molecular biology-based reagents. We also began taking orders for the ABI
PRISM-Registered Trademark- 3700 DNA Analyzer, which was introduced late in the
quarter. Excluding orders from the Celera Genomics Group, orders were accepted
for more than 70 units of the 3700 in the first two weeks following its
introduction. Shipments of the 3700 DNA Analyzer to early-access customers and
the Celera Genomics Group are expected to begin during the second quarter. Other
significant new instrument systems and services introduced during the quarter
include: several applied genetic analysis kits, including one for HIV profiling;
high-throughput drug discovery screening services through Tropix; and FMAT, a
new bioassay system to detect cells in vitro for drug discovery, which was
developed in collaboration with Biometric Imaging, Inc. These products began
generating revenues late in the quarter and are expected to contribute to
revenues over the balance of the year.

On January 21, 1999, we announced a decision to pursue a sale of our
Analytical Instruments business, which has been classified as discontinued
operations.

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CELERA GENOMICS GROUP --
BUSINESS

OVERVIEW

The Celera Genomics Group is engaged principally in the generation, sale and
support of genomic information and related information management and analysis
software; discovery, validation and licensing of proprietary gene products,
genetic markers and information concerning genetic variability; and related
consulting and contract research and development services.

We and Dr. J. Craig Venter, a leading genomic scientist and founder of The
Institute for Genomic Research ("TIGR"), announced the intent to form the Celera
Genomics business in May 1998. This business commenced operations in August
1998. This business was formed for the purpose of generating and commercializing
genomic information to accelerate the understanding of biological processes; and
assisting pharmaceutical, biotechnology and life science research entities in
areas of research including:

- new drugs and improved drug development processes;

- novel genes and factors that regulate and control gene expression; and

- interrelationships between genetic variability, disease and drug
response.

The foundation of the Celera Genomics Group's strategy is the sequencing of
the human genome, which it expects it will complete by December 31, 2001. The
underlying human genetic sequence will be the basis for the Celera Genomics
Group's development of a value-added, integrated information and discovery
system. The system will include increasing layers of functional information,
such as gene expression data, comparative data from other model organisms, such
as DROSOPHILA (fruit fly) and mouse, genetic variation and ultimately gene
function. Users of the system will have the ability to view, browse and analyze
the data in an integrated way that should assist scientists and commercial
enterprises in accelerating their understanding of the human genetic code. The
Celera Genomics Group anticipates using its genomic data as a platform upon
which to develop tools and services. The Celera Genomics Group anticipates that
this genomic data, together with such tools and services, will become a
comprehensive scientific and medical resource for a wide range of customers.

Other genomics companies have focused on strategies that emphasize finding
and sequencing particular genes within the human genome to find specific drug or
disease targets. In contrast, the Celera Genomics Group plans to sequence the
entire human genome using whole genome shotgun sequencing, a unique sequencing
strategy designed to produce genomic data rapidly and efficiently. The Celera
Genomics Group's goal is to create a comprehensive knowledge base of the human
genome that will allow multiple scientific and commercial applications. The
Celera Genomics Group believes that its shotgun sequencing strategy will not
only accelerate the discovery of new genes, but will help generate genomic
information that has not yet been the focus of research. This information
includes rarely expressed genes and the proteins they code for and other
factors, such as regulatory regions, that control gene expression.

Dr. Venter and his team at TIGR were the first to apply the whole genome
shotgun strategy to the sequencing of several genomes, including the first three
in history. To date, ten of the 20 genomes that have been completely sequenced
and are (or are expected to be) in the public domain have been sequenced by TIGR
using this strategy.

The Celera Genomics Group includes GenScope, which our company acquired in
February 1997. GenScope is a provider of genomics-related products and services,
gene discovery, target discovery and validation, efficacy and safety assessment,
and pharmacogenomics study services. GenScope's core technology, GeneTag-TM-, is
a proprietary process for analysis of gene expression. This technology provides
a method with which to compare many samples in order to quickly identify which
genes are affected by a disease or treatment.

The Celera Genomics Group also includes AgGen which was formed by our
company in

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July 1997 for the purpose of developing an application group specializing in
providing services to the agriculture market. AgGen provides genetic testing
services for plant and animal breeding programs. In addition, AgGen provides
expertise in plant and animal functional genomics.

The Celera Genomics Group believes that it has competitive advantages that
differentiate it from other genomic companies. These advantages include:

- EXPERTISE OF KEY SCIENTIFIC PERSONNEL

-- Recognized leading scientific expertise of the Celera Genomics
Group's key personnel, including Dr. Venter, and their experience at
TIGR and other organizations in shotgun sequencing and the assembly,
interpretation and application of genomic information; and

-- Key GenScope personnel with expertise in gene expression profiling
and the interpretation of data in a biological context.

- WHOLE GENOME SHOTGUN SEQUENCING STRATEGY

-- Permits accelerated sequencing of the entire human genome; and

-- Produces comprehensive polymorphism information necessary to
understand genetic variability between individuals.

- ADVANCED GENOMIC AND COMPUTING TECHNOLOGY

-- Unique sequencing facility with capacity at a level never before
attempted. The facility will contain the PE Biosystems Group's new DNA
sequencers, which use unique high-throughput (high-volume) sequencing
technology;

-- GenScope's GeneTag-TM- expression technology, which allows rapid and
simultaneous profiling to monitor known genes and discover novel genes
and provides data to build databases to assist in identifying gene
function;

-- Early access to the PE Biosystems Group's other technologies and
products, such as automated sample handling, sequencing chemistries,
gene expression, genetic variation analysis and bioinformatics; and

-- Strategic alliance with Compaq Computer Corporation to assist in the
development of computational capacity and tools required to acquire,
analyze and distribute sequence information.

- OUR COMPANY'S RESOURCES AND MARKET EXPERIENCE

-- Access to our company's financial resources that provide a source of
capital for the Celera Genomics Group's business;

-- Administrative shared services provided by our company that permit
the Celera Genomics Group to focus on its mission;

-- Our company's established track record in developing new applications
and technologies in life sciences markets; and

-- Our company's extensive relationships with users of life sciences
products.

GENOMICS INDUSTRY BACKGROUND

GENES, GENETIC VARIABILITY AND ITS
RELATIONSHIP TO DISEASE

The human genome governs all cellular function, which, in turn, determines
human physiology, such as metabolism, susceptibility to disease and reactions to
certain drugs. The human genome is organized into 23 pairs of chromosomes, which
include the X and Y chromosomes that determine sex. These chromosome sets, in
turn, are comprised of strands of DNA molecules that consist of long chains of
chemical subunits, called nucleotides. There are four nucleotides--adenine,
cytosine, guanine, and thymine--often abbreviated with their first letters A, C,
G, and T. DNA molecules consist of two long chains of nucleotides bound together
by base pairs of nucleotides. Approximately 3.5 billion nucleotide base pairs,
or 7 billion total bases, make up the entire

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human genome. It is the unique sequence of the nucleotide arrangement that
determines cellular structure and function.

Certain sequences of nucleotides, called genes, carry the specific
information necessary to construct proteins that regulate every aspect of human
life. Genes may contain from several dozen to tens of thousands of nucleotides.
The Celera Genomics Group believes the best scientific evidence to date
indicates that the number of genes in the human genome is between 50,000 and
80,000, although some have estimated the number to be as high as 150,000. Less
than 6,000 genes have been well "characterized." Between 40,000 and 50,000
segments, however, have been partially tagged through partial gene sequencing
(ESTs, also known as expressed sequence tags) although most of these are without
known function. Most importantly, genes not only regulate human physiology but
are also an important determinant of human health and disease pathways. Despite
what has been discovered to date, only a limited amount is known about the human
genome, and significant additional discoveries are necessary to develop a more
comprehensive understanding of the human genome.

Human variability arises from both differences in the sequences of genes and
from differences in gene expression. The normal sequence of a gene may be
altered by replication errors or environmental factors. These variations, also
known as polymorphisms, may have little or no effect on a gene's ability to
function. Some polymorphisms, however, may affect gene function and result in
the development of particular diseases, most notably cancer.

Gene expression is the process by which a gene's coded information is
translated into the production of proteins within a cell. While all cells
contain the full set of DNA, different cells express different sets of genes
depending on cell type and environmental conditions. Certain diseases also arise
from the "over" or "under" expression of genes.

VALUE OF GENOMIC RESEARCH

Genomics--the study of genetic information, its relationship to disease and
its use in identifying targets for drug development-- is a relatively new and
evolving field. Industry analysts expect genomics to lead a medical "revolution"
in the identification and treatment of disease based on growing evidence that
genes play a significant role among most major diseases.

The Celera Genomics Group believes that the field of genomics will affect
medicine in at least three significant ways:

- TARGET IDENTIFICATION AND DRUG DISCOVERY. The Celera Genomics Group
expects genomics to play a long-term role in the discovery of targets for
small molecule drugs and novel protein drugs in the future. Prozac is an
example of a small molecule drug, and insulin, growth hormone and EPO are
examples of novel protein drugs, all of which are significant products
for pharmaceutical companies today. The Celera Genomics Group expects
that discoveries of targets for small molecule drugs and novel protein
drugs will affect virtually every aspect of the treatment of diseases,
including cardiovascular diseases, infectious diseases, neuropsychiatric
disorders, asthma, obesity, diabetes and cancers.

- PHARMACOGENOMICS AND DRUG DEVELOPMENT. Pharmacogenomics, an outgrowth of
genomic research, is also a rapidly evolving field and focuses on
identifying genetic variability factors that may affect an individual's
response to a specific drug. The Celera Genomics Group expects the
application of pharmacogenomics to improve the drug development process.

- DIAGNOSTICS AND DISEASE MANAGEMENT. As the understanding of genetic
causes of disease improves, the Celera Genomics Group expects genomics to
enhance physicians' ability to diagnose particular diseases. As a result,
genomic research should also lead to better treatment and monitoring of
diseases.

GENOMIC RESEARCH EFFORTS TO DATE

Sequencing technology generally permits only small amounts of DNA to be
sequenced at a time. That technology has limited the

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generation of genomic data and the understanding of biological systems.
Moreover, substantial amounts of time and money are required for mapping the
human genome and the preparation of samples prior to sequencing. As a result,
less than 5-7% of the entire human genome has been sequenced. In addition, there
are other limitations in these technologies. For example, genomic scientists
have been able to generate only limited genetic information relating primarily
to highly expressed genes. Scientists have been unable to develop a meaningful
information base that addresses rarely expressed genes, regulatory factors and
polymorphisms. Furthermore, currently available tools to measure and detect
polymorphisms are technologically immature and expensive. Significant research
is required to fully understand the interrelationship of genes, regulatory
factors and polymorphisms in biological processes.

Most early genomic research was funded under the auspices of the Human
Genome Project, a worldwide coordinated effort to sequence the human genome,
undertaken largely by governments and nonprofit organizations in the United
States, England, Japan, France and other nations. In the United States, most
public funding for the Human Genome Project has come from the National
Institutes of Health ("NIH") and the Department of Energy, although there has
been an increasing amount of work in support of the Human Genome Project by
private businesses like the Celera Genomics Group. The Human Genome Project has
generated interest in genomics and encouraged the development of technology for
and commercial interest in genomic research. Commercialization of genomic
research began in the early 1990's and led to the development of
privately-funded gene discovery initiatives focused on supplementing drug
discovery efforts within the pharmaceutical industry.

PUBLIC HUMAN GENOME RESEARCH EFFORTS. As DNA sequencing technology improved
and computational capacity increased, scientists began a focused effort to
sequence the entire human genome. The project was first funded by the U.S.
Government in 1990 with a 15-year budget of $3 billion and an announced
objective of compiling a public database of the complete human genome sequence
by 2005. Significant additional amounts are being spent by other governments and
organizations around the world. After the announcement by the Celera Genomics
Group of its goals, the NIH and one private foundation announced their intention
to accelerate the projected completion date for sequencing the entire human
genome to 2003.

The underlying strategy of the public effort to sequence the human genome is
based on breaking up the genome into discrete sections of DNA that are mapped to
chromosomes and then sequenced one section at a time. This strategy provides an
overall map of the genome upon which areas can be incrementally sequenced along
the map. As a result, the Celera Genomics Group believes the public approach has
two commercial limitations in addition to its high cost:

- The human genome sequence information will be available at a slower rate;
and

- It will not produce the quantity of polymorphism information to support
the study of genetic variability that would result from sequencing the
entire genome from multiple individuals.

The NIH recently announced a program relying, in part, on Human Genome
Project data to address the absence of polymorphism information. The Celera
Genomics Group believes that the NIH's funded efforts to generate a significant
amount of information will be limited by its sequencing and polymorphism
detection strategies.

PRIVATE HUMAN GENOME RESEARCH EFFORTS. A number of companies are sequencing
segments of the human genome. However, these efforts have been limited to small,
targeted areas of the genome due to the technical and financial hurdles
associated with sequencing the entire human genome. Prior to the Celera Genomics
Group's announcement, no private organization had announced that it planned to
sequence the entire human genome.

The first genomics companies generally relied on the expressed sequence tag
("EST") approach, a shortcut sequencing strategy using partial gene sequences as
markers, developed by Dr. Venter when he was at the NIH. ESTs are

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derived from tissues in which individual genes are expressed and help identify
specific genes that may be involved in particular diseases. Due to the nature of
the EST approach, the genes identified are typically more highly expressed
genes. Rarely expressed genes that may be of more interest in studying disease
are not as likely to be identified by the EST approach. Although the EST
approach has been considerably faster than other methods and successful in
identifying some genes, it provides only a starting point in the gene
identification process.

Some genomics companies use ESTs in a strategy known as "gene mapping." Gene
mapping refers to the process by which DNA samples are taken from members of
families with high incidences of a particular disease. These samples are used to
identify ESTs to help locate the exact position in the genome of a gene that may
be partially or fully responsible for the disease. Gene mapping offers the
advantage of much higher certainty in associating a gene with a particular
disease, but it tends to be a considerably slower and more expensive process of
gene identification than the EST method alone.

Some genomics companies offer fee-based access to their genomics databases.
These databases are built primarily with data sequenced using the EST and gene
mapping techniques. By not sequencing the entire genome, these companies are not
as likely to identify rarely expressed genes, which the Celera Genomics Group
believes are likely to provide medically-significant information. These
companies typically require customers that access their data to share
intellectual property rights on discoveries made from the data provided by the
database company, regardless of the database company's involvement in a
discovery.

Other companies are developing detailed maps of the human genome, but these
maps are expected to show substantially less than all of the sequences in the
genome. These maps are being used to discover genes and their relevance to
broader patient populations. Some companies use genomic maps and special
techniques to identify limited polymorphisms and other data to be used in
pharmacogenomics.

Even with the use of partial genomic information, private genomic companies
have achieved the following:

- Numerous partnering and collaborative relationships with pharmaceutical
companies involving significant research funding; and

- Significant gene discoveries from both the EST and gene mapping methods.

By focusing their efforts on identifying specific genes and disease targets,
however, genomic companies have identified only a fraction of the 3%-5% of the
human genome believed to be responsible for gene coding. Unlike its competitors,
many of which believe that the remaining 95% to 97% is composed of "junk" DNA,
the Celera Genomics Group believes that gaining an understanding of the whole
human genome will yield valuable biological and medical information. Such
information includes novel genes, polymorphisms and gene timing and tissue
localization instructions not found in gene transcripts, i.e., cDNA and EST
sequences. The Celera Genomics Group believes that it will create the foundation
for discovery from the wealth of genomic information that cannot be discovered
through the EST or gene mapping approaches alone. Moreover, the Celera Genomics
Group believes that by overlaying the expression profiles for different tissues
and multiple species, it can facilitate accurate pathway identification and the
determination of possible gene function. These discoveries, in turn, should lead
to a more comprehensive understanding of the genome and the genomic factors
influencing diseases and drug responses in patients.

CELERA GENOMICS' APPROACH TO GENOMICS

Since the early 1990's, with the commencement of the Human Genome Project,
scientists have generally believed that technology would limit the pace at which
the entire human genome might be sequenced. The development of the PE Biosystems
Group's higher-volume sequencing equipment, together with the advances in
sequencing strategy developed by Dr. Venter and his scientific team at TIGR, led
our company to believe that it might be possible to sequence the entire human
genome efficiently. This combination of advanced

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technology and the shotgun sequencing approach allowed our company and Dr.
Venter and his team to conclude that whole genome sequencing could be
commercially viable.

The Celera Genomic Group's plan is to develop, on an accelerated basis,
comprehensive genomic information on the entire human genome and related
comparative genomic information from other model organisms. The advantages of
complete and comparative genomic information should include:

- Integrated information products that permit a level of analysis and
interpretation that databases derived from ESTs and gene mapping
approaches do not provide. For example, the whole genome approach will
disclose rarely expressed genes, regulatory regions and other
discoveries.

- Identification of a far greater number of polymorphisms than can be
identified by the current gene mapping approaches.

The Celera Genomics Group also anticipates adding significant value to its
information products by providing software tools and analysis capabilities to
facilitate access to the data and by annotating them with interpretive
information, including information resulting from collaborations with key life
science researchers. For example, the Celera Genomics Group expects to employ
GeneTag-TM- gene expression sequence technology, a leading technology for
identifying rarely-expressed genes.

The Celera Genomics Group expects to derive its revenues primarily from
access fees from database customers, fees for collaborative polymorphic
services, fees from collaborative gene discovery arrangements, and, in certain
cases, from licensing intellectual property.

The Celera Genomics Group expects to sell access to its genomics information
to customers for their internal use. For certain information products, the
Celera Genomics Group does not expect to seek intellectual property rights from
customers on such use. For these products, this policy should promote use of its
information by a wide variety of users and will distinguish the Celera Genomics
Group from other genomics companies that seek intellectual property rights in
their customers' discoveries based solely upon access to those companies'
database information. The Celera Genomics Group expects to collaborate with
customers to identify targets that can be used in the discovery and development
of new diagnostics and drugs and in the development of polymorphism information.
For such collaborations, the Celera Genomics Group intends to share with its
customers intellectual property rights on discoveries resulting from those
collaborations.

The Celera Genomics Group has adopted a policy to make available, to the
research community for free, the basic reference human sequence information
generated by its sequencing and assembly efforts. The Celera Genomics Group
intends to make available this information on a quarterly basis in the form of
unordered consensus human sequence data in excess of specified lengths.

The Celera Genomics Group has not yet determined the precise form in which
the data will be made available, whether in viewable form on the Celera Genomics
Group's Web site or by contribution to GenBank, the U.S. Government's genome
database. The ultimate form of data release will be affected by, among other
things, the evolution of intellectual property law and the Celera Genomics
Group's assessment of the likelihood that other organizations may seek to obtain
the Celera Genomics Group's data and resell it to their own customers. The
Celera Genomics Group believes that current efforts by some companies to obtain
data made publicly available for the purpose of private resale may continue, and
that the need to protect the value of its information while honoring its
intention to share this data with the research community will affect its data
disclosure strategy.

After completion of sequencing, the Celera Genomics Group expects to release
a detailed ordered consensus human genome assembly.

The Celera Genomics Group believes that disclosing consensus sequence data
will not affect the value of its information products and services to customers
and will encourage researchers to use its data and ultimately become the Celera
Genomics Group's customers. The Celera Genomics Group will make available to its
customers, on a subscription basis, the assets that are most

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responsible for the value of its products and services--extensive integrated
genomic information systems, including proprietary annotations, certain
polymorphism information, comparative genomics information, search tools and
algorithms, and assay and other services.

BUSINESS STRATEGY

The Celera Genomics Group's mission is to become the definitive source of
genomic and associated biological and medical information that will facilitate a
better understanding of human biological processes and accelerate future
improvements in health care. The Celera Genomics Group intends to use the
genomic information derived from its human genome sequencing program as a
platform upon which to develop an integrated information and discovery system.

The Celera Genomics Group believes that its information platform, along with
the assay systems it will develop, will be used by pharmaceutical, biotechnology
and other private entities and academic and other life science research
institutions. The Celera Genomics Group will seek to make its discovery and
information system the fundamental resource in molecular medicine for
acceleration of the development of new drugs, targeted diagnostics and
personalized medicine.

Key elements of the Celera Genomics Group's strategy include:

- "SHOTGUN" SEQUENCING OF THE ENTIRE HUMAN GENOME

The Celera Genomics Group intends to sequence the entire human genome on
an accelerated and cost-effective basis. It believes that its shotgun
sequencing strategy will produce a highly marketable source of genomic
information and build a foundation for a series of comprehensive
information products, tools and services to analyze data.

- INTEGRATED INFORMATION AND DISCOVERY SYSTEM

The Celera Genomics Group intends to develop an integrated information
system that will include the most comprehensive and integrated databases
of genomic and medically-related information available. The Celera
Genomics Group expects to integrate its proprietary information with
information from external sources. The discovery and information system
will also include software tools that provide the ability to view,
browse and analyze this information in an integrated way to facilitate
discovery. The Celera Genomics Group also expects to offer a variety of
services to customers to assist in the analysis and interpretation of
the data.

The Celera Genomics Group intends to supplement the base-level, human
genome sequence data it generates with other information to increase the
value of its information system. This additional information may include
comparative genomic information and associated tissue-specific gene
expression profiles from human and other model organisms. Comparative
genomic information from model organisms, such as DROSOPHILA and mouse,
are often used as a mechanism by which to better analyze specific areas
of the genome and develop the interrelationships of the genetic code to
disease and drug response. This information, which will permit better
understanding of how genes are controlled by regulatory elements, has
significant implications for better molecular control of genes and gene
therapy.

For example, the Celera Genomics Group intends to sequence the
DROSOPHILA genome, as a pilot project, prior to starting to sequence the
human genome. This sequence information will represent the first level
of the Celera Genomics Group's comparative genomic information and is
intended to add to the understanding of human genomic data, particularly
in furthering the understanding of neurological function.

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- POLYMORPHIC DISCOVERIES AND BIOLOGICAL ASSAY SYSTEMS

The Celera Genomics Group believes that its sequencing efforts using the
DNA from multiple individuals will likely result in the discovery of
millions of polymorphic sites. This level of discovery should
significantly exceed the efforts of its competitors. Polymorphic sites
are locations on the genome where variations in genetic sequence can
occur and which may lead to the development of certain diseases or
influence the effect of a drug on a patient. Scientists believe that
polymorphism information is important in understanding the relationship
of genetic factors to disease and how and why certain patients react
favorably to certain drugs while others do not. Because the
identification of polymorphic sites is very difficult using current
methods and few polymorphic discovery programs exist, the Celera
Genomics Group believes that the polymorphisms it discovers will add
considerable value to its integrated information system.

After it generates the polymorphism data, the Celera Genomics Group
intends to develop biological assay systems to screen for genetic
variances that may predispose individuals to diseases, such as diabetes,
heart disease, stroke, cancer and obesity, and their interaction with
specific drugs. The assay systems that the Celera Genomics Group intends
to develop will be flexible systems that allow for this study of genetic
variances at various levels of detail.

Use of the Celera Genomics Group's polymorphism information will depend
on the cost of applying polymorphism assays to large clinical trials and
patient samples in drug discovery and drug development. The Celera
Genomics Group believes that, through its relationship with the PE
Biosystems Group and early access to its developing technologies, it
will be able to reduce the cost of this technology to a level that will
permit widespread application of polymorphism assay technology.

COMPETITIVE ADVANTAGES

The Celera Genomics Group believes that it has competitive advantages that
differentiate it from other genomic companies. These advantages should enable it
to sequence and assemble the large and complex human genome and build and market
its information products and services. These advantages include:

- EXPERTISE OF KEY SCIENTIFIC PERSONNEL

The Celera Genomics Group has recruited a team of recognized leading
scientists, led by Dr. Venter, with substantial expertise and experience
in the techniques required to build genomic databases. These scientists
are widely recognized as experts in the following areas:

-- Genome sequencing;

-- Bioinformatics, including genomic data assembly;

-- Genomic data and functional analysis;

-- Gene expression profiling; and

-- Medical application of genomic information.

Dr. Venter and certain of these scientists, while employed by TIGR,
participated in TIGR's sequencing of the entire genome of the first
living organism in 1995 and of the nine other whole genomes sequenced
and published (or expected to be published) by TIGR. The whole genome
shotgun sequencing approach to be used by the Celera Genomics Group was
used to sequence each of these genomes.

The team also includes personnel from GenScope and TIGR who provide
expertise in gene discovery and functional analysis; personnel from TIGR
and other organizations with the computational expertise required for
analysis and the difficult process of assembling genomic sequence data;
and personnel with the medical expertise

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required to develop potential medical applications for genomic
information.

- WHOLE GENOME SHOTGUN SEQUENCING STRATEGY

The Celera Genomics Group will use whole genome shotgun sequencing to
assemble a complete human genome. The shotgun method breaks the genome
up into many tiny, random fragments of different lengths. These
fragments are sequenced and then using newly developed and specialized
algorithms, the raw data is assembled into contiguous blocks and
assigned to the correct location in the genome.

The Celera Genomics Group believes that the benefits to its customers
from its whole genome shotgun sequencing strategy include:

-- FASTER ACCESS TO GENOMIC SEQUENCE INFORMATION THAT HAS NOT BEEN
PREVIOUSLY PRODUCED BY OTHER PUBLIC OR PRIVATE INITIATIVES. The rapid
production of genomic information will provide pharmaceutical and
biotechnology companies and the scientific community with the ability
to "mine" this information for novel genomic information and pursue
intellectual property rights on discoveries.

-- COMPREHENSIVE GENOMIC INFORMATION. The Celera Genomics Group intends
to significantly increase the level of genomic information available
to pharmaceutical and biotechnology companies and to the scientific
community. As more information is generated by the Celera Genomics
Group's sequencing, assembly and annotation programs, it will begin to
develop a comprehensive genomic map with increasing resolution over
time. With the incorporation of EST data and other levels of
annotation, users will begin to gain a more thorough understanding of
the location, function and interrelationships of genomic material.

-- MORE COMPREHENSIVE POLYMORPHISM DATA. Compared to other organizations
developing polymorphism programs, which are expected to produce
thousands or perhaps up to two hundred thousand polymorphisms, the
Celera Genomics Group expects to produce millions of polymorphisms in
the near term as a result of its sequencing strategy.

- ADVANCED GENOMICS AND COMPUTING TECHNOLOGY

-- UNIQUE SEQUENCING FACILITY. The Celera Genomics Group will use the PE
Biosystems Group's new high-throughput 3700 DNA sequencers to produce
significantly more sequence information than that being produced by
other sequencing efforts. The Celera Genomics Group expects that this
facility will have the capacity to sequence more than 100 million base
pairs of DNA daily. The Celera Genomics Group believes the capacity of
this facility will exceed the worldwide sequencing capacity in
operation today.

-- EARLY ACCESS TO OTHER PE BIOSYSTEMS GROUP TECHNOLOGIES AND PRODUCTS.
The Celera Genomics Group expects to capitalize on opportunities to
apply the PE Biosystems Group's developing technologies in areas such
as automated sample handling, sequencing chemistries, gene expression,
genetic variation analysis and bioinformatics, to its genomics
information business. Through its unique relationship with the PE
Biosystems Group, the Celera Genomics Group expects to stay at the
leading edge of technology.

-- INCORPORATION OF GENSCOPE TECHNOLOGY. The Celera Genomics Group
expects to apply GenScope's technology and expertise in gene
expression profiling which will provide value-added technology for

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the Celera Genomics Group's gene discovery and functional analysis
programs.

-- STRATEGIC ALLIANCE WITH COMPAQ COMPUTER CORPORATION. The Celera
Genomics Group has formed a strategic alliance with Compaq Computer
Corporation to provide computer hardware and software and the
expertise required for complex scientific applications and for the
computational capacity and tools needed to analyze sequence
information.

- RESOURCES AND MARKET EXPERIENCE OF OUR COMPANY

-- ACCESS TO CAPITAL. As part of our company, the Celera Genomics Group
has access to capital.

-- ADMINISTRATIVE SHARED SERVICES. Our company provides other resources,
such as accounting, human resources and other corporate services, to
the Celera Genomics Group that it would otherwise have to provide for
itself if it were an independent company. As a result, the Celera
Genomics Group is able to focus on its mission.

-- ESTABLISHED TRACK RECORD. Our company's established track record in
developing new applications and technologies in life sciences markets.

-- CUSTOMER RELATIONSHIPS. Our company's extensive relationships with
users of life sciences products.

COMMERCIAL APPLICATIONS OF GENOMICS

The Celera Genomics Group expects that the use of genomic information will
transform life sciences by increasing the understanding of biological processes
and allowing scientists to target specific processes once a given genome has
been mapped. The commercial markets that the Celera Genomics Group believes will
benefit from genomic information include pharmaceutical drug discovery and
development, medical diagnostics, agriculture and other applied medical markets.

DRUG DISCOVERY AND DEVELOPMENT

The Celera Genomics Group believes that genomics will not only assist in the
discovery and toxic profiling of new drugs, but also will be used to segment
patient populations to develop more personalized disease management strategies.

DRUG DISCOVERY. One of the most important factors limiting the development
of new drugs is the limited number of known disease target molecules for which
new drugs can be developed. Disease target molecules are those which can be
affected by a drug and cause a subsequent, desired biological reaction in the
body. Historically, the process of discovering new target molecules has been
extremely slow and very expensive due to reliance on trial and error approaches
to discovery. Many believe genomic research will reduce the reliance on
historical approaches and will contribute to the discovery of new and viable
drugs by accelerating the rate at which new target molecules are identified and
ultimately reduce the cost of the discovery process.

MOLECULAR TOXICOLOGY. Approximately 2.2 million Americans per year are
admitted to hospitals as a result of adverse side effects from drugs; more than
100,000 die annually from these side effects. Organ-specific gene expression
profiles for drugs already available will enable researchers to study toxicity
of new drug compounds with more certainty. In addition, gene expression data,
combined with polymorphism information related to metabolic pathways, will
provide important indications regarding how people individually react to drugs
of various dosage levels.

DRUG DEVELOPMENT AND CLINICAL TRIALS. A new area of genomic research, known
as pharmacogenomics, focuses on identifying genetic variances among patients
that may affect the efficacy of drug treatment (an individual's absorption and
metabolism of a specific drug) in order to develop more personalized drug
therapy. Pharmacogenomics has become more important in the pharmaceutical and
biotechnology communities due to increasing evidence that a given drug does not
have the same effect on all people.

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In particular, pharmacogenomics is believed to offer at least three
different market applications:

- Increasing the success rate of clinical trials by improving the process
of patient population selection;

- Identifying new uses for existing drugs; and

- "Rescuing" drugs that have failed previous drug trials by identifying
more appropriate populations for using the drug; candidates for rescued
drugs include those where particular sub-populations react adversely to
that drug.

DIAGNOSTICS

The Celera Genomics Group expects that two major areas of diagnostics--risk
assessment and personalized medicine--will benefit from genomics.

RISK ASSESSMENT. Diagnostic risk assessment has historically focused on
measuring general indicators in the body, such as blood pressure and cholesterol
levels. These measurements are based on general symptoms rather than the
specific genetic basis of disease. As a consequence, these diagnostic tests do
not address the underlying cause of disease and can result in compromised
medical care for patients and increased risk of litigation.

New genomic-based diagnostics will focus on determining an individual's risk
to develop a particular disease by looking at specific genes and any
disease-related changes in a particular patient. These new diagnostics will
likely lead to better preventative care by offering more accurate assessments of
a patient's potential risk for developing a particular disease.

PERSONALIZED MEDICINE. The Celera Genomics Group expects that genomic
information will be used to develop molecular diagnostic tests to identify the
genetic make-up of individuals. These diagnostic tests will contribute to a more
personalized approach to medicine. For example, there are many types of cancer
that have similar symptoms. Because these symptoms may be similar between one
genetic type of cancer and another, it may be important to discriminate between
the actual type of disease rather than just the symptoms in prescribing an
effective treatment. It is believed that rather than prescribing a drug based
solely on symptoms, physicians will be able to use a molecular diagnostic test
to help select the most effective drug with the minimum number of side effects.
As a result, this approach should benefit the patient with more customized care,
reduced illness length, and ultimately, better treatment results.

AGRICULTURE

After health care, agriculture is the next largest market likely to benefit
from genomic research. The ability to diagnose plant and animal diseases and
develop treatments targeted against those diseases should produce better
agricultural products and improve yields. For example, the comparison of genetic
information from disease or pest-resistant plant strains with non-resistant
strains and the use of selective breeding programs for favorable traits will
significantly increase the number and success of new strains available to
various agricultural areas around the world.

OTHER APPLICATIONS

Genomic information should also be important in forensics and veterinary
medicine, as well as in non-traditional life science markets such as textile
production, waste control and environmental remediation.

PRODUCTS AND SERVICES

The Celera Genomics Group anticipates generating genomic information as a
platform for developing the following products and services:

- Genomic information databases consisting of comprehensive and integrated
human sequence information and information from other model organisms;

- Software systems and tools to facilitate customer access, viewing,
browsing, analysis and discovery;

- Polymorphism data and assay services for the pharmaceutical and health
care industry, including through collaborative service agreements using
the polymorphism data resulting from the Celera Genomics Group's
sequencing;

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- Gene discovery services in collaboration with customers to pursue novel
discoveries;

- Other business extensions, involving the Celera Genomics Group's own gene
discoveries, population genetics analysis, sequencing of additional
genomes and contract sequencing; and

- Advanced genomics technologies, including technologies offered by
GenScope, such as gene expression profiling, high throughput DNA
sequencing, complementary DNA (cDNA) cloning and bioinformatics, to
accelerate drug discovery and development efforts.

ANTICIPATED REVENUE SOURCES

The Celera Genomics Group expects to offer its information products on a
subscription basis for multiple year subscriptions. The information products
will include a variety of databases, including the Human Gene Index, the
DROSOPHILA Genome Database, the Human Genome Database, a Gene Expression
Database, a Comparative Genomics Database that would include data from model
organisms, and additional databases over time.

The structure of customer subscriptions, including the databases to be
offered, the access fees to be charged, the intellectual property terms, and the
nature of any services provided to customers, will vary according to customer
requirements and are expected to change over time. The Celera Genomics Group
expects to continue to generate revenues through GenScope's services in gene
expression analysis.

The Celera Genomics Group expects to realize revenues from its genomics
information products in several phases:

INITIAL PHASE. In the initial phase, expected to last until sequencing
begins in early 1999, the Celera Genomics Group expects to enter into agreements
with a limited number of early access subscribers to its information and
discovery system. The Celera Genomics Group's strategy in seeking these
customers is to offer them early access to genomic data as it is being
generated, to enhance their opportunities for early gene discovery and to permit
them to seek intellectual property rights in connection with their own
discoveries. The Celera Genomics Group may make available, in some cases, early
access to gene expression information, interfaced with customers' internal
biological and clinical "know-how," to help the customers focus on biological
pathways for gene identification, including rarely transcribed genes, and aid
data mining efforts. Early access customers will also be offered the opportunity
to provide input into the design of the Celera Genomics Group's product and
service offerings. The first early access customer is Amgen Inc., which has
entered into a five-year subscription agreement under which it will pay annual
subscription fees conditioned upon the Celera Genomics Group meeting specified
milestones. Other early access candidates are likely to be other companies with
experience in genomics, such as pharmaceutical companies and larger companies
with businesses focused on gene discovery.

SECOND PHASE. The Celera Genomics Group anticipates that the second phase
of its business development should start after the commencement of sequencing
and will involve expanded efforts to seek additional database subscriptions.
Terms offered to customers in this phase are expected to differ from those
offered in the initial phase. The Celera Genomics Group believes that customers
in this phase are also likely to be leading pharmaceutical companies and other
larger companies with focused gene discovery efforts. Targeted customers will
also include universities and other research institutions with substantial
genomic research interests. The Celera Genomics Group expects that its strategy
for expanding the number of subscriptions will be based, in part, on its
demonstrating early success in high volume sequencing, assembly and annotation
of the DROSOPHILA genome.

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THIRD PHASE. The Celera Genomics Group expects that the third phase of its
business development will expand to include the development of related products
and services to existing and new customers. These expanded products and services
include the development of its polymorphism information business, targeted to
pharmaceutical and biotechnology companies, and the development of assay and
related services through collaborative arrangements. The Celera Genomics Group
expects to share intellectual property rights in this area with its customers,
and to derive service-based fee income from polymorphism database access and
assay services. While the polymorphism information and assay business is at an
early stage of development, the Celera Genomics Group believes these products
and services could generate significant revenues over time.

In this phase, the Celera Genomics Group also anticipates broadening its
analysis capability by incorporating more sophisticated search and other
software tools in its product offerings. The Celera Genomics Group expects also
to emphasize at this stage collaborations with key partners already in the
genomics business or those seeking to utilize genomic information in gene
discovery. The Celera Genomics Group also expects to generate licensing revenues
from its own gene discovery efforts.

LATER STAGES. In the later stages of its business development, the Celera
Genomics Group anticipates developing the technological capabilities to provide
access to its databases to broader customer groups, including physicians,
patients and individual researchers. The Celera Genomics Group expects that
access for these customers will be available on a different basis than access
for its other genomics customers.

INFORMATION PRODUCTS

The Celera Genomics Group's information products may include the following
features:

- A comprehensive information and analysis system built on the foundation
of the human genome;

- A human genome reference sequence and a comprehensive genetic map;

- Continual annotation of genomic sequence information, through internal
research and integration of information obtained from public and private
sources, including the following:

-- location of identified genes;

-- specific identification of regulatory regions; and

-- medically-related information on genetic disease;

- Gene expression software that allows customers to access their data for
tracking projects and analyzing proprietary data;

- Proprietary bioinformatics software that allows users to visualize
information and interrelationships and perform their own analysis;

- The capability to perform comparative analysis on other genomes,
including that of DROSOPHILA and mouse, to permit researchers to better
understand gene function and the ways in which genes and proteins operate
within cells; and

- The ability to permit customers to integrate their proprietary data and
annotations.

The Celera Genomics Group is initially offering the following information
products:

HUMAN GENE INDEX. The Celera Genomics Group intends that this database
represent the most current view available of the set of human genes. It will be
the extension of the TIGR Human Gene Index, which has been in development at
TIGR for over three years and will be licensed to the Celera Genomics Group on a
non-exclusive basis. The sequence data will be derived from transcripts derived
from genomic sequences, assemblies of ESTs and related data used to develop the
ESTs. This database will contain an extensive network of links to other sources
of biological information, including information from mapping data,

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genomic sequences, expression data and the Human Genome Project's databases.

DROSOPHILA GENOME DATABASE. The Celera Genomics Group expects that the
first complete sequence of available data generated by the Celera Genomics
Group's sequencing activity will be the DROSOPHILA genome. Scientists have
widely studied DROSOPHILA, which has been shown to share similar genes with
humans. This new genomic information will allow valuable comparisons of both
sequences and genes for the drug discovery process. Initially, the content of
the DROSOPHILA database will include DNA sequence information generated by the
Celera Genomics Group. Over time, the Celera Genomics Group will assemble and
supplement this data with data obtained from other accessible resources. The
database will include, as a minimum, the following annotations: protein matches,
exon predictions, EST matches and marker locations on chromosome maps.

HUMAN GENOME DATABASE. This information base will be the foundation for
developing an information and discovery source that ultimately links genomic
data to relevant biological and medical information. The Celera Genomics Group
anticipates that it will sequence the human genome at full capacity at a rate of
100 million base pairs of DNA per day and assemble sequenced data daily. In
addition, it will order the information using existing available data from its
own and third party sources. Concurrent with the sequencing project, separate
teams will be designated for annotating specific chromosomes. The Human Genome
Database will include, as a minimum, the following annotations: protein matches,
exon predictions, EST matches and marker locations on chromosome maps.

GENETAG-TM- EXPRESSION DATABASES. These databases will consist of human and
animal gene expression information to provide rapid, in-depth analysis of where
genes are expressed and in what quantities. This will include the GeneTag-TM-
rat database, which is the largest rat gene database in the world. GenScope has
identified 30,000 unique GeneTags-TM- in four months and that number is rapidly
increasing. The rat is an important model organism for pharmaceutical discovery
and development. Currently, these databases are used internally to expedite
internal research and gene identification for contract projects.

The Celera Genomics Group expects to develop and offer additional databases
over time, including those that contain polymorphism data and comparative data
from other genomes.

POLYMORPHISM DATA AND ASSAY SERVICES

The polymorphism data and services program will focus on understanding
genetic variations among individuals. This program will provide collaborators
with access to the Celera Genomics Group's polymorphism database as well its
assay development capability. The Celera Genomics Group intends to pursue
scientific collaborations with a number of customers to leverage the use of the
Celera Genomics Group's polymorphism information in customers' research and
development efforts. From its shotgun sequencing strategy and the use of DNA
from three to five individuals, the Celera Genomics Group expects to generate
from 10 million to 30 million polymorphisms, which will be included in a
database accessible by the Celera Genomics Group's customers and collaborators.
From that information, the Celera Genomics Group expects to work with
collaborators to select polymorphisms for additional validation testing on broad
populations. The database will include both all known candidate and validated
polymorphisms, and will be continually updated as candidate polymorphisms are
validated. The Celera Genomics Group intends to seek protection of intellectual
property rights in such polymorphism information.

The Celera Genomics Group also expects to offer a program to develop
customized assay systems that will be used by customers in collaborative
arrangements for both population studies undertaken for purposes of gene
discovery and pharmacogenomics studies undertaken for the purpose of
understanding individual drug response. The Celera Genomics Group intends to
utilize technology developed by the PE Biosystems Group and other companies to
create biological assays that will be used to

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perform diagnostic tests on patient populations. These assays systems will be
based on flexible formats that may use a variety of technologies including mass
spectrometry detection, Taqman-Registered Trademark- chemistry and
GeneTag-Registered Trademark- (AFLP) technology. A variety of customized options
are expected to be available from high resolution of localized genome areas to
whole genome wide scans. Customers will be able to carry out these studies by
entering into collaborative service agreements with the Celera Genomics Group.

GENE DISCOVERY SERVICES

The Celera Genomics Group intends to enter into collaborative arrangements
with customers to pursue novel discoveries in the customers' specific areas of
interest. It anticipates that the terms of these collaborative arrangements will
generally provide for research fees and joint ownership of any discoveries made
through the collaborative relationship.

GenScope GeneTag-TM- technology provides the Celera Genomics Group with
additional capabilities in the field of gene discovery. GenScope provides gene
expression profiling technology that simultaneously discovers novel genes,
including rarely-expressed genes, and monitors known genes for applications such
as molecular toxicology, gene discovery and pharmacogenomics.

BUSINESS EXTENSIONS

The Celera Genomics Group believes that its investment in staff and
technology and its integrated information systems should permit it to expand its
business into several areas. These additional areas may include licensing of
proprietary intellectual property rights from its own gene discovery efforts and
collaborative endeavors and establishment of collaborative relationships to
develop genomic information related to other organisms.

The Celera Genomics Group intends to conduct its own gene discovery
initiatives as part of its analysis of genomic data generated through its
sequencing efforts. The Celera Genomics Group currently intends to pursue
intellectual property protection on a limited number of novel gene discoveries.
If the Celera Genomics Group is successful in making novel discoveries and
generally establishing intellectual property rights, it expects to license most
of its discoveries broadly.

The Celera Genomics Group may also enter into other collaborative
arrangements with customers to develop genomic information specific to a
particular customer's interest. Such arrangements could involve an extensive
population genetics study on behalf of a pharmaceutical company or the
sequencing of certain plant, animal or insect genomes on behalf of customers in
the agriculture industry. In addition, customers may build proprietary gene
expression databases using GeneTag-TM- sequencing technology through a
collaborative arrangement. These arrangements may also include providing to
customers biological materials, such as full length cDNA clones, and sequencing
of clones of novel genes. The Celera Genomics Group anticipates that the terms
of these collaborative arrangements will generally provide for up-front license
fees, research fees and joint ownership of any discoveries or royalties and
milestones thereon.

GENSCOPE

GenScope, a unit of the Celera Genomics Group, offers customers advanced
genomics information, including gene expression profiling, gene discovery, DNA
sequencing, complementary DNA (cDNA) cloning and bioinformatics to accelerate
their drug discovery and development efforts.

GenScope has exclusive worldwide rights to GeneTag-TM- AFLP technology (for
human health care applications). AFLP technology was invented and patented by
Keygene N.V. of The Netherlands as a DNA fingerprinting technique for use in
genomics-based plant breeding programs and offers substantial advantages over
other gene fingerprinting techniques. This technique is an enhancement of
polymerase chain reaction ("PCR") that allows selective analysis of any portion
of genetic material without the specific, prior sequence information normally
required for PCR.

GenScope products include gene expression profiling technology that
simultaneously discovers novel genes and monitors known genes

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for applications such as molecular toxicology, gene discovery, including rarely
expressed genes, and pharmacogenomics. This capability, enabled by the
GeneTag-TM- expression technology, allows rapid gene expression profiling,
simultaneously monitoring known genes and discovering novel genes in a tissue or
cell line. The rapid data generated allows for fast construction of expression
databases for specific animal models and tissue. This information can then be
used to develop differential gene expression assays for genes identified in the
global gene expression studies to analyze disease and target specific pathways
and drug to drug or drug to organ side effects.

GenScope also offers software and bioinformatics services which allow
customers to access proprietary data via a secure Internet or Intranet
connection, allowing them to rapidly analyze and distribute information from
public and private sources throughout their research and development
organizations. Using these resources, GenScope also is building databases of
model organism gene expression data for gene identification and other research.

COMPETITION

The Celera Genomics Group's principal competitors will be those public and
private entities that are currently or intend to become involved in providing
genomic information and related genomic analysis capabilities in such areas as
genetic variability and gene discovery. The Celera Genomics Group's market and
financial success will be dependent, in large part, upon its ability to maintain
a competitive position in each of these areas. Entities with which the Celera
Genomics Group will be directly competing include Curagen, Genset, Inc. and
Incyte Pharmaceuticals, Inc. There are also a number of companies with which the
Celera Genomics Group will indirectly compete in particular lines of business,
such as in gene discovery and the development of drug targets. In addition, some
of the Celera Genomics Group's potential customers, such as pharmaceutical
companies, may choose to develop technologies similar to those offered by the
Celera Genomics Group. Finally, new technologies that improve the gene analysis
and discovery process may emerge over time and could compete with those being
developed by the Celera Genomics Group, or otherwise affect its business
strategy.

Some competitors may add data made available to the public by the Celera
Genomics Group to their own databases for resale to their customers. To prevent
this, the Celera Genomics Group intends to seek contractual and intellectual
property protection.

The Celera Genomics Group does not believe it is competing with the U.S.
government's efforts to sequence the human genome, and has sought to coordinate
its efforts with those funded by the U.S. government. The Celera Genomics Group
has signed a Memorandum of Understanding with the publicly funded Berkeley
Drosophila Genome Project Group to sequence and assemble the Drosophila genome.
The Celera Genomics Group expects to continue to seek ways to supplement and
benefit from coordinating its activities with those of the NIH and the
Department of Energy.

INTELLECTUAL PROPERTY AND PROPRIETARY TECHNOLOGY

The Celera Genomics Group's business and competitive position is dependent,
in part, upon its ability to protect its database information, proprietary gene
sequence methods, software technology and the novel genes it identifies. The
Celera Genomics Group's commercial success will be affected by, but is not
directly dependent on, the ability to obtain patent protection on genes and
polymorphisms discovered by it and/or by the Celera Genomics Group's customers
on their own behalf and by collaborators. The Celera Genomics Group plans to
seek intellectual property protection, including copyright protection, for the
information and discovery system including its content, the software and methods
it creates to manage, store, analyze and search novel information.

The Celera Genomics Group's current plan is to apply for patent protection
upon the identification of candidate novel genes, novel gene fragments and their
biological function or utility. The Celera Genomics Group also plans to apply
for patent protection for certain novel

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polymorphisms. This plan includes applying for claims to the gene sequences as
well as equivalent sequences and their variant forms. Although obtaining patent
protection based on partial gene sequences might enhance the Celera Genomics
Group's business, the Celera Genomics Group does not believe that its commercial
success will be materially dependent on its ability to do so. When gene
discovery or analysis has been performed on behalf of customers or
collaborators, the Celera Genomics Group anticipates that these patent rights
will be jointly owned by the Celera Genomics Group and the customer or
collaborator. If a gene product was developed, the Celera Genomics Group
anticipates it would receive various forms of consideration including license
fees, milestone payments and royalty payments on sales of the gene product and
related products.

The granting of patents on genomic discoveries is uncertain worldwide and is
currently under review and revision in many countries. Moreover, publication of
information concerning partial gene sequences prior to the time that the Celera
Genomics Group applies for patent protection based on the full-length gene
sequences or different partial gene sequences in the same gene may affect the
Celera Genomics Group's ability to obtain patent protection. Certain court
decisions suggest that disclosure of a partial sequence may not be sufficient to
support the patentability of a full-length sequence and that patent claims to a
partial sequence may not cover a full-length sequence inclusive of that partial
sequence.

In January 1997, TIGR, in collaboration with the National Center for
Biological Information, disclosed full-length DNA sequences assembled from ESTs
available in publicly accessible databases or sequenced at TIGR. The National
Human Genome Research Institute also plans to release sequence information to
the public. Such disclosures might limit the scope of the Celera Genomics
Group's claims or make subsequent discoveries related to full-length genes
unpatentable. While the Celera Genomics Group believes that the publication of
sequence data will not preclude it or others from being granted patent
protection on genes, there can be no assurances that such publication has not
and will not affect the ability to obtain patent protection.

The Celera Genomics Group can not ensure that these or other uncertainties
will not result in changes in, or interpretations of, the patent laws that will
adversely affect its patent position. The Celera Genomics Group anticipates that
there will be significant litigation in the industry regarding genomic patent
and other intellectual property rights. If the Celera Genomics Group becomes
involved in such litigation, it could consume a substantial portion of the
Celera Genomics Group's resources.

The Celera Genomics Group also intends to rely on trade secret protection
for its confidential and proprietary information. The Celera Genomics Group
believes it has developed proprietary procedures for sequencing and analyzing
genes and for assembling the genes in their naturally occurring order. In
addition, the Celera Genomics Group believes it has developed novel methods for
searching and identifying particularly important regions of genetic information
or whole genes of interest. The Celera Genomics Group currently protects these
methods and procedures by trade secret and has not sought patent protection,
although it may decide to do so in the future.

The Celera Genomics Group has taken security measures to protect its
databases concerning genes identified by it, including entering confidentiality
agreements with employees and academic collaborators who are provided or have
access to confidential or proprietary information. The Celera Genomics Group
continues to explore ways to further enhance the security for its data,
including copyright protection for its databases.

Intellectual property derived from the GenScope gene-profiling service
provided to current GenScope customers is owned by the customers. GenScope has
retained rights to markers for clinical research, human and animal diagnostics
or pharmacogenomics. GenScope service agreements negotiated to date have also
provided for clinical milestones and royalty payments on products derived from
the deliverables in gene discovery contracts.

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SCIENTIFIC STAFF AND MANAGEMENT

The Celera Genomics Group's senior scientific staff and management include
the following persons:

J. CRAIG VENTER, Ph.D., President and Chief Scientific Officer, was the
founder and President of TIGR, a not-for-profit genomics research institution,
from 1992 until August 1998. He also was a scientific founder of Human Genome
Sciences, Inc. Dr. Venter has been Chief Scientific Officer at TIGR since August
1998, and remains Chairman of the Board of TIGR since being appointed in 1992.
Prior to 1992, he was a Section Chief and a Lab Chief in the National Institute
of Neurological Disorders and Strokes at the NIH. At the NIH, Dr. Venter
developed the EST method, a new strategy for gene discovery. Using this method
at TIGR, Dr. Venter and other TIGR scientists discovered and published one half
of all human genes that have been sequenced. Using new algorithms developed at
TIGR, TIGR developed the whole genome shotgun method that led TIGR to completing
the first three genomes ever sequenced.

MARK ADAMS, Ph.D., Vice President for Genome Programs, was Director of DNA
Sequencing at TIGR from 1992 until August 1998 and Director of Eukaryotic
Genomes from 1996 to 1998. Prior to joining TIGR, Dr. Adams was a post doctoral
fellow in Dr. Venter's lab at NIH and is a co-developer of the EST method of
sequencing. He also participates in projects devoted to sequencing and
characterization of other eukaryotic and prokaryotic genomes.

PETER BARRETT, Ph.D., Executive Vice President and Chief Business Officer,
was Vice President, Corporate Planning and Business Development of our company
since 1995. Dr. Barrett was a member of the team of corporate officers
responsible for the Company's direction and management, focusing on strategic
planning, mergers and acquisitions, and new business development for life
science businesses. Dr. Barrett joined our company in 1979 and has held a number
of managerial positions in the United States and Europe, including executive
management in our company's life science business from 1990 to 1995.

STEPHEN BATES, Vice President and General Manager of AgGen, started PE
Biosystem's agriculture business in 1993 and was responsible for a number of
acquisitions, which led to the formation of AgGen. He joined our company in 1987
and has held a number of managerial positions in the United States and Europe
including European Marketing manager for PE Biosystems.

SAMUEL BRODER, M.D., Executive Vice President and Chief Medical Officer, was
Senior Vice President for Research and Development at IVAX Corporation, from
1995 until August 1998. Dr. Broder was Presidentially-appointed director of the
National Cancer Institute ("NCI") at NIH, which had over 2,000 employees and an
annual budget of more than $2 billion, from 1989 to 1995. His laboratory played
a major role in the discovery or development of several marketed drugs. As NCI
director, he initiated and directed several large-scale clinical studies in
prevention, diagnosis and treatment of cancer.

ANNE DESLATTES MAYS, Director of Software Systems, was the principal
software engineer at TIGR from 1997 to 1998, responsible for developing software
solutions for the closure process. Prior to this, she designed and developed
software solutions for a variety of industries including the telecommunications,
biotechnology and air traffic industries. The applications that she developed
for these industries included instrument control, modeling and simulation, and
user interface software.

DENNIS A. GILBERT, Ph.D., Vice President and General Manager of GenScope,
has been with GenScope since its acquisition by Perkin-Elmer. Mr. Gilbert is
responsible for the development and commercialization of its proprietary gene
expression technology. At GenScope, he directs a multidisciplinary functional
genomics research and production operation. From 1993 to 1997, Dr. Gilbert was
Manager of Molecular Genetic Applications for PE Biosystems where he developed
technology on the ABI 377 and ABI 310 instruments for linkage mapping and
characterization of genes involved in human diseases. Prior to joining our
company, he was

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Program Manager, Genetics at W.R. Grace, where he applied molecular genetic
technologies to the identification of economically important traits in
agricultural animals.

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CELERA GENOMICS GROUP --
MANAGEMENT'S DISCUSSION AND ANALYSIS

MANAGEMENT'S DISCUSSION OF OPERATIONS

You should read this discussion with our combined financial statements and
our consolidated financial statements. Historical results and percentage
relationships are not necessarily indicative of operating results for any future
periods.

OVERVIEW

The Celera Genomics Group was formed for the purpose of generating and
commercializing genomic information to accelerate the understanding of
biological processes and assisting pharmaceutical, biotechnology and life
science research entities. The Celera Genomics Group is engaged principally in
the generation, sale and support of genomic information databases and related
information management and analysis software; discovery, validation and
licensing of proprietary gene products, genetic markers and information
regarding genetic variability; and related consulting and contract research and
development services. The foundation of the Celera Genomics Group's strategy is
the sequencing of the entire human genome, which it expects to complete by
December 31, 2001.

The Celera Genomics Group also includes the business and operations of
GenScope and AgGen. GenScope provides genomic-related contract research and
discovery services, utilizing AFLP gene expression profiling technology. AgGen
is a provider of genetic analysis services for plant and animal breeding. The
purchase of Linkage Genetics, Inc. and Zoogen, Inc. were combined with our
company's applied agriculture unit to form AgGen.

Operations to date have been principally funded from our company's working
capital, GenScope's collaborative arrangements, and AgGen's contract research
services. Contract research services of GenScope and AgGen have accounted for
all of the Celera Genomics Group's revenues to date. Net losses for the three
months ended September 30, 1998 and 1997, were $3.6 million and $1.4 million,
respectively. Net losses for the fiscal years ended June 30, 1998, 1997, and
1996 were $12.8 million, $32.1 million, and $2.9 million, respectively. Results
through fiscal 1998 have primarily reflected the operations of GenScope and
AgGen. Fiscal 1997 and 1996 included charges of $26.8 million and $2.1 million,
respectively, for purchased in-process research and development. The Celera
Genomics Group anticipates that net operating losses will continue and will
increase through at least 2001.

EVENTS IMPACTING COMPARABILITY

During the third quarter of fiscal 1997, our company acquired GenScope,
Inc., for $26.8 million. GenScope, founded in 1995, represented a development
stage venture with no operating history and effectively no revenues, limited R&D
contract services only. Its sole material asset is a cross license for gene
expression technology still under development and, at acquisition date, was not
commercially viable. GenScope's limited balance sheet, assets of approximately
$.2 million, had yet to deliver commercial value. Accordingly, we recorded a
charge of $25.4 million attributable to the in-process technology purchased. The
acquisition represented the purchase of development stage technology, not at the
time considered commercially viable in the health care applications that our
company intends to pursue. Our company's intent was to first develop the
technology into a set of molecular screening tools for use in the enhancement of
pharmaceutical product development. We allocated $1.4 million of the purchase
price to technology rights attributable to GenScope's AFLP gene expression
technology. AFLP is an enhancement of the polymerase chain reaction ("PCR")
process that allows selective analysis of any portion of genetic material
without the specific, prior sequence information normally required for PCR. Of
the $25.4 million expensed as in-process research and development, $5.5 million
represented a contingent liability due on the issuance of a process patent for
technology under development.

We acquired Linkage, a company solely engaged in genetic R&D activities in
the

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agriculture industry, during the fourth quarter of fiscal 1997. We expensed the
acquisition cost of $1.4 million was expensed as purchased in-process research
and development.

During the fourth quarter of fiscal 1996, we acquired Zoogen, a company
solely engaged in genetic R&D activities in the animal healthcare market for
$2.1 million. We expensed the acquisition cost as purchased in-process R&D.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED
WITH SEPTEMBER 30, 1997

The Celera Genomics Group reported a net loss of $3.6 million for the first
quarter of fiscal 1999 compared with a net loss of $1.4 million for the first
quarter of fiscal 1998. The significant increase in net loss reflected the
establishment and start-up of operations to support the expanded sequencing
activities of the business.

Net revenues for the Celera Genomics Group were $3.9 million for the first
quarter of fiscal 1999, compared with $.6 million for the first quarter of
fiscal 1998, an increase of $3.3 million. Revenues for both periods related to
contract research services of the AgGen business. The increase in revenues was
comprised of $.9 million for the animal business, $.2 million for the plant
business, and $2.2 million for the genomics business. During the first quarter
of fiscal 1999, our company entered into a three year contract to provide
expression-based gene discovery services in the agricultural market. Revenues
from this contract will be recognized in accordance with the provisions of the
agreement.

In the first quarter of fiscal 1999, our company also entered into a
collaborative agreement whereby GenScope will provide certain genomic
information on biological samples of tumors or other cell tissues utilizing AFLP
technology. Upon execution of the agreement, a $1.0 million payment was received
and recorded as deferred revenues.

Selling, general and administrative expenses were $4.8 million in the first
quarter of fiscal 1999. The first quarter of fiscal 1999 included the allocation
of $1.0 million of corporate overhead and administrative shared services. See
Note 1 to the Celera Genomics Group combined financial statements. The amount of
corporate overhead and administrative shared services allocated to the Celera
Genomics Group was $.1 million for the first quarter of fiscal 1998. SG&A
expenses represented 57% of total operating expenses for the first quarter of
fiscal 1999. SG&A expenses for the first quarter of fiscal 1998 reflected only
the costs associated with the GenScope and AgGen businesses. The first quarter
of fiscal 1999 included the establishment and start-up of operations at the
Celera Genomics Group's headquarters in Rockville, Maryland and, to a lesser
extent, increased staffing for GenScope. The headquarters includes
administrative facilities, sequencing facilities, laboratories and
bioinformatics facilities. On July 10, 1998, our company entered into a ten-year
non-cancelable lease for the Celera Genomics Group's Rockville facility.
Approximately 160 employees were employed by the Celera Genomics Group at
September 30, 1998, compared with approximately 124 at June 30, 1998.

R&D expenses were $3.7 million for the first quarter of fiscal 1999 compared
with $.6 million for the prior period. The first three months of fiscal 1999
included a cost of $.4 million, including overhead, for research performed by
the PE Biosystems Group on behalf of the Celera Genomics Group. GenScope's
related R&D expenses increased $1.8 million for the first three months of fiscal
1999 over the comparable period resulting from costs incurred to support the
continuing development of transitioning its in-process technology into a
commercially viable product for the health care industry. For the first quarter
of fiscal 1999, AgGen's R&D expenses increased $.3 million, or 65%, over the
first quarter of fiscal 1998, primarily related to research in the animal
business.

The income tax benefit was computed using an effective tax rate of 35% for
the first quarter of fiscal 1999. See Note 1 to the Celera Genomics Group
combined financial statements for a discussion of allocations of federal and
state income taxes.

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RESULTS OF OPERATIONS--1998 COMPARED WITH 1997

The Celera Genomics Group reported a net loss of $12.8 million for fiscal
1998, compared with a net loss of $32.1 million for fiscal 1997. Fiscal 1997
included a $26.8 million charge for purchased in-process research and
development in connection with the GenScope and Linkage acquisitions.

Net revenues for the Celera Genomics Group were $4.2 million for fiscal 1998
compared with $.9 million for fiscal 1997. Revenues for AgGen increased $3.0
million over the prior period to $3.9 million for fiscal 1998. The animal
business represented 56% of the total revenues for fiscal 1998. Net revenues of
$.3 million for fiscal 1998 were derived from a contract research program
directed towards the identification of diagnostic DNA markers for rat liver
genes using GenScope's AFLP technology. The requirements of the contract were
completed in fiscal 1998. In the fourth quarter of fiscal 1998 our company also
entered into a pilot study contract research services agreement. The total
amount of this latter agreement was $.3 million and the agreement requires
GenScope to deliver AFLP expressed gene profiles on biological samples. The
entire amount has been deferred and will be recognized in accordance with the
provisions of the agreement. No revenues were reported for GenScope in fiscal
1997.

SG&A expenses were $6.7 million for fiscal 1998 compared with $2.2 million
for fiscal 1997. Fiscal 1998 included $1.7 million of corporate overhead and
administrative shared services. The amount of allocated corporate overhead and
shared services for fiscal 1997 was $.2 million. Fiscal 1997 included the
operations of GenScope and Linkage from the date of acquisition.

R&D expenses were $6.2 million for fiscal 1998 compared with $3.1 million
for fiscal 1997. Fiscal 1997 included the operations of GenScope and Linkage
from the date of acquisition.

See Note 1 to the Celera Genomics Group combined financial statements for a
discussion of allocations of federal and state income taxes.

RESULTS OF OPERATIONS--1997 COMPARED WITH 1996

The Celera Genomics Group reported a net loss of $32.1 million for fiscal
1997, compared with a net loss of $2.9 million for fiscal 1996. During fiscal
1997 and 1996, charges of $26.8 million and $2.1 million, respectively, were
recorded for purchased in-process research and development in connection with
certain acquisitions for the Celera Genomics Group. See Note 2 to the Celera
Genomics Group combined financial statements.

Net revenues for the Celera Genomics Group were $.9 million for fiscal 1997,
compared with $.2 million for fiscal 1996. Revenues in both fiscal years were
derived from the AgGen business. The increase was primarily in the animal
business. No revenues were reported in fiscal 1997 for GenScope since the date
of acquisition.

SG&A expenses were $2.2 million for fiscal 1997, compared with $.6 million
for fiscal 1996, an increase of $1.6 million. The AgGen business comprised $1.5
million of the increase, with fiscal 1997 reflecting a full year of operations
for Zoogen. Fiscal 1997 and 1996 included $.2 million and $.1 million,
respectively, of allocated corporate overhead and administrative shared
services.

R&D expenses of $3.1 million for fiscal 1997, increased $2.9 million
compared with the prior year. Fiscal 1997 included $.6 million of R&D expenses
for the GenScope business, since the date of acquisition, and $2.5 million for
the AgGen business. Fiscal 1997 reflected the operations of Zoogen for a full
year.

See Note 1 to the Celera Genomics Group combined financial statements for a
discussion of allocations of federal and state income taxes.

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MANAGEMENT'S DISCUSSION OF FINANCIAL RESOURCES AND LIQUIDITY
OVERVIEW

The Celera Genomics Group has relied principally on our company to fund its
operations and capital expenditures. At September 30, 1998 the Celera Genomics
Group was not allocated cash or cash equivalents from our company. Working
capital was $332.2 million at September 30, 1998 compared with $5.5 million at
June 30, 1998. Working capital at September 30, 1998 included a note receivable
of $330 million from the PE Biosystems Group.

The development of the Celera Genomics Group's products and services will
require substantial funding. No organization has ever attempted to combine in
one business organization all of the Celera Genomics Group's businesses. The
initial capitalization of the Celera Genomics Group has been accounted for as an
equity contribution from the PE Biosystems Group. This equity contribution is
reflected in the combined financial statements as a $330 million short-term note
receivable from the PE Biosystems Group. The note payable will not result in the
PE Biosystems Group holding an equity interest in the Celera Genomics Group. The
note is expected to be repaid with the proceeds from the sale of the Analytical
Instruments business of the PE Biosystems Group. Accordingly, no interest will
be ascribed to the note. Our company also intends to allocate tax benefits to
the Celera Genomics Group for losses incurred, resulting in up to $75 million of
additional cash resources for the Celera Genomics Group. Our company believes
that the note receivable, allocated tax benefits, and anticipated revenues of
the Celera Genomics Group should be sufficient to fund its current business
objectives through 2001.

In addition, our board of directors has adopted a financing policy, included
in Note 1 to the Celera Genomics Group combined financial statements, which will
permit the PE Biosystems Group to make loans to the Celera Genomics Group and to
make equity contributions to the Celera Genomics Group in exchange for Celera
Genomics Designated Shares.

SIGNIFICANT CHANGES IN THE COMBINED STATEMENTS OF FINANCIAL POSITION

Tax benefit receivable from the PE Biosystems Group was $1.9 million at
September 30, 1998. See Note 1 to the Celera Genomics Group combined financial
statements for a discussion of allocations of federal and state income taxes.
Management intends to settle in cash the tax benefit receivable on a quarterly
basis following the recapitalization.

Other accrued expenses increased by $1.0 million, to $2.4 million at
September 30, 1998, from $1.3 million at June 30, 1998. Increased deferred
contract research service revenues of $.7 million, pertaining to the contract
entered into by GenScope in the first quarter of fiscal 1999, primarily
accounted for the change. A $.4 million accrual for services provided by The
Institute of Genomic Research to the Celera Genomics Group, accounted for a
significant portion of the increase in other accrued expenses from June 30, 1997
to June 30, 1998.

Other long-term liabilities increased by $.2 million at September 30, 1998
from June 30, 1998, primarily representing the long-term portion of the deferred
contract revenues on the $1.0 million agreement that was entered into by
GenScope during the quarter.

COMBINED STATEMENTS OF CASH FLOWS

Cash used by operating activities was $6.3 million for the first quarter of
fiscal 1999 compared with $1.7 million for the prior year period. The increase
in cash used by operating activities resulted primarily from net operating
losses and an increase in the tax benefit receivable from the PE Biosystems
Group, partially offset by an increase of $1.0 million in deferred revenues. For
fiscal 1998, net cash used by operating activities was $11.4 million, compared
with $4.9 million for fiscal 1997. An increase in net losses from operating
activities for fiscal 1998 and an increase in the tax benefit receivable from
the PE Biosystems Group of $4.5 million was partially offset by an increase in
current liabilities.

Net cash used by investing activities was $2.2 million for the three months
ended

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September 30, 1998 compared with $.7 million for the prior year period,
primarily as a result of increased capital spending for the establishment and
start-up of operations at the Celera Genomics Group's headquarters. Net cash
used by investing activities of $3.6 million for fiscal 1998 primarily reflected
our company's capital investment in the GenScope business. Net cash used for
investing activities for fiscal 1997 was $23.1 million and was related to the
acquisition of GenScope in the third quarter of fiscal 1997 and Linkage in the
fourth quarter of fiscal 1997. See Note 2 to the Celera Genomics Group combined
financial statements.

YEAR 2000

In fiscal 1997, our company initiated a worldwide program to assess the
expected impact of the Year 2000 date recognition problem on our existing
internal computer systems; our non-information technology systems, including
embedded and process control systems; our product offerings; and our significant
suppliers. The purpose of this program is to ensure the event does not have
a material adverse effect on our company's business operations.

The operations of the Celera Genomics Group are included within this
program. At this time, our company is not able to determine the relative
resources required to implement this program in the Celera Genomics Group.
However, our company believes that a substantial portion of the resources
required will be allocated to the PE Biosystems Group.

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contingency plans to address any issues that may not be corrected by
implementation of our company's Year 2000 compliance plan in a timely manner. If
our company is not successful in implementing its Year 2000 compliance plan, or
there are delays in and/or increased costs associated with implementing such
changes, the Year 2000 problem could have a material adverse effect on our
company's consolidated results of operations and financial condition.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The provisions of the statement
require the recognition of all derivatives as either assets or liabilities in
the statement of financial position and the measurement of those instruments at
fair value. The accounting for changes in the fair value of a derivative depends
on the intended use of the derivative and the resulting designation. The Celera
Genomics Group is required to implement the statement in the first quarter of
fiscal 2000. The Celera Genomics Group currently believes the statement will not
have a material impact on its combined financial statements.

The FASB issued the following Statement of Financial Accounting Standards,
which will become effective for the Celera Genomics Group's fiscal 1999 annual
financial statements: SFAS No. 132, "Employers' Disclosures about Pensions and
other Postretirement Benefits," which requires additional disclosures relating
to a company's pension and postretirement benefit plans; and SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information," which
requires certain financial and descriptive information about a company's
reportable operating segments. The adoption of these new accounting standards
may require additional disclosures but should not have a material effect, if
any, on the combined financial statements of the Celera Genomics Group.

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PROPOSALS 2 AND 3-- ADOPTION OF PE CORPORATION/PE BIOSYSTEMS GROUP 1999 STOCK
INCENTIVE PLAN AND PE CORPORATION/CELERA GENOMICS GROUP 1999 STOCK INCENTIVE
PLAN

BACKGROUND AND REASONS FOR THE PROPOSALS

Proposal 2 pertains to PE Corporation/PE Biosystems Group 1999 Stock
Incentive Plan (the "PE Biosystems Plan") and Proposal 3 pertains to PE
Corporation/Celera Genomics Group 1999 Stock Incentive Plan (the "Celera
Genomics Plan"). Those plans are identical except as otherwise noted.

On November 19, 1998, our board of directors adopted the PE Biosystems Plan
and the Celera Genomics Plan (collectively, the "Incentive Plans").

The PE Biosystems Plan authorizes grants of awards with respect to PE
Biosystems Stock only and the Celera Genomics Plan authorizes grants of awards
with respect to Celera Genomics Stock only. Directors and certain officers and
key employees who will continue to have responsibilities involving both the PE
Biosystems Group and the Celera Genomics Group and certain key employees of each
Group will be granted awards under both Incentive Plans in a manner which
reflects their responsibilities. Our board of directors believes that granting
participants awards tied to the performance of the Group in which the
participants work and, in certain cases, the other Group, is in the best
interests of our company and our stockholders.

If approved by the shareholders, the Incentive Plans will become effective
upon the recapitalization. We believe that the Incentive Plans will promote the
interests of our company and our shareholders by helping to attract and retain
exceptional employees, officers, directors and consultants, motivating the
participants by means of stock options, restricted shares and
performance-related incentives to achieve long-term performance goals, and
enabling the employees, officers, directors and consultants to participate in
the long-term growth and financial success of our company.

If the recapitalization is implemented and Proposals 2 and 3 are approved,
no additional grants of awards will be made from our previously approved stock
incentive plans, including our 1998 Stock Incentive Plan. As of January 25,
1999, options for 12,000 shares had been granted under that plan.

This summary highlights all material information from the Incentive Plans.
To understand the Incentive Plans more fully, you should read carefully the
Incentive Plans attached to this proxy statement as Annexes III and IV.

SUMMARY OF THE INCENTIVE PLANS

SHARES SUBJECT TO THE PLANS

Subject to adjustment as provided below, we will make available 2,400,000
shares of PE Biosystems Stock for issuance under the PE Biosystems Plan and
4,800,000 shares of Celera Genomics Stock for issuance under the Celera Genomics
Plan. Shares delivered under the Incentive Plans may be newly issued shares or
treasury shares.

TYPES OF INCENTIVES

Incentives granted under the Incentive Plans may be:

- stock options, consisting of incentive stock options within the meaning
of Section 422 of the Code and non-qualified stock options (collectively,
"Options");

- shares of PE Biosystems Stock or Celera Genomics Stock which may be
subject to restrictions ("Employee Stock Awards");

- shares of PE Biosystems Stock or Celera Genomics Stock, subject to
performance goals ("Performance Shares"); or

- director stock awards, which will be shares of PE Biosystems Stock or
Celera Genomics Stock, subject to restrictions ("Director Stock Awards").

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ELIGIBILITY

Under the terms of the Incentive Plans:

- all regular salaried employees, including executive officers, of our
company and our subsidiaries may receive Options, Employee Stock Awards
and Performance Shares (collectively, "Employee Awards");

- all consultants performing significant services for our company may
receive non-qualified stock options; and

- all non-employee directors of our company may receive non-qualified stock
options and Director Stock Awards.

As of January 25, 1999, approximately 7,200 employees, consultants and
directors were eligible to participate in the Incentive Plans.

ADMINISTRATION

The Incentive Plans will be administered by the Management Resources
Committee (the "Committee") of our board of directors, all of the members of
which qualify as outside directors as defined under Section 162(m) of the Code
and non-employee directors as defined under Rule 16b-3 of the Securities
Exchange Act of 1934. The Committee will determine, subject to the Incentive
Plans, the employees, non-employee directors and consultants to whom, and the
time or times at which, it will grant awards, as well as the terms and
provisions of each award.

STOCK OPTIONS

The purchase price of a share of PE Biosystems Stock or Celera Genomics
Stock covered by an Option will be equal to 100% of the fair market value of the
underlying stock on the date of the grant. The vesting period and all other
terms and conditions of each Option will be determined by the Committee, except
each Option will expire not more than ten years from the date of the grant.

If the employment of an employee, the service of a non-employee director or
the service of a consultant to whom an Option has been granted is terminated,
other than by reason of retirement, disability or death, the employee,
non-employee director or consultant may exercise the Option, to the extent that
person would be entitled to do so at the termination date, for 30 days after the
termination, but not after the Option expires.

If an employee to whom an Option has been granted retires from our company
under any qualified pension plan provided by our company or if an employee or a
consultant to whom an Option has been granted becomes totally and permanently
disabled, the Option may be fully exercised without regard to the period of
continuous employment or service at any time: (1) in the case of an incentive
stock option, within three months after retirement or disability, but not after
the Option expires; or (2) in the case of a non-qualified stock option, within
one year after retirement or disability, but not after the Option expires. If a
non-employee director (1) retires from our board of directors on reaching normal
retirement age, (2) resigns or declines to stand for reelection with the
approval of our board of directors or (3) becomes totally and permanently
disabled, the Option may be fully exercised, without regard to the period of
continuous service, at any time within three years after retirement, resignation
or disability, but not after the Option expires.

If an employee, non-employee director or consultant to whom an Option has
been granted dies while employed by or engaged to provide services to our
company or while serving as a member of our board of directors, the Option may
be exercised to the extent that person was entitled to do so at the date of
death by his or her executor or administrator or other person at the time
entitled by law to the employee's, non-employee director's or consultant's
rights under the Option. The person exercising the Option must do so within one
year after the death, as shall be stated in the option agreement, but not after
the Option expires.

Options will be exercisable only by the optionee or his or her guardian or
legal representative, and may not be transferred, except under a domestic
relations order. However, the Committee may, in its sole discretion, permit an
optionee to transfer a non-qualified stock option to (1) a member of the

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optionee's immediate family, (2) a trust, the beneficiaries of which consist
only of the members of the optionee's immediate family, or (3) a partnership,
the partners of which consist only of members of the optionee's immediate
family. After the death of an optionee, the Option may be transferred pursuant
to the laws of descent and distribution.

A condition to the exercise of an Option following termination of employment
or service is that the optionee has not (1) rendered services or engaged
directly or indirectly in any business which, in the opinion of the Committee,
competes with or is in conflict with the interests of our company or (2)
violated any written agreement with our company. An optionee's violation of
either of these conditions will result in the forfeiture of all Options held.

Except as discussed below, no one individual may be granted an Option or
Options under either Incentive Plan during any fiscal year for an aggregate
number of shares of stock which exceeds 10% of the total number of shares
reserved for issuance under the respective Incentive Plan. The Celera Genomics
Plan permits the grant of options to the President of the Celera Genomics Group
representing up to 30% of the total number of shares reserved for issuance under
that plan during the fiscal year ending June 30, 1999.

EMPLOYEE STOCK AWARDS

Employee Stock Awards may be subject to restrictions, as determined by the
Committee. Until those conditions are met, the recipient may not sell, assign,
bequeath, transfer, pledge or otherwise dispose of the shares. Recipients of
Employee Stock Awards will otherwise be entitled to the rights of a stockholder
with respect to the shares of stock subject to Employee Stock Awards as the
Committee may determine, including the right to vote and receive dividends and
other distributions made with respect to the stock.

If a recipient of an Employee Stock Award terminates employment before any
applicable restrictions lapse, by reason of death, total and permanent
disability, retirement or resignation or discharge from employment other than
for cause, the Committee may, in its sole discretion, remove restrictions on all
or a portion of the stock subject to the Employee Stock Award.

Subject to adjustment as provided below, no employee may receive an Employee
Stock Award under either Incentive Plan representing more than 40,000 shares of
the applicable class of common stock during any fiscal year, and the maximum
number of shares of stock that may be issued to all employees as Employee Stock
Awards under either Incentive Plan is 80,000.

PERFORMANCE SHARES

Performance Shares will be subject to the attainment of performance goals
within the meaning of Section 162(m) of the Code and the regulations thereunder.
These performance goals could relate to stock price, market share, sales,
earnings per share, return on equity, costs and cash flow, as determined by the
Committee. Certificates representing Performance Shares will be registered in
the name of the award recipient but remain in the physical custody of our
company until the Committee has determined that the performance goals have been
attained and other stock restrictions have been satisfied. Until Performance
Shares are delivered to an award recipient, the recipient may not sell, assign,
bequeath, transfer, pledge or otherwise dispose of those shares. Recipients of
Performance Shares will be entitled to other rights of a stockholder with
respect to Performance Shares as the Committee determines, including the right
to vote and receive dividends and other distributions.

If a recipient of Performance Shares terminates employment by reason of
death, total and permanent disability, retirement, resignation or discharge from
employment other than for cause before all applicable performance goals have
been attained, the Committee may, in its sole discretion, remove restrictions on
all or a portion of the Performance Shares or determine that the performance
objectives with respect to all or a portion of the Performance Shares have been
attained. However, the Committee may not exercise its discretion to the extent
that it would cause the award of Performance Shares not to qualify as
performance-based compensation under Section 162(m) of the Code.

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Subject to adjustment as provided below, no employee may receive Performance
Shares under either Incentive Plan representing more than 100,000 shares of the
applicable class of common stock during any fiscal year, and the maximum number
of shares that may be issued to all employees as Performance Shares under either
Incentive Plan is 400,000.

DIRECTOR STOCK AWARDS

As of the date of each election or reelection to our board of directors,
each non-employee director will automatically be granted a Director Stock Award
of 300 shares of PE Biosystems Stock under the PE Biosystems Plan and 150 shares
of Celera Genomics Stock under the Celera Genomics Plan, in each case subject to
adjustment as provided below. Non-employee directors elected other than at an
annual meeting will be granted a pro rata portion of such shares. Each Director
Stock Award will vest on the date immediately preceding the first annual meeting
of stockholders next following the date of grant, provided that the holder
continues to serve as a member of our board of directors as of that date.

Except as set forth below, the holder of a Director Stock Award will be
entitled to all rights of a stockholder with respect to the shares of PE
Biosystems Stock or Celera Genomics Stock issued under the Director Stock Award,
including the right to receive dividends and to vote the shares. However, stock
dividends paid on the shares will be restricted to the same extent as the
underlying shares issued under the Director Stock Award. Prior to vesting, the
shares of stock issued under a Director Stock Award may not be sold, assigned,
bequeathed, transferred, pledged, hypothecated or otherwise disposed of.

If a non-employee director to whom a Director Stock Award has been granted
ceases to serve as a director as a result of (1) death, (2) retiring from our
board of directors upon reaching normal retirement age, (3) becoming totally and
permanently disabled or (4) resigning with the approval of our board of
directors, all shares subject to the Director Stock Award will be fully vested
as of the date of termination of service.

Non-employee directors will be permitted to defer the receipt of their
Director Stock Awards. Deferred awards will be credited to a bookkeeping account
and those awards will be deemed invested in stock units, each unit representing
one share of PE Biosystems Stock or Celera Genomics Stock. As dividends are
paid, a corresponding number of additional units will be credited to the
director's deferral account. A non-employee director who defers receipt of a
Director Stock Award will only have voting rights with respect to the Director
Stock Award at such time as he or she receives an actual distribution of the
stock.

CHANGE OF CONTROL

All outstanding Options granted under the Incentive Plans will become fully
and immediately exercisable, all restrictions on Employee Stock Awards and
awards of Performance Shares will immediately terminate, all performance
objectives applicable to awards of Performance Shares will be deemed attained,
and all Director Stock Awards will become fully vested if:

- a tender offer or exchange offer, other than an offer by our company, is
made for common stock representing more than 25% of the combined voting
power of the outstanding voting securities of our company entitled to
vote generally in the election of directors;

- any person acquires common stock representing more than 25% of such
combined voting power;

- a majority of the incumbent directors ceases to remain on our board of
directors; or

- the stockholders approve the sale of all or substantially all of the
stock or assets of our company.

The last three of the foregoing events are defined as a "change of control"
under the Incentive Plans.

TERMINATION AND AMENDMENT; NO REPRICING

No award may be made under the Incentive Plans after March 31, 2004. Our
board of directors may at any time prior to that date terminate either of the
Incentive Plans or make

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any amendment or modification it deems advisable. However, any such amendments
will require stockholder approval if they would (1) increase the aggregate
number of shares which may be issued or (2) materially modify the eligibility
requirements for participation.

The Committee may amend the terms of any outstanding Option or Award at any
time in its discretion in any manner it deems appropriate, including
accelerating the date of exercise of any award, terminating restrictions or
converting an incentive stock option into a non-qualified stock option. However,
no amendment may adversely affect in any material manner any right of any
recipient without his or her consent. In addition, the Committee may not (1)
amend any previously-issued award of Performance Shares to the extent that the
amendment would cause the award not to qualify as performance-based compensation
under Section 162(m) of the Code or (2) amend any previously issued Option to
reduce the purchase price, whether by modification of the Option or by
cancellation of the Option in consideration of the immediate issuance of a
replacement Option with a reduced purchase price.

ADJUSTMENTS BY THE MANAGEMENT RESOURCES COMMITTEE

The Incentive Plans provide that the Committee may adjust, as it deems
appropriate, the maximum number of shares that may be subject to Options or
Awards, and the terms of any outstanding Options or Awards under the Incentive
Plans, to reflect changes in the outstanding stock that occur because of stock
dividends, stock splits, recapitalizations, reorganizations, liquidations or
other similar events.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

We believe that, based upon the laws as in effect on the date of this
document, the following are the principal federal income tax consequences to
participants and our company of awards granted under the Incentive Plans. State
and local laws are not discussed, and special rules may apply if a participant
has been a resident or citizen of a foreign country during his or her period of
plan participation. THIS SUMMARY IS NOT A COMPLETE ANALYSIS OF ALL POTENTIAL TAX
CONSEQUENCES RELEVANT TO PARTICIPANTS AND OUR COMPANY AND DOES NOT DESCRIBE TAX
CONSEQUENCES BASED ON PARTICULAR CIRCUMSTANCES. FOR THESE REASONS, PARTICIPANTS
SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO ANY SPECIFIC QUESTIONS REGARDING THE
TAX CONSEQUENCES OF AWARDS GRANTED UNDER THE INCENTIVE PLANS.

INCENTIVE STOCK OPTIONS

If we issue shares to an employee upon the exercise of an incentive stock
option granted under the Incentive Plans during the employee's employment or
within three months after the employee's termination of employment, then:

- the employee will not recognize income at the time of the grant of the
incentive stock option or upon exercise of the incentive stock option;

- we will not be allowed a federal income tax deduction in connection with
the grant or exercise of the incentive stock option; and

- upon a sale of exchange of the shares after the later of (1) one year
from the date of transfer of the shares to the employee or (2) two years
from the date of grant of the incentive stock option, any amount received
by the employee in excess of the incentive stock option price will be
taxed to the employee as a capital gain, and any loss sustained by the
employee will be a capital loss. The capital gain, if any, from sales or
exchanges of shares is subject to tax at various rates depending upon the
length of time the shares were held, the date of disposition and the
income tax bracket of the employee.

If the shares are disposed of before the holding period requirements are
satisfied, then:

- the employee will recognize ordinary income in the year of disposition in
an amount (1) equal to the excess, on the date of exercise of the
incentive stock option, of the fair market value of the shares received
over the option price paid, but (2) limited to the excess of the amount
received on the sale over the

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option price if the shares are disposed of at a loss;

- we will be entitled to a deduction for the year equal to the ordinary
income recognized by the employee; and

- the employee will have capital gain or loss equal to the difference
between (1) the amount received by the employee upon the sale or exchange
of the shares and (2) the option price paid by the employee increased by
any ordinary income recognized.

NON-QUALIFIED STOCK OPTIONS

An employee, consultant or director to whom a non-qualified stock option is
granted will not recognize income at the time the option is granted. When the
employee, consultant or director exercises the option, he or she will recognize
ordinary income equal to the difference, if any, between the option price paid
and the fair market value, as of the date of exercise, of the shares received.
Subject to the Code and regulations thereunder, we will generally be entitled to
a federal income tax deduction equal to the ordinary income recognized by the
employee, consultant or director. Any compensation included in an employee's
gross income will be subject to federal employment taxes. Upon the sale of
shares acquired through the exercise of a non-qualified stock option, the
employee, consultant or director will have capital gain or loss equal to the
difference between the amount received on the sale and the tax basis of the
shares sold.

EMPLOYEE STOCK AWARDS

No taxable income will be recognized by an employee upon the grant of an
Employee Stock Award that is subject to a substantial risk of forfeiture unless
the employee makes the election under Section 83(b) of the Code referred to in
the next paragraph. If the employee does not make an election, he or she will
recognize ordinary income at the time his or her interest in the shares is
either transferable or no longer subject to a substantial risk of forfeiture
(the "Section 83 Restrictions"). The amount of this ordinary income will be
equal to the excess of the fair market value of the shares received at the time
over the amount, if any, the employee paid for the shares. The employee's tax
basis in the shares received at the lapse of the Section 83 Restrictions will be
equal to the amount, if any, paid for the shares plus the amount of ordinary
income recognized. Dividends paid on shares while they are subject to the
Section 83 Restrictions will be taxable as ordinary compensation income and not
as dividends.

An employee receiving shares under an Employee Stock Award may elect under
Section 83(b) of the Code to be taxed at the time the employee receives the
shares in an amount equal to the fair market value of the shares received,
determined without regard to the Section 83 Restrictions, at the time of
transfer less the purchase price, if any, paid for the shares. If a Section
83(b) election is made, dividends paid on these shares will not be taxable as
compensation income but will be taxable as dividends, and no additional
compensation income will be recognized when the Section 83 Restrictions lapse or
are released. Employees should consult their tax advisor regarding the possible
use of a Section 83(b) election, which must be made within 30 days following the
transfer of the shares.

PERFORMANCE SHARES

Generally, no income will be recognized by an employee upon the grant of
Performance Shares and instead the employee will recognize ordinary income at
the time the Performance Shares vest or are no longer subject to a substantial
risk of forfeiture. The income will be equal to the excess of the fair market
value of the shares at the time they become vested or non-forfeitable over the
amount, if any, the employee paid for the shares. If the employee is entitled to
receive dividends on the shares prior to the time they vest or become
non-forfeitable, the dividends will be taxable as ordinary compensation income
and not as dividends. The employee's tax basis in the shares will be equal to
the amount, if any, paid for the shares plus the amount of ordinary income
recognized with respect to the shares.

An employee receiving Performance Shares may elect under Section 83(b) of
the Code to be

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taxed at the time the employee receives the shares. If a Section 83(b) election
is made, dividends paid on the shares will not be taxable as compensation income
but will be taxable as dividends and no additional compensation income will be
recognized when the shares vest or become non-forfeitable. Employees should
consult their tax advisor regarding the possible use of a Section 83(b)
election, which must be made within 30 days following the receipt of a
Performance Share award.

DIRECTOR STOCK AWARDS

No taxable income will be recognized by a non-employee director upon the
grant of a Director Stock Award unless he or she makes the election under
Section 83(b) referred to above. If no election is made, the director will
recognize ordinary income at the time his or her interest in the shares vests or
is no longer subject to a substantial risk of forfeiture. The amount of ordinary
income will be equal to the excess of the fair market value of the shares
received at such time over the amount, if any, the director paid for the shares.
Dividends paid on shares while they are subject to a substantial risk of
forfeiture will be taxable as ordinary compensation income and not as dividends.
The director's tax basis in the shares received will be equal to the amount, if
any, paid for the shares plus the amount of ordinary income recognized.

If a Section 83(b) election is made, dividends paid on the shares will not
be taxable as compensation income but will be taxable as dividends and no
additional compensation income will be recognized when the shares vest.
Directors should consult their tax advisor regarding the possible use of a
Section 83(b) election, which must be made within 30 days following the transfer
of the shares.

DEFERRALS

In general, a non-employee director who elects to defer a Director Stock
Award will not be subject to current federal income tax on the award, or related
earnings, until it is distributed. Deferred compensation distributed under the
Incentive Plans will be taxed as ordinary income and not as capital gains.

LIMITS ON DEDUCTIONS

Under Section 162(m) of the Code, compensation paid to our chief executive
officer and our four other most highly paid executive officers in a particular
year is limited to $1 million per person, except that compensation that is
performance-based will be excluded for purposes of calculating the amount of
compensation subject to this $1 million limitation. Our ability to deduct
compensation paid to any other executive officer or employee of our company,
including our subsidiaries, is not affected by this provision.

Except where the Committee deems it to be in the best interest of our
company, the Committee will attempt to structure awards under the Incentive
Plans to qualify as performance-based under Section 162(m) of the Code. This
qualification depends upon the shareholders approving the Incentive Plans and
assumes that the provisions of the plans relating to stock options and
performance shares are followed. With respect to any awards under the Incentive
Plans that are not performance-based, any deduction we may claim will be subject
to the limitations on deductibility in Section 162(m) of the Code.

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BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS

In connection with the recapitalization, the Committee has granted options
to purchase a total of 3,613,931 shares of Celera Genomics Stock to certain
executive officers and directors of our company and employees of the Celera
Genomics Group, as follows:

<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF OPTIONS
- ---------------------------------- ------------------
<S> <C>
Tony L. White..................... 258,470
Chairman, President and Chief
Executive Officer
Michael W. Hunkapiller............ 155,082
Senior Vice President and
President
of the PE Biosystems Group
William B. Sawch.................. 103,388
Senior Vice President, General
Counsel and Secretary
Dennis L. Winger.................. 103,388
Senior Vice President and Chief
Financial Officer
All current executive officers.... 2,186,675(1)
All directors who are not
executive officers.............. 165,424
Celera Genomics Group employees,
excluding executive officers.... 1,261,850
</TABLE>

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

(1) Includes options for 1,421,585 granted to Dr. Venter in recognition of his
contributions to the organization of the Celera Genomics Group and his
continuing efforts for its future success.

These options have an exercise price of $17.12 per share which represents
the fair market value of a share of Celera Genomics Stock on the date of the
grant. The options are exercisable in four annual installments and have a
ten-year term.

VOTE REQUIRED

Approval of each Incentive Plan proposal requires the favorable vote of a
majority of the votes cast at the special meeting.

RECOMMENDATION OF THE BOARD OF DIRECTORS

Our board of directors has carefully considered each Incentive Plan proposal
and believes that the approval of these proposals by the shareholders is in the
best interests of our company and our shareholders. OUR BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT YOU APPROVE THESE PROPOSALS.

PRICE RANGE AND DIVIDENDS ON
EXISTING COMMON STOCK

The following table shows the high and low sales prices of our existing
common stock on the New York Stock Composite Tape and cash dividends paid during
the periods indicated:

<TABLE>
<CAPTION>
CASH
FISCAL YEAR HIGH LOW DIVIDENDS
- ---------------------------------------------------------------------- --------- --- -------
<S> <C> <C> <C>
1997
First Quarter......................................................... $ 1/8 58 $ 1/4 44 $.17
Second Quarter........................................................ 7/8 61 1/2 52 .17
Third Quarter......................................................... 1/8 77 7/8 57 .17
Fourth Quarter........................................................ 1/8 81 3/8 60 .17

1998
First Quarter......................................................... 1/8 86 1/8 72 .17
Second Quarter........................................................ 74 1/4 59 .17
Third Quarter......................................................... 76 13/1556 .17
Fourth Quarter........................................................ 1/8 75 11/1586 .17

1999
First Quarter......................................................... 15/1706 1/2 54 .17
Second Quarter........................................................ 11/10016 65 .17
Third Quarter (through January 28).................................... 11/10016 13/1896 --
</TABLE>

The closing sale price of our existing common stock on the New York Stock
Exchange was $69 13/16 per share on September 22, 1998, the trading day prior to
our announcement of the recapitalization proposal, and $ per share on
, 1999, the trading day prior to the date of this proxy
statement. As of February , 1999, there were shares of our existing
common stock outstanding and holders of record.

INFORMATION ABOUT
STOCKHOLDER PROPOSALS

If you wish to submit proposals to be included in the proxy statement for
our 1999 annual meeting, we must receive them on or before May 12, 1999. Please
address your proposals to: PE Corporation, 761 Main Avenue, Norwalk, Connecticut
06859, Attention: Secretary. Your proposal, if you choose to submit one, has to
include specified information about the proposed business and yourself.

The new by-laws also provide that any stockholder who intends to present a
nomination for a directorship or a proposal for action at any annual meeting of
stockholders must give advance notice of such proposal together with

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certain specified information. These requirements are separate and apart from
and in addition to the SEC requirements noted above that a stockholder must meet
in order to have a proposal included in our proxy materials. In general, the
advance notice must be given to the secretary of our company not less than 45
days or more than 75 days prior to the first anniversary of the date on which we
first mailed proxy materials for the preceding year's annual meeting. In the
case of our 1999 annual meeting, such advance notice must be received no earlier
than June 28, 1999 or later than July 28, 1999. If the recapitalization is
implemented, we will have discretionary authority to vote on any stockholder
proposal presented at the 1999 annual meeting which do not comply with these
notice requirements. Further information regarding the submission of stockholder
proposals may be obtained by writing to the secretary of our company.

EXPENSES OF SOLICITATION

We will pay the cost of soliciting proxies for the special meeting. In
addition to soliciting by mail, our directors, officers and other employees may
solicit proxies in person, or by telephone, facsimile transmission or other
means of electronic communication. We will also pay brokers, nominees,
fiduciaries and other custodians their reasonable fees and expenses for sending
proxy materials to beneficial owners and obtaining their instructions. We have
retained Morrow & Co., Inc. to perform various solicitation services and Morgan
Stanley Dean Witter, Bear Stearns and SG Cowen to perform various advisory and
solicitation services. We have agreed to pay Morrow & Co., Inc. a customary fee
for their services. For information about compensation that we will pay Morgan
Stanley Dean Witter, Bear Stearns and SG Cowen for their services, you should
read "Proposal 1--The Recapitalization Proposal-- Financial Advisor."

LEGAL OPINIONS

Simpson Thacher & Bartlett, New York, New York, has rendered opinions
concerning the validity of the common stock and concerning certain tax matters
described under "Proposal 1--The Recapitalization Proposal--United States
Federal Income Tax Considerations."

EXPERTS

The financial statements as of June 30, 1997 and 1998 and for each of the
three fiscal years in the period ended June 30, 1998 included in this proxy
statement have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on their authority as
experts in auditing and accounting.

Representatives of PricewaterhouseCoopers LLP will attend the special
meeting and will have an opportunity to make a statement and to respond to
appropriate questions that you pose.

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INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
The Perkin-Elmer Corporation
Report of Independent Accountants........................................................................ F-2
Consolidated Statements of Operations for the Years Ended
June 30, 1996, 1997 and 1998, and for the Three
Months Ended September 30, 1997 and 1998 (unaudited)................................................... F-3
Consolidated Statements of Financial Position at June 30, 1997
and 1998, and at September 30, 1998 (unaudited)........................................................ F-4
Consolidated Statements of Cash Flows for the Years Ended
June 30, 1996, 1997 and 1998, and for the Three Months
Ended September 30, 1997 and 1998 (unaudited).......................................................... F-5
Consolidated Statements of Shareholders' Equity and
Comprehensive Income (Loss) at June 30, 1996, 1997 and 1998,
and September 30, 1998 (unaudited)..................................................................... F-6
Notes to Consolidated Financial Statements............................................................... F-7

PE Biosystems Group
Report of Independent Accountants........................................................................ F-33
Combined Statements of Operations for the Years Ended
June 30, 1996, 1997 and 1998, and for the Three
Months Ended September 30, 1997 and 1998 (unaudited)................................................... F-34
Combined Statements of Financial Position at June 30, 1997
and 1998, and at September 30, 1997 (unaudited)........................................................ F-35
Combined Statements of Cash Flows for the Years Ended
June 30, 1996, 1997 and 1998, and for the Three
Months Ended September 30, 1997 and 1998 (unaudited)................................................... F-36
Combined Statements of Group Equity and
Comprehensive Income (Loss) at June 30, 1996, 1997 and 1998,
and September 30, 1998 (unaudited)..................................................................... F-37
Notes to Combined Financial Statements................................................................... F-38

Celera Genomics Group
Report of Independent Accountants........................................................................ F-66
Combined Statements of Operations for the Years Ended June 30, 1996, 1997
and 1998, and for the Three Months Ended September 30, 1997 and 1998 (unaudited)....................... F-67
Combined Statements of Financial Position at June 30, 1997 and 1998,
and at September 30, 1998 (unaudited).................................................................. F-68
Combined Statements of Cash Flows for the Years Ended June 30, 1996, 1997
and 1998, and for the Three Months Ended September 30, 1997 and 1998 (unaudited)....................... F-69
Combined Statements of Group Equity at June 30, 1996, 1997 and 1998,
and September 30, 1998 (unaudited)..................................................................... F-70
Notes to Combined Financial Statements................................................................... F-71
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of
The Perkin-Elmer Corporation

In our opinion, the accompanying consolidated statements of financial position
and the related consolidated statements of operations, of shareholders' equity
and comprehensive income (loss), and of cash flows present fairly, in all
material respects, the financial position of The Perkin-Elmer Corporation and
its subsidiaries at June 30, 1998 and 1997, and the results of their operations
and their cash flows for each of the three fiscal years in the period ended June
30, 1998, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits 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.

PricewaterhouseCoopers LLP
Stamford, Connecticut
July 31, 1998, except as to Note 15
which is as of January 21, 1999

F-2
<PAGE>
THE PERKIN-ELMER CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED
FOR THE YEARS ENDED JUNE 30, SEPTEMBER 30,
---------------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
(DOLLAR AMOUNTS IN THOUSANDS
EXCEPT PER SHARE AMOUNTS) 1996 1997 1998 1997 1998
- ----------------------------------------------------- ---------- ---------- ---------- ---------- ----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET REVENUES......................................... $ 642,218 $ 768,368 $ 944,306 $ 194,696 $ 254,720
Cost of sales........................................ 318,166 362,210 435,837 94,252 113,242
---------- ---------- ---------- ---------- ----------
GROSS MARGIN......................................... 324,052 406,158 508,469 100,444 141,478
---------- ---------- ---------- ---------- ----------
Selling, general and administrative.................. 188,268 229,915 283,399 59,490 77,479
Research, development and engineering................ 62,435 81,222 111,665 21,965 35,561
Restructuring and other merger costs................. 17,454 -- 43,980 -- 938
Acquired research and development.................... 33,878 26,801 28,850 -- --
---------- ---------- ---------- ---------- ----------
OPERATING INCOME..................................... 22,017 68,220 40,575 18,989 27,500
Gain on investments.................................. 11,704 64,850 1,605 845 --
Interest expense..................................... 8,444 5,859 4,905 1,275 802
Interest income...................................... 5,376 8,826 5,938 2,358 490
Other income (expense), net.......................... (2,053) 1,881 3,147 417 1,706
---------- ---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES........................... 28,600 137,918 46,360 21,334 28,894
Provision for income taxes........................... 27,290 35,426 25,069 3,785 7,898
Minority interest.................................... -- -- 5,597 -- 3,108
---------- ---------- ---------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS.................... 1,310 102,492 15,694 17,549 17,888
INCOME (LOSS) FROM DISCONTINUED OPERATIONS (NET OF
INCOME TAXES)...................................... (37,833) 27,906 40,694 3,872 (879)
---------- ---------- ---------- ---------- ----------

NET INCOME (LOSS).................................... $ (36,523) $ 130,398 $ 56,388 $ 21,421 $ 17,009
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------

INCOME PER SHARE
FROM CONTINUING OPERATIONS:
Basic................................................ $ 0.03 $ 2.16 $ 0.32 $ 0.37 $ 0.36
Diluted.............................................. $ 0.03 $ 2.07 $ 0.31 $ 0.35 $ 0.36

INCOME (LOSS) PER SHARE
FROM DISCONTINUED OPERATIONS:
Basic................................................ $ (0.83) $ 0.58 $ 0.84 $ 0.08 $ (0.02)
Diluted.............................................. $ (0.80) $ 0.56 $ 0.81 $ 0.08 $ (0.02)

NET INCOME (LOSS) PER SHARE:
Basic................................................ $ (0.80) $ 2.74 $ 1.16 $ 0.45 $ 0.34
Diluted.............................................. $ (0.77) $ 2.63 $ 1.12 $ 0.43 $ 0.34
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-3
<PAGE>
THE PERKIN-ELMER CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
AT JUNE 30, AT
-------------------------- SEPTEMBER 30,
(DOLLAR AMOUNTS IN THOUSANDS) 1997 1998 1998
- ----------------------------------------------------------------------- ------------ ------------ -------------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents............................................ $ 213,028 $ 82,865 $ 71,848
Short-term investments............................................... 4,194 1,226 --
Accounts receivable, less allowances for doubtful accounts of $3,840,
$5,206, and $4,922 at June 30, 1997 and 1998, and September 30,
1998 (unaudited)................................................... 178,885 228,985 239,994
Inventories.......................................................... 111,069 137,015 159,122
Prepaid expenses and other current assets............................ 63,535 61,973 66,917
Current net assets of discontinued operations........................ 102,870 139,959 143,894
------------ ------------ -------------
Total current assets................................................... 673,581 652,023 681,775
Property, plant and equipment, net..................................... 128,363 163,674 172,791
Other long-term assets................................................. 156,800 241,819 234,621
Long-term net assets of discontinued operations........................ 48,049 77,760 91,099
------------ ------------ -------------
TOTAL ASSETS........................................................... $ 1,006,793 $ 1,135,276 $ 1,180,286
------------ ------------ -------------
------------ ------------ -------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Loans payable........................................................ $ 29,916 $ 12,099 $ 58,794
Accounts payable..................................................... 85,586 119,555 96,478
Accrued salaries and wages........................................... 26,622 30,036 26,997
Accrued taxes on income.............................................. 98,307 79,860 80,598
Other accrued expenses............................................... 78,408 122,482 126,963
------------ ------------ -------------
Total current liabilities.............................................. 318,839 364,032 389,830
Long-term debt......................................................... 59,152 33,726 29,650
Other long-term liabilities............................................ 124,532 129,513 131,641
------------ ------------ -------------
Total liabilities...................................................... 502,523 527,271 551,121
------------ ------------ -------------
Minority interest...................................................... -- 43,757 49,177
Commitments and contingencies (see Note 11)
Shareholders' equity
Capital stock
Preferred stock $1 par value: 1,000,000 shares authorized; none
issued
Common stock $1 par value: 180,000,000 shares authorized; shares
issued 50,122,390, 50,148,384, and 50,148,384 at June 30, 1997 and
1998 and September 30, 1998 (unaudited)............................ 50,122 50,148 50,148
Capital in excess of par value....................................... 374,423 379,974 376,880
Retained earnings.................................................... 167,482 190,966 197,656
Accumulated other comprehensive income............................... (2,671) (9,513) (7,328)
Treasury stock, at cost (shares: 1,795,563; 831,213; and 630,248 at
June 30, 1997 and 1998, and September 30, 1998 (unaudited))........ (85,086) (47,327) (37,368)
------------ ------------ -------------
Total shareholders' equity............................................. 504,270 564,248 579,988
------------ ------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............................. $ 1,006,793 $ 1,135,276 $ 1,180,286
------------ ------------ -------------
------------ ------------ -------------
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-4
<PAGE>
THE PERKIN-ELMER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>
OPERATING ACTIVITIES FROM CONTINUING OPERATIONS (UNAUDITED)
<S> <C> <C> <C> <C> <C>

Income from continuing operations..................................... $ 1,310 $ 102,492 $ 15,694 $ 17,549 $ 17,888
Adjustments to reconcile income from continuing operations to net cash
provided (used) by operating activities:
Depreciation and amortization..................................... 23,725 25,646 35,928 5,164 9,405
Long-term compensation programs................................... 4,058 9,103 6,853 1,207 642
Deferred income taxes............................................. (15,342) (40,819) 10,234 (1,279) (1,741)
Gains from the sale of assets..................................... (11,704) (66,636) (3,052) -- --
Provision for restructured operations and other merger costs...... 17,454 -- 48,080 -- --
Acquired research and development................................. 33,878 26,801 28,850 -- --
Impairment of assets.............................................. 9,906
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable.......................... (42,539) (43,548) (23,507) (7,298) (4,448)
(Increase) decrease in inventories.................................. (20,447) (4,421) (21,362) (9,677) (19,097)
Increase in prepaid expenses and other assets....................... (406) (6,794) (30,862) (7,825) (5,118)
Increase (decrease) in accounts payable and other liabilities....... 45,112 71,590 1,219 (14,972) (20,043)
--------- --------- --------- --------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES...................... 45,005 73,414 68,075 (17,131) (22,512)
--------- --------- --------- --------- ---------

INVESTING ACTIVITIES FROM CONTINUING OPERATIONS

Additions to property, plant and equipment (net of disposals of
$4,727, $5,738, $11,339, $1,068 (unaudited), and $506 (unaudited),
respectively)....................................................... (23,471) (52,319) (60,481) (23,542) (23,822)
Acquisitions and investments, net..................................... (119,189) (27,676) (97,998) (7,238) --
Proceeds from the sale of assets, net................................. 102,318 99,710 19,496 4,195 14,301
Proceeds from the collection of notes receivable...................... -- 4,978 9,673 9,673 --
Proceeds from short-term investments.................................. 5,773 -- -- -- --
--------- --------- --------- --------- ---------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES...................... (34,569) 24,693 (129,310) (16,912) (9,521)
--------- --------- --------- --------- ---------
NET CASH FROM CONTINUING OPERATIONS BEFORE FINANCING ACTIVITIES....... 10,436 98,107 (61,235) (34,043) (32,033)
--------- --------- --------- --------- ---------
DISCONTINUED OPERATIONS
Net cash provided (used) by operating activities...................... 45,903 39,781 10,084 (1,467) 1,542
Net cash used by investing activities................................. (15,911) (11,315) (40,639) (9,401) (19,276)
--------- --------- --------- --------- ---------
NET CASH FROM DISCONTINUED OPERATIONS BEFORE FINANCING ACTIVITIES..... 29,992 28,466 (30,555) (10,868) (17,734)
--------- --------- --------- --------- ---------

FINANCING ACTIVITIES

Net change in loans payable........................................... (17,040) (4,914) (6,797) 4,327 43,837
Proceeds from long-term debt.......................................... -- 31,033 -- -- --
Principal payments on long-term debt.................................. -- (22,908) (25,449) -- (5,297)
Dividends............................................................. (29,095) (29,459) (39,072) (7,454) (8,396)
Purchases of common stock for treasury................................ (41,028) (25,126) -- -- --
Proceeds from issuance of equity put warrants......................... -- 1,846 -- -- --
Proceeds from stock issuance for stock plans.......................... 64,954 33,637 33,629 2,889 6,375
--------- --------- --------- --------- ---------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES...................... (22,209) (15,891) (37,689) (238) 36,519
--------- --------- --------- --------- ---------

Elimination of PerSeptive results from
July 1, 1997 to September 30, 1997 (see Note 1)..................... -- -- 2,590 2,590 --
EFFECT OF EXCHANGE RATE CHANGES ON CASH............................... (2,699) 1,601 (3,274) 1,020 2,231
--------- --------- --------- --------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS............................... 15,520 112,283 (130,163) (41,539) (11,017)
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD......................... 85,225 100,745 213,028 213,028 82,865
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS END OF PERIOD............................... $ 100,745 $ 213,028 $ 82,865 $ 171,489 $ 71,848
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-5
<PAGE>
THE PERKIN-ELMER CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME (LOSS)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON CAPITAL IN OTHER TREASURY STOCK
STOCK $1.00 EXCESS OF RETAINED COMPREHENSIVE --------------------
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS) PAR VALUE PAR VALUE EARNINGS INCOME (LOSS) AT COST SHARES
- ------------------------------------------------------- ----------- ----------- ----------- -------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1995............................... $ 48,760 $ 311,043 $ 142,741 $ (24,415) $(108,322) (3,490)
Comprehensive loss
Net loss............................................. -- -- (36,523) -- -- --
Other comprehensive income, net of tax
Foreign currency translation adjustments........... -- -- -- (10,957) -- --
Minimum pension liability adjustment............... -- -- -- 5,080 -- --
Unrealized gain on investments, net................ -- -- -- 23,175 -- --
--------------
Other comprehensive income........................... -- -- -- 17,298 -- --
Comprehensive loss..................................... -- -- -- -- -- --
Cash dividends declared................................ -- -- (29,095) -- -- --
Share repurchases...................................... -- -- -- -- (41,028) (800)
Shares issued under stock plans........................ 45 1,336 (5,627) -- 51,202 1,559
Tax benefit related to employee stock options.......... -- 5,280 -- -- -- --
Restricted stock plan.................................. -- 4,079 -- -- 993 30
Common stock issuances for acquisitions................ 1,077 34,796 -- -- -- --
Other.................................................. 144 1,920 (1,977) -- -- --
----------- ----------- ----------- -------------- --------- ---------
BALANCE AT JUNE 30, 1996............................... 50,026 358,454 69,519 (7,117) (97,155) (2,701)
Comprehensive income
Net income........................................... -- -- 130,398 -- -- --
Other comprehensive income, net of tax
Foreign currency translation adjustments........... -- -- -- (4,125) -- --
Minimum pension liability adjustment............... -- -- -- 28,660 -- --
Unrealized gain on investments, net................ -- -- -- 3,156 -- --
Sale of equity investment.......................... -- -- -- (23,245) -- --
--------------
Other comprehensive income........................... -- -- -- 4,446 -- --
Comprehensive income................................... -- -- -- -- -- --
Cash dividends declared................................ -- -- (29,536) -- -- --
Share repurchases...................................... -- -- -- -- (25,126) (428)
Shares issued under stock plans........................ 61 2,065 (1,459) -- 31,615 1,146
Tax benefit related to employee stock options.......... -- 4,568 -- -- -- --
Restricted stock plan.................................. -- 6,098 -- -- 5,580 187
Sale of equity put warrants............................ -- 1,846 -- -- -- --
Other.................................................. 35 1,392 (1,440) -- -- --
----------- ----------- ----------- -------------- --------- ---------
BALANCE AT JUNE 30, 1997............................... 50,122 374,423 167,482 (2,671) (85,086) (1,796)
Comprehensive income
Net income........................................... -- -- 56,388 -- -- --
Other comprehensive loss, net of tax
Foreign currency translation adjustments........... -- -- -- (2,747) -- --
Minimum pension liability adjustment............... -- -- -- 354 -- --
Unrealized loss on investments, net................ -- -- -- (4,449) -- --
--------------
Other comprehensive loss............................. -- -- -- (6,842) -- --
Comprehensive income................................... -- -- -- -- -- --
Cash dividends declared................................ -- -- (31,604) -- -- --
Shares issued under stock plans........................ 26 1,358 (3,468) -- 37,759 965
Tax benefit related to employee stock options.......... -- 2,335 -- -- -- --
Restricted stock plan.................................. -- 1,858 (136) -- -- --
Elimination of PerSeptive results from July 1, 1997 to
September 30, 1997 (see Note 1)...................... -- -- 2,590 -- -- --
Other.................................................. -- -- (286) -- -- --
----------- ----------- ----------- -------------- --------- ---------
BALANCE AT JUNE 30, 1998............................... 50,148 379,974 190,966 (9,513) (47,327) (831)
Comprehensive income
Net income........................................... -- -- 17,009 -- -- --
Other comprehensive income, net of tax
Foreign currency translation adjustments........... -- -- -- 6,197 -- --
Unrealized loss on investments, net................ -- -- -- (4,012) -- --
--------------
Other comprehensive income........................... -- -- -- 2,185 -- --
Comprehensive income................................... -- -- -- -- -- --
Cash dividends declared................................ -- -- (8,396) -- -- --
Shares issued under stock plans........................ -- -- (3,130) -- 7,986 159
Restricted stock plan.................................. -- (3,094) 1,207 -- 1,973 42
----------- ----------- ----------- -------------- --------- ---------
BALANCE AT SEPTEMBER 30, 1998 (UNAUDITED).............. $ 50,148 $ 376,880 $ 197,656 $ (7,328) $ (37,368) (630)
----------- ----------- ----------- -------------- --------- ---------
----------- ----------- ----------- -------------- --------- ---------

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS) TOTAL
- ------------------------------------------------------- ----------
<S> <C>
BALANCE AT JUNE 30, 1995............................... $ 369,807
Comprehensive loss
Net loss............................................. (36,523)
Other comprehensive income, net of tax
Foreign currency translation adjustments...........
Minimum pension liability adjustment...............
Unrealized gain on investments, net................

Other comprehensive income........................... 17,298
----------
Comprehensive loss..................................... (19,225)
----------
Cash dividends declared................................ (29,095)
Share repurchases...................................... (41,028)
Shares issued under stock plans........................ 46,956
Tax benefit related to employee stock options.......... 5,280
Restricted stock plan.................................. 5,072
Common stock issuances for acquisitions................ 35,873
Other.................................................. 87
----------
BALANCE AT JUNE 30, 1996............................... 373,727
----------
Comprehensive income
Net income........................................... 130,398
Other comprehensive income, net of tax
Foreign currency translation adjustments...........
Minimum pension liability adjustment...............
Unrealized gain on investments, net................
Sale of equity investment..........................

Other comprehensive income........................... 4,446
----------
Comprehensive income................................... 134,844
----------
Cash dividends declared................................ (29,536)
Share repurchases...................................... (25,126)
Shares issued under stock plans........................ 32,282
Tax benefit related to employee stock options.......... 4,568
Restricted stock plan.................................. 11,678
Sale of equity put warrants............................ 1,846
Other.................................................. (13)
----------
BALANCE AT JUNE 30, 1997............................... 504,270
----------
Comprehensive income
Net income........................................... 56,388
Other comprehensive loss, net of tax
Foreign currency translation adjustments...........
Minimum pension liability adjustment...............
Unrealized loss on investments, net................

Other comprehensive loss............................. (6,842)
----------
Comprehensive income................................... 49,546
----------
Cash dividends declared................................ (31,604)
Shares issued under stock plans........................ 35,675
Tax benefit related to employee stock options.......... 2,335
Restricted stock plan.................................. 1,722
Elimination of PerSeptive results from July 1, 1997 to
September 30, 1997 (see Note 1)...................... 2,590
Other.................................................. (286)
----------
BALANCE AT JUNE 30, 1998............................... 564,248
----------
Comprehensive income
Net income........................................... 17,009
Other comprehensive income, net of tax
Foreign currency translation adjustments...........
Unrealized loss on investments, net................

Other comprehensive income........................... 2,185
----------
Comprehensive income................................... 19,194
----------
Cash dividends declared................................ (8,396)
Shares issued under stock plans........................ 4,856
Restricted stock plan.................................. 86
----------
BALANCE AT SEPTEMBER 30, 1998 (UNAUDITED).............. $ 579,988
----------
----------
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 ACCOUNTING POLICIES AND PRACTICES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of all
majority-owned subsidiaries of The Perkin-Elmer Corporation ("Perkin-Elmer" or
the "Company"). The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates. Certain
amounts in the consolidated financial statements and notes have been
reclassified for comparative purposes.

On January 22, 1998, the Company acquired PerSeptive Biosystems, Inc.
("PerSeptive"). The acquisition has been accounted for as a pooling of interests
and, accordingly, the Company's financial results have been restated to include
the combined operations (see Note 2). The Company's fiscal year ended June 30
and PerSeptive's fiscal year ended September 30. The fiscal 1998 Combined
Statements of Operations combined the Company's operating results for the year
ended June 30, 1998 with PerSeptive's operating results for the nine months
ended June 30, 1998 and the three months ended September 30, 1997 (PerSeptive's
fiscal 1997 fourth quarter). The fiscal 1997 and 1996 Consolidated Statements of
Operations combined the Company's results of operations for the years ended June
30, 1997 and 1996 with PerSeptive's results of operations for the fiscal years
ended September 30, 1997 and 1996, respectively. In order to conform PerSeptive
to a June 30 fiscal year-end in fiscal 1998, PerSeptive's results of operations
for the three months ended September 30, 1997 have been included in the
Company's Consolidated Statements of Operations for the fiscal years ended June
30, 1998 and 1997.

DISCONTINUED OPERATIONS

The Company's consolidated financial statements have been restated to
reflect the net assets and operating results of the Analytical Instruments
business as discontinued operations pending disposition for all periods
presented (see Note 15). The net assets have been reclassified in both the
current and long-term asset sections of the Consolidated Statements of Financial
Position for all periods presented. The operating results are reflected in the
Consolidated Statements of Operations as income (loss) from discontinued
operations for all periods presented. The accompanying notes, except Note 15,
relate only to continuing operations.

RECENT ACCOUNTING STANDARDS

During the first quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." The provisions of this statement require disclosure of total
comprehensive income within the condensed financial statements of interim
periods and additional disclosures of the components of comprehensive income on
an annual basis. Total comprehensive income includes net income, foreign
currency translation adjustments, unrealized gains and losses on
available-for-sale investments, and minimum pension liability adjustment. The
Company presents such information in its Consolidated Statements of
Shareholders' Equity and Comprehensive Income (Loss) and Note 14.

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." The
provisions of the statement require the recognition of all derivatives as either
assets or liabilities in the statement of financial position and the measurement
of those instruments at fair value. The accounting for changes in the fair value
of a derivative depends on the intended use of the derivative and the resulting
designation. The Company is required to implement the statement in the first
quarter of fiscal 2000. The Company is currently analyzing the statement to
determine the impact, if any, on the consolidated financial statements.

F-7
<PAGE>
EARNINGS PER SHARE

During the second quarter of fiscal 1998, the Company adopted SFAS No. 128,
"Earnings per Share." The statement establishes new standards for computing and
presenting earnings per share and requires presentation of basic and diluted
earnings per share on the face of the income statement. Basic earnings per share
is computed by dividing net income for the period by the weighted average number
of common shares outstanding. Diluted earnings per share is computed similarly
to the Company's previously disclosed amounts by dividing net income for the
period by the weighted average number of common shares outstanding including the
dilutive effect of common stock equivalents. Earnings per share amounts for all
prior periods have been restated to conform with the provisions of this
statement.

The table below presents a reconciliation of basic and diluted earnings per
share from continuing operations for the following periods:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
(AMOUNTS IN THOUSANDS YEARS ENDED JUNE 30, SEPTEMBER 30,
EXCEPT PER SHARE ------------------------------- --------------------
AMOUNTS) 1996 1997 1998 1997 1998
- --------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Weighted average
number of common
shares used in the
calculation of
basic earnings per
share from
continuing
operations......... 45,859 47,517 48,560 48,081 49,377
Common stock
equivalents........ 1,703 1,996 1,592 2,084 1,052
--------- --------- --------- --------- ---------
Shares used in the
calculation of
diluted earnings
per share from
continuing
operations......... 47,562 49,513 50,152 50,165 50,429
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

Net income used in
the calculation of
basic and diluted
earnings per share
from continuing
operations......... $ 1,310 $ 102,492 $ 15,694 $ 17,549 $ 17,888

Net income per share
from continuing
operations:
Basic................ $ .03 $ 2.16 $ .32 $ .37 $ .36
Diluted.............. $ .03 $ 2.07 $ .31 $ .35 $ .36
</TABLE>

Options and warrants to purchase 2.1 million, .2 million, and 1.4 million,
.1 million and 1.4 million shares of the Company's common stock were outstanding
at June 30, 1996, 1997, and 1998, and September 30, 1997 and 1998, respectively,
but were not included in the computation of diluted earnings per share because
the effect was antidilutive.

FOREIGN CURRENCY

Assets and liabilities of foreign operations, where the functional currency
is the local currency, are translated into U.S. dollars at the fiscal period-end
exchange rates. The related translation adjustments are recorded as a separate
component of shareholders' equity. Foreign currency revenues and expenses are
translated using monthly average exchange rates prevailing during the period.
Foreign currency transaction gains and losses, as well as translation
adjustments of foreign operations where the functional currency is the U.S.
dollar, are included in net income. Transaction gains and losses for the periods
ended June 30, 1996, 1997, and 1998 were gains of $4.8 million, $1.5 million,
and a loss of $2.5 million, respectively.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments to offset exposure to
market risks arising from changes in foreign currency exchange rates and
interest rates. Derivative financial instruments currently utilized by the
Company include foreign currency forward contracts, synthetic forward contracts,
foreign currency options, and an interest rate swap (see Note 12).

CASH, SHORT-TERM INVESTMENTS, AND MARKETABLE SECURITIES

Cash equivalents consist of highly liquid debt instruments, time deposits,
and certificates of deposit with original maturities of three months or less.
Time deposits and certificates of deposit with original maturities of three
months to one year are classified as short-term investments. Short-term
investments, which include marketable securities, are recorded at cost, which
generally approximates market value.

ACCOUNTS RECEIVABLE

The Company periodically sells accounts receivable arising from business
conducted in Japan. During fiscal 1996, 1997, and 1998, the Company received
cash proceeds of $61.9 million, $65.7 million, and $98.8 million,

F-8
<PAGE>

respectively, from the sale of such receivables. The Company accounts for such
sales in accordance with SFAS 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities" and believes it has
adequately provided for any risk of loss that may occur under these
arrangements.

INVESTMENTS

The equity method of accounting is used for investments in joint ventures
that are 50% owned or less. Minority equity investments are classified as
available-for-sale and carried at market value in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."

INVENTORIES

Inventories are stated at the lower of cost (on a first-in, first-out basis)
or market. Inventories at June 30, 1997 and 1998, and September 30, 1998,
included the following components:

<TABLE>
<CAPTION>
JUNE 30,
(DOLLAR AMOUNTS -------------------- SEPTEMBER 30,
IN MILLIONS) 1997 1998 1998
- ---------------------- --------- --------- -------------
<S> <C> <C> <C>
(UNAUDITED)
Raw materials and
supplies............ $ 25.2 $ 45.2 $ 44.9
Work-in-process....... 6.1 7.3 9.3
Finished products..... 79.8 84.5 104.9
--------- --------- ------
Total inventories..... $ 111.1 $ 137.0 $ 159.1
--------- --------- ------
--------- --------- ------
</TABLE>

PROPERTY, PLANT, AND EQUIPMENT AND DEPRECIATION.

Property, plant and equipment are recorded at cost and consisted of the
following at June 30, 1997 and 1998:

<TABLE>
<CAPTION>
JUNE 30,
--------------------
<S> <C> <C>
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998
- ----------------------------------- --------- ---------
Land............................... $ 13.3 $ 12.0
Buildings and leasehold
improvements..................... 79.6 96.5
Machinery and equipment............ 125.7 174.9
--------- ---------
Property, plant and equipment, at
cost............................. 218.6 283.4
Accumulated depreciation and
amortization..................... 90.2 119.7
--------- ---------
Property, plant and equipment,
net.............................. $ 128.4 $ 163.7
--------- ---------
--------- ---------
</TABLE>

Major renewals and improvements that significantly add to productive
capacity or extend the life of an asset are capitalized. Repairs, maintenance
and minor renewals, and improvements are expensed when incurred. Machinery and
equipment included capitalized internal-use software, primarily related to the
Company's worldwide strategic program to improve its information technology
infrastructure, of $9.5 million and $43.3 million at June 30, 1997 and 1998,
respectively.

Provisions for depreciation of owned property, plant and equipment are based
upon the expected useful lives of the assets and computed primarily by the
straight-line method. Leasehold improvements are amortized over their estimated
useful lives or the term of the applicable lease, whichever is less, using the
straight-line method. Internal-use software costs are amortized primarily over
the expected useful lives, not to exceed seven years.

CAPITALIZED SOFTWARE

Internal software development costs incurred from the time technological
feasibility of the software is established until the software is ready for its
intended use are capitalized and included in other long-term assets. Research
and development costs and other computer software maintenance costs related to
software development are expensed as incurred. The costs are amortized using the
straight-line method over a maximum of three years or the expected life of the
product, whichever is less. At June 30, 1997, capitalized software amounts were
not material. At June 30, 1998, capitalized software costs, net of accumulated
amortization, were $4.4 million.

INTANGIBLE ASSETS

The excess of purchase price over the net asset value of companies acquired
is amortized on a straight-line method over periods not exceeding 40 years.
Patents and trademarks are amortized using the straight-line method over their
expected useful lives. At June 30, 1997 and 1998, and September 30, 1998
(unaudited), other long-term assets included goodwill, net of accumulated
amortization, of $17.5 million, $69.8 million, and $68.6 million, respectively.
Accumulated amortization of goodwill was

F-9
<PAGE>

$3.3 million, $6.1 million, and $7.4 million at June 30, 1997 and 1998, and
September 30, 1998 (unaudited), respectively.

ASSET IMPAIRMENT

The Company periodically reviews all long-lived assets for impairment in
accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of." Assets are written down to
fair value when the carrying costs exceed this amount. In fiscal 1996, the
Company recorded a cost of sales charge of $9.9 million for the impairment of
certain production assets associated with the realignment of the product
offerings of PerSeptive. In fiscal 1997, the Company recorded a $.7 million cost
of sales charge for the write-down of impaired assets. The impairment losses
were determined based upon estimated future cash flows and fair values.

REVENUES

Revenues are recorded at the time of shipment of products or performance of
services. Revenues from service contracts are recorded as deferred service
contract revenues and reflected in net revenues over the term of the contract,
generally one year.

RESEARCH, DEVELOPMENT AND ENGINEERING

Research, development and engineering costs are expensed when incurred.

INCOME TAXES

The Company accounts for certain income and expense items differently for
financial reporting and income tax purposes. Deferred tax assets and liabilities
are determined based on differences between the financial reporting and the tax
basis of assets and liabilities, and are measured by applying enacted tax rates
to taxable years in which the differences are expected to reverse.

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest and income taxes and significant non-cash investing
and financing activities for the following periods were as follows:

<TABLE>
<CAPTION>
FOR THE
THREE MONTHS
FOR THE ENDED
YEARS ENDED JUNE 30, SEPTEMBER 30,
(AMOUNTS IN ------------------------------- --------------------
MILLIONS) 1996 1997 1998 1997 1998
- ---------------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest........ $ 8.9 $ 6.0 $ 5.7 $ 1.6 $ 0.6
Income taxes.... $ 15.0 $ 31.3 $ 60.5 $ 10.8 $ 5.7
Significant non-
cash investing
and financing
activities:
Unrealized
gains (loss)
on
investments.. $ 23.2 $ 3.1 $ (4.4) $ 3.1 $ (4.0)
Dividends
declared not
paid........ $ 7.4 $ 7.5 $ -- $ 7.5 $ --
Common shares
issued in
PerSeptive
pooling..... -- -- 4.6 -- --
Minority
interest
assumed..... $ -- $ -- $ 41.3 $ -- $ --
</TABLE>

UNAUDITED INTERIM FINANCIAL STATEMENTS

The accompanying unaudited consolidated interim financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and in accordance with the Securities and Exchange
Commission's rules and regulations for interim reporting. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the unaudited consolidated interim financial statements include all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly such interim financial information.

NOTE 2 ACQUISITIONS AND DISPOSITIONS

PERSEPTIVE BIOSYSTEMS, INC.

The merger (the "Merger") of Seven Acquisition Corp., a wholly-owned
subsidiary of the Company, and PerSeptive was consummated on January 22, 1998.
PerSeptive develops, manufactures, and markets an integrated line of proprietary
consumable products and advanced instrumentation systems for the purification,
analysis, and synthesis of biomolecules. As a result of the Merger, PerSeptive,
which was the surviving corporation of the Merger, became a wholly-owned
subsidiary of the Company on that

F-10
<PAGE>
date. Each outstanding share of PerSeptive common stock was converted into
shares of the Company's common stock at an exchange ratio equal to 0.1926.
Accordingly, the Company issued 4.6 million shares of its common stock for all
outstanding shares of PerSeptive common stock. Each outstanding option and
warrant for shares of PerSeptive common stock was converted into options and
warrants for the number of shares of the Company's common stock that would have
been received if such options and warrants had been exercised immediately prior
to the effective time of the Merger. All shares of Series A Redeemable
Convertible Preferred Stock of PerSeptive outstanding immediately prior to the
effective time of the Merger were converted in accordance with their terms into
shares of PerSeptive common stock which were then converted into shares of the
Company's common stock. As a result of the Merger, PerSeptive's 8 1/4%
Convertible Subordinated Notes Due 2001 (the PerSeptive Notes) became
convertible into shares of the Company's common stock. On March 23, 1998, the
Company redeemed the PerSeptive Notes for a total of $26.1 million representing
$24.7 million of principal and $1.4 million of accrued interest and premium
relating to the PerSeptive Notes. Additionally, $2.5 million of the principal
amount of the PerSeptive Notes was converted by the holders thereof into 35,557
shares of the Company's common stock.

The Merger qualified as a tax-free reorganization and has been accounted for
as a pooling of interests. Accordingly, the Company's financial results have
been restated to include the combined operations.

Combined and separate results of the Company and PerSeptive during the periods
preceding the Merger were as follows:

<TABLE>
<CAPTION>
PERKIN- PER-
(DOLLAR AMOUNTS IN MILLIONS) ELMER SEPTIVE ADJ. COMBINED
- -------------------------------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Fiscal year ended June 30, 1996:
Net revenues.................... $ 556.1 $ 86.1 $ 642.2
Income (loss) from continuing
operations.................... $ 49.1 $ (50.4) $ 1.3

Fiscal year ended June 30, 1997:
Net revenues.................... $ 671.9 $ 96.5 $ 768.4
Income from continuing
operations.................... $ 87.3 $ 15.2 $ 102.5

Six months ended December 31,
1997 (unaudited):
Net revenues.................... $ 358.7 $ 52.6 $ 411.3
Income (loss) from continuing
operations.................... $ 14.9 $ (5.4) $ .6 $ 10.1
</TABLE>

The adjustment for the six months ended December 31, 1997 reflects the
inclusion of PerSeptive's operating results within the Company's consolidated
tax provision. There were no material intercompany transactions between the
Company and PerSeptive during any period presented.

TECAN AG

The Company acquired a 14.5% interest and approximately 52% of the voting
rights in Tecan AG ("Tecan") in December 1997. Tecan is a world leader in the
development and manufacturing of automated sample processors, liquid handling
systems, and microplate photometry. Used in research, industrial, and clinical
markets, these products provide automated solutions for pharmaceutical drug
discovery, molecular biology, genomic testing, and clinical diagnostics. The
acquisition cost was $53.2 million in cash and was accounted for as a purchase
with a minority interest of $41.3 million. The excess purchase price over the
fair market value of the underlying assets was $46.2 million and is being
amortized over fifteen years.

MOLECULAR INFORMATICS, INC.

During the second quarter of fiscal 1998, the Company acquired Molecular
Informatics, Inc. ("Molecular Informatics"), a leader in the development of
infrastructure software for the pharmaceutical, biotechnology, and agrochemical
industries as well as for applied markets such as forensics and human
identification. The acquisition cost was $53.9 million and was accounted for as
a purchase. In connection with the acquisition, $28.9 million was expensed as
purchased in-process research and development and $24.7 million was allocated to
goodwill and other intangible assets. Goodwill of $9.0 million is being
amortized over ten years, and other intangible assets of $15.7 million are being
amortized over periods of four to seven years.

The $28.9 million expensed as in-process research and development
represented 53.6% of the purchase price and was attributed and supported by a
discounted probable cash flow analysis on a project by project basis.

F-11
<PAGE>

Approximately 10% of the in-process research and development value was
attributed to BioLIMS, a software system that manages data, initiates analysis
programs, and captures the results in a centralized, relational database for
sequencing instruments; 6% was attributed to GA SFDB, a client-side add-on
product to several existing gene sequencing instruments; 38% was attributed to
BioMERGE, a client-server management and integration system that organizes
proprietary, public, and third-party results in a single relational database for
the drug discovery and genomic research markets; 9% was attributed to BioCLINIC,
a client-server management and integration system that organizes proprietary,
public, and third-party results generated from DNA and protein sequence analysis
in a single database for the clinical trials phase of drug development; and 37%
was attributed to SDK, an open architecture software platform from which all of
Molecular Informations' future software applications are expected to be derived.

At the date of the acquisition, management expected to complete the majority
of these projects and commence generating significant revenues in 1999. A total
of $11.8 million of the purchase price was attributed to core technology and
existing products, primarily related to the BioMERGE product. The risk-adjusted
discount rate applied to the projects cash flows was 20% for existing technology
and 23% for in-process technology. The significant risks associated with these
products include the limited operating history of Molecular Informatics,
uncertainties surrounding market acceptance of such in-process products,
competitive threats from other bioinformatics companies, and other risks.
Management is primarily responsible for estimating the fair value of such
existing and in-process technology.

BIOMETRIC IMAGING, INC.

During fiscal 1998, the Company acquired a minority equity interest in
Biometric Imaging, Inc. for $4.0 million. The Company and Biometric Imaging,
Inc. are collaborating on the development and manufacturing of a high-throughput
screening system for use by pharmaceutical research companies to accelerate the
drug discovery process. The Company received exclusive worldwide marketing
rights for products developed for that market. Biometric Imaging products are
designed to help ensure the integrity of transfused products, optimize cell
therapy procedures, and monitor disease progression and the efficacy of therapy.

GENSCOPE, INC.

During the third quarter of fiscal 1997, our company acquired GenScope,
Inc., for $26.8 million. GenScope, founded in 1995, represented a development
stage venture with no operating history and effectively no revenues (limited R&D
contract services only). Its sole material asset is a cross license for gene
expression technology still under development and, at acquisition date, was not
commercially viable. GenScope's limited balance sheet, assets of approximately
$.2 million, had yet to deliver commercial value. Accordingly, our Company
recorded a charge of $25.4 million attributable to the in-process technology
purchased. The acquisition represented the purchase of development stage
technology, not at the time considered commercially viable in the health care
applications that our company intends to pursue. Our Company's intent was to
first develop the technology into a set of molecular screening tools for use in
the enhancement of pharmaceutical product development. Our company allocated
$1.4 million of the purchase price to technology rights attributable to
GenScope's AFLP gene expression technology. AFLP is an enhancement of the
polymerase chain reaction ("PCR") process that allows selective analysis of any
portion of genetic material without the specific, prior sequence information
normally required for PCR. Of the $25.4 million expensed as in-process research
and development, $5.5 million represented a contingent liability due on the
issuance of a process patent for technology under development.

OTHER ACQUISITIONS

During the fourth quarter of fiscal 1998, the Company made a minority equity
investment of $2.5 million in ACLARA BioSciences, Inc. The companies are
collaborating on the development of advanced genetic analysis systems.

F-12
<PAGE>
The Company entered into a strategic partnership with Hyseq, Inc., acquiring
a minority equity interest for an initial cash investment of $5.0 million,
during the fourth quarter of fiscal 1997. Hyseq, Inc. applies proprietary DNA
array technology to develop gene-based therapeutic product candidates and
diagnostic products and tests. In the first quarter of fiscal 1998, the Company
increased its investment by $5.0 million.

The Company acquired Linkage Genetics, Inc., a provider of genetic services
in the agriculture industry, during the fourth quarter of fiscal 1997. The cash
acquisition cost of $1.4 million was accounted for as a purchase. The entire
acquisition cost was expensed as purchased in-process research and development.

In fiscal 1996, the Company acquired Zoogen, Inc., a leading provider of
genetic analysis services; Tropix, Inc., a world leader in the development,
manufacture, and sale of chemiluminescent detection technology and a minority
equity interest in Paracel, Inc., a provider of information filtering
technologies for a total cost, net of cash acquired, of $42.5 million. In
connection with these and other life science acquisitions, $33.9 million of
purchased in-process research and development was expensed in fiscal 1996.

The net assets and results of operations for the above acquisitions
accounted for under the purchase method have been included in the consolidated
financial statements since the date of each acquisition. The pro forma effect of
these acquisitions, individually or in the aggregate, on the Company's
consolidated financial statements was not significant.
DISPOSITIONS

MILLENNIUM PHARMACEUTICALS, INC.

During fiscal 1998, the Company recorded a before-tax gain of $1.6 million
in connection with the release of previously existing contingencies on shares of
Millennium Pharmaceuticals, Inc. ("Millennium") common stock. During fiscal
1997, the Company recognized a before-tax gain of $27.5 million associated with
the sale of approximately 50% of its investment in Millennium and the release of
previously existing contingencies. The gain included $25.9 million from the
Company's exchange of a 34% equity interest in ChemGenics Pharmaceuticals, Inc.
for an approximate 6% equity interest in Millennium.

ETEC SYSTEMS, INC.

In fiscal 1997, the Company completed the sale of its entire equity interest
in Etec Systems, Inc. Before-tax gains of $11.7 million and $37.4 million were
recognized for fiscal 1996 and 1997, respectively. Net cash proceeds from the
sales were $16.6 million and $45.8 million for fiscal 1996 and 1997,
respectively.

NOTE 3 DEBT AND LINES OF CREDIT

Loans payable and long-term debt at June 30, 1997 and 1998, and September
30, 1998 are summarized below:

<TABLE>
<CAPTION>
JUNE 30,
(DOLLAR AMOUNTS IN --------------------
MILLIONS) 1997 1998
- ---------------------- --------- --------- SEPTEMBER 30,
1998
---------------
(UNAUDITED)
<S> <C> <C> <C>
Loans payable:
Short-term loans...... $ 23.1 $ 12.1 $ 58.8
Current portion of
convertible
subordinated
notes............... 6.8
--------- --------- -----
Total loans payable... $ 29.9 $ 12.1 $ 58.8
--------- --------- -----
--------- --------- -----

Long-term debt:
Yen loan.............. $ 33.6 $ 27.0 $ 28.0
Convertible
subordinated
notes............... 20.4
Other................. 5.2 6.7 1.7
--------- --------- -----
Total long-term
debt................ $ 59.2 $ 33.7 $ 29.7
--------- --------- -----
--------- --------- -----
</TABLE>

The weighted average interest rates at June 30, 1997 and 1998, and September
30, 1998 (unaudited) for loans payable were 3.6%, 1.8%, and 4.3%, respectively.

F-13
<PAGE>
On March 23, 1998, the Company redeemed PerSeptive's 8 1/4% convertible
subordinated notes (see Note 2).

During the third quarter of fiscal 1997, the Company replaced its Yen 2.8
billion loan, which matured in February 1997, with a Yen 3.8 billion variable
rate long-term loan which matures in March 2002. Through an interest rate swap
agreement (see Note 12), the effective interest rate for the new loan is 2.1%
compared with 3.3% for the previous loan.

On June 1, 1994, the Company entered into a $100 million three year
revolving credit agreement. The agreement was amended in fiscal 1996 to extend
the maturity an additional three years to June 1, 2000. Commitment and facility
fees are based on leverage and interest coverage ratios. Interest rates on
amounts borrowed vary depending on whether borrowings are undertaken in the
domestic or Eurodollar markets. There were no borrowings under the facility at
June 30, 1997 or 1998.

At June 30, 1998, and September 30, 1998 (unaudited), the Company had unused
credit facilities for short-term borrowings from domestic and foreign banks in
various currencies totaling $343 million and $313 million, respectively. All
other credit facilities available consist of uncommitted overdraft credit lines
that are provided at the discretion of local banks. A parent guarantee is
required by the facility if the local unit borrows any funds.

Under various debt and credit agreements, the Company is required to
maintain certain minimum net worth and interest coverage ratios.

There are no maturities of long-term debt scheduled for fiscal 1999, 2000,
2001, or 2003. The Yen 3.8 billion loan matures in fiscal 2002. NOTE 4 INCOME
TAXES

Income before income taxes from continuing operations for fiscal 1996, 1997,
and 1998 is summarized below:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS
IN MILLIONS) 1996 1997 1998
- ------------------------- --------- --------- ---------
<S> <C> <C> <C>
United States............ $ (30.5) $ 98.3 $ (38.0)
Foreign.................. 59.1 39.6 84.4
--------- --------- ---------
Total.................... $ 28.6 $ 137.9 $ 46.4
--------- --------- ---------
--------- --------- ---------
</TABLE>

The components of the provision for income taxes from continuing operations
for fiscal 1996, 1997, and 1998 consisted of the following:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1996 1997 1998
- ----------------------------- --------- --------- ---------
<S> <C> <C> <C>
Currently payable:
Domestic..................... $ 12.5 $ 57.2 $ 3.8
Foreign...................... 15.6 18.7 17.8
--------- --------- ---------
Total currently payable...... 28.1 75.9 21.6
--------- --------- ---------
Deferred:
Domestic..................... 3.4 (45.8) 6.1
Foreign...................... (4.2) 5.3 (2.6)
--------- --------- ---------
Total deferred............... (.8) (40.5) 3.5
--------- --------- ---------
Total provision for income
taxes from continuing
operations ................ $ 27.3 $ 35.4 $ 25.1
--------- --------- ---------
--------- --------- ---------
</TABLE>

Significant components of deferred tax assets and liabilities from
continuing operations at June 30, 1997 and 1998 are summarized below:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998
- ------------------------------------- --------- ---------
<S> <C> <C>
Deferred tax assets:
Inventories.......................... $ .7 $ 4.0
Postretirement and postemployment
benefits........................... 35.7 35.0
Other reserves and accruals.......... 48.5 44.3
Tax credit and loss carryforwards.... 39.4 32.2
--------- ---------
Subtotal............................. 124.3 115.5
Valuation allowance.................. (69.7) (62.8)
--------- ---------
Total deferred tax assets............ 54.6 52.7
--------- ---------
Deferred tax liabilities:
Millennium equity transaction........ 4.3
Other reserves and accruals.......... (.2) 6.9
--------- ---------
Total deferred tax liabilities....... 4.1 6.9
--------- ---------
Total deferred tax assets, net....... $ 50.5 $ 45.8
--------- ---------
--------- ---------
</TABLE>

F-14
<PAGE>

A reconciliation of the federal statutory tax to the Company's continuing
tax provision for fiscal 1996, 1997, and 1998 is set forth in the following
table:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1996 1997 1998
- ----------------------------- --------- --------- ---------
<S> <C> <C> <C>
Federal statutory rate....... 35% 35% 35%
--------- --------- ---------
Tax at federal statutory
rate....................... $ 10.0 $ 48.3 $ 16.2
State income taxes (net of
federal benefit)........... (1.9) .1 .1
Effect on income from foreign
operations................. .1 41.1 1.2
Effect on income from foreign
sales corporation.......... (1.1) (1.6) (2.5)
Acquired research and
development................ 11.9 9.4 10.1
Restructuring and other
merger costs............... 5.2
Domestic temporary
differences for which
benefit is recognized...... (9.9) (56.6) (4.8)
Benefit of loss not
recognized/(utilization of
net operating losses)...... 16.9 (7.7)
Other........................ 1.3 2.4 (.4)
--------- --------- ---------
Total provision for income
taxes from continuing
operations................. $ 27.3 $ 35.4 $ 25.1
--------- --------- ---------
--------- --------- ---------
</TABLE>

The category "domestic temporary differences for which benefit is
recognized" reported in the rate reconciliation table reflects changes in net
domestic deferred tax assets and liabilities, and the utilization of domestic
tax credit carryforwards, and reversing temporary differences for the fiscal
years 1996, 1997, and 1998.

At June 30, 1998, the Company had a U.S. alternative minimum tax credit
carryforward of $4.9 million with an indefinite carryforward period. The
Company's subsidiary, PerSeptive, has domestic loss carryforwards of
approximately $64 million that will expire between the years 2003 and 2012. The
amount of these net operating loss carryforwards that can be utilized annually
to offset future taxable income or tax liability has been limited under the
Internal Revenue Code as a result of the acquisition. The Company also has loss
carryforwards of approximately $38 million in various foreign countries with
varying expiration dates.

U.S. income taxes have not been provided on approximately $77 million of net
unremitted earnings from foreign subsidiaries since the Company intends to
permanently reinvest substantially all of such earnings in the operations of the
subsidiaries. These earnings include income from manufacturing operations in
Singapore, which is tax exempt through the year 2004. In those instances where
the Company expects to remit earnings, the effect on the results of operations,
after considering available tax credits and amounts previously accrued, was not
significant.

The Company and its subsidiaries are subject to tax examinations in various
U.S. and foreign jurisdictions. The Company believes that adequate tax payments
have been made and adequate accruals have been recorded for all years.

NOTE 5 RETIREMENT AND OTHER BENEFITS

PENSION PLANS

The total worldwide pension expense of continuing operations for all
employee pension plans was $3.3 million, $4.7 million, and $4.3 million for
fiscal 1996, 1997, and 1998, respectively. The components of net pension expense
are set forth in the following table:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1996 1997 1998
- ------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Domestic Plans:
Service cost................... $ 3.0 $ 3.4 $ 4.8
Interest cost.................. 27.7 31.9 36.2
Actual return on assets........ (26.5) (30.3) (35.4)
Net amortization and
deferral..................... (1.1) (.5) (1.5)
--------- --------- ---------
Net pension expense............ $ 3.1 $ 4.5 $ 4.1
--------- --------- ---------
--------- --------- ---------

Foreign Plans:
Service cost................... $ .2 $ .2 $ .1
Interest cost.................. .2 .1 .2
Actual return on assets........ (.3) (.1) (.2)
Net amortization and
deferral..................... .1 -- .1
--------- --------- ---------
Net pension expense............ $ .2 $ .2 $ .2
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-15
<PAGE>

The following table sets forth the funded status of the plans of continuing
operations and amounts recognized in the Company's Consolidated Statements of
Financial Position at June 30, 1997 and 1998:

<TABLE>
<CAPTION>
DOMESTIC PLANS
------------------------------------------
<S> <C> <C> <C> <C>
ACCUMULATED
ASSETS EXCEED BENEFITS
ACCUMULATED BENEFITS EXCEED ASSETS
-------------------- --------------------

<CAPTION>
(DOLLAR AMOUNTS IN
MILLIONS) 1997 1998 1997 1998
- ------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Plan assets at fair
value.................. $ 474.2 $ 559.4 $ -- $ --
Projected benefit
obligation............. 475.0 544.5 10.7 12.2
--------- --------- --------- ---------
Plan assets greater
(less) than projected
benefit obligation..... (.8) 14.9 (10.7) (12.2)
Unrecognized items:
Net actuarial loss..... 43.3 33.4 1.7 2.8
Prior service cost..... (5.5) (4.7) 3.0 2.6
Net transition (asset)
obligation........... (7.2) (4.8) .5 .4
Minimum pension liability
adjustment............. (3.8) (4.1)
--------- --------- --------- ---------
Prepaid (accrued) pension
expense................ $ 29.8 $ 38.8 $ (9.3) $ (10.5)
--------- --------- --------- ---------
--------- --------- --------- ---------
Actuarial present value
of accumulated
benefits............... $ 470.2 $ 530.4 $ 9.3 $ 10.5
Accumulated benefit
obligation related to
vested benefits........ $ 461.7 $ 522.0 $ 8.0 $ 9.5
</TABLE>

A minimum pension liability adjustment is required when the actuarial
present value of accumulated benefits exceeds plan assets and accrued pension
liabilities. The minimum liability adjustment, less allowable intangible assets,
net of tax benefit, is reported as a reduction of shareholders' equity and
totaled $.7 million and $.4 million at June 30, 1997 and 1998, respectively.

<TABLE>
<CAPTION>
FOREIGN PLANS
--------------------
<S> <C> <C>
ASSETS EXCEED
ACCUMULATED BENEFITS
--------------------

<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998
- ----------------------------------------- --------- ---------
<S> <C> <C>
Plan assets at fair value................ $ 3.1 $ 3.6
Projected benefit obligation............. 3.2 3.8
--------- ---------
Plan assets (less) than projected benefit
obligation............................. (.1) (.2)
Unrecognized items:
Net actuarial loss..................... .8 1.0
--------- ---------
Prepaid pension expense.................. $ .7 $ .8
--------- ---------
--------- ---------

Actuarial present value of accumulated
benefits............................... $ 2.2 $ 2.5
Accumulated benefit obligation related to
vested benefits........................ $ 2.0 $ 2.4
</TABLE>

The following actuarial assumptions were used in accounting for the defined
benefit plans:

<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Domestic Plans
Assumptions:
Discount rate................. 8 1/2% 8%
Compensation increase......... 4% 4%
Long-term rate of return...... 8 1/2-9 1/4% 8 1/2-9 1/4%

Foreign Plans
Assumptions:
Discount rate................. 6% 5 1/2%
Compensation increase......... 4 1/4% 4 1/4%
Long-term rate of return...... 6 1/2% 6 1/2%
</TABLE>

SAVINGS PLAN

The Company provides a 401(k) savings plan, for most domestic employees,
with automatic Company contributions of 2% of eligible compensation and a
dollar-for-dollar matching contribution of up to 4% of eligible compensation.
The Company's contributions to this plan for continuing operations were $3.3
million, $4.7 million, and $5.9 million for fiscal 1996, 1997, and 1998,
respectively.

RETIREE HEALTH CARE AND LIFE INSURANCE BENEFITS

The Company provides certain health care and life insurance benefits to
domestic employees hired prior to January 1, 1993, who retire and satisfy
certain service and age requirements. Generally, medical coverage pays a stated
percentage of most medical expenses, reduced for any deductible and for payments
made by Medicare or other group coverage. The cost of providing these benefits
is shared with retirees. The plan is unfunded.

The following table sets forth the accrued postretirement benefit liability
recognized in the Company's Consolidated Statements of Financial Position at
June 30, 1997 and 1998:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998
- --------------------------------------- --------- ---------
<S> <C> <C>
Actuarial present value of
postretirement benefit obligation
Retirees............................... $ 60.6 $ 60.7
Fully eligible active participants..... 1.0 1.4
Other active participants.............. 9.7 10.3
--------- ---------
Accumulated postretirement benefit
obligation (APBO).................... 71.3 72.4
Unrecognized net gain.................. 24.4 21.5
--------- ---------
Accrued postretirement benefit
liability............................ $ 95.7 $ 93.9
--------- ---------
--------- ---------
</TABLE>

F-16
<PAGE>
The net postretirement benefit cost for fiscal 1997 and 1998 included the
following components:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998
- ---------------------------------------- --------- ---------
<S> <C> <C>
Service cost............................ $ .1 $ .1
Interest cost........................... 4.8 4.7
Amortization of unrecognized gain....... (1.1) (1.2)
--------- ---------
Net postretirement benefit cost......... $ 3.8 $ 3.6
--------- ---------
--------- ---------
</TABLE>

The discount rate used in determining the APBO was 8.5% in fiscal 1997 and
8% in fiscal 1998. The assumed health care cost trend rate used for measuring
the APBO was divided into two categories:

<TABLE>
<CAPTION>
1997 1998
----- -----
<S> <C> <C>
Participants under age 65............... 10.3% 9.6%
Participants age 65 and over............ 7.7% 7.4%
</TABLE>

Both rates were assumed to decline to 5.5% over eight and seven years in
fiscal 1997 and 1998, respectively.

If the health care cost trend rate were increased 1%, the APBO, as of June
30, 1998, would have increased 11%. The effect of this change on the aggregate
of service and interest cost for fiscal 1998 would be an increase of 10%.

POSTEMPLOYMENT BENEFITS

The Company provides certain postemployment benefits to eligible employees.
These benefits generally include severance, disability, and medical-related
costs paid after employment but before retirement.

NOTE 6 BUSINESS SEGMENTS AND GEOGRAPHIC
AREA INFORMATION

BUSINESS SEGMENTS

The Company is comprised of two separate business segments in continuing
operations: PE Biosystems and the recently formed Celera Genomics Corporation.
PE Biosystems includes PE Applied Biosystems, PerSeptive, Molecular Informatics,
Tropix, and Tecan. PE Biosystems manufactures and markets biochemical instrument
systems and associated consumable products for life science research and related
applications. These automated systems are used for synthesis, amplification,
purification, isolation, analysis, and sequencing of nucleic acids, proteins,
and other biological molecules. Through a joint venture, the Company
manufactures mass spectrometry instrument systems.

During the fourth quarter of fiscal 1998, Celera Genomics Corporation was
formed by the Company and Dr. J. Craig Venter of the Institute for Genomic
Research. The new company's strategy is focused on a plan to become the
definitive source of genomic information that will be used to develop a better
understanding of biological processes in humans. The plan is to substantially
complete the sequencing of the human genome by December 31, 2001. The company
intends to build the scientific expertise and informatics tools necessary to
extract biological knowledge from genomic data. Results for Celera Genomics
Corporation were not material for fiscal 1998.

GEOGRAPHIC AREAS

Revenues between geographic areas are primarily comprised of the sale of
products by the Company's manufacturing units. The revenues reflect the rules
and regulations of the respective governing tax authorities. Net revenues and
operating profits are reported in the region of destination. Operating income is
determined by deducting from net revenues the related costs and operating
expenses attributable to the region. Research, development and engineering
expenses are reflected in the area where the activity was performed.
Identifiable assets include all assets directly identified with those geographic
areas. Corporate assets include cash and short-term investments, deferred tax
assets, property, plant, and equipment, and other assets that are corporate in
nature.

Export net revenues for fiscal 1996, 1997, and 1998 were $14.1 million,
$27.6 million, and $28.5 million, respectively.

F-17
<PAGE>

GEOGRAPHIC AREAS

<TABLE>
<CAPTION>
UNITED FAR OTHER
(DOLLAR AMOUNTS IN MILLIONS) STATES EUROPE EAST COUNTRIES CORPORATE CONSOLIDATED
- ---------------------------------------------------- --------- --------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
1996
Total revenues...................................... $ 309.6 $ 270.7 $ 212.8 $ 23.2 $ -- $ 816.3
Transfers between geographic areas.................. (18.5) (74.2) (75.5) (5.9) (174.1)
--------- --------- --------- ----------- ----------- ------------
Revenues to unaffiliated customers.................. $ 291.1 $ 196.5 $ 137.3 $ 17.3 $ $ 642.2
--------- --------- --------- ----------- ----------- ------------
Income (loss)....................................... $ 18.2 $ 47.3 $ 43.7 $ 1.8 $ (27.7) $ 83.3
Restructuring charge................................ (17.5) (17.5)
Acquired research and development................... (33.9) (33.9)
Impairment of assets................................ (9.9) (9.9)
--------- --------- --------- ----------- ----------- ------------
Operating income (loss)........................... $ (43.1) $ 47.3 $ 43.7 $ 1.8 $ (27.7) $ 22.0
--------- --------- --------- ----------- ----------- ------------
Identifiable assets................................. $ 268.3 $ 97.1 $ 56.5 $ 13.9 $ 225.8 $ 661.6
Net assets of discontinued operations............... 148.3
------------
Total assets........................................ $ 809.9

1997
Total revenues...................................... $ 384.1 $ 333.7 $ 255.0 $ 27.1 $ -- $ 999.9
Transfers between geographic areas.................. (34.1) (93.8) (95.3) (8.3) (231.5)
--------- --------- --------- ----------- ----------- ------------
Revenues to unaffiliated customers.................. $ 350.0 $ 239.9 $ 159.7 $ 18.8 $ $ 768.4
--------- --------- --------- ----------- ----------- ------------
Income (loss)....................................... $ 19.4 $ 61.4 $ 45.8 $ 3.7 $ (34.6) $ 95.7
Acquired research and development................... (26.8) (26.8)
Impairment of assets................................ (.7) (.7)
--------- --------- --------- ----------- ----------- ------------
Operating income (loss)........................... $ (8.1) $ 61.4 $ 45.8 $ 3.7 $ (34.6) $ 68.2
--------- --------- --------- ----------- ----------- ------------
Identifiable assets................................. $ 317.0 $ 112.3 $ 70.2 $ 6.2 $ 350.2 $ 855.9
Net assets of discontinued operations............... 150.9
------------
Total assets........................................ $ 1,006.8

1998
Total revenues...................................... $ 500.6 $ 377.2 $ 274.2 $ 36.7 $ -- $ 1,188.7
Transfers between geographic areas.................. (43.5) (85.3) (102.7) (12.9) (244.4)
--------- --------- --------- ----------- ----------- ------------
Revenues to unaffiliated customers.................. $ 457.1 $ 291.9 $ 171.5 $ 23.8 $ $ 944.3
--------- --------- --------- ----------- ----------- ------------
Income (loss)....................................... $ 26.7 $ 72.0 $ 55.7 $ 3.0 $ (39.8) $ 117.6
Restructuring and other merger costs................ (26.2) (21.7) (.2) (48.1)
Acquired research and development................... (28.9) (28.9)
--------- --------- --------- ----------- ----------- ------------
Operating income (loss)........................... $ (28.4) $ 50.3 $ 55.5 $ 3.0 $ (39.8) $ 40.6
--------- --------- --------- ----------- ----------- ------------
Identifiable assets................................. $ 449.1 $ 206.4 $ 62.9 $ 9.9 $ 189.3 $ 917.6
Net assets of discontinued operations............... 217.7
------------
Total assets........................................ $ 1,135.3
</TABLE>

F-18
<PAGE>
NOTE 7 SHAREHOLDERS' EQUITY

TREASURY STOCK

Common stock purchases have been made in support of the Company's various
stock plans and as part of a general share repurchase authorization. The general
share repurchase authorization was rescinded by the Board of Directors in fiscal
1998. During fiscal 1996 and 1997, the Company purchased .8 million and .4
million shares, respectively, to support various stock plans. There were no
share purchases in fiscal 1998.

STOCK PURCHASE WARRANTS

As a result of the Merger with PerSeptive, each outstanding warrant for
shares of PerSeptive common stock was converted into warrants for the number of
shares of the Company's common stock that would have been received by the holder
if such warrants had been exercised immediately prior to the effective time of
the Merger.

At June 30, 1998 the following warrants to purchase common stock were
outstanding:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE EXPIRATION
SHARES PRICE DATE
----------- --------- ------------------
<S> <C> <C> <C>
Class C........ 4,097 $ 37.95 March 1999
Class E........ 8,065 $ 171.34 December 1998
Class F........ 10,266 $ 39.56 October 2002
Class G........ 53,799 $ 65.73 September 2003
</TABLE>

EQUITY PUT WARRANTS

During the first quarter of fiscal 1997, the Company sold in a private
placement 600,000 put warrants on shares of its common stock. Each warrant
obligated the Company to purchase the shares from the holder, at specified
prices, if the closing price of the common stock was below the exercise price on
the maturity date. The cash proceeds from the sale of the put warrants were $1.8
million and have been included in capital in excess of par value. During fiscal
1997, all 600,000 warrants expired unexercised. No equity put warrants were sold
in fiscal 1998.

SHAREHOLDERS' PROTECTION RIGHTS PLAN

The Company has a Shareholders' Protection Rights Plan designed to protect
shareholders against abusive takeover tactics by declaring a dividend of one
right on each outstanding share of common stock. Each right entitles
shareholders to buy one one-hundredth of a newly issued share of participating
preferred stock having economic and voting terms similar to those of one share
of common stock at an exercise price of $90, subject to adjustment.

The rights will be exercisable only if a person or a group: (a) acquires 20%
or more of the Company's shares or (b) commences a tender offer that will result
in such person or group owning 20% or more of the Company's shares. Before that
time, the rights trade with the common stock, but thereafter they become
separately tradeable.

Upon exercise, after a person or a group acquires 20% or more of the
Company's shares, each right (other than rights held by the acquiring person)
will entitle the shareholder to purchase a number of shares of preferred stock
of the Company having a market value of two times the exercise price. If the
Company is acquired in a merger or other business combination, each right will
entitle the shareholder to purchase at the then exercise price a number of
shares of common stock of the acquiring company having a market value of two
times such exercise price. If any person or group acquires between 20% and 50%
of the Company's shares, the Company's Board of Directors may, at its option,
exchange one share of the Company's common stock for each right. The rights are
redeemable at the Company's option at one cent per right prior to a person or
group becoming an acquiring person.

COMMON STOCK

In October 1997, the Company's shareholders approved an increase in the
number of authorized shares of the Company's common stock from 90 million to 180
million.

F-19
<PAGE>
NOTE 8 STOCK PLANS

STOCK OPTION PLANS

Under the Company's stock option plans, officers and other key employees may
be, and directors are, granted options, each of which allows for the purchase of
common stock at a price of not less than 100% of fair market value at the date
of grant. Under the normal vesting requirements, 50% of the options are
exercisable after one year and 100% after two years. Options generally expire
ten years from the date of grant.

Transactions relating to the stock option plans of the Company are
summarized below:

<TABLE>
<CAPTION>
NUMBER WEIGHTED
OF AVERAGE
OPTIONS EXERCISE PRICE
--------- ---------------
<S> <C> <C>
FISCAL 1996
Outstanding at June 30,
1995...................... 4,597,214 $ 29.97
Granted..................... 820,495 $ 46.43
Exercised................... 1,393,807 $ 29.48
Cancelled................... 201,367 $ 34.17
---------
Outstanding at June 30,
1996...................... 3,822,535 $ 34.05
Exercisable at June 30,
1996...................... 2,544,100 $ 30.17

FISCAL 1997
Granted..................... 1,595,528 $ 59.78
Exercised................... 1,167,179 $ 29.73
Cancelled................... 95,281 $ 43.17
---------
Outstanding at June 30,
1997...................... 4,155,603 $ 45.03
Exercisable at June 30,
1997...................... 2,254,052 $ 35.24

FISCAL 1998
Granted..................... 1,997,041 $ 70.41
Exercised................... 780,994 $ 34.76
Cancelled................... 154,686 $ 71.42
---------
Outstanding at June 30,
1998...................... 5,216,964 $ 55.51
Exercisable at June 30,
1998...................... 2,936,389 $ 43.12
</TABLE>

At June 30, 1998, 241,437 shares remained available for option grant.

The following table summarizes information regarding options outstanding and
exercisable at June 30, 1998:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
----------------------------
<S> <C> <C> <C>
CONTRACTUAL
LIFE
(OPTION PRICES PER NUMBER REMAINING EXERCISE
SHARE) OF OPTIONS IN YEARS PRICE
- ----------------------- ----------- --------------- -----------
Options outstanding:
At $ 2.04-$29.95..... 448,472 4.2 $ 20.93
At $30.25-$59.75..... 2,038,936 7.0 $ 40.87
At $60.06-$85.69..... 2,713,648 9.3 $ 71.83
At $90.86-$163.55.... 15,908 5.4 $ 120.86
Options exercisable:
At $ 2.04-$29.95..... 448,472 4.2 $ 20.93
At $30.25-$59.75..... 1,992,736 6.9 $ 40.53
At $60.06-$83.69..... 479,273 8.7 $ 72.07
At $90.86-$163.55.... 15,908 5.4 $ 120.86
</TABLE>

EMPLOYEE STOCK PURCHASE PLAN

The Employee Stock Purchase Plan offers domestic and certain foreign
employees the right to purchase, over a certain period, shares of common stock
on an annual offering date. The purchase price in the United States is equal to
the lower of 85% of the average market price of the common stock on the offering
date or 85% of the average market price of the common stock on the last day of
the purchase period. Provisions of the plan for employees in foreign countries
vary according to local practice and regulations.

Common stock issued under the Employee Stock Purchase Plan during fiscal
1996, 1997, and 1998 totaled 77,000 shares, 111,000 shares, and 174,000 shares,
respectively. At June 30, 1998, 499,000 shares remained available for issuance.

DIRECTOR STOCK PURCHASE AND DEFERRED COMPENSATION PLAN

The Company has a Director Stock Purchase and Deferred Compensation Plan
that requires non-employee directors of the Company to apply at least 50% of
their annual retainer to the purchase of common stock. The purchase price is the
fair market value on the first business day of the third month of each fiscal
quarter. At June 30, 1998, approximately 87,000 shares were available for
issuance.

F-20
<PAGE>
RESTRICTED STOCK

Restricted stock granted to key employees and non-employee directors during
fiscal 1996, 1997, and 1998 totaled 185,000 shares (155,000 of which were
subject to shareholder approval in fiscal 1997), 42,000 shares and 4,350 shares,
respectively. Compensation expense of continuing operations recognized for these
awards was $4.1 million, $9.1 million, and $1.8 million in fiscal 1996, 1997,
and 1998, respectively.

PERFORMANCE UNIT BONUS PLAN

The Company has a Performance Unit Bonus Plan whereby employees may be
awarded performance units in conjunction with an equal number of stock options.
A performance unit represents the right to receive a cash or stock payment from
the Company at a specified date in the future. The amount of the payment is
equal to the fair market value of a share of common stock on the date of the
grant. The performance units vest upon shares of the Company's common stock
attaining and maintaining specified stock price levels for a specified period,
and are payable on or after June 26, 2000. As of June 30, 1998, 324,500
performance units were outstanding. Compensation expense of continuing
operations recognized for these awards totaled $5.1 million in fiscal 1998.

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," in accounting for its stock-based compensation
plans. Accordingly, no compensation expense has been recognized for its stock
option and employee stock purchase plans, as all options have been issued at
fair market value.

Pro forma net income and earnings per share information, as required by SFAS
No. 123, "Accounting for Stock-Based Compensation," has been determined for
employee stock plans under the statement's fair value method. The fair value of
the options was estimated at grant date using a Black-Scholes option pricing
model with the following weighted average assumptions:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
JUNE 30, 1996 1997 1998
- ---------------------- --------- --------- ---------
<S> <C> <C> <C>
Dividend yield........ .89% .85% .94%
Volatility............ 35.32% 29.07% 27.00%
Risk-free interest
rates............... 6.24% 6.42% 5.64%
Expected option life
in years............ 4.87 5.12 5.70
</TABLE>

For purposes of pro forma disclosure, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information for the years ended June 30, 1996, 1997, and 1998 is
presented below:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN
MILLIONS,
EXCEPT PER SHARE AMOUNTS) 1996 1997 1998
- --------------------------- --------- --------- ---------
<S> <C> <C> <C>
Income (loss) from
continuing operations
As reported.............. $ 1.3 $ 102.5 $ 15.7
Pro forma................ (1.1) 92.3 (15.0)
Basic earnings (loss) from
continuing operations per
share
As reported.............. $ .03 $ 2.16 $ .32
Pro forma................ (.02) 1.94 (.31)
Diluted earnings (loss)
from continuing
operations per share
As reported.............. $ .03 $ 2.07 $ .31
Pro forma................ (.02) 1.86 (.31)
</TABLE>

Fiscal 1998 pro forma net income includes compensation expense of $9.8
million, or $.19 per diluted share after-tax, owing to the immediate vesting of
options as a result of the acquisitions of PerSeptive and Molecular Informatics.

The weighted average fair value of options granted was $16.58, $20.17, and
$24.83 per share for fiscal 1996, 1997, and 1998, respectively.

F-21
<PAGE>
NOTE 9 ADDITIONAL INFORMATION

SELECTED ACCOUNTS

The following table provides the major components of selected accounts of
the Consolidated Statements of Financial Position:

Other accrued expenses:
Deferred service contract
revenues......................... $ 20.5 $ 28.7
Restructuring provisions........... -- 26.9
Other.............................. 57.9 66.9
--------- ---------
Total other accrued expenses....... $ 78.4 $ 122.5
--------- ---------
--------- ---------

Other long-term liabilities:
Accrued postretirement benefits.... $ 91.2 $ 87.4
Other.............................. 33.3 42.1
--------- ---------
Total other long-term liabilities.. $ 124.5 $ 129.5
--------- ---------
--------- ---------
</TABLE>

RELATED PARTY TRANSACTIONS

One of the Company's directors is an employee of the Roche Group, a
pharmaceutical manufacturer and strategic partner of the Company in the
biotechnology field. The Company made payments to the Roche Group and its
affiliates, for the purchase of reagents and consumables, of $59.7 million,
$68.2 million, and $72.5 million in fiscal 1996, 1997, and 1998, respectively.

NOTE 10 RESTRUCTURING AND OTHER MERGER COSTS

The Company initiated a restructuring plan in fiscal 1998 for actions
associated with the acquisition of PerSeptive. Fiscal 1996 included a charge by
PerSeptive for restructuring actions and other related costs. The before-tax
charges associated with the implementation of these restructuring plans were
$17.5 million and $48.1 million for fiscal 1996 and 1998, respectively.

FISCAL 1996

Fiscal 1996 included a charge by PerSeptive for restructuring actions and
other related costs. These costs primarily related to actions to identify
research and development programs, discontinue certain product lines, and make
organizational changes. The components of these costs included $9.8 million
related to the write-off of certain long-term assets used in discontinued
product offerings and other asset impairments, $2.6 million of severance costs
principally resulting from approximately 65 U.S. and European employee
terminations, and $5.1 million of accrued legal costs primarily related to
patent defense costs. The majority of asset write-offs and severance costs were
completed in fiscal 1996. Legal costs paid were $1.6 million, $1.6 million, and
$.3 million in fiscal 1996, 1997, and 1998, respectively. No significant
adjustments were made to the liability accrued in fiscal 1996.

FISCAL 1998

During fiscal 1998, the Company recorded a $48.1 million before-tax charge
for restructuring and other merger costs to integrate PerSeptive into the
Company following the acquisition. The objectives of this plan are to lower
PerSeptive's cost structure by reducing excess manufacturing capacity, achieve
broader worldwide distribution of PerSeptive's products, and combine sales,
marketing, and administrative functions. The charge included: $33.9 million for
restructuring the combined operations; $8.6 million for transaction costs; and
$4.1 million of inventory-related write-offs, recorded in costs of sales,
associated with the rationalization of certain product lines. Additional
non-recurring acquisition costs of $1.5 million for training, relocation, and
communication were recognized as period expenses in the third and fourth
quarters of fiscal 1998, and classified as other merger-related costs. During
fiscal 1999, the Company recorded $.9 million of additional merger-related costs
as part of this plan. The Company expects to incur approximately $5.5 million to
$7.5 million of additional merger-related costs for training, relocation, and
communication over the remaining quarters of fiscal 1999. These costs will be
recognized as

F-22
<PAGE>
period expenses when incurred and will be classified as other merger-related
costs.

The $33.9 million restructuring charge includes $13.8 million for
severance-related costs and workforce reductions of approximately 170 employees,
consisting of 114 employees in production labor and 56 employees in sales and
administrative support. The remaining $20.1 million represents facility
consolidation and asset-related write-offs and includes: $11.7 million for
contract and lease terminations and facility related expenses in connection with
the reduction of excess manufacturing capacity; $3.2 million for dealer
termination payments, sales office consolidations, and consolidation of sales
and administrative support functions; and $5.2 million for the write-off of
certain tangible and intangible assets and the termination of certain
contractual obligations. These restructuring actions are expected to be
substantially completed by the end of fiscal 1999. Transaction costs of $8.6
million include acquisition-related investment banking and professional fees. As
of September 30, 1998, approximately 32 employees were separated under the plan,
and the actions are proceeding as planned.

The following table details the major components of the fiscal 1998
restructuring plan:

<TABLE>
<CAPTION>
FACILITY CONSOLIDATION
AND
(DOLLAR AMOUNTS IN MILLIONS) PERSONNEL ASSET RELATED WRITE-OFFS TOTAL
- --------------------------------------------------------------------- ------------- --------------------------- ---------
<S> <C> <C> <C>
Provision:
Reduction of excess European manufacturing capacity.................. $ 5.1 $ 11.7 $ 16.8
Consolidation of sales and administrative support.................... 8.7 3.2 11.9
Other................................................................ 5.2 5.2
----- ----- ---------
Total provision...................................................... $ 13.8 $ 20.1 $ 33.9
----- ----- ---------
Fiscal 1998 activity:
Reduction of excess European manufacturing capacity.................. $ -- $ .4 $ .4
Consolidation of sales and administrative support.................... .3 1.2 1.5
Other................................................................ 5.1 5.1
----- ----- ---------
Total fiscal 1998 activity........................................... $ .3 $ 6.7 $ 7.0
----- ----- ---------
Fiscal 1999 activity:
Reduction of excess European manufacturing capacity.................. $ -- $ 3.6 $ 3.6
Consolidation of sales and administrative support.................... 2.1 .5 2.6
Other................................................................ .1 .1
----- ----- ---------
Total fiscal 1999 activity (unaudited)............................... $ 2.1 $ 4.2 $ 6.3
----- ----- ---------
Balance at September 30, 1998:
Reduction of excess European manufacturing capacity.................. $ 5.1 $ 7.7 $ 12.8
Consolidation of sales and administrative support.................... 6.3 1.5 7.8
Other................................................................
----- ----- ---------
Balance at September 30, 1998 (unaudited)............................ $ 11.4 $ 9.2 $ 20.6
----- ----- ---------
----- ----- ---------
</TABLE>

NOTE 11 COMMITMENTS AND CONTINGENCIES

Future minimum payments at June 30, 1998 under non-cancelable operating
leases for real estate and equipment were as follows:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS)
- ---------------------------------------------
<S> <C>
1999......................................... $ 21.3
2000......................................... 17.1
2001......................................... 15.4
2002......................................... 13.4
2003......................................... 12.2
2004 and thereafter.......................... 60.6
---------
Total........................................ $ 140.0
---------
---------
</TABLE>

Rental expense was $23.5 million in fiscal 1996, $22.3 million in fiscal
1997, and $29.0 million in fiscal 1998.

On July 10, 1998, the Company entered into a ten year non-cancelable lease
for a facility for Celera Genomics Corporation in Rockville, Maryland, effective
August 1, 1998. Total lease payments over the ten year period will be
approximately $22 million. In fiscal 1997, the Company entered into a fifteen
year non-cancelable lease for a facility in Foster City, California, effective
July 1, 2000. Total lease payments over the fifteen year period will be
approximately $42 million.

F-23
<PAGE>
The Company has been named as a defendant in several legal actions,
including patent, commercial, and environmental, arising from the conduct of its
normal business activities. Although the amount of any liability that might
arise with respect to any of these matters cannot be accurately predicted, the
resulting liability, if any, will not in the opinion of management have a
material adverse effect on the financial statements of the Company.

NOTE 12 FINANCIAL INSTRUMENTS

DERIVATIVES

The Company utilizes foreign exchange forward, option, and synthetic forward
contracts and an interest rate swap agreement to manage foreign currency and
interest rate exposures. The principal objective of these contracts is to
minimize the risks and/or costs associated with global financial and operating
activities. The Company does not use derivative financial instruments for
trading or other speculative purposes, nor is the Company a party to leveraged
derivatives.

FOREIGN CURRENCY RISK MANAGEMENT

Foreign exchange forward, option, and synthetic forward contracts are used
primarily to hedge reported and anticipated cash flows resulting from the sale
of products in foreign locations. Option contracts outstanding at June 30, 1998
were purchased at a cost of $4.1 million. Under these contracts, the Company has
the right, but not the obligation, to purchase or sell foreign currencies at
fixed rates at various maturity dates. These contracts are utilized primarily
when the amount and/or timing of the foreign currency exposures are not certain.
Synthetic forward contracts outstanding at June 30, 1998 were purchased having
no up-front cost. Under these contracts, the Company may participate in some
favorable currency movements but is protected against adverse currency changes.
These contracts are used as an alternative to options to reduce the cost of the
Company's hedging program.

At June 30, 1997 and 1998, and September 30, 1998, the Company had forward,
option, and synthetic forward contracts outstanding for the sale and purchase of
foreign currencies at fixed rates as summarized in the table below:

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
(DOLLAR JUNE 30, 1997 JUNE 30, 1998 (UNAUDITED)
AMOUNTS IN ---------------------- ---------------------- ----------------------
MILLIONS) SALE PURCHASE SALE PURCHASE SALE PURCHASE
- -------------- --------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Japanese Yen.. $ 74.6 $ -- $ 99.4 $ -- $ 112.3 $ 7.1
French
Francs...... 14.1 16.9 .2 15.9
Australian
Dollars..... 7.4 7.5 5.4
German
Marks....... 11.4 17.2 22.4
Italian
Lira........ 5.6 1.2 21.4 .8 21.7
British
Pounds...... 1.7 1.1 6.2 2.1 1.8
Swiss Francs.. 3.2 5.4 2.1 5.5 2.1
Swedish
Krona....... 1.4 6.1 5.8
Danish Krona.. 1.0 5.3 4.5
Other......... 3.4 21.6 .3 19.5 .6
--------- ----- --------- ----- --------- -----
Total......... $ 122.1 $ 2.9 $ 201.9 $ 9.6 $ 215.1 $ 11.6
--------- ----- --------- ----- --------- -----
--------- ----- --------- ----- --------- -----
</TABLE>

Foreign exchange contracts are accounted for as hedges of firm commitments
and anticipated foreign currency transactions. With respect to firm commitments,
unrealized gains and losses are deferred and included in the basis of the
transaction underlying the commitment. Gains and losses on foreign currency
transactions are recognized in income and offset the foreign exchange losses and
gains, respectively, on the related transactions. The amount of the contracts
covering anticipated transactions is marked to market and recognized in income.

INTEREST RATE RISK MANAGEMENT

In fiscal 1997, the Company entered into an interest rate swap in
conjunction with a five year Japanese Yen debt obligation (see Note 3). The
interest rate swap agreement involves the payment of a fixed rate of interest
and the receipt of a floating rate of interest without the exchange of the
underlying notional loan principal amount. Under this contract, the Company will
make fixed interest payments of 2.1% while receiving interest at a LIBOR
floating rate. No other cash payments will be made unless the contract is
terminated prior to maturity, in which case the amount to be paid or received in
settlement is established by agreement at the time of termination. The agreed
upon amount usually represents the net present value at the then existing
interest rates

F-24
<PAGE>
of the remaining obligation to exchange payments under the terms of the
contract.

Based on the level of interest rates prevailing at June 30, 1998, the fair
value of the Company's floating rate debt approximated its carrying value. There
would be a payment of $.9 million to terminate the related interest rate swap
contract, which would equal the unrealized loss. Unrealized gains or losses on
debt or interest rate swap contracts are not recognized for financial reporting
purposes unless the debt is retired or the contracts are terminated prior to
maturity. A change in interest rates would have no impact on the Company's
reported interest expense and related cash payments because the floating rate
debt and fixed rate swap contract have the same maturity and are based on the
same interest rate index.

CONCENTRATIONS OF CREDIT RISK

The forward contracts, options, synthetic forwards, and swaps used by the
Company in managing its foreign currency and interest rate exposures contain an
element of risk that the counterparties may be unable to meet the terms of the
agreements. However, the Company minimizes such risk exposure by limiting the
counterparties to a diverse group of highly rated major domestic and
international financial institutions with which the Company has other financial
relationships. The Company is exposed to potential losses in the event of non-
performance by these counterparties; however, the Company does not expect to
record any losses as a result of counterparty default. The Company does not
require and is not required to place collateral for these financial instruments.

FAIR VALUE

The fair value of foreign currency forward, option (net of fees), and
synthetic forward contracts, as well as interest rate swaps, is estimated based
on quoted market prices of comparable contracts and reflects the amounts the
Company would receive (or pay) to terminate the contracts at the reporting date.
The following table presents notional amounts and fair values of the Company's
derivatives at June 30, 1997 and 1998:

<TABLE>
<CAPTION>
1997 1998
------------------------ ------------------------
<S> <C> <C> <C> <C>
(DOLLAR AMOUNTS IN NOTIONAL FAIR NOTIONAL FAIR
MILLIONS) AMOUNT VALUE AMOUNT VALUE
- ------------------------ ----------- ----- ----------- -----
Forward contracts....... $ 89.0 $ (3.7) $ 123.9 $ 2.1
Purchased options....... $ 36.1 $ .3 $ 76.7 $ 1.3
Synthetic forwards...... $ 41.5 $ 1.7
Interest rate swap...... $ 33.6 $ .2 $ 27.0 $ (.9)
</TABLE>

The following methods are used in estimating the fair value of other
significant financial instruments held or owed by the Company. Cash and
short-term investments approximate their carrying amount due to the duration of
these instruments. Fair values of minority equity investments and notes
receivable are estimated based on quoted market prices, if available, or quoted
market prices of financial instruments with similar characteristics. The fair
value of debt is based on the current rates offered to the Company for debt of
similar remaining maturities. The following table presents the carrying amounts
and fair values of the Company's other financial instruments at June 30, 1997
and 1998:

<TABLE>
<CAPTION>
1997 1998
---------------------- ------------------------
<S> <C> <C> <C> <C>
(DOLLAR AMOUNTS IN CARRYING FAIR CARRYING FAIR
MILLIONS) AMOUNT VALUE AMOUNT VALUE
- ----------------------- ----------- --------- ----------- -----
Cash and short-term
investments.......... $ 217.2 $ 217.2 $ 84.1 $ 84.1
Minority equity
investments.......... $ 22.6 $ 22.6 $ 29.2 $ 29.2
Note receivable........ $ 7.2 $ 7.2
Short-term debt........ $ 29.9 $ 29.9 $ 12.1 $ 12.1
Long-term debt......... $ 59.2 $ 59.0 $ 33.7 $ 34.6
</TABLE>

Net unrealized gains and losses on minority equity investments are reported
as a separate component of shareholders' equity. The Company reported an
unrealized holding gain of $3.1 million at June 30, 1997 and a $1.4 million
unrealized holding loss at June 30, 1998.

F-25
<PAGE>
NOTE 13 QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following is a summary of quarterly financial results:

<TABLE>
<CAPTION>
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
(DOLLAR AMOUNTS IN MILLIONS -------------------- -------------------- -------------------- --------------------
EXCEPT PER SHARE AMOUNTS) 1997 1998 1997 1998 1997 1998 1997 1998
- ----------------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues............................. $ 161.8 $ 194.7 $ 191.3 $ 216.6 $ 203.7 $ 248.7 $ 211.6 $ 284.3
Gross margin............................. 82.6 100.5 99.1 120.7 110.9 131.2 113.5 156.1
Income (loss) from continuing
operations............................. 22.0 17.5 55.5 (7.4) 1.1 (19.3) 23.9 24.9
Income (loss) from discontinued
operations............................. 6.6 3.9 18.1 13.4 8.2 12.3 (5.0) 11.1
Net income (loss)........................ 28.6 21.4 73.6 6.0 9.3 (7.0) 18.9 36.0
Income (loss) per share from continuing
operations:
Basic.................................. 0.47 0.36 1.17 (0.15) 0.02 (0.40) 0.50 0.51
Diluted................................ 0.45 0.35 1.13 (0.15) 0.02 (0.40) 0.48 0.49
Income (loss) per share from discontinued
operations:
Basic.................................. 0.14 0.09 0.39 0.27 0.18 0.26 (0.11) 0.22
Diluted................................ 0.14 0.08 0.36 0.27 0.17 0.26 (0.10) 0.22
Net income (loss) per share:
Basic.................................. 0.61 0.45 1.56 0.12 0.20 (0.14) 0.39 0.73
Diluted................................ 0.59 0.43 1.49 0.12 0.19 (0.14) 0.38 0.71
</TABLE>

EVENTS IMPACTING COMPARABILITY

FISCAL 1997

First and second quarter results included before-tax gains of $11.3 million
and $26.1 million, or $.21 and $.38 per diluted share after-tax, respectively,
from the sale of the Company's remaining equity interest in Etec Systems, Inc.
(see Note 2). Second, third, and fourth quarter results included before-tax
gains of $25.9 million, $.8 million, and $.8 million, or $.52, $.02, and $.02
per diluted share after-tax, respectively, relating to the sale and release of
contingencies on minority equity investments (see Note 2). Third quarter results
included a $25.4 million before-tax charge, or $.51 per diluted share after-tax,
for acquired research and development (see Note 2). Fourth quarter results
included a $1.4 million before-tax charge, or $.03 per diluted share after-tax,
for acquired research and development (see Note 2), and a $.7 million before-tax
charge, or $.01 per diluted share after-tax, for asset impairment (see Note 1).
In addition, the Company recognized deferred royalty income, other miscellaneous
income, and certain compensation-related expenses. The net effect of these items
increased fourth quarter net income by approximately $5.5 million, or $.11 per
diluted share.

FISCAL 1998

First and fourth quarter results included before-tax gains of $.8 million in
each quarter, or $.02 and $.01 per diluted share after-tax, respectively,
relating to the Company's release of contingencies on minority equity
investments respectively (see Note 2). Second quarter results included a $28.9
million before-tax charge, or $.57 per diluted share after-tax, for acquired
research and development (see Note 2). Third and fourth quarter results included
before-tax charges for restructuring and other merger costs of $47.0 million and
$1.1 million, respectively, or $.85 and $.02 per diluted share after-tax,
respectively (see Note 10). In the third quarter the Company also recognized
one-time royalty revenues and capitalized certain legal expenses relating to the
successful defense of certain patents. The net effect of these items increased
third quarter net income by approximately $4.2 million, or $.08 per diluted
share.

F-26
<PAGE>
<TABLE>
<CAPTION>
STOCK PRICES AND DIVIDENDS 1997
- ----------------------------------------------------------------------------- -----------------
<S> <C> <C> <C> <C>
STOCK PRICES HIGH LOW
- ----------------------------------------------------------------------------- ------- ------
First Quarter................................................................ $ 58 1/8 $ 44 1/4
Second Quarter............................................................... $ 61 7/8 $ 52 1/2
Third Quarter................................................................ $ 77 1/8 $ 57 7/8
Fourth Quarter............................................................... $ 81 1/8 $ 60 3/8

<CAPTION>
STOCK PRICES AND DIVIDENDS 1998
- ----------------------------------------------------------------------------- --------------------
<S> <C> <C> <C> <C>
STOCK PRICES HIGH LOW
- ----------------------------------------------------------------------------- ------- --------
First Quarter................................................................ $ 86 1/8 $ 72 1/8
Second Quarter............................................................... $ 74 $ 59 1/4
Third Quarter................................................................ $ 76 $ 55 13/16
Fourth Quarter............................................................... $ 75 1/8 $ 58 11/16
</TABLE>

<TABLE>
<CAPTION>
DIVIDENDS PER SHARE 1997 1998
- ---------------------------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
First Quarter....................................................................................... $ .17 $ .17
Second Quarter...................................................................................... .17 .17
Third Quarter....................................................................................... .17 .17
Fourth Quarter...................................................................................... .17 .17
--- ---
Total dividends per share........................................................................... $ .68 $ .68
--- ---
--- ---
</TABLE>

NOTE 14 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) for fiscal 1996, 1997, 1998,
and for the three months ended September 30, 1998 (unaudited) is as follows:

<TABLE>
<CAPTION>
FOREIGN MINIMUM
CURRENCY UNREALIZED PENSION
TRANSLATION GAIN (LOSS) ON LIABILITY
(DOLLAR AMOUNTS IN MILLIONS) ADJUSTMENTS INVESTMENTS ADJUSTMENT
- ----------------------------------------------------------------------- ----------- -------------- -----------
<S> <C> <C> <C>
Balance at June 30, 1995............................................... $ 10.0 $ -- $ (34.4)
Current period activity................................................ (10.9) 23.2 5.0
----------- ------- -----------

Balance at June 30, 1996............................................... (.9) 23.2 (29.4)
Current period activity................................................ (4.2) (20.1) 28.7
----------- ------- -----------

Balance at June 30, 1997............................................... (5.1) 3.1 (.7)
Current period activity................................................ (2.7) (4.5) .3
----------- ------- -----------

Balance at June 30, 1998............................................... (7.8) (1.4) (.4)
Current period activity................................................ 6.2 (4.0)
----------- ------- -----------

Balance at September 30, 1998 (unaudited).............................. $ (1.6) $ (5.4) $ (.4)
----------- ------- -----------
----------- ------- -----------
</TABLE>

F-27
<PAGE>

NOTE 15 DISCONTINUED OPERATIONS

On January 21, 1999, the Company announced a plan to sell its Analytical
Instruments business. The plan is expected to be completed within a year,
although there can be no assurance in this regard. Accordingly, the results have
been reclassified from amounts previously reported and are stated separately in
the consolidated financial statements as discontinued operations pending
disposition. The Company expects to recognize a gain on disposal. However, the
actual results could differ significantly depending on the transaction costs
incurred, the amount expected to be realized upon the sale of the business and
the resolution of certain contingencies. Summary results prior to discontinuance
were as follows:

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED
JUNE 30, ENDED SEPTEMBER 30,
------------------------------- --------------------
(DOLLAR AMOUNTS IN MILLIONS) 1996 1997 1998 1997 1998
- ----------------------------------------------------------------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues..................................................... $ 606.7 $ 604.9 $ 586.8 $ 128.0 $ 121.1
Restructuring charges............................................ 71.6 13.0 -- -- --
Total costs and expenses......................................... 650.2 570.2 532.6 122.0 122.3
Provision (benefit) for income taxes............................. (5.7) 6.8 13.5 2.1 (.3)
--------- --------- --------- --------- ---------
Income (loss) from discontinued operations....................... $ (37.8) $ 27.9 $ 40.7 $ 3.9 $ (.9)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

The components of net assets of discontinued operations included in the
Consolidated Statements of Financial Position are as follows:

<TABLE>
<CAPTION>
AT JUNE 30, AT SEPTEMBER 30,
-------------------- -----------------
<S> <C> <C> <C>
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998 1998
- -------------------------------------------------------------------------- --------- --------- -----------------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Accounts receivable, net................................................ $ 149.2 $ 145.9 $ 136.4
Inventories............................................................. 103.5 103.0 98.0
Prepaid expenses and other current assets............................... 25.9 35.2 31.0

Current liabilities:
Accounts payable........................................................ 45.8 45.7 28.6
Accrued expenses........................................................ 129.9 98.4 92.9
--------- --------- ------
CURRENT NET ASSETS........................................................ $ 102.9 $ 140.0 $ 143.9
--------- --------- ------
Long-term assets:
Property, plant and equipment, net...................................... $ 69.0 $ 95.1 $ 112.3

Other long-term assets.................................................. 35.2 37.7 40.1

Long-term liabilities:
Other long-term liabilities............................................. 56.2 55.1 61.3
--------- --------- ------
LONG-TERM NET ASSETS...................................................... $ 48.0 $ 77.7 $ 91.1
--------- --------- ------
NET ASSETS................................................................ $ 150.9 $ 217.7 $ 235.0
--------- --------- ------
--------- --------- ------
</TABLE>

F-28
<PAGE>

The cash flow provided (used) from discontinued operations was as follows:

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED ENDED
JUNE 30, SEPTEMBER 30,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
(DOLLAR AMOUNTS IN MILLIONS) 1996 1997 1998 1997 1998
- -------------------------------------------------------------------- --------- --------- --------- --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS

Income (loss) from discontinued operations.......................... $ (37.8) $ 27.9 $ 40.7 $ 3.9 $ (.9)

Adjustments to reconcile income (loss) from discontinued operations
to net cash provided (used) by operating activities from
discontinued operations:

Depreciation and amortization................................... 28.0 18.2 17.2 4.5 3.9
Long-term compensation programs................................. 1.0 2.6 1.2 .2 .3
Deferred income taxes........................................... 2.2 3.0 2.7 .3 (.1)
Provision for restructured operations and other charges......... 71.6 13.0 -- -- --
Impairment of assets............................................ -- 7.5 -- -- --

Net change in assets and liabilities................................ (19.1) (32.4) (51.7) (10.4) (1.7)
--------- --------- --------- --------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES FROM DISCONTINUED
OPERATIONS........................................................ 45.9 39.8 10.1 (1.5) 1.5
--------- --------- --------- --------- ---------
NET CASH USED BY INVESTING ACTIVITIES FROM DISCONTINUED
OPERATIONS........................................................ (15.9) (11.3) (40.6) (9.4) (19.2)
NET CASH FROM DISCONTINUED OPERATIONS BEFORE EFFECT OF EXCHANGE RATE
CHANGES ON CASH................................................... 30.0 28.5 (30.5) (10.9) (17.7)
EFFECT OF EXCHANGE RATE CHANGES ON CASH............................. 3.2 (.6) 4.4 1.9 (.4)
--------- --------- --------- --------- ---------
CASH FLOW PROVIDED (USED) FROM DISCONTINUED OPERATIONS.............. $ 33.2 $ 27.9 $ (26.1) $ (9.0) $ (18.1)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

RESTRUCTURING

FISCAL 1996

The fiscal 1996 before-tax restructuring charge of $71.6 million was the
first phase of a plan focused on improving the profitability and cash flow
performance of the Analytical Instruments business. In connection with the plan,
the division was reorganized into three vertically integrated, fiscally
accountable operating units; a distribution center was established in Holland to
centralize the European infrastructure for shipping, administration, and related
functions; and a program was implemented to eliminate excess production capacity
in Germany. The charge included $37.8 million for worldwide workforce reductions
of approximately 390 positions in manufacturing, sales and support, and
administrative functions. The charge also included $33.8 million for facility
consolidation and asset-related write-offs associated with the discontinuation
of various product lines.

In fiscal 1996, the Company transferred the development and manufacturing of
certain analytical instrument product lines from its facility in Germany to
other sites, primarily in the United States. The facility in Germany remains the
principal site for the development of atomic absorption products.

In fiscal 1996, a distribution center in Holland was established to provide
an integrated sales, shipment, and administration support infrastructure for the
Company's European operations and to integrate certain operating and business
activities. The European distribution center includes certain administrative,
financial, and information systems functions previously transacted at individual
locations throughout Europe.

In the fourth quarter of fiscal 1997, the Company finalized actions
associated with the restructuring plan announced in fiscal 1996. The costs to
implement the program were $11.2 million below the $71.6 million charge recorded
in fiscal 1996. As a result, during the fourth quarter of fiscal 1997, the
Company recorded an $11.2 million reduction of charges required to implement the
fiscal 1996 plan.

F-29
<PAGE>

The following table details the major components of the $71.6 million fiscal
1996 restructuring provision:

Fiscal 1996 activity:
Reduction of excess European manufacturing capacity.................. $ 2.1 $ 6.7 $ 8.8
Reduction of European distribution and administrative capacity....... 1.6 .7 2.3
Other worldwide workforce reductions and facility closings........... 1.9 1.6 3.5
----- ----- ---------
Total fiscal 1996 activity........................................... $ 5.6 $ 9.0 $ 14.6
----- ----- ---------

Fiscal 1997 activity:
Reduction of excess European manufacturing capacity.................. $ 10.9 $ 6.6 $ 17.5
Adjustment to decrease liabilities originally accrued for excess
European manufacturing capacity.................................... 4.7 6.5 11.2
Reduction of European distribution and administrative capacity....... 6.2 4.4 10.6
Other worldwide workforce reductions and facility closings........... 1.9 2.0 3.9
----- ----- ---------
Total fiscal 1997 activity........................................... $ 23.7 $ 19.5 $ 43.2
----- ----- ---------

Fiscal 1998 activity:
Reduction of excess European manufacturing capacity.................. $ 2.0 $ 3.2 $ 5.2
Reduction of European distribution and administrative capacity....... 3.7 .9 4.6
Other worldwide workforce reductions and facility closings........... 2.8 1.2 4.0
----- ----- ---------
Total fiscal 1998 activity........................................... $ 8.5 $ 5.3 $ 13.8
----- ----- ---------
Balance at June 30, 1998............................................. $ -- $ -- $ --
----- ----- ---------
----- ----- ---------
</TABLE>

As of June 30, 1998 all costs associated with the 1996 restructuring plans
have been incurred.

FISCAL 1997

During the fourth quarter of fiscal 1997, the Company announced a follow-on
phase to Analytical Instruments' profit improvement program begun by the Company
in fiscal 1996. The cost for this action was $24.2 million before-tax, and
included $19.4 million for costs focused on further improving the operating
efficiency of manufacturing facilities in the United States, Germany, and the
United Kingdom. These actions were designed to help transition Analytical
Instruments from a highly vertical manufacturing operation to one that relies
more on outsourcing functions not considered core competencies. The
restructuring charge also included $4.8 million to finalize the consolidation of
sales and administrative support, primarily in Europe, where 17 facilities were
closed.

The workforce reductions under this plan total approximately 285 employees
in production labor and 25 employees in sales and administrative support. The
charge included $11.9 million for severance-related costs. The $12.3 million
provided for facility consolidation and asset-related write-offs included $1.2
million for lease termination payments and $11.1 million for the write-off of
machinery, equipment, and tooling associated with those functions to be
outsourced.

F-30
<PAGE>

The following table details the major components of the fiscal 1997
restructuring provision:

Fiscal 1997 activity:
Changes in manufacturing operations............................................ $ .1 $ 4.6 $ 4.7
Consolidation of sales and administrative support..............................
----- ----- ---------
Total fiscal 1997 activity..................................................... $ .1 $ 4.6 $ 4.7
----- ----- ---------

Fiscal 1998 activity:
Changes in manufacturing operations............................................ $ 7.8 $ 4.9 $ 12.7
Consolidation of sales and administrative support.............................. 1.3 1.1 2.4
----- ----- ---------
Total fiscal 1998 activity..................................................... $ 9.1 $ 6.0 $ 15.1
----- ----- ---------

Fiscal 1999 activity:
Changes in manufacturing operations............................................ $ 1.4 $ -- $ 1.4
Consolidation of sales and administrative support.............................. .1 .1 .2
----- ----- ---------
Total fiscal 1999 activity (unaudited)......................................... $ 1.5 $ .1 $ 1.6
----- ----- ---------

Balance at September 30, 1998:
Changes in manufacturing operations............................................ $ .3 $ .3 $ .6
Consolidation of sales and administrative support.............................. .9 1.3 2.2
----- ----- ---------
Balance at September 30, 1998 (unaudited)...................................... $ 1.2 $ 1.6 $ 2.8
----- ----- ---------
----- ----- ---------
</TABLE>

INCOME TAXES

Income (loss) before income taxes of discontinued operations for fiscal
1996, 1997, and 1998 is summarized below:

F-31
<PAGE>

The components of the provision (benefit) for income taxes of discontinued
operations for fiscal 1996, 1997, and 1998 consisted of the following:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1996 1997 1998
- -------------------------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Currently payable:
Domestic............................................................................ $ (2.0) $ (1.0) $ (3.7)
Foreign............................................................................. 8.7 5.1 7.8
--------- --------- ---------
Total currently payable............................................................. 6.7 4.1 4.1
Deferred:
Domestic............................................................................ (7.8) 4.8 4.9
Foreign............................................................................. (4.6) (2.1) 4.5
--------- --------- ---------
Total deferred...................................................................... (12.4) 2.7 9.4
--------- --------- ---------
Provision (benefit) for income taxes from discontinued operations..................... $ (5.7) $ 6.8 $ 13.5
--------- --------- ---------
--------- --------- ---------
</TABLE>

In the fiscal years 1996, 1997 and 1998, the effective tax rates for the
discontinued operations were 13%, 20% and 25%, respectively. The difference
between the effective tax rate and the statutory tax rate of 35% was mainly
attributable to benefits from the use of U.S. alternative minimum tax credit
carryforwards, the benefits from the use of a foreign sales corporation and
federal research tax credits, and restructuring charges.

F-32
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of
The Perkin-Elmer Corporation

In our opinion, the accompanying combined statements of financial position and
the related combined statements of operations, of group equity and comprehensive
income (loss), and of cash flows present fairly, in all material respects, the
financial position of the PE Biosystems Group of The Perkin-Elmer Corporation at
June 30, 1998 and 1997, and the results of its operations and its cash flows for
each of the three fiscal years in the period ended June 30, 1998, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the management of The Perkin-Elmer Corporation; 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 described above and more fully in Note 1 to the PE Biosystems Group combined
financial statements, the PE Biosystems Group is a group of The Perkin-Elmer
Corporation; accordingly, the combined financial statements of the PE Biosystems
Group should be read in conjunction with the audited financial statements of The
Perkin-Elmer Corporation.

PricewaterhouseCoopers LLP
Stamford, Connecticut
July 31, 1998, except as to Note 15
which is as of January 21, 1999

F-33
<PAGE>

PE BIOSYSTEMS GROUP

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED
FOR THE YEARS ENDED JUNE 30, SEPTEMBER 30,
(DOLLAR AMOUNTS IN THOUSANDS ----------------------------------------- -----------------------
EXCEPT PER SHARE AMOUNTS) 1996 1997 1998 1997 1998
- --------------------------------------------- ------------- ------------ ------------ ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET REVENUES................................. $ 642,059 $ 767,465 $ 940,095 $ 194,083 $ 251,204
Cost of sales................................ 318,038 361,315 431,738 93,714 112,229
------------- ------------ ------------ ----------- ----------
GROSS MARGIN................................. 324,021 406,150 508,357 100,369 138,975
------------- ------------ ------------ ----------- ----------
Selling, general and administrative.......... 187,644 227,687 276,674 58,640 72,687
Research, development and engineering........ 62,223 78,141 105,485 21,328 32,297
Restructuring and other merger costs......... 17,454 -- 43,980 -- 938
Acquired research and development............ 31,812 -- 28,850 -- --
------------- ------------ ------------ ----------- ----------
OPERATING INCOME............................. 24,888 100,322 53,368 20,401 33,053
Gain on investments.......................... 11,704 64,850 1,605 845
Interest expense............................. 8,444 5,859 4,905 1,275 802
Interest income.............................. 5,376 8,826 5,938 2,358 490
Other income (expense), net.................. (2,053) 1,881 3,147 417 1,706
------------- ------------ ------------ ----------- ----------
INCOME BEFORE INCOME TAXES................... 31,471 170,020 59,153 22,746 34,447
Provision for income taxes................... 27,290 35,426 25,069 3,785 9,842
Minority interest............................ -- -- 5,597 -- 3,108
------------- ------------ ------------ ----------- ----------
INCOME FROM CONTINUING OPERATIONS............ 4,181 134,594 28,487 18,961 21,497
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
(NET OF INCOME TAXES)...................... (37,833) 27,906 40,694 3,872 (879)
------------- ------------ ------------ ----------- ----------
NET INCOME (LOSS)............................ $ (33,652) $ 162,500 $ 69,181 $ 22,833 $ 20,618
------------- ------------ ------------ ----------- ----------
------------- ------------ ------------ ----------- ----------
UNAUDITED PRO FORMA INCOME PER SHARE FROM
CONTINUING OPERATIONS (SEE NOTE 1):
Basic........................................ $ .59 $ .44
Diluted...................................... $ .57 $ .43

UNAUDITED PRO FORMA INCOME PER SHARE FROM
DISCONTINUED OPERATIONS
(SEE NOTE 1):
Basic........................................ $ .83 $ (.02)
Diluted...................................... $ .81 $ (.02)

UNAUDITED PRO FORMA NET INCOME PER SHARE (SEE
NOTE 1):
Basic........................................ $ 1.42 $ .42
Diluted...................................... $ 1.38 $ .41
</TABLE>

SEE ACCOMPANYING NOTES TO THE PE BIOSYSTEMS GROUP COMBINED FINANCIAL STATEMENTS.

F-34
<PAGE>

PE BIOSYSTEMS GROUP

COMBINED STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
AT JUNE 30,
--------------------------
(DOLLAR AMOUNTS IN THOUSANDS) 1997 1998
- ----------------------------------------------------------------------- ------------ ------------ AT
SEPTEMBER 30,
1998
-------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............................................ $ 213,028 $ 82,865 $ 71,848
Short-term investments............................................... 4,194 1,226 --
Accounts receivable, less allowances for doubtful accounts of $3,840,
$5,206, and $4,922 at June 30, 1997 and 1998, and September 30,
1998 (unaudited)................................................... 178,483 228,229 236,761
Inventories.......................................................... 111,069 137,015 159,122
Prepaid expenses and other current assets............................ 63,465 61,835 66,784
Current net assets of discontinued operations........................ 102,870 139,959 143,894
------------ ------------ -------------
Total current assets................................................... 673,109 651,129 678,409
Property, plant and equipment, net..................................... 127,301 159,476 166,728
Other long-term assets................................................. 155,351 240,572 246,407
Long-term net assets of discontinued operations........................ 48,049 77,760 78,090
------------ ------------ -------------
TOTAL ASSETS........................................................... $ 1,003,810 $ 1,128,937 $ 1,169,634
------------ ------------ -------------
------------ ------------ -------------
LIABILITIES AND GROUP EQUITY
Current liabilities
Loans payable........................................................ $ 29,916 $ 12,099 $ 58,794
Note payable to the Celera Genomics Group (see Note 7)............... 330,000
Tax benefit payable to the Celera Genomics Group (See Note 1)........ 1,944
Accounts payable..................................................... 85,367 119,067 96,145
Accrued salaries and wages........................................... 26,419 29,800 26,545
Accrued taxes on income.............................................. 98,307 79,860 80,598
Other accrued expenses............................................... 77,937 121,152 124,604
------------ ------------ -------------
Total current liabilities.............................................. 317,946 361,978 718,630
Long-term debt......................................................... 59,152 33,726 29,650
Other long-term liabilities............................................ 118,978 123,969 125,856
------------ ------------ -------------
Total liabilities...................................................... 496,076 519,673 874,136
------------ ------------ -------------
Minority interest...................................................... -- 43,757 49,177
Commitments and contingencies (see Note 11)
Group equity........................................................... 507,734 565,507 246,321
------------ ------------ -------------
TOTAL LIABILITIES AND GROUP EQUITY..................................... $ 1,003,810 $ 1,128,937 $ 1,169,634
------------ ------------ -------------
------------ ------------ -------------
</TABLE>

SEE ACCOMPANYING NOTES TO THE PE BIOSYSTEMS GROUP COMBINED FINANCIAL STATEMENTS.

F-35
<PAGE>

PE BIOSYSTEMS GROUP

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED JUNE 30, ENDED SEPTEMBER 30,
------------------------------- --------------------
(DOLLAR AMOUNTS IN THOUSANDS) 1996 1997 1998 1997 1998
- -------------------------------------------------------------------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
Income from continuing operations................................... $ 4,181 $ 134,594 $ 28,487 $ 18,467 $ 21,497
Adjustments to reconcile income from continuing operations to net
cash
provided (used) by operating activities:
Depreciation and amortization................................... 23,522 25,405 35,278 5,044 8,994
Long-term compensation programs................................. 4,058 9,103 6,853 1,207 642
Deferred income taxes........................................... (15,342) (40,819) 10,234 (1,279) (1,741)
Gains from the sale of assets................................... (11,704) (66,636) (3,052) -- --
Provision for restructured operations and other merger costs.... 17,454 -- 48,080 -- --
Acquired research and development............................... 31,812 -- 28,850 -- --
Impairment of assets............................................ 9,906 -- -- -- --
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable........................ (42,516) (43,169) (23,153) (7,160) (1,971)
(Increase) decrease in inventories................................ (20,447) (4,421) (21,362) (9,677) (19,097)
Increase in prepaid expenses and other assets..................... (322) (6,712) (30,858) (7,663) (5,110)
Increase (decrease) in accounts payable and other liabilities..... 44,746 71,009 68 (14,390) (19,430)
--------- --------- --------- --------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES.................... 45,348 78,354 79,425 (15,451) (16,216)
--------- --------- --------- --------- ---------

INVESTING ACTIVITIES FROM CONTINUING OPERATIONS

Additions to property, plant and equipment (net of disposals of
$4,727, $5,738, $11,339, $1,068 (unaudited) and $506 (unaudited),
respectively)..................................................... (22,398) (51,908) (56,833) (22,794) (21,583)
Acquisitions and investments, net................................... (117,123) (5,000) (97,998) (7,238) --
Proceeds from the sale of assets, net............................... 102,318 99,710 19,496 4,195 14,301
Proceeds from the collection of notes receivable.................... -- 4,978 9,673 9,673 --
Proceeds from short-term investments................................ 5,773 -- -- -- --
--------- --------- --------- --------- ---------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES.................... (31,430) 47,780 (125,662) (16,164) (7,282)
--------- --------- --------- --------- ---------
NET CASH FROM CONTINUING OPERATIONS BEFORE FINANCING ACTIVITIES..... 13,918 126,134 (46,237) (31,615) (23,498)
--------- --------- --------- --------- ---------
DISCONTINUED OPERATIONS
Net cash provided (used) by operating activities.................... 45,903 39,781 10,084 (1,467) 1,542
Net cash used by investing activitives.............................. (15,911) (11,315) (40,639) (9,401) (19,276)
--------- --------- --------- --------- ---------
NET CASH FROM DISCONTINUED OPERATIONS BEFORE FINANCING ACTIVITIES... 29,992 28,466 (30,555) (10,868) (17,734)
--------- --------- --------- --------- ---------

FINANCING ACTIVITIES

Net change in loans payable......................................... (17,040) (4,914) (6,797) 4,327 43,837
Proceeds from long-term debt........................................ -- 31,033 -- -- (5,297)
Principal payments on long-term debt................................ -- (22,908) (25,449) -- --
Dividends paid on Perkin-Elmer Common Stock......................... (29,095) (29,459) (39,072) (7,454) (8,396)
Purchases of Perkin-Elmer Common Stock for treasury................. (41,028) (25,126) -- -- --
Proceeds from issuance of equity put warrants
on Perkin-Elmer Common Stock...................................... -- 1,846 -- -- --
Proceeds from stock issued for Perkin-Elmer Common Stock plans...... 64,954 33,637 33,629 2,889 6,375
Net cash allocated to the Celera Genomics Group..................... (3,482) (28,027) (14,998) (2,428) (8,535)
--------- --------- --------- --------- ---------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES.................... (25,691) (43,918) (52,687) (2,666) 27,984
--------- --------- --------- --------- ---------

Elimination of PerSeptive results from
July 1, 1997 to September 30, 1997 (see Note 1)................... -- -- 2,590 2,590 --
EFFECT OF EXCHANGE RATE CHANGES ON CASH............................. (2,699) 1,601 (3,274) 1,020 2,231
--------- --------- --------- --------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS............................. 15,520 112,283 (130,163) (41,539) (11,017)
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD....................... 85,225 100,745 213,028 213,028 82,865
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS END OF PERIOD............................. $ 100,745 $ 213,028 $ 82,865 $ 171,489 $ 71,848
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

SEE ACCOMPANYING NOTES TO THE PE BIOSYSTEMS GROUP COMBINED FINANCIAL STATEMENTS.

F-36
<PAGE>

PE BIOSYSTEMS GROUP

COMBINED STATEMENTS OF GROUP EQUITY AND COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
ACCUMULATED
OTHER
RETAINED COMPREHENSIVE GROUP
(DOLLAR AMOUNTS IN THOUSANDS) OTHER EARNINGS INCOME (LOSS) EQUITY
- -------------------------------------------------------------------- --------- ----------- --------------- ---------
<S> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1995............................................ $ 251,481 $ 142,741 $ (24,415) $ 369,807
---------
Comprehensive loss
Net loss.......................................................... -- (33,652) -- (33,652)
Other comprehensive income, net of tax
Foreign currency translation adjustments........................ -- -- (10,957)
Minimum pension liability adjustment............................ -- -- 5,080
Unrealized gain on investments, net............................. -- -- 23,175
---------------
Other comprehensive income........................................ -- -- 17,298 17,298
---------
Comprehensive loss.................................................. -- -- -- (16,354)
---------
Cash dividends declared on Perkin-Elmer Common Stock................ -- (29,095) -- (29,095)
Share repurchases of Perkin-Elmer Common Stock...................... (41,028) -- -- (41,028)
Shares issued under Perkin-Elmer Common Stock plans................. 52,583 (5,627) -- 46,956
Tax benefit related to Perking-Elmer employee stock options......... 5,280 -- -- 5,280
Perkin-Elmer restricted stock plan.................................. 5,072 -- -- 5,072
Perkin-Elmer Common Stock issued for acquisitions................... 35,873 -- -- 35,873
Net cash allocated to the Celera Genomics Group..................... (3,482) (3,482)
Other............................................................... 2,064 (1,977) -- 87
--------- ----------- --------------- ---------
BALANCE AT JUNE 30, 1996............................................ 307,843 72,390 (7,117) 373,116
---------
Comprehensive income
Net income........................................................ -- 162,500 -- 162,500
Other comprehensive income, net of tax
Foreign currency translation adjustments........................ -- -- (4,125)
Minimum pension liability adjustment............................ -- -- 28,660
Unrealized gain on investments, net............................. -- -- 3,156
Sale of equity investment....................................... -- -- (23,245)
---------------
Other comprehensive income........................................ -- -- 4,446 4,446
---------
Comprehensive income................................................ -- -- -- 166,946
---------
Cash dividends declared on Perkin-Elmer Common Stock................ -- (29,536) -- (29,536)
Share repurchases of Perkin-Elmer Common Stock...................... (25,126) -- -- (25,126)
Shares issued under Perkin-Elmer Common Stock plans................. 33,741 (1,459) -- 32,282
Tax benefit related to Perkin-Elmer employee stock options.......... 4,568 -- -- 4,568
Perkin-Elmer restricted stock plan.................................. 11,678 -- -- 11,678
Sale of equity put warrants on Perkin-Elmer Common Stock............ 1,846 -- -- 1,846
Net cash allocated to the Celera Genomics Group..................... (28,027) -- -- (28,027)
Other............................................................... 1,427 (1,440) -- (13)
--------- ----------- --------------- ---------
BALANCE AT JUNE 30, 1997............................................ 307,950 202,455 (2,671) 507,734
---------
Comprehensive income
Net income........................................................ -- 69,181 -- 69,181
Other comprehensive loss, net of tax
Foreign currency translation adjustments........................ -- -- (2,747)
Minimum pension liability adjustment............................ -- -- 354
Unrealized loss on investments, net............................. -- -- (4,449)
---------------
Other comprehensive loss.......................................... -- -- (6,842) (6,842)
---------
Comprehensive income................................................ -- -- -- 62,339
---------
Cash dividends declared on Perkin-Elmer Common Stock................ -- (31,604) -- (31,604)
Shares issued under Perkin-Elmer Common Stock plans................. 39,143 (3,468) -- 35,675
Tax benefit related to Perkin-Elmer employee stock options.......... 2,335 -- -- 2,335
Perkin-Elmer restricted stock plan.................................. 1,858 (136) -- 1,722
Elimination of PerSeptive results from July 1, 1997 to September 30,
1997.............................................................. -- 2,590 -- 2,590
Net cash allocated to the Celera Genomics Group..................... (14,998) -- -- (14,998)
Other............................................................... -- (286) -- (286)
--------- ----------- --------------- ---------
BALANCE AT JUNE 30, 1998............................................ 336,288 238,732 (9,513) 565,507
--------- ----------- --------------- ---------
Comprehensive income
Net income........................................................ -- 20,618 -- 20,618
Other comprehensive income, net of tax
Foreign currency translation adjustments........................ -- -- 6,197
Unrealized loss on investments, net............................. -- -- (4,012)
---------------
Other comprehensive income........................................ -- -- 2,185 2,185
---------
Comprehensive income................................................ -- -- -- 22,803
---------
Cash dividends declared on Perkin-Elmer Common Stock................ -- (8,396) -- (8,396)
Shares issued under Perkin-Elmer Common Stock plans................. 7,986 (3,130) -- 4,856
Perkin-Elmer restricted stock plan.................................. (1,121) 1,207 -- 86
Net cash allocated to the Celera Genomics Group..................... (8,535) -- -- (8,535)
Equity contribution to the Celera Genomics Group.................... (330,000) -- -- (330,000)
--------- ----------- --------------- ---------
BALANCE AT SEPTEMBER 30, 1998 (UNAUDITED)........................... $ 4,618 $ 249,031 $ (7,328) $ 246,321
--------- ----------- --------------- ---------
--------- ----------- --------------- ---------
</TABLE>

SEE ACCOMPANYING NOTES TO THE PE BIOSYSTEMS GROUP COMBINED FINANCIAL STATEMENTS.

F-37
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS

NOTE 1 ACCOUNTING POLICIES AND PRACTICES

BASIS OF PRESENTATION

The Board of Directors (the "Board") of the Company has recommended
shareholder approval of the Recapitalization Proposal that would result in The
Perkin-Elmer Corporation merging with a subsidiary of PE Corporation, a new
Delaware Corporation, and the issuance to stockholders in the merger of two new
classes of common stock called PE Corporation-PE Biosystems Group Common Stock
("PE Biosystems Stock") and PE Corporation-Celera Genomics Group Common Stock
("Celera Genomics Stock"). PE Biosystems Stock is intended to reflect separately
the performance of the established PE Biosystems' life sciences and the
discontinued Analytical Instruments businesses ("PE Biosystems Group"), and
Celera Genomics Stock is intended to reflect separately the performance of the
Celera Genomics business ("Celera Genomics Group"). Each share of existing
Perkin-Elmer common stock will be converted into one share of PE Biosystems
Stock and 0.5 of a share of Celera Genomics Stock. As used herein,
"Perkin-Elmer" or the "Company" means, with respect to events after the
Recapitalization, the new Delaware company that will issue PE Biosystems Stock
and Celera Genomics Stock.

The combined financial statements of the PE Biosystems Group and the Celera
Genomics Group (individually referred to as a "Group") comprise all of the
accounts included in the corresponding consolidated financial statements of the
Company. The separate Group combined financial statements give effect to the
accounting policies that will be applicable upon implementation of the
Recapitalization Proposal. The separate PE Biosystems Group and Celera Genomics
Group combined financial statements have been prepared on a basis that
management believes to be reasonable and appropriate and reflect (i) the
financial position, results of operations, and cash flows of businesses that
comprise each of the Groups, with all significant intragroup transactions and
balances eliminated, (ii) in the case of the Celera Genomics Group combined
financial statements, corporate assets and liabilities of the Company and
related transactions identified with the Celera Genomics Group, including
allocated portions of the Company's debt and selling, general and administrative
costs, and (iii) in the case of the PE Biosystems Group's combined financial
statements, all other corporate assets and liabilities and related transactions
of the Company, including allocated portions of the Company's debt and selling,
general and administrative costs. Intergroup transactions between the PE
Biosystems Group and the Celera Genomics Group have not been eliminated in the
PE Biosystems Group's combined financial statements.

F-38
<PAGE>
could be subject to the liabilities of the other Group, whether such liabilities
arise from lawsuits, contracts or indebteness attributable to the other Group.
If the Company is unable to satisfy one Group's liabilities out of assets
attributed to it, the Company may be required to satisfy these liabilities with
assets attributed to the other Group.

Financial effects arising from one Group that affect the Company's results
of operations or financial condition could, if significant, affect the results
of operations or financial condition of the other Group and the market price of
the class of common stock relating to the other Group. Any net losses of the PE
Biosystems Group or the Celera Genomics Group and dividends or distributions on,
or repurchases of, PE Biosystems Stock or Celera Genomics Stock or repurchases
of preferred stock or junior preferred stock of the Company will reduce the
assets of the Company legally available for payment of dividends on PE
Biosystems Stock.

The management and allocation policies applicable to the preparation of the
financial statements of the PE Biosystems Group and the Celera Genomics Group
may be modified or rescinded, or additional policies may be adopted, at the sole
discretion of the Board at any time without approval of the stockholders. The PE
Biosystems Group's combined financial statements reflect the application of the
management and allocation policies adopted by the Board to various corporate
activities, as described below. The PE Biosystems Group's combined financial
statements should be read in conjunction with the Company's consolidated
financial statements.

FINANCING ACTIVITIES

As a matter of policy, the Company manages most financial activities of the
PE Biosystems Group and the Celera Genomics Group on a centralized basis. These
activities include the investment of surplus cash, the issuance and repayment of
short-term and long-term debt and the issuance and repayment of any preferred
stock. As the results of the Celera Genomics Group were not significant for any
of the periods presented, all historical cash and debt balances for the periods
presented have been allocated to the PE Biosystems Group.

The Board has adopted the following financing policy which will affect the
combined statements of the PE Biosystems Group and the Celera Genomics Group.

The Company will allocate the Company's debt between the PE Biosystems Group
and the Celera Genomics Group ("pooled debt") or, if the Company so determines,
in its entirety to a particular Group. The Company will allocate preferred
stock, if issued, in a similar manner.

Cash allocated to one Group that is used to repay pooled debt or redeem
pooled preferred stock will decrease such Group's allocated portion of the
pooled debt or preferred stock. Cash or other property allocated to one Group
that is transferred to the other Group will, if so determined by the Board,
decrease the transferring Group's allocated portion of the pooled debt or
preferred stock and, correspondingly, increase the recipient Group's allocated
portion of the pooled debt or preferred stock.

F-39
<PAGE>
Group will receive a credit for an amount equal to the difference as
compensation for the use of the Company's credit capacity. Any expense related
to debt or preferred stock of the Company that is allocated in its entirety to a
Group will be allocated in whole to that Group.

Cash or other property that the Company allocates to one Group that is
transferred to the other Group, could, if so determined by the Board, be
accounted for either as a short-term loan or as a long-term loan. Short-term
loans will bear interest at a rate equal to the weighted average interest rate
of the Company's pooled debt. If the Company does not have any pooled debt, the
Board will determine the rate of interest for such loan. The Board will
establish the terms on which long-term loans between the Groups will be made,
including interest rate, amortization schedule, maturity and redemption terms.

Although the Company may allocate its debt and preferred stock between
Groups, the debt and preferred stock will remain obligations of the Company and
all stockholders of the Company will be subject to the risks associated with
those obligations.

In addition, cash allocated to the PE Biosystems Group may be contributed to
the Celera Genomics Group in exchange for Celera Genomics Group Designated
Shares.

ALLOCATION OF CORPORATE OVERHEAD AND ADMINISTRATIVE SHARED SERVICES

A portion of the Company's corporate overhead (such as executive management,
human resources, legal, accounting, auditing, tax, treasury, strategic planning
and environmental services) has been allocated to the PE Biosystems Group based
upon the use of services by that Group. A portion of the Company's costs of
administrative shared services (such as information technology services) has
been allocated in a similar manner. Where determination based on use alone is
not practical, other methods and criteria were used that management believes are
equitable and provide a reasonable estimate of the cost attributable to the PE
Biosystems Group. The total of these allocations were $27.7 million, $34.4
million and $38.1 million in fiscal 1996, 1997, and 1998, respectively. It is
not practicable to provide a detailed estimate of the expenses which would be
recognized if the PE Biosystems Group were a separate legal entity.

ALLOCATION OF FEDERAL AND STATE INCOME TAXES

The federal income taxes of the Company and its subsidiaries which own
assets allocated between the Groups are determined on a consolidated basis.
Consolidated federal income tax provisions and related tax payments or refunds
will be allocated between the Groups based principally on the taxable income and
tax credits directly attributable to each Group. Such allocations will reflect
each Group's contribution (positive or negative) to the Company's consolidated
federal taxable income and the consolidated federal tax liability and tax credit
position. Tax benefits that cannot be used by the Group generating those
benefits but can be used on a consolidated basis will be credited to the Group
that generated such benefits. Intergroup transactions will be taxed as if each
group were a stand alone Company. Tax benefits generated by the Celera Genomics
Group commencing July 1, 1998, which then can be utilized on a consolidated
basis, will be credited to the Celera Genomics Group up to a maximum limit of
$75 million. The tax benefit payable by the PE Biosystems Group to the Celera
Genomics Group was $1.9 million at June 30, 1998.

Had the Groups filed separate tax returns, the provision for income taxes
and net income for each Group would not have differed from the amounts reported
in the Groups' combined statements of operations for the years ended June 30,
1996, 1997, and 1998 or for the three-month periods ended September 30, 1997 and
1998. However, the amount of current and deferred taxes and taxes payable or
refundable allocated to each Group in these historical combined financial
statements may differ from those that would have been allocated to each Group
had they filed separate income tax returns.

Depending on the tax laws of the respective jurisdictions, state and local
income taxes are calculated on either a consolidated or combined

F-40
<PAGE>
basis between the Groups based on their respective contribution to such
consolidated or combined state taxable incomes. State and local income tax
provisions and related tax payments or refunds which are determined on a
separate corporation basis will be allocated between the Groups in a manner
designed to reflect the respective contributions of the Groups to the Company's
separate or local taxable income.

The discussion of the PE Biosystems Group's income taxes (see Note 4) should
be read in conjunction with the Company's consolidated financial statements and
notes thereto.

DIVIDENDS

For purposes of the historical combined financial statements of the PE
Biosystems Group and the Celera Genomics Group, all dividends declared and paid
by the Company have been allocated to the PE Biosystems Group. The Company
initially intends to pay a dividend on PE Biosystems Stock but does not
anticipate paying dividends on Celera Genomics Stock for the foreseeable future.

PRINCIPLES OF COMBINATION

The PE Biosystems Group's combined financial statements have been prepared
in accordance with generally accepted accounting principles and, taken together
with the Celera Genomics Group's combined financial statements, comprise all the
accounts included in the corresponding consolidated financial statements of the
Company. The combined financial statements of each Group reflect the financial
condition, results of operations, and cash flows of the businesses included
therein. The combined financial statements of the PE Biosystems Group include
the accounts or assets of the Company specifically allocated to the PE
Biosystems Group. The preparation of the combined financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.

On January 22, 1998, the Company acquired PerSeptive Biosystems, Inc.
("PerSeptive"). The acquisition has been accounted for as a pooling of interests
and, accordingly, the PE Biosystems Group's financial results have been restated
to include the combined operations (see Note 2). The PE Biosystems Group's
fiscal year ended June 30 and PerSeptive's fiscal year ended September 30. The
fiscal 1996 and 1997 Combined Statements of Operations combined the PE
Biosystems Group's results of operations for the years ended June 30, 1996 and
1997 with PerSeptive's results of operations for the fiscal years ended
September 30, 1996 and 1997, respectively. The fiscal 1998 Combined Statements
of Operations combined the PE Biosystems Group's operating results for the year
ended June 30, 1998 with PerSeptive's operating results for the nine months
ended June 30, 1998 and the three months ended September 30, 1997 (PerSeptive's
fiscal 1997 fourth quarter). In order to conform PerSeptive to a June 30 fiscal
year-end in fiscal 1998, PerSeptive's results of operations for the three months
ended September 30, 1997 have been included in the PE Biosystems Group's
Combined Statements of Operations for the fiscal years ended June 30, 1997 and
1998.

DISCONTINUED OPERATIONS

The PE Biosystems Group's combined financial statements have been restated
to reflect the net assets and operating results of the Analytical Instruments
business as discontinued operations pending disposition for all periods
presented (see Note 15). The net assets have been reclassified in both the
current and long-term asset sections of the Combined Statements of Financial
Position for all periods presented. The operating results are reflected in the
Combined Statements of Operations as income (loss) from discontinued operations
for all periods presented. The accompanying notes, except Note 15, relate only
to continuing operations.

F-41
<PAGE>
RECENT ACCOUNTING STANDARDS

During the first quarter of fiscal 1999, the PE Biosystems Group adopted
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." The provisions of this statement require disclosure of
total comprehensive income within the condensed financial statements of interim
periods and additional disclosures of the components of comprehensive income on
an annual basis. Total comprehensive income includes net income, foreign
currency translation adjustments, unrealized gains and losses on
available-for-sale investments, and minimum pension liability adjustment. The PE
Biosystems Group presents such information in its Combined Statements of Group
Equity and Comprehensive Income (Loss) and Note 14.

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." The
provisions of the statement require the recognition of all derivatives as either
assets or liabilities in the statement of financial position and the measurement
of those instruments at fair value. The accounting for changes in the fair value
of a derivative depends on the intended use of the derivative and the resulting
designation. The PE Biosystems Group is required to implement the statement in
the first quarter of fiscal 2000. Management is currently analyzing the
statement to determine the impact, if any, on the combined financial statements.

EARNINGS PER SHARE

Historical per share information is omitted from the Combined Statements of
Operations because PE Biosystems Stock was not part of the capital structure of
the Company for the periods presented. Following implementation of the
Recapitalization Proposal, earnings per share for PE Biosystems Stock will
reflect the terms of the new Delaware company's certificate of incorporation and
will be computed in accordance with SFAS No.128, "Earnings per Share." Basic
earnings per share will be computed by dividing net income for the period by the
weighted average number of PE Biosystems Stock outstanding. Diluted earnings per
share will be computed by dividing net income for the period by the weighted
average number of PE Biosystems Stock outstanding including the dilutive effect
of Perkin-Elmer Group Stock equivalents. Pro-forma earnings per share,
reflecting PE Biosystems Stock issued under the Recapitalization Proposal, is
presented in the PE Biosystems Group's Combined Statements of Operations.

FOREIGN CURRENCY

Assets and liabilities of foreign operations, where the functional currency
is the local currency, are translated into U.S. dollars at the fiscal period-end
exchange rates. The related translation adjustments are recorded as a separate
component of Group equity. Foreign currency revenues and expenses are translated
using monthly average exchange rates prevailing during the period. Foreign
currency transaction gains and losses, as well as translation adjustments of
foreign operations where the functional currency is the U.S. dollar, are
included in net income. Transaction gains and (losses) for the periods ended
June 30, 1996, 1997, and 1998 were gains of $4.8 million, $1.5 million, and a
loss of $2.5 million, respectively.

DERIVATIVE FINANCIAL INSTRUMENTS

CASH, SHORT-TERM INVESTMENTS, AND MARKETABLE SECURITIES

F-42
<PAGE>
to one year are classified as short-term investments. Short-term investments,
which include marketable securities, are recorded at cost, which generally
approximates market value.

ACCOUNTS RECEIVABLE

The Company periodically sells accounts receivable arising from business
conducted in Japan. During fiscal 1996, 1997 and 1998, the PE Biosystems Group
was allocated all cash proceeds received of $61.9 million, $65.7 million and
$98.8 million, respectively, from the sale of such receivables. The PE
Biosystems Group accounts for such sales in accordance with SFAS 125, "Acounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities" and believes it has adequately provided for any risk of loss that
may occur under these arrangements.

INVESTMENTS

INVENTORIES

Inventories are stated at the lower of cost (on a first-in, first-out basis)
or market. Inventories at June 30, 1997 and 1998, and September 30, 1998,
included the following components:

<TABLE>
<CAPTION>
JUNE 30,
(DOLLAR AMOUNTS IN --------------------
MILLIONS) 1997 1998
- ------------------------ --------- --------- SEPTEMBER 30,
1998
---------------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials and
supplies.............. $ 25.2 $ 45.2 $ 44.9
Work-in-process......... 6.1 7.3 9.3
Finished products....... 79.8 84.5 104.9
--------- --------- ------
Total inventories....... $ 111.1 $ 137.0 $ 159.1
--------- --------- ------
--------- --------- ------
</TABLE>

PROPERTY, PLANT, AND EQUIPMENT AND DEPRECIATION

Property, plant and equipment are recorded at cost and consisted of the
following at June 30, 1997 and 1998:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998
- ------------------------------------- --------- ---------
<S> <C> <C>
Land................................. $ 13.3 $ 12.0
Buildings and leasehold
improvements....................... 79.3 92.3
Machinery and equipment.............. 124.3 173.2
--------- ---------
Property, plant and equipment, at
cost............................... 216.9 277.5
Accumulated depreciation and
amortization....................... 89.6 118.0
--------- ---------
Property, plant and equipment, net... $ 127.3 $ 159.5
--------- ---------
--------- ---------
</TABLE>

CAPITALIZED SOFTWARE

F-43
<PAGE>

material. At June 30, 1998, capitalized software costs, net of accumulated
amortization, were $4.4 million.

INTANGIBLE ASSETS

The excess of purchase price over the net asset value of companies acquired
is amortized on a straight-line method over periods not exceeding 40 years.
Patents and trademarks are amortized using the straight-line method over their
expected useful lives. At June 30, 1997 and 1998, and September 30, 1998
(unaudited), other long-term assets included goodwill, net of accumulated
amortization, of $17.5 million, $69.8 million and $68.6 million, respectively.
Accumulated amortization of goodwill was $3.3 million, $6.1 million, and $7.4
million at June 30, 1997 and 1998, and September 30, 1998 (unaudited),
respectively.

ASSET IMPAIRMENT

The PE Biosystems Group periodically reviews all long-lived assets for
impairment in accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." Assets are
written down to fair value when the carrying costs exceed this amount. In fiscal
1996, the PE Biosystems Group recorded a cost of sales charge of $9.9 million
for the impairment of certain production assets associated with the realignment
of the product offerings of PerSeptive. In fiscal 1997, the PE Biosystems Group
recorded a $.7 million cost of sales charge for the write-down of impaired
assets. The impairment losses were determined based upon estimated future cash
flows and fair values.

REVENUES

RESEARCH, DEVELOPMENT AND ENGINEERING

Research, development and engineering costs are expensed when incurred.

SUPPLEMENTAL CASH FLOW INFORMATION

All cash paid for interest and income taxes for the following periods and
significant non-cash investing and financing activities were allocated to the
Perkin-Elmer Group:

<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDED
FOR THE
YEARS ENDED JUNE 30, SEPTEMBER 30,
(AMOUNTS IN ------------------------------- --------------------
MILLIONS) 1996 1997 1998 1997 1998
- ---------------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest........ $ 8.9 $ 6.0 $ 5.7 $ 1.6 $ 0.6
Income taxes.... $ 15.0 $ 31.3 $ 60.5 $ 10.8 $ 5.7
Significant non-
cash investing
and financing
activities:
Unrealized
gain (loss)
on
investments.. $ 23.2 $ 3.2 $ (4.4) $ 3.1 $ (4.0)
Dividends
declared not
paid........ $ 7.4 $ 7.5 $ -- $ 7.5 $ --
Common shares
issued in
PerSeptive
pooling..... -- -- 4.6 -- --
Minority
interest
assumed..... $ -- $ -- $ 41.3 $ -- $ --
</TABLE>

UNAUDITED INTERIM FINANCIAL STATEMENTS

The accompanying unaudited combined interim financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in accordance with the Securities and Exchange
Commission's rules and regulations for interim reporting. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of the
PE Biosystems Group's management, the unaudited combined interim financial
statements include all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly such interim financial information.

NOTE 2 ACQUISITIONS AND DISPOSITIONS

PERSEPTIVE BIOSYSTEMS, INC.

The merger (the "Merger") of Seven Acquisition Corp., a wholly-owned
subsidiary of the Company, and PerSeptive was consummated on January 22, 1998.
PerSeptive develops,

F-44
<PAGE>
manufactures, and markets an integrated line of proprietary consumable products
and advanced instrumentation systems for the purification, analysis, and
synthesis of biomolecules. As a result of the Merger, PerSeptive, which was the
surviving corporation of the Merger, became a wholly-owned subsidiary of the
Company on that date. Each outstanding share of PerSeptive common stock was
converted into shares of the Company's common stock at an exchange ratio equal
to 0.1926. Accordingly, the Company issued 4.6 million shares of its common
stock for all outstanding shares of PerSeptive common stock. Each outstanding
option and warrant for shares of PerSeptive common stock was converted into
options and warrants for the number of shares of the Company's common stock that
would have been received if such options and warrants had been exercised
immediately prior to the effective time of the Merger. All shares of Series A
Redeemable Convertible Preferred Stock of PerSeptive outstanding immediately
prior to the effective time of the Merger were converted in accordance with
their terms into shares of PerSeptive common stock which were then converted
into shares of the Company's common stock. As a result of the Merger,
PerSeptive's 8 1/4% Convertible Subordinated Notes Due 2001 (the "PerSeptive
Notes") became convertible into shares of the Company's common stock. On March
23, 1998, the Company redeemed the PerSeptive Notes for a total of $26.1 million
representing $24.7 million of principal and $1.4 million of accrued interest and
premium relating to the PerSeptive Notes. Additionally, $2.5 million of the
principal amount of the PerSeptive Notes was converted by the holders thereof
into 35,557 shares of the Company's common stock.

The Merger qualified as a tax-free reorganization and has been accounted for
as a pooling of interests. Accordingly, the PE Biosystems Group financial
results have been restated to include the combined operations.

Combined and separate results of the PE Biosystems Group and PerSeptive
during the periods preceding the Merger were as follows:

<TABLE>
<CAPTION>
PE
BIOSYSTEMS PER-
(DOLLAR AMOUNTS IN MILLIONS) GROUP SEPTIVE ADJ. COMBINED
- ----------------------------- ------------- ----------- --- -----------
<S> <C> <C> <C> <C>
Fiscal year ended June 30,
1996:
Net revenues................. $ 556.0 $ 86.1 $ 642.1
Income (loss) from continuing
operations................. $ 54.3 $ (50.4) $ 3.9

Fiscal year ended June 30,
1997:
Net revenues................. $ 671.0 $ 96.5 $ 767.5
Income from continuing
operations................. $ 117.5 $ 15.2 $ 132.7

Six months ended December 31,
1997 (unaudited):
Net revenues................. $ 356.8 $ 52.6 $ 409.4
Income (loss) from continuing
operations................. $ 17.2 $ (5.4) $ .6 $ 12.4
</TABLE>

The adjustment for the six months ended December 31, 1997 reflects the
inclusion of PerSeptive's operating results within the Company's consolidated
tax provision. There were no material intercompany transactions between the PE
Biosystems Group and PerSeptive during any period presented.

TECAN AG

MOLECULAR INFORMATICS, INC.

F-45
<PAGE>

applied markets such as forensics and human identification. The acquisition cost
was $53.9 million and was accounted for as a purchase. In connection with the
acquisition, $28.9 million of purchased in-process research and development
expense was allocated to the PE Biosystems Group and $24.7 million was allocated
to goodwill and other intangible assets. Goodwill of $9.0 million is being
amortized over ten years, and other intangible assets of $15.7 million are being
amortized over periods of four to seven years.

Approximately 10% of the in-process research and development value was
attributed to BioLIMS, a software system that manages data, initiates analysis
programs, and captures the results in a centralized, relational database for
sequencing instruments; 6% was attributed to GA SFDB, a client-side add-on
product to several existing gene sequencing instruments; 38% was attributed to
BioMERGE, a client-server management and integration system that organizes
proprietary, public, and third-party results in a single relational database for
the drug discovery and genomic research markets; 9% was attributed to BioCLINIC,
a client-server management and integration system that organizes proprietary,
public, and third-party results generated from DNA and protein sequence analysis
in a single database for the clinical trials phase of drug development; and 37%
was attributed to SDK, an open architecture software platform from which all of
Molecular Informatics' future software applications are expected to be derived.

At the date of the acquisition, management expected to complete the majority
of these projects and commence generating significant revenues in 1999.

A total of $11.8 million of the purchase price was attributed to core
technology and existing products, primarily related to the BioMERGE product. The
risk-adjusted discount rate applied to the projects cash flows was 20% for
existing technology and 23% for in-process technology. Management's cash flow
and other assumptions utilized at the time of acquisition have not materially
changed at September 30, 1998. The significant risks associated with these
products include the limited operating history of Molecular Informatics,
uncertainties surrounding market acceptance of such in-process products,
competitive threats from other bioinformatics companies, and other risks.
Management is primarily responsible for estimating the fair value of such
existing and in-process technology.

BIOMETRIC IMAGING, INC.

During fiscal 1998, the Company acquired a minority equity interest in
Biometric Imaging, Inc. for $4.0 million. The Company and Biometric Imaging are
collaborating on the development and manufacturing of a high-throughput
screening system for use by pharmaceutical research companies to accelerate the
drug discovery process. The Company received exclusive worldwide marketing
rights for products developed for that market. Biometric Imaging products are
designed to help ensure the integrity of transfused products, optimize cell
therapy procedures, and monitor disease progression and the efficacy of therapy.

OTHER ACQUISITIONS

The Company entered into a strategic partnership with Hyseq, Inc., acquiring
a minority equity interest for an initial cash investment of $5.0 million,
during the fourth quarter of fiscal 1997. Hyseq, Inc. applies proprietary DNA
array technology to develop gene-based therapeutic product candidates and
diagnostic products and tests. In the first quarter of fiscal 1998, the Company
increased its investment by $5.0 million

In fiscal 1996, the Company acquired Tropix, Inc., a world leader in the
development, manufacture, and sale of chemiluminescent detection technology and
a minority equity

F-46
<PAGE>

interest in Paracel, Inc., a provider of information filtering technologies for
a total cost, net of cash acquired, of $40.4 million. In connection with these
and other life science acquisitions, the PE Biosystems Group was allocated $31.8
million of purchased in-process research and development expensed in fiscal
1996.

The net assets and results of operations for the above acquisitions
accounted for under the purchase method have been included in the combined
financial statements of the PE Biosystems Group since the date of each
acquisition. The pro forma effect of these acquisitions, individually or in the
aggregate, on the PE Biosystems Group's combined financial statements was not
significant.

DISPOSITIONS

MILLENNIUM PHARMACEUTICALS, INC.

During fiscal 1998, the PE Biosystems Group recorded a before-tax gain of
$1.6 million in connection with the release of previously existing contingencies
on shares of Millennium Pharmaceuticals, Inc. ("Millennium") common stock.
During fiscal 1997, the Company sold approximately 50% of its investment in
Millennium and allocated the before-tax gain of $27.5 million associated with
the sale to the PE Biosystems Group. The gain included $25.9 million from the
Company's exchange of a 34% equity interest in ChemGenics Pharmaceuticals, Inc.
for an approximate 6% equity interest in Millennium.

ETEC SYSTEMS, INC.

In fiscal 1997, the Company completed the sale of its entire equity interest
in Etec Systems, Inc. Before-tax gains of $11.7 million and $37.4 million were
allocated to the PE Biosystems Group for fiscal 1996 and 1997, respectively. Net
cash proceeds from the sales were $16.6 million and $45.8 million for fiscal
1996 and 1997, respectively.

NOTE 3 DEBT AND LINES OF CREDIT

ALLOCATED DEBT ACTIVITY

All historical debt activity has been allocated to the PE Biosystems Group.
Loans payable and long-term debt at June 30, 1997 and 1998 and September 30,
1998 are summarized below:

The weighted average interest rates at June 30, 1997 and 1998, and September
30, 1998 (unaudited) for loans payable were 3.6% and 1.8%, and 4.3%
respectively.

On March 23, 1998, the Company redeemed PerSeptive's 8 1/4% convertible
subordinated notes (see Note 2).

F-47
<PAGE>

borrowed vary depending on whether borrowings are undertaken in the domestic or
Eurodollar markets. There were no borrowings under the facility at June 30, 1997
or 1998. All other credit facilities available consist of uncommitted overdraft
credit lines that are provided at the discretion of local banks. A parent
guarantee is required by the facility if the local unit borrows any funds.

At June 30, 1998, and September 30, 1998, the Company had unused credit
facilities for short-term borrowings from domestic and foreign banks in various
currencies totaling $343 million and $313 million, respectively.
Under various debt and credit agreements, the Company is required to
maintain certain minimum net worth and interest coverage ratios.

There are no maturities of long-term debt scheduled for fiscal 1999, 2000,
2001, or 2003. The Yen 3.8 billion loan matures in fiscal 2002.

NOTE PAYABLE TO THE CELERA GENOMICS GROUP

The Company has allocated to the Celera Genomics Group a $330 million note
payable of the PE Biosystems Group. The Company believes its capital resources
and the cash flows of the PE Biosystems Group will be sufficient to fund the
note payable to the Celera Genomics Group and to maintain and support the growth
requirements of the PE Biosystems Group's current operations.

NOTE 4 INCOME TAXES

Income before income taxes from continuing operations for fiscal 1996, 1997,
and 1998 is summarized below:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN
MILLIONS) 1996 1997 1998
- ------------------------- --------- --------- ---------
<S> <C> <C> <C>
United States............ $ (27.6) $ 130.4 $ (25.2)
Foreign.................. 59.1 39.6 84.4
--------- --------- ---------
Total.................... $ 31.5 $ 170.0 $ 59.2
--------- --------- ---------
--------- --------- ---------
</TABLE>

The provision for income taxes from continuing operations includes the PE
Biosystems Group's allocated portion of income taxes currently payable and those
deferred because of differences between the financial statement and tax bases of
assets and liabilities. The PE Biosystems Group's provision for income taxes
from continuing operations consists of the following:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN
MILLIONS) 1996 1997 1998
- --------------------------- --------- --------- ---------
<S> <C> <C> <C>
Currently payable:
Domestic................... $ 12.4 $ 57.2 $ 3.8
Foreign.................... 15.6 18.7 17.8
--------- --------- ---------
Total currently payable.... 28.0 75.9 21.6
--------- --------- ---------
Deferred:
Domestic................... 3.4 (45.8) 6.1
Foreign.................... (4.1) 5.3 (2.6)
--------- --------- ---------
Total deferred............. .7 (40.5) 3.5
--------- --------- ---------
Total provision for income
taxes from continuing
operations............... $ 27.3 $ 35.4 $ 25.1
--------- --------- ---------
--------- --------- ---------
</TABLE>

Significant components of deferred tax assets and liabilities from
continuing operations at June 30, 1997 and 1998 are summarized below:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998
- ----------------------------------- --------- ---------
<S> <C> <C>
Deferred tax assets:
Inventories........................ $ .7 $ 4.0
Postretirement and postemployment
benefits......................... 35.7 35.0
Other reserves and accruals........ 48.5 44.3
Tax credit and loss
carryforwards.................... 39.4 32.2
--------- ---------
Subtotal........................... 124.3 115.5
Valuation allowance................ (69.7) (62.8)
--------- ---------
Total deferred tax assets.......... 54.6 52.7
--------- ---------
Deferred tax liabilities:
Millennium equity transaction...... 4.3
Other reserves and accruals........ (.2) 6.9
--------- ---------
Total deferred tax liabilities..... 4.1 6.9
--------- ---------
Total deferred tax assets, net..... $ 50.5 $ 45.8
--------- ---------
--------- ---------
</TABLE>

A reconciliation of the federal statutory tax to the PE Biosystems Group's
continuing tax

F-48
<PAGE>
provision for fiscal 1996, 1997, and 1998 is set forth in the following table:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN
MILLIONS) 1996 1997 1998
- --------------------------- --------- --------- ---------
<S> <C> <C> <C>
Federal statutory rate..... 35% 35% 35%
--------- --------- ---------
Tax at federal statutory
rate..................... $ 11.0 $ 59.5 $ 20.7
State income taxes (net of
federal benefit)......... (1.9) .1 .1
Effect on income from
foreign operations....... .1 41.1 1.2
Effect on income from
foreign sales
corporation.............. (1.1) (1.6) (2.5)
Acquired research and
development.............. 11.2 10.1
Restructuring and other
merger costs............. 5.2
Domestic temporary
differences for which
benefit is recognized.... (9.9) (56.6) (4.8)
Benefit of loss not
recognized/(utilization
of net operating
losses).................. 16.9 (7.7)
Other...................... 1.0 .6 (4.9)
--------- --------- ---------
Total provision for income
taxes from continuing
operations............... $ 27.3 $ 35.4 $ 25.1
--------- --------- ---------
--------- --------- ---------
</TABLE>

At June 30, 1998, the PE Biosystems Group had an allocated U.S. alternative
minimum tax credit carryforward of $4.9 million with an indefinite carryforward
period. The Company's subsidiary, PerSeptive, has domestic loss carryforwards of
approximately $64 million that will expire between the years 2003 and 2012 which
have also been allocated to the PE Biosystems Group. The amount of these net
operating loss carryforwards that can be utilized annually to offset future
taxable income or tax liability has been limited under the Internal Revenue Code
as a result of the acquisition. The PE Biosystems Group also has been allocated
loss carryforwards of approximately $38 million in various foreign countries
with varying expiration dates.

U.S. income taxes have not been provided on approximately $77 million of net
unremitted earnings from foreign subsidiaries since the Company intends to
permanently reinvest substantially all of such earnings in the operations of the
subsidiaries. These earnings include income from manufacturing operations in
Singapore, which is tax exempt through the year 2004. In those instances where
the Company expects to remit earnings, the effect on the PE Biosystems Group's
results of operations, after considering available tax credits and amounts
previously accrued, was not significant.

NOTE 5 RETIREMENT AND OTHER BENEFITS

PENSION PLANS

The Company maintains or sponsors pension plans that cover substantially all
worldwide employees. Pension benefits earned are generally based on years of
service and compensation during active employment. However, the level of
benefits and terms of vesting vary among the plans. Pension plan assets are
administered by trustees and are principally invested in equity and fixed income
securities. The funding of pension plans is determined in accordance with
statutory funding requirements. As the pension activity attributable to the
Celera Genomics Group was not material for the three years ended June 30, 1998,
all pension amounts recognized in the Company's Statements of Financial Position
have been allocated to the PE Biosystems Group.

The total worldwide pension expense of continuing operations for all
employee pension plans was $3.3 million, $4.6 million, and $4.2 million for
fiscal 1996, 1997, and 1998,

F-49
<PAGE>
respectively. The components of net pension expense are set forth in the
following table:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1996 1997 1998
- ------------------------------ --------- --------- ---------
<S> <C> <C> <C>
Domestic Plans:
Service cost.................. $ 3.0 $ 3.3 $ 4.7
Interest cost................. 27.7 31.9 36.2
Actual return on assets....... (26.5) (30.3) (35.4)
Net amortization and
deferral.................... (1.1) (.5) (1.5)
--------- --------- ---------
Net pension expense........... $ 3.1 $ 4.4 $ 4.0
--------- --------- ---------
--------- --------- ---------
Foreign Plans:
Service cost.................. $ .2 $ .2 $ .1
Interest cost................. .2 .1 .2
Actual return on assets....... (.3) (.1) (.2)
Net amortization and
deferral.................... .1 -- .1
--------- --------- ---------
Net pension expense........... $ .2 $ .2 $ .2
--------- --------- ---------
--------- --------- ---------
</TABLE>

The following table sets forth the funded status of the plans of continuing
operations and amounts recognized in the PE Biosystems Group Combined Statements
of Financial Position at June 30, 1997 and 1998:

<TABLE>
<CAPTION>
DOMESTIC PLANS
------------------------------------------
ASSETS EXCEED ACCUMULATED BENEFITS
ACCUMULATED BENEFITS EXCEED ASSETS
-------------------- --------------------
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998 1997 1998
- ---------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Plan assets at fair value......... $ 474.2 $ 559.4 $ -- $ --
Projected benefit obligation...... 475.0 544.5 10.7 12.2
--------- --------- --------- ---------
Plan assets greater (less) than
projected benefit obligation.... (.8) 14.9 (10.7) (12.2)
Unrecognized items:
Net actuarial loss.............. 43.3 33.4 1.7 2.8
Prior service cost.............. (5.5) (4.7) 3.0 2.6
Net transition (asset)
obligation.................... (7.2) (4.8) .5 .4
Minimum pension liability
adjustment...................... (3.8) (4.1)
--------- --------- --------- ---------
Prepaid (accrued) pension
expense......................... $ 29.8 $ 38.8 $ (9.3) $ (10.5)
--------- --------- --------- ---------
--------- --------- --------- ---------
Actuarial present value of
accumulated benefits............ $ 470.2 $ 530.4 $ 9.3 $ 10.5
Accumulated benefit obligation
related to vested benefits...... $ 461.7 $ 522.0 $ 8.0 $ 9.5
</TABLE>

<TABLE>
<CAPTION>
FOREIGN PLANS
--------------------
ASSETS EXCEED
ACCUMULATED BENEFITS
--------------------
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998
- -------------------------------------------- --------- ---------
<S> <C> <C>
Plan assets at fair value................... $ 3.1 $ 3.6
Projected benefit obligation................ 3.2 3.8
--------- ---------
Plan assets (less) than projected benefit
obligation................................ (.1) (.2)
Unrecognized items:
Net actuarial (gain) loss................. .8 1.0
--------- ---------
Prepaid pension expense..................... $ .7 $ .8
--------- ---------
--------- ---------
Actuarial present value of accumulated
benefits.................................. $ 2.2 $ 2.5
Accumulated benefit obligation related to
vested benefits........................... $ 2.0 $ 2.4
</TABLE>

The following actuarial assumptions were used in accounting for the defined
benefit plans:

<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Domestic Plans
Assumptions:
Discount rate.......... 8 1/2% 8%
Compensation increase.. 4% 4%
Long-term rate of 8 1/2 - 8 1/2 -
return............... 9 1/4% 9 1/4%

Foreign Plans
Assumptions:
Discount rate.......... 6% 5 1/2%
Compensation increase.. 4 1/4% 4 1/4%
Long-term rate of
return............... 6 1/2% 6 1/2%
</TABLE>

SAVINGS PLAN

The Company provides a 401(k) savings plan, for most domestic employees,
with automatic Company contributions of 2% of eligible compensation and a
dollar-for-dollar matching contribution of up to 4% of eligible compensation.
Company contributions to this plan for continuing operations of $3.3 million,
$4.6 million, and $5.7 million for fiscal 1996, 1997, and 1998, respectively,
were allocated to the PE Biosystems Group. Amounts attributable to the Celera
Genomics Group activity were not material.

RETIREE HEALTH CARE AND LIFE INSURANCE BENEFITS

F-50
<PAGE>

number of the Celera Genomics Group employees were eligible for these benefits,
the amounts of which were not material, the postretirement liability has been
allocated to the PE Biosystems Group.

The following table sets forth the accrued postretirement benefit liability
recognized in the PE Biosystems Group Combined Statements of Financial Position
at June 30, 1997 and 1998:

The net postretirement benefit cost of continuing operations for fiscal 1997
and 1998 included the following components:

The discount rate used in determining the APBO was 8.5% in fiscal 1997 and
8% in fiscal 1998. The assumed health care cost trend rate used for measuring
the APBO was divided into two categories:

<TABLE>
<CAPTION>
1997 1998
----- -----
<S> <C> <C>
Participants under age 65............... 10.3% 9.6%
Participants age 65 and over............ 7.7% 7.4%
</TABLE>

Both rates were assumed to decline to 5.5% over eight and seven years in
fiscal 1997 and 1998, respectively.

POSTEMPLOYMENT BENEFITS

NOTE 6 BUSINESS SEGMENTS AND GEOGRAPHIC AREA INFORMATION

BUSINESS SEGMENTS

The PE Biosystems Group operates in one industry segment. It manufactures
and markets biochemical instrument systems and associated consumable products
for life science research and related applications. These automated systems are
used for synthesis, amplification, purification, isolation analysis and
sequencing of nucleic acids, proteins, and other biological molecules.

GEOGRAPHIC AREAS

Revenues between geographic areas are primarily comprised of the sale of
products by the PE Biosystems Group's manufacturing units. The revenues reflect
the rules and regulations of the respective governing tax authorities. Net
revenues and operating profits are reported in the region of destination.
Operating income is determined by deducting from net revenues the related costs
and operating expenses attributable to the region. Research, development and
engineering expenses are reflected in the area where the activity was performed.
Other expenses includes allocated corporate overhead and administrative shared
services. Identifiable assets include all assets directly identified with those
geographic areas. Other includes cash and short-term investments, deferred tax
assets, property, plant, and equipment, and other assets that are corporate in
nature.

Export net revenues for fiscal 1996, 1997, and 1998 were $14.1 million,
$27.6 million, and $28.5 million, respectively.

F-51
<PAGE>

GEOGRAPHIC AREAS

<TABLE>
<CAPTION>
UNITED FAR OTHER
(DOLLAR AMOUNTS IN MILLIONS) STATES EUROPE EAST COUNTRIES OTHER COMBINED
- -------------------------------------------------- --------- --------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
1996
Total revenues.................................... $ 309.5 $ 270.7 $ 212.8 $ 23.2 $ -- $ 816.2
Transfers between geographic areas................ (18.5) (74.2) (75.5) (5.9) (174.1)
--------- --------- --------- ----------- --------- -----------
Revenues to unaffiliated customers................ $ 291.0 $ 196.5 $ 137.3 $ 17.3 $ $ 642.1
--------- --------- --------- ----------- --------- -----------
Income (loss)..................................... $ 18.9 $ 47.3 $ 43.7 $ 1.8 $ (27.6) $ 84.1
Restructuring charge.............................. (17.5) (17.5)
Acquired research and development................. (31.8) (31.8)
Impairment of assets.............................. (9.9) (9.9)
--------- --------- --------- ----------- --------- -----------
Operating income (loss)......................... $ (40.3) $ 47.3 $ 43.7 $ 1.8 $ (27.6) $ 24.9
--------- --------- --------- ----------- --------- -----------
Identifiable assets............................... $ 267.3 $ 97.1 $ 56.5 $ 13.9 $ 225.8 $ 660.6
Net assets of discontinued operations............. 148.3
-----------
Total assets...................................... $ 808.9

1997
Total revenues.................................... $ 383.2 $ 333.7 $ 255.0 $ 27.1 $ -- $ 999.0
Transfers between geographic areas................ (34.1) (93.8) (95.3) (8.3) (231.5)
--------- --------- --------- ----------- --------- -----------
Revenues to unaffiliated customers................ $ 349.1 $ 239.9 $ 159.7 $ 18.8 $ $ 767.5
--------- --------- --------- ----------- --------- -----------
Income (loss)..................................... $ 24.5 $ 61.4 $ 45.8 $ 3.7 $ (34.4) $ 101.0
Impairment of assets.............................. (.7) (.7)
--------- --------- --------- ----------- --------- -----------
Operating income (loss)......................... $ 23.8 $ 61.4 $ 45.8 $ 3.7 $ (34.4) $ 100.3
--------- --------- --------- ----------- --------- -----------
Identifiable assets............................... $ 314.0 $ 112.3 $ 70.2 $ 6.2 $ 350.2 $ 852.9
Net assets of discontinued operations............. 150.9
-----------
Total assets...................................... $ 1,003.8

1998
Total revenues.................................... $ 496.4 $ 377.2 $ 274.2 $ 36.7 $ -- $ 1,184.5
Transfers between geographic areas................ (43.5) (85.3) (102.7) (12.9) (244.4)
--------- --------- --------- ----------- --------- -----------
Revenues to unaffiliated customers................ $ 452.9 $ 291.9 $ 171.5 $ 23.8 $ $ 940.1
--------- --------- --------- ----------- --------- -----------
Income (loss)..................................... $ 37.8 $ 72.0 $ 55.7 $ 3.0 $ (38.1) $ 130.4
Restructuring and other merger costs.............. (26.2) (21.7) (.2) (48.1)
Acquired research and development................. (28.9) (28.9)
--------- --------- --------- ----------- --------- -----------
Operating income (loss)......................... $ (17.3) $ 50.3 $ 55.5 $ 3.0 $ (38.1) $ 53.4
--------- --------- --------- ----------- --------- -----------
Identifiable assets............................... $ 442.7 $ 206.4 $ 62.9 $ 9.9 $ 189.3 $ 911.2
Net assets of discontinued operations............. 217.7
-----------
Total assets...................................... $ 1,128.9
</TABLE>

F-52
<PAGE>

NOTE 7 GROUP EQUITY

PE Biosystems Stock will represent a separate class of the new Delaware
company's common stock if the Company's Recapitalization Proposal is approved.
Additional shares of PE Biosystems Stock may be issued from time to time upon
exercise of stock options or at the discretion of the Company's Board.

SHAREHOLDERS' PROTECTION RIGHTS PLAN

The Company has a Shareholder's Protection Rights Plan (the "Original Rights
Agreement") designed to protect shareholders against abusive takeover tactics by
issuing Participating Preferred Stock Purchase Rights (the "Original Rights")
for each share of existing common stock. Each Original Right entitles the holder
to buy one one-hundredth of a newly issued share of participating preferred
stock having economic and voting terms similar to those of one share of existing
common stock at an exercise price of $90, subject to adjustment.

The Original Rights are exercisable only if a person or a group acquires 20%
of more of the Company's existing common stock or commences a tender offer for
20% or more of the Company's existing common stock. Before that time, the rights
trade with the common stock, but thereafter they become separately tradeable.

Upon exercise, each Original Right entitles the holder to purchase a number
of shares of preferred stock of the Company having a market value of two times
the exercise price. If the Company is acquired in a merger or other business
combination, each Original Right will entitle the holder to purchase at the then
exercise price a number of shares of common stock of the acquiring company
having a market value of two times such exercise price. If any person or group
acquires between 20% and 50% of the Company's shares, the Company's Board may,
at its option, exchange one share of the Company's existing common stock for
each Original Right. The Original Rights are redeemable at the Company's option
at one cent per right prior to a person or group becoming an acquiring person.

If the Recapitalization Proposal is implemented, the Company will enter into
a new rights agreement (the "New Rights Agreement"), substantially similar to
the Original Rights Agreement containing provisions designed to, among other
things, (i) reflect the new equity structure of the Company and (ii) reset the
prices at which rights issued under the New Rights Agreement may be exercised
for shares of participating preferred stock. As of the Effective Time, the
Company will, (i) designate a new series of Preferred Stock as the Series A
Participating Junior Preferred Stock, (ii) designate another new series of
Preferred Stock as the Series B Participating Junior Preferred Stock, (iii)
issue one right for each share of PE Biosystems Stock (a "PE Biosystems Right"),
which will allow holders to purchase shares of Series A Participating Junior
Preferred Stock under conditions specified in the New Rights Agreement and (iv)
issue one right for each share of Celera Genomics Stock (a "Celera Genomics
Right"), which will allow holders to purchase shares of series B Participating
Junior Preferred Stock under conditions specified in the New Rights Agreement.

The Rights will expire on the tenth anniversary of the adoption of the New
Rights Agreement, unless extended or terminated by the Company. The Rights would
be exercisable only if a person or group acquires (i) 15% or more of the shares
of PE Biosystems Stock then outstanding or (ii) 15% or more of the shares of
Celera Genomics Stock then outstanding, or commences a tender offer that would
result in such person or groups beneficially owning such number of shares. In
such event, each right would entitle the holder to purchase from the Company (i)
in the case of a PE Biosystems Right, one one-thousandth ( 1/1000th) of a share
of Series A Participating Junior Preferred Stock at a purchase price of $425,
subject to adjustment, and (ii) in the case of a Celera Genomics Right, one one-
thousandth ( 1/1000th) of a share of Series B Participating Junior Preferred
Stock at a purchase price of $125, subject to adjustment.

F-53
<PAGE>
NOTE 8 STOCK INCENTIVE PLANS

1999 INCENTIVE STOCK PLANS

The Board has approved PE Corporation/ PE Biosystems Group 1999 Stock
Incentive Plan (the "PE Biosystems Group Plan") and PE Corporation/Celera
Genomics Group 1999 Stock Incentive Plan (the "Celera Genomics Group Plan"),
subject to shareholder approval. The PE Biosystems Group Plan authorizes grants
of stock options, stock awards and performance shares with respect to PE
Biosystems Stock. The Celera Genomics Group Plan authorizes grants of stock
options, stock awards, and performance shares with respect to Celera Genomics
Stock. The Company does not currently intend to grant awards under the PE
Biosystems Group Plan to members of the Celera Genomics Group. It is intended,
however, that certain directors, officers and key employees of the Company with
responsibilities involving both the PE Biosystems Group and the Celera Genomics
Group and certain key employees of each Group may be granted awards under both
incentive plans, in a manner which reflects their responsibilities. The Board
believes that permitting incentive awards to be made to participants with
respect to the class of common stock which reflects the performance of the
Group's business in which the participants work and, in certain cases the other
Group, is in the best interest of the Company and its stockholders.

Several existing stock incentive plans which offer benefits in the form of,
or based on the performance of, the existing common stock will be affected by
the Recapitalization Proposal. The affected plans and management's intentions
with respect to those plans upon the approval and implementation of the
Recapitalization Proposal are discussed below.

STOCK OPTION PLANS

Under the Company's stock option plans, officers and other key employees may
be, and directors are, granted options, each of which allows for the purchase of
existing common stock at a price of not less than 100% of fair market value at
the date of grant. Under the normal vesting requirements, 50% of the options are
exercisable after one year and 100% after two years. Options generally expire
ten years from the date of grant.

Transactions relating to the stock option plans of the Company are
summarized below:

<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
OPTIONS EXERCISE PRICE
--------- ---------------
<S> <C> <C>
FISCAL 1996
Outstanding at June 30,
1995...................... 4,597,214 $ 29.97
Granted..................... 820,495 $ 46.43
Exercised................... 1,393,807 $ 29.48
Cancelled................... 201,367 $ 34.17
---------
Outstanding at June 30,
1996...................... 3,822,535 $ 34.05
Exercisable at June 30,
1996...................... 2,544,100 $ 30.17

At June 30, 1998, 241,437 shares remained available for option grant.

The following table summarizes information regarding options outstanding and
exercisable at June 30, 1998:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
----------------------------
CONTRACTUAL
(OPTION PRICES PER NUMBER OF LIFE REMAINING EXERCISE
SHARE) OPTIONS IN YEARS PRICE
- ------------------------ ----------- --------------- -----------
<S> <C> <C> <C>
Options outstanding:
At $ 2.04--$ 29.95.... 448,472 4.2 $ 20.93
At $30.25--$ 59.75.... 2,038,936 7.0 $ 40.87
At $60.06--$ 85.69.... 2,713,648 9.3 $ 71.83
At $90.86--$163.55.... 15,908 5.4 $ 120.86

Options exercisable:
At $ 2.04--$ 29.95.... 448,472 4.2 $ 20.93
At $30.25--$ 59.75.... 1,992,736 6.9 $ 40.53
At $60.06--$ 83.69.... 479,273 8.7 $ 72.07
At $90.86--$163.55.... 15,908 5.4 $ 120.86
</TABLE>

If the Recapitalization Proposal is approved by the shareholders and
implemented by the Board, each outstanding stock option under the Company's
stock option plans will be converted

F-54
<PAGE>

into separately exercisable options to acquire one share of PE Biosystems Stock
and 0.5 of a share of Celera Genomics Stock. The exercise price for the
resulting PE Biosystems Stock options and Celera Genomics Stock options will be
calculated by multiplying the exercise price under the original option from
which they were converted by a fraction, the numerator of which is the average
of the high and low price of PE Biosystems Stock or Celera Genomics Stock, as
the case may be, on the first date such stocks are traded, on the New York Stock
Exchange and the denominator of which is the sum of such PE Biosystems Stock and
Celera Genomics Stock prices. This is intended to ensure that the aggregate
intrinsic value of the options will be preserved, and the ratio of the exercise
price per option to the market value per share will not be reduced. In addition,
the vesting provision and option periods of the original grants will remain the
same when converted. No further grants may be made under the amended plan.

EMPLOYEE STOCK PURCHASE PLAN

If the Recapitalization Proposal is approved by the shareholders and
implemented by the Board, the terms of the offering will be adjusted to allow
employees to purchase either PE Biosystems Stock or Celera Genomics Stock for
each share of existing common stock.

DIRECTOR STOCK PURCHASE AND DEFERRED COMPENSATION PLAN

The Company has a Director Stock Purchase and Deferred Compensation Plan
that requires non-employee directors of the Company to apply at least 50% of
their annual retainer to the purchase of existing common stock. The purchase
price is the fair market value on the first business day of the third month of
each fiscal quarter. At June 30, 1998, approximately 87,000 shares were
available for issuance.

If the Recapitalization Proposal is approved, each share of stock currently
held will be converted into one share of PE Biosystems Stock and 0.5 of a share
of Celera Genomics Stock. In addition, it is intended that non-employee
directors will be required to apply at least 50% their annual retainer to the
purchase of both PE Biosystems Stock and Celera Genomics Stock in a ratio
approximately equal to the number of shares of PE Biosystems Stock and Celera
Genomics Stock outstanding.

RESTRICTED STOCK

As part of the Company's stock incentive plans, key employees may be, and
non-employee directors are, granted shares of restricted stock that will vest
when certain continuous employment/service restrictions and/or specified
performance goals are achieved. The fair value of shares granted is generally
expensed over the restricted periods, which may vary depending on the estimated
achievement of performance goals. Restricted stock granted to key employees and
non-employee directors during fiscal 1996, 1997, and 1998 totaled 185,000 shares
(155,000 of which were subject to shareholder approval in fiscal 1997), 42,000
shares, and 4,350 shares, respectively. Compensation expense of continuing
operations recognized by the PE Biosystems Group for these awards was $4.1
million, $9.1 million, and $1.8 million in fiscal 1996, 1997, and 1998,
respectively.

Upon approval and implementation of the Recapitalization Proposal, each
share of restricted stock currently held will be redesignated into one share of
PE Biosystems Stock and 0.5 of a share of Celera Genomics Stock.

F-55
<PAGE>
PERFORMANCE UNIT BONUS PLAN

The Company has a Performance Unit Bonus Plan whereby employees may be
awarded performance units in conjunction with an equal number of stock options.
A performance unit represents the right to receive a cash or stock payment from
the Company at a specified date in the future. The amount of the payment is
equal to the fair market value of a share of common stock on the date of the
grant. The performance units vest upon shares of the Company's existing common
stock attaining and maintaining specific stock price levels for a specified
period, and are payable on or after June 26, 2000. As of June 30, 1998, 324,500
performance units were outstanding. Compensation expense of continuing
operations recognized by the PE Biosystems Group for these awards totaled $5.1
million in fiscal 1998.

Upon approval and implementation of the Recapitalization Proposal, each
performance unit will be converted in conjunction with the conversion of the
Company's stock options.

OTHER

The Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation,"
in 1996. The Company has elected to continue to account for its stock-based
compensation plans under Accounting Principles Board ("APB") Opinion No. 25 and
disclose the pro forma effects of the plans on net income and earnings per share
as provided by SFAS No. 123. Accordingly, no compensation expense has been
recognized for the stock option plans and employee stock purchase plans as all
options have been issued at fair market value. Since PE Biosystems Stock was not
part of the capital structure of the Company for the periods presented, there
were no stock options outstanding. Therefore, the pro forma effect of PE
Biosystems Stock options on the accompanying historical combined financial
statements is not presented.

NOTE 9 ADDITIONAL INFORMATION

SELECTED ACCOUNTS

The following table provides the major components of selected accounts of
the Combined Statements of Financial Position:

<TABLE>
<CAPTION>
AT JUNE 30,
--------------------
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998
- ----------------------------------- --------- ---------
<S> <C> <C>
Other long-term assets:
Goodwill........................... $ 17.5 $ 69.8
Other.............................. 137.9 170.8
--------- ---------
Total other long-term assets....... $ 155.4 $ 240.6
--------- ---------
--------- ---------
Other accrued expenses:
Deferred service contract
revenues......................... $ 20.4 $ 28.4
Restructuring provisions........... -- 26.9
Other.............................. 57.5 65.9
--------- ---------
Total other accrued expenses....... $ 77.9 $ 121.2
--------- ---------
--------- ---------
Other long-term liabilities:
Accrued postretirement benefits.... $ 91.2 $ 87.4
Other.............................. 27.8 36.6
--------- ---------
Total other long-term liabilities.. $ 119.0 $ 124.0
--------- ---------
--------- ---------
</TABLE>

F-56
<PAGE>
NOTE 10 RESTRUCTURING AND OTHER MERGER COSTS

The PE Biosystems Group initiated a restructuring plan in fiscal 1998 for
actions associated with the acquisition of PerSeptive. Fiscal 1996 also included
a charge by PerSeptive for restructuring actions and other related costs. The
before-tax charges associated with the implementation of these restructuring
plans were $17.5 million and $48.1 million for fiscal 1996 and 1998,
respectively.

FISCAL 1996

FISCAL 1998

During fiscal 1998, the PE Biosystems Group recorded a $48.1 million
before-tax charge for restructuring and other merger costs to integrate
PerSeptive into the PE Biosystems Group following the acquisition. The
objectives of this plan are to lower PerSeptive's cost structure by reducing
excess manufacturing capacity, achieve broader worldwide distribution of
PerSeptive's products, and combine sales, marketing, and administrative
functions. The charge included: $33.9 million for restructuring the combined
operations; $8.6 million for transaction costs; and $4.1 million of inventory-
related write-offs, recorded in cost of sales, associated with the
rationalization of certain product lines. Additional non-recurring acquisition
costs of $1.5 million for training, relocation, and communication were
recognized as period expenses in the third and fourth quarters of fiscal 1998,
and classified as other merger-related costs. During fiscal 1999, the PE
Biosystems Group recognized $.9 million of additional merger-related period
expenses as part of this plan, and the PE Biosystems Group expects to incur an
additional $5.5 million to $7.5 million of merger-related costs for training,
relocation, and communication over the remaining quarters of fiscal 1999. These
costs will be recognized as period expenses when incurred and will be classified
as other merger-related costs.

The $33.9 million restructuring charge includes $13.8 million for
severance-related costs and workforce reductions of approximately 170 employees,
consisting of 114 employees in production labor and 56 employees in sales and
administrative support. The remaining $20.1 million represents facility
consolidation and asset-related write-offs and includes: $11.7 million for
contract and lease terminations and facility related expenses in connection with
the reduction of excess manufacturing capacity; $3.2 million for dealer
termination payments, sales office consolidations, and consolidation of sales
and administrative support functions; and $5.2 million for the write-off of
certain tangible and intangible assets and the termination of certain
contractual obligations. These restructuring actions are expected to be
substantially completed by the end of fiscal 1999. Transaction costs of $8.6
million include acquisition-related investment banking and professional fees. As
of September 30, 1998, approximately 32 employees were separated under the plan,
and the actions are proceeding as planned.

F-57
<PAGE>
The following table details the major components of the fiscal 1998
restructuring plan:

<TABLE>
<CAPTION>
FACILITY
CONSOLIDATION AND
ASSET RELATED
(DOLLAR AMOUNTS IN MILLIONS) PERSONNEL WRITE-OFFS TOTAL
- ---------------------------------------------------------------------------- ------------- ------------------- ---------
<S> <C> <C> <C>
Provision:
Reduction of excess European manufacturing capacity......................... $ 5.1 $ 11.7 $ 16.8
Consolidation of sales and administrative support........................... 8.7 3.2 11.9
Other....................................................................... 5.2 5.2
----- ----- ---------
Total provision............................................................. $ 13.8 $ 20.1 $ 33.9
----- ----- ---------
Fiscal 1998 activity:
Reduction of excess European manufacturing capacity......................... $ -- $ .4 $ .4
Consolidation of sales and administrative support........................... .3 1.2 1.5
Other....................................................................... 5.1 5.1
----- ----- ---------
Total fiscal 1998 activity.................................................. $ .3 $ 6.7 $ 7.0
----- ----- ---------
Fiscal 1999 activity:
Reduction of excess European manufacturing capacity......................... $ -- $ 3.6 $ 3.6
Consolidation of sales and administrative support........................... 2.1 .5 2.6
Other....................................................................... .1 .1
----- ----- ---------
Total fiscal 1999 activity (unaudited)...................................... $ 2.1 $ 4.2 $ 6.3
----- ----- ---------
Balance at September 30, 1998:
Reduction of excess European manufacturing capacity......................... $ 5.1 $ 7.7 $ 12.8
Consolidation of sales and administrative support........................... 6.3 1.5 7.8
Other.......................................................................
----- ----- ---------
Balance at September 30, 1998 (unaudited)................................... $ 11.4 $ 9.2 $ 20.6
----- ----- ---------
----- ----- ---------
</TABLE>

NOTE 11 COMMITMENTS AND CONTINGENCIES

Future minimum payments at June 30, 1998 under non-cancelable operating
leases for real estate and equipment were as follows:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS)
- ---------------------------------------------
<S> <C>
1999......................................... $ 21.0
2000......................................... 16.8
2001......................................... 15.2
2002......................................... 13.2
2003......................................... 12.2
2004 and thereafter.......................... 60.6
---------
Total........................................ $ 139.0
---------
---------
</TABLE>

Rental expense was $23.5 million in fiscal 1996, $22.2 million in fiscal
1997, and $28.7 million in fiscal 1998.

In fiscal 1997, the PE Biosystems Group entered into a fifteen year
non-cancelable lease for a facility in Foster City, California, effective July
1, 2000. Total lease payments over the fifteen year period will be approximately
$42 million.

The Company has been named as a defendant in several legal actions,
including patent, commercial, and environmental, arising from the conduct of the
PE Biosystems Group's normal business activities. Although the amount of any
liability that might arise with respect to any of these matters cannot be
accurately predicted, the resulting liability, if any, will not in the opinion
of management have a material adverse effect on the financial statements of the
PE Biosystems Group or the Company.

The holders of PE Biosystems Stock will be stockholders of the Company and
will continue to be subject to all risks associated with an investment in the
Company, including any legal proceedings and claims affecting the Celera
Genomics Group.

NOTE 12 FINANCIAL INSTRUMENTS

The PE Biosystems Group utilizes foreign exchange forward, option, and
synthetic forward contracts and an interest rate swap agreement to manage
foreign currency and interest rate exposures. The principal objective of these
contracts is to minimize the risks and/or costs associated with global financial
and operating activities. The PE Biosystems Group does not use derivative
financial instruments for trading or other speculative purposes, nor is the PE

F-58
<PAGE>

Biosystems Group a party to leveraged derivatives.

FOREIGN CURRENCY RISK MANAGEMENT

At June 30, 1997 and 1998, and September 30, 1998 the Company had forward,
option, and synthetic forward contracts outstanding for the sale and purchase of
foreign currencies at fixed rates as summarized in the table below:

<TABLE>
<CAPTION>
SEPTEMBER
30, 1998
JUNE 30, 1997 JUNE 30, 1998 (UNAUDITED)
------------------------ ------------------------ ---------
(DOLLAR AMOUNTS IN MILLIONS) SALE PURCHASE SALE PURCHASE SALE
- -------------------------------------------------------------------- --------- ------------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Japanese Yen........................................................ $ 74.6 $ -- $ 99.4 $ -- $ 112.3
French Francs....................................................... 14.1 16.9 .2 15.9
Australian Dollars.................................................. 7.4 7.5 5.4
German Marks........................................................ 11.4 17.2 22.4
Italian Lira........................................................ 5.6 1.2 21.4 .8 21.7
British Pounds...................................................... 1.7 1.1 6.2 2.1
Swiss Francs........................................................ 3.2 5.4 2.1 5.5
Swedish Krona....................................................... 1.4 6.1 5.8
Danish Krona........................................................ 1.0 5.3 4.5
Other............................................................... 3.4 21.6 .3 19.5
--------- ----- --------- ----- ---------
Total............................................................... $ 122.1 $ 2.9 $ 201.9 $ 9.6 $ 215.1
--------- ----- --------- ----- ---------
--------- ----- --------- ----- ---------

(DOLLAR AMOUNTS IN MILLIONS) PURCHASE
- -------------------------------------------------------------------- -------------
<S> <C>
Japanese Yen........................................................ $ 7.1
French Francs.......................................................
Australian Dollars..................................................
German Marks........................................................
Italian Lira........................................................
British Pounds...................................................... 1.8
Swiss Francs........................................................ 2.1
Swedish Krona.......................................................
Danish Krona........................................................
Other............................................................... .6
-----
Total............................................................... $ 11.6
-----
-----
</TABLE>

INTEREST RATE RISK MANAGEMENT

Based on the level of interest rates prevailing at June 30, 1998, the fair
value of the Company floating rate debt approximated its carrying value. There
would be a payment of $.9 million to terminate the related interest rate swap
contract, which would equal the unrealized

F-59
<PAGE>
loss. Unrealized gains or losses on debt or interest rate swap contracts are not
recognized for financial reporting purposes unless the debt is retired or the
contracts are terminated prior to maturity. A change in interest rates would
have no impact on the Company reported interest expense and related cash
payments because the floating rate debt and fixed rate swap contract have the
same maturity and are based on the same interest rate index.

CONCENTRATIONS OF CREDIT RISK

FAIR VALUE

<TABLE>
<CAPTION>
1997 1998
------------------------ ------------------------
(DOLLAR AMOUNTS IN NOTIONAL NOTIONAL
MILLIONS) AMOUNT FAIR VALUE AMOUNT FAIR VALUE
- ------------------ ----------- ----- ----------- -----
<S> <C> <C> <C> <C>
Forward
contracts....... $ 89.0 $ (3.7) $ 123.9 $ 2.1
Purchased
options......... $ 36.1 $ .3 $ 76.7 $ 1.3
Synthetic
forwards........ $ 41.5 $ 1.7
Interest rate
swap............ $ 33.6 $ .2 $ 27.0 $ (.9)
</TABLE>

The following methods are used in estimating the fair value of other
significant financial instruments held or owed by the Company. Cash and
short-term investments approximate their carrying amount due to the duration of
these instruments. Fair values of minority equity investments and notes
receivable are estimated based on quoted market prices, if available, or quoted
market prices of financial instruments with similar characteristics. The fair
value of debt is based on the current rates offered to the Company for debt of
similar remaining maturities. The following table presents the carrying amounts
and fair values of the Company other financial instruments at June 30, 1997 and
1998:

<TABLE>
<CAPTION>
1997 1998
---------------------- ------------------------
(DOLLAR AMOUNTS IN CARRYING FAIR CARRYING
MILLIONS) AMOUNT VALUE AMOUNT FAIR VALUE
- ----------------------- ----------- --------- ----------- -----
<S> <C> <C> <C> <C>
Cash and short-term
investments.......... $ 217.2 $ 217.2 $ 84.1 $ 84.1
Minority equity
investments.......... $ 22.6 $ 22.6 $ 29.2 $ 29.2
Note receivable........ $ 7.2 $ 7.2
Short-term debt........ $ 29.9 $ 29.9 $ 12.1 $ 12.1
Long-term debt......... $ 59.2 $ 59.0 $ 33.7 $ 34.6
</TABLE>

Net unrealized gains and losses on minority equity investments are reported
as a separate component of shareholders' equity. The PE Biosystems Group
reported an unrealized holding gain of $3.1 million at June 30, 1997 and a $1.4
million unrealized holding loss at June 30, 1998.

NOTE 13 RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

One of the Company's directors is an employee of the Roche Group, a
pharmaceutical manufacturer and strategic partner of the Company in the
biotechnology field. The PE Biosystems Group made payments to the Roche Group
and its affiliates, for the purchase of reagents and consumables, of $59.7
million, $68.2 million, and $72.5 million in fiscal 1996, 1997, and 1998,
respectively.

SALES OF PRODUCTS AND SERVICES BETWEEN GROUPS

A Group will sell products or services to the other Group on terms that
would be available

F-60
<PAGE>
from third parties in commercial transactions. If terms for such transactions
are not available, the purchasing Group will pay fair value as determined by the
Board for such products and pay for such services at fair value, as determined
by the Board, or at the cost (including overhead) of the selling Group.

ACCESS TO TECHNOLOGY AND KNOW-HOW

Each Group will have free access to all Company technology and know-how
(excluding products and services of the other Group) that may be useful in that
Group's business, subject to obligations and limitations applicable to the
Company and to such exceptions that the Board may determine. The Groups will
consult with each other on a regular basis concerning technology issues that
affect both Groups. The costs of developing this technology remains in the Group
responsible for its development.

NOTE 14 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) for fiscal 1996, 1997, 1998,
and for the three months ended September 30, 1998 (unaudited) is as follows:

<TABLE>
<CAPTION>
FOREIGN MINIMUM
CURRENCY UNREALIZED PENSION
TRANSLATION GAIN (LOSS) ON LIABILITY
(DOLLARS AMOUNTS IN MILLIONS) ADJUSTMENTS INVESTMENTS ADJUSTMENT
- ---------------------------------------------------------------------- ----------- -------------- -----------
<S> <C> <C> <C>
Balance at June 30, 1995.............................................. $ 10.0 $ -- $ (34.4)
Current period activity............................................... (10.9) 23.2 5.0
----------- ------- -----------
Balance at June 30, 1996.............................................. (.9) 23.2 (29.4)
Current period activity............................................... (4.2) (20.1) 28.7
----------- ------- -----------

Balance at June 30, 1997.............................................. (5.1) 3.1 (.7)
Current period activity............................................... (2.7) (4.5) .3
----------- ------- -----------

Balance at June 30, 1998.............................................. (7.8) (1.4) (.4)
Current period activity............................................... 6.2 (4.0)
----------- ------- -----------

Balance at September 30, 1998 (unaudited)............................. $ (1.6) $ (5.4) $ (.4)
----------- ------- -----------
----------- ------- -----------
</TABLE>

NOTE 15 DISCONTINUED OPERATIONS

On January 21, 1999, the Company announced a plan to sell its Analytical
Instruments business. The plan is expected to be completed within a year,
although there can be no assurance in this regard. Accordingly, the results have
been reclassified from amounts previously reported and are stated separately in
the combined financial statements as discontinued operations pending
disposition. The Company expects to recognize a gain on disposal. However, the
actual results could differ significantly depending on the transaction costs

F-61
<PAGE>

incurred, the amount expected to be realized upon the sale of the business and
the resolution of certain contingencies. Summary results prior to discontinuance
were as follows:

The components of net assets of discontinued operations included in the
Consolidated Statements of Financial Position are as follows:

<TABLE>
<CAPTION>
AT JUNE 30, AT SEPTEMBER 30, 1998
-------------------- -----------------------
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998 (UNAUDITED)
- --------------------------------------------------------------------------- --------- ---------
<S> <C> <C> <C>
Current assets:
Accounts receivable, net................................................. $ 149.2 $ 145.9 $ 136.4
Inventories.............................................................. 103.5 103.0 98.0
Prepaid expenses and other current assets................................ 25.9 35.2 31.0
Current liabilities:
Accounts payable......................................................... 45.8 45.7 28.6
Accrued expenses......................................................... 129.9 98.4 92.9
--------- --------- ------

CURRENT NET ASSETS......................................................... $ 102.9 $ 140.0 $ 143.9
--------- --------- ------

Long-term assets:
Property, plant and equipment, net....................................... $ 69.0 $ 95.1 $ 112.3
Other long-term assets................................................... 35.2 37.7 40.1
Long-term liabilities:
Other long-term liabilities.............................................. 56.2 55.1 61.3
--------- --------- ------
LONG-TERM NET ASSETS....................................................... $ 48.0 $ 77.7 $ 91.1
--------- --------- ------
NET ASSETS................................................................. $ 150.9 $ 217.7 $ 235.0
--------- --------- ------
--------- --------- ------
</TABLE>

F-62
<PAGE>

The cash flow provided (used) from discontinued operations were as follows:

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED ENDED
JUNE 30, SEPTEMBER 30,
------------------------------- --------------------
(DOLLAR AMOUNTS IN MILLIONS) 1996 1997 1998 1997 1998
- ------------------------------------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS
Income (loss) from discontinued operations........................ $ (37.8) $ 27.9 $ 40.7 $ 3.9 $ (.9)
Adjustments to reconcile income (loss) from discontinued
operations to net cash provided (used) by operating activities
from discontinued operations:
Depreciation and amortization................................. 28.0 18.2 17.2 4.5 3.9
Long-term compensation programs............................... 1.0 2.6 1.2 .2 .3
Deferred income taxes......................................... 2.2 3.0 2.7 .3 (.1)
Provision for restructured operations and other charges....... 71.6 13.0 -- -- --
Impairment of assets.......................................... -- 7.5 -- -- --
Net change in assets and liabilities.............................. (19.1) (32.4) (51.7) (10.4) (1.7)
--------- --------- --------- --------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES FROM DISCONTINUED
OPERATIONS...................................................... 45.9 39.8 10.1 (1.5) 1.5
--------- --------- --------- --------- ---------
NET CASH USED BY INVESTING ACTIVITIES FROM DISCONTINUED
OPERATIONS...................................................... (15.9) (11.3) (40.6) (9.4) (19.2)
Net cash from discontinued operations before effect of exchange
rate changes on cash............................................ 30.0 28.5 (30.5) (10.9) (17.7)
--------- --------- --------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH........................... 3.2 (.6) 4.4 1.9 (.4)
--------- --------- --------- --------- ---------
CASH FLOW PROVIDED (USED) FROM DISCONTINUED OPERATIONS............ $ 33.2 $ 27.9 $ (26.1) $ (9.0) $ (18.1)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

RESTRUCTURING

FISCAL 1996

The fiscal 1996 before-tax restructuring charge of $71.6 million was the
first phase of a plan focused on improving the profitability and cash flow
performance of the Analytical Instruments business. In connection with the plan,
the business was reorganized into three vertically integrated, fiscally
accountable operating units; a distribution center was established in Holland to
centralize the European infrastructure for shipping, administration, and related
functions; and a program was implemented to eliminate excess production capacity
in Germany. The charge included $37.8 million for worldwide workforce reductions
of approximately 390 positions in manufacturing, sales and support, and
administrative functions. The charge also included $33.8 million for facility
consolidation and asset-related write-offs associated with the discontinuation
of various product lines.

In fiscal 1996, the PE Biosystems Group transferred the development and
manufacturing of certain analytical instrument product lines from its facility
in Germany to other sites, primarily in the United States. The facility in
Germany remains the principal site for the development of atomic absorption
products.

In the fourth quarter of fiscal 1997, the PE Biosystems Group finalized
actions associated with the restructuring plan announced in fiscal 1996. The
costs to implement the program were $11.2 million below the $71.6 million charge
recorded in fiscal 1996. As a result, during the fourth quarter of fiscal 1997,
the Company recorded an $11.2 million reduction of charges required to implement
the fiscal 1996 plan.

F-63
<PAGE>
The following table details the major components of the $71.6 million fiscal
1996 restructuring provision:
<TABLE>
<CAPTION>
FACILITY
CONSOLIDATION AND
ASSET RELATED
(DOLLAR AMOUNTS IN MILLIONS) PERSONNEL WRITE-OFFS
- ----------------------------------------------------------------------------------------- ------------- ---------------------
<S> <C> <C>
Provision:
Reduction of excess European manufacturing capacity...................................... $ 19.7 $ 23.0
Reduction of European distribution and administrative capacity........................... 11.5 6.0
Other worldwide workforce reductions and facility closings............................... 6.6 4.8
----- -----
Total provision.......................................................................... $ 37.8 $ 33.8
----- -----
Fiscal 1996 activity:
Reduction of excess European manufacturing capacity...................................... $ 2.1 $ 6.7
Reduction of European distribution and administrative capacity........................... 1.6 .7
Other worldwide workforce reductions and facility closings............................... 1.9 1.6
----- -----
Total fiscal 1996 activity............................................................... $ 5.6 $ 9.0
----- -----
Fiscal 1997 activity:
Reduction of excess European manufacturing capacity...................................... $ 10.9 $ 6.6
Adjustment to decrease liabilities originally accrued for excess European manufacturing
capacity............................................................................... 4.7 6.5
Reduction of European distribution and administrative capacity........................... 6.2 4.4
Other worldwide workforce reductions and facility closings............................... 1.9 2.0
----- -----
Total fiscal 1997 activity............................................................... $ 23.7 $ 19.5
----- -----
Fiscal 1998 activity:
Reduction of excess European manufacturing capacity...................................... $ 2.0 $ 3.2
Reduction of European distribution and administrative capacity........................... 3.7 .9
Other worldwide workforce reductions and facility closings............................... 2.8 1.2
----- -----
Total fiscal 1998 activity............................................................... $ 8.5 $ 5.3
----- -----
Balance at June 30, 1998................................................................. $ -- $ --
----- -----
----- -----

(DOLLAR AMOUNTS IN MILLIONS) TOTAL
- ----------------------------------------------------------------------------------------- ---------
<S> <C>
Provision:
Reduction of excess European manufacturing capacity...................................... $ 42.7
Reduction of European distribution and administrative capacity........................... 17.5
Other worldwide workforce reductions and facility closings............................... 11.4
---------
Total provision.......................................................................... $ 71.6
---------
Fiscal 1996 activity:
Reduction of excess European manufacturing capacity...................................... $ 8.8
Reduction of European distribution and administrative capacity........................... 2.3
Other worldwide workforce reductions and facility closings............................... 3.5
---------
Total fiscal 1996 activity............................................................... $ 14.6
---------
Fiscal 1997 activity:
Reduction of excess European manufacturing capacity...................................... $ 17.5
Adjustment to decrease liabilities originally accrued for excess European manufacturing
capacity............................................................................... 11.2
Reduction of European distribution and administrative capacity........................... 10.6
Other worldwide workforce reductions and facility closings............................... 3.9
---------
Total fiscal 1997 activity............................................................... $ 43.2
---------
Fiscal 1998 activity:
Reduction of excess European manufacturing capacity...................................... $ 5.2
Reduction of European distribution and administrative capacity........................... 4.6
Other worldwide workforce reductions and facility closings............................... 4.0
---------
Total fiscal 1998 activity............................................................... $ 13.8
---------
Balance at June 30, 1998................................................................. $ --
---------
---------
</TABLE>

As of June 30, 1998 all costs associated with the 1996 restructuring plans
have been incurred.

FISCAL 1997

During the fourth quarter of fiscal 1997, the PE Biosystems Group announced
a follow-on phase to Analytical Instruments' profit improvement program begun by
the Company in fiscal 1996. The cost for this action was $24.2 million
before-tax, and included $19.4 million for costs focused on further improving
the operating efficiency of manufacturing facilities in the United States,
Germany, and the United Kingdom. These actions were designed to help transition
Analytical Instruments from a highly vertical manufacturing operation to one
that relies more on outsourcing functions not considered core competencies. The
restructuring charge also included $4.8 million to finalize the consolidation of
sales and administrative support, primarily in Europe, where 17 facilities were
closed.

F-64
<PAGE>
The following table details the major components of the fiscal 1997
restructuring provision:

<TABLE>
<CAPTION>
FACILITY
CONSOLIDATION AND
ASSET RELATED
(DOLLAR AMOUNTS IN MILLIONS) PERSONNEL WRITE-OFFS TOTAL
- ---------------------------------------------------------------------------- ------------- ------------------- ---------
<S> <C> <C> <C>
Provision:
Changes in manufacturing operations......................................... $ 9.6 $ 9.8 $ 19.4
Consolidation of sales and administrative support........................... 2.3 2.5 4.8
----- ----- ---------
Total provision............................................................. $ 11.9 $ 12.3 $ 24.2
----- ----- ---------
Fiscal 1997 activity:
Changes in manufacturing operations......................................... $ .1 $ 4.6 $ 4.7
Consolidation of sales and administrative support...........................
----- ----- ---------
Total fiscal 1997 activity.................................................. $ .1 $ 4.6 $ 4.7
----- ----- ---------
Fiscal 1998 activity:
Changes in manufacturing operations......................................... $ 7.8 $ 4.9 $ 12.7
Consolidation of sales and administrative support........................... 1.3 1.1 2.4
----- ----- ---------
Total fiscal 1998 activity.................................................. $ 9.1 $ 6.0 $ 15.1
----- ----- ---------
Fiscal 1999 activity:
Changes in manufacturing operations......................................... $ 1.4 $ -- $ 1.4
Consolidation of sales and administrative support........................... .1 .1 .2
----- ----- ---------
Total fiscal 1999 activity (unaudited)...................................... $ 1.5 $ .1 $ 1.6
----- ----- ---------
Balance at September 30, 1998:
Changes in manufacturing operations......................................... $ .3 $ .3 $ .6
Consolidation of sales and administrative support........................... .9 1.3 2.2
----- ----- ---------
Balance at September 30, 1998 (unaudited)................................... $ 1.2 $ 1.6 $ 2.8
----- ----- ---------
----- ----- ---------
</TABLE>

INCOME TAXES

Income (loss) before income taxes of discontinued operations for fiscal
1996, 1997, and 1998 is summarized below:

The components of the provision (benefit) for income taxes for fiscal 1996,
1997, and 1998 consisted of the following:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS) 1996 1997 1998
- ------------------------------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Currently payable:
Domestic................................................................................. $ (2.0) $ (1.0) $ (3.7)
Foreign.................................................................................. 8.7 5.1 7.8
--------- --------- ---------
Total currently payable.................................................................. 6.7 4.1 4.1
Deferred:
Domestic................................................................................. (7.8) 4.8 4.9
Foreign.................................................................................. (4.6) (2.1) 4.5
--------- --------- ---------
Total deferred........................................................................... (12.4) 2.7 9.4
--------- --------- ---------
Provision (benefit) for income tax from discontinued operations............................ $ (5.7) $ 6.8 $ 13.5
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-65
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of
The Perkin-Elmer Corporation

In our opinion, the accompanying combined statements of financial position and
the related combined statements of operations, of group equity, and of cash
flows present fairly, in all material respects, the financial position of the
Celera Genomics Group of The Perkin-Elmer Corporation at June 30, 1998 and 1997,
and the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the management of The Perkin-Elmer
Corporation; 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 described above and more fully in Note 1 to the Celera Genomics Group
combined financial statements, the Celera Genomics Group is a group of The
Perkin-Elmer Corporation; accordingly, the combined financial statements of the
Celera Genomics Group should be read in conjunction with the audited financial
statements of The Perkin-Elmer Corporation.

PricewaterhouseCoopers LLP
Stamford, Connecticut
July 31, 1998, except as to Note 7,
which is as of October 19, 1998

F-66
<PAGE>
CELERA GENOMICS GROUP
COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED JUNE 30, ENDED SEPTEMBER 30,
(DOLLAR AMOUNTS IN THOUSANDS --------------------------------- --------------------
EXCEPT PER SHARE AMOUNTS) 1996 1997 1998 1997 1998
- ---------------------------------------------------------- --------- ---------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET REVENUES.............................................. $ 159 $ 903 $ 4,211 $ 613 $ 3,916
Cost of sales............................................. 128 895 4,099 538 1,013
--------- ---------- ---------- --------- ---------
GROSS MARGIN.............................................. 31 8 112 75 2,903
--------- ---------- ---------- --------- ---------
Selling, general and administrative....................... 624 2,228 6,725 850 4,792
Research and development.................................. 212 3,081 6,180 637 3,664
Acquired research and development......................... 2,066 26,801 -- -- --
--------- ---------- ---------- --------- ---------
OPERATING LOSS............................................ (2,871) (32,102) (12,793) (1,412) (5,553)
--------- ---------- ---------- --------- ---------
LOSS BEFORE INCOME TAXES.................................. (2,871) (32,102) (12,793) (1,412) (5,553)
Income tax benefit........................................ -- -- -- -- 1,944
--------- ---------- ---------- --------- ---------
NET LOSS.................................................. $ (2,871) $ (32,102) $ (12,793) $ (1,412) $ (3,609)
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------

UNAUDITED PRO FORMA NET LOSS PER SHARE (SEE NOTE 1):
Basic..................................................... $ (.53) $ (.15)
Diluted................................................... $ (.53) $ (.15)
</TABLE>

SEE ACCOMPANYING NOTES TO THE CELERA GENOMICS GROUP COMBINED FINANCIAL
STATEMENTS.

F-67
<PAGE>
CELERA GENOMICS GROUP
COMBINED STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
AT JUNE 30,
--------------------
(DOLLAR AMOUNTS IN THOUSANDS) 1997 1998
- ----------------------------------------------------------------------------- --------- --------- AT SEPTEMBER
30, 1998
-------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Accounts receivable........................................................ $ 402 $ 756 $ 3,233
Note receivable from the PE Biosystems Group (see Note 5) -- -- 330,000
Tax benefit receivable from the PE Biosystems Group (see Note 1)........... -- -- 1,944
Prepaid expenses and other current assets.................................. 70 138 133
--------- --------- -------------
Total current assets......................................................... 472 894 335,310
Property and equipment, net.................................................. 1,062 4,198 6,063
Other long-term assets....................................................... 1,449 1,247 1,223
--------- --------- -------------
TOTAL ASSETS................................................................. $ 2,983 $ 6,339 $ 342,596
--------- --------- -------------
--------- --------- -------------

LIABILITIES AND GROUP EQUITY
Current liabilities
Accounts payable........................................................... $ 219 $ 488 $ 333
Accrued salaries and wages................................................. 203 236 452
Other accrued expenses..................................................... 471 1,330 2,359
--------- --------- -------------
Total current liabilities.................................................... 893 2,054 3,144
Other long-term liabilities.................................................. 5,554 5,544 5,785
--------- --------- -------------
Total liabilities............................................................ 6,447 7,598 8,929
--------- --------- -------------
Commitments and contingencies (see Note 7)
Group equity (deficit)....................................................... (3,464) (1,259) 333,667
--------- --------- -------------
TOTAL LIABILITIES AND GROUP EQUITY........................................... $ 2,983 $ 6,339 $ 342,596
--------- --------- -------------
--------- --------- -------------
</TABLE>

SEE ACCOMPANYING NOTES TO THE CELERA GENOMICS GROUP COMBINED FINANCIAL
STATEMENTS.

F-68
<PAGE>
CELERA GENOMICS GROUP
COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED JUNE 30, ENDED SEPTEMBER 30,
--------------------------------- --------------------
(DOLLAR AMOUNTS IN THOUSANDS) 1996 1997 1998 1997 1998
- ---------------------------------------------------------- --------- ---------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES

Net loss.................................................. $ (2,871) $ (32,102) $ (12,793) $ (1,412) $ (3,609)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization........................... 203 241 650 120 411
Acquired research and development....................... 2,066 26,801 -- -- --
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable.............. (23) (379) (354) (138) (2,477)
Increase in tax benefit receivable from
the PE Biosystems Group............................... -- -- -- -- (1944)
(Increase) decrease in prepaid expenses and other
assets................................................ (84) (82) (4) (162) (8)
Increase (decrease) in accounts payable and other
liabilities........................................... 366 581 1,151 (88) 1,331
--------- ---------- ---------- --------- ---------
NET CASH USED BY OPERATING ACTIVITIES..................... (343) (4,940) (11,350) (1,680) (6,296)
--------- ---------- ---------- --------- ---------

INVESTING ACTIVITIES

Additions to property and equipment....................... (1,073) (411) (3,648) (748) (2,239)
Acquisitions and investments, net......................... (2,066) (22,676) -- -- --
--------- ---------- ---------- --------- ---------
NET CASH USED BY INVESTING ACTIVITIES..................... (3,139) (23,087) (3,648) (748) (2,239)
--------- ---------- ---------- --------- ---------

FINANCING ACTIVITIES

Net cash allocated from the PE Biosystems Group........... 3,482 28,027 14,998 2,428 8,535
--------- ---------- ---------- --------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES................. 3,482 28,027 14,998 2,428 8,535
--------- ---------- ---------- --------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS................... -- -- -- -- --
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD............. -- -- -- -- --
--------- ---------- ---------- --------- ---------
CASH AND CASH EQUIVALENTS END OF PERIOD................... $ -- $ -- $ -- $ -- $ --
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------
</TABLE>

SEE ACCOMPANYING NOTES TO THE CELERA GENOMICS GROUP COMBINED FINANCIAL
STATEMENTS.

F-69
<PAGE>
CELERA GENOMICS GROUP
COMBINED STATEMENTS OF GROUP EQUITY

<TABLE>
<CAPTION>
ACCUMULATED GROUP
(DOLLAR AMOUNTS IN THOUSANDS) OTHER DEFICIT EQUITY
- ---------------------------------------------------------------------------- ---------- ------------ ----------
<S> <C> <C> <C>
BALANCE AT JUNE 30, 1995.................................................... $ -- $ -- $ --
Net cash allocated from the PE Biosystems Group............................. 3,482 -- 3,482
Net loss.................................................................... -- (2,871) (2,871)
---------- ------------ ----------
BALANCE AT JUNE 30, 1996.................................................... 3,482 (2,871) 611
Net cash allocated from the PE Biosystems Group............................. 28,027 -- 28,027
Net loss.................................................................... -- (32,102) (32,102)
---------- ------------ ----------
BALANCE AT JUNE 30, 1997.................................................... 31,509 (34,973) (3,464)
Net cash allocated from the PE Biosystems Group............................. 14,998 -- 14,998
Net loss.................................................................... -- (12,793) (12,793)
---------- ------------ ----------
BALANCE AT JUNE 30, 1998.................................................... 46,507 (47,766) (1,259)
Net cash allocated from the PE Biosystems Group............................. 8,535 -- 8,535
Net loss.................................................................... -- (3,609) (3,609)
Equity contribution from the PE Biosystems Group............................ 330,000 -- 330,000
---------- ------------ ----------
BALANCE AT SEPTEMBER 30, 1998 (UNAUDITED)................................... $ 385,042 $ (51,375) $ 333,667
---------- ------------ ----------
---------- ------------ ----------
</TABLE>

SEE ACCOMPANYING NOTES TO THE CELERA GENOMICS GROUP COMBINED FINANCIAL
STATEMENTS.

F-70
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS

NOTE 1 ACCOUNTING POLICIES AND PRACTICES

BASIS OF PRESENTATION

The Perkin-Elmer Corporation ("Perkin-Elmer" or the "Company") is comprised
of two separate business segments in continuing operations: PE Biosystems and
the Celera Genomics business. PE Biosystems manufactures and markets biochemical
instrument systems and associated consumable products for life science research
and related applications. The Celera Genomics Group is engaged principally in
the generation, sale and support of genomic information databases and related
information management and analysis software; discovery, validation and
licensing of proprietary gene products, genetic markers and information
regarding genetic variability; and related consulting and contract research and
development services. The foundation of the Celera Genomics Group's strategy is
the sequencing of the entire human genome, which it expects to complete by
December 31, 2001. The Celera Genomics Group also includes the business and
operations of GenScope and AgGen. GenScope provides genomic-related contract
research and discovery services, utilizing AFLP gene expression profiling
technology. AgGen is a provider of genetic analysis services for plant and
animal breeding. The purchase of Linkage Genetics, Inc. and Zoogen, Inc. were
combined with the Company's applied agriculture unit to form AgGen.

The Board of Directors (the "Board") of the Company has recommended
shareholder approval of the Recapitalization Proposal that would result in The
Perkin-Elmer Corporation merging with a subsidiary of PE Corporation, a new
Delaware corporation, and the issuance to stockholders in the merger of two new
classes of common stock called PE Corporation-PE Biosystems Group Common Stock
("PE Biosystems Stock") and PE Corporation-Celera Genomics Group Common Stock
("Celera Genomics Stock"). PE Biosystems Stock is intended to reflect separately
the performance of the established PE Biosystems' life sciences and the
discontinued Analytical Instruments businesses ("PE Biosystems Group"), and
Celera Genomics Stock is intended to reflect separately the performance of the
Celera Genomics business ("Celera Genomics Group"). Each share of existing
common stock will be converted into one share of PE Biosystems Stock and 0.5 of
a share of Celera Genomics Stock. As used herein, "Perkin-Elmer" or the
"Company" means, with respect to events after the Recapitalization, the new
Delaware company that will issue the PE Biosystems Stock and the Celera Genomics
Stock.

The combined financial statements of the Celera Genomics Group and the PE
Biosystems Group (individually referred to as a "Group") comprise all of the
accounts included in the corresponding consolidated financial statements of the
Company. The separate Group combined financial statements give effect to the
accounting policies that will be applicable upon implementation of the
Recapitalization Proposal. The separate Celera Genomics Group and PE Biosystems
Group combined financial statements have been prepared on a basis that
management believes to be reasonable and appropriate and reflect (i) the
financial position, results of operations, and cash flows of businesses that
comprise each of the Groups, with all significant intragroup transactions and
balances eliminated, (ii) in the case of the Celera Genomics Group combined
financial statements, corporate assets and liabilities of the Company and
related transactions identified with the Celera Genomics Group, including
allocated portions of the Company's debt and selling, general and administrative
costs, and (iii) in the case of the PE Biosystems Group's combined financial
statements, all other corporate assets and liabilities and related transactions
of the Company, including allocated portions of the Company's debt and selling,
general and administrative costs. Intergroup transactions between the Celera
Genomics Group and the PE Biosystems Group have not been eliminated in the
Celera Genomics Group's combined financial statements.

F-71
<PAGE>

Holders of Celera Genomics Stock and PE Biosystems Stock will be
stockholders of a single company. The Celera Genomics Group and the PE
Biosystems Group are not separate legal entities. As a result, stockholders will
continue to be subject to all of the risks associated with an investment in the
Company and all of its businesses, assets, and liabilities. The issuance of
Celera Genomics Stock and PE Biosystems Stock and the allocations of assets and
liabilities between the Celera Genomics Group and the PE Biosystems Group will
not result in a distribution or spin-off of any assets or liabilities of the
Company or otherwise affect ownership of any assets or responsibility for the
liabilities of the Company or any of its subsidiaries. The assets the Company
attributes to one Group could be subject to the liabilities of the other Group,
whether such liabilities arise from lawsuits, contracts or indebtedness
attributable to the other Group. If the Company is unable to satisfy one Group's
liabilities out of assets attributed to it, the Company may be required to
satisfy these liabilities with assets attributed to the other Group.

Financial effects arising from one Group that affect the Company's results
of operations or financial condition could, if significant, affect the results
of operations or financial condition of the other Group and the market price of
the class of common stock relating to the other Group. Any net losses of the
Celera Genomics Group or the PE Biosystems Group and dividends or distributions
on, or repurchases of, Celera Genomics Stock or PE Biosystems Stock or
repurchases of preferred stock or junior preferred stock of the Company will
reduce the assets of the Company legally available for payment of dividends on
Celera Genomics Stock.

The management and allocation policies applicable to the preparation of the
combined financial statements of the Celera Genomics Group and the PE Biosystems
Group may be modified or rescinded, or additional policies may be adopted, at
the sole discretion of the Board at any time without approval of the
stockholders. The Celera Genomics Group's combined financial statements reflect
the application of the management and allocation policies adopted by the Board
to various corporate activities, as described below. The Celera Genomics Group's
combined financial statements should be read in conjunction with the Company's
consolidated financial statements.

FINANCING ACTIVITIES

As a matter of policy, the Company manages most financing activities of the
Celera Genomics Group and the PE Biosystems Group on a centralized basis. These
activities include the investment of surplus cash, the issuance and repayment of
short-term and long-term debt and the issuance and repayment of any preferred
stock. As the results of the Celera Genomics Group were not significant for any
of the periods presented, all historical cash and debt balances for the periods
presented have been allocated to the PE Biosystems Group.

The Board has adopted the following financing policy which will affect the
combined statements of the Celera Genomics Group and the PE Biosystems Group.

The Company will allocate the Company's debt between the Celera Genomics
Group and the PE Biosystems Group ("pooled debt") or, if the Company so
determines, in its entirety to a particular Group. The Company will allocate
preferred stock, if issued, in a similar manner.

Cash allocated to one Group that is used to repay pooled debt or redeem
pooled preferred stock will decrease such Group's allocated portion of the
pooled debt or preferred stock. Cash or other property allocated to one Group
that is transferred to the other Group will, if so determined by the Board,
decrease the transferring Group's allocated portion of the pooled debt or
preferred stock and, correspondingly, increase the recipient Group's allocated
portion of the pooled debt or preferred stock.

F-72
<PAGE>
purposes at a rate based on the weighted average dividend rate of the preferred
stock similarly calculated and applied. Any expense related to increases in
pooled debt or preferred stock will be reflected in the weighted average
interest or dividend rate of such pooled debt or preferred stock as a whole.

If the Company allocates debt for a particular financing in its entirety to
one Group, that debt will bear interest for Group financial statement purposes
at the rate determined by the Board. If the Company allocates preferred stock in
its entirety to one Group, the Company will charge the dividend cost to that
Group in a similar manner. If the interest or dividend cost is higher than the
Company's actual cost, the other Group will receive a credit for an amount equal
to the difference as compensation for the use of the Company's credit capacity.
Any expense related to debt or preferred stock of the Company that is allocated
in its entirety to a Group will be allocated in whole to that Group.

In addition, cash allocated to the PE Biosystems Group may be contributed to
the Celera Genomics Group in exchange for Celera Group Designated Shares.

ALLOCATION OF CORPORATE OVERHEAD AND ADMINISTRATIVE SHARED SERVICES

A portion of the Company's corporate overhead (such as executive management,
human resources, legal, accounting, auditing, tax, treasury, strategic planning
and environmental services) has been allocated to the Celera Genomics Group
based upon the use of services by that Group. A portion of the Company's costs
of administrative shared services (such as information technology services) has
been allocated in a similar manner. Where determination based on use alone is
not practical, other methods and criteria were used that management believes are
equitable and provide a reasonable estimate of the cost attributable to the
Celera Genomics Group. The total of these allocations was $.1 million for fiscal
1996, $.2 million for fiscal 1997, $1.7 million for fiscal 1998, $.1 million for
the three months ended September 30, 1997 and $1.0 million for the three months
ended September 30, 1998. It is not practicable to provide a detailed estimate
of the expenses which would be recognized if the Celera Genomics Group were a
separate legal entity.

ALLOCATION OF FEDERAL AND STATE INCOME TAXES

The federal income taxes of the Company and its subsidiaries which own
assets allocated between the Groups are determined on a consolidated basis.
Consolidated federal income tax provisions and related tax payments or refunds
will be allocated between the Groups based principally on the taxable income and
tax credits directly attributable to each Group. Such allocations will reflect
each Group's contribution (positive or negative) to the Company's consolidated
federal taxable income and the consolidated federal tax liability and tax credit
position. Tax benefits that cannot be used by the Group generating those
benefits but can be used on a consolidated basis will be credited to the Group
that generated such benefits. Intergroup transactions will be taxed as if each
group were a stand alone company. Tax benefits generated by the Celera Genomics
Group commencing July 1, 1998, which then can be utilized on a consolidated
basis, will be credited to the Celera Genomics Group up to a maximum limit of

F-73
<PAGE>

$75 million. The tax benefit receivable from the PE Biosystems Group at
September 30, 1998 was $1.9 million.

Had the Groups filed separate tax returns, the provision (benefit) for
income taxes and net income (loss) for each Group would not have differed from
the amounts reported in the Groups' combined statements of operations for the
years ended June 30, 1996, 1997, and 1998, or for the three-month periods ended
September 30, 1997, and 1998. However, the amount of current and deferred taxes
and taxes payable or refundable allocated to each Group in these historical
combined financial statements may differ from those that would have been
allocated to each Group had they filed separate income tax returns.

Depending on the tax laws of the respective jurisdictions, state and local
income taxes are calculated on either a consolidated or combined basis between
the Groups based on their respective contribution to such consolidated or
combined state taxable incomes. State and local income tax provisions and
related tax payments or refunds which are determined on a separate corporation
basis will be allocated between the Groups in a manner designed to reflect the
respective contributions of the Groups to the Company's separate or local
taxable income.

The discussion of the Celera Genomics Group's income taxes (Note 3) should
be read in conjunction with the Company's consolidated financial statements and
the notes thereto.

DIVIDENDS

For purposes of the historical combined financial statements of the Celera
Genomics Group and the PE Biosystems Group, all dividends declared and paid by
the Company have been allocated to the PE Biosystems Group. The Company
initially intends to pay a dividend on PE Biosystems Stock but does not
anticipate paying dividends on Celera Genomics Stock for the foreseeable future.

PRINCIPLES OF COMBINATION

The Celera Genomics Group's combined financial statements have been prepared
in accordance with generally accepted accounting principles and, taken together
with the PE Biosystems Group's combined financial statements, comprise all the
accounts included in the corresponding consolidated financial statements of the
Company. The combined financial statements of each Group reflect the financial
condition, results of operations, and cash flows of the businesses included
therein. The combined financial statements of the Celera Genomics Group include
the accounts or assets of the Company specifically allocated to the Celera
Genomics Group. The preparation of the combined financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.

RECENT ACCOUNTING STANDARDS

During the first quarter of fiscal 1999, the Celera Genomics Group adopted
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." The provisions of this statement requires disclosure of
total comprehensive income within the combined financial statements of interim
periods and additional disclosures of the components of comprehensive income on
an annual basis. The Celera Genomics Group has no items of other comprehensive
income (loss) in any period presented.

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." The
provisions of the statement require the recognition of all derivatives as either
assets or liabilities in the statement of financial position and the measurement
of those instruments at fair value. The accounting for changes in the fair value
of a derivative depends on the intended use of the derivative and the resulting
designation. The Celera Genomics Group is required to implement the statement in
the first quarter of fiscal 2000. Management believes the statement

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<PAGE>
will not have a material impact on the combined financial statements.

EARNINGS PER SHARE

Historical per share information is omitted from the Combined Statements of
Operations because Celera Genomics Stock was not part of the capital structure
of the Company for the periods presented. Following implementation of the
Recapitalization Proposal, earnings per share for Celera Genomics Stock will
reflect the terms of the new Delaware company's certificate of incorporation and
will be computed in accordance with SFAS No.128, "Earnings per Share." Basic
earnings per share will be computed by dividing net income for the period by the
weighted average number of Celera Genomics Stock outstanding. Diluted earnings
per share will be computed by dividing net income for the period by the weighted
average number of Celera Genomics Stock outstanding including the dilutive
effect of Celera Genomics Stock equivalents. Pro-forma earnings per share,
reflecting Celera Genomics Stock issued under the Recapitalization Proposal, is
presented in the Celera Genomics Group Combined Statements of Operations.

PROPERTY AND EQUIPMENT AND DEPRECIATION

Property and equipment are recorded at cost and consisted of the following
at June 30, 1997 and 1998:

<TABLE>
<CAPTION>
JUNE 30,
--------------------
(DOLLAR AMOUNTS IN MILLIONS) 1997 1998
- ---------------------------------------- --------- ---------
<S> <C> <C>
Machinery and equipment................. $ 1.4 $ 1.7
Leasehold improvements.................. .3 4.2
--- ---
Property and equipment, at cost......... 1.7 5.9
Accumulated depreciation and
amortization.......................... .6 1.7
--- ---
Property and equipment, net............. $ 1.1 $ 4.2
--- ---
--- ---
</TABLE>

Provisions for depreciation of owned property and equipment are based upon
the expected useful lives of the assets and computed primarily by the
straight-line method. Leasehold improvements are amortized over their estimated
useful lives or the term of the applicable lease, whichever is less, using the
straight-line method.

INTANGIBLE ASSETS

Purchased technology rights are amortized using the straight-line method
over their expected useful lives. At June 30, 1997, and 1998, and September 30,
1998 (unaudited), other long-term assets included purchased technology rights,
net of accumulated amortization, of $1.3 million, $1.2 million, and $1.1
million, respectively. Accumulated amortization of purchased technology rights
was $.1 million, $.2 million, and $.3 million at June 30, 1997, and 1998, and
September 30, 1998 (unaudited), respectively.

REVENUES

Revenues are currently generated from the Celera Genomics Group's GenScope
and AgGen businesses in the form of contract research services. Contract
revenues are earned and recognized generally on a percentage of completion or as
contract research costs are incurred according to the provisions of the
underlying agreement. Amounts received in advance of performance are recorded as
deferred revenue.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed when incurred.

UNAUDITED INTERIM FINANCIAL STATEMENTS

The accompanying unaudited combined interim financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in accordance with the Securities and Exchange
Commission's rules and regulations for interim reporting. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of the
Celera Genomics Group's management, the unaudited combined interim financial
statements include all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly such interim financial information.

F-75
<PAGE>
NOTE 2 ACQUISITION

GENSCOPE, INC.

During the third quarter of fiscal 1997, our company acquired GenScope,
Inc., for $26.8 million. GenScope, founded in 1995, represented a development
stage venture with no operating history and effectively no revenues (limited R&D
contract services only). Its sole material asset is a cross license for gene
expression technology still under development and, at acquisition date, was not
commercially viable. GenScope's limited balance sheet, assets of approximately
$.2 million, had yet to deliver commercial value. Accordingly, our Company
recorded a charge of $25.4 million attributable to the in-process technology
purchased. The acquisition represented the purchase of development stage
technology, not at the time considered commercially viable in the health care
applications that our company intends to pursue. Our Company's intent was to
first develop the technology into a set of molecular screening tools for use in
the enhancement of pharmaceutical product development. Our company allocated
$1.4 million of the purchase price to technology rights attributable to
GenScope's AFLP gene expression technology. AFLP is an enhancement of the
polymerase chain reaction ("PCR") process that allows selective analysis of any
portion of genetic material without the specific, prior sequence information
normally required for PCR. Of the $25.4 million expensed as in-process research
and development, $5.5 million represented a contingent liability due on the
issuance of a process patent for technology under development.

Our company acquired Linkage, a company solely engaged in genetic R&D
activities in the agriculture industry, during the fourth quarter of fiscal
1997. As a result, the acquisition cost of $1.4 million was expensed as
purchased in-process research and development.

During the fourth quarter of fiscal 1996, our company acquired Zoogen, a
company solely engaged in genetic R&D activities in the animal healthcare market
for $2.1 million. We expensed the acquisition cost as purchased in-process R&D.

NOTE 3 INCOME TAXES

The income tax benefit includes the Celera Genomics Group's allocated
portion of the Company's consolidated provision for income taxes for the first
quarter of fiscal 1999.

Loss before income taxes, consisting of losses generated in the United
States, for the three months ended September 30, 1998 was $5.6 million. The
domestic income tax benefit for the three months ended September 30, 1998 was
$1.9 million. A federal statutory tax rate of 35% was used.

NOTE 4 RETIREMENT AND OTHER BENEFITS

PENSION PLANS

The Company maintains or sponsors pension plans that cover selective
employees of the Celera Genomics Group. Pension benefits earned are generally
based on years of service and compensation during active employment. However,
the level of benefits and terms of vesting vary among the plans. Pension plan
assets are administered by trustees and are principally invested in equity and
fixed income securities. The funding of pension plans is determined in
accordance with statutory funding requirements. Pension expense, consisting
primarily of service cost, allocated to the Celera Genomics Group was less than
$.05 million in fiscal 1996, $.1 million in fiscal 1997, and $.1 million in
fiscal 1998.

SAVINGS PLAN

The Company provides a 401(k) savings plan, for most domestic employees,
with automatic Company contributions of 2% of eligible compensation and a
dollar-for-dollar matching contribution of up to 4% of eligible compensation.
The Company's contributions allocated to the Celera Genomics Group were less
than $.05 million in fiscal 1996, $.1 million in fiscal 1997, and $.2 million in
fiscal 1998.

RETIREE HEALTH CARE AND LIFE INSURANCE BENEFITS

F-76
<PAGE>

Medicare or other group coverage. The cost of providing these benefits is shared
with retirees. The plan is unfunded. The postretirement benefit expense
allocated to the Celera Genomics Group was not material for fiscal 1996, 1997,
and 1998. Amounts allocated to the Celera Genomics Group were less than $.05
million for all periods presented.

POSTEMPLOYMENT BENEFITS

The Company provides certain postemployment benefits to selective employees.
These benefits generally include severance, disability, and medical-related
costs paid after employment but before retirement.

NOTE 5 GROUP EQUITY AND NOTE RECEIVABLE

Celera Genomics Stock will represent a separate class of the new Delaware
company's common stock if the Recapitalization Proposal is approved. Additional
Celera Genomics Stock may be issued from time to time upon exercise of stock
options or at the discretion of the Company's Board.

NOTE RECEIVABLE FROM THE PE BIOSYSTEMS GROUP

The development of the Celera Genomics Group's products and services will
require substantial funding. No organization has ever attempted to combine in
one business organization all of the Celera Genomics Group's businesses. The
initial capitalization of the Celera Genomics Group will be accounted for as an
equity contribution from the PE Biosystems Group. This equity contribution is
reflected in the combined financial statements as a $330 million short-term note
receivable from the PE Biosystems Group. The note payable will not result in the
PE Biosystems Group holding an equity interest in the Celera Genomics Group. The
note is expected to be repaid with the proceeds from the sale of the Analytical
Instruments business of the PE Biosystems Group. Accordingly, no interest will
be ascribed to the note. The Company also intends to allocate tax benefits to
the Celera Genomics Group for losses incurred, resulting in up to $75 million of
additional cash resources for the Celera Genomics Group.

SHAREHOLDER'S PROTECTION RIGHTS PLAN

The Original Rights are exercisable only if a person or a group acquires 20%
of more of the Company's existing common stock or commences a tender offer for
20% or more of the existing common stock. Before that time, the rights trade
with the existing common stock, but thereafter they become separately tradeable.

If the Recapitalization Proposal is implemented, the Company will adopt a
new rights agreement (the "New Rights Agreement"), substantially similar to the
Original Rights Agreement containing provisions designed to, among other things,
(i) reflect the new equity structure of the Company, and (ii) reset the prices
at which rights issued under the New Rights Agreement may be exercised for
shares of participating preferred stock. As of the Effective Time, the Company
will (i) designate a new series of Preferred Stock as the Series A

F-77
<PAGE>

Participating Junior Preferred Stock, (ii) designate another new series of
Preferred Stock as the Series B Participating Junior Preferred Stock, (iii)
issue one right for each share of PE Biosystems Stock (a "PE Biosystems Right"),
which will allow holders to purchase shares of Series A Participating Junior
Preferred Stock under conditions specified in the New Rights Agreement and (iv)
issue one right for each share of Celera Genomics Stock (a "Celera Genomic
Right"), which will allow holders to purchase shares of Series B Participating
Junior Preferred Stock under conditions specified in the New Rights Agreement.

The Rights will expire on the tenth anniversary of the adoption of the New
Rights Agreement, unless extended or terminated by the Company. The Rights would
be exercisable only if a person or group acquires (1) 15% or more of the shares
of PE Biosystems Stock then outstanding or (2) 15% or more of the Celera
Genomics Stock then outstanding, or commences a tender offer that would result
in such person or groups beneficially owning such number of shares. In such
event, each right would entitle the holder to purchase from the Company (1) in
the case of a PE Biosystems Right, one one-thousandth (1/1000th) of a share of
Series A Participating Junior Preferred Stock at a purchase price of $425,
subject to adjustment, and (2) in the case of a Celera Genomics Right, one
one-thousandth (1/1000th) of a share of Series B Participating Junior Preferred
Stock at a purchase price of $125, subject to adjustment.

NOTE 6 STOCK INCENTIVE PLANS

1999 INCENTIVE STOCK PLANS

The Board has approved the PE Corporation/PE Biosystems Group 1999 Stock
Incentive Plan (the "PE Biosystems Group Plan") and the PE Corporation/Celera
Genomics Group 1999 Stock Incentive Plan (the "Celera Genomics Group Plan"),
subject to shareholder approval. The PE Biosystems Group Plan authorizes grants
of stock options, stock awards and performance shares with respect to PE
Biosystems Stock. The Celera Genomics Group Plan authorizes grants of stock
options, stock awards and performance shares with respect to Celera Genomics
Stock. The Company does not currently intend to grant awards under the PE
Biosystems Group Plan to members of the Celera Genomics Group. It is intended,
however, that certain directors, officers and key employees of the Company with
responsibilities involving both the PE Biosystems Group and the Celera Genomics
Group and certain key employees of each Group may be granted awards under both
incentive plans in a manner which reflects their responsibilities. The Board
believes that permitting incentive awards to be made to participants with
respect to the class of common stock which reflects the performance of the
Group's business in which the participants work and, in certain cases the other
Group, is in the best interest of the Company and its stockholders.

STOCK OPTION PLANS

F-78
<PAGE>
Transactions relating to the stock option plans of the Company are
summarized below:

<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
OPTIONS EXERCISE PRICE
----------- ---------------
<S> <C> <C>
FISCAL 1996
Outstanding at June 30,
1995....................... 4,597,214 $ 29.97
Granted..................... 820,495 $ 46.43
Exercised................... 1,393,807 $ 29.48
Cancelled................... 201,367 $ 34.17
-----------
Outstanding at June 30,
1996....................... 3,822,535 $ 34.05
Exercisable at June 30,
1996....................... 2,544,100 $ 30.17

FISCAL 1997
Granted..................... 1,595,528 $ 59.78
Exercised................... 1,167,179 $ 29.73
Cancelled................... 95,281 $ 43.17
-----------
Outstanding at June 30,
1997....................... 4,155,603 $ 45.03
Exercisable at June 30,
1997....................... 2,254,052 $ 35.24

FISCAL 1998
Granted..................... 1,997,041 $ 70.41
Exercised................... 780,994 $ 34.76
Cancelled................... 154,686 $ 71.42
-----------
Outstanding at June 30,
1998....................... 5,216,964 $ 55.51
Exercisable at June 30,
1998....................... 2,936,389 $ 43.12
</TABLE>

At June 30, 1998, 241,437 shares remained available for option grant.

The following table summarizes information regarding options outstanding and
exercisable at June 30, 1998:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
----------------------------
CONTRACTUAL
(OPTION PRICES PER NUMBER OF LIFE REMAINING EXERCISE
SHARE) OPTIONS IN YEARS PRICE
- ------------------------ ----------- --------------- -----------
<S> <C> <C> <C>
Options outstanding:
At $2.04-$29.95......... 448,472 4.2 $ 20.93
At $30.25-$59.75........ 2,038,936 7.0 $ 40.87
At $60.06-$85.69........ 2,713,648 9.3 $ 71.83
At $90.86-$163.55....... 15,908 5.4 $ 120.86

Options exercisable:
At $2.04-$29.95......... 448,472 4.2 $ 20.93
At $30.25-$59.75........ 1,992,736 6.9 $ 40.53
At $60.06-$83.69........ 479,273 8.7 $ 72.07
At $90.86-$163.55....... 15,908 5.4 $ 120.86
</TABLE>

If the Recapitalization Proposal is approved by the shareholders and
implemented by the Board, each outstanding stock option under the Company's
stock option plans will be converted into separately exercisable options to
acquire one share of PE Biosystems Stock and 0.5 of a share of Celera Genomics
Stock. The exercise price for the resulting PE Biosystems Stock options and
Celera Genomics Stock options will be calculated by multiplying the exercise
price under the original option from which they were converted by a fraction,
the numerator of which is the average of the high and low price of PE Biosystems
Stock or Celera Genomics Stock, as the case may be, on the first date such
stocks are traded on the New York Stock Exchange and the denominator of which is
the sum of such PE Biosystems Stock and Celera Genomics Stock prices. This is
intended to ensure that the aggregate intrinsic value of the options will be
preserved, and the ratio of the exercise price per option to the market value
per share will not be reduced. In addition, the vesting provision and option
periods of the original grants will remain the same when converted. No further
grants may be made under the amended plan.

EMPLOYEE STOCK PURCHASE PLAN

The Company's Employee Stock Purchase Plan offers domestic and certain
foreign employees the right to purchase, over a certain period, shares of
existing common stock on an annual offering date. The purchase price in the
United States is equal to the lower of 85% of the average market price of the
common stock on the offering date or 85% of the average market price of the
common stock on the last day of the purchase period. Provisions of the plan for
employees in foreign countries vary according to local practice and regulations.
Common stock issued under the Employee Stock Purchase Plan during fiscal 1996,
1997, and 1998 totaled 77,000 shares, 111,000 shares, and 174,000 shares,
respectively. At June 30, 1998, 499,000 shares remained available for issuance.

DIRECTOR STOCK PURCHASE AND DEFERRED COMPENSATION PLAN

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<PAGE>
purchase price is the fair market value on the first business day of the third
month of each fiscal quarter. At June 30, 1998, approximately 87,000 shares were
available for issuance.

RESTRICTED STOCK

As part of the Company's stock incentive plans, key employees may be, and
non-employee directors are, granted shares of restricted stock that will vest
when certain continuous employment/service restrictions and/or specified
performance goals are achieved. The fair value of shares granted is generally
expensed over the restricted periods, which may vary depending on the estimated
achievement of performance goals. Restricted stock granted to key employees and
non-employee directors during fiscal 1996, 1997, and 1998 totaled 185,000 shares
(155,000 of which were subject to shareholder approval in fiscal 1997), 42,000
shares, and 4,350 shares, respectively. No compensation expense was allocated to
the Celera Genomics Group for these awards.

PERFORMANCE UNIT BONUS PLAN

The Company has a Performance Unit Bonus Plan whereby employees may be
awarded performance units in conjunction with an equal number of stock options.
A performance unit represents the right to receive a cash or stock payment from
the Company at a specific date in the future. The amount of the payment is equal
to the fair market value of a share of common stock on the date of the grant.
The performance units vest upon shares of the Company's existing common stock
attaining and maintaining specific stock price levels for a specified period,
and are payable on or after June 26, 2000. As of June 30, 1998, 324,500
performance units were outstanding. All amounts recognized in the Company's
Consolidated Statements of Financial Position have been allocated to the
Perkin-Elmer Group. No amounts were allocated to the Celera Genomics Group for
fiscal 1996, 1997, and 1998.

Upon approval and implementation of the Recapitalization Proposal, each
performance unit will be converted in conjunction with the conversion of the
Company's stock options.

OTHER

The Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation,"
in 1996. The Company has elected to continue to account for its stock-based
compensation plans under Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and disclose the pro forma effects
of the plans on net income and earnings per share as provided by SFAS No. 123.
Accordingly, no compensation expense has been recognized for the stock option
plans and employee stock purchase plans, as all options have been issued at fair
market value. Since Celera Genomics Stock was not part of the capital structure
of the Company for the periods presented, there were no stock options
outstanding. Therefore, the pro forma effect of Celera Genomics Stock options on
the accompanying historical combined financial statements is not presented.

NOTE 7 COMMITMENTS AND CONTINGENCIES

Future minimum payments at June 30, 1998 under non-cancelable operating
leases for real estate and equipment were as follows:

<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN MILLIONS)
- ----------------------------------------------
<S> <C>
1999.......................................... $ .3
2000.......................................... .3
2001.......................................... .2
2002.......................................... .2
---
Total......................................... $ 1.0
---
---
</TABLE>

F-80
<PAGE>

Rental expense was $.1 million in fiscal 1997 and $.3 million in fiscal
1998. Rental expense for fiscal 1996 was not material.

On July 10, 1998, the Company entered into a ten year non-cancellable lease
for the Celera Genomics Group's facility in Rockville, Maryland. Total lease
payments over the ten-year period will be approximately $22 million.

On October 19, 1998, Amersham Pharmacia Biotech, Inc. ("Amersham") filed a
patent infringement action against a subsidiary of the Company which is a part
of the Celera Genomics Group in the United States District Court for the
District of Delaware. The complaint alleges that the subsidiary is directly,
contributorily or by inducement infringing U.S. Patent No. 5,688,648 ("the `648
patent"), entitled "Probes Labeled with Energy Transfer Coupled Dyes." The
complaint seeks declaratory judgment that the use of the Perkin-Elmer BigDye-TM-
Primer and BigDye-TM- Terminator kits would infringe the `648 patent, as well as
injunctive and monetary relief. The Celera Genomics Group answered the
complaint, alleging that the `648 patent is invalid and that the Celera Genomics
Group has not infringed the `648 patent.

The Company has been named as a defendant in several legal actions,
including patent, commercial, and environmental, arising from the conduct of
normal business activities. Although the amount of any liability that might
arise with respect to any of these matters cannot be accurately predicted, the
resulting liability, if any, will not in the opinion of management have a
material adverse effect on the financial statements of the Celera Genomics Group
or the Company.

The holders of Celera Genomics Stock will be stockholders of the Company and
will continue to be subject to all of the risks associated with an investment in
the Company, including any legal proceeding and claims affecting the PE
Biosystems Stock.

NOTE 8 RELATED PARTY TRANSACTIONS

SALES OF PRODUCTS AND SERVICES BETWEEN GROUPS

A Group will sell products or services to the other Group on terms that
would be available from third parties in commercial transactions. If terms for
such transaction are not available, the purchasing Group will pay fair value as
determined by the Board for such products and pay for such services at fair
value, as determined by the Board, or at the cost (including overhead) of the
selling Group. For the three month period ended September 30, 1998, R&D expense
includes $.4 million of services provided by the Perkin-Elmer Group.

ACCESS TO TECHNOLOGY AND KNOW-HOW

NOTE 9 ADDITIONAL INFORMATION

SELECTED ACCOUNTS

The following table provides the major components of other accrued expenses
in the Combined Statements of Financial Position:

<TABLE>
<CAPTION>
AT JUNE 30,
--------------------
1997 1998
--------- ---------
<S> <C> <C>
Other accrued expenses:
Deferred contract research
revenues........................ $ -- $ .5
Other............................. .5 .8
--------- ---------
Total other accrued expenses...... $ .5 $ 1.3
--------- ---------
--------- ---------
</TABLE>

F-81
<PAGE>
ANNEX I

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of January 21, 1999 (this
"Agreement"), among PE Corporation, a Delaware corporation ("PE Delaware"), PE
Merger Corp., a New York corporation and a wholly-owned subsidiary of PE
Delaware ("Merger Subsidiary"), and The Perkin-Elmer Corporation, a New York
Corporation ("Perkin-Elmer").

WHEREAS, Perkin-Elmer's authorized capital stock consists of 180,000,000
shares of Common Stock, par value $1.00 ("Existing Common Stock"), and 1,000,000
shares of Preferred Stock, par value $1.00 per share, of which shares of
Existing Common Stock are outstanding on the date hereof (subject to change
after the date hereof and prior to the Effective Time (as defined herein) as a
result of exercises of stock options and warrants);

WHEREAS, Merger Subsidiary's authorized capital stock consists of 1,000
shares of common stock, par value $.01, of which 100 shares are outstanding on
the date hereof and held by PE Delaware;

WHEREAS, PE Delaware's authorized capital stock consists of (a) 500,000,000
shares of PE Corporation-PE Biosystems Group Common Stock, par value $.01 per
share ("PE Biosystems Stock"), (b) 225,000,000 shares of PE Corporation-Celera
Genomics Group Common Stock, par value $.01 per share ("Celera Genomics Stock"),
and (c) 10,000,000 shares of Preferred Stock, par value $.01 per share;

WHEREAS, immediately prior to the Effective Time, PE Delaware and
BankBoston, N.A. will enter into a Rights Agreement in the form filed as an
exhibit to the Registration Statement on Form S-4 of PE Delaware (the "Rights
Agreement");

WHEREAS, the Boards of Directors of PE Delaware, Merger Subsidiary and
Perkin-Elmer have each adopted this Agreement and approved the merger of Merger
Subsidiary with and into Perkin-Elmer and Perkin-Elmer becoming a wholly-owned
subsidiary of PE Delaware (the "Merger") in accordance with the New York
Business Corporation Law ("NYBCL"), subject to the terms and conditions set
forth herein; and

WHEREAS, this Agreement will be submitted for adoption by the shareholders
of Perkin-Elmer at a special meeting of shareholders (the "Special Meeting")
called for such purpose (and has been approved by PE Delaware, the sole
shareholder of Merger Subsidiary).

NOW, THEREFORE, the parties agree as follows:

ARTICLE I
THE MERGER

1.1. THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Subsidiary shall be merged with and into Perkin-Elmer
in accordance with the NYBCL. From and after the Effective Time, the separate
corporate existence of Merger Subsidiary shall cease and Perkin-Elmer shall
continue as the surviving corporation of the Merger under the name "PE
Corporation" (the "Surviving Corporation"). From and after the Effective Time,
the Surviving Corporation shall possess all of the rights, privileges,
immunities, powers and purposes, and be subject to all of the liabilities,
obligations and penalties, of Perkin-Elmer and Merger Subsidiary, all as
provided under applicable law.

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1.2. EFFECTIVE TIME. The Merger shall become effective (the "Effective
Time") upon the due filing of a certificate of merger (the "Certificate of
Merger") with the New York Secretary of State in accordance with the NYBCL, or
at such later time as is specified in the Certificate of Merger.

1.3. CERTIFICATE OF INCORPORATION AND BY-LAWS. The certificate of
incorporation of Merger Subsidiary shall be the certificate of incorporation of
the Surviving Corporation after the Effective Time, until amended in accordance
with applicable law. The by-laws of Merger Subsidiary shall be the by-laws of
the Surviving Corporation after the Effective Time, until amended in accordance
with applicable law.

1.4. DIRECTORS AND OFFICERS. The directors and officers of Merger
Subsidiary at the Effective Time shall be the directors and officers of the
Surviving Corporation after the Effective Time, until expiration of their
current terms, or their prior resignation, removal or death, subject to the
certificate of incorporation and the by-laws of the Surviving Corporation.

ARTICLE II
CONVERSION AND EXCHANGE OF STOCK

2.1. CONVERSION. As of the Effective Time, by virtue of the Merger and
without any action on the part of any party hereto or any shareholder of
Perkin-Elmer:

(a) Each issued and outstanding share of Existing Common Stock shall be
converted into and become (i) one validly issued, fully paid and
non-assessable share of PE Biosystems Stock (together with one PE Biosystems
Right (as defined in the Rights Agreement)) and (ii) subject to Section 2.2,
.5 of a share of validly issued, fully paid and non-assessable shares of
Celera Genomics Stock (together with .5 of a Celera Genomics Right (as
defined in the Rights Agreement)).

(b) Each issued and outstanding share of capital stock of Merger
Subsidiary shall be converted in the Merger into one share of common stock
of the Surviving Corporation and the aggregate of all such shares shall
thereafter constitute all of the issued and outstanding capital stock of the
Surviving Corporation.

2.2. FRACTIONAL INTERESTS. No certificates or script representing
fractional shares of Celera Genomics Stock shall be issued in connection with
the Merger, and such fractional interests will not entitle the owner thereof to
any rights of a stockholder of PE Delaware. The Exchange Agent (as defined
below) shall determine the number of fractional shares of Celera Genomics Stock
allocable to each holder of record of Existing Common Stock (after taking into
account all shares of Existing Common Stock held immediately prior to the
Effective Time by such holder), shall aggregate such fractional shares (together
with the related Celera Genomics Rights) of all such holders, shall sell the
whole interests obtained thereby in an orderly manner after the Effective Time
in the open market and shall cause to be distributed to each such holder a check
in lieu of any fractional interests that such holder would otherwise be entitled
to receive (minus any pro rata share of any brokerage commissions payable in
connection with such sale).

2.3. EXCHANGE PROCEDURES. (a) As of the Effective Time, each certificate
that represents issued and outstanding shares of Existing Common Stock
("Existing Certificates") shall be deemed for all purposes to evidence ownership
of, and to represent, the same number of shares of PE Biosystems Stock. The
registered owner on the books and records of PE Delaware or its transfer agents
of any such Existing Certificate shall, until such certificate is surrendered
for transfer pursuant to this Section 2.3, have and be entitled to exercise any
and all voting and other rights with respect to, and receive any and all
dividends and other distributions upon, the shares of PE Biosystems Stock
evidenced by such Existing Certificate.

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(b) As soon as practicable after the Effective Time, such bank or trust
company as PE Delaware may designate (the "Exchange Agent") shall mail to each
holder of record of Existing Certificates certificates representing the number
of whole shares of Celera Genomics Stock ("Celera Genomics Certificates") to
which such holder is entitled pursuant to Section 2.1 hereof (and a check in
lieu of fractional shares of Celera Genomics Stock pursuant to Section 2.2), and
information pursuant to which such holder may exchange Existing Certificates for
certificates representing shares of PE Biosystems Stock ("PE Biosystems
Certificates"), which shall specify that delivery shall be effected, and risk of
loss and title to the Existing Certificates shall pass, only upon delivery of
the Existing Certificates to the Exchange Agent.

(c) Upon surrender, in accordance with the information delivered pursuant to
Section 2.3(b), of duly executed Existing Certificates for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by PE
Delaware, the holder of such Existing Certificates shall be entitled to receive
in exchange therefor PE Biosystems Certificates representing a number of shares
of PE Biosystems Stock equal to the number of shares of Existing Common Stock
represented by such Existing Certificates. If any PE Biosystems Certificate is
to be issued in a name other than that in which the Existing Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Existing Certificate so surrendered shall be properly
endorsed and the signatures thereon properly guaranteed and otherwise in proper
form for transfer and that the person requesting such exchange shall pay to the
Exchange Agent any transfer or other taxes required by reason of the issuance of
PE Biosystems Certificate in any name other than that of the registered holder
of the Existing Certificate surrendered, or otherwise required, or shall
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.

(d) After the Effective Time, no transfer of shares of Existing Common Stock
shall thereafter be made. If, after the Effective Time, Existing Certificates
are presented for transfer, they shall be canceled and exchanged for PE
Biosystems Certificates representing the number of shares of PE Biosystems Stock
represented by such Existing Certificates.

ARTICLE III
CONDITIONS

Consummation of the Merger is subject to the satisfaction at or before the
Effective Time of the following conditions:

3.1 SHAREHOLDER AUTHORIZATION. This Agreement shall have been adopted at
the Special Meeting by the affirmative vote of the holders of two-thirds of the
shares of Existing Common Stock outstanding on the record date fixed for
determining the shareholders of Perkin-Elmer entitled to vote thereon.

3.2 RIGHTS AGREEMENT. The Rights Agreement shall have been executed by the
parties thereto.

ARTICLE IV
MISCELLANEOUS

4.1 TERMINATION. At any time prior to the consummation of the Merger, this
Agreement may be terminated and the Merger abandoned by the Board of Directors
of Perkin-Elmer.

4.2 AMENDMENT. This Agreement may be amended at any time prior to the
Effective Time with the mutual consent of the Boards of Directors of
Perkin-Elmer and PE Delaware; provided, however, that this Agreement may not be
amended after it has been adopted by the shareholders of Perkin-Elmer in any
manner which, in the judgment of the Board of Directors of Perkin-Elmer, would
have a

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material adverse effect on the rights of such shareholders or in any manner not
permitted under applicable law.

4.3 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed by its respective officers thereunto duly authorized all as of the
date first above written.

PE CORPORATION

(a Delaware corporation)

By _______________________________________
Name:

Title:

PE MERGER CORP.

(a New York corporation)

By _______________________________________
Name:

Title:

THE PERKIN-ELMER CORPORATION

(a New York corporation)

By _______________________________________
Name:

Title:

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<PAGE>
ANNEX II

RESTATED CERTIFICATE OF INCORPORATION
OF
PE CORPORATION

(Originally Incorporated November 16, 1998 Under the Name of The Perkin-Elmer
Corporation)

ARTICLE I.
NAME

The name of the corporation is PE Corporation (the "Corporation").

ARTICLE II.
ADDRESS OF REGISTERED OFFICE;
NAME OF REGISTERED AGENT

The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, 19801. The name of its registered agent at
that address is The Corporation Trust Company.

ARTICLE III.
PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Delaware General Corporation
Law (the "DGCL").

ARTICLE IV.
CAPITAL STOCK

SECTION 1. AUTHORIZATION. The aggregate number of shares of stock which
the Corporation shall have authority to issue is seven hundred thirty-five
million (735,000,000) shares, of which five hundred million (500,000,000) shares
shall be shares of a class of common stock designated as "PE Corporation--PE
Biosystems Group Common Stock," having a par value of $0.01 per share (the "PE
Biosystems Stock"), two hundred twenty-five million (225,000,000) shares shall
be shares of a class of common stock designated as "PE Corporation--Celera
Genomics Group Common Stock," having a par value of $0.01 per share (the "Celera
Genomics Stock"), and ten million (10,000,000) shares shall be shares of a class
of preferred stock having a par value of $.01 per share (the "Preferred Stock")
and issuable in one or more series as hereinafter provided. The PE Biosystems
Stock and the Celera Genomics Stock shall hereinafter collectively be called
"Common Stock" and either shall sometimes be called a class of Common Stock. For
purposes of this Article IV, references to the "Board of Directors" shall refer
to the Board of Directors of the Corporation, as established in accordance with
Article V of the certificate of incorporation of the Corporation, and references
to "the Certificate of Incorporation" shall refer to this Restated Certificate
of Incorporation as the same may be amended from time to time. Certain
capitalized terms used in this Article IV, shall have the meanings set forth in
Section 2.6

II-1
<PAGE>

of this Article. For purposes of this Article IV, the PE Biosystems Stock, when
issued, shall be considered issued in respect of the PE Biosystems Group and the
Celera Genomics Stock, when issued, shall be considered issued in respect of the
Celera Genomics Group. The number of authorized shares of any class or classes
of capital stock of the Corporation may be increased or decreased (but not below
the number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the voting power of the stock of the Corporation
entitled to vote generally in the election of directors.

SECTION 2. COMMON STOCK. The voting powers, preferences and relative,
participating, optional or other special rights of the Common Stock, and the
qualifications and restrictions thereon, shall be as follows in this Section 2.

SECTION 2.1 DIVIDENDS. Subject to any preferences and relative,
participating, optional or other special rights of any outstanding class or
series of preferred stock of the Corporation and any qualifications or
restrictions on either class of Common Stock created thereby, dividends may be
declared and paid upon either class of Common Stock, upon the terms with respect
to each such class, and subject to the limitations provided for below in this
Section 2.1, as the Board of Directors may determine.

(a) DIVIDENDS ON PE BIOSYSTEMS STOCK. Dividends on PE Biosystems Stock may
be declared and paid only out of the lesser of (i) the funds of the Corporation
legally available therefor and (ii) the PE Biosystems Group Available Dividend
Amount.

(b) DIVIDENDS ON CELERA GENOMICS STOCK. Dividends on Celera Genomics Stock
may be declared and paid only out of the lesser of (i) the funds of the
Corporation legally available therefor and (ii) the Celera Genomics Group
Available Dividend Amount.

(c) DISCRIMINATION IN DIVIDENDS BETWEEN CLASSES OF COMMON STOCK. The Board
of Directors, subject to the provisions of Sections 2.1(a) and 2.1(b), may at
any time declare and pay dividends exclusively on PE Biosystems Stock,
exclusively on Celera Genomics Stock, or on both such classes, in equal or
unequal amounts, notwithstanding the relative amounts of the Available Dividend
Amount with respect to either Group, the amount of dividends previously declared
on either class, the respective voting or liquidation rights of either class or
any other factor.

(d) SHARES DISTRIBUTIONS. Except as permitted by Sections 2.4(a) and 2.4(b),
the Board of Directors may declare and pay dividends or distributions of shares
of PE Biosystems Stock or Celera Genomics Stock (or Convertible Securities
convertible into or exchangeable or exercisable for shares of PE Biosystems
Stock or Celera Genomics Stock) on shares of a class of Common Stock or shares
of a class or series of preferred stock of the Corporation only as follows:

(i) dividends or distributions of shares of PE Biosystems Stock (or
Convertible Securities convertible into or exchangeable or exercisable for
shares of PE Biosystems Stock) on shares of PE Biosystems Stock or shares of
preferred stock attributed to the PE Biosystems Group;

(ii) dividends or distributions of shares of Celera Genomics Stock (or
Convertible Securities convertible into or exchangeable or exercisable for
shares of Celera Genomics Stock) on shares of Celera Genomics Stock or
shares of preferred stock attributed to the Celera Genomics Group; and

(iii) dividends or distributions of shares of Celera Genomics Stock (or
Convertible Securities convertible into or exchangeable or exercisable for
shares of Celera Genomics Stock) on shares of PE Biosystems Stock or shares
of preferred stock attributed to the PE Biosystems Group, but only if the
sum of (1) the number of shares of Celera Genomics Stock to be so issued (or
the number of such shares which would be issuable upon conversion, exchange
or exercise of any Convertible Securities to be so issued) and (2) the
number of shares of Celera Genomics Stock which are issuable upon
conversion, exchange or exercise of any Convertible Securities then
outstanding that are attributed to the PE Biosystems Group is less than or
equal to the Number of Celera Genomics Designated Shares.

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<PAGE>

For purposes of this Section 2.1(d), any outstanding Convertible Securities
that are convertible into or exchangeable or exercisable for any other
Convertible Securities which are themselves convertible into or exchangeable or
exercisable for PE Biosystems Stock or Celera Genomics Stock (or other
Convertible Securities that are so convertible, exchangeable or exercisable)
shall be deemed to have been converted, exchanged or exercised in full for such
Convertible Securities.

SECTION 2.2 VOTING RIGHTS. (a) GENERAL. Except as otherwise provided by
law, by the terms of any outstanding class or series of preferred stock of the
Corporation or by any provision of the Certificate of Incorporation restricting
the power to vote on a specified matter to other stockholders, the entire voting
power of the stockholders of the Corporation shall be vested in the holders of
the Common Stock, who shall be entitled to vote on any matter on which the
holders of stock of the Corporation shall, by law or by the provisions of the
Certificate of Incorporation or Bylaws of the Corporation, be entitled to vote,
and both classes of Common Stock shall vote thereon together as a single class.

(b) NUMBER OF VOTES FOR EACH CLASS OF COMMON STOCK. On each matter to be
voted on by the holders of both classes of Common Stock voting together as a
single class, the number of votes per share of each class shall be as follows:

(i) each outstanding share of PE Biosystems Stock shall have one vote;
and

(ii) each outstanding share of Celera Genomics Stock shall have a number
of votes (including a fraction of one vote) equal to the quotient (rounded
to the nearest three decimal places) of the average Market Value of one
share of Celera Genomics Stock during the 20-Trading Day Period ending on
the tenth Trading Day prior to the record date for determining the
stockholders entitled to vote, divided by the average Market Value of a
share of PE Biosystems Stock during such 20-Trading Day period.

Notwithstanding the foregoing, if shares of only one class of Common Stock are
outstanding on the record date for determining the holders of Common Stock
entitled to vote on any matter, then each share of that class shall be entitled
to one vote and, if either class of Common Stock is entitled to vote as a
separate class with respect to any matter, each share of that class shall, for
purpose of such vote, be entitled to one vote on such matter.

In addition to any provision of law or any provision of the Certificate of
Incorporation entitling the holders of outstanding shares of PE Biosystems Stock
or Celera Genomics Stock to vote as a separate class, the Board of Directors may
condition the approval of any matter submitted to stockholders on receipt of a
separate vote of the holders of outstanding shares of PE Biosystems Stock or
Celera Genomics Stock.

SECTION 2.3 LIQUIDATION RIGHTS. In the event of any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, after
payment or provision for payment of the debts and other liabilities of the
Corporation and the full preferential amounts (including any accumulated and
unpaid dividends) to which the holders of any outstanding shares of preferred
stock of the Corporation are entitled (regardless of the Group to which such
shares of preferred stock were attributed), the holders of the PE Biosystems
Stock and Celera Genomics Stock shall be entitled to receive the assets, if any,
of the Corporation remaining for distribution to holders of Common Stock on a
per share basis in proportion to the respective liquidation units per share of
such class. Each share of PE Biosystems Stock shall have one liquidation unit
and each share of Celera Genomics Stock shall have a number of liquidation units
(including a fraction of one liquidation unit) equal to the quotient (rounded to
the nearest five decimal places) of the average Market Value of one share of
Celera Genomics Stock during the 20-Trading Day period ending on the 40th
Trading Day after the effective date of this certificate of incorporation,
divided by the average Market Value of one share of PE Biosystems Stock during
such 20-Trading Day period. Neither the merger nor consolidation of the
Corporation into or with any other corporation, nor a sale, transfer or lease of
all or any part of the assets of the Corporation, shall, alone, be deemed a
liquidation or winding up of the Corporation or cause the dissolution of the
Corporation, for purposes of this Section 2.3.

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<PAGE>

If the Corporation shall in any manner subdivide (by stock split,
reclassification or otherwise) or combine (by reverse stock split,
reclassification or otherwise) the outstanding shares of PE Biosystems Stock or
Celera Genomics Stock, or declare a dividend in shares of either class to
holders of such class, the per share liquidation units of either class of Common
Stock specified in the preceding paragraph of this Section 2.3, as adjusted from
time to time, shall be appropriately adjusted as determined by the Board of
Directors, so as to avoid dilution in the aggregate, relative liquidation rights
of the shares of any class of Common Stock.

SECTION 2.4 CONVERSION OR REDEMPTION OF THE COMMON STOCK. PE Biosystems
Stock is subject to conversion or redemption and Celera Genomics Stock is
subject to conversion or redemption, in each case, upon the terms provided below
in this Section 2.4; provided, however, that neither class of Common Stock may
be converted or redeemed if the other class of Common Stock has been converted
or redeemed in its entirety or notice thereof shall have been given as required
by this Section 2.4.

(a) MANDATORY AND OPTIONAL CONVERSION AND REDEMPTION OF PE BIOSYSTEMS STOCK
OTHER THAN FOR PE BIOSYSTEMS SUBSIDIARY STOCK. (i) In the event of the
Disposition, in one transaction or a series of related transactions, by the
Corporation and/or its subsidiaries of all or substantially all of the
properties and assets attributed to the PE Biosystems Group to one or more
persons or entities (other than the Disposition (w) by the Corporation of all or
substantially all of its properties and assets in one transaction or a series of
related transactions in connection with the dissolution, liquidation or winding
up of the Corporation and the distribution of assets to stockholders as referred
to in Section 2.3, (x) of the properties and assets attributed to the PE
Biosystems Group as contemplated by Section 2.4(c) or otherwise to all holders
of shares of PE Biosystems Stock divided among such holders on a pro rata basis
in accordance with the number of shares of PE Biosystems Stock outstanding, (y)
to any person or entity controlled (as determined by the Board of Directors) by
the Corporation or (z) in connection with a Related Business Transaction in
respect of the PE Biosystems Group), the Corporation shall, on or prior to the
95th Trading Day after the date of consummation of such Disposition (the
"Disposition Date"), pay a dividend on PE Biosystems Stock or redeem some or all
of PE Biosystems Stock or convert PE Biosystems Stock into Celera Genomics Stock
(or another class or series of common stock of the Corporation), all as provided
by the following Sections 2.4(a)(i)(1) and 2.4(a)(i)(2) and, to the extent
applicable, by Section 2.4(f), as the Board of Directors shall have selected
among such alternatives:

(1) provided that there are funds of the Corporation legally available
therefor:

(A) pay to the holders of the shares of PE Biosystems Stock a
dividend pro rata in accordance with the number of shares of PE
Biosystems Stock held by each such holder, as the Board of Directors
shall have declared subject to compliance with Section 2, in cash and/ or
in securities (other than a dividend of shares of a class of Common
Stock) or other property having a Fair Value as of the Disposition Date
in the aggregate equal to the Fair Value as of the Disposition Date of
the Net Proceeds of such Disposition; or

(B) (I) subject to the last sentence of this Section 2.4(a)(i), if
such Disposition involves all (not merely substantially all) of the
properties and assets attributed to the PE Biosystems Group, redeem or
exchange as of the Redemption Date determined as provided by Section
2.4(f)(iii), all outstanding shares of PE Biosystems Stock in exchange
for, on a pro rata basis, cash and/or for securities (other than shares
of a class of Common Stock) or other property having a Fair Value as of
the Disposition Date in the aggregate equal to the Fair Value as of the
Disposition Date of the Net Proceeds of such Disposition; or

(II) subject to the last sentence of this Section 2.4(a)(i), if such
Disposition involves substantially all (but not all) of the properties
and assets attributed to the PE Biosystems Group, redeem or exchange as
of the Redemption Date determined as provided by Section 2.4(f)(iv) such
number of whole shares of PE Biosystems Stock (which may be all, but not
more than all, of such shares outstanding) as have in the aggregate an
average Market Value

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<PAGE>
during the period of ten consecutive Trading Days beginning on the 26th
Trading Day immediately succeeding the Disposition Date closest to the
Fair Value as of the Disposition Date of the Net Proceeds of such
Disposition in consideration for, on a pro rata basis, cash and/or
securities (other than shares of a class of Common Stock) or other
property having a Fair Value as of the Disposition Date in the aggregate
equal to such Fair Value of the Net Proceeds; or

(2) declare that each outstanding share of PE Biosystems Stock shall be
converted as of the Conversion Date determined as provided by Section
2.4(f)(v) into a number of fully paid and nonassessable shares of Celera
Genomics Stock (or, if Celera Genomics Stock is not Publicly Traded at such
time and shares of another class or series of common stock of the
Corporation (other than PE Biosystems Stock) are then Publicly Traded, of
such other class or series of the common stock of the Corporation as has the
largest Market Capitalization as of the close of business on the Trading Day
immediately preceding the date of the notice of such conversion required by
Section 2.4(f)(v)) equal to 110% of the ratio, expressed as a decimal
fraction rounded to the nearest five decimal places, of the average Market
Value of one share of PE Biosystems Stock over the period of ten consecutive
Trading Days beginning on the 26th Trading Day immediately succeeding the
Disposition Date to the average Market Value of one share of Celera Genomics
Stock (or such other class or series of common stock) over the same ten
Trading Day period.

Notwithstanding the foregoing provisions of this Section 2.4(a)(i), the
Corporation shall redeem shares of a class of Common Stock as provided by
Section 2.4(a)(i)(1)(B)(I) or (II) only if the amount to be paid in redemption
of such stock is less than or equal to the PE Biosystems Group Available
Dividend Amount as of the Redemption Date.

(ii) For purposes of this Section 2.4(a): (1) as of any date, "substantially
all of the properties and assets" attributed to the PE Biosystems Group shall
mean a portion of such properties and assets (A) that represents at least 80% of
the Fair Value of the properties and assets attributed to the PE Biosystems
Group as of such date or (B) from which were derived at least 80% of the
aggregate revenues for the immediately preceding twelve fiscal quarterly periods
of the Corporation (calculated on a pro forma basis to include revenues derived
from any of such properties and assets acquired during such period) derived from
the properties and assets attributed to the PE Biosystems Group as of such date;
(2) in the case of a Disposition of the properties and assets attributed to the
PE Biosystems Group in a series of related transactions, such Disposition shall
not be deemed to have been consummated until the consummation of the last of
such transactions; and (3) the Board of Directors may pay any dividend or
redemption price referred to in Section 2.4(a)(i) in cash, securities (other
than shares of a class of Common Stock) or other property, regardless of the
form or nature of the proceeds of the Disposition.

(iii) The Board of Directors may at any time declare that each outstanding
share of PE Biosystems Stock shall be converted, as of the Conversion Date
provided by Section 2.4(f)(v), into a number of fully paid and nonassessable
shares of Celera Genomics Stock (or, if Celera Genomics Stock is not Publicly
Traded at such time and shares of any other class or series of common stock of
the Corporation (other than PE Biosystems Stock) are then Publicly Traded, of
such other class or series of common stock of the Corporation as has the largest
Market Capitalization as of the close of business on the fifth Trading Day
immediately preceding the date of the notice of conversion required by Section
2.4(f)(v)) equal to 110% of the Market Value Ratio of PE Biosystems Stock to
Celera Genomics Stock as of the fifth Trading Day prior to the date of the
notice of such conversion required by Section 2.4(f)(v).

(b) MANDATORY AND OPTIONAL CONVERSION AND REDEMPTION OF CELERA GENOMICS
STOCK OTHER THAN FOR CELERA GENOMICS SUBSIDIARY STOCK. (i) In the event of the
Disposition, in one transaction or a series of related transactions, by the
Corporation and/or its subsidiaries of all or substantially all of the

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properties and assets attributed to the Celera Genomics Group to one or more
persons or entities (other than the Disposition (w) by the Corporation of all or
substantially all of its properties and assets in one transaction or a series of
related transactions in connection with the dissolution, liquidation or winding
up of the Corporation and the distribution of assets to stockholders as referred
to in Section 2.3, (x) of the properties and assets attributed to the Celera
Genomics Group as contemplated by Section 2.4(d) or otherwise to all holders of
shares of Celera Genomics Stock divided among such holders on a pro rata basis
in accordance with the number of shares of Celera Genomics Stock outstanding,
(y) to any person or entity controlled (as determined by the Board of Directors)
by the Corporation or (z) in connection with a Related Business Transaction in
respect of the Celera Genomics Group), the Corporation shall, on or prior to the
95th Trading Day after the date of consummation of such Disposition (the
"Disposition Date"), pay a dividend on Celera Genomics Stock or redeem some or
all of Celera Genomics Stock or convert Celera Genomics Stock into PE Biosystems
Stock (or another class or series of common stock of the Corporation), all as
provided by the following Sections 2.4(b)(i)(1) and 2.4(b)(i)(2) and, to the
extent applicable, by Section 2.4(f), as the Board of Directors shall have
selected among such alternatives:

(1) provided that there are funds of the Corporation legally available
therefor:

(A) pay to the holders of the shares of Celera Genomics Stock a dividend
pro rata in accordance with the number of shares of Celera Genomics Stock
held by each such holder, as the Board of Directors shall have declared
subject to compliance with Section 2.1, in cash and/or in securities (other
than a dividend of shares of a class of Common Stock) or other property
having a Fair Value as of the Disposition Date in the aggregate equal to the
Fair Value as of the Disposition Date of the Net Proceeds of such
Disposition; or

(B) (I) subject to the last sentence of this Section 2.4(b)(i), if such
Disposition involves all (not merely substantially all) of the properties
and assets attributed to the Celera Genomics Group, redeem or exchange as of
the Redemption Date determined as provided by Section 2.4(f)(iii), all
outstanding shares of Celera Genomics Stock in exchange for, on a pro rata
basis, cash and/or for securities (other than shares of a class of Common
Stock) or other property having a Fair Value as of the Disposition Date in
the aggregate equal to the Fair Value as of the Disposition Date of the Net
Proceeds of such Disposition; or

(II) subject to the last sentence of this Section 2.4(b)(i), if such
Disposition involves substantially all (but not all) of the properties and
assets attributed to the Celera Genomics Group, redeem or exchange as of the
Redemption Date determined as provided by Section 2.4(f)(iv) such number of
whole shares of Celera Genomics Stock (which may be all, but not more than
all, of such shares outstanding) as have in the aggregate an average Market
Value during the period of ten consecutive Trading Days beginning on the
26th Trading Day immediately succeeding the Disposition Date closest to the
Fair Value as of the Disposition Date of the Net Proceeds of such
Disposition in consideration for, on a pro rata basis, cash and/or
securities (other than shares of a class of Common Stock) or other property
having a Fair Value as of the Disposition Date in the aggregate equal to
such product; or

(2) declare that each outstanding share of Celera Genomics Stock shall
be converted as of the Conversion Date determined as provided by Section
2.4(f)(v) into a number of fully paid and nonassessable shares of PE
Biosystems Stock (or, if PE Biosystems Stock is not Publicly Traded at such
time and shares of another class or series of common stock of the
Corporation (other than Celera Genomics Stock) are then Publicly Traded, of
such other class or series of the common stock of the Corporation as has the
largest Market Capitalization as of the close of business on the Trading Day
immediately preceding the date of the notice of such conversion required by
Section 2.4(f)(v)) equal to 110% of the ratio, expressed as a decimal
fraction rounded to the nearest five decimal places, of the average Market
Value of one share of Celera Genomics Stock over the period of ten
consecutive Trading Days beginning on the 26th Trading Day immediately
succeeding

II-6
<PAGE>

the Disposition Date to the average Market Value of one share of PE
Biosystems Stock (or such other class or series of common stock) over the
same ten Trading Day period.

Notwithstanding the foregoing provisions of this Section 2.4(b)(i), the
Corporation shall redeem shares of a class of Common Stock as provided by
Section 2.4(b)(i)(1)(B)(I) or (II) only if the amount to be paid in redemption
of such stock is less than or equal to the Celera Genomics Group Available
Dividend Amount as of the Redemption Date.

(ii) For purposes of this Section 2.4(b): (1) as of any date, "substantially
all of the properties and assets" attributed to the Celera Genomics Group shall
mean a portion of such properties and assets (A) that represents at least 80% of
the Fair Value of the properties and assets attributed to the Celera Genomics
Group as of such date or (B) from which were derived at least 80% of the
aggregate revenues for the immediately preceding twelve fiscal quarterly periods
of the Corporation (calculated on a pro forma basis to include revenues derived
from any of such properties and assets acquired during such period) derived from
the properties and assets attributed to the Celera Genomics Group as of such
date; (2) in the case of a Disposition of the properties and assets attributed
to the Celera Genomics Group in a series of related transactions, such
Disposition shall not be deemed to have been consummated until the consummation
of the last of such transactions; and (3) the Board of Directors may pay any
dividend or redemption price referred to in Section 2.4(b)(i) in cash,
securities (other than shares of a class of Common Stock) or other property,
regardless of the form or nature of the proceeds of the Disposition.

(iii) The Board of Directors may at any time declare that each outstanding
share of Celera Genomics Stock shall be converted, as of the Conversion Date
provided by Section 2.4(f)(v), into a number of fully paid and nonassessable
shares of PE Biosystems Stock (or, if PE Biosystems Stock is not Publicly Traded
at such time and shares of any other class or series of common stock of the
Corporation (other than Celera Genomics Stock) are then Publicly Traded, of such
other class or series of common stock of the Corporation as has the largest
Market Capitalization as of the close of business on the fifth Trading Day
immediately preceding the date of the notice of conversion required by Section
2.4(f)(v)) equal to 110% of the Market Value Ratio of Celera Genomics Stock to
PE Biosystems Stock as of the fifth Trading Day prior to the date of the notice
of such conversion required by Section 2.4(f)(v).

(c) REDEMPTION OF PE BIOSYSTEMS STOCK FOR PE BIOSYSTEMS SUBSIDIARY STOCK. At
any time at which all of the assets and liabilities attributed to the PE
Biosystems Group (and no other assets or liabilities of the Corporation or any
subsidiary thereof) are held directly or indirectly by one or more wholly-owned
subsidiaries of the Corporation (each, a "PE Biosystems Subsidiary"), the Board
of Directors may, provided that there are funds of the Corporation legally
available therefor, redeem all of the outstanding shares of PE Biosystems Stock,
on a Redemption Date of which notice is delivered in accordance with Section
2.4(f)(vi), in exchange for all of the shares of common stock of each PE
Biosystems Subsidiary as will be outstanding immediately following such exchange
of shares, such shares of common stock of each PE Biosystems Subsidiary to be
delivered to the holders of shares of PE Biosystems Stock on the Redemption Date
either directly or indirectly through the delivery of shares of another PE
Biosystems Subsidiary that owns directly or indirectly all such shares, and to
be divided among the holders of PE Biosystems Stock pro rata in accordance with
the number of shares of PE Biosystems Stock held by each such holder on such
Redemption Date, each of which shares of common stock of such PE Biosystems
Subsidiary shall be, upon such delivery, fully paid and nonassessable.

II-7
<PAGE>
(d) REDEMPTION OF CELERA GENOMICS STOCK FOR CELERA GENOMICS SUBSIDIARY
STOCK. At any time at which all of the assets and liabilities attributed to the
Celera Genomics Group (and no other assets or liabilities of the Corporation or
any subsidiary thereof) are held directly or indirectly by one or more
wholly-owned subsidiaries of the Corporation (each, a "Celera Genomics
Subsidiary"), the Board of Directors may, provided that there are funds of the
Corporation legally available therefor, redeem all of the outstanding shares of
Celera Genomics Stock, on a Redemption Date of which notice is delivered in
accordance with Section 2.4(f)(vi), in exchange for all of the shares of common
stock of each Celera Genomics Subsidiary as will be outstanding immediately
following such exchange of shares, such shares of common stock of each Celera
Genomics Subsidiary to be delivered to the holders of shares of Celera Genomics
Stock on the Redemption Date either directly or indirectly through the delivery
of shares of another Celera Genomics Subsidiary that owns directly or indirectly
all such shares, and to be divided among the holders of Celera Genomics Stock
pro rata in accordance with the number of shares of Celera Genomics Stock held
by each such holder on such Redemption Date, each of which shares of common
stock of such Celera Genomics Subsidiary shall be, upon such delivery, fully
paid and nonassessable.

(e) TREATMENT OF CONVERTIBLE SECURITIES. After any Conversion Date or
Redemption Date on which all outstanding shares of either PE Biosystems Stock or
Celera Genomics Stock are converted or redeemed, any share of such class of
Common Stock that is to be issued on conversion, exchange or exercise of any
Convertible Securities shall, immediately upon such conversion, exchange or
exercise and without any notice from or to, or any other action on the part of,
the Corporation or its Board of Directors or the holder of such Convertible
Security:

(i) in the event the shares of such class of Common Stock outstanding on
such Conversion Date were converted into shares of the other class of Common
Stock (or another class or series of common stock of the Corporation)
pursuant to Section 2.4(a)(i)(2), 2.4(a)(iii), 2.4(b)(i)(2) or 2.4(a)(iii),
be converted into the amount of cash and/or the number of shares of the kind
of capital stock and/or other securities or property of the Corporation that
number of shares of such class of Common Stock that were to be issued upon
such conversion, exchange or exercise would have received had such shares
been outstanding on such Conversion Date; or

(ii) in the event the shares of such class of Common Stock outstanding
on such Redemption Date were redeemed pursuant to Section 2.4(a)(i)(1)(B),
2.4(b)(i)(1)(B), 2.4(c) or 2.4(d), be redeemed, to the extent of funds of
the Corporation legally available therefor, for $.01 per share in cash for
each share of such class of Common Stock that otherwise would be issued upon
such conversion, exchange or exercise.

The provisions of the preceding sentence of this Section 2.4(e) shall not apply
to the extent that other adjustments in respect of such conversion, exchange or
redemption of a class of Common Stock are otherwise made pursuant to the
provisions of such Convertible Securities.

(f) NOTICE AND OTHER PROVISIONS. (i) Not later than the 20th Trading Day
following the consummation of a Disposition referred to in Section 2.4(a)(i) (in
the case of PE Biosystems Stock) or Section 2.4(b)(i) (in the case of Celera
Genomics Stock), the Corporation shall announce publicly by press release (1)
the estimated Net Proceeds of such Disposition, (2) the number of shares
outstanding of the class of Common Stock relating to the Group subject to such
Disposition and (3) the number of shares of such class of Common Stock into or
for which Convertible Securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price thereof. Not earlier
than the 36th Trading Day and not later than the 40th Trading Day following the
consummation of such Disposition, the Corporation shall announce publicly by
press release which of the actions specified in Section 2.4(a)(i) or 2.4(b)(i),
as the case may be, it has irrevocably determined to take in respect of such
Disposition.

II-8
<PAGE>

(ii) If the Corporation determines to pay a dividend pursuant to Section
2.4(a)(i)(1)(A) (in the case of PE Biosystems Stock) or Section 2.4(b)(i)(1)(A)
(in the case of Celera Genomics Stock), the Corporation shall, not later than
the 40th Trading Day following the consummation of the Disposition referred to
in such Section, cause notice to be given to the holders of shares of the class
of Common Stock relating to the Group subject to such Disposition and to each
holder of Convertible Securities that are convertible into or exchangeable or
exercisable for shares of such class of Common Stock (unless alternate provision
for such notice to the holders of such Convertible Securities is made pursuant
to the terms of such Convertible Securities), setting forth (1) the record date
for determining holders entitled to receive such dividend, which shall be not
earlier than the tenth Trading Day and not later than the 20th Trading Day
following the date of such notice, (2) the anticipated payment date of such
dividend (which shall not be more than 95 Trading Days following the
consummation of such Disposition), (3) the type of property to be paid as such
dividend in respect of the outstanding shares of such class of Common Stock, (4)
the Net Proceeds of such Disposition, (5) the number of outstanding shares of
such class of Common Stock and the number of shares of such class of Common
Stock into or for which outstanding Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise price
thereof and (6) in the case of notice to be given to holders of Convertible
Securities, a statement to the effect that a holder of such Convertible
Securities shall be entitled to receive such dividend only if such holder
properly converts, exchanges or exercises such Convertible Securities on or
prior to the record date referred to in clause (1) of this sentence. Such notice
shall be sent by first-class mail, postage prepaid, to each such holder at such
holder's address as the same appears on the transfer books of the Corporation on
the record date fixed for such notice.

(iii) If the Corporation determines to undertake a redemption pursuant to
Section 2.4(a)(i)(1)(B)(I) (in the case of PE Biosystems Stock) or Section
2.4(b)(i)(1)(B)(I) (in the case of Celera Genomics Stock), the Corporation
shall, not earlier than the 35th Trading Day and not later than the 45th Trading
Day prior to the Redemption Date, cause notice to be given to the holders of
shares of the class of Common Stock relating to the Group subject to the
Disposition referred to in such Section and to each holder of Convertible
Securities convertible into or exchangeable or exercisable for shares of such
class of Common Stock (unless alternate provision for such notice to the holders
of such Convertible Securities is made pursuant to the terms of such Convertible
Securities), setting forth (1) a statement that all shares of such class of
Common Stock outstanding on the Redemption Date shall be redeemed, (2) the
Redemption Date (which shall not be more than 95 Trading Days following the
consummation of such Disposition), (3) the type of property in which the
redemption price for the shares of such class of Common Stock to be redeemed is
to be paid, (4) the Net Proceeds of such Disposition, (5) the place or places
where certificates for shares of such class of Common Stock, properly endorsed
or assigned for transfer (unless the Corporation waives such requirement), are
to be surrendered for delivery of cash and/or securities or other property, (6)
the number of outstanding shares of such class of Common Stock and the number of
shares of such class of Common Stock into or for which outstanding Convertible
Securities are then convertible, exchangeable or exercisable and the conversion,
exchange or exercise price thereof, (7) in the case of notice to be given to
holders of Convertible Securities, a statement to the effect that a holder of
such Convertible Securities shall be entitled to participate in such redemption
only if such holder properly converts, exchanges or exercises such Convertible
Securities on or prior to the Redemption Date referred to in clause (2) of this
sentence and a statement as to what, if anything, such holder will be entitled
to receive pursuant to the terms of such Convertible Securities or, if
applicable, this Section 2.4 if such holder thereafter converts, exchanges or
exercises such Convertible Securities and (8) a statement to the effect that,
except as otherwise provided by Section 2.4(f)(ix), dividends on shares of such
class of Common Stock shall cease to be paid as of such Redemption Date. Such
notice shall be sent by first-class mail, postage prepaid, to each such holder
at such holder's address as the same appears on the transfer books of the
Corporation on the record date fixed for such notice.

II-9
<PAGE>

(iv) If the Corporation determines to undertake a redemption pursuant to
Section 2.4(a)(i)(1)(B)(II) (in the case of PE Biosystems Stock) or Section
2.4(b)(i)(1)(B)(II) (in the case of Celera Genomics Stock), the Corporation
shall, not later than the 40th Trading Day following the consummation of the
Disposition referred to in such Section, cause notice to be given to the holders
of shares of the class of Common Stock relating to the Group subject to such
Disposition and to each holder of Convertible Securities that are convertible
into or exchangeable or exercisable for shares of such class of Common Stock
(unless alternate provision for such notice to the holders of such Convertible
Securities is made pursuant to the terms of such Convertible Securities) setting
forth (1) a date not earlier than the tenth Trading Day and not later than the
20th Trading Day following the date of such notice on which shares of such class
of Common Stock shall be selected for redemption, (2) the anticipated Redemption
Date (which shall not be more than 95 Trading Days following the consummation of
such Disposition), (3) the type of property in which the redemption price for
the shares to be redeemed is to be paid, (4) the Net Proceeds of such
Disposition, (5) the number of shares of such class of Common Stock outstanding
and the number of shares of such class of Common Stock into or for which
outstanding Convertible Securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price thereof, (6) in the
case of notice to be given to holders of Convertible Securities, a statement to
the effect that a holder of such Convertible Securities shall be eligible to
participate in such selection for redemption only if such holder properly
converts, exchanges or exercises such Convertible Securities on or prior to the
record date referred to in clause (1) of this sentence, and a statement as to
what, if anything, such holder will be entitled to receive pursuant to the terms
of such Convertible Securities or, if applicable, this Section 2.4 if such
holder thereafter converts, exchanges or exercises such Convertible Securities
and (7) a statement that the Corporation will not be required to register a
transfer of any shares of such class of Common Stock for a period of 15 Trading
Days next preceding the date referred to in clause (1) of this sentence.
Promptly following the date referred to in clause (1) of the preceding sentence,
the Corporation shall cause a notice to be given to each holder of record of
shares of such class of Common Stock to be redeemed setting forth (1) the number
of shares of such class of Common Stock held by such holder to be redeemed, (2)
a statement that such shares of such class of Common Stock shall be redeemed,
(3) the Redemption Date, (4) the kind and per share amount of cash and/or
securities or other property to be received by such holder with respect to each
share of such class of Common Stock to be redeemed, including details as to the
calculation thereof, (5) the place or places where certificates for shares of
such class of Common Stock, properly endorsed or assigned for transfer (unless
the Corporation shall waive such requirement), are to be surrendered for
delivery of such cash and/or securities or other property, (6) if applicable, a
statement to the effect that the shares being redeemed may no longer be
transferred on the transfer books of the Corporation after the Redemption Date
and (7) a statement to the effect that, subject to Section 2.4(f)(ix), dividends
on such shares of such class of Common Stock shall cease to be paid as of the
Redemption Date. Such notices shall be sent by first-class mail, postage
prepaid, to each such holder at such holder's address as the same appears on the
transfer books of the Corporation on the record date fixed for such notice.

(v) If the Corporation determines to convert PE Biosystems Stock into Celera
Genomics Stock or Celera Genomics Stock into PE Biosystems Stock (or, in either
case, another class or series of common stock of the Corporation) pursuant to
Section 2.4(a)(i)(2) or 2.4(a)(iii) (in the case of the conversion of PE
Biosystems Stock) or Section 2.4(b)(i)(2) or 2.4(b)(iii) (in the case of the
conversion of Celera Genomics Stock), the Corporation shall, not earlier than
the 35th Trading Day and not later than the 45th Trading Day prior to the
Conversion Date cause notice to be given to the holders of shares of the class
of Common Stock to be so converted and to each holder of Convertible Securities
that are convertible into or exchangeable or exercisable for shares of such
class of Common Stock (unless alternate provision for such notice to the holders
of such Convertible Securities is made pursuant to the terms of such Convertible
Securities) setting forth (1) a statement that all outstanding shares of such
class of Common Stock shall be converted, (2) the Conversion Date (which, in the
case of a conversion

II-10
<PAGE>
after a Disposition, shall not be more than 95 Trading Days following the
consummation of such Disposition), (3) the per share number of shares of Common
Stock (or another class or series of common stock of the Corporation) to be
received with respect to each share of such class of Common Stock, including
details as to the calculation thereof, (4) the place or places where
certificates for shares of such class of Common Stock, properly endorsed or
assigned for transfer (unless the Corporation shall waive such requirement), are
to be surrendered for delivery of certificates for shares of such class of
Common Stock, (5) the number of outstanding shares of such class of Common Stock
and the number of shares of such class of Common Stock into or for which
outstanding Convertible Securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price thereof, (6) a
statement to the effect that, subject to Section 2.4(f)(ix), dividends on shares
of such class of Common Stock shall cease to be paid as of such Conversion Date
and (7) in the case of notice to holders of such Convertible Securities, a
statement to the effect that a holder of such Convertible Securities shall be
entitled to receive shares of such class of Common Stock upon such conversion
only if such holder properly converts, exchanges or exercises such Convertible
Securities on or prior to such Conversion Date and a statement as to what, if
anything, such holder will be entitled to receive pursuant to the terms of such
Convertible Securities or, if applicable, this Section 2.4 if such holder
thereafter converts, exchanges or exercises such Convertible Securities. Such
notice shall be sent by first-class mail, postage prepaid, to each such holder
at such holder's address as the same appears on the transfer books of the
Corporation on the record date fixed for such notice.

(vi) If the Corporation determines to redeem shares of PE Biosystems Stock
pursuant to Section 2.4(c) or Celera Genomics Stock pursuant to Section 2.4(d),
the Corporation shall cause notice to be given to each holder of shares of such
class of Common Stock to be redeemed and to the holders of Convertible
Securities that are convertible into or exchangeable or exercisable for shares
of such class of Common Stock (unless alternate provision for such notice to the
holders of such Convertible Securities is made pursuant to the terms of such
Convertible Securities), setting forth (1) a statement that all shares of such
class of Common Stock outstanding on the Redemption Date shall be redeemed in
exchange for shares of common stock of each PE Biosystems Subsidiary or Celera
Genomics Subsidiary, as applicable, (2) the Redemption Date, (3) the place or
places where certificates for shares of the class of Common Stock to be
redeemed, properly endorsed or assigned for transfer (unless the Corporation
shall waive such requirement), are to be surrendered for delivery of
certificates for shares of common stock of each PE Biosystems Subsidiary or
Celera Genomics Subsidiary, as applicable, (4) a statement to the effect that,
subject to Section 2.4(f)(ix), dividends on shares of such class of Common Stock
being redeemed shall cease to be paid as of such Redemption Date, (5) the number
of shares of such class of Common Stock outstanding and the number of shares of
such class of Common Stock into or for which outstanding Convertible Securities
are then convertible, exchangeable or exercisable and the conversion, exchange
or exercise price thereof and (6) in the case of notice to holders of
Convertible Securities, a statement to the effect that a holder of Convertible
Securities shall be entitled to receive shares of common stock of each PE
Biosystems Subsidiary or Celera Genomics Subsidiary, as applicable, upon
redemption only if such holder properly converts, exchanges or exercises such
Convertible Securities on or prior to the Redemption Date and a statement as to
what, if anything, such holder will be entitled to receive pursuant to the terms
of such Convertible Securities or, if applicable, this Section 2.4(f), if such
holder thereafter converts, exchanges or exercises such Convertible Securities.
Such notice shall be sent by first-class mail, postage prepaid, not less than 35
Trading Days nor more than 45 Trading Days prior to the Redemption Date to each
such holder at such holder's address as the same appears on the transfer books
of the Corporation on the record date fixed for such notice.

(vii) If less than all of the outstanding shares of either class of Common
Stock are to be redeemed pursuant to Section 2.4(a)(i)(1) (in the case of PE
Biosystems Stock) or Section 2.4(b)(i)(1) (in the case of Celera Genomics
Stock), the shares to be redeemed by the Corporation shall be selected from
among the holders of shares of such class of Common Stock outstanding at the
close of business on the

II-11
<PAGE>
record date for such redemption on a pro rata basis among all such holders or by
lot or by such other method as may be determined by the Board of Directors to be
equitable.

(viii) The Corporation shall not be required to issue or deliver fractional
shares of any capital stock or of any other securities to any holder of either
class of Common Stock upon any conversion, redemption, dividend or other
distribution pursuant to this Section 2.4. If more than one share of either
class of Common Stock shall be held at the same time by the same holder, the
Corporation may aggregate the number of shares of any capital stock that shall
be issuable or any other securities or property that shall be distributable to
such holder upon any conversion, redemption, dividend or other distribution
(including any fractional shares). If fractional shares of any capital stock or
of any other securities would be required to be issued or distributed to the
holders of either class of Common Stock, the Corporation shall, if such
fractional shares are not issued or distributed to the holder, pay cash in
respect of such fractional shares in an amount equal to the Fair Value thereof
(without interest).

(ix) No adjustments in respect of dividends shall be made upon the
conversion or redemption of any shares of either class of Common Stock;
provided, however, that if the Conversion Date or Redemption Date, as the case
may be, with respect to any shares of either class of Common Stock shall be
subsequent to the record date for the payment of a dividend or other
distribution thereon or with respect thereto, the holders of such class of
Common Stock at the close of business on such record date shall be entitled to
receive the dividend or other distribution payable on or with respect to such
shares on the date set for payment of such dividend or other distribution, in
each case without interest, notwithstanding the subsequent conversion or
redemption of such shares.

(x) Before any holder of shares of either class of Common Stock shall be
entitled to receive any cash payment and/or certificates or instruments
representing shares of any capital stock and/or other securities or property to
be distributed to such holder with respect to such class of Common Stock
pursuant to this Section 2.4, such holder shall surrender at such place as the
Corporation shall specify certificates for such shares of Common Stock, properly
endorsed or assigned for transfer (unless the Corporation shall waive such
requirement). The Corporation shall as soon as practicable after receipt of
certificates representing such shares of Common Stock deliver to the person for
whose account such shares of Common Stock were so surrendered, or to such
person's nominee or nominees, the cash and/ or the certificates or instruments
representing the number of whole shares of the kind of capital stock and/or
other securities or property to which such person shall be entitled as
aforesaid, together with any payment in respect of fractional shares
contemplated by Section 2.4(f)(viii), in each case without interest. If less
than all of the shares of either class of Common Stock represented by any one
certificate are to be redeemed, the Corporation shall issue and deliver a new
certificate for the shares of such class of Common Stock not redeemed.

(xi) From and after any applicable Conversion Date or Redemption Date, as
the case may be, all rights of a holder of shares of either class of Common
Stock that were converted or redeemed shall cease except for the right, upon
surrender of the certificates representing such shares of Common Stock as
required by Section 2.4(f)(x), to receive the cash and/or the certificates or
instruments representing shares of the kind and amount of capital stock and/or
other securities or property for which such shares were converted or redeemed,
together with any payment in respect of fractional shares contemplated by
Section 2.4(f)(viii) (which shall be held by the Corporation for the holder of
such shares of Common Stock that were redeemed until the receipt of certificates
representing such shares of Common Stock as provided in Section 2.4(f)(x)) and
rights to dividends as provided in Section 2.4(f)(ix), in each case without
interest. No holder of a certificate that immediately prior to the applicable
Conversion Date or Redemption Date represented shares of a class of Common Stock
shall be entitled to receive any dividend or other distribution or interest
payment with respect to shares of any kind of capital stock or other security or
instrument for which such class of Common Stock was converted or redeemed until
the surrender as required by this Section 2.4 of such certificate in exchange
for a certificate or certificates or instrument or instruments representing such
capital stock or

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<PAGE>
other security. Subject to applicable escheat and similar laws, upon such
surrender, there shall be paid to the holder the amount of any dividends or
other distributions (without interest) which theretofore became payable on any
class or series of capital stock of the Corporation as of a record date after
the Conversion Date or Redemption Date, but that were not paid by reason of the
foregoing, with respect to the number of whole shares of the kind of capital
stock represented by the certificate or certificates issued upon such surrender.
From and after a Conversion Date or Redemption Date, the Corporation shall,
however, be entitled to treat the certificates for a class of Common Stock that
have not yet been surrendered for conversion or redemption as evidencing the
ownership of the number of whole shares of the kind or kinds of capital stock of
the Corporation for which the shares of such class of Common Stock represented
by such certificates shall have been converted or redeemed, notwithstanding the
failure to surrender such certificates.

(xii) The Corporation shall pay any and all documentary, stamp or similar
issue or transfer taxes that may be payable in respect of the issuance or
delivery of any shares of capital stock and/or other securities upon conversion
or redemption of shares of either class of Common Stock pursuant to this Section
2.4. The Corporation shall not, however, be required to pay any tax that may be
payable in respect of any transfer involved in the issuance or delivery of any
shares of capital stock and/or other securities in a name other than that in
which the shares of such class of Common Stock so converted or redeemed were
registered, and no such issuance or delivery shall be made unless and until the
person requesting such issuance or delivery has paid to the Corporation the
amount of any such tax or has established to the satisfaction of the Corporation
that such tax has been paid.

(xiii) Neither the failure to mail any notice required by this Section 2.4
to any particular holder of a class of Common Stock or of Convertible Securities
nor any defect therein shall affect the sufficiency thereof with respect to any
other holder of outstanding shares of a class of Common Stock or of Convertible
Securities or the validity of any such conversion or redemption.

(xiv) The Board of Directors may establish such rules and requirements to
facilitate the effectuation of the transactions contemplated by this Section 2.4
as the Board of Directors shall determine to be appropriate.

SECTION 2.5 APPLICATION OF THE PROVISIONS OF ARTICLE IV. (a) CERTAIN
DETERMINATIONS BY THE BOARD OF DIRECTORS. The Board of Directors shall make such
determinations with respect to the businesses, assets, properties and
liabilities to be attributed to the Groups, the application of the provisions of
the Certificate of Incorporation to transactions to be engaged in by the
Corporation and the voting powers, preferences and relative, participating,
optional and other special rights of the holders of either class of Common
Stock, and the qualifications and restrictions thereon, provided by the
Certificate of Incorporation as may be or become necessary or appropriate to the
exercise of such powers, preferences and relative, participating, optional and
other special rights, including, without limiting the foregoing, the
determinations referred to in this Section 2.5. A record of any such
determination shall be filed with the records of the actions of the Board of
Directors.

(i) Upon any acquisition by the Corporation or its subsidiaries of any
assets or business, or any assumption of liabilities, outside of the
ordinary course of business of the PE Biosystems Group or the Celera
Genomics Group, as the case may be, the Board of Directors shall determine
whether such assets, business and liabilities (or an interest therein) shall
be for the benefit of the PE Biosystems Group or the Celera Genomics Group
or that an interest therein shall be partly for the benefit of the PE
Biosystems Group and partly for the benefit of the Celera Genomics Group
and, accordingly, shall be attributed to the PE Biosystems Group or the
Celera Genomics Group, or partly to each, in accordance with Section 2.6(q)
or 2.6(b), as the case may be.

(ii) Upon any issuance of any shares of Celera Genomics Stock at a time
when the Number of Celera Genomics Designated Shares is greater than zero,
the Board of Directors shall determine, based on the use of the proceeds of
such issuance and any other relevant factors, whether all or any part of the
shares of Celera Genomics Stock so issued shall reduce the Number of Celera
Genomics Designated Shares and the Number of Celera Genomics Designated
Shares shall be adjusted accordingly.

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<PAGE>
(iii) Upon any issuance by the Corporation or any subsidiary thereof of
any Convertible Securities that are convertible into or exchangeable or
exercisable for shares of Celera Genomics Stock, if at the time such
Convertible Securities are issued the Number of Celera Genomics Designated
Shares is greater than zero, the Board of Directors shall determine, based
on the use of the proceeds of such issuance and any other relevant factors,
whether, upon conversion, exchange or exercise thereof, the issuance of
shares of Celera Genomics Stock pursuant thereto shall, in whole or in part,
reduce the Number of Celera Genomics Designated Shares and the Number of
Celera Genomics Designated Shares shall be adjusted accordingly.

(iv) Upon any issuance of any shares of any class or series of preferred
stock of the Corporation, the Board of Directors shall attribute, based on
the use of proceeds of such issuance of shares of preferred stock in the
business of the PE Biosystems Group or the Celera Genomics Group and any
other relevant factors, the shares so issued entirely to the PE Biosystems
Group or entirely to the Celera Genomics Group or partly to the PE
Biosystems Group and partly to the Celera Genomics Group in such proportion
as the Board of Directors shall determine.

(v) Upon any redemption or repurchase by the Corporation or any
subsidiary thereof of shares of preferred stock of any class or series or of
other securities or debt obligations of the Corporation, the Board of
Directors shall determine, based on the property used to redeem or purchase
such shares, other securities or debt obligations, which, if any, of such
shares, other securities or debt obligations redeemed or repurchased shall
be attributed to the PE Biosystems Group and which, if any, of such shares,
other securities or debt obligations shall be attributed to the Celera
Genomics Group and, accordingly, how many of the shares of such class or
series of preferred stock or of such other securities, or how much of such
debt obligations, that remain outstanding, if any, are thereafter attributed
to the PE Biosystems Group or the Celera Genomics Group.

(b) CERTAIN DETERMINATIONS NOT REQUIRED. Notwithstanding the foregoing
provisions of this Section 2.5, the provisions of Section 2.6(b) or 2.6(q) or
any other provision of the Certificate of Incorporation, at any time when there
are not outstanding both (i) one or more shares of PE Biosystems Stock or
Convertible Securities convertible into or exchangeable or exercisable for PE
Biosystems Stock and (ii) one or more shares of Celera Genomics Stock or
Convertible Securities convertible into or exchangeable or exercisable for
Celera Genomics Stock, the Corporation need not (A) attribute any of the assets
or liabilities of the Corporation or any of its subsidiaries to the PE
Biosystems Group or the Celera Genomics Group or (B) make any determination
required in connection therewith, nor shall the Board of Directors be required
to make any of the determinations otherwise required by this Article, and in
such circumstances the holders of the shares of PE Biosystems Stock and Celera
Genomics Stock outstanding, as the case may be, shall (unless otherwise
specifically provided by the Certificate of Incorporation) be entitled to all
the voting powers, preferences and relative, participating, optional and other
special rights of both classes of Common Stock without differentiation between
the PE Biosystems Stock and the Celera Genomics Stock.

(c) BOARD DETERMINATIONS BINDING. Subject to applicable law, any
determinations made in good faith by the Board of Directors of the Corporation
under any provision of this Section 2.5 or otherwise in furtherance of the
application of this Section 2 shall be final and binding on all stockholders.

SECTION 2.6 CERTAIN DEFINITIONS. As used in the Certificate of
Incorporation, the following terms shall have the following meanings (with terms
defined in the singular having comparable meaning when used in the plural and
vice versa), unless the context otherwise requires. As used in this Section 2.6,
a "contribution" or "transfer" of assets or properties from one Group to another
shall refer to the reattribution of such assets or properties from the
contributing or transferring Group to the other Group and correlative phrases
shall have correlative meanings.

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(a) AVAILABLE DIVIDEND AMOUNT shall mean, as the context requires, a
reference to the PE Biosystems Group Available Dividend Amount or the Celera
Genomics Group Available Dividend Amount.

(b) CELERA GENOMICS GROUP shall mean, as of any date:

(i) the interest of the Corporation on such date in Celera Genomics
Corporation and GenScope, Inc. (the "Celera Genomics Group Companies"), any
successor companies, and all of the businesses, assets and liabilities of
the Celera Genomics Group Companies and any subsidiaries thereof;

(ii) all assets and liabilities of the Corporation and its subsidiaries
attributed by the Board of Directors to the Celera Genomics Group, whether
or not such assets or liabilities are or were also assets and liabilities of
the Celera Genomics Group Companies;

(iii) all businesses, assets, properties and liabilities transferred to
the Celera Genomics Group from the PE Biosystems Group (other than in a
transaction pursuant to Section 2.6(b)(iv)) pursuant to transactions in the
ordinary course of business of the Celera Genomics Group and the PE
Biosystems Group or otherwise as the Board of Directors may have directed as
permitted by the Certificate of Incorporation;

(iv) all properties and assets transferred to the Celera Genomics Group
from the PE Biosystems Group in connection with an increase in the Number of
Celera Genomics Designated Shares; and

(v) the interest of the Corporation or any of its subsidiaries in any
business or asset acquired and any liabilities assumed by the Corporation or
any of its subsidiaries outside of the ordinary course of business and
attributed to the Celera Genomics Group, as determined by the Board of
Directors as contemplated by Section 2.5(a)(i);

provided that from and after any transfer of any assets or properties from the
Celera Genomics Group to the PE Biosystems Group, the Celera Genomics Group
shall no longer include such assets or properties so transferred.

(x)(i) an amount equal to the fair market value of the total assets
attributed to the Celera Genomics Group less the total liabilities
attributed to the Celera Genomics Group (provided that preferred stock shall
not be treated as a liability), in each case, as of such date and determined
on a basis consistent with that applied in determining PE Corporation
Earnings (Loss) Attributable to the Celera Genomics Group, minus (ii) the
aggregate par value of, or any greater amount determined in accordance with
applicable law to be capital in respect of, all outstanding shares of Celera
Genomics Stock and each class or series of preferred stock attributed in
accordance with the Certificate of Incorporation to the Celera Genomics
Group, or

(y) in case the total amount calculated pursuant to clause (i) above is
not a positive number, an amount equal to PE Corporation Earnings (Loss)
Attributable to the Celera Genomics Group (if positive) for the fiscal year
in which the dividend is declared and/or the preceding fiscal year.

Notwithstanding the foregoing provisions of this Section 2.6(c), and consistent
with Section 2.5(c), at any time when there are not outstanding both (i) one or
more shares of PE Biosystems Stock or Convertible Securities convertible into or
exchangeable or exercisable for PE Biosystems Stock and (ii) one or more shares
of Celera Genomics Stock or Convertible Securities convertible into or
exchangeable or exercisable for Celera Genomics Stock, the "Available Dividend
Amount," on any calculation date during such time period, with respect to the PE
Biosystems Stock or the Celera Genomics Stock, as the case may be (depending on
which of such classes of Common Stock or Convertible Securities convertible into
or exchangeable or exercisable for such class of Common Stock

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is outstanding), shall mean the amount available for the payment of dividends on
such Common Stock in accordance with law.

(d) CONVERSION DATE shall mean the date fixed by the Board of Directors as
the effective date for the conversion of shares of PE Biosystems Stock into
shares of Celera Genomics Stock (or another class or series of common stock of
the Corporation) or of shares of Celera Genomics Stock into shares of PE
Biosystems Stock (or another class or series of common stock of the
Corporation), as the case may be, as shall be set forth in the notice to holders
of shares of the class of Common Stock subject to such conversion and to holders
of any Convertible Securities that are convertible into or exchangeable or
exercisable for shares of the class of Common Stock subject to such conversion
required pursuant to Section 2.4(f)(v).

(e) CONVERTIBLE SECURITIES shall mean, as of any date, any securities of the
Corporation or of any subsidiary thereof (other than shares of a class of Common
Stock), including warrants and options, outstanding at such time that by their
terms are convertible into or exchangeable or exercisable for or evidence the
right to acquire any shares of either class of Common Stock, whether
convertible, exchangeable or exercisable at such time or a later time or only
upon the occurrence of certain events; provided that securities shall only be
Convertible Securities in respect of the number of shares of Common Stock into
or for which such securities are then convertible, exchangeable or exercisable.

(f) DISPOSITION shall mean a sale, transfer, assignment or other disposition
(whether by merger, consolidation, sale or contribution of assets or stock or
otherwise) of properties or assets (including stock, other securities and
goodwill).

(g) FAIR VALUE shall mean, (i) in the case of equity securities or debt
securities of a class or series that has previously been Publicly Traded for a
period of at least 15 months, the Market Value thereof (if such Market Value, as
so defined, can be determined); (ii) in the case of an equity security or debt
security that has not been Publicly Traded for at least 15 months or the Market
Value of which cannot be determined, the fair value per share of stock or per
other unit of such security, on a fully distributed basis, as determined by an
independent investment banking firm experienced in the valuation of securities
selected in good faith by the Board of Directors, or, if no such investment
banking firm is, as determined in the good faith judgment of the Board of
Directors, available to make such determination, in good faith by the Board of
Directors; (iii) in the case of cash denominated in U.S. dollars, the face
amount thereof and in the case of cash denominated in other than U.S. dollars,
the face amount thereof converted into U.S. dollars at the rate published in The
Wall Street Journal on the date for the determination of Fair Value or, if not
so published, at such rate as shall be determined in good faith by the Board of
Directors based upon such information as the Board of Directors shall in good
faith determine to be appropriate; and (iv) in the case of property other than
securities or cash, the "Fair Value" thereof shall be determined in good faith
by the Board of Directors based upon such appraisals or valuation reports of
such independent experts as the Board of Directors shall in good faith determine
to be appropriate. Any such determination of Fair Value shall be described in a
statement filed with the records of the actions of the Board of Directors.

(h) GROUP shall mean, as of any date, the PE Biosystems Group or the Celera
Genomics Group, as the case may be.

(i) MARKET CAPITALIZATION of any class or series of capital stock on any
date shall mean the product of (i) the Market Value of one share of such class
or series of capital stock on such date and (ii) the number of shares of such
class or series of capital stock outstanding on such date.

(j) MARKET VALUE of a share of any class or series of capital stock of the
Corporation on any day shall mean the average of the high and low reported sales
prices regular way of a share of such class or series on such Trading Day or, in
case no such reported sale takes place on such Trading Day, the average of the
reported closing bid and asked prices regular way of a share of such class or
series on such Trading Day, in either case as reported on the New York Stock
Exchange Composite Tape or, if the shares of such class or series are not listed
or admitted to trading on such Exchange on such

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Trading Day, on the principal national securities exchange in the United States
on which the shares of such class or series are listed or admitted to trading
or, if not listed or admitted to trading on any national securities exchange on
such Trading Day, on the Nasdaq National Market or, if the shares of such class
or series are not listed or admitted to trading on any national securities
exchange or quoted on the Nasdaq National Market on such Trading Day, the
average of the closing bid and asked prices of a share of such class or series
in the over-the-counter market on such Trading Day as furnished by any New York
Stock Exchange member firm selected from time to time by the Corporation or, if
such closing bid and asked prices are not made available by any such New York
Stock Exchange member firm on such Trading Day, the Fair Value of a share of
such class or series as set forth in clause (ii) of the definition of Fair
Value; provided that, for purposes of determining the "Market Value" of a share
of any class or series of capital stock for any period, (i) the "Market Value"
of a share of capital stock on any day prior to any "ex-dividend" date or any
similar date occurring during such period for any dividend or distribution
(other than any dividend or distribution contemplated by clause (ii)(B) of this
sentence) paid or to be paid with respect to such capital stock shall be reduced
by the Fair Value of the per share amount of such dividend or distribution and
(ii) the "Market Value" of any share of capital stock on any day prior to (A)
the effective date of any subdivision (by stock split or otherwise) or
combination (by reverse stock split or otherwise) of outstanding shares of such
class or series of capital stock occurring during such period or (B) any
"ex-dividend" date or any similar date occurring during such period for any
dividend or distribution with respect to such capital stock to be made in shares
of such class or series of capital stock or Convertible Securities that are
convertible, exchangeable or exercisable for such class or series of capital
stock shall be appropriately adjusted, as determined by the Board of Directors,
to reflect such subdivision, combination, dividend or distribution.

(k) MARKET VALUE RATIO OF CELERA GENOMICS STOCK TO PE BIOSYSTEMS STOCK as of
any date shall mean the fraction (which may be greater or less than 1/1),
expressed as a decimal (rounded to the nearest five decimal places), of a share
of PE Biosystems Stock (or another class or series of common stock of the
Corporation, if so provided by Section 2.4(b)(iii) because PE Biosystems Stock
is not then Publicly Traded) to be issued in respect of a share of Celera
Genomics Stock upon a conversion of Celera Genomics Stock into PE Biosystems
Stock (or another class or series of common stock of the Corporation) in
accordance with Section 2.4(b)(iii) the numerator of which shall be the average
Market Value of one share of Celera Genomics Stock during the 20-Trading Day
period ending on such date and the denominator of which shall be the average
Market Value of one share of PE Biosystems Stock (or such other common stock)
during the 20-Trading Day period ending on such date.

(l) MARKET VALUE RATIO OF PE BIOSYSTEMS STOCK TO CELERA GENOMICS STOCK as of
any date shall mean the fraction (which may be greater or less than 1/1),
expressed as a decimal (rounded to the nearest five decimal places), of a share
of Celera Genomics Stock (or another class or series of common stock of the
Corporation, if so provided by Section 2.4(a)(iii) because Celera Genomics Stock
is not then Publicly Traded) to be issued in respect of a share of PE Biosystems
Stock upon a conversion of PE Biosystems Stock into Celera Genomics Stock (or
another class or series of common stock of the Corporation) in accordance with
Section 2.4(a)(iii), the numerator of which shall be the average Market Value of
one share of PE Biosystems Stock during the 20-Trading Day period ending on such
date and the denominator of which shall be the average Market Value of one share
of Celera Genomics Stock (or such other common stock) during the 20-Trading Day
period ending on such date.

(m) NET PROCEEDS shall mean, as of any date with respect to any Disposition
of any of the properties and assets attributed to the PE Biosystems Group or the
Celera Genomics Group, as the case may be, an amount, if any, equal to what
remains of the gross proceeds of such Disposition after payment of, or
reasonable provision is made as determined by the Board of Directors for, (i)
any taxes payable by the Corporation (or which would have been payable but for
the utilization of tax benefits attributable to the other Group) in respect of
such Disposition or in respect of any resulting dividend or redemption pursuant
to Section 2.4(a)(i)(1)(A), 2.4(a)(i)(1)(B), 2.4(b)(i)(1)(A) or 2.4(b)(i)(1)(B),
(ii) any transaction costs, including, without limitation, any legal, investment
banking and accounting

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fees and expenses and (iii) any liabilities (contingent or otherwise) of or
attributed to such Group, including, without limitation, any liabilities for
deferred taxes or any indemnity or guarantee obligations of the Corporation
incurred in connection with the Disposition or otherwise, and any liabilities
for future purchase price adjustments and any preferential amounts plus any
accumulated and unpaid dividends in respect of the preferred stock attributed to
such Group. For purposes of this definition, any properties and assets
attributed to the Group, the properties and assets of which are subject to such
Disposition, remaining after such Disposition shall constitute "reasonable
provision" for such amount of taxes, costs and liabilities (contingent or
otherwise) as the Board of Directors determines can be expected to be supported
by such properties and assets.

(n) NUMBER OF CELERA GENOMICS DESIGNATED SHARES shall be, as of the date of
effectiveness of the Certificate of Incorporation, zero; provided, however, that
the "Number of Celera Genomics Designated Shares" shall from time to time
thereafter be:

(i) adjusted, if before such adjustment such number is greater than
zero, as determined by the Board of Directors to be appropriate to reflect
equitably any subdivision (by stock split or otherwise) or combination (by
reverse stock split or otherwise) of the Celera Genomics Stock or any
dividend or other distribution of shares of Celera Genomics Stock to holders
of shares of Celera Genomics Stock or any reclassification of Celera
Genomics Stock;

(ii) decreased (but to not less than zero), if before such adjustment
such number is greater than zero, by action of the Board of Directors by (1)
the number of shares of Celera Genomics Stock issued or sold by the
Corporation that, immediately prior to such issuance or sale, were included
in the Number of Celera Genomics Designated Shares, (2) the number of shares
of Celera Genomics Stock issued upon conversion, exchange or exercise of
Convertible Securities that, immediately prior to the issuance or sale of
such Convertible Securities, were included in the Number of Celera Genomics
Designated Shares, (3) the number of shares of Celera Genomics Stock issued
by the Corporation as a dividend or other distribution (including in
connection with any reclassification or exchange of shares) to holders of PE
Biosystems Stock, (4) the number of shares of Celera Genomics Stock issued
upon the conversion, exchange or exercise of any Convertible Securities
issued by the Corporation as a dividend or other distribution (including in
connection with any reclassification or exchange of shares) to holders of PE
Biosystems Stock, and (5) the number (rounded, if necessary, to the nearest
whole number) equal to the quotient of (A) the aggregate Fair Value as of
the date of contribution of properties or assets (including cash)
transferred from the Celera Genomics Group to the PE Biosystems Group in
consideration for a reduction in the Number of Celera Genomics Designated
Shares divided by (B) the average Market Value of one share of Celera
Genomics Stock during the 20-Trading Day period ending on the date
immediately prior to the date of such transfer; and

(iii) increased by the number (rounded, if necessary, to the nearest
whole number) equal to the quotient of (A) the Fair Value of properties or
assets (including cash) theretofore attributed as provided by Section 2.6(o)
to the PE Biosystems Group that are contributed to the Celera Genomics Group
in consideration of an increase in the Number of Celera Genomics Designated
Shares divided by (B) the average Market Value of one share of Celera
Genomics Stock during the 20-Trading Day period ending on the date
immediately prior to the date of such contribution.

(o) PE BIOSYSTEMS GROUP shall mean, as of any date:

(i) the interest of the Corporation or any of its subsidiaries on such
date in all of the businesses, assets, properties and liabilities of the
Corporation or any of its subsidiaries (and any successor companies), other
than any businesses, assets, properties and liabilities attributed in
accordance with this Article to the Celera Genomics Group;

(ii) all businesses, assets, properties and liabilities transferred to
the PE Biosystems Group from the Celera Genomics Group (other than in a
transaction pursuant to Section 2.6(o)(iii)) pursuant to transactions in the
ordinary course of business of the PE Biosystems Group and the

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Celera Genomics Group or otherwise as the Board of Directors may have
directed as permitted by the Certificate of Incorporation;

(iii) all properties and assets transferred to the PE Biosystems Group
from the Celera Genomics Group in connection with a reduction of the Number
of Celera Genomics Designated Shares; and

(iv) the interest of the Corporation or any of its subsidiaries in any
business or asset acquired and any liabilities assumed by the Corporation or
any of its subsidiaries outside of the ordinary course of business and
attributed to the PE Biosystems Group, as determined by the Board of
Directors as contemplated by Section 2.5(a)(i);

provided that from and after any transfer of any assets or properties from the
PE Biosystems Group to the Celera Genomics Group, the PE Biosystems Group shall
no longer include such assets or properties so transferred.

(p) PE BIOSYSTEMS GROUP AVAILABLE DIVIDEND AMOUNT shall mean, on any date,
either:

(x)(i) the amount equal to the fair market value of the total assets
attributed to the PE Biosystems Group less the total liabilities attributed
to the PE Biosystems Group (provided that preferred stock shall not be
treated as a liability), in each case, as of such date and determined on a
basis consistent with that applied in determining PE Corporation Earnings
(Loss) Attributable to the PE Biosystems Group, minus (ii) the aggregate par
value of, or any greater amount determined in accordance with applicable law
to be capital in respect of, all outstanding shares of PE Biosystem Stock
and each class or series of preferred stock attributed in accordance with
the Certificate of Incorporation to the PE Biosystems Group, or

(y) in case the total amount calculated pursuant to clause (i) above is
not a positive number, an amount equal to PE Corporation Earnings (Loss)
Attributable to the PE Biosystems Group (if positive) for the fiscal year in
which the dividend is declared and/or the preceding fiscal year.

Notwithstanding the foregoing provisions of this Section 2.6(p), and consistent
with Section 2.5(c), at any time when there are not outstanding both (i) one or
more shares of PE Biosystems Stock or Convertible Securities convertible into or
exchangeable or exercisable for PE Biosystems Stock and (ii) one or more shares
of Celera Genomics Stock or Convertible Securities convertible into or
exchangeable or exercisable for Celera Genomics Stock, the "Available Dividend
Amount," on any calculation date during such time period, with respect to the PE
Biosystems Stock or the Celera Genomics Stock, as the case may be (depending on
which of such classes of Common Stock or Convertible Securities convertible into
or exchangeable or exercisable for such class of Common Stock is outstanding),
shall mean the amount available for the payment of dividends on such Common
Stock in accordance with law.

(q) PE CORPORATION EARNINGS (LOSS) ATTRIBUTABLE TO THE CELERA GENOMICS GROUP
shall mean, for any period through any date, (i) the net income or loss of the
Celera Genomics Group for such period determined in accordance with generally
accepted accounting principles in effect at such time, reflecting income and
expense of the Corporation attributed to the Celera Genomics Group on a basis
substantially consistent with attributions of income and expense made in the
calculation of PE Corporation Earnings (Loss) Attributable to the PE Biosystems
Group, including, without limitation, corporate administrative costs, net
interest and other financial costs and income taxes, reduced by (ii) the
aggregate amount of consolidated allowable tax benefits for federal income tax
purposes generated by the Celera Genomics Group for such period which can not be
utilized by the Celera Genomics Group but can be utilized by the Corporation on
a consolidated basis for such period to the extent such amount was included in
the calculation of net income or loss under clause (i) for such period
("Excludable Celera Tax Benefits") (provided that the amount referred to in
clause (i) shall be reduced only to the extent the cumulative amount of
Excludable Celera Tax Benefits from July 1, 1998 exceeds $75 million).

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<PAGE>

(r) PE CORPORATION EARNINGS (LOSS) ATTRIBUTABLE TO THE PE BIOSYSTEMS GROUP
shall mean, for any period through any date, (i) the net income or loss of the
PE Biosystems Group for such period determined in accordance with generally
accepted accounting principles in effect at such time, reflecting income and
expense of the Corporation attributed to the PE Biosystems Group on a basis
substantially consistent with attributions of income and expense made in the
calculation of PE Corporation Earnings (Loss) Attributable to the Celera
Genomics Group, including, without limitation, corporate administrative costs,
net interest and other financial costs and income taxes, increased by (ii) the
amount reducing PE Corporation Earnings (Loss) Attributable to the Celera
Genomics Group for such period pursuant to clause (ii) of Section 2.6(q).

(s) PUBLICLY TRADED with respect to any security shall mean that such
security is (i) registered under Section 12 of the Securities Exchange Act of
1934, as amended (or any successor provision of law), and (ii) listed for
trading on the New York Stock Exchange or the American Stock Exchange (or any
national securities exchange registered under Section 7 of the Securities
Exchange Act of 1934, as amended (or any successor provision of law), that is
the successor to either such exchange) or listed on The Nasdaq Stock Market (or
any successor market system).

(t) REDEMPTION DATE shall mean the date fixed by the Board of Directors as
the effective date for a redemption of shares of either class of Common Stock,
as set forth in a notice to holders thereof required pursuant to Section
2.4(f)(iii), (iv), (v) or (vi).

(u) RELATED BUSINESS TRANSACTION means any Disposition of all or
substantially all the properties and assets attributed to the PE Biosystems
Group or the Celera Genomics Group, as the case may be, in a transaction or
series of related transactions that result in the Corporation receiving in
consideration of such properties and assets primarily equity securities
(including, without limitation, capital stock, debt securities convertible into
or exchangeable for equity securities or interests in a general or limited
partnership or limited liability company, without regard to the voting power or
other management or governance rights associated therewith) of any entity which
(i) acquires such properties or assets or succeeds (by merger, formation of a
joint venture or otherwise) to the business conducted with such properties or
assets or controls such acquiror or successor and (ii) is engaged primarily or
proposes to engage primarily in one or more businesses similar or complementary
to the businesses conducted by such Group prior to such Disposition, as
determined by the Board of Directors.

(v) TRADING DAY shall mean each weekday other than any day on which the
relevant class of common stock of the Corporation is not traded on any national
securities exchange or listed on The Nasdaq Stock Market or in the
over-the-counter market.

SECTION 3. PREFERRED STOCK. The Preferred Stock may be issued from time to
time in one or more series, each with such distinctive designation as may be
stated in the Certificate of Incorporation or in any amendment hereto, or in a
resolution or resolutions providing for the issue of such stock from time to
time adopted by the Board of Directors or a duly authorized committee thereof.
The resolution or resolutions providing for the issue of shares of a particular
series shall fix, subject to applicable laws and the provisions of the
Certificate of Incorporation, for each such series the number of shares
constituting such series and the designation and the voting powers, preferences
and relative, participating, optional or other special rights and the
qualifications, limitations or restrictions thereof, including, without limiting
the generality of the foregoing, such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets,
conversion or exchange, and such other subjects or matters as may be fixed by
the Board of Directors or a duly authorized committee thereof under the DGCL.

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ARTICLE V.

BOARD OF DIRECTORS

SECTION 1. NUMBER OF DIRECTORS. The number of directors shall be fixed by
resolution of the Board of Directors, but shall not be less than three nor more
than thirteen. Election of directors need not be by written ballot, unless so
provided in the By-laws of the Corporation.

SECTION 2. POWERS OF THE BOARD OF DIRECTORS. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors selected as provided by law and the Certificate of Incorporation and
the By-laws of the Corporation. In furtherance, and not in limitation, of the
powers conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized to:

(a) adopt, amend, alter, change or repeal By-laws of the Corporation;

(b) subject to the By-laws as from time to time in effect, determine the
rules and procedures for the conduct of the business of the Board of
Directors and the management and direction by the Board of Directors of the
business and affairs of the Corporation, including the power to designate
and empower committees of the Board of Directors, to elect, or authorize the
appointment of, and empower officers and other agents of the Corporation,
and to determine the time and place of, the notice requirements for, and the
manner of conducting, Board meetings, as well as other notice requirements
for, and the manner of taking, Board action; and

(c) exercise all such powers and do all such acts as may be exercised or
done by the Corporation, subject to the provisions of the DGCL and the
Certificate of Incorporation and By-laws of the Corporation.

ARTICLE VI.

STOCKHOLDER ACTIONS

SECTION 1. SPECIAL MEETINGS. Special meetings of stockholders may be called
at any time by the Board of Directors or by the Chairman of the Board of
Directors, the President or the Secretary of the Corporation.

SECTION 2. WRITTEN CONSENTS. Any action required or permitted to be taken
by the stockholders of the Corporation may be effected by written consent in
lieu of a meeting of such holders, provided that such consent must be signed by
all the holders of all outstanding shares of the Corporation's capital stock
entitled to vote thereon.

ARTICLE VII.

LIMITATION ON LIABILITY OF DIRECTORS

No person shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director, including
without limitation for serving on a committee of the Board of Directors;
provided, however, that the foregoing shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
arising under Section 174 of the DGCL, or (iv) for any transaction from which
the director derived an improper personal benefit. Any amendment, repeal or
modification of this Article VII shall not adversely affect any right or
protection of a director of the Corporation existing hereunder with respect to
any act or omission occurring prior to such amendment, repeal or modification.

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ARTICLE VIII.

AMENDMENT OF CERTIFICATE OF INCORPORATION

The Corporation hereby reserves the right from time to time to amend, alter,
change or repeal any provision contained in the Certificate of Incorporation of
the Corporation in any manner permitted by the DGCL and all rights and powers
conferred upon stockholders, directors and officers herein are granted subject
to this reservation. In addition to any vote otherwise required by law, and
except as may otherwise be provided in the Certificate of Incorporation, any
such amendment, alteration, change or repeal shall require approval of both (i)
the Board of Directors by the affirmative vote of a majority of the members then
in office and (ii) the holders of a majority of the voting power of all of the
shares of capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class.

IN WITNESS WHEREOF, this Restated Certificate of Incorporation which
restates, integrates and amends the provisions of the certificate of
incorporation of the Corporation, and which has been duly adopted in accordance
with the provisions of Sections 241 and 245 of the Delaware General Corporation
Law, has been executed by , its
, this day of , and by
so executing, the undersigned certifies that the Corporation has not received
any payment for any of its stock.

PE CORPORATION
By:___________________________________

Name:
Title:

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ANNEX III

PE CORPORATION/PE BIOSYSTEMS GROUP
1999 STOCK INCENTIVE PLAN

1. PURPOSE OF THE PLAN.

The purpose of PE Corporation/PE Biosystems Group 1999 Stock Incentive Plan
(the "Plan") is to increase stockholder value and to advance the interests of PE
Corporation and its subsidiaries (collectively, the "Corporation") by providing
financial incentives designed to attract, retain, and motivate employees,
officers, consultants, and directors of the Corporation. The Plan continues the
established policy of the Corporation of encouraging ownership of its Stock by
key personnel and of providing incentives for such individuals to put forth
maximum efforts for the success of the Corporation.

2. DEFINITIONS.

As used herein, the following terms have the meanings hereinafter set forth
unless the context clearly indicates to the contrary:

2.1 "ACT" means the Securities Exchange Act of 1934, as amended from time to
time.

2.2 "AGREEMENT" means the written agreement between the Corporation and an
Optionee or Award Recipient, as the case may be, evidencing the grant of an
Option or Award and setting forth the terms and conditions thereof.

2.3 "AWARD" means a Stock Award or Performance Share Award.

2.4 "AWARD RECIPIENT" means an individual to whom an Award has been granted
under the Plan.

2.5 "BOARD OF DIRECTORS" means the Board of Directors of the Corporation.

2.6 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.

2.7 "COMMITTEE" means the Management Resources Committee of the Board of
Directors, or any successor thereto or committee designated thereby whose
members qualify as (a) outside directors as defined in Section 162(m) of the
Code and the Treasury Regulations issued pursuant thereto and (b) non-employee
directors within the meaning of Rule 16b-3 under the Act.

2.8 "CONTINUOUS SERVICE" means an uninterrupted chain of continuous regular
employment by the Corporation or an uninterrupted chain of continuous
performance of significant services for the Corporation by a consultant. A leave
of absence granted in accordance with the Corporation's usual procedures which
does not operate to interrupt continuous employment or continuous performance of
significant services for other benefits granted by the Corporation shall not be
considered a termination of employment nor an interruption of Continuous Service
hereunder, and an employee or consultant who is granted such a leave of absence
shall be considered to be continuously employed or continuously performing
significant services during the period of such leave; PROVIDED, HOWEVER, that if
regulations under the Code or an amendment to the Code shall establish a more
restrictive definition of a leave of absence, such definition shall be
substituted herein.

2.9 "DEFERRAL ACCOUNT" means the bookkeeping account established for the
deferral of a Director Stock Award by a Non-Employee Director pursuant to
Section 10.7 hereof.

2.10 "DIRECTOR STOCK AWARD" means an award of shares of Stock granted
pursuant to Section 10 hereof.

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2.11 "EMPLOYEE AWARD" means an Employee Stock Award or Performance Share
Award.

2.12 "EMPLOYEE STOCK AWARD" means an award of shares of Stock granted
pursuant to Section 8 hereof.

2.13 "FAIR MARKET VALUE" means the simple average of the high and low sales
prices of a share of Stock as reported in the report of composite transactions
(or other source designated by the Committee) on the date on which fair market
value is to be determined (or if there shall be no trading on such date, then on
the first previous date on which sales were made on a national securities
exchange).

2.14 "INCENTIVE STOCK OPTIONS" means those Options granted hereunder to
employees as incentive stock options as defined in, and which by their terms
comply with the requirements for such Options set out in, Section 422 of the
Code and the Treasury Regulations issued pursuant thereto.

2.15 "NON-EMPLOYEE DIRECTOR" means a member of the Board of Directors who is
not an employee or officer of the Corporation.

2.16 "NON-QUALIFIED STOCK OPTIONS" means those Options granted hereunder
which are not intended to qualify as Incentive Stock Options.

2.17 "NORMAL RETIREMENT AGE" means the normal retirement age of a member of
the Board as determined by the Board from time to time.

2.18 "OPTION" means an option granted pursuant to Section 6 hereof.

2.19 "OPTIONEE" means an individual to whom an Option has been granted under
the Plan.

2.20 "PERFORMANCE SHARE AWARD" means an award of Performance Shares granted
pursuant to Section 9 hereof.

2.21 "PERFORMANCE SHARES" means shares of Stock covered by a Performance
Share Award.

2.22 "STOCK" means the PE Corporation--PE Biosystems Group Common Stock, par
value $.01 per share, of the Corporation.

2.23 "STOCK AWARD" means an Employee Stock Award or Director Stock Award.

2.24 "STOCK UNIT" means the bookkeeping entry representing the equivalent of
one share of Stock.

2.25 "STOCK RESTRICTIONS" mean the restrictions, including performance
goals, placed on a Stock Award or Performance Share Award under the Plan.

2.26 "TEN PERCENT STOCKHOLDER" means an individual who owns, within the
meaning of Section 422(b)(6) of the Code and the Treasury Regulations issued
pursuant thereto, stock possessing more than ten (10%) percent of the total
combined voting power of all classes of stock of the Corporation.

3. SHARES RESERVED FOR THE PLAN.

The aggregate number of shares of Stock available for Options and Awards
under the Plan is 2,400,000, subject to adjustment in accordance with Section
15. Shares of Stock issued under the Plan shall be authorized but unissued
shares. In lieu of such unissued shares, the Corporation may, in its discretion,
transfer on the exercise of Options or the delivery of shares of Stock issued
pursuant to Awards treasury shares, reacquired shares, or shares acquired in the
market for purposes of the Plan.

If any Options or Awards granted under the Plan shall for any reason
terminate, be canceled, or expire without having been exercised or vested in
full, shares of Stock not issued or vested in full under such Options or Awards
shall be available again for issuance under the Plan.

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<PAGE>
4. ADMINISTRATION OF THE PLAN.

The Committee shall have plenary authority in its discretion, but subject to
the express provisions of the Plan, to administer the Plan, including, without
limitation, the authority to determine the individuals to whom, and the time or
times at which, Options and Awards shall be granted, the number of shares of
Stock to be covered by each Option and Award, and the terms and conditions of
each Option and Award. The Committee shall also have plenary authority in its
discretion to interpret the Plan; to prescribe, amend, and rescind rules and
regulations relating to it; to determine the terms (which need not be identical)
of Agreements executed and delivered under the Plan, including, without
limitation, such terms and provisions as shall be requisite in the judgment of
the Committee to conform to any change in any law or regulation applicable
thereto; and to make any and all other determinations and take any and all
actions deemed necessary or advisable for the administration of the Plan. The
Committee's determination on the foregoing matters shall be conclusive and
binding on all persons having an interest in the Plan.

5. ELIGIBILITY; FACTORS TO BE CONSIDERED IN GRANTING OPTIONS AND AWARDS.

Subject to the terms of the Plan, an Option may be granted to any person
who, at the time the Option is granted, is a regular full-time employee (which
term shall include officers and directors) of the Corporation, a Non-Employee
Director, or a consultant performing significant services for the Corporation.
Employee Awards may be granted to any person who, at the time the Employee Award
is granted, is a regular full-time employee (which term shall include officers
and directors) of the Corporation. Non-Employee Directors, shall not be eligible
to receive Employee Awards. In determining the employees, Non-Employee Directors
and consultants to whom Options or Awards shall be granted, the number of shares
of Stock to be covered by each Option or Award, and the terms and conditions of
each Option and Award, the Committee shall take into account the duties and
responsibilities of the respective employees, Non-Employee Directors, and
consultants, their present and potential contributions to the success of the
Corporation, and such other factors as they shall deem relevant in connection
with accomplishing the purposes of the Plan. An employee, Non-Employee Director,
or consultant who has been granted an Option or Award may be granted and hold
additional Options or Awards if the Committee shall so determine.

6. OPTIONS.

6.1 GRANT OF OPTIONS. Subject to the terms of the Plan, the Committee may
grant Options to such employees, Non-Employee Directors, and consultants at such
time or times and in such amounts as it shall determine. Each Option granted
hereunder shall be designated as an Incentive Stock Option or Non-Qualified
Stock Option and shall be evidenced by an Agreement containing such terms and
conditions consistent with the Plan as the Committee shall determine; PROVIDED,
HOWEVER, that Incentive Stock Options shall be granted only to employees of the
Corporation.

6.2 PURCHASE PRICE. The purchase price of each share of Stock covered by an
Option shall be 100% (or 110% in the case of an Incentive Stock Option granted
to a Ten Percent Stockholder) of the Fair Market Value of a share of Stock on
the date the Option is granted.

6.3 TERM. The term of each Option shall be for such period as the Committee
shall determine, but not more than ten (10) years (or five (5) years in the case
of an Incentive Stock Option granted to a Ten Percent Stockholder) from the date
of grant thereof, and shall be subject to earlier termination as hereinafter
provided. If the original term of any Option is less than ten (10) years (or
five (5) years in the case of an Incentive Stock Option granted to a Ten Percent
Stockholder) from the date of grant, the Option prior to its expiration may be
amended, with the approval of the Committee and the employee, Non-Employee
Director, or consultant, as the case may be, to extend the term so that the

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<PAGE>
term as amended is not more than ten (10) years (or five (5) years in the case
of an Incentive Stock Option granted to a Ten Percent Stockholder) from the
original date of grant of such Option.

6.4 VESTING. An Option shall be exercisable at such time or times and in
such manner and number of shares as the Committee shall determine. Except as
provided in the Plan, no Option may be exercised at any time unless the holder
thereof is then a regular employee of the Corporation, a member of the Board of
Directors, or a consultant performing significant services for the Corporation.
Options granted under the Plan shall not be affected by any change of duties or
position so long as the holder continues to be an employee of the Corporation,
continues to be a member of the Board of Directors, or a consultant performing
significant services for the Corporation.

6.5 TERMINATION OF EMPLOYMENT OR SERVICES. In the event that the employment
of an employee to whom an Option has been granted under the Plan shall be
terminated or the services of a Non-Employee Director or consultant to whom an
Option has been granted under the Plan shall be terminated (other than by reason
of retirement, disability, or death) such Option may, subject to the provisions
of the Plan, be exercised, to the extent that the employee, Non-Employee
Director, or consultant was entitled to do so at the date of termination of his
or her employment or services, at any time within thirty (30) days after such
termination, but in no event after the expiration of the term of the Option.

6.6 RETIREMENT OR DISABILITY. If an employee to whom an Option has been
granted under the Plan shall retire from the Corporation pursuant to any
qualified pension plan provided by the Corporation, or if a Non-Employee
Director (a) retires from the Board of Directors upon reaching Normal Retirement
Age or (b) resigns or declines to stand for reelection with the approval of the
Board of Directors, or if an employee, Non-Employee Director, or consultant to
whom an Option has been granted becomes totally and permanently disabled, such
Option may be exercised, notwithstanding the provisions of Section 6.4, in full
without regard to the period of Continuous Service after the Option was granted
at any time (a) in the case of an employee holding an Incentive Stock Option,
within three (3) months after such retirement or disability, but in no event
after the expiration of the term of the Option or (b) in the case of a
Non-Qualified Stock Option, within one (1) year (three (3) years in the case of
a Non-Employee Director) after such retirement, disability, resignation, or
declining, but in no event after the expiration of the term of the Option.

6.7 DEATH. If an employee, Non-Employee Director, or consultant to whom an
Option has been granted under the Plan shall die while employed by the
Corporation, serving as a member of the Board of Directors, or engaged to
perform services for the Corporation, such Option may be exercised to the extent
that the employee, Non-Employee Director, or consultant was entitled to do so at
the date of his or her death, by his or her executor or administrator or other
person at the time entitled by law to the employee's, Non-Employee Director's,
or consultant's rights under the Option, at any time within such period, not
exceeding one (1) year after his or her death, as shall be prescribed in the
Agreement, but in no event after the expiration of the term of the Option.

7. TERMS AND CONDITIONS APPLICABLE TO OPTIONS.

7.1 TRANSFERABILITY. During the lifetime of an Optionee, an Option shall not
be transferable, except pursuant to a domestic relations order; PROVIDED,
HOWEVER, that the Committee may, in its sole discretion, permit an Optionee to
transfer a Non-Qualified Stock Option to (a) a member of the Optionee's
immediate family, (b) a trust, the beneficiaries of which consist exclusively of
members of the Optionee's immediate family, or (c) a partnership, the partners
of which consist exclusively of members of the Optionee's immediate family.
After the death of an Optionee, an Option may be transferred pursuant to the
laws of descent and distribution.

7.2 METHOD OF EXERCISE. An Option may be exercised by giving written notice
to the Corporation specifying the number of shares of Stock to be purchased;
PROVIDED THAT, except as otherwise provided

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<PAGE>

by the Committee, an Option may not be exercised as to fewer than 100 shares, or
the remaining exercisable shares covered by the Option if fewer than 100, at any
one time. No Option may be exercised with respect to a fractional share. The
purchase price of the shares as to which an Option shall be exercised shall be
paid in full at the time of exercise at the election of the holder of an Option
(a) in cash or currency of the United States of America, (b) by tendering to the
Corporation shares of Stock owned by such holder for at least six (6) months
having a Fair Market Value equal to the cash exercise price applicable to the
purchase price of the shares as to which the Option is being exercised, (c) a
combination of cash and/or previously owned shares of Stock valued at Fair
Market Value, or (d) by payment of such other consideration as the Committee
shall from time to time determine. For purposes of the immediately preceding
sentence, Fair Market Value shall be determined as of the business day
immediately preceding the day on which the Option is exercised. Notwithstanding
the foregoing, the Committee shall have the right to modify, amend, or cancel
the provisions of clauses (b) and (c) above at any time upon prior notice to the
holders of Options.

7.3 STOCKHOLDER RIGHTS. An Optionee shall have none of the rights of a
stockholder with respect to the shares subject to an Option until such shares
have been registered upon the exercise of the Option on the transfer books of
the Corporation in the name of such Optionee and then only to the extent that
any restrictions imposed thereon by the Committee shall have lapsed.

7.4 NO LOANS. Neither the Corporation, any company with which it is
affiliated, nor any of their respective subsidiaries may directly or indirectly
lend money to any person for the purpose of assisting such person in acquiring
or carrying shares of Stock issued upon the exercise of an Option.

7.5 CONDITIONS PRECEDENT TO EXERCISE. Notwithstanding any other provision of
the Plan, but subject to the provisions of Section 11, the exercise of an Option
following termination of employment or service shall be subject to the
satisfaction of the conditions precedent that the Optionee has not (a) rendered
services or engaged directly or indirectly in any business which in the opinion
of the Committee competes with or is in conflict with the interests of the
Corporation; PROVIDED, HOWEVER, that the ownership by an Optionee of 5% or less
of any class of securities of a publicly traded company shall not be deemed to
violate this clause or (b) violated any written agreement with the Corporation,
including, without limitation, any confidentiality agreement. An Optionee's
violation of clause (a) or (b) of the preceding sentence shall result in the
immediate forfeiture of any Options held by such Optionee.

7.6 LIMITATIONS ON THE GRANT OF OPTIONS. No one individual may be granted an
Option or Options under the Plan during any fiscal year of the Corporation for
an aggregate number of shares of Stock which exceeds 10% of the total number of
shares reserved for issuance under the Plan. The aggregate Fair Market Value of
the Stock (determined as of the date the Option is granted) with respect to
which Incentive Stock Options granted under the Plan and all other stock option
plans of the Corporation (or any parent or subsidiary of the Corporation) are
exercisable for the first time by any specific individual during any calendar
year shall not exceed $100,000. No Incentive Stock Option may be granted
hereunder to an individual who immediately after such Option is granted is a Ten
Percent Stockholder unless (a) the Option price is at least 110% of the fair
market value of such stock on the date of grant and (b) the Option may not be
exercised more than five (5) years after the date of grant.

8. EMPLOYEE STOCK AWARDS.

8.1 GRANT OF EMPLOYEE STOCK AWARDS. Subject to the terms of the Plan, the
Committee may grant Employee Stock Awards to such employees at such time or
times and in such amounts as it shall determine. Shares of Stock issued pursuant
to Employee Stock Awards may, but need not, be subject to such restrictions as
may be established by the Committee at the time of the grant and reflected in an
Agreement.

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8.2 RESTRICTIONS ON EMPLOYEE STOCK AWARDS. Except as provided in the Plan,
any shares of Stock subject to an Employee Stock Award with respect to which
Stock Restrictions have not been satisfied shall be forfeited and all rights of
the employee to such Employee Stock Award shall terminate without any payment of
consideration by the Corporation. Except as set forth in Section 8.5, a
recipient of an Employee Stock Award subject to Stock Restrictions shall forfeit
such award in the event of the termination of his or her employment during the
period the shares are subject to Stock Restrictions.

8.3 STOCKHOLDER RIGHTS. The recipient of an Employee Stock Award shall be
entitled to such rights of a stockholder with respect to the shares of Stock
issued pursuant to such Employee Stock Award as the Committee shall determine,
including the right to vote such shares of Stock, except that cash and stock
dividends with respect to such shares may, at the discretion of the Committee,
be either paid currently or withheld by the Corporation for the Award
Recipient's account, and interest may be accrued on the amount of cash dividends
withheld at a rate and subject to such terms as determined by the Committee.

The Committee, in its discretion, may cause a legend or legends to be placed
on any certificate representing shares issued pursuant to Employee Stock Awards,
which legend or legends shall make appropriate reference to the Stock
Restrictions imposed thereon. The Committee may also in its discretion require
that certificates representing shares issued pursuant to Employee Stock Awards
remain in the physical custody of the Corporation or an escrow holder until any
or all of the Stock Restrictions imposed under the Plan have lapsed.

8.4 NON-TRANSFERABILITY. Prior to the time Stock Restrictions lapse, none of
the shares of Stock issued pursuant to an Employee Stock Award may be sold,
assigned, bequeathed, transferred, pledged, hypothecated, or otherwise disposed
of in any way by the Award Recipient.

8.5 LAPSE OF RESTRICTIONS. In the event of the termination of employment of
an Award Recipient, prior to the lapse of Stock Restrictions, by reason of
death, total and permanent disability, retirement, or resignation or discharge
from employment other than discharge for cause, the Committee may, in its
discretion, remove any Stock Restrictions on all or a portion of the Stock
subject to an Employee Stock Award.

8.6 LIMITATIONS ON EMPLOYEE STOCK AWARDS. No employee may receive an
Employee Stock Award representing more than 40,000 shares of Stock during any
fiscal year of the Corporation, and the maximum number of shares of Stock which
may be issued to all employees pursuant to Employee Stock Awards under the Plan
shall be 80,000, subject in each case to adjustment in accordance with Section
15.

9. PERFORMANCE SHARE AWARDS.

9.1 GRANT OF PERFORMANCE SHARE AWARDS. Subject to the terms of the Plan, the
Committee may grant Performance Share Awards to such employees at such time or
times and in such amounts as it shall determine. Stock issued pursuant to a
Performance Share Award shall be subject to the attainment of performance goals
relating to one or more criteria within the meaning of Section 162(m) of the
Code and the Treasury Regulations issued pursuant thereto, including, without
limitation, stock price, market share, sales, earnings per share, return on
equity, costs, and cash flow, as determined by the Committee from time to time.
Any such objectives and the period in which such objectives are to be met shall
be determined by the Committee at the time of the grant and reflected in an
Agreement. Each Performance Share Award shall also be subject to such other
restrictions as the Committee may determine.

9.2 DELIVERY OF PERFORMANCE SHARES. Certificates representing Performance
Shares shall be registered in the Award Recipient's name but shall remain in the
physical custody of the Corporation until the

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Committee has determined that the performance goals and other Stock Restrictions
with respect to such Performance Shares have been met.

9.3 STOCKHOLDER RIGHTS. The recipient of a Performance Share Award shall be
entitled to such rights of a stockholder with respect to the Performance Shares
as the Committee shall determine, including the right to vote such shares of
Stock, except that cash and stock dividends with respect to the Performance
Shares may, at the discretion of the Committee, be either paid currently or
withheld by the Corporation for the Award Recipient's account, and interest may
be accrued on the amount of cash dividends withheld at a rate and subject to
such terms as determined by the Committee.

9.4 NON-TRANSFERABILITY. Prior to the time shares of Stock issued pursuant
to a Performance Share Award are delivered to an Award Recipient, none of such
shares may be sold, assigned, bequeathed, transferred, pledged, hypothecated, or
otherwise disposed of in any way by the Award Recipient.

9.5 LAPSE OF RESTRICTIONS. In the event of the termination of employment of
an Award Recipient, prior to the lapse of Stock Restrictions, by reason of
death, total and permanent disability, retirement, or resignation or discharge
from employment other than discharge for cause, the Committee may, in its
discretion, remove any Stock Restrictions on all or a portion of a Performance
Share Award, or determine the performance objectives with respect to all or a
portion of a Performance Share Award to have been attained; PROVIDED, HOWEVER,
that the Committee shall not be entitled to exercise such discretion to the
extent that the ability to exercise such discretion would cause the Performance
Share Award not to qualify as performance based compensation under Section
162(m) of the Code.

9.6 LIMITATIONS ON PERFORMANCE SHARE AWARDS. No employee may receive
Performance Share Awards representing more than 100,000 shares of Stock during
any fiscal year of the Corporation, and the maximum number of shares of Stock
which may be issued to all employees pursuant to Performance Share Awards under
the Plan shall be 400,000, subject in each case to adjustment in accordance with
Section 15.

10. DIRECTOR STOCK AWARDS.

10.1 GRANT OF DIRECTOR STOCK AWARDS. As of the date of each election or
reelection to the Board of Directors, each Non-Employee Director shall
automatically be granted a Director Stock Award with respect to 300 shares of
Stock, subject to adjustment in accordance with Section 15. Notwithstanding the
foregoing, each Non-Employee Director first elected to the Board of Directors on
a date other than the date of an annual meeting of stockholders shall be granted
that number of whole shares of Stock equal to the number of shares then subject
to a Director Stock Award multiplied by a fraction, the numerator of which shall
be the number of months remaining until the anticipated date of the next annual
meeting of stockholders, and the denominator of which shall be 12. All Director
Stock Awards shall be evidenced by an agreement containing such terms and
conditions consistent with the Plan as the Committee shall determine.

10.2 VESTING. Each Director Stock Award shall vest in full on the date
immediately preceding the first annual meeting of stockholders next following
the date of grant; PROVIDED, HOWEVER, that, except as provided in the Plan, the
recipient thereof continues to serve as a member of the Board of Directors as of
such date.

10.3 FORFEITURE OF DIRECTOR STOCK AWARDS. Except as provided in the Plan, a
recipient of a Director Stock Award shall forfeit any unvested shares of Stock
subject to the Director Stock Award, and all rights of the Non-Employee Director
to such unvested shares shall terminate without payment of consideration by the
Corporation, upon the termination of his or her service as a member of the Board
of Directors.

10.4 STOCKHOLDER RIGHTS. Except as provided in Sections 10.5 and 10.7, a
recipient of a Director Stock Award shall be entitled to all rights of a
stockholder with respect to the shares of Stock issued

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pursuant to the Director Stock Award, including the right to receive dividends
and to vote such shares of Stock; PROVIDED, HOWEVER, that stock dividends paid
with respect to such shares shall be restricted to the same extent as the
underlying shares of Stock issued pursuant to the Director Stock Award.

The Committee shall cause a legend or legends to be placed on any
certificate representing shares issued pursuant to a Director Stock Award, which
legend or legends shall make appropriate reference to the terms of the Director
Stock Award and the Plan. The Committee shall also require that certificates
representing shares issued pursuant to Director Stock Awards remain in the
physical custody of the Corporation or an escrow holder until such shares have
vested in accordance with the terms of the Plan.

10.5 NON-TRANSFERABILITY. Prior to vesting, none of the shares of Stock
issued pursuant to a Director Stock Award may be sold, assigned, bequeathed,
transferred, pledged, hypothecated, or otherwise disposed of in any way by the
recipient thereof.

10.6 TERMINATION OF SERVICE. If a Non-Employee Director to whom a Director
Stock Award has been granted shall cease to serve as a director as a result of
(a) his or her death, (b) retiring from the Board of Directors upon reaching
Normal Retirement Age, (c) becoming totally and permanently disabled, or (d)
resigning with the approval of the Board of Directors, all shares subject to
such Director Stock Award shall be vested in full, notwithstanding the
provisions of Section 10.2, as of the date of termination of service.

10.7 DEFERRAL ELECTION. A Non-Employee Director may elect to defer receipt
of any Director Stock Award by filing the appropriate deferral form with the
Corporate Secretary on or before December 15th of the calendar year prior to the
calendar year in which such deferral is to be effective. Notwithstanding the
foregoing, any person elected as a Non-Employee Director for the first time
shall be permitted to make his or her first deferral election no later than
twenty (20) days after such election. In no event, however, shall any deferral
be permitted to the extent prohibited by applicable law. Deferrals shall be
subject to the following terms and conditions:

(a) A Non-Employee Director may elect to defer receipt of a Director
Stock Award until (i) a specified date in the future, (ii) cessation of his
or her service as a member of the Board of Directors, or (iii) the end of
the calendar year in which cessation of his or her service as a member of
the Board of Directors occurs.

(b) There shall be established a Deferral Account on the books of the
Corporation for each Non-Employee Director electing to defer a Director
Stock Award pursuant to this Section 10.7. Deferrals shall be credited to
the Non-Employee Director's Deferral Account in Stock Units in the following
manner: on the award date to which the deferral election applies, the amount
deferred shall be converted into a number of Stock Units equal to the number
of shares of Stock awarded that are subject to the deferral election. A
Non-Employee Director shall not have any voting rights with respect to any
Stock Units held in his or her Deferral Account.

(c) Whenever cash dividends are paid with respect to shares of Stock,
each Non-Employee Director's Deferral Account shall be credited on the
payment date of such dividend with additional Stock Units (including
fractional units to the nearest one/one hundredth (1/100)) equal in value to
the amount of the cash dividend paid on a single share of Stock multiplied
by the number of Stock Units (including fractional units) credited to his or
her Deferral Account as of the date of record for dividend purposes. For
purposes of crediting dividends, the value of a Stock Unit shall be the Fair
Market Value of a share of Stock as of the payment date of the dividend.

(d) The number of Stock Units credited to each Non-Employee Director's
Deferral Account shall be appropriately adjusted in the same manner and to
the same extent Director Stock Awards are adjusted and modified pursuant to
Section 15. In the event of a transaction subject to Section 11, the Board
of Directors shall have the authority to amend the Plan to provide for the

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conversion of Stock Units credited to Deferral Accounts into units equal to
shares of stock of the resulting or acquiring company (or a related
company), as appropriate, if such stock is publicly traded or, if not, into
cash of equal value on the effective date of such transaction. If pursuant
to the preceding sentence cash is credited to a Non-Employee Director's
Deferral Account, interest shall be credited thereon from the date such cash
is received to the date of distribution quarterly, at the end of each
calendar quarter, at a rate per annum (computed on the basis of a 360-day
year and a 91-day quarter) equal to the prime rate announced publicly by
Citibank, N.A. at the end of such calendar quarter. If units representing
publicly traded stock of the resulting or acquired company (or a related
company) are credited to a Non-Employee Director's Deferral Account,
dividends shall be credited thereto in the same manner as dividends are
credited on Stock Units credited to such Deferral Accounts.

(e) Subject to Section 10.7(g), distributions of a Non-Employee
Director's Deferral Account under the Plan shall be made as follows:

(i) If a Non-Employee Director has elected to defer a Director Stock
Award to a specified date in the future, payment shall be as of such date
and shall be made or shall commence, as the case may be, within thirty
(30) days after the date specified;

(ii) If a Non-Employee Director has elected to defer a Director Stock
Award until cessation of his or her service as a member of the Board of
Directors, payment shall be as of the date of such cessation of service
and shall be made or shall commence, as the case may be, within thirty
(30) days after the cessation of the Non-Employee Director's service as a
director; and

(iii) If a Non-Employee Director has elected to defer a Director
Stock Award until the end of the calendar year in which the cessation of
his or her service as a member of the Board of Directors occurs, payment
shall be made as of December 31st of such year and shall be made or
commence, as the case may be, on December 31st of such year.

(f) Notwithstanding any elections pursuant to Sections 10.7(a) and/or
(g) hereof, in the event of the death of the Non-Employee Director prior to
the distribution of his or her Deferral Account, the balance credited to
such Deferral Account as of the date of his or her death shall be paid, as
soon as reasonably possible thereafter, in a single distribution to the
Non-Employee Director's beneficiary or beneficiaries designated on such
Non-Employee Director's deferral election form. If no such election or
designation has been made, such amounts shall be payable to the Non-Employee
Director's estate.

(g) A Non-Employee Director may elect to have his or her Deferral
Account under the Plan paid in a single distribution or equal annual
installments, not to exceed ten (10) annual installments. To the extent a
Deferral Account is deemed invested in Stock Units, such Stock Units shall
be converted to Stock on the distribution date as provided in Section
10.7(h). To the extent deemed invested in units of any other stock, such
units shall similarly be converted and distributed in the form of stock. To
the extent invested in a medium other than Stock Units or other units, each
such distribution hereunder shall be in the medium credited to the Deferral
Account.

(h) To the extent a Deferral Account is deemed invested in Stock Units,
a single distribution shall consist of the number of whole shares of Stock
equal to the number of Stock Units credited to the Non-Employee Director's
Deferral Account on the date as of which the distribution occurs. Cash shall
be paid to a Non-Employee Director in lieu of a fractional share, determined
by reference to the Fair Market Value of a share of Stock on the date as of
which the distribution

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occurs. In the event a Non-Employee Director has elected to receive annual
installment payments, each such payment shall be determined as follows:

(i) To the extent his or her Deferral Account is deemed to be
invested in Stock Units, each such payment shall consist of the number of
whole shares of Stock equal to the number of Stock Units (including
fractional units) credited to the Deferral Account on the date as of
which the distribution occurs, divided by the number of annual
installments remaining as of such distribution date. Cash shall be paid
to Non-Employee Directors in lieu of fractional shares, determined by
reference to the Fair Market Value of a share of Stock on the date as of
which the distribution occurs.

(ii) To the extent his or her Deferral Account has been credited in
cash, each such payment shall be calculated by dividing the value on the
date the distribution occurs of that portion of the Non-Employee
Director's Deferral Account which is in cash by the number of annual
installments remaining as of such distribution date.

11. ACCELERATION UPON A CHANGE OF CONTROL.

Notwithstanding any other provision of the Plan or any Option or Award
granted hereunder, (a) any Option granted hereunder and then outstanding shall
become immediately exercisable in full, (b) all Stock Restrictions shall
immediately terminate, and (c) all performance objectives applicable to any
Performance Share Award shall be deemed attained (i) in the event that a tender
offer or exchange offer (other than an offer by the Corporation) for common
stock of the Company representing more than 25% of the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors ("Voting Securities") is made by any "person"
within the meaning of Section 14(d) of the Act and not withdrawn within ten (10)
days after the commencement thereof; PROVIDED, HOWEVER, that the Committee may
by action taken prior to the end of such ten (10) day period extend such ten
(10) day period; and, PROVIDED FURTHER, that the Committee may by further action
taken prior to the end of such extended period declare (a) all Options granted
hereunder and then outstanding to be immediately exercisable in full, (b) all
Stock Restrictions to be immediately terminated, and (c) all performance
objectives applicable to any Performance Share Award to be deemed attained; or
(ii) in the event of a Change in Control (as hereinafter defined).

For purposes of this Section 11, a "Change in Control" means an event that
would be required to be reported (assuming such event has not been "previously
reported") in response to Item 1(a) of the Current Report on Form 8-K, as in
effect on the effective date of the Plan, pursuant to Section 13 or 15(d) of the
Act; PROVIDED, HOWEVER, that, without limitation, such a Change in Control shall
be deemed to have occurred at such time as (a) any "person" within the meaning
of Section 14(d) of the Act becomes the "beneficial owner" as defined in Rule
13d-3 thereunder, directly or indirectly, of more than 25% of the combined
voting power of the then outstanding Voting Securities, (b) during any two-year
period, individuals who constitute the Board of Directors (the "Incumbent
Board") as of the beginning of the period cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director during
such period whose election or nomination for election by the Corporation's
stockholders was approved by a vote of at least three-quarters of the Incumbent
Board (either by a specific vote or by approval of the proxy statement of the
Corporation in which such person is named as a nominee for director without
objection to such nomination, other than in response to an actual or threatened
Change in Control or proxy contest) shall be, for purposes of this clause (b),
considered as though such person were a member of the Incumbent Board, or (c)
the approval by the Corporation's stockholders of the sale of all or
substantially all of the stock or assets of the Corporation. The Committee may
adopt such procedures as to notice and exercise as may be necessary to
effectuate the acceleration of the exercisability of Options, termination of
Stock Restrictions, and attainment of performance objectives as described above.

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12. SHARE WITHHOLDING.

With respect to any Option or Award, the Committee may, in its discretion
and subject to such rules as the Committee may adopt, permit or require any
Optionee or Award Recipient to satisfy, in whole or in part, any withholding tax
obligation which may arise in connection with an Option or Award by electing to
have the Corporation withhold Stock having a Fair Market Value (as of the date
the amount of withholding tax is determined) equal to the amount of withholding
tax.

13. NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE.

Nothing contained in the Plan or in any Option or Award granted or Agreement
entered into pursuant to the Plan shall confer upon any employee the right to
continue in the employ of the Corporation, any consultant the right to continue
to perform services for the Corporation, or any Non-Employee Director the right
to continue as a member of the Board of Directors or interfere with the right of
the Corporation to terminate such employee's employment, such consultant's
service, or Non-Employee Director's service at any time.

14. TIME OF GRANTING OPTIONS AND EMPLOYEE AWARDS.

Nothing contained in the Plan or in any resolution adopted by the Board of
Directors or the holders of Stock shall constitute the grant of any Option or
Award hereunder. An Option or Award under the Plan shall be deemed to have been
granted on the date on which the name of the recipient and the terms of the
Option or Award are set forth in an Agreement and delivered to the recipient,
unless otherwise provided in the Agreement.

15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

Notwithstanding any other provision of the Plan, in the event of changes in
the outstanding Stock by reason of stock dividends, stock splits,
recapitalizations, combinations or exchanges of shares, corporate separations or
divisions (including, but not limited to, split-ups, split-offs, or spin-offs),
reorganizations (including, but not limited to, mergers or consolidations),
liquidations, or other similar events, the aggregate number and class of shares
available under the Plan, the number of shares subject to Director Stock Awards,
the maximum number of shares that may be subject to Options and Awards, and the
terms of any outstanding Options or Awards (including, without limitation, the
number of shares subject to an outstanding Option or Award and the price at
which shares of Stock may be issued pursuant to an outstanding Option) and of
any Stock Units shall be adjusted in such manner as the Committee in its
discretion deems appropriate.

16. TERMINATION AND AMENDMENT OF THE PLAN.

Unless the Plan shall have been terminated as hereinafter provided, no
Option or Award shall be granted hereunder after March 31, 2004. The Board of
Directors may at any time prior to that date terminate the Plan or make such
modification or amendment to the Plan as it shall deem advisable; PROVIDED,
HOWEVER, that, except as provided in Section 15, no amendment may be made
without the approval by the holders of Stock (to the extent such approval would
be required for an exemption under Section 16(b) of the Act which the Company
wishes to have) if such amendment would (a) increase the aggregate number of
shares of Stock which may be issued under the Plan, or (b) materially modify the
requirements as to eligibility for participation in the Plan. No termination,
modification, or amendment of the Plan may, without the consent of an Optionee
or Award Recipient, adversely affect in any material manner the rights of such
Optionee or Award Recipient under any Option or Award.

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17. AMENDMENT OF OPTIONS AND AWARDS AT THE DISCRETION OF THE COMMITTEE.

The terms of any outstanding Option or Award may be amended from time to
time by the Committee in its discretion in any manner that it deems appropriate,
including, without limitation, acceleration of the date of exercise of any
Option or Award, termination of Stock Restrictions as to any Award, or the
conversion of an Incentive Stock Option into a Non-Qualified Stock Option;
PROVIDED, HOWEVER, that no such amendment shall adversely affect in any material
manner any right of any Optionee or Award Recipient under the Plan without his
or her consent; and, PROVIDED FURTHER, that the Committee shall not (a) amend
any previously-issued Performance Share Award to the extent that such amendment
would cause such Performance Share Award not to qualify as performance based
compensation under Section 162(m) of the Code or (b) amend any previously-issued
Option to reduce the purchase price thereof whether by modification of the
Option or by cancellation of the Option in consideration of the immediate
issuance of a replacement Option bearing a reduced purchase price.

18. GOVERNMENT REGULATIONS.

The Plan and the grant and exercise of Options and Awards hereunder, and the
obligation of the Corporation to issue, sell, and deliver shares, as applicable,
under such Options and Awards, shall be subject to all applicable laws, rules,
and regulations.

Notwithstanding any other provision of the Plan, transactions under the Plan
are intended to comply with the applicable exemptions under Rule 16b-3 under the
Act as to persons subject to the reporting requirements of Section 16(a) of the
Act with respect to shares of Stock, and Options and Awards under the Plan shall
be fashioned and administered in a manner consistent with the conditions
applicable under Rule 16b-3.

19. OPTIONS AND AWARDS IN FOREIGN COUNTRIES.

The Committee shall have the authority and discretion to adopt such
modifications, procedures, and subplans as it shall deem necessary or desirable
to comply with the provisions of the laws of foreign countries in which the
Corporation may operate in order to assure the viability of the benefits of the
Options and Awards made to individuals employed in such countries and to meet
the objectives of the Plan.

20. GOVERNING LAW.

The Plan shall be construed, regulated, and administered under the internal
laws of the State of Delaware.

21. STOCKHOLDER APPROVAL.

The Plan shall become effective upon the date of adoption by the Board of
Directors, subject to approval by the stockholders of the Corporation in
accordance with applicable law. Unless so approved within one (1) year after the
date of the adoption of the Plan by the Board of Directors, the Plan shall not
be effective for any purpose. Prior to approval by the Corporation's
stockholders, the Committee may grant Options and Awards under the terms of the
Plan, but if stockholder approval is not obtained in the specified period, such
Options and Awards shall be of no effect.

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ANNEX IV

PE CORPORATION/CELERA GENOMICS GROUP
1999 STOCK INCENTIVE PLAN

1. PURPOSE OF THE PLAN.

The purpose of PE Corporation/Celera Genomics Group 1999 Stock Incentive
Plan (the "Plan") is to increase stockholder value and to advance the interests
of PE Corporation and its subsidiaries (collectively, the "Corporation") by
providing financial incentives designed to attract, retain, and motivate
employees, officers, consultants, and directors of the Corporation. The Plan
continues the established policy of the Corporation of encouraging ownership of
its Stock by key personnel and of providing incentives for such individuals to
put forth maximum efforts for the success of the Corporation.

2. DEFINITIONS.

As used herein, the following terms have the meanings hereinafter set forth
unless the context clearly indicates to the contrary:

2.1 "ACT" means the Securities Exchange Act of 1934, as amended from time to
time.

2.3 "AWARD" means a Stock Award or Performance Share Award.

2.4 "AWARD RECIPIENT" means an individual to whom an Award has been granted
under the Plan.

2.5 "BOARD OF DIRECTORS" means the Board of Directors of the Corporation.

2.6 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.

2.9 "DEFERRAL ACCOUNT" means the bookkeeping account established for the
deferral of a Director Stock Award by a Non-Employee Director pursuant to
Section 10.7 hereof.

2.10 "DIRECTOR STOCK AWARD" means an award of shares of Stock granted
pursuant to Section 10 hereof.

2.11 "EMPLOYEE AWARD" means an Employee Stock Award or Performance Share
Award.

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2.12 "EMPLOYEE STOCK AWARD" means an award of shares of Stock granted
pursuant to Section 8 hereof.

2.15 "NON-EMPLOYEE DIRECTOR" means a member of the Board of Directors who is
not an employee or officer of the Corporation.

2.16 "NON-QUALIFIED STOCK OPTIONS" means those Options granted hereunder
which are not intended to qualify as Incentive Stock Options.

2.17 "NORMAL RETIREMENT AGE" means the normal retirement age of a member of
the Board as determined by the Board from time to time.

2.18 "OPTION" means an option granted pursuant to Section 6 hereof.

2.19 "OPTIONEE" means an individual to whom an Option has been granted under
the Plan.

2.20 "PERFORMANCE SHARE AWARD" means an award of Performance Shares granted
pursuant to Section 9 hereof.

2.21 "PERFORMANCE SHARES" means shares of Stock covered by a Performance
Share Award.

2.22 "STOCK" means the PE Corporation--Celera Genomics Group Common Stock,
par value $.01 per share, of the Corporation.

2.23 "STOCK AWARD" means an Employee Stock Award or Director Stock Award.

2.24 "STOCK UNIT" means the bookkeeping entry representing the equivalent of
one share of Stock.

2.25 "STOCK RESTRICTIONS" mean the restrictions, including performance
goals, placed on a Stock Award or Performance Share Award under the Plan.

3. SHARES RESERVED FOR THE PLAN.

The aggregate number of shares of Stock available for Options and Awards
under the Plan is 4,800,000, subject to adjustment in accordance with Section
15. Shares of Stock issued under the Plan shall be authorized but unissued
shares. In lieu of such unissued shares, the Corporation may, in its discretion,
transfer on the exercise of Options or the delivery of shares of Stock issued
pursuant to Awards treasury shares, reacquired shares, or shares acquired in the
market for purposes of the Plan.

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<PAGE>
4. ADMINISTRATION OF THE PLAN.

5. ELIGIBILITY; FACTORS TO BE CONSIDERED IN GRANTING OPTIONS AND AWARDS.

Subject to the terms of the Plan, an Option may be granted to any person
who, at the time the Option is granted, is a regular full-time employee (which
term shall include officers and directors) of the Corporation, a Non-Employee
Director, or a consultant performing significant services for the Corporation.
Employee Awards may be granted to any person who, at the time the Employee Award
is granted, is a regular full-time employee (which term shall include officers
and directors) of the Corporation. Non-Employee Directors shall not be eligible
to receive Employee Awards. In determining the employees, Non-Employee Directors
and consultants to whom Options or Awards shall be granted, the number of shares
of Stock to be covered by each Option or Award, and the terms and conditions of
each Option and Award, the Committee shall take into account the duties and
responsibilities of the respective employees, Non-Employee Directors, and
consultants, their present and potential contributions to the success of the
Corporation, and such other factors as they shall deem relevant in connection
with accomplishing the purposes of the Plan. An employee, Non-Employee Director,
or consultant who has been granted an Option or Award may be granted and hold
additional Options or Awards if the Committee shall so determine.

6. OPTIONS.

6.2 PURCHASE PRICE. The purchase price of each share of Stock covered by
an Option shall be 100% (or 110% in the case of an Incentive Stock Option
granted to a Ten Percent Stockholder) of the Fair Market Value of a share of
Stock on the date the Option is granted.

6.3 TERM. The term of each Option shall be for such period as the
Committee shall determine, but not more than ten (10) years (or five (5) years
in the case of an Incentive Stock Option granted to a Ten Percent Stockholder)
from the date of grant thereof, and shall be subject to earlier termination as
hereinafter provided. If the original term of any Option is less than ten (10)
years (or five (5) years in the case of an Incentive Stock Option granted to a
Ten Percent Stockholder) from the date of grant, the Option prior to its
expiration may be amended, with the approval of the Committee and the employee,
Non-Employee Director, or consultant, as the case may be, to extend the term so
that the

IV-3
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term as amended is not more than ten (10) years (or five (5) years in the case
of an Incentive Stock Option granted to a Ten Percent Stockholder) from the
original date of grant of such Option.

6.5 TERMINATION OF EMPLOYMENT OR SERVICES. In the event that the
employment of an employee to whom an Option has been granted under the Plan
shall be terminated or the services of a Non-Employee Director or consultant to
whom an Option has been granted under the Plan shall be terminated (other than
by reason of retirement, disability, or death) such Option may, subject to the
provisions of the Plan, be exercised, to the extent that the employee,
Non-Employee Director, or consultant was entitled to do so at the date of
termination of his or her employment or services, at any time within thirty (30)
days after such termination, but in no event after the expiration of the term of
the Option.

7. TERMS AND CONDITIONS APPLICABLE TO OPTIONS.

7.1 TRANSFERABILITY. During the lifetime of an Optionee, an Option shall
not be transferable, except pursuant to a domestic relations order; PROVIDED,
HOWEVER, that the Committee may, in its sole discretion, permit an Optionee to
transfer a Non-Qualified Stock Option to (a) a member of the Optionee's
immediate family, (b) a trust, the beneficiaries of which consist exclusively of
members of the Optionee's immediate family, or (c) a partnership, the partners
of which consist exclusively of members of the Optionee's immediate family.
After the death of an Optionee, an Option may be transferred pursuant to the
laws of descent and distribution.

7.2 METHOD OF EXERCISE. An Option may be exercised by giving written
notice to the Corporation specifying the number of shares of Stock to be
purchased; PROVIDED THAT, except as otherwise provided

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<PAGE>

7.5 CONDITIONS PRECEDENT TO EXERCISE. Notwithstanding any other provision
of the Plan, but subject to the provisions of Section 11, the exercise of an
Option following termination of employment or service shall be subject to the
satisfaction of the conditions precedent that the Optionee has not (a) rendered
services or engaged directly or indirectly in any business which in the opinion
of the Committee competes with or is in conflict with the interests of the
Corporation; PROVIDED, HOWEVER, that the ownership by an Optionee of 5% or less
of any class of securities of a publicly traded company shall not be deemed to
violate this clause or (b) violated any written agreement with the Corporation,
including, without limitation, any confidentiality agreement. An Optionee's
violation of clause (a) or (b) of the preceding sentence shall result in the
immediate forfeiture of any Options held by such Optionee.

7.6 LIMITATIONS ON THE GRANT OF OPTIONS. No one individual may be granted
an Option or Options under the Plan during any fiscal year of the Corporation
for an aggregate number of shares of Stock which exceeds 10% of the total number
of shares reserved for issuance under the Plan; provided, however, that during
the fiscal year of the Corporation ending June 30, 1999 the Committee may grant
Options to the President of the Celera Genomics Group representative of up to
30% of the total number of shares reserved for issuance under the Plan. The
aggregate Fair Market Value of the Stock (determined as of the date the Option
is granted) with respect to which Incentive Stock Options granted under the Plan
and all other stock option plans of the Corporation (or any parent or subsidiary
of the Corporation) are exercisable for the first time by any specific
individual during any calendar year shall not exceed $100,000. No Incentive
Stock Option may be granted hereunder to an individual who immediately after
such Option is granted is a Ten Percent Stockholder unless (a) the Option price
is at least 110% of the fair market value of such stock on the date of grant and
(b) the Option may not be exercised more than five (5) years after the date of
grant.

8. EMPLOYEE STOCK AWARDS.

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<PAGE>
such restrictions as may be established by the Committee at the time of the
grant and reflected in an Agreement.

8.2 RESTRICTIONS ON EMPLOYEE STOCK AWARDS. Except as provided in the Plan,
any shares of Stock subject to an Employee Stock Award with respect to which
Stock Restrictions have not been satisfied shall be forfeited and all rights of
the employee to such Employee Stock Award shall terminate without any payment of
consideration by the Corporation. Except as set forth in Section 8.5, a
recipient of an Employee Stock Award subject to Stock Restrictions shall forfeit
such award in the event of the termination of his or her employment during the
period the shares are subject to Stock Restrictions.

8.4 NON-TRANSFERABILITY. Prior to the time Stock Restrictions lapse, none
of the shares of Stock issued pursuant to an Employee Stock Award may be sold,
assigned, bequeathed, transferred, pledged, hypothecated, or otherwise disposed
of in any way by the Award Recipient.

8.5 LAPSE OF RESTRICTIONS. In the event of the termination of employment
of an Award Recipient, prior to the lapse of Stock Restrictions, by reason of
death, total and permanent disability, retirement, or resignation or discharge
from employment other than discharge for cause, the Committee may, in its
discretion, remove any Stock Restrictions on all or a portion of the Stock
subject to an Employee Stock Award.

9. PERFORMANCE SHARE AWARDS.

9.1 GRANT OF PERFORMANCE SHARE AWARDS. Subject to the terms of the Plan,
the Committee may grant Performance Share Awards to such employees at such time
or times and in such amounts as it shall determine. Stock issued pursuant to a
Performance Share Award shall be subject to the attainment of performance goals
relating to one or more criteria within the meaning of Section 162(m) of the
Code and the Treasury Regulations issued pursuant thereto, including, without
limitation, stock price, market share, sales, earnings per share, return on
equity, costs, and cash flow, as determined by the Committee from time to time.
Any such objectives and the period in which such objectives are to be met shall
be determined by the Committee at the time of the grant and reflected in an
Agreement. Each Performance Share Award shall also be subject to such other
restrictions as the Committee may determine.

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<PAGE>
9.2 DELIVERY OF PERFORMANCE SHARES. Certificates representing Performance
Shares shall be registered in the Award Recipient's name but shall remain in the
physical custody of the Corporation until the Committee has determined that the
performance goals and other Stock Restrictions with respect to such Performance
Shares have been met.

9.3 STOCKHOLDER RIGHTS. The recipient of a Performance Share Award shall
be entitled to such rights of a stockholder with respect to the Performance
Shares as the Committee shall determine, including the right to vote such shares
of Stock, except that cash and stock dividends with respect to the Performance
Shares may, at the discretion of the Committee, be either paid currently or
withheld by the Corporation for the Award Recipient's account, and interest may
be accrued on the amount of cash dividends withheld at a rate and subject to
such terms as determined by the Committee.

9.5 LAPSE OF RESTRICTIONS. In the event of the termination of employment
of an Award Recipient, prior to the lapse of Stock Restrictions, by reason of
death, total and permanent disability, retirement, or resignation or discharge
from employment other than discharge for cause, the Committee may, in its
discretion, remove any Stock Restrictions on all or a portion of a Performance
Share Award, or determine the performance objectives with respect to all or a
portion of a Performance Share Award to have been attained; PROVIDED, HOWEVER,
that the Committee shall not be entitled to exercise such discretion to the
extent that the ability to exercise such discretion would cause the Performance
Share Award not to qualify as performance based compensation under Section
162(m) of the Code.

10. DIRECTOR STOCK AWARDS.

10.1 GRANT OF DIRECTOR STOCK AWARDS. As of the date of each election or
reelection to the Board of Directors, each Non-Employee Director shall
automatically be granted a Director Stock Award with respect to 150 shares of
Stock, subject to adjustment in accordance with Section 15. Notwithstanding the
foregoing, each Non-Employee Director first elected to the Board of Directors on
a date other than the date of an annual meeting of stockholders shall be granted
that number of whole shares of Stock equal to the number of shares then subject
to a Director Stock Award multiplied by a fraction, the numerator of which shall
be the number of months remaining until the anticipated date of the next annual
meeting of stockholders, and the denominator of which shall be 12. All Director
Stock Awards shall be evidenced by an agreement containing such terms and
conditions consistent with the Plan as the Committee shall determine.

10.3 FORFEITURE OF DIRECTOR STOCK AWARDS. Except as provided in the Plan,
a recipient of a Director Stock Award shall forfeit any unvested shares of Stock
subject to the Director Stock Award, and all rights of the Non-Employee Director
to such unvested shares shall terminate without payment of consideration by the
Corporation, upon the termination of his or her service as a member of the Board
of Directors.

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<PAGE>
10.4 STOCKHOLDER RIGHTS. Except as provided in Sections 10.5 and 10.7, a
recipient of a Director Stock Award shall be entitled to all rights of a
stockholder with respect to the shares of Stock issued pursuant to the Director
Stock Award, including the right to receive dividends and to vote such shares of
Stock; PROVIDED, HOWEVER, that stock dividends paid with respect to such shares
shall be restricted to the same extent as the underlying shares of Stock issued
pursuant to the Director Stock Award.

(d) The number of Stock Units credited to each Non-Employee Director's
Deferral Account shall be appropriately adjusted in the same manner and to
the same extent Director Stock Awards

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<PAGE>
are adjusted and modified pursuant to Section 15. In the event of a
transaction subject to Section 11, the Board of Directors shall have the
authority to amend the Plan to provide for the conversion of Stock Units
credited to Deferral Accounts into units equal to shares of stock of the
resulting or acquiring company (or a related company), as appropriate, if
such stock is publicly traded or, if not, into cash of equal value on the
effective date of such transaction. If pursuant to the preceding sentence
cash is credited to a Non-Employee Director's Deferral Account, interest
shall be credited thereon from the date such cash is received to the date of
distribution quarterly, at the end of each calendar quarter, at a rate per
annum (computed on the basis of a 360-day year and a 91-day quarter) equal
to the prime rate announced publicly by Citibank, N.A. at the end of such
calendar quarter. If units representing publicly traded stock of the
resulting or acquired company (or a related company) are credited to a
Non-Employee Director's Deferral Account, dividends shall be credited
thereto in the same manner as dividends are credited on Stock Units credited
to such Deferral Accounts.

(e) Subject to Section 10.7(g), distributions of a Non-Employee
Director's Deferral Account under the Plan shall be made as follows:

(ii) If a Non-Employee Director has elected to defer a Director
Stock Award until cessation of his or her service as a member of the
Board of Directors, payment shall be as of the date of such cessation of
service and shall be made or shall commence, as the case may be, within
thirty (30) days after the cessation of the Non-Employee Director's
service as a director; and

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<PAGE>
occurs. In the event a Non-Employee Director has elected to receive annual
installment payments, each such payment shall be determined as follows:

11. ACCELERATION UPON A CHANGE OF CONTROL.

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<PAGE>
12. SHARE WITHHOLDING.

13. NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE.

14. TIME OF GRANTING OPTIONS AND EMPLOYEE AWARDS.

15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

16. TERMINATION AND AMENDMENT OF THE PLAN.

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<PAGE>
17. AMENDMENT OF OPTIONS AND AWARDS AT THE DISCRETION OF THE COMMITTEE.

18. GOVERNMENT REGULATIONS.

19. OPTIONS AND AWARDS IN FOREIGN COUNTRIES.

20. GOVERNING LAW.

The Plan shall be construed, regulated, and administered under the internal
laws of the State of Delaware.

21. STOCKHOLDER APPROVAL.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law (the "DGCL") permits the
company's board of directors to indemnify any person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with any threatened, pending or
completed action (except settlements or judgments in derivative suits), suit or
proceeding in which such person is made a party by reason of his or her being or
having been a director, officer, employee or agent of the company, in terms
sufficiently broad to permit such indemnification under certain circumstances
for liabilities (including reimbursement for expenses incurred) arising under
the Securities Act of 1933, as amended (the "Securities Act"). The statute
provides that indemnification pursuant to its provisions is not exclusive of
other rights of indemnification to which a person may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors, or
otherwise.

The company's certificate of incorporation and by-laws provide for
indemnification of its directors and officers to the fullest extent permitted by
law.

As permitted by sections 102 and 145 of the DGCL, the company's certificate
of incorporation eliminates a director's personal liability for monetary damages
to the company and its stockholders arising from a breach or alleged breach of a
director's fiduciary duty except for liability under section 174 of the DGCL,
for liability for any breach of the director's duty of loyalty to the company or
its stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or for any transaction
which the director derived an improper personal benefit.

The directors and officers of the company are covered by insurance policies
indemnifying against certain liabilities, including certain liabilities arising
under the Securities Act which might be incurred by them in such capabilities
and against which they cannot be indemnified by the company.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(A) EXHIBITS

<TABLE>
<C> <S>
2.1 Agreement and Plan of Merger, dated as of January 21, 1999, among The Perkin-Elmer
Corporation, a New York corporation, PE Corporation, a Delaware corporation, and
PE Merger Corp., a New York corporation (included as Annex I to the Proxy
Statement and Prospectus).

3.1 Certificate of Incorporation (included as Annex II to the Proxy Statement and
Prospectus).

3.2 By-laws.

3.3 Certificate of Designations for the Series A Participating Junior Preferred Stock
and Series B Participating Junior Preferred Stock (included as Exhibits A and B of
the Rights Agreement).

4.1 Rights Agreement, dated as of , 1999, between PE Corporation and
BankBoston N.A.

5.1 Opinion of Simpson Thacher & Bartlett as to the legality of the securities.

8.1 Opinion of Simpson Thacher & Bartlett as to tax matters.
</TABLE>

II-1
<PAGE>

<TABLE>
<C> <S>
10.1 PE Corporation/PE Biosystems Group 1999 Stock Incentive Plan (included as Annex
III to the Proxy Statement and Prospectus).

10.2 PE Corporation/Celera Genomics Group 1999 Stock Incentive Plan (included as Annex
IV to the Proxy Statement and Prospectus).

10.3 Office Building Lease dated July 10, 1998 between Meridian Rockville Plaza, LLC
and The Perkin-Elmer Corporation.

10.4 First Amendment to Lease dated October 1998 between Meridian Rockville Plaza, LLC
and The Perkin-Elmer Corporation.

10.5 Early Access Program Agreement dated December 31, 1998 between Celera Genomics
Corporation and Amgen Inc. (to be filed by amendment).

23.1 Consent of PricewaterhouseCoopers LLP.

23.2 Consent of Simpson Thacher & Bartlett (contained in Exhibits 5 and 8.1).

24.1 Powers of Attorney (previously filed).

27.1 Financial Data Schedule.

99.1 Form of Proxy (previously filed).
</TABLE>

ITEM 22. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in the volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered)
and any deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" Table in the effective registration statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the

II-2
<PAGE>
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.

(c) (1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the meaning
of Rule 145(c), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.

(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.

(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
corresponding to the request.

(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

II-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Norwalk, State of Connecticut, on January 29, 1999.

PE CORPORATION (formerly known as
The Perkin-Elmer Corporation)

By /s/ WILLIAM B. SAWCH as Attorney-In-Fact
-----------------------------------------
Name: Tony L. White
Title: Chairman of the Board, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------

/s/ WILLIAM B. SAWCH as
Attorney-In-Fact
- ------------------------------ Chairman of the Board of January 29, 1999
Tony L. White Directors, President and
Chief Executive Officer
(principal executive
officer)

/s/ DENNIS L. WINGER
- ------------------------------ Senior Vice President and January 29, 1999
Dennis L. Winger Chief Financial Officer
(principal financial
officer)

/s/ UGO D. DEBLASI
- ------------------------------ Corporate Controller January 29, 1999
Ugo D. DeBlasi (principal accounting
officer)

/s/ WILLIAM B. SAWCH as
Attorney-In-Fact Director
- ------------------------------ January 29, 1999
Joseph F. Abely, Jr.

/s/ WILLIAM B. SAWCH as
Attorney-In-Fact Director
- ------------------------------ January 29, 1999
Richard H. Ayers

/s/ WILLIAM B. SAWCH as
Attorney-In-Fact Director
- ------------------------------ January 29, 1999
Jean-Luc Belingard

/s/ WILLIAM B. SAWCH as
Attorney-In-Fact Director
- ------------------------------ January 29, 1999
Robert H. Hayes

/s/ WILLIAM B. SAWCH as
Attorney-In-Fact Director
- ------------------------------ January 29, 1999
Georges C. St. Laurent, Jr.

II-4
<PAGE>

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------

/s/ WILLIAM B. SAWCH as
Attorney-In-Fact Director
- ------------------------------ January 29, 1999
Carolyn W. Slayman

/s/ WILLIAM B. SAWCH as
Attorney-In-Fact Director
- ------------------------------ January 29, 1999
Orin R. Smith

II-5

<PAGE>

BY-LAWS
OF
PE CORPORATION
MEETINGS OF STOCKHOLDERS

1. PLACE OF MEETINGS. Every meeting of the stockholders of PE Corporation
(hereinafter called the Corporation) shall be held at the office of the
Corporation or at such other place within or without the State of Delaware as
shall be specified in the notice of said meeting given as hereinafter provided.

2. ANNUAL MEETINGS. Each annual meeting of the stockholders of the
Corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held on the third
Thursday of October in each year, or on such other date as shall be designated
by the Board of Directors of the Corporation (hereinafter called the Board),
which date shall be within thirteen (13) months of the last annual meeting of
stockholders, at such hour as shall be specified in the notice thereof.

3. SPECIAL MEETINGS. Special meetings of the stockholders unless otherwise
prescribed by statute, may be called at any time by the Board or by the Chairman
of the Board, the President or the Secretary.

4. NOTICE OF MEETINGS. Notice of every meeting of the stockholders shall
be in writing and signed by the Chairman of the Board or the President or a Vice
President or the Secretary or an Assistant Secretary of the Corporation. Such
notice shall state the purpose or purposes for which a special meeting is called
and the place, date and hour of the meeting and, unless it is the annual
meeting, indicate that it is being issued by or at the direction of the person
or persons calling the meeting. A copy of the notice shall be given, either
personally or by mail with postage thereon prepaid, not less than ten nor more
than sixty days before the date of the meeting, to each stockholder entitled to
vote at such meeting. If mailed, it shall be directed to each stockholder at his
address as it appears on the record of stockholders unless he shall have filed
with the Secretary of the Corporation a written request that notices intended
for him be mailed to some other address, in which case it shall be directed to
him at such other address. A written waiver of any notice, signed by a
stockholder or agent, whether before or after the time of the event for which
notice is to be given, shall be deemed equivalent to the notice required to be
given to such stockholder or agent. Neither the business nor the purpose of any
meeting need be specified in such a waiver. Unless the Board shall fix a new
record date for an adjourned meeting, or the date of the adjourned meeting is
more than thirty (30) days after the date for which the meeting was originally
noticed, notice of such adjourned meeting need not be given if the time and
place to which the meeting shall be adjourned were announced at the meeting at
which the adjournment is taken.

5. QUORUM. Except as otherwise provided by law or by the Certificate of
Incorporation, the presence, in person or by proxy, of the holders of record of
the shares of capital stock of the Corporation entitled to cast a majority of
the votes entitled to be cast by holders of all outstanding shares of such
capital stock entitled to vote shall constitute a quorum at all meetings of the
stockholders. In the absence of a quorum at any such meeting or any adjournment
or adjournments thereof, the holders of record of shares of capital stock
entitled to cast a majority of the votes entitled to be cast by the holders of
all outstanding shares of such capital stock entitled to vote thereat and
present, in person or by proxy, may adjourn such meeting from time to time. At
any such adjourned meeting at which a quorum is present any business may be
transacted which might have been transacted at the meeting as originally called.
Where a separate vote by a class or classes is required, the holders of shares
of such class or classes entitled to cast a majority of the votes entitled to be
cast by holders of all outstanding shares of such class or classes shall
constitute a quorum entitled to take action with respect to that matter.

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<PAGE>
6. ORDER OF BUSINESS AND VOTING. Except as otherwise provided in the
Certificate of Incorporation of the Corporation or by statute, each holder of
record of shares of common stock of the Corporation shall at each meeting of the
stockholders be entitled to one vote for every share of such stock standing in
his name on the record of stockholders of the Corporation:

(a) on the date fixed pursuant to the provisions of Section 38 of these
By-laws as the record date for the determination of the stockholders who
shall be entitled to notice of and to vote at such meeting; or

(b) if such record date shall not have been so fixed, then at the close
of business on the day next preceding the day on which notice thereof shall
be given or if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held.

Each stockholder entitled to vote at any meeting of stockholders may authorize
another person or persons to act for him by a proxy signed by such stockholder
or his attorney-in-fact. Any such proxy shall be delivered to the secretary of
such meeting at or prior to the time designated in the order of business for so
delivering such proxies. At all meetings of stockholders, a quorum being
present, any corporate action to be taken by vote of the stockholders, except as
otherwise provided by statute, the Certificate of Incorporation of the
Corporation or these By-laws, shall be authorized by a majority of the votes
cast affirmatively or negatively by the holders of shares present in person or
represented by proxy and entitled to vote thereat. Except in the case of a vote
for the election of directors, unless demanded by a stockholder present in
person or represented by proxy at any meeting of the stockholders and entitled
to vote thereat or so directed by the Chairman of the meeting, the vote thereat
on any question need not be by ballot. Upon a demand by any such stockholder for
a vote by ballot on any question or at the direction of such Chairman that a
vote by ballot be taken on any question, such vote shall be taken. On a vote by
ballot each ballot shall be signed by the stockholder voting, or in his name by
his proxy, if there be such proxy, and it shall show the number of shares voted
by him. Except as otherwise required by law or by these By-laws all voting may
be by a voice vote.

7. CONDUCT OF THE MEETING. The Chairman of the meeting at any meeting of
stockholders shall have all the powers and authority vested in a presiding
officer by law or practice and, without limitation, shall have authority, in
order to conduct an orderly meeting, to impose reasonable limits on the amount
of time of the meeting taken up in remarks by any one stockholder, provided that
any stockholder whose remarks or questions are curtailed by the Chairman of the
meeting shall be afforded a reasonable opportunity after the meeting to present
his comments or address his questions to an appropriate officer of the
Corporation. The powers of the presiding officer shall include but not be
limited to the following:

(a) The Chairman of the meeting shall have authority over all matters of
procedure;

(b) In order to prevent disruption or disorder which could interfere
with the conduct of the business of the meeting or for any other reason
deemed necessary or advisable, the Chairman of the meeting at any meeting
may, in his sole discretion, adjourn the meeting; and, upon his so doing,
the meeting is thereupon adjourned;

(c) The Chairman of the meeting may require that any person not a
stockholder of record or the proxy of a stockholder of record leave the
meeting;

(d) A resolution or motion shall be considered for a vote at a meeting
only if (i) proposed by a stockholder of record or a duly authorized proxy
of such a stockholder of record, (ii) seconded by a stockholder of record or
a duly authorized proxy of such a stockholder of record (other than the
individual proposing the resolution or motion), and (iii) such resolution or
motion is ruled in order by the Chairman of the meeting;

2
<PAGE>

(e) At any meeting called for the election of directors, the polls shall
be opened and closed at the times and in the manner directed by the Chairman
of the meeting. Once the Chairman of the meeting has announced the closing
of the polls, no further voting shall be permitted; and

(f) The Chairman of the meeting shall conduct the meeting in a fair and
reasonable manner and in good faith; and, therefore, his decisions shall be
final and binding on all stockholders.

8. ADVANCE NOTICE OF STOCKHOLDER PROPOSALS. Nominations of persons for
election to the Board and the proposal of business to be transacted by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice with respect to such meeting, (b) by or at the
direction of the Board or (c) by any stockholder of record of the Corporation
who was a stockholder of record at the time of the giving of the notice provided
for in the following paragraph, who is entitled to vote at the meeting and who
has complied with the notice procedures set forth in this section.

For nominations or other business to be properly brought before an annual
meeting by a stockholder pursuant to clause (c) of the foregoing paragraph, (1)
the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation, (2) such business must be a proper matter for
stockholder action under the General Corporation Law of the State of Delaware,
(3) if the stockholder, or the beneficial owner on whose behalf any such
proposal or nomination is made, has provided the Corporation with a Solicitation
Notice, as that term is defined in subclause (c)(iii) of this paragraph, such
stockholder or beneficial owner must, in the case of a proposal, have delivered
a proxy statement and form of proxy to holders of at least the percentage of the
Corporation's voting shares required under applicable law to carry any such
proposal, or, in the case of a nomination or nominations, have delivered a proxy
statement and form of proxy to holders of a percentage of the Corporation's
voting shares reasonably believed by such stockholder or beneficial holder to be
sufficient to elect the nominee or nominees proposed to be nominated by such
stockholder, and must, in either case, have included in such materials the
Solicitation Notice and (4) if no Solicitation Notice relating thereto has been
timely provided pursuant to this section, the stockholder or beneficial owner
proposing such business or nomination must not have solicited a number of
proxies sufficient to have required the delivery of such a Solicitation Notice
under this section. To be timely, a stockholder's notice shall be delivered to
the Secretary at the principal executive offices of the Corporation not less
than 45 or more than 75 days prior to the first anniversary (the "Anniversary")
of the date on which the Corporation first mailed its proxy materials for the
preceding year's annual meeting of stockholders (or, in the case of the 1999
annual meeting, such stockholder's notice must be delivered no earlier than June
28, 1999 or later than July 29, 1999); provided, however, that if the date of
the annual meeting is advanced more than 30 days prior to or delayed by more
than 30 days after the anniversary of the preceding year's annual meeting,
notice by the stockholder to be timely must be so delivered not later than the
close of business on the later of (i) the 90th day prior to such annual meeting
or (ii) the 10th day following the day on which public announcement of the date
of such meeting is first made. Such stockholder's notice shall set forth (a) as
to each person whom the stockholder proposes to nominate for election or
reelection as a director all information relating to such person as would be
required to be disclosed in solicitations of proxies for the election of such
nominees as directors pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and such person's written consent
to serve as a director if elected; (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of such
business, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; (c) as to the stockholder giving
the notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such stockholder, as they appear on
the Corporation's books, and of such beneficial owner, (ii) the class and number
of shares of the Corporation that are owned beneficially and of record by such
stockholder and such beneficial owner, and (iii) whether either such stockholder
or beneficial owner intends to deliver a proxy statement and form of proxy to
holders of, in the case of

3
<PAGE>

a proposal, at least the percentage of the Corporation's voting shares required
under applicable law to carry the proposal or, in the case of a nomination or
nominations, a sufficient number of holders of the Corporation's voting shares
to elect such nominee or nominees (an affirmative statement of such intent being
hereinafter referred to as a "Solicitation Notice").

Notwithstanding anything in the second sentence of the second paragraph of
this Section 8 to the contrary, in the event that the number of directors to be
elected to the Board at an annual meeting is increased and there is no public
announcement naming all of the nominees or director or specifying the size of
the increased Board made by the Corporation at least 55 days prior to the
Anniversary, a stockholder's notice required by this By-law shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.

Only persons nominated in accordance with the procedures set forth in this
Section 8 shall be eligible to serve as directors and only such business shall
be conducted at an annual meeting of stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in this section.
The Chairman of the meeting shall have the power and the duty to determine
whether a nomination or any business proposed to be brought before the meeting
has been made in accordance with the procedures set forth in these By-laws and,
if any proposed nomination or business is not in compliance with these By-laws,
to declare that such defective proposed business or nomination shall not be
presented for stockholder action at the meeting and shall be disregarded.

Only such business shall be conducted at a special meeting of stockholders
as shall have been brought before the meeting pursuant to the Corporation's
notice of meeting. Nominations of persons for election to the Board may be made
at a special meeting of stockholders at which directors are to be elected
pursuant to the Corporation's notice of meeting (a) by or at the direction of
the Board or (b) by any stockholder of record of the Corporation who is a
stockholder of record at the time of giving of notice provided for in this
paragraph, who shall be entitled to vote at the meeting and who complies with
the notice procedures set forth in this Section 8. Nominations by stockholders
of persons for election to the Board may be made at such a special meeting of
stockholders if the stockholder's notice required by the second paragraph of
this Section 8 shall be delivered to the Secretary at the principal executive
offices of the Corporation not later than the close of business on the later of
the 90th day prior to such special meeting or the 10th day following the day on
which public announcement is first made of the date of the special meeting and
of the nominees proposed by the Board to be elected at such meeting.

For purposes of this section, "public announcement" shall mean disclosure in
a press release reported by the Dow Jones News Service, Associated Press or a
comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.

Notwithstanding the foregoing provisions of this Section 8, a stockholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to matters set forth in this
Section 8. Nothing in this Section 8 shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.

9. INSPECTORS OF ELECTION. The Corporation may, and to the extent required
by law, shall, in advance of any meeting of stockholders, appoint one or more
inspectors to act at the meeting and make a written report thereof. The
Corporation may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at a
meeting of stockholders, the Chairman of the meeting may, and to the extent
required by law, shall, appoint one or more inspectors to act at the meeting.
Each inspector, before entering upon the

4
<PAGE>
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his
ability. Every vote taken by ballots shall be counted by an inspector or
inspectors appointed by the Chairman of the meeting.

BOARD OF DIRECTORS

10. POWERS, QUALIFICATION, NUMBER, TERM AND ELECTION. The business of the
Corporation shall be managed by the Board. The Board may exercise all such
authority and powers of the Corporation and do all such lawful acts and things
as are not by statute or the Certificate of Incorporation of the Corporation or
by these By-laws directed or required to be exercised or done by the
stockholders. At all elections of directors by the stockholders, the persons
receiving a plurality of the votes cast shall be directors. Such election shall
be by ballot. The term of office of each director shall be from the time of his
election and qualification until his successor shall have been duly elected at
the next annual meeting and shall have qualified, or until his death, or until
he shall have resigned or shall have been removed as provided in these By-laws.
No director need be a stockholder.

11. COMPENSATION. Directors as such shall not receive any stated salary
for their services, but by resolution of the Board an annual fee, together with
expenses, if any, of attendance at any meeting may be allowed each director;
provided, however, that nothing herein contained shall be construed so as to
preclude any director from serving the Corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.

12. PLACE OF MEETINGS. The Board may hold its meetings at such place or
places within or without the State of Delaware as it may from time to time by
resolution determine or as shall be specified or fixed in the respective notices
or waivers of notice thereof.

13. FIRST MEETING. The Board shall meet for the purpose of organization,
election of officers, appointment of committees and the transaction of other
business as soon as practicable after each annual meeting of the stockholders.

14. REGULAR MEETINGS. Each regular meeting of the Board shall be held at
such time and place (a) as shall be specified in a resolution adopted by the
Board then in effect, (b) if there shall not be any such resolution then in
effect, as shall be specified in a notice of such meeting, given as provided in
Section 15 of these By-laws for notices of special meetings of the Board, or (c)
as shall be specified in a waiver of notice thereof signed by all the directors
of the Corporation then in office. If at the time any regular meeting of the
Board is to be held the time and place of holding regular meetings of the Board
shall have been fixed by resolution of the Board then in effect, then, except as
otherwise provided by law, notice of such regular meeting need not be given.

15. SPECIAL MEETINGS. Special meetings of the Board may be called by the
Chairman or the President and shall be held at such place, on such date, and at
such time as they or he shall fix. Notice of the place, date and time of each
such special meeting shall be given each director by whom it is not waived by
mailing written notice not less than five (5) days before the meeting or by
telegraphing or telexing or by facsimile transmission of the same not less than
twenty-four (24) hours before the meeting. Unless otherwise indicated in the
notice thereof, any and all business may be transacted at a special meeting.

16. QUORUM AND MANNER OF ACTING. At each meeting of the Board the presence
of a majority of the directors then in office shall be necessary to constitute a
quorum and sufficient for the transaction of business (except during the
existence of any emergency following a national catastrophe due to enemy attack,
in which case one-third of the directors then in office shall constitute a
quorum), and any vote of a majority of the directors present at a meeting at
which there is a quorum present at the time of the vote shall be the act of the
Board, except as may be otherwise specifically provided by statute or in the
Certificate of Incorporation of the Corporation or these By-laws. Any meeting of
the

5
<PAGE>
Board may be adjourned by a majority vote of the directors present at such
meeting. In the absence of a quorum from any such meeting, a majority of the
directors present thereat may adjourn such meeting to another time and place
until a quorum shall be present thereat. Notice of any adjourned meeting need
not be given. The directors shall act only as a Board and the individual
directors shall have no power as such. Action may be taken by the Board without
a meeting if all members thereof consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board.

17. ATTENDANCE AT MEETINGS. Any one or more members of the Board or any
Committee thereof may participate in a meeting of such Board or Committee by
means of a conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at such meeting.

18. REMOVAL OF DIRECTORS. Any director may be removed for cause at any
time by the affirmative vote of a majority of the entire Board at a special
meeting called for that purpose. Any director may be removed, either with or
without cause, at any time by the affirmative vote of the holders of record of
shares of capital stock of the Corporation entitled to cast a majority of the
votes entitled to be cast for the removal of such director given at a special
meeting of the stockholders called for the purpose; and the vacancy in the Board
caused by any such removal may be filled by the stockholders at such meeting.

COMMITTEES

19. COMMITTEES OF THE BOARD OF DIRECTORS. The Board, by a vote of a
majority of the whole Board, may from time to time designate committees of the
Board, with such lawfully delegable powers and duties as it thereby confers, to
serve at the pleasure of the Board and shall, for those committees and any
others provided for herein, elect a director or directors to serve as the member
or members, designating, if it desires, other directors as alternate members who
may replace any absent or disqualified member at any meeting of the committee.
Any committee so designated may exercise the power and authority of the Board to
the fullest extent provided by law. In the absence or disqualification of any
member of any committee and any alternate member in his or her place, the member
or members of the committee present at the meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may by unanimous vote
appoint another member of the Board to act at the meeting in the place of the
absent or disqualified member.

20. CONDUCT OF BUSINESS. Each committee may determine the procedural rules
for meeting and conducting its business and shall act in accordance therewith,
except as otherwise provided herein or required by law. Adequate provision shall
be made for notice to members of all meetings. One-third (1/3) of the members
shall constitute a quorum unless the committee shall consist of one (1) or two
(2) members, in which event one (1) member shall constitute a quorum; and all
matters shall be determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members thereof consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of such committee.

OFFICERS

21. MEMBER AND QUALIFICATIONS. The officers of the Corporation shall be
the Chairman of the Board (who shall be a member of the Board), the President
(who shall be a member of the Board), one or more Vice Presidents (one or more
of whom may be classified as Executive Vice Presidents, or as Senior Vice
Presidents or in such other classifications as may be established from time to
time by the Board), a Controller, a Secretary and a Treasurer; and there may be,
in addition, such subordinate officers, agents and employees as shall be
appointed in accordance with the provisions of Section 22 of

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these By-laws. One person may hold any number of offices. The Board may require
any such officer, subordinate officer, agent or employee to give security for
the faithful performance of his duties.

22. ELECTION AND TERM OF OFFICE. The officers of the Corporation shall be
elected from time to time by the Board, each to hold office until the meeting of
the Board following the next annual meeting of the stockholders, or until his
successor shall have been duly elected and shall have qualified, or until his
death, or until he shall have resigned or upon removal as provided in these
By-laws.

23. SUBORDINATE OFFICERS, ETC. The Board may from time to time appoint
such subordinate officers, agents or employees as the Board may deem necessary
or advisable, including one or more Assistant Treasurers and one or more
Assistant Secretaries, each of whom shall hold office for such period, have such
authority and perform such duties as are provided in these By-laws or as the
Board may from time to time determine. The Board may delegate to any officer or
to any committee the power to appoint any such additional officers, agents or
employees.

24. REMOVAL. Any officer, agent or employee of the Corporation may be
removed, either with or without cause, at any time, by resolution adopted by a
majority of the entire Board at a special meeting thereof called for that
purpose, or, except in the case of an officer elected by the Board, by any
committee or officer upon whom such power of removal may be conferred by the
Board.

25. SPECIAL DESIGNATIONS.

(a) CHIEF EXECUTIVE OFFICER. Either the Chairman of the Board or the
President may be designated by the Board to be the Chief Executive Officer
of the Corporation. The individual so designated will have the final
responsibility, subject to the control of the Board, for the control and
direction of the Corporation. The Chief Executive Officer shall see that all
orders and resolutions of the Board are carried into effect. In the absence
of such designation by the Board, the Chairman of the Board shall be deemed
to have such responsibility.

(b) CHIEF OPERATING OFFICER. Either the President or another officer
of the Corporation may be designated by the Board to be the Chief Operating
Officer of the Corporation, and the person so designated shall have direct
responsibility and authority for the day-to-day operation of the business of
the Corporation, subject to the control of the Chief Executive Officer and
the Board.

26. (a) CHAIRMAN OF THE BOARD. The Chairman of the Board, when he is not
also the Chief Executive Officer, shall advise, counsel and assist the Chief
Executive Officer in every way practicable. He shall, if present, preside at all
meetings of the stockholders and the Board, and shall have the particular
administrative powers described in Section 26(c).

(b) PRESIDENT. The President may be designated either the Chief
Executive Officer or the Chief Operating Officer. If the President has been
designated the Chief Operating Officer of the Corporation, the President, in
addition to his duties as Chief Operating Officer for the day-to-day
operation of the business of the Corporation, shall report to and assist the
Chairman in carrying out the Chairman's Chief Executive Officer function, as
directed. If the President has been designated by the Board as of the Chief
Executive Officer, he shall discharge that function, subject to the control
of the Board, as set forth in Section 25(a) with the advice and counsel of
the Chairman. In the absence of the Chairman, the President shall preside at
stockholder and Board meetings, and shall have the particular administrative
powers described in Section 26(c).

(c) ADMINISTRATIVE POWERS OF THE CHAIRMAN OF THE BOARD AND THE
PRESIDENT. The Chairman of the Board and the President each may sign, with
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, certificates for shares of stock of the Corporation; and each may
sign, execute and deliver in the name of the Corporation all deeds,
mortgages, bonds, contracts or other instruments authorized by the Board,
except in cases where the signing, execution or delivery thereof shall be
expressly delegated by the Board or by these By-laws to

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some other officer or agent of the Corporation or where any thereof shall be
required by law otherwise to be signed, executed and delivered, and each may
affix the seal of the Corporation to any instrument which shall require it.
Each shall perform such other duties as may from time to time be assigned to
him by the Board or by these By-laws and, in general, shall perform all
duties incident to the office of Chairman of the Board or President,
whichever is applicable.

27. VICE PRESIDENTS. Each Vice President shall perform all such duties as
from time to time may be assigned to him by the Board, the Chairman or the
President. Any Vice President may sign, with the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, certificates for shares
of stock of the Corporation. At the request of the Chairman or the President, or
in case of the absence of both or inability of either to act, an Executive Vice
President or, in the absence of an Executive Vice President, a Senior Vice
President or, in the absence of a Senior Vice President, any Vice President
designated by the Board or by the Chairman or the President, shall perform the
duties of the Chairman or the President, and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the Chairman or the
President.

28. THE CONTROLLER. The Controller shall be the accounting officer of the
Corporation; shall keep full and accurate accounts of all assets, liabilities,
receipts, disbursements and other transactions of the Corporation; shall cause
regular audits of such books and records to be made; shall render financial
statements at all meetings of the Board and a full financial report at the
annual meeting of stockholders, if called upon to do so; and in general, shall
perform all the duties incident to the office of Controller and such other
duties as may from time to time be assigned to him by the Board or by the
Chairman or the President.

29. THE TREASURER. The Treasurer shall have charge and custody of, and be
responsible for, all the funds and securities of the Corporation, shall keep
full and accurate accounts of receipts and disbursements in books belonging to
the Corporation and shall deposit all moneys and other valuable effects in the
name of and to the credit of the Corporation in such banks or other depositories
as may be designated by the Board; he shall disburse the funds of the
Corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the Chairman and the President and to the
directors at the meetings of the Board or whenever they may require it, a
statement of all his transactions as Treasurer and an account of the financial
condition of the Corporation; and, in general, he shall perform all the duties
incident to the office of Treasurer and such other duties as may from time to
time be assigned to him by the Board or by the Chairman or the President. He may
sign, with the Chairman, or the President or a Vice President, certificates for
shares of stock of the Corporation.

30. ASSISTANT TREASURER. At the request of the Treasurer, or in case of
his absence or inability to act, the Assistant Treasurer shall perform the
duties of the Treasurer, and, when so acting, shall have all the powers of, and
be subject to all the restrictions upon, the Treasurer. The Assistant Treasurer
shall perform such other duties as from time to time may be assigned to him by
the Chairman, the President, the Treasurer or the Board.

31. THE SECRETARY. The Secretary shall act as secretary of, and keep the
minutes of, all meetings of the Board and of the stockholders; he shall cause to
be given notice of all meetings of the stockholders and directors; he shall be
custodian of the seal of the Corporation and shall affix the seal, or cause it
to be affixed, to all certificates for shares of stock of the Corporation,
unless the seal on such certificates shall be a facsimile as provided in these
By-laws, and to all documents the execution of which on behalf of the
Corporation under its seal shall have been specifically or generally authorized
by the Board; he shall have charge of the record of stockholders and also of the
other books, records and papers of the Corporation relating to its organization
as a Corporation, and shall see that the reports, statements and other documents
required by law are properly kept or filed; and he shall in general perform all
the duties incident to the office of Secretary. He may sign, with the Chairman,
or the

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President, or a Vice President, certificates for shares of stock of the
Corporation. He shall also have such powers and perform such duties as are
assigned to him by these By-laws; and he shall have such other powers and
perform such other duties, not inconsistent with these By-laws, as the Board or
the Chairman or the President shall from time to time prescribe.

32. ASSISTANT SECRETARY. At the request of the Secretary, or in case of
his absence or inability to act, the Assistant Secretary shall perform the
duties of the Secretary, and, when so acting, shall have all the powers of, and
be subject to all the restrictions upon, the Secretary. The Assistant Secretary
shall perform such other duties as from time to time may be assigned to him by
the Chairman, the President, the Secretary or the Board.

33. SALARIES. The salaries of the officers of the Corporation, if any,
shall be fixed from time to time by the Board, and none of such officers shall
be prevented from receiving a salary by reason of the fact that he is also a
member of the Board; but none thereof who shall also be a member of the Board
shall have any vote in the determination of the amount of the salary that shall
be paid to him.

VACANCIES AND RESIGNATIONS

34. VACANCIES. Except as otherwise specified in these By-laws, in case the
office of any director or of the Chairman of the Board, the President, any Vice
President, the Controller, the Secretary, the Treasurer, or any subordinate
officer, agent or employee becomes vacant due to death, resignation or removal,
or should a vacancy exist from an increase in the number of directors, the
directors then in office, although less than a majority of the entire Board, by
a majority vote, may elect or appoint a successor who shall hold office for the
unexpired term.

35. RESIGNATIONS. Any director or officer, or any subordinate officer,
agent or employee appointed by the Board, may resign his office at any time by
giving written notice of his resignation to the Chairman of the Board, the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein or, if no time be specified therein, at the
time of the receipt thereof, and the acceptance thereof shall not be necessary
to make it effective.

SHARES AND DIVIDENDS

36. SHARES. Shares of stock shall be issued and signed by the Chairman,
the President, or a Vice President, and by the Secretary or an Assistant
Secretary, or the Treasurer or an Assistant Treasurer, and sealed with the seal
of the Corporation. Such seal may be a facsimile, engraved or printed; and where
any such certificate is countersigned (which may be by facsimile) by a Transfer
Agent or is registered by a Registrar other than the Corporation or its
employee, the signatures of the Chairman, the President, Vice President,
Secretary, Assistant Secretary, Treasurer or Assistant Treasurer may be
facsimiles, engraved or printed.

37. TRANSFERS. Transfers of shares of stock shall be made on the record of
stockholders of the Corporation only upon authorization by the registered holder
of the shares in person or by his duly authorized attorney or legal
representative, upon surrender and cancellation of certificates duly endorsed or
accompanied by duly executed stock powers for a like number of shares and upon
payment of all taxes thereon. The person in whose name shares of stock shall
stand on the record of stockholders of the Corporation shall be deemed the owner
thereof for all purposes as regards the Corporation. Whenever any transfers of
shares shall be made for collateral security and not absolutely and written
notice thereof shall be given to the Secretary or to such transfer agent, such
fact shall be stated in the entry of the transfer. The Board may make such
additional rules and regulations and take such action as it may deem expedient,
not inconsistent with these By-laws, concerning the issue, transfer and
registration of certificates for shares of stock of the Corporation or the issue
of certificates in lieu of certificates claimed to have been lost, destroyed,
stolen or mutilated. It may appoint, or

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authorize any officer to appoint, one or more Transfer Agents and one or more
Registrars and may require all certificates for shares of stock to bear the
signature or signatures of any of them.

38. FIXING OF RECORD DATE. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders, or
to receive payment of any dividend or other distribution or allotment of any
rights or to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board may
fix a record date, which record date shall not precede the date on which the
resolution fixing the record date is adopted and which record date shall not be
more than sixty (60) nor less than ten (10) days before the date of any meeting
of stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held, and, for determining stockholders entitled to receive
payment of any dividend or other distribution or allotment of rights or to
exercise any rights of change, conversion or exchange of stock or for any other
purpose, the record date shall be at the close of business on the day on which
the Board adopts a resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however that the Board may fix a new record date for the adjourned
meeting.

In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board may fix a
record date, which shall not precede the date upon which the resolution fixing
the record date is adopted by the Board, and which record date shall be not more
than ten (10) days after the date upon which the resolution fixing the record
date is adopted. If no record date has been fixed by the Board and no prior
action by the Board is required by the Delaware General Corporation Law, the
record date shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the Corporation.
If no record date has been fixed by the Board and prior action by the Board is
required by the Delaware General Corporation Law with respect to the proposed
action by written consent of the stockholders, the record date for determining
stockholders entitled to consent to corporate action in writing shall be at the
close of business on the day on which the Board adopts the resolution taking
such prior action.

39. DIVIDENDS, SURPLUS. Subject to the provisions of the Certificate of
Incorporation of the Corporation, and to the extent permitted by law, the Board
may declare dividends on the shares of capital stock of the Corporation at such
times and in such amounts as, in its opinion, the condition of the business of
the Corporation shall render advisable. Before payment of any dividend or making
any distribution of profits, the Board may set aside out of the surplus or net
profits of the Corporation such sum or sums as the Board from time to time, in
its absolute discretion, shall deem proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purposes as the Board shall deem
conducive to the best interest of the Corporation.

OFFICES AND BOOKS

40. OFFICES. The Board may from time to time and at any time establish
offices of the Corporation or branches of its business at whatever place or
places seen to it expedient.

41. BOOKS AND RECORDS. Each director, each member of any committee
designated by the Board, and each officer of the Corporation shall, in the
performance of his duties, be fully protected in relying in good faith upon the
books of account or other records of the Corporation and upon such

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information, opinions, reports or statements presented to the Corporation by any
of its officers or employees, or committees of the Board so designated, or by
any other person as to matters which such director, committee member or officer
reasonably believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Corporation.

FISCAL YEAR

42. FISCAL YEAR. The fiscal year of the Corporation shall end on the last
day of June in each year.

AMENDMENTS

43. AMENDMENTS. These By-laws may be amended or repealed, or new By-laws
may be adopted, at any annual or special meeting of the stockholders, by the
stockholders entitled to vote in the election of directors, or at any regular or
special meeting of the Board, by vote of a majority of the members of the Board
then in office, provided that the proposed action in respect thereof shall be
stated in the notice of such meeting.

INDEMNIFICATION

44. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is
threatened to be made a party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he is or was a director
or an officer of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan (hereinafter called an "indemnitee"),
whether the basis of such proceeding is alleged action in an official capacity
as a director, officer, employee or agent or in any other capacity while serving
as a director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than such law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith; provided, however, that,
except as provided in Section 46 with respect to proceedings to enforce rights
to indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board.

45. RIGHT OF ADVANCEMENT OF EXPENSES. The right to indemnification
conferred in Section 44 shall include the right to be paid by the Corporation
the expenses (including attorneys' fees) incurred in defending any such
proceeding in advance of its final disposition, (hereinafter called an
"advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking (hereinafter called an "undertaking"), by or on
behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter called a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section 45 or otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections 44 and 45 shall be contract rights and such
rights shall continue as to an indemnitee who has ceased to be a director,
officer,

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employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators.

46. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Section 44 or 45
is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be twenty
(20) days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (a) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
(b) in any suit brought by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the Corporation shall be entitled to
recover such expenses upon a final adjudication that, the indemnitee has not met
any applicable standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation (including the Board,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such suit that indemnification of the indemnitee is
proper in the circumstances because the indemnitee has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the Corporation (including the Board, independent legal
counsel, or its stockholders) that the indemnitee has not met such applicable,
standard of conduct, shall create a presumption that the indemnitee has not met
the applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under these
By-laws or otherwise shall be on the Corporation.

47. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and to the
advancement of expenses conferred in these By-laws shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
the Corporation's Certificate of Incorporation, By-laws, agreement, vote of
stockholders or disinterested directors or otherwise.

48. INSURANCE. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.

49. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION. The
Corporation may, to the extent authorized from time to time by the Board, grant
rights to indemnification and to the advancement of expenses to any employee or
agent of the Corporation to the fullest extent of the provisions of these
By-laws with respect to the indemnification and advancement of expenses of
directors and officers of the Corporation.

<PAGE>

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

PE CORPORATION

and

BANKBOSTON, N.A.,

as Rights Agent

Rights Agreement

Dated as of , 1999

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

<PAGE>

TABLE OF CONTENTS

Page
----

Section 1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . .2

Section 2. Appointment of Rights Agent. . . . . . . . . . . . . . . . . . .7

Section 3. Issue of Right Certificates. . . . . . . . . . . . . . . . . . .7

Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . . .9

Section 5. Countersignature and Registration. . . . . . . . . . . . . . . .9

Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Section 7. Exercise of Rights, Purchase Price; Expiration
Date of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Section 8. Cancellation and Destruction of Right Certificates . . . . . . 11

Section 9. Availability of Shares of Preferred Stock. . . . . . . . . . . 12

Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . 13

Section 11. Adjustment of Purchase Price, Number of Shares and
Number of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Section 12. Certificate of Adjusted Purchase Price or Number of Shares. . 22

Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earnings Power. . . . . . . . . . . . . . . . . . . . . . . 22

Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . 26

Section 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . 27

Section 16. Agreement of Right Holders. . . . . . . . . . . . . . . . . . 27

Section 17. Right Certificate Holder Not Deemed a Stockholder . . . . . . 28

Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . 28

Section 19. Merger or Consolidation or Change of Name of Rights Agent . . 28

Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . 29

Section 21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . . 31

<PAGE>

Page
----

Section 22. Issuance of New Right Certificates. . . . . . . . . . . . . . 32

Section 23. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . 32

Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Section 25. Notice of Certain Events. . . . . . . . . . . . . . . . . . . 34

Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Section 27. Supplements and Amendments. . . . . . . . . . . . . . . . . . 35

Section 28. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . 35

Section 29. Benefits of this Agreement. . . . . . . . . . . . . . . . . . 36

Section 30. Determinations and Actions by the Board of Directors. . . . . 36

Section 31. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 36

Section 32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 36

Section 33. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 36

Section 34. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . 36

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<PAGE>

RIGHTS AGREEMENT

STOCKHOLDER PROTECTION RIGHTS AGREEMENT (this "Agreement"), dated as
of , 1999 between PE Corporation, a Delaware corporation (the "Company"),
and BankBoston, N.A., a national banking association, as Rights Agent (the
"Rights Agent", which term shall include any successor Rights Agent hereunder).

W I T N E S S E T H:

WHEREAS, the Board of Directors of The Perkin-Elmer Corporation, a New
York corporation ("P-E Corp.") has approved and recommended to its stockholders
a recapitalization proposal that would create two new classes of common stock
and change its state of incorporation from New York to Delaware (the
"Recapitalization Proposal");

WHEREAS, on ________, 1999 (the "Issue Date"), in connection with the
Recapitalization Proposal, the Company entered into an Agreement and Plan of
Merger among the Company, PE Merger Corp., a New York corporation and a
wholly-owned subsidiary of the Company ("Merger Corp."), and P-E Corp., pursuant
to which Merger Corp. shall merge with and into P-E Corp. and P-E Corp. shall
become a wholly-owned subsidiary of the Company (the "Merger");

WHEREAS, pursuant to the Merger each outstanding share of the
common stock of P-E Corp. outstanding at the effective time of the Merger
("Effective Time") will be converted into (i) one share of PE Biosystems
Stock (as defined below), together with one preferred share purchase right
representing the right to purchase ("PE Right") one one-thousandth of a
share of Series A Preferred Stock (as defined below), and (ii) .5 of a share
of Celera Genomics Stock (as defined below), together with .5 of one
preferred share purchase right, representing the right to purchase ("Celera
Genomics Right", together with the PE Right, the "Rights") one one-thousandth
of a share of Series B Preferred Stock (as defined below);

WHEREAS, the Board of Directors has further authorized and directed
the issuance of one Right (subject to adjustment as provided herein) with
respect to each share of Common Stock (as defined below) which shall be issued
and become outstanding between the Effective Time and the earliest of the close
of business on the Distribution Date, the Redemption Date and the close of
business on the Final Expiration Date (as such terms are hereinafter defined);
PROVIDED, HOWEVER, that Rights may be issued with respect to shares of Common
Stock that shall become outstanding after the Distribution Date and prior to the
Redemption Date and the Final Expiration Date in accordance with Section 22; and

WHEREAS, the Company desires to appoint the Rights Agent to act on
behalf of the Company, and the Rights Agent is willing to so act, in connection
with the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein;

<PAGE>
2

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

Section . CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meaning indicated:

(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates of such Person, has acquired, obtained the right to acquire or
otherwise obtained Beneficial Ownership (as such term is hereinafter
defined) of (i) 15% or more of the shares of PE Biosystems Stock then
outstanding or (ii) 15% or more of the shares of Celera Genomics Stock
then outstanding, but shall not include an Exempt Person (as such term is
hereinafter defined); PROVIDED, HOWEVER, that if the Board of Directors of
the Company determines in good faith that a Person who would otherwise be
an "Acquiring Person" has become such inadvertently (including, without
limitation, because (i) such Person was unaware that it beneficially owned
a percentage of Common Stock that would otherwise cause such Person to be
an "Acquiring Person" or (ii) such Person was aware of the extent of its
Beneficial Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Rights Agreement) and
without any intention of changing or influencing control of the Company,
and such Person, as promptly as practicable after being advised of such
determination divested or divests himself or itself of Beneficial Ownership
of a sufficient number of shares of Common Stock so that such Person would
no longer be an Acquiring Person, then such Person shall not be deemed to
be or to have become an "Acquiring Person" for any purposes of this
Agreement. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of shares of Common
Stock by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such
Person to (i) 15% or more of the shares of PE Biosystems Stock then
outstanding or (ii) 15% or more of the shares of Celera Genomics Stock
then outstanding, PROVIDED, HOWEVER, that if a Person shall become the
Beneficial Owner of (i) 15% or more of the shares of PE Biosystems
Stock then outstanding or (ii) 15% or more of the shares of Celera
Genomics Stock then outstanding by reason of such share acquisitions by the
Company and thereafter becomes the Beneficial Owner of any additional
shares of PE Biosystems or Celera Genomics Stock, as the case
may be, (other than pursuant to a dividend or distribution paid or made by
the Company on the outstanding Common Stock in shares of Common Stock or
pursuant to a split or subdivision of the outstanding Common Stock), then
such Person shall be deemed to be an "Acquiring Person" unless upon the
consummation of the acquisition of such additional shares of
PE Biosystems or Celera Genomics Stock, as the case may be, such Person
does not own (i) 15% or more of the shares of PE Biosystems then
outstanding or (ii) 15% or more of the shares of Celera Genomics Stock then
outstanding. The phrase "then outstanding", when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the
number of

<PAGE>
3

such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.

(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act, as in effect on the date of this Agreement.

(c) A Person shall be deemed the "Beneficial Owner" of, shall be
deemed to have "Beneficial Ownership" of and shall be deemed to
"Beneficially Own" any securities:

(i) which such Person or any of such Person's
Affiliates or Associates is or may be deemed to beneficially own,
directly or indirectly within the meaning of Rule 13d-3 of the General
Rules and Regulations under the Exchange Act as in effect on the date
of this Agreement;

(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or
upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person
shall not be deemed the Beneficial Owner of, or to Beneficially Own,
(x) securities tendered pursuant to a tender or exchange offer made by
or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange, (y) securities which such Person has a right to acquire on
the exercise of Rights at any time prior to the time a Person becomes
an Acquiring Person or (z) securities issuable upon exercise of Rights
from and after the time a Person becomes an Acquiring Person if such
Rights were acquired by such Person or any of such Person's Affiliates
or Associates prior to the Distribution Date or pursuant to Section
3(a) or Section 22 hereof ("original Rights") or pursuant to Section
11(i) or Section 11(n) with respect to an adjustment to original
Rights; or (B) the right to vote or direct the voting of such
securities pursuant to any agreement, arrangement or understanding;
PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, any security by reason of such
agreement, arrangement or understanding if the agreement, arrangement
or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report); or

<PAGE>
3

(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.

(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the Commonwealth of
Massachusetts, or the State in which the principal office of the Rights
Agent is located, are authorized or obligated by law or executive order to
close.

(e) "close of business" on any given date shall mean 5:00 P.M.,
Eastern time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M., Eastern time, on the next succeeding
Business Day.

(f) "Celera Genomics Right" shall have the meaning set forth in the
preamble to this Agreement.

(g) "Celera Genomics Stock" shall mean PE Corporation -- Celera
Genomics Group Common Stock, a class of Common Stock having a par value
of $.01 per share.

(h) "Common Stock", when used in reference to the Company, shall mean
the PE Biosystems Stock and/or Celera Genomics Stock as the context
requires. "Common Stock" when used with reference to any Person other than
the Company shall mean the capital stock (or, in the case of an
unincorporated entity, the equivalent equity interest) with the greatest
voting power of such other Person or, if such other Person is a subsidiary
of another Person, the Person or Persons which ultimately control such
first-mentioned Person.

(i) "Common Stock equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.

(j) "Distribution Date" shall have the meaning set forth in Section 3
hereof.

(k) "equivalent preferred shares" shall have the meaning set forth in
Section 11(b) hereof.

(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

(m) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary
(as such term is hereinafter defined) of the Company, (iii) any employee
benefit plan of the

<PAGE>
5

Company or of any Subsidiary of the Company, or (iv) any entity or trustee
holding Common Stock for or pursuant to the terms of any such plan or for
the purpose of funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company.

(n) "Expiration Date" shall have the meaning set forth in Section
3(a) hereof.

(o) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.

(p) "invalidation time" shall have the meaning set forth in Section
11(a) hereof.

(q) "Issue Date" shall have the meaning set forth in the preamble to
this Agreement.

(r) "NASDAQ" shall mean The National Association of Securities
Dealers Automated Quotations.

(s) "New York Stock Exchange" shall mean the New York Stock Exchange,
Inc.

(t) "Pacific Stock Exchange" shall mean the Pacific Exchange.

(u) "PE Biosystems Stock" shall mean PE Corporation - PE Biosystems
Common Stock, a class of Common Stock having a par value of $.01 per share.

(v) "PE Right" shall have the meaning set forth in the
preamble to this Agreement.

(w) "Person" shall mean any individual, firm, partnership,
association, group (as such term is used in Rule 13d-5 under the Exchange
Act, as such Rule is in effect on the date of this Agreement), corporation
or other entity, and shall include any successor (by merger or otherwise)
of such entity.

(x) "Preferred Stock" shall mean the Series A Preferred Stock and/or
the Series B Preferred Stock, as the context requires.

(y) "Purchase Price" shall mean the Series A Purchase Price and/or
the Series B Purchase Price, as the context requires.

(z) "Record Date" shall have the meaning set forth in the preamble to
this Agreement.

<PAGE>
5

(aa) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.

(bb) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.

(cc) "Securities Act" shall mean the Securities Act of 1933, as
amended.

(dd) "Series A Preferred Stock" shall mean the Series A Participating
Junior Preferred Stock, $0.01 par value, of the Company having the rights
and preferences set forth in the form of Certificate of Designations
attached to this Agreement as Exhibit A.

(ee) "Series B Preferred Stock" shall mean the Series B Participating
Junior Preferred Stock, $0.01 par value, of the Company having the rights
and preferences set forth in the form of Certificate of Designations
attached to this Agreement as Exhibit A.

(ff) "Series A Purchase Price" shall have the meaning set forth in
Section 7(b) hereof.

(gg) "Series B Purchase Price" shall have the meaning set forth in
Section 7(b) hereof.

(hh) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.

(ii) "Stock Acquisition Date" shall mean the first date of public
announcement including, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act by the Company or an Acquiring Person
that an Acquiring Person has become such or such earlier date as a majority
of the Board of Directors shall become aware of the existence of an
Acquiring Person.

(jj) "Subsidiary" of any Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the Board of Directors or
other persons performing similar functions are beneficially owned, directly
or indirectly, by such Person, and any corporation or other entity that is
otherwise controlled by such Person.

(ll) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.

(mm) "Trading Day", when used with respect to any securities, shall
mean a day on which the New York Stock Exchange is open for the
transaction of business or, if such securities are not listed or admitted
to trading on the New York Stock Exchange, a day on which the principal
national securities exchange on which such securities are listed or
admitted to trading is open for the transaction of business or, if such
securities are not listed or admitted to trading on any national securities
exchange, a Business Day.

<PAGE>
7

(nn) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or
regulatory authority in respect of any transfer of any security, instrument
or right including Rights, shares of Common Stock and shares of Series A
and Series B Preferred Stock.

(oo) "Trigger Date" shall have the meaning set forth in Section
11(a)(iii).

Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable, upon ten (10) days' prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise, and shall in no event be liable
for, the acts or omissions of any such co-Rights Agent.

Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the earlier of
(i) the tenth day after a public announcement that a Person and/or group of
Affiliates or Associates of such Person (other than an Exempt Person) has
acquired, obtained the right to acquire, or otherwise obtained Beneficial
Ownership of (i) 15% or more of the shares of PE Biosystems Stock then
outstanding or (ii) 15% or more of the shares of Celera Genomics Stock then
outstanding; or (ii) the tenth Business Day (or such later date as may be
determined by action of the Board of Directors prior to such time as any
Person becomes an Acquiring Person) following the commencement of a tender or
exchange offer that would result in such Person and/or group beneficially
owning (i) 15% or more of the shares of PE Biosystems Stock then outstanding
or (ii) 15% or more of the shares of Celera Genomics Stock then outstanding
(the earlier of such dates, the "Distribution Date"), each PE Right and each
Celera Genomics Right will be evidenced only by the certificates representing
shares of PE Biosystems Stock and Celera Genomics Stock, respectively, then
outstanding. Until the Distribution Date, no separate rights certificates
will be distributed and the PE Rights will be transferred with and only with
the PE Biosystems Stock, and the Celera Genomics Rights will be transferred
with and only with the Celera Genomics Stock.

At the close of business on the Distribution Date, the Rights will
separate from the Common Stock and become exercisable as described below.
The Rights will expire on the tenth anniversary of the adoption of this
Agreement (the "Expiration Date"), unless extended or terminated as described
herein. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Stock as of the close of business on the Distribution Date (other than any
Acquiring Person or any Associate or Affiliate of an Acquiring Person), at
the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a "PE Right
Certificate"), evidencing one PE Right (subject to adjustment as provided
herein) for each share of PE Biosystems Stock so held and a Right
Certificate, in substantially the form of Exhibit C hereto (a "Celera Genomics

<PAGE>
8

Right Certificate", together with the PE Right Certificate, the "Right
Certificates,") evidencing one Celera Genomics Right (subject to adjustment as
provided herein) for each share of Celera Genomics Stock so held. As of the
close of business of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.

(b) Until the Distribution Date, the Rights will be evidenced by
certificates of Common Stock registered in the names of the holders thereof.
Until the Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any certificate for Common Stock
outstanding on the Issue Date or issued subsequent to the Issue Date and prior
to the Distribution Date, shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby.

Certificates issued for Common Stock (including, without limitation,
upon transfer of outstanding Common Stock, disposition of Common Stock out of
treasury stock, or issuance or reissuance of Common Stock out of authorized but
unissued shares) prior to the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:

This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between
PE Corporation (the "Company") and BankBoston, N.A., dated as
of , 1999 as the same may be amended from time to time (the
"Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights may be redeemed,
may be exchanged for shares of Common Stock or other securities
or assets of the Company or may be evidenced by separate certificates
and will no longer be evidenced by this certificate. PE Corporation
will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases or
otherwise acquires any Common Stock prior to the Distribution Date, any Rights
associated with such Common Stock

<PAGE>
9

shall be deemed canceled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Stock which are no longer
outstanding.

Notwithstanding this paragraph (b), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.

Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and
the forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit B
hereto for the PE Rights and Exhibit C hereto for the Celera Genomics
Rights and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of the New York
Stock Exchange, Pacific Stock Exchange, NASDAQ or of any other stock exchange or
automated quotation system on which the Rights may from time to time be listed,
or to conform to usage. Subject to the provisions of Sections 11, 13 and 22
hereof, the Right Certificates shall entitle the holders thereof to purchase
such number of one one-thousandths of a share of Preferred Stock as shall be set
forth therein at the price per one one-thousandth of a share of Preferred Stock
set forth therein, but the number of such one one-thousandths of a share of
Preferred Stock and the Purchase Price shall be subject to adjustment as
provided herein.

Section 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right
Certificates shall be executed on behalf of the Company by the Chairman of the
Board of Directors, the President, any of the Vice Presidents, the Treasurer or
the Controller of the Company, either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
countersigned either manually or by facsimile by the Rights Agent and shall not
be valid for any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the Person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such Person was not such an officer.

(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at an office or agency designated for such purpose, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.

<PAGE>
10

Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. (a)
Subject to the provisions of Sections 7(e), 11(a)(ii) and 14 hereof, at any time
after the close of business on the Distribution Date, and prior to the close of
business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates may be transferred, split up, combined
or exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of one one-thousandths of a share of
Preferred Stock as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office or agency of the Rights Agent designated for
such purpose. Thereupon the Rights Agent shall countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.

(b) Subject to the provisions of Section 11(a)(ii) hereof, at any
time after the Distribution Date and prior to the close of business on the
earlier of the Redemption Date or the Final Expiration Date, upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
them, and, at the Company's request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to the Rights Agent
for delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.

Section 7. EXERCISE OF RIGHTS, PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) Except as otherwise provided herein, the Rights shall become
exercisable on or after the Distribution Date, and thereafter the registered
holder of any Right Certificate may, subject to Section 11(a)(ii) hereof and
except as otherwise provided herein, exercise the Rights evidenced thereby in
whole or in part upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the office or agency of the Rights Agent designated for such purpose,
together with payment of the applicable Purchase Price for each one
one-thousandth of a share of Series A Preferred Stock, in the case of a
PE Right, and one one-thousandth of a share of Series B Preferred
Stock, in the case of a Celera Genomics Right, as to which the Rights are
exercised, at any time which is both after the Distribution Date and prior to
the earliest of (i) the close of business on , 2009 (the "Final
Expiration Date"), (ii) the effective time at which the Rights are redeemed and
thereby terminate, as provided in Section 23 hereof (the "Redemption Date") or
(iii) the time at which such Rights are exchanged as provided in Section 24
hereof.

(b) The purchase price shall be initially $ ("Series A
Purchase Price") for each one one-thousandth of a share of Series A Preferred
Stock, purchasable upon the exercise of

<PAGE>
11

a PE Right, and $__________ ("Series B Purchase Price") for each one
one-thousandth of a share of Series B Preferred Stock, purchasable upon the
exercise of a Celera Genomics Right. The Purchase Price and the number of one
one-thousandths of a share of Preferred Stock or other securities or property to
be acquired upon exercise of a Right shall be subject to adjustment from time to
time as provided in Sections 11 and 13 hereof and shall be payable in lawful
money of the United States of America in accordance with paragraph (c) of this
Section 7.

(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the shares of Preferred Stock to be purchased and an amount equal to any
applicable Transfer Tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof, in cash or by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly: (i) (A) requisition from any transfer agent of
the Preferred Stock certificates for the number of shares of Preferred Stock to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from the depositary agent
depositary receipts representing interests in such number of one one-thousandths
of a share of Preferred Stock as are to be purchased (in which case certificates
for the Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request; (ii) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof; (iii) promptly after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder; and (iv) when
appropriate, after receipt, promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate.

(d) Except as otherwise provided herein, in case the registered
holder of any Right Certificate shall exercise less than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights equivalent to the
exercisable Rights remaining unexercised shall be issued by the Rights Agent to
the registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 14 hereof.

(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of Rights upon the occurrence of any
purported transfer or exercise of Rights pursuant to Section 6 hereof or this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or election to purchase set
forth on the reverse side of the Rights Certificate surrendered for such
transfer or exercise and/or (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) thereof as the
Company shall reasonably request.

Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for

<PAGE>
12

cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.

Section 9. AVAILABILITY OF SHARES OF PREFERRED STOCK.

(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or any shares of Preferred Stock held in its treasury, the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights.

(b) So long as the shares of Preferred Stock (and, following the time
that a Person becomes an Acquiring Person, shares of Common Stock and other
securities) issuable upon the exercise of Rights may be listed or admitted to
trading on the New York Stock Exchange or listed on any other national
securities exchange or quotation system, the Company shall use its best efforts
to cause, from and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed or admitted to trading on the New York
Stock Exchange, Pacific Stock Exchange, NASDAQ or listed on any other exchange
or quotation system upon official notice of issuance upon such exercise.

(c) From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
shares of Preferred Stock (and following the time that a Person first becomes an
Acquiring Person, shares of Common Stock and other securities) upon the exercise
of Rights, to register and qualify such shares of Preferred Stock (and following
the time that a Person first becomes an Acquiring Person, shares of Common Stock
and other securities) under the Securities Act and any applicable state
securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Final Expiration Date.
The Company may temporarily suspend, for a period of time not to exceed ninety
(90) days, the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained and until
a registration statement under the Securities Act (if required) shall have been
declared effective.

<PAGE>
13

(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock (and,
following the time that a Person becomes an Acquiring Person, shares of Common
Stock and other securities) delivered upon exercise of Rights shall, at the time
of delivery of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.

(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state Transfer Taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any shares of Preferred Stock (or shares of Common Stock or other
securities) upon the exercise of Rights. The Company shall not, however, be
required (i) to pay any Transfer Tax which may be payable in respect of any
transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Stock (or shares of Common Stock or other securities) in a name other than that
of the registered holder of the Right Certificate evidencing Rights surrendered
for exercise or (ii) to issue or deliver any certificates or depositary receipts
for Preferred Stock (or shares of Common Stock or other securities) upon the
exercise of any Rights until any such Transfer Taxes shall have been paid (any
such tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.

Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose name
any certificate for Series A Preferred Stock or Series B Preferred Stock is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the shares of Preferred Stock represented thereby
on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable Transfer Taxes) was made. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preferred Stock for which the
Rights shall be exercisable, including, without limitation, the right to vote or
to receive dividends or other distributions, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES AND NUMBER
OF RIGHTS. The Purchase Price, the number of shares of Preferred Stock or other
securities or property purchasable upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.

(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller
number of Preferred Stock or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of

<PAGE>
14

the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind
of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock which the holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; PROVIDED, HOWEVER, that
in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.

(ii) Subject to Section 24 of this Agreement, in the
event that any Person becomes an Acquiring Person, then (A) the
Purchase Price shall be adjusted to be the Purchase Price in effect
immediately prior to such Person becoming an Acquiring Person
multiplied by the number of one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such
Person becoming an Acquiring Person, whether or not such Right was
then exercisable, and (B) each holder of a Right, except as otherwise
provided in this Section 11(a)(ii) and Subsection 11(a)(iii) hereof,
shall thereafter have the right to receive, upon exercise at a price
equal to the Purchase Price (as so adjusted), in accordance with the
terms of this Agreement and in lieu of shares of Preferred Stock, such
number of shares of PE Biosystems Stock or Celera Genomics Stock,
as the case may be (or at the option of the Company, such number of
one one-thousandths of a share of Series A Preferred Stock or Series B
Preferred Stock, as the case may be) as shall equal the result
obtained by (x) multiplying the then current Series A Purchase Price
or Series B Purchase Price, as the case may be, by the number of one
one-thousandths of a share of Series A Preferred Stock or Series B
Preferred Stock, as the case may be, for which a Right is then
exercisable and dividing that product by (y) 50% of the then current
per share market price of the Company's PE Biosystems Stock or
Celera Genomics Stock (determined pursuant to Section 11(d) hereof),
as the case may be, on the date such Person became an Acquiring
Person; PROVIDED, HOWEVER, that the Purchase Price and the number of
shares of PE Biosystems Stock or Celera Genomics Stock so
receivable upon exercise of a Right shall thereafter be subject to
further adjustment as appropriate in accordance with Section 11(f)
hereof. Notwithstanding anything in this Agreement to the contrary,
however, from and after the earlier of the time (the "invalidation
time") when any Person first becomes an Acquiring Person and the
Distribution Date, any Rights that are beneficially owned by (x) any
Acquiring Person (or any Affiliate or Associate of any Acquiring
Person), (y) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the
invalidation time or (z) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who became a transferee prior to or
concurrently with the invalidation time pursuant to either (I) a
transfer from the Acquiring Person to holders of its equity securities
or to any Person with whom it has any continuing agreement,
arrangement or

<PAGE>
15

understanding regarding the transferred Rights or (II) a transfer
which the Board of Directors has determined is part of a plan,
arrangement or understanding which has the purpose or effect of
avoiding the provisions of this paragraph, and subsequent transferees
of such Persons, shall be void without any further action and any
holder of such Rights shall thereafter have no rights whatsoever with
respect to such Rights under any provision of this Agreement. The
Company shall use all reasonable efforts to ensure that the provisions
of this Section 11(a)(ii) are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a
result of its determination or its failure to make any determination
with respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder. From and after the invalidation time, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 hereof
that represents Rights that are or have become void pursuant to the
provisions of this paragraph, and any Right Certificate delivered to
the Rights Agent that represents Rights that are or have become void
pursuant to the provisions of this paragraph shall be canceled. From
and after the occurrence of an event specified in Section 13(a)
hereof, any Rights that theretofore have not been exercised pursuant
to this Section 11(a)(ii) shall thereafter be exercisable only in
accordance with Section 13 and not pursuant to this Section 11(a)(ii).

(iii) The Company may at its option substitute for a share of
PE Biosystems Stock or Celera Genomics Stock, as the case may be,
issuable upon the exercise of Rights in accordance with the foregoing
subparagraph (ii) such number or fractions of shares of Series A
Preferred Stock or Series B Preferred Stock, as the case may be,
having an aggregate current market value equal to the current per
share market price of a share of PE Biosystems Stock or Celera
Genomics Stock, as the case may be. In the event that there shall not
be sufficient shares of PE Biosystems Stock or Celera Genomics
Stock, as the case may be, issued but not outstanding or authorized
but unissued to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Board of
Directors shall, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party (A)
determine the excess of (1) the value of the shares of PE Biosystems
Stock or Celera Genomics Stock, as the case may be, issuable
upon the exercise of a Right in accordance with the foregoing
subparagraph 11(a)(ii) (the "Current Value") over (2) the then current
Series A Purchase Price or Series B Purchase Price, as the case may
be, multiplied by the number of one one-thousandths of shares of
Series A Preferred Stock or Series B Preferred Stock, as the case may
be, for which a Right was exercisable immediately prior to the time
that the Acquiring Person became such (such excess, the "Spread"), and
(B) with respect to each Right (other than Rights which have become
void pursuant to Section 11(a)(ii)), make adequate provision to
substitute for the shares of PE Biosystems Stock or Celera
Genomics Stock, as the case may be, issuable in accordance with
subparagraph (ii) upon exercise of the Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Series A
Purchase Price or Series B

<PAGE>
16

Purchase Price, as the case may be, (3) shares of Preferred Stock or other
equity securities of the Company (including, without limitation, shares or
fractions of shares of preferred stock which, by virtue of having dividend,
voting and liquidation rights substantially comparable to those of the
shares of Common Stock, are deemed in good faith by the Board of Directors
to have substantially the same value as the shares of Common Stock (such
shares of preferred stock and shares or fractions of shares of preferred
stock are hereinafter referred to as "Common Stock equivalents"), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having a value which, when added to the value of the shares of
Common Stock actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value (less the amount of any
reduction in the Purchase Price), where such aggregate value has been
determined by the Board of Directors upon the advice of a nationally
recognized investment banking firm selected in good faith by the Board of
Directors; PROVIDED, HOWEVER, if the Company shall not make adequate
provision to deliver value pursuant to clause (B) above within thirty (30)
days following the date that the Acquiring Person became such (the "Trigger
Date"), then the Company shall be obligated to deliver, to the extent
permitted by applicable law and any material agreements then in effect to
which the Company is a party, upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price, shares of
PE Biosystems Stock or Celera Genomics Stock, as the case may be (to the
extent available), and then, if necessary, such number or fractions of
shares of Series A Preferred Stock or Series B Preferred Stock, as the
case may be (to the extent available), and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. If, upon
the date any Person becomes an Acquiring Person, the Board of Directors
shall determine in good faith that it is likely that sufficient additional
shares of PE Biosystems Stock and Celera Genomics Stock could be
authorized for issuance upon exercise in full of the Rights, then, if the
Board of Directors so elects, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than ninety
(90) days after the Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
thirty (30) day period, as it may be extended, is herein called the
"Substitution Period"). To the extent that the Company determines that
some action need be taken pursuant to the second and/or third sentence of
this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 11(a)(ii) hereof and the last sentence of this Section 11(a)(iii)
hereof, that such action shall apply uniformly to all outstanding Rights
and (y) may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution
to be made pursuant to such second sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time
as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the shares of PE Biosystems Stock
and Celera
<PAGE>
17

Genomics Stock shall be the current per share market price (as
determined pursuant to Section 11(d)(i)) on the Trigger Date and the
per share or fractional value of any Common Stock equivalent shall be
deemed to equal the current per share market price of the Common
Stock. The Board of Directors of the Company may, but shall not be
required to, establish procedures to allocate the right to receive
shares of Common Stock upon the exercise of the Rights among holders
of Rights pursuant to this Section 11(a)(iii).

(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling
them (for a period expiring within forty-five (45) calendar days after such
record date) to subscribe for or purchase Preferred Stock (or shares having
similar rights, privileges and preferences as the Preferred Stock
("equivalent preferred shares")) or securities convertible into Preferred
Stock or equivalent preferred shares at a price per share of Preferred
Stock or equivalent preferred shares (or having a conversion price per
share, if a security convertible into shares of Preferred Stock or
equivalent preferred shares) less than the then current per share market
price of the Preferred Stock (determined pursuant to Section 11(d) hereof)
on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record
date plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or
equivalent preferred shares to so be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall
be the number of shares of Preferred Stock outstanding on such record date
plus the number of additional shares of Preferred Stock and/or equivalent
preferred shares to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially convertible);
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right.
In case such subscription price may be paid in a consideration, part or all
of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Shares of Preferred Stock and
equivalent preferred shares owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is
fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.

(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular

<PAGE>
18

quarterly cash dividend or a dividend payable in Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section
11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be
the then current per share market price of the Preferred Stock (determined
pursuant to Section 11(d) hereof) on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company
whose determination shall be described in a statement filed with the Rights
Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
share of Preferred Stock, and the denominator of which shall be such
current per share market price (determined pursuant to Section 11(d)
hereof) of the Preferred Stock; PROVIDED, HOWEVER, that in no event shall
the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.

(d) (i) Except as otherwise provided herein, for the purpose of any
computation hereunder, the "current per share market price" of any security
(a "Security" for the purpose of this Section 11(d)(i)) on any date shall
be deemed to be the average of the daily closing prices per share of such
Security for the thirty (30) consecutive Trading Days immediately prior to
such date; PROVIDED, HOWEVER, that in the event that the current per share
market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (B) any subdivision,
combination or reclassification of such Security, and prior to the
expiration of thirty (30) Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current
per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing
price for each day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported by the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange, the Pacific Stock
Exchange, NASDAQ or, if the Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Security selected by
the Board of Directors of the Company.

<PAGE>
19

(ii) For the purpose of any computation hereunder, if the Preferred
Stock is publicly traded, the "current per share market price" of the
Preferred Stock shall be determined in accordance with the method set forth
in Section 11(d)(i). If the Preferred Stock is not publicly traded but the
Common Stock is publicly traded, the "current per share market price" of
the Preferred Stock shall be conclusively deemed to be the current per
share market price of the PE Biosystems Stock or the Celera Genomics
Stock, as the case may be, as determined pursuant to Section 11(d)(i)
multiplied by one thousand (appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof). If neither the Common Stock nor the Preferred Stock is publicly
traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.

(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Purchase Price; PROVIDED, HOWEVER, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest one
ten-thousandth of a share of Preferred Stock or share of Common Stock or
other share or security as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of
the transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.

(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than the
Preferred Stock, thereafter the Purchase Price and the number of such other
shares so receivable upon exercise of a Right 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 Preferred Stock
contained in Sections 11(a), 11(b), 11(c), 11(e), 11(h), 11(i) and 11(m)
and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to
the Preferred Stock shall apply on like terms to any such other shares.

(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-thousandths of
a share of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided
herein.

(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Series A Purchase
Price or Series B Purchase Price, as the case may be, as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number
of

<PAGE>
20

one-thousandths of a share of Series A Preferred Stock or Series B
Preferred Stock (calculated to the nearest one ten-thousandth of a share of
Preferred Stock), as the case may be, obtained by (i) multiplying (x) the
number of one-thousandths of a share covered by a PE Biosystems Right or
Celera Genomics Right, as the case may be, immediately prior to such
adjustment by (y) the Series A Purchase Price or Series B Purchase Price,
as the case may be, in effect immediately prior to such adjustment of the
Series A Purchase Price or Series B Purchase Price, as the case may be, and
(ii) dividing the product so obtained by the Series A Purchase Price or
Series B Purchase Price, as the case may be, in effect immediately after
such adjustment of the Series A Purchase Price or Series B Purchase Price,
as the case may be.

(i) The Company may elect on or after the date of any adjustment of
the Series A Purchase Price or Series B Purchase Price, as the case may be,
to adjust the number of PE Rights or Celera Genomics Rights, as
the case may be, in substitution for any adjustment in the number of one
one-thousandths of a share of Series A Preferred Stock or Series B
Preferred Stock, as the case may be, purchasable upon the exercise of a
PE Right or Celera Genomics Right, as the case may be. Each of
the Rights outstanding after such adjustment of the number of Rights shall
be exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Series A Purchase
Price or Series B Purchase Price, as the case may be, in effect immediately
prior to adjustment of the Series A Purchase Price or Series B Purchase
Price, as the case may be, by the Series A Purchase Price or Series B
Purchase Price, as the case may be, in effect immediately after adjustment
of the Series A Purchase Price or Series B Purchase Price, as the case may
be. The Company shall make a public announcement of its election to adjust
the number of Rights, 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 Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at
least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company may, as promptly as
practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights 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 Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company,
new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.

<PAGE>
21

(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number
of one one-thousandths of a share of Preferred Stock which were expressed
in the initial Right Certificates issued hereunder.

(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the Preferred Stock
or other shares of capital stock issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of Preferred Stock or other such
shares at such adjusted Purchase Price.

(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such
record date of the Preferred Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the
Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; PROVIDED, HOWEVER, that the Company shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.

(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Preferred
Stock, issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, issuance wholly for cash or Preferred Stock
or securities which by their terms are convertible into or exchangeable for
Preferred Stock, dividends on Preferred Stock payable in shares of
Preferred Stock or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders of
its Preferred Stock shall not be taxable to such stockholders.

(n) Anything in this Agreement to the contrary notwithstanding, in
the event that at any time after the date of this Agreement and prior to
the Distribution Date, the Company shall (i) declare or pay any dividend on
the PE Biosystems Stock or Celera Genomics Stock, as the case may be,
payable in PE Biosystems Stock or Celera Genomics Stock, as the case
may be, or (ii) effect a subdivision, combination or consolidation of the
PE Biosystems Stock or Celera Genomics Stock, as the case may be (by
reclassification or otherwise than by payment of a dividend payable in
PE Biosystems Stock or Celera Genomics Stock, as the case may be) into
a greater or lesser number of shares of PE Biosystems Stock or Celera
Genomics Stock, as the case may be, then in any such case, the number of
Rights associated with each share of PE Biosystems

<PAGE>
22

Stock or Celera Genomics Stock, as the case may be, then
outstanding, or issued or delivered thereafter, shall be proportionately
adjusted so that the number of Rights thereafter associated with each share
of PE Biosystems Stock or Celera Genomics Stock, as the case may be,
following any such event shall equal the result obtained by multiplying the
number of Rights associated with each share of PE Biosystems Stock or
Celera Genomics Stock, as the case may be, immediately prior to such event
by a fraction the numerator of which shall be the total number of shares of
PE Biosystems Stock or Celera Genomics Stock, as the case may be,
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of PE Biosystems
Stock or Celera Genomics Stock, as the case may be, outstanding
immediately following the occurrence of such event.

(o) The Company agrees that, after the earlier of the Distribution
Date or the Stock Acquisition Date, it will not, except as permitted by
Sections 23, 24 or 27 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably foreseeable
that such action will diminish substantially or eliminate the benefits
intended to be afforded by the Rights.

Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common Stock
or the Preferred Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a PE Right Certificate or Celera Genomics
Right Certificate in accordance with Section 25 hereof (if so required under
Section 25 hereof). The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and shall not be deemed
to have knowledge of any such adjustment unless and until it shall have received
such certificate.

Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNINGS POWER. (a) In the event, directly or indirectly, at any time after
any Person has become an Acquiring Person, (i) the Company shall merge with and
into any other Person, (ii) any Person shall consolidate with the Company, or
any Person shall merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Stock shall be changed into or exchanged for
stock or other securities of any other Person (or of the Company) or cash or any
other property, or (iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more of its wholly-owned
Subsidiaries), then upon the first occurrence of such event, proper provision
shall be made so that: (A) each holder of record of a Right (other than Rights
which have become void pursuant to Section 11(a)(ii)) shall thereafter have the
right to receive, upon the exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable (whether or not such Right was
then

<PAGE>
23

exercisable) immediately prior to the time that any Person first became an
Acquiring Person (each as subsequently adjusted thereafter pursuant to Sections
11(a)(i), 11(b), 11(c), 11(h), 11(i) and 11(m)), in accordance with the terms of
this Agreement and in lieu of Preferred Stock, such number of validly issued,
fully paid and non-assessable and freely tradeable shares of Common Stock of the
Principal Party (as defined herein) not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Series A Purchase Price or Series B
Purchase Price, as the case may be, by the number of one one-thousandths of a
share of Series A Preferred Stock or Series B Preferred Stock for which a Right
was exercisable immediately prior to the time that any Person first became an
Acquiring Person (as subsequently adjusted thereafter pursuant to Sections
11(a)(i), 11(b), 11(c), 11(h), 11(i) and 11(m)) and (2) dividing that product by
50% of the then current per share market price of the Common Stock of such
Principal Party (determined pursuant to Section 11(d)(i) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; PROVIDED that the
Purchase Price and the number of shares of Common Stock of such Principal Party
issuable upon exercise of each Right shall be further adjusted as provided in
Section 11(f) of this Agreement to reflect any events occurring in respect of
such Principal Party after the date of the such consolidation, merger, sale or
transfer; (B) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (C) the term
"Company" shall thereafter be deemed to refer to such Principal Party; and (D)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its shares of Common Stock in accordance
with Section 9 hereof) in connection with such consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of its Common Stock thereafter deliverable upon the exercise of the
Rights; PROVIDED that, upon the subsequent occurrence of any consolidation,
merger, sale or transfer of assets or other extraordinary transaction in respect
of such Principal Party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Purchase Price as provided
in this Section 13(a), such cash, shares, rights, warrants and other property
which such holder would have been entitled to receive had such holder, at the
time of such transaction, owned the Common Stock of the Principal Party
receivable upon the exercise of a Right pursuant to this Section 13(a), and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.

(b) "Principal Party" shall mean

(i) in the case of any transaction described in (i) or (ii) of
the first sentence of Section 13(a) hereof: (A) the Person that is the
issuer of the securities into which the shares of Common Stock are
converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer of the shares of Common Stock which have the
greatest aggregate market value of shares outstanding, or (B) if no
securities are so issued, (x) the Person that is the other party to the
merger, if such Person survives said merger, or, if there is more than one
such Person, the Person the shares of Common Stock

<PAGE>
24

of which have the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger
(including the Company if it survives) or (z) the Person resulting
from the consolidation; and

(ii) in the case of any transaction described in (iii) of
the first sentence in Section 13(a) hereof, the Person that is the
party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives
the same portion of the assets or earning power so transferred or if
the Person receiving the greatest portion of the assets or earning
power cannot be determined, whichever of such Persons as is the issuer
of Common Stock having the greatest aggregate market value of shares
outstanding;

PROVIDED, HOWEVER, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), if the Common Stock of such Person is not at such time
or has not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, then (1) if such Person is a direct
or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, the term "Principal Party" shall refer to such
other Person, or (2) if such Person is a Subsidiary, directly or
indirectly, of more than one Person, and the Common Stocks of all of such
persons have been so registered, the term "Principal Party" shall refer to
whichever of such Persons is the issuer of Common Stock having the greatest
aggregate market value of shares outstanding, or (3) if such Person is
owned, directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in clauses (1) and (2) above shall apply to each of the
owners having an interest in the venture as if the Person owned by the
joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth
in this Section 13 in the same ratio as its interest in such Person bears
to the total of such interests.

(c) The Company shall not consummate any consolidation, merger,
sale or transfer referred to in Section 13(a) hereof unless prior thereto
the Company and the Principal Party involved therein shall have executed
and delivered to the Rights Agent an agreement confirming that the
requirements of Sections 13(a) and (b) hereof shall promptly be performed
in accordance with their terms and that such consolidation, merger, sale or
transfer of assets shall not result in a default by the Principal Party
under this Agreement as the same shall have been assumed by the Principal
Party pursuant to Sections 13(a) and (b) hereof and providing that, as soon
as practicable after executing such agreement pursuant to this Section 13,
the Principal Party will:

(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate
form, use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Final Expiration Date, and similarly comply
with applicable state securities laws;

<PAGE>
25

(ii) use its best efforts, if the Common Stock of the
Principal Party shall be listed or admitted to trading on the New York
Stock Exchange, the Pacific Stock Exchange, NASDAQ or on another
national securities exchange, to list or admit to trading (or continue
the listing of) the Rights and the securities purchasable upon
exercise of the Rights on the New York Stock Exchange or such
securities exchange, or, if the Common Stock of the Principal Party
shall not be listed or admitted to trading on the New York Stock
Exchange or a national securities exchange, to cause the Rights and
the securities receivable upon exercise of the Rights to be reported
by such other system then in use;

(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all
respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act; and

(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal
Party subject to purchase upon exercise of outstanding Rights.

(d) In case the Principal Party has provision in any of its
authorized securities or in its certificate of incorporation or by-laws or
other instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue (other than to
holders of Rights pursuant to this Section 13), in connection with, or as a
consequence of, the consummation of a transaction referred to in this
Section 13, shares of Common Stock of such Principal Party at less than the
then current market price per share thereof (determined pursuant to Section
11(d) hereof) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then current market price,
or (ii) providing for any special payment, tax or similar provision in
connection with the issuance of the Common Stock of such Principal Party
pursuant to the provisions of Section 13, then, in such event, the Company
hereby agrees with each holder of Rights that it shall not consummate any
such transaction unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental
agreement providing that the provision in question of such Principal Party
shall have been canceled, waived or amended, or that the authorized
securities shall be redeemed, so that the applicable provision will have no
effect in connection with, or as a consequence of, the consummation of the
proposed transaction.

(e) The Company covenants and agrees that it shall not, at any
time after a Person first becomes an Acquiring Person enter into any
transaction of the type contemplated by (i) - (iii) of Section 13(a) hereof
if (x) at the time of or immediately after such consolidation, merger,
sale, transfer or other transaction there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, (y) prior to, simultaneously with or immediately
after such consolidation, merger, sale, transfer of other transaction, the
stockholders of the Person who constitutes, or would constitute, the
Principal Party for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any

<PAGE>
26

of its Affiliates or Associates or (z) the form or nature of organization
of the Principal Party would preclude or limit the exercisability of the
Rights.

Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.

(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights (except prior
to the Distribution Date in accordance with Section 11(n) hereof). In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.

(b) The Company shall not be required to issue fractions of Preferred
Stock (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock). Interests in fractions of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
PROVIDED, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandth of a share of Preferred Stock, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Preferred Stock. For the
purposes of this Section 14(b), the current market value of a share of Preferred
Stock shall be the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.

<PAGE>
27

(c) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock upon the exercise or exchange of Rights. In lieu of such
fractional shares of Common Stock, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable in an amount in cash equal to the same
fraction of the current market value of a whole share of Common Stock (as
determined in accordance with Section 14(a) hereof) for the Trading Day
immediately prior to the date of such exercise or exchange.

(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).

Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), on his own behalf and for his own
benefit, may enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate (or, prior to
the Distribution Date, such Common Stock) in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.

Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:

(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Stock;

(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office or agency of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer; and

(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the
Common Stock certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the

<PAGE>
28

Common Stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary.

Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.

Section 18. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability arising therefrom, directly or
indirectly.

(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Stock or Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.

Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. (a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust powers of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
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 Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall

<PAGE>
29

succeed to the agency created by this Agreement, any of the Right Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.

(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.

Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:

(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion;

(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman
of the Board of Directors, the President, any Vice President, the
Treasurer, the Controller or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate;

(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or wilful
misconduct;

(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only;

<PAGE>
30

(e) The Rights 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 Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant
to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections
3, 11, 13, 23 and 24, or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after receipt of a
certificate furnished pursuant to Section 12, describing such change or
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Preferred Stock or other securities to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of Preferred
Stock or other securities will, when issued, be validly authorized and
issued, fully paid and nonassessable;

(f) 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 Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement;

(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any person reasonably believed by the Rights Agent to be one of the
Chairman of the Board of Directors, the President, the Chief Financial
Officer or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered by it in good faith in accordance
with instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent under this Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such application
on or after the date specified in such application (which date shall not be
less than five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted;

(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may

<PAGE>
31

be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity;

(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof; and

(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the
form of assignment or the form of election to purchase set forth on the
reverse thereof, as the case may be, has not been completed to certify the
holder is not an Acquiring Person (or an Affiliate or Associate thereof),
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.

Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock or Preferred Stock by registered or certified
mail, and, following the Distribution Date, to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Stock or Preferred Stock by registered or certified mail, and,
following the Distribution Date, to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (A)
a corporation organized and doing business under the laws of the United States
or any State thereof, which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million or (B) an
affiliate of a corporation described in clause (A) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later

<PAGE>
32

than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock or Preferred Stock, and, following the Distribution Date, mail
a notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such forms as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of Common Stock following the Distribution
Date and prior to the earlier of the Redemption Date and the Final Expiration
Date, the Company may with respect to shares of Common Stock so issued or sold
(i) pursuant to the exercise of stock options, (ii) under any employee plan or
arrangement, (iii) upon the exercise, conversion or exchange of securities,
notes or debentures issued by the Company, or (iv) pursuant to a contractual
obligation of the Company, in each case existing prior to the Distribution Date,
issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale.

Section 23. REDEMPTION. (a) The Board of Directors of the Company
may, at any time prior to such time as any Person first becomes an Acquiring
Person, redeem all but not less than all of the then outstanding Rights at a
redemption price of $.01 per Right (appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof)
(the redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion may
establish. The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the current market price of the Common Stock at
the time of redemption) or any other form of consideration deemed appropriate by
the Board of Directors.

(b) Immediately upon the action of the Board of Directors ordering
the redemption of the Rights pursuant to paragraph (a) of this Section 23 (or at
such later time as the Board of Directors may establish for the effectiveness of
such redemption), and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; PROVIDED, HOWEVER, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within ten (10) days after such action of the Board of
Directors ordering the redemption of the Rights (or such later time as the Board
of Directors may establish for the effectiveness of such redemption), the
Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common

<PAGE>
33

Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made.

Section 24. EXCHANGE. (a) The Board of Directors of the Company
may, at its option, at any time after any Person first becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for shares of Common Stock at an
exchange ratio of one share of PE Biosystems Stock per PE Right and one share
of Celera Genomics Stock per Celera Genomics Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such amount per Right being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time (1) after any
Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of shares of Common
Stock aggregating (i) 50% or more of the shares of PE Biosystems Stock then
outstanding or (ii) 50% or more of the shares of Celera Genomics Stock then
outstanding. From and after the occurrence of an event specified in Section
13(a) hereof, any Rights that theretofore have not been exchanged pursuant to
this Section 24(a) shall thereafter be exercisable only in accordance with
Section 13 and may not be exchanged pursuant to this Section 24(a). The
exchange of the Rights by the Board of Directors may be made effective at
such time, on such basis and with such conditions as the Board of Directors
in its sole discretion may establish.

(b) Immediately upon the effectiveness of the action of the Board
of Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and without
any notice, the right to exercise such Rights shall terminate and the only
right thereafter of a holder of such Rights shall be to receive that number
of shares of PE Biosystems Stock or Celera Genomics Stock, as the case may
be, equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; PROVIDED, HOWEVER, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to all of the holders of the
Rights so exchanged at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Rights.

(c) The Company may at its option and, in the event that there shall
not be sufficient shares of Common Stock issued but not outstanding or
authorized but unissued to permit an exchange of Rights as contemplated in
accordance with this Section 24, the Company shall substitute to the extent of
such insufficiency, for each share of Common Stock that would otherwise be
issuable upon exchange of a Right, a number of shares of Preferred Stock or

<PAGE>
34

fraction thereof (or equivalent preferred shares as such term is defined in
Section 11(b)) such that the current per share market price (determined
pursuant to Section 11(d) hereof) of one share of Preferred Stock (or
equivalent preferred share) multiplied by such number or fraction is equal to
the current per share market price of one share of PE Biosystems Stock or
Celera Genomics Stock, as the case may be (determined pursuant to Section
11(d) hereof) as of the date of such exchange).

Section 25. NOTICE OF CERTAIN EVENTS. (a) In case the Company shall
at any time after the earlier of the Distribution Date or the Stock Acquisition
Date propose (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Stock or to make any other distribution to the holders
of its Preferred Stock (other than a regular quarterly cash dividend), (ii) to
offer to the holders of its Preferred Stock rights or warrants to subscribe for
or to purchase any additional shares of Preferred Stock or shares of stock of
any class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision or combination of outstanding Preferred Stock), (iv) to
effect the liquidation, dissolution or winding up of the Company, or (v) to
declare or pay any dividend on the Common Stock payable in Common Stock or to
effect a subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the Common Stock and/or Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 10 days prior to the
record date for determining holders of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the Common Stock and/or Preferred Stock, whichever shall be
the earlier.

(b) In case any event described in Section 11(a)(ii) or Section 13
shall occur then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate (or if occurring prior to the Distribution
Date, the holders of the Common Stock) in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
and Section 13 hereof.

Section 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:

PE Corporation
761 Main Avenue
Norwalk, Connecticut 06859-0001

<PAGE>
35

Attn: Secretary

Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:

BankBoston, N.A.
c/o EquiServe Limited Partnership
150 Royall Street
Canton, Massachusetts 02021
Attn: Client Administration

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.

Section 27. SUPPLEMENTS AND AMENDMENTS. Except as otherwise provided
in this Section 27, for so long as the Rights are then redeemable, and at any
time prior to the Distribution Date, the Company may in its sole and absolute
discretion, and the Rights Agent shall if the Company so directs, supplement or
amend any provision of this Agreement in any respect, whether or not such
supplement or amendment is adverse to any holder of the Rights, without the
approval of any holders of the Rights. At any time when the Rights are no
longer redeemable, except as otherwise provided in this Section 27, the Company
may, and the Rights Agent shall, if the Company so directs, supplement or amend
this Agreement without the approval of any holders of Rights Certificates in
order to (i) cure any ambiguity, (ii) correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder, or (iv)
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable; PROVIDED that no such supplement or amendment
shall adversely affect the interests of the holders of Rights as such (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person),
and no such amendment may cause the Rights again to become redeemable or cause
the Agreement again to become amendable other than in accordance with this
sentence. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which decreases the
Redemption Price. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment.

Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

<PAGE>
36

Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Stock).

Section 30. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise the rights and powers
specifically granted to the Board of Directors of the Company or to the Company,
or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including, without
limitation, a determination to redeem or not redeem the Rights or to amend this
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) that are done or made by the Board of Directors of the Company in
good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights, as such, and all other parties, and (y)
not subject the Board of Directors to any liability to the holders of the
Rights.

Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement or applicable to this Agreement is held by a court
of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

Section 32. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.

Section 33. 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 all such counterparts shall together constitute
but one and the same instrument.

Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.

<PAGE>
37

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above written.

Attest: PE CORPORATION

By
------------------------------
Name:
Title:

BANKBOSTON, N.A.

By
------------------------------
Name:
Title:

<PAGE>

EXHIBIT A

FORM

CERTIFICATE OF DESIGNATIONS

SERIES A PARTICIPATING JUNIOR PREFERRED STOCK

AND

SERIES B PARTICIPATING JUNIOR PREFERRED STOCK

PE CORPORATION

(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)

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

The PE Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter called
the "Corporation"), hereby certifies that the following resolution was duly
adopted by the Board of Directors of the Corporation as required by Section 151
of the General Corporation Law of the State of Delaware at a meeting duly called
and held on ______ __, 1999.

A. Series A Participating Junior Preferred Stock

RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the
Corporation's Restated Certificate of Incorporation, as amended (hereinafter
called the "Certificate of Incorporation"), the Board of Directors hereby
creates a series of preferred stock, par value $.01 per share, of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, powers and preferences thereof, and the limitations
thereof, as follows:

Section A.. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as "Series A Participating Junior Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 50,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; PROVIDED, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the

<PAGE>

exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible into Series A
Preferred Stock.

Section A.2. DIVIDENDS AND DISTRIBUTIONS.

(A) Subject to the rights of the holders of any shares of any
series of preferred stock of the Corporation (the "Preferred Stock") (or any
similar stock) ranking prior and superior to the Series A Preferred Stock
with respect to dividends, the holders of shares of Series A Preferred Stock,
in preference to the holders of PE Corporation-PE Biosystems Common Stock,
par value $.01 per share, of the Corporation (the "PE Biosystems Stock"), PE
Biosystems Corporation-Celera Genomics Group Common Stock, par value $.01 per
share, of the Corporation ("Celera Genomics Stock"; together with the PE
Biosystems Stock, the "Common Stock") and of any other stock of the
Corporation ranking junior to the Series A Preferred Stock, shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
first business day of January, April, July, and October in each year (each
such date being referred to herein as a "Dividend Payment Date"), commencing
on the first Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $10 or (b) subject
to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of PE Biosystems
Stock, declared on the PE Biosystems Stock since the immediately preceding
Dividend Payment Date or, with respect to the first Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A
Preferred Stock; provided that, in the event of a Disposition (as defined in
the Certificate of Incorporation) resulting in a dividend on the PE
Biosystems Stock, such dividend shall not be paid unless the corresponding
dividend on the Series A Preferred Stock under this Section A.2 is paid at
the same time (and the amount of such corresponding dividend shall be a
preferential amount for the purposes of calculating the Net Proceeds (as
defined in the Certificate of Incorporation) of such Disposition). In the
event the Corporation shall at any time after the effective date ("Effective
Date") of the reincorporation merger of The PE Biosystems Corporation, a New
York corporation, with PE Merger Corp., a subsidiary of the Corporation,
declare or pay any dividend on the PE Biosystems Stock payable in shares of
PE Biosystems Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of PE Biosystems Stock (by
reclassification or otherwise than by payment of a dividend in shares of PE
Biosystems Stock) into a greater or lesser number of shares of PE Biosystems
Stock, then in each such case the amount to which holders of shares of Series
A Preferred Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of shares of PE Biosystems
Stock outstanding immediately after such event and the denominator of which
is the number of shares of PE Biosystems Stock that were outstanding
immediately prior to such event;

(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a

A-2
<PAGE>

dividend or distribution on the PE Biosystems Stock (other than a dividend
payable in shares of PE Biosystems Stock); PROVIDED that, in the event no
dividend or distribution shall have been declared on the PE Biosystems Stock
during the period between any Dividend Payment Date and the next subsequent
Dividend Payment Date, a dividend of $10 per share on the Series A Preferred
Stock shall nevertheless be payable, when, as and if declared, on such
subsequent Dividend Payment Date; and

(C) Dividends shall begin to accrue and be cumulative, whether or not
earned or declared, on outstanding shares of Series A Preferred Stock from the
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and before such Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.

Section A.3. VOTING RIGHTS. The holders of shares of Series A
Preferred Stock shall have the following voting rights:

(A) Subject to the provision for adjustment hereinafter set forth
and except as otherwise provided in the Certificate of Incorporation or
required by law, each share of Series A Preferred Stock shall entitle the
holder thereof to 1,000 votes on all matters upon which the holders of the PE
Biosystems Stock are entitled to vote. In the event the Corporation shall at
any time after the Effective Date declare or pay any dividend on the PE
Biosystems Stock payable in shares of PE Biosystems Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of PE
Biosystems Stock (by reclassification or otherwise than by payment of a
dividend in shares of PE Biosystems Stock) into a greater or lesser number of
shares of PE Biosystems Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number
by a fraction, the numerator of which is the number of shares of PE
Biosystems Stock outstanding immediately after such event and the denominator
of which is the number of shares of PE Biosystems Stock that were outstanding
immediately prior to such event;

(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock, and except as otherwise required by law,
the holders of shares of Series A Preferred Stock, Series B Preferred Stock,
PE Biosystems Stock and Celera Genomics Stock and any other capital

A-3
<PAGE>

stock of the Corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the Corporation; and

(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of PE Biosystems Stock as set forth herein) for taking
any corporate action.

Section A.4. CERTAIN RESTRICTIONS.

(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section A.2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not earned or declared, on shares of Series A
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:

(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (as to dividends) to the Series
A Preferred Stock;

(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (as to dividends) with the
Series A Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;

(iii) redeem, purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (as to dividends
and upon dissolution, liquidation or winding up) to the Series A
Preferred Stock or rights, warrants or options to acquire such junior
stock; or

(iv) redeem, purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.

(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the

A-4
<PAGE>

Corporation could, under paragraph (A) of this Section A.4, purchase or
otherwise acquire such shares at such time and in such manner.

Section A.5. REACQUIRED SHARES. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their retirement become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to any conditions and restrictions on issuance set forth
herein.

Section A.6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (A) to the holders of the PE Biosystems Stock or of shares of
any other stock of the Corporation ranking junior, upon liquidation,
dissolution or winding up, to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have
received the greater of $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, or an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth equal to 1,000
times the aggregate amount to be distributed per share to holders of shares
of PE Biosystems Stock, and (B) to the holders of shares of stock ranking on
a parity upon liquidation, dissolution or winding up with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such parity stock in proportion to the total amounts to which
the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event, however, that there are not
sufficient assets available to permit payment in full of the Series A
liquidation preference and the liquidation preferences of all other classes
and series of stock of the Corporation, if any, that rank on a parity with
the Series A Preferred Stock in respect thereof, then the assets available
for such distribution shall be distributed ratably to the holders of the
Series A Preferred Stock and the holders of such parity shares in the
proportion to their respective liquidation preferences. In the event the
Corporation shall at any time after the Effective Date declare or pay any
dividend on the PE Biosystems Stock payable in shares of PE Biosystems Group
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of PE Biosystems Stock (by reclassification or otherwise
than by payment of a dividend in shares of PE Biosystems Stock) into a
greater or lesser number of shares of PE Biosystems Stock, then in each such
case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the proviso in
clause (A) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of PE
Biosystems Stock outstanding immediately after such event and the denominator
of which is the number of shares of PE Biosystems Stock that were outstanding
immediately prior to such event.

Section A.7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction
in which the shares of PE Biosystems Stock are converted into, exchanged for
or changed into other stock or securities, cash and/or any other property,
then in any such case each share of Series A Preferred Stock shall at the
same time be similarly converted into, exchanged for or changed into an
amount per share

A-5
<PAGE>

(subject to the provision for adjustment hereinafter set forth) equal to
1,000 times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of PE Biosystems Stock is converted, exchanged or converted. In the
event the Corporation shall at any time after the Effective Date declare or
pay any dividend on the PE Biosystems Stock payable in shares of PE
Biosystems Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of PE Biosystems Stock (by reclassification or
otherwise than by payment of a dividend in shares of PE Biosystems Stock)
into a greater or lesser number of shares of PE Biosystems Stock, then in
each such case the amount set forth in the preceding sentence with respect to
the conversion, exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of PE Biosystems Stock outstanding immediately
after such event and the denominator of which is the number of shares of PE
Biosystems Stock that were outstanding immediately prior to such event.

Section A.8. REDEMPTION; CONVERSION.

(A) The shares of Series A Preferred Stock shall not be redeemable
from any holder except as provided in this Section A.8.

(B) In the event of a Disposition resulting in a redemption of PE
Biosystems Stock, the Series A Preferred Stock shall be redeemed in the same
manner as the PE Biosystems Stock; PROVIDED that the redemption price for the
Series A Preferred Stock shall be 1,000 times the aggregate amount to be
distributed per share to holders of shares of PE Biosystems Stock (and the
aggregate amount of the redemption price for the Series A Preferred Stock
shall be a preferential amount for the purposes of calculating the Net
Proceeds of such Disposition). In the event the Corporation shall at any time
after the Effective Date, declare or pay any dividend on the PE Biosystems
Stock payable in shares of PE Biosystems Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of PE Biosystems Stock
(by reclassification or otherwise than by payment of a dividend in shares of
PE Biosystems Stock) into a greater or lesser number of shares of PE
Biosystems Stock, then in each such case the amount of the redemption price
for the Series A Preferred Stock under the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of PE Biosystems Stock outstanding immediately after
such event and the denominator of which is the number of shares of PE
Biosystems Stock that were outstanding immediately prior to such event.

(C) In the event of any conversion of PE Biosystems Stock into
Celera Genomics Stock pursuant to Section 2.4 of the Certificate of
Incorporation, the Series A Preferred Stock shall be converted into the
Series B Preferred Stock in the same manner, and at the same conversion
ratio, as the conversion of the PE Biosystems Stock. In the event the
Company shall at any time after the Effective Date (i) declare or pay any
dividend on the PE Biosystems Stock payable in shares of PE Biosystems Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of PE Biosystems Stock (by reclassification or otherwise than by
payment of a dividend in shares of PE Biosystems Stock) into a greater or
lesser number of shares of PE Biosystems Stock or (ii) declare or

A-6
<PAGE>

pay any dividend on the Celera Genomics Stock payable in shares of Celera
Genomics Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Celera Genomics Stock (by reclassification or
otherwise than by payment of a dividend in shares of Celera Genomics Stock)
into a greater or lesser number of shares of Celera Genomics Stock, then in
each such case the conversion ratio for the Series A Preferred Stock under
the preceding sentence shall be adjusted by multiplying such ratio by (x) a
fraction, the numerator of which is the number of shares of PE Biosystems
Stock outstanding immediately after such event and the denominator of which
is the number of shares of PE Biosystems Stock that were outstanding
immediately prior to such event and (y) another fraction, the numerator of
which is the number of shares of Celera Genomics Stock outstanding
immediately prior to such event and the denominator of which is the number of
shares of Celera Genomics Stock that were outstanding immediately after such
event.

Section A.9. RANK. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Corporation, junior to all other
series of Preferred Stock, senior to the Common Stock and on parity with the
Series B Participating Junior Preferred Stock, par value $0.01 of the
Corporation (the "Series B Preferred Stock").

Section A.10. AMENDMENT. If any proposed amendment to the
Certificate of Incorporation (including this Certificate of Designations) would
alter, change or repeal any of the preferences, powers or special rights given
to the Series A Preferred Stock so as to affect the Series A Preferred Stock
adversely, then the holders of the Series A Preferred Stock shall be entitled to
vote separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Series A Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.

Section A.11. FRACTIONAL SHARES. Series A Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.

B. Series B Participating Junior Preferred Stock.

RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the
Corporation's Certificate of Incorporation, as amended (hereinafter called the
"Certificate of Incorporation"), the Board of Directors hereby creates an
additional series of Preferred Stock, par value $.01 per share, of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, powers and preferences thereof, and the limitations
thereof, as follows:

Section B.1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as "Series B Participating Junior Preferred Stock" (the "Series B
Preferred Stock") and

A-7
<PAGE>

the number of shares constituting the Series B Preferred Stock shall be 30,000.
Such number of shares may be increased or decreased by resolution of the Board
of Directors; PROVIDED, that no decrease shall reduce the number of shares of
Series B Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series B
Preferred Stock.

Section B.2. DIVIDENDS AND DISTRIBUTIONS.

(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock of the Corporation (the "Preferred Stock") (or any
similar stock) ranking prior and superior to the Series B Preferred Stock
with respect to dividends, the holders of shares of Series B Preferred Stock,
in preference to the holders of PE Corporation-PE Biosystems Common Stock,
par value $.01 per share, of the Corporation ("PE Biosystems Stock"), PE
Corporation-Celera Genomics Common Stock, par value $.01 per share, of the
Corporation ("Celera Genomics Stock"; together with the PE Biosystems Stock,
the "Common Stock") and of any other stock of the Corporation ranking junior
to the Series B Preferred Stock, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first business day of
January, April, July, and October in each year (each such date being referred
to herein as a "Dividend Payment Date"), commencing on the first Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series B Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $10 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount
of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than
a dividend payable in shares of Celera Genomics Stock, declared on the Celera
Genomics Stock since the immediately preceding Dividend Payment Date or, with
respect to the first Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series B Preferred Stock; provided that, in
the event of a Disposition (as defined in the Certificate of Incorporation)
resulting in a dividend on the Celera Genomics Stock, such dividend shall not
be paid unless the corresponding dividend on the Series B Preferred Stock
under this Section B.2 is paid at the same time (and the amount of such
corresponding dividend shall be a preferential amount for the purposes of
calculating the Net Proceeds (as defined in the Certificate of Incorporation)
of such Disposition). In the event the Corporation shall at any time after
the effective date ("Effective Date") of the reincorporation merger of The PE
Biosystems Corporation, a New York corporation, with PE Merger Corp., a
subsidiary of the Corporation, declare or pay any dividend on the Celera
Genomics Stock payable in shares of Celera Genomics Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Celera Genomics Stock (by reclassification or otherwise than by payment of a
dividend in shares of Celera Genomics Stock) into a greater or lesser number
of shares of Celera Genomics Stock, then in each such case the amount to
which holders of shares of Series B Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Celera Genomics Stock outstanding immediately

A-8
<PAGE>

after such event and the denominator of which is the number of shares of Celera
Genomics Stock that were outstanding immediately prior to such event.

(B) The Corporation shall declare a dividend or distribution on the
Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Celera Genomics
Stock (other than a dividend payable in shares of Celera Genomics Stock);
provided that, in the event no dividend or distribution shall have been declared
on the Celera Genomics Stock during the period between any Dividend Payment Date
and the next subsequent Dividend Payment Date, a dividend of $10 per share on
the Series B Preferred Stock shall nevertheless be payable, when, as and if
declared, on such subsequent Dividend Payment Date.

(C) Dividends shall begin to accrue and be cumulative, whether or not
earned or declared, on outstanding shares of Series B Preferred Stock from the
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive a quarterly
dividend and before such Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series B Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.

Section B.3. VOTING RIGHTS. The holders of shares of Series B
Preferred Stock shall have the following voting rights;

(A) Subject to the provision for adjustment hereinafter set forth and
except as otherwise provided in the Certificate of Incorporation or required by
law, each share of Series B Preferred Stock shall entitle the holder thereof to
1,000 votes on all matters upon which the holders of the Celera Genomics Stock
of the Corporation are entitled to vote. In the event the Corporation shall at
any time after the Effective Date declare or pay any dividend on the Celera
Genomics Stock payable in shares of Celera Genomics Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Celera
Genomics Stock (by reclassification or otherwise than by payment of a dividend
in shares of Celera Genomics Stock) into a greater or lesser number of shares of
Celera Genomics Stock, then in each such case the number of votes per share to
which holders of shares of Series B Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Celera Genomics Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Celera Genomics Stock that were outstanding immediately
prior to such event.

A-9
<PAGE>

(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a series
of Preferred Stock or any similar stock, and except as otherwise required by
law, the holders of shares of Series A Preferred Stock, Series B Preferred
Stock, PE Biosystems Stock, Celera Genomics Stock and any other capital stock
of the Corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the Corporation.

(C) Except as set forth herein, or as otherwise provided by law,
holders of Series B Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.

Section B.4. CERTAIN RESTRICTIONS.

(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section B.2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not earned or declared, on shares of Series B
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:

(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (as to dividends) to the Series
B Preferred Stock;

(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (as to dividends) with the
Series B Preferred Stock, except dividends paid ratably on the Series
B Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;

(iii) redeem, purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (as to dividends
and upon dissolution, liquidation or winding up) to the Series B
Preferred Stock or rights, warrants or options to acquire such junior
stock; or

(iv) redeem, purchase or otherwise acquire for consideration any
shares of Series B Preferred Stock, or any shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series B Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.

A-10
<PAGE>

(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section B.4, purchase or otherwise acquire such shares at such time and in
such manner.

Section B.5. REACQUIRED SHARES. Any shares of Series B Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their retirement become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to any conditions and restrictions on issuance set forth
herein.

Section B.6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (A) to the holders of the Celera Genomics Stock or of shares of any
other stock of the Corporation ranking junior, upon liquidation, dissolution or
winding up, to the Series B Preferred Stock unless, prior thereto, the holders
of shares of Series B Preferred Stock shall have received the greater of $100
per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not earned or declared, to the date of such
payment, or an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to
be distributed per share to holders of shares of Celera Genomics Stock, and (B)
to the holders of shares of stock ranking on a parity upon liquidation,
dissolution or winding up with the Series B Preferred Stock, except
distributions made ratably on the Series B Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Series B Preferred liquidation preference and the liquidation
preferences of all other classes and series of stock of the Corporation, if any,
that rank on a parity with the Series B Preferred Stock in respect thereof, then
the assets available for such distribution shall be distributed ratably to the
holders of the Series B Preferred Stock and the holders of such parity shares in
the proportion to their respective liquidation preferences. In the event the
Corporation shall at any time after the Effective Date declare or pay any
dividend on the Celera Genomics Stock payable in shares of Celera Genomics
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Celera Genomics Stock (by reclassification or otherwise
than by payment of a dividend in shares of Celera Genomics Stock) into a greater
or lesser number of shares of Celera Genomics Stock, then in each such case the
aggregate amount to which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event under the proviso in clause (A) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Celera Genomics Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Celera Genomics Stock that were outstanding immediately
prior to such event.

Section B.7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Celera Genomics Stock are converted into, exchanged for or
changed into other stock or securities, cash

A-11
<PAGE>

and/or any other property, then in any such case each share of Series A
Preferred Stock shall at the same time be similarly converted into, exchanged
for or changed into an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Celera Genomics Stock is converted,
exchanged or converted. In the event the Corporation shall at any time after
the Effective Date declare or pay any dividend on the Celera Genomics Stock
payable in shares of Celera Genomics Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Celera Genomics Stock
(by reclassification or otherwise than by payment of a dividend in shares of
Celera Genomics Stock) into a greater or lesser number of shares of Celera
Genomics Stock, then in each such case the amount set forth in the preceding
sentence with respect to the conversion, exchange or change of shares of Series
B Preferred Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Celera Genomics Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Celera Genomics Stock that were outstanding immediately
prior to such event.

Section B.8. REDEMPTION; CONVERSION.

(A) The shares of Series B Preferred Stock shall not be redeemable
from any holder except as provided in this Section B.8.

(B) In the event of a Disposition resulting in a redemption of Celera
Genomics Stock, the Series B Preferred Stock shall be redeemed in the same
manner as the Celera Genomics Stock; PROVIDED that the redemption price for the
Series B Preferred Stock shall be 1,000 times the aggregate amount to be
distributed per share to holders of shares of Celera Genomics Stock (and the
aggregate amount of the redemption price for the Series B Preferred Stock shall
be a preferential amount for the purposes of calculating the Net Proceeds of
such Disposition). In the event the Corporation shall at any time after the
Effective Date, declare or pay any dividend on the Celera Genomics Stock payable
in shares of Celera Genomics Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Celera Genomics Stock (by
reclassification or otherwise than by payment of a dividend in shares of Celera
Genomics Stock) into a greater or lesser number of shares of Celera Genomics
Stock, then in each such case the amount of the redemption price for the Series
B Preferred Stock under the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Celera Genomics Stock outstanding immediately after such event and the
denominator of which is the number of shares of Celera Genomics Stock that were
outstanding immediately prior to such event.

(C) In the event of any conversion of Celera Genomics Stock into
PE Biosystems Stock pursuant to Section 2.4 of the Certificate of
Incorporation, the Series B Preferred Stock shall be converted into the
Series A Preferred Stock in the same manner, and at the same conversion
ratio, as the conversion of the Celera Genomics Stock. In the event the
Corporation shall at any time after the Effective Date (i) declare or pay any
dividend on the PE Biosystems Stock payable in shares of PE Biosystems Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of PE Biosystems Stock (by

A-12
<PAGE>

reclassification or otherwise than by payment of a dividend in shares of PE
Biosystems Stock) into a greater or lesser number of shares of PE Biosystems
Stock or (ii) declare or pay any dividend on the Celera Genomics Stock
payable in shares of Celera Genomics Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Celera Genomics
Stock (by reclassification or otherwise than by payment of a dividend in
shares of Celera Genomics Stock) into a greater or lesser number of shares of
Celera Genomics Stock, then in each such case the conversion ratio for the
Series B Preferred Stock under the preceding sentence shall be adjusted by
multiplying such ratio by (x) a fraction, the numerator of which is the
number of shares of Celera Genomics Stock outstanding immediately after such
event and the denominator of which is the number of shares of Celera Genomics
Stock that were outstanding immediately prior to such event and (y) another
fraction, the numerator of which is the number of shares of PE Biosystems
Stock outstanding immediately prior to such event and the denominator of
which is the number of shares of PE Biosystems Stock that were outstanding
immediately after such event.

Section B.9. RANK. The Series B Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Corporation, junior to all other
series of Preferred Stock, senior to the Common Stock and on parity with Series
A Preferred Stock.

Section B.10. AMENDMENT. If any proposed amendment to the
Certificate of Incorporation (including this Certificate of Designations) would
alter, change or repeal any of the preferences, powers or special rights given
to the Series B Preferred Stock so as to affect the Series B Preferred Stock
adversely, then the holders of the Series B Preferred Stock shall be entitled to
vote separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Series B Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.

Section B.11. FRACTIONAL SHARES. Series B Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series B Preferred Stock.

A-13
<PAGE>

IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its and attested by its
Secretary this __ day of _________, 1999.

-------------------------------
Name:
Title:

A-14
<PAGE>

Exhibit B

Form of Right Certificate

Certificate No. R- ____ ___ Rights

NOT EXERCISABLE AFTER , 2009 OR EARLIER IF REDEMPTION
OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON
(AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

Right Certificate

PE CORPORATION

This certifies that ___________ or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of , , 1999 as the same may be amended from time
to time (the "Rights Agreement"), between PE Corporation, a Delaware corporation
(the "Company"), and BankBoston, N.A. (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such term is defined
in the Rights Agreement) and prior to 5:00 P.M., New York City time, on
, 2009 at the office or agency of the Rights Agent designated for
such purpose, or of its successor as Rights Agent, one one-thousandth of a
fully paid non-assessable share of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the Company, at a
purchase price of $ per one one-thousandth of a share of Preferred Stock
(the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number
of Rights evidenced by this Right Certificate (and the number of one
one-thousandths of a share of Preferred Stock which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of , 1999 based on the Preferred
Stock as constituted at such date. As provided in the Rights Agreement, the
Purchase Price, the number of one one-thousandths of a share of Preferred Stock
(or other securities or property) which may be purchased upon the exercise of
the Rights and the number of Rights evidenced by this Right Certificate are
subject to modification and adjustment upon the happening of certain events.

<PAGE>

This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned office or agency of the Rights Agent. The
Company will mail to the holder of this Right Certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor.

This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.

Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged in whole or in
part for shares of Preferred Stock or shares of the Company's PE Biosystems
Common Stock ("Common Stock") par value $.01 per share.

No fractional shares of Preferred Stock or Common Stock will be issued
upon the exercise or exchange of any Right or Rights evidenced hereby (other
than fractions of Preferred Stock which are integral multiples of one
one-thousandth of a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.

No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise or exchange hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.

This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.

B-2
<PAGE>

WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____________.

ATTEST: PE CORPORATION

By: By:
--------------------------- --------------------------------
Name:
Title:

Countersigned:

BANKBOSTON, N.A.
as Rights Agent

By:
---------------------------
Name:
Title:
Date:

B-3
<PAGE>

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)

FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfer unto __________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
Rights represented by this Right Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
___________________ Attorney, to transfer said Rights on the books of the
within-named Company, with full power of substitution.

Dated: _________________

___________________________________
Signature

Signature Guaranteed:

Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program

------------------------------------------------------------
(To be completed)

The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being assigned to, an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

____________________________
Signature

B-4
<PAGE>

Form of Reverse Side of Right Certificate - continued

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)

To PE Corporation:

The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Right Certificate to purchase the shares of
Preferred Stock (or other securities or property) issuable upon the exercise
of such Rights and requests that certificates for such shares of Preferred
Stock (or such other securities) be issued in the name of:

___________________________________________________________
(Please print name and address)

___________________________________________________________

If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivery to:

Please insert social security
or other identifying number

___________________________________________________________
(Please print name and address)

___________________________________________________________

Dated: ____________________________

________________________________
Signature

(Signature must conform to holder specified on Right Certificate)

Signature Guaranteed:

Signature must be guaranteed by bank, trust company, broker, dealer or
other eligible institution participating in a recognized signature guarantee
medallion program.

B-5
<PAGE>
Form of Reverse Side of Right Certificate -- continued

(To be completed)
_______________________________________________________________________

The undersigned certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement)

_______________________________
Signature

_______________________________________________________________________

NOTICE

The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.

In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.

B-6
<PAGE>
Exhibit C

Form of Right Certificate

Certificate No. R- ____ ___ Rights

NOT EXERCISABLE AFTER , 2009 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

Right Certificate

PE CORPORATION

This certifies that ___________ or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement, dated as of , 1999 as the same may be
amended from time to time (the "Rights Agreement"), between PE Corporation, a
Delaware corporation (the "Company"), and BankBoston, N.A. (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M., New
York City time, on , 2009 at the office or agency of the
Rights Agent designated for such purpose, or of its successor as Rights
Agent, one one-thousandth of a fully paid non-assessable share of Series B
Junior Participating Preferred Stock, par value $.01 per share (the
"Preferred Stock"), of the Company, at a purchase price of $ per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-thousandths of a share of
Preferred Stock which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as
of , 1999 based on the Preferred Stock as constituted at such
date. As provided in the Rights Agreement, the Purchase Price, the number of
one one-thousandths of a share of Preferred Stock (or other securities or
property) which may be purchased upon the exercise of the Rights and the
number of Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.

C-1
<PAGE>

Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $.01 per Right or (ii) may be exchanged in whole or in part for shares
of Preferred Stock or shares of the Company's Celera Genomics Group Stock
("Celera Genomics Stock") par value $.01 per share.

No fractional shares of Preferred Stock or Celera Genomics Stock will
be issued upon the exercise or exchange of any Right or Rights evidenced hereby
(other than fractions of Preferred Stock which are integral multiples of one
one-thousandth of a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.

This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.

C-2
<PAGE>

WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____________.

ATTEST: PE CORPORATION

By: By:
--------------------------- --------------------------------
Name:
Title:

Countersigned:

BANKBOSTON, N.A.
as Rights Agent

By:
---------------------------
Name:
Title:
Date:

C-3
<PAGE>

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)

__________________________________________________________________

Rights represented by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
___________________ Attorney, to transfer said Rights on the books of the
within-named Company, with full power of substitution.

Dated: _________________

______________________________
Signature

Signature Guaranteed:

Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program

- ------------------------------------------------------------
(To be completed)

_______________________________
Signature

C-4
<PAGE>

Form of Reverse Side of Right Certificate - continued

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)

To PE Corporation:

The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Right Certificate to purchase the shares of
Preferred Stock (or other securities or property) issuable upon the
exercise of such Rights and requests that certificates for such shares of
Preferred Stock (or such other securities) be issued in the name of:

______________________________________________________________
(Please print name and address)

______________________________________________________________

Please insert social security
or other identifying number

(Please print name and address)

______________________________________________________________

Dated:
___________________________

________________________________
Signature

(Signature must conform to holder specified on Right Certificate)

Signature Guaranteed:

Signature must be guaranteed by bank, trust company, broker, dealer or
other eligible institution participating in a recognized signature guarantee
medallion program.

C-5
<PAGE>
Form of Reverse Side of Right Certificate -- continued

(To be completed)
_____________________________________________________________

____________________________
Signature

__________________________________________________________________

NOTICE

C-6

<PAGE>

[Letterhead of Simpson Thacher & Bartlett]

January 29, 1999

PE Corporation
761 Main Street
Norwalk, Connecticut 06859

Ladies and Gentlemen:

This opinion letter is furnished to you in connection with the
Registration Statement on Form S-4 (as amended, the "Registration Statement")
of PE Corporation, a Delaware corporation (the "Company"), relating to the
issuance of shares of its PE Corporation--PE Biosystems Group Common Stock,
par value $.01 per share (the "PE Biosystems Stock"), and shares of its PE
Corporation--Celera Genomics Group Common Stock, par value $.01 per share
(the "Celera Genomics Stock"; together with the PE Biosystems Stock, the
"Common Stock"), pursuant to the merger (the "Merger") of a subsidiary of the
Company with The Perkin-Elmer Corporation, a New York corporation, described
in the Registration Statement.

We have examined, and have relied as to matters of fact upon, a copy of
the Registration Statement, and originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records, agreements, documents
and other instruments and such certificates or comparable documents of public
officials and of officers and representatives of the Company, and have made
such other and further investigations, as we have deemed relevant and necessary
as a basis for the opinions hereinafter set forth.

<PAGE>

-2- January 29, 1999

In such examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents.

Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that the shares of Common
Stock to be issued by the Company pursuant to the Merger have been duly
authorized and, when issued in accordance with the Registration Statement,
will be legally issued, fully paid and nonassessable.

We are members of the Bar of the State of New York and we do not express
any opinion herein concerning any law other than the Delaware General
Corporation Law.

This opinion letter is rendered to you in connection with the above
described transaction. We hereby consent to the filing of this opinion letter
as an exhibit to the Registration Statement and to the use of our name
therein under the caption "Legal Opinions."

Very truly yours,

/s/ Simpson Thacer & Bartlett
---------------------------------
SIMPSON THACHER & BARTLETT

<PAGE>

[Letterhead of Simpson Thacher & Bartlett]

January 29, 1999

Re: Recapitalization Proposal of
The Perkin-Elmer Corporation

The Perkin-Elmer Corporation
761 Main Avenue
Norwalk, CT 06859-0001

Ladies and Gentlemen:

We have acted as special tax counsel ("Tax Counsel") to The
Perkin-Elmer Corporation, a New York corporation ("Perkin-Elmer"), in connection
with the preparation of the Registration Statement on Form S-4 dated January 29,
1999 (the "Registration Statement") and in connection with the Agreement and
Plan of Merger (the "Merger Agreement") among PE Corporation, a Delaware
corporation ("Parent"), PE Merger Corp., a New York corporation and wholly-owned
subsidiary of Parent ("Merger Subsidiary"), and Perkin-Elmer, which provides for
the merger of Merger Subsidiary with and into Perkin-Elmer (the "Merger") on
the terms and conditions set forth therein. Pursuant to the Merger, each share
of the existing common stock of Perkin-Elmer will be exchanged for common stock
of the Parent consisting of one share of PE Biosystems Stock and 0.5
shares of Celera Genomics Stock.

In delivering this opinion letter, we have assumed with your consent
that the Merger will be effected in accordance with the Registration Statement
and Merger Agreement and that the representations made by Perkin-Elmer and by
Parent in letters provided to us are true, correct and complete as of the date
hereof and will continue to be true, correct and complete as of the

<PAGE>

SIMPSON THACHER & BARTLETT

The Perkin-Elmer Corporation January 29, 1999

Effective Time of the Merger. We have also assumed that the representations and
warranties contained in the Merger Agreement, and statements as to factual
matters contained in the Registration Statement are true, correct and complete
as of the date hereof, and that the parties have complied with and, if
applicable, will continue to comply with, the covenants contained in the Merger
Agreement. We have examined the documents referred to above and the originals,
or copies certified or otherwise identified to our satisfaction, of such
records, documents, certificates or other instruments and made such other
inquiries as in our judgement are necessary or appropriate to enable us to
render the opinion set forth below. We have not, however, undertaken any
independent investigation of any factual matter set forth in any of the
foregoing.

Subject to the foregoing and to the qualifications and limitations set
forth herein, we hereby confirm our opinions set forth in the Registration
Statement under the caption "Proposal 1--The Recapitalization Proposal--United
States Federal Income Tax Considerations".

If the Merger is effected on a factual basis different from that
contemplated in the Merger Agreement and the Registration Statement, the opinion
expressed herein and in the Registration Statement may be inapplicable. Our
opinion is based upon the Internal Revenue Code of 1986, as amended, the
Treasury regulations promulgated thereunder and other relevant authorities and
law, all as in effect on the date hereof. Consequently, future changes in the
law may cause the tax treatment of the transactions referred to herein to be
materially different from that described above.

We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the federal law of the
United States.

<PAGE>

SIMPSON THACHER & BARTLETT

The Perkin-Elmer Corporation January 29, 1999

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name in the
Registration Statement under the captions "Proposal 1--The Recapitalization
Proposal--United States Federal Income Tax Considerations" and "Legal
Opinions". This opinion letter is rendered to you in connection with the above
described transaction.

Very truly yours,

/s/ Simpson Thacher & Bartlett
-----------------------------------
SIMPSON THACHER & BARTLETT

<PAGE>

Exhibit 10.3

OFFICE BUILDING LEASE

between

MERIDIAN ROCKVILLE PLAZA, LLC

LANDLORD

and

THE PERKIN-ELMER CORPORATION

TENANT

Dated July 10, 1998

<PAGE>

OFFICE BUILDING LEASE

TABLE OF CONTENTS

Section Page

1. Introductory Provisions . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Fundamental Lease Provisions . . . . . . . . . . . . . . . . . . . 1
(b) References and Conflicts . . . . . . . . . . . . . . . . . . . . . 2
(c) Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2. Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Demised Premises . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Tenant's Proportionate Share . . . . . . . . . . . . . . . . . . . 3

3. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Lease Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Certificate of Commencement. . . . . . . . . . . . . . . . . . . . 3
(c) Acceptance of Demised Premises . . . . . . . . . . . . . . . . . . 3
(d) Rule Against Perpetuities. . . . . . . . . . . . . . . . . . . . . 4
(e) Option to Extend . . . . . . . . . . . . . . . . . . . . . . . . . 4

4. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Base Annual Rent . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Rent Commencement Date . . . . . . . . . . . . . . . . . . . . . . 5
(c) Additional Rent. . . . . . . . . . . . . . . . . . . . . . . . . . 5
(i) General . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(ii) Operating Expenses. . . . . . . . . . . . . . . . . . . . . . 5
(iii)Landlord's Enforcement Costs. . . . . . . . . . . . . . . . . 8
(iv) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Additional Rent Estimates and Adjustments. . . . . . . . . . . . . 9
(e) Taxes on Tenant's Property . . . . . . . . . . . . . . . . . . . .10
(f) Payment of Rent. . . . . . . . . . . . . . . . . . . . . . . . . .10
(g) Survival of Rent Obligation. . . . . . . . . . . . . . . . . . . .10

5. Intentionally Deleted . . . . . . . . . . . . . . . . . . . . . . . . .10

6. Construction of Premises and Occupancy. . . . . . . . . . . . . . . . .11

7. Use of Demised Premises . . . . . . . . . . . . . . . . . . . . . . . .12
(a) Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(b) Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(i) Legal . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(ii) Fire and Safety . . . . . . . . . . . . . . . . . . . . . . .12
(c) Environmental Protection . . . . . . . . . . . . . . . . . . . . .12
(d) Hazardous Waste Documentation. . . . . . . . . . . . . . . . . . .13
(e) Right to Inspect . . . . . . . . . . . . . . . . . . . . . . . . .13
(f) Right to Participate . . . . . . . . . . . . . . . . . . . . . . .13
(g) Tenant's Obligation. . . . . . . . . . . . . . . . . . . . . . . .13
(h) Termination Audit. . . . . . . . . . . . . . . . . . . . . . . . .13
(i) Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . .14
(j) Moving and Deliveries. . . . . . . . . . . . . . . . . . . . . . .14
(k) Excessive Floor Load . . . . . . . . . . . . . . . . . . . . . . .14
(l) Plumbing System. . . . . . . . . . . . . . . . . . . . . . . . . .14
(m) Existing Hazardous Waste . . . . . . . . . . . . . . . . . . . . .14

8. Rules and Regulations . . . . . . . . . . . . . . . . . . . . . . . . .14

2. Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Demised Premises . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Tenant's Proportionate Share . . . . . . . . . . . . . . . . . . . 3
(c) Measurement of Demised Premises. . . . . . . . . . . . . . . . . . 3

4. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Base Annual Rent . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Rent Commencement Date . . . . . . . . . . . . . . . . . . . . . . 5
(c) Additional Rent. . . . . . . . . . . . . . . . . . . . . . . . . . 5
(i) General. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(ii) Operating Expenses . . . . . . . . . . . . . . . . . . . . . 5
(iii) Landlord's Enforcement Costs . . . . . . . . . . . . . . . . 8
(iv) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Additional Rent Estimates and Adjustments. . . . . . . . . . . . . 9
(e) Taxes on Tenant's Property . . . . . . . . . . . . . . . . . . . .10
(f) Payment of Rent. . . . . . . . . . . . . . . . . . . . . . . . . .10
(g) Survival of Rent Obligation. . . . . . . . . . . . . . . . . . . .10

5. Intentionally Deleted . . . . . . . . . . . . . . . . . . . . . . . . .10

6. Construction of Premises and Occupancy. . . . . . . . . . . . . . . . .10

8. Rules and Regulations . . . . . . . . . . . . . . . . . . . . . . . . .14

9. Subletting and Assignment . . . . . . . . . . . . . . . . . . . . . . .14
(a) Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
(b) Subsidiaries and Corporate Transfers . . . . . . . . . . . . . . .15
(c) Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
(d) Subletting . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
(e) Required Information . . . . . . . . . . . . . . . . . . . . . . .15
(f) Fees; Documents. . . . . . . . . . . . . . . . . . . . . . . . . .16
(g) No Release . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
(h) Tenant Liability . . . . . . . . . . . . . . . . . . . . . . . . .16
(i) Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

10. Services and Utilities. . . . . . . . . . . . . . . . . . . . . . . . .16
(a) Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
(b) Interruption of Services . . . . . . . . . . . . . . . . . . . . .16
(c) Intentionally Deleted. . . . . . . . . . . . . . . . . . . . . . .17
(d) Separate Metering. . . . . . . . . . . . . . . . . . . . . . . . .17
(e) Excessive Heat Generation. . . . . . . . . . . . . . . . . . . . .17
(f) Intentionally Deleted. . . . . . . . . . . . . . . . . . . . . . .17
(g) Laboratory Waste . . . . . . . . . . . . . . . . . . . . . . . . .17

<PAGE>

(h) Pest Control . . . . . . . . . . . . . . . . . . . . . . . . . . .18

11. Maintenance and Repairs . . . . . . . . . . . . . . . . . . . . . . . .18
(a) Tenant's Responsibility. . . . . . . . . . . . . . . . . . . . . .18
(b) Landlord's Responsibility. . . . . . . . . . . . . . . . . . . . .18
(c) ADA Notification . . . . . . . . . . . . . . . . . . . . . . . . .18
(d) Maintenance Program and Contracts. . . . . . . . . . . . . . . . .18

12. Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
(a) Landlord's Consent . . . . . . . . . . . . . . . . . . . . . . . .19
(b) Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
(c) Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . .19
(d) Removal of Alterations . . . . . . . . . . . . . . . . . . . . . .19

13. Signs and Advertisements. . . . . . . . . . . . . . . . . . . . . . . .19

14. Common Areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(a) Common Areas Defined . . . . . . . . . . . . . . . . . . . . . . .20
(b) Landlord's Control . . . . . . . . . . . . . . . . . . . . . . . .20
(c) Changes and Additions. . . . . . . . . . . . . . . . . . . . . . .20

15. Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(a) Parking Rights . . . . . . . . . . . . . . . . . . . . . . . . . .20
(b) Intentionally Deleted. . . . . . . . . . . . . . . . . . . . . . .20
(c) Tenant's Parking Area. . . . . . . . . . . . . . . . . . . . . . .20

16. Surrender and Inspection. . . . . . . . . . . . . . . . . . . . . . . .21
(a) Surrender. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
(b) Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
(c) Alterations. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
(d) Fixtures and Personal Property Remaining . . . . . . . . . . . . .21
(e) Initial Improvements . . . . . . . . . . . . . . . . . . . . . . .21

17. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
(a) Access to Building . . . . . . . . . . . . . . . . . . . . . . . .21
(b) Landlord's Access to Demised Premises. . . . . . . . . . . . . . .21
(c) Restricted Access. . . . . . . . . . . . . . . . . . . . . . . . .22
(d) Access System Credit . . . . . . . . . . . . . . . . . . . . . . .22

18. Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
(a) Personal Property. . . . . . . . . . . . . . . . . . . . . . . . .22
(b) Tenant's Liability . . . . . . . . . . . . . . . . . . . . . . . .22
(c) Criminal Acts of Third Parties . . . . . . . . . . . . . . . . . .22
(d) Tenant's Indemnity . . . . . . . . . . . . . . . . . . . . . . . .22
(e) Landlord's Indemnity . . . . . . . . . . . . . . . . . . . . . . .22
(f) Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

19. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(a) Intentionally Deleted. . . . . . . . . . . . . . . . . . . . . . .23
(b) Coverages. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(i) Commercial General Liability. . . . . . . . . . . . . . . . .23
(ii) Broad Form Property . . . . . . . . . . . . . . . . . . . . .23
(iii)Workers' Compensation . . . . . . . . . . . . . . . . . . . .23
(iv) Additional Insurance. . . . . . . . . . . . . . . . . . . . .23
(c) Policy Requirements. . . . . . . . . . . . . . . . . . . . . . . .23
(d) No Limitation of Liability . . . . . . . . . . . . . . . . . . . .23
(e) Notice of Fire and Accident. . . . . . . . . . . . . . . . . . . .23
(f) Waiver of Subrogation. . . . . . . . . . . . . . . . . . . . . . .23
(g) Landlord's Insurance . . . . . . . . . . . . . . . . . . . . . . .23

20. Damage by Casualty. . . . . . . . . . . . . . . . . . . . . . . . . . .24
(a) Damage to Demised Premises . . . . . . . . . . . . . . . . . . . .24
(b) Substantial Damage . . . . . . . . . . . . . . . . . . . . . . . .24
(c) Tenant's Right of Termination. . . . . . . . . . . . . . . . . . .24
(d) Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . .24
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

<PAGE>

21. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

22. Defaults and Remedies . . . . . . . . . . . . . . . . . . . . . . . . .25
(a) Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
(b) Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
(c) Right of Landlord to Cure Tenant's Default . . . . . . . . . . . .27
(d) Intentionally Deleted. . . . . . . . . . . . . . . . . . . . . . .27
(e) Intentionally Deleted. . . . . . . . . . . . . . . . . . . . . . .27
(f) Landlord's Remedies Cumulative . . . . . . . . . . . . . . . . . .27
(g) Attorney's Fees. . . . . . . . . . . . . . . . . . . . . . . . . .27
(h) Mitigation of Damages. . . . . . . . . . . . . . . . . . . . . . .27
(i) Waiver of Distraint Rights . . . . . . . . . . . . . . . . . . . .28

23. Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

24. Lender Requirements . . . . . . . . . . . . . . . . . . . . . . . . . .28
(a) Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . .28
(b) Attornment . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(c) Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . .29
(d) Non-Disturbance. . . . . . . . . . . . . . . . . . . . . . . . . .29
(e) Financial Statements . . . . . . . . . . . . . . . . . . . . . . .29
(f) Assignment of Rents. . . . . . . . . . . . . . . . . . . . . . . .29

25. Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . .29

26. Tenant Holdover . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
(a) With Landlord Consent. . . . . . . . . . . . . . . . . . . . . . .30
(b) Without Landlord Consent . . . . . . . . . . . . . . . . . . . . .30

27. Intentionally Deleted . . . . . . . . . . . . . . . . . . . . . . . . .30

28. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

29. Mechanics Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

30. Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

31. Postponement of Performance . . . . . . . . . . . . . . . . . . . . . .30

32. Landlord's Reserved Rights. . . . . . . . . . . . . . . . . . . . . . .31

33. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

34. Limitation of Landlord's Liability. . . . . . . . . . . . . . . . . . .31

35. Transfer of the Building. . . . . . . . . . . . . . . . . . . . . . . .31

36. Waiver of Counterclaim and Trial by Jury. . . . . . . . . . . . . . . .31

37. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
(a) Addresses for Notices. . . . . . . . . . . . . . . . . . . . . . .32
(b) Effective Date of Notice . . . . . . . . . . . . . . . . . . . . .32

38. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

39. Construction Allowance Offset . . . . . . . . . . . . . . . . . . . . .32

40. Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . . . . . .32
(a) Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . .32
(b) Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
(c) No Partnership . . . . . . . . . . . . . . . . . . . . . . . . . .32
(d) No Representations by Landlord . . . . . . . . . . . . . . . . . .32
(e) Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
(f) Pronouns . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
(g) Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

<PAGE>

(h) Landlord's Approval. . . . . . . . . . . . . . . . . . . . . . . .32
(i) Invalidity of Particular Provisions. . . . . . . . . . . . . . . .32
(j) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .32
(k) Entire Agreement; Modification . . . . . . . . . . . . . . . . . .32
(l) Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
(m) Examination of Lease . . . . . . . . . . . . . . . . . . . . . . .33
(n) Recovery of Attorney's Fees. . . . . . . . . . . . . . . . . . . .33
(o) Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
(p) Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . .33
(q) Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . .33

41. Right of First Purchase Offer . . . . . . . . . . . . . . . . . . . . .33

42. Right of First Lease Offer. . . . . . . . . . . . . . . . . . . . . . .34

43. Expansion in Adjacent Building. . . . . . . . . . . . . . . . . . . . .35

44. Right of First Purchase Offer - Adjacent Building . . . . . . . . . . .36

45. Right of First Purchase Offer - Other Property. . . . . . . . . . . . .37

46. Package Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

47. Loading dock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

48. Fence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

49. Subordination of Lien . . . . . . . . . . . . . . . . . . . . . . . . .40

50. Satellite Dish. . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

EXHIBITS

Exhibit "A" Floor Plan of Demised Premises [SS2(a)]
Exhibit "B" Intentionally Deleted
Exhibit "C" Work Agreement [SS6(b)]
Exhibit "C" Schedule 1 Rules and Procedures for Contractors
Exhibit "D" Rules and Regulations [SS8]
Exhibit "E" Certificate of Commencement [SS3(b)]
Exhibit "F" Intentionally Deleted
Exhibit "G" NFPA 45 [SS7(b)]
Exhibit "H" Sketch Depicting the Other Property [SS42]
Exhibit "I" Tenant's Parking Area [SS15(c)]
Exhibit "J" Form of Non-Disturbance Agreement [SS24(g)]
Exhibit "K" I-3 Zoning Code Excerpt [SS6(g)]
Exhibit AL" The County Letter [SS7(a)]

<PAGE>

LEASE

This Lease (the "Lease") is made this 10th day of July, 1998, between
Meridian Rockville Plaza, LLC, a Delaware limited liability company
("Landlord"), and The Perkin-Elmer Corporation, a New York corporation
("Tenant").

WITNESSETH:

For and in consideration of the covenants herein contained and upon the
terms and conditions herein set forth, the parties agree as follows:

1. INTRODUCTORY PROVISIONS

(a) FUNDAMENTAL LEASE PROVISIONS. Certain Fundamental Lease Provisions
are presented in this Section in summary form solely to facilitate convenient
reference by the parties hereto:

<TABLE>
<S> <C> <C>
1. DEMISED PREMISES 113,960 rentable square feet in the Building [See Section 2(a)]

2. BUILDING Building located at 45 West Gude Drive, [See Section 2(a)]
Rockville, Maryland 20852

3. RENTABLE AREA OF 113,960 rentable square feet, [See Section 2(a)]
DEMISED PREMISES measured in accordance with the BOMA
Standard Method of Floor Measurement
for Office Buildings most recently adopted
as of the date of this Lease (the "BOMA
Method")

4. PROPORTIONATE SHARE 100% [See Section 2(b)]

5. LEASE TERM Approximately ten and one-half (10.5) years [See Section 3(a)]

6. COMMENCEMENT DATE July 10, 1998 [See Section 3(a)]

7. EXPIRATION DATE December 31, 2008 [See Section 3(a)]

8. RENTAL AGENT The Meridian Group [See Section 4]
11200 Rockville Pike, Suite 205
Rockville, Maryland 20852

9. BASE ANNUAL RENT AND
BASE MONTHLY RENT [See Section 4(a)]

</TABLE>

PERIOD BASE ANNUAL RENT BASE MONTHLY RENT
<S> <C> <C>
Date on which Tenant is obligated
to pay Base Annual Rent with respect $ 31,356.19
to the Phase I Premises until the Phase 2
Commencement Date

Subject to Section 4(b) of this Lease,
Phase 2 Commencement Date until 12/31/99 $157,223.00

1/1/00 - 12/31/00 $1,943,276.20 $161,939.69

1/1/01 - 12/31/01 $2,001,574.40 $166,797.88

1/1/02 - 12/31/02 $2,061,621.60 $171,801.81

1/1/03 - 12/31/03 $2,123,470.20 $176,955.86

1/1/04 - 12/31/04 $2,187,174.30 $182,264.53

1/1/05 - 12/31/05 $2,252,789.50 $187,732.46

1/1/06 - 12/31/06 $2,320,373.10 $193,364.42

Page 1
<PAGE>

1/1/07 - 12/31/07 $2,389,984.20 $199,165.36

1/1/08 - 12/31/08 $2,461,683.70 $205,140.32

</TABLE>

10. INTENTIONALLY DELETED

11. INTENTIONALLY DELETED

12. USE OF DEMISED PREMISES For uses permitted under I-3 Zoning in effect
in the City of Rockville, Maryland as of the date
of this Lease

13. INTENTIONALLY DELETED

14. INTENTIONALLY DELETED

15. INTENTIONALLY DELETED

16. INTENTIONALLY DELETED

17. INTENTIONALLY DELETED

18. ADDRESS FOR NOTICES The Perkin-Elmer Corporation [See Section 37]
TO TENANT BEFORE 45 West Gude Drive
OCCUPANCY OF DEMISED Rockville, Maryland 20852
PREMISES Attention: Controller

19. ADDRESS FOR NOTICES The Perkin-Elmer Corporation [See Section 37]
TO TENANT AFTER 45 West Gude Drive
OCCUPANCY OF DEMISED Rockville, Maryland 20852
PREMISES Attention: Controller

with a copy to:

Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attn: Richard M. Lucas, Esq.

20. ADDRESS FOR NOTICES Meridian Rockville Plaza, LLC [See Section 37]
TO LANDLORD c/o the Meridian Group
11200 Rockville Pike, Suite 205
Rockville, Maryland 20852
Attention: Bruce Lane

with a copy to:

Shulman, Rogers, Gandal, Pordy & Ecker, P.A.
Third Floor, 11921 Rockville Pike
Rockville, Maryland 20852-2743
Attention: David A. Pordy, Esquire

21. LEASING BROKER Catherine C. Jones and Marc Magazine [See Section 38]
of Insignia Barnes Morris and Neil M.
Narcisenfeld and Brian S. Liss of
Julien J. Studley, Inc.

22. INTENTIONALLY DELETED

</TABLE>

(b) REFERENCES AND CONFLICTS. References appearing in Section 1(a) are
intended to designate some of the other places in the Lease where additional
provisions applicable to the particular Fundamental Lease Provisions appear.
These references are for convenience only and shall not be deemed all inclusive.
Each reference in this Lease to any of the Fundamental Lease Provisions
contained in Section 1(a) shall be construed to incorporate all of the terms
provided for under such provisions, and such provisions shall be read in
conjunction with all other provisions of this Lease applicable thereto. If
there is any conflict between any of the Fundamental Lease Provisions set forth
in Section 1(a) and any other provisions of the Lease, the latter shall control.

Page 2
<PAGE>

(c) EXHIBITS. The following drawings and special provisions are attached
hereto as exhibits and hereby made a part of this Lease:

Exhibit "A" Floor Plan of Demised Premises [SS2(a)]
Exhibit "B" Intentionally Deleted
Exhibit "C" Work Agreement [SS6(b)]
Exhibit "D" Rules and Regulations [SS8]
Exhibit "E" Certificate of Commencement [SS3(b)]
Exhibit "F" [Intentionally Deleted]
Exhibit "G" NFPA 45 [SS7(b)]
Exhibit "H" Sketch Depicting the Other Property [SS42]
Exhibit "I" Tenant's Parking Area [SS15(c)]
Exhibit "J" Form of Non-Disturbance Agreement [SS24(g)]
Exhibit "K" I-3 Zoning Code Excerpt [SS6(g)]
Exhibit "L" The County Letter [SS7(a)]

2. PREMISES.

(a) DEMISED PREMISES. Landlord hereby leases to Tenant, and Tenant hereby
rents from Landlord, the Demised Premises as specified in Section 1(a)(1)
located in the Building specified in Section 1(a)(2). The Demised Premises
shall consist of approximately the square footage of rentable floor space as
specified in Section 1(a)(3) and as shown on the floor plan attached hereto as
Exhibit "A".

(b) TENANT'S PROPORTIONATE SHARE. Tenant's Proportionate Share of certain
expenses hereinafter made payable to Landlord as Additional Rent is specified in
Section 1(a)(4). Said computation is based upon the ratio of the total rentable
area of the Demised Premises to the rentable area of the Building.

(c) MEASUREMENT OF DEMISED PREMISES. If Tenant disputes the rentable
square footage of the Demised Premises that is set forth in Section 1(a)3 of
this Lease, then, on or before the date that is sixty (60) days after the date
of this Lease, Tenant may provide Landlord with a rentable square footage figure
for the Demised Premises as determined by Tenant's architect in accordance with
the BOMA Method. Despite the foregoing, in the event that Tenant does not
provide Landlord with a written notice by the date which occurs sixty (60) days
after the date of this Lease (which notice disputes the amount of rentable
square feet contained in the Demised Premises and which is accompanied by a
rentable square footage figure, as determined by Tenant's architect in
accordance with the BOMA Method), then (i) the provisions of this Section 2(c)
shall be null and void and of no further force and effect, and (ii) the Demised
Premises shall be deemed for all purposes, to contain 113,960 rentable square
feet. If Landlord and Tenant are unable to mutually agree upon the rentable
square footage of the Demised Premises, Landlord and Tenant shall submit the
matter to an architect (the "Architect") mutually selected and equally paid for
by Landlord and Tenant. The Architect shall measure the Demised Premises in
accordance with the BOMA Method. The determination of the Architect shall be
conclusive and binding on Landlord and Tenant. All rentals, other charges and
the "Improvements Allowance" (as defined in Exhibit C) shall be adjusted in
accordance with the Landlord's and Tenant's agreement, or if the parties are
unable to so agree, in accordance with the Architect's determination of the
rentable square footage of the Demised Premises, and Landlord and Tenant shall
execute an amendment certifying the amended rentable square footage figure and
the rentals to be paid by Tenant hereunder and the amount of the Improvements
Allowance. Despite the foregoing, in the event that the rentable square footage
of the Demised Premises does not vary by more than two percent (2%) from the
rentable square footage specified in Section 1(a)3 of this Lease, there shall be
no adjustment of (i) the rental or other charges payable hereunder by Tenant, or
(ii) the Improvements Allowance.

3. TERM

(a) LEASE TERM. The term of this Lease (sometimes herein called the
"Lease Term") shall be the period commencing on the date Landlord delivers
possession of the Demised Premises to Tenant (the "Commencement Date") and,
subject to sooner termination as herein provided, ending on December 31, 2008
(the "Expiration Date"). Landlord shall deliver possession of the Demised
Premises to Tenant on the Commencement Date. The period commencing with the
Commencement Date and ending on the following December 31 shall constitute the
first "Lease Year" as such term is used herein. Each successive full twelve
(12) month period during the Lease Term shall constitute a "Lease Year". If
permission is given to Tenant to enter into the possession of the Demised
Premises prior to the Commencement Date in Section 1(a)(6), Tenant covenants and
agrees that such occupancy shall be deemed to be under all the terms, covenants,
conditions and provisions of this Lease and the Commencement Date will coincide
with the date of occupancy.

(b) CERTIFICATE OF COMMENCEMENT. Within fifteen (15) days after the
Commencement Date, Landlord and Tenant shall execute a Certificate of
Commencement in the form of Exhibit "E".

Page 3
<PAGE>

(c) ACCEPTANCE OF DEMISED PREMISES. Subject to the provisions of Section
6 of this Lease, occupancy of the Demised Premises or any portion thereof by
Tenant or anyone claiming through or under Tenant for the conduct of Tenant's or
such other person's business therein shall be conclusive evidence that Tenant
and all parties claiming through or under Tenant (a) have accepted the Demised
Premises or such portion (i) as suitable for the purposes for which the Demised
Premises are leased hereunder, and (ii) as complying with all requirements of
Tenant with respect to the condition, order and repair thereof as required by
the terms of this Lease, (b) have accepted the common areas as being in a good
and satisfactory condition, and (c) have waived any defects (other than latent
defects) in the Demised Premises and the Building.

(d) RULE AGAINST PERPETUITIES. In the event that the Lease Term has not
commenced within three (3) years after the date specified as the Commencement
Date in Section 1(a)6 above, then this Lease shall automatically terminate at
the expiration of such three (3) year period, whereupon the parties shall
thereupon be relieved of any and all further liability hereunder.

(e) OPTION TO EXTEND.

(i) Provided that (a) this Lease shall be in full force and effect,
and (b) Tenant shall not then be in default, and (c) Tenant shall then be
occupying at least fifty percent (50%) of the rentable area of the Demised
Premises, Tenant shall have the right, at Tenant's sole option, to extend the
Lease for one (1) consecutive additional period of five (5) years (such
additional period being herein referred to as the "extension term", if
exercised, and included in the definition of the Lease Term). The extension
term shall be on the same terms, covenants and conditions as set forth herein
with respect to the original term of this Lease, except that the Base Annual
Rent payable during the extension term shall be determined pursuant to
subparagraph (ii) of this Section 3(e). In the event Tenant shall wish to
exercise such option to extend, it shall give written notice ("Initial Notice")
of its interest in exercising such option to Landlord, (x) not less than four
hundred fifty (450) days prior to the expiration of the then-current term (i.e.,
the original term) and (y) not more than five hundred forty-five (545) days
prior to the expiration of the then current term. If Tenant shall fail to
timely give such Initial Notice, Landlord shall be relieved of any and all
liability created by the grant of such option.

(ii) Upon Landlord's receipt of the Initial Notice, Landlord and
Tenant shall attempt to agree upon the then-prevailing fair market rent
[including any fees that may be payable for "Parking Rights" (as defined in
Section 15 below)] for the Demised Premises (the "Market Rent"). If Landlord
and Tenant are unable to agree upon the Market Rent within thirty (30) days
after Landlord's receipt of the Initial Notice, then Landlord and Tenant shall
employ the procedure and the timetable described below for the purpose of
computing the Market Rent for the Demised Premises and the Base Annual Rent
properly payable during the extension term. In the event Landlord and Tenant
are unable to agree upon the Market Rent payable during the extension term
within thirty (30) days of Landlord's receipt of Tenant's notice to extend, then
the Market Rent for the first Lease Year of the extension term shall be
determined by a board of three (3) disinterested real estate appraisers, one (1)
of whom shall be named by Landlord, one (1) by Tenant, and the two (2) so
appointed shall select a third. Said appraisers shall each be practicing
appraisers in Montgomery County, Maryland, specializing in the field of
commercial real estate, having no less than ten (10) years experience in such
field, recognized as ethical and reputable within their field, and certified as
MAI or an equivalent professional certification. Landlord and Tenant agree to
make their appointments promptly within ten (10) days after the expiration of
the thirty (30) day period, or sooner if mutually agreed upon. Within fifteen
(15) days after both such appraisers have been appointed, the two (2) appraisers
shall promptly select a third appraiser. Within fifteen (15) days after the
third appraiser is selected, each appraiser shall submit his or her
determination of said fair market rent. The Base Annual Rent for the first
Lease Year of the extension term shall be the greater of: (i) the average of
the three (3) determinations; provided, however, that if two of the appraisers
are within five percent (5%) of each other and the third appraiser is not within
five percent (5%) of either of the other two appraisals, then the average of the
two appraisals which are within five percent (5%) of each other shall be used;
or (ii) one hundred three percent (103%) of the Base Annual Rent payable during
the last Lease Year of the initial term of this Lease. In arriving at their
individual rate determinations, each appraiser shall consider and analyze all
the components of the Lease and apply them to current market factors. Landlord
and Tenant shall pay the fee of the appraiser selected by it and they shall
equally share the payment of the fee of the third appraiser. Notwithstanding
the foregoing, Landlord and Tenant may at any time after appointing the
appraisers, agree upon the Base Annual Rent payable during the extension term
and such mutual agreement shall supersede the appraisers' determinations.
Within ten (10) days after the determination of Market Rent by the three
appraisers, Tenant shall have the right to deliver a written notice (the
"Rescission Notice") to Landlord which rescinds Tenant's exercise of its
option to extend the Lease Term for a period of five years at Market Rent.
In the event that Tenant delivers to Landlord the Rescission Notice within
ten (10) days after the determination of the Market Rent by the three (3)
appraisers, then (i) Tenant shall be deemed to have never exercised its
option to extend the initial term of this Lease, (ii) the provisions of
Section 3(e) of this Lease shall be null and void and of no further force or
effect, and (iii) Landlord shall have the right to Lease the Demised Premises
to any party or parties for a term which commences immediately after the
expiration of the initial term of this Lease. In the event that Tenant fails
to deliver the Rescission Notice to Landlord prior to the expiration of the
applicable ten (10) day period, Tenant shall be deemed to have irrevocably
exercised its option to extend the initial term of this Lease for a period
of five (5) years, and the term of the Lease shall be automatically extended
for a period of five (5) years in accordance with the foregoing term of
Section 3(e) of the Lease.

Page 4
<PAGE>

4. RENT.

(a) BASE ANNUAL RENT. The Base Annual Rent reserved hereunder shall be as
specified in Section 1(a)9 which shall be payable by Tenant to the Landlord
during each Lease Year of the Lease Term in equal monthly installments of Base
Monthly Rent each as specified in Section 1(a)9. Subject to the provisions of
Section 4(b) of this Lease, Tenant shall pay the monthly installments of Base
Annual Rent in advance, without notice or demand, and without set off, deduction
or abatement of any kind, on or before the first day of each and every calendar
month throughout the entire term of the Lease, at the office of the Rental Agent
specified in Section 1(a)(8), or to such other person or at such other address
as Landlord may designate by written notice to Tenant from time to time.

(b) RENT COMMENCEMENT DATE. It is expressly understood and agreed that
Tenant's obligation to pay Base Monthly Rent with respect to the portion of the
Demised Premises that is located on the first floor of the Building (such
portion shall hereafter be referred to as "Phase 1 Premises") will occur on a
different date than the date that Tenant's obligation to pay Base Monthly Rent
with respect to the balance of the space that Tenant is leasing in the Building
(i.e., the remaining portion of the Demised Premises that excludes the Phase 1
Premises shall hereafter be referred to as the "Phase 2 Premises" with respect
to which Tenant shall commence paying Rent on a floor by floor basis as
described below). Tenant's obligation to pay Base Monthly Rent with respect to
the Phase 1 Premises shall commence on the earlier to occur of the following
dates: (i) the date that Tenant shall have commenced beneficial use for
Tenant's business purposes of all or any portion of the Phase 1 Premises; (ii)
the date Tenant obtains an occupancy permit for the Phase 1 Premises; or (iii)
August 1, 1998. From and after the date of this Lease, Tenant, at its sole cost
and expense, shall use diligent and continuous efforts to obtain all permits
that are necessary for its occupancy of the Phase 1 Premises and Phase 2
Premises. Tenant's obligation to pay Base Monthly Rent with respect to each
floor (or portion thereof) which constitutes a portion of the Phase 2 Premises
shall commence on the earlier to occur of the following dates: (i) the date
that Tenant shall have commenced beneficial use for Tenant's business purposes
of all or more than twenty percent (20%) of the area of such floor within the
Phase 2 Premises; (ii) the date that "Tenant's Work" (as defined in Exhibit "C")
with respect to any such floor is substantially complete; or (iii) subject to
the provisions of Section 4(d) of Exhibit C hereto, December 31, 1998 (the
"Outside Date"). Until such time that the "Phase 2 Commencement Date" (as
defined below) has occurred, Base Monthly Rent shall be determined in accordance
with the foregoing provisions of this Section 4(b) based upon the following rent
per square foot for each portion of the Demised Premises: (i) lower level --
south side of the corridor (approximately 15,933 square feet) at the rate of
Fifteen and 50/100 Dollars ($15.50) per rentable square foot; (ii) lower level
- -- north side of the corridor (approximately 5,000 square feet) at the rate of
Seven and 00/100 Dollars ($7.00) per rentable square foot; and (iii) floors 1-4
(approximately 93,027 square feet) at the rate of Seventeen and 25/100 Dollars
($17.25) per rentable square foot. Notwithstanding anything in this Lease to
the contrary, in no event shall Tenant's obligation to commence paying Base
Monthly Rent be extended beyond December 31, 1998. As used herein, (i) "Interim
Date" shall mean the date that Tenant has first commenced to pay Base Monthly
Rent with respect to any portion of the Phase 2 Premises, and (ii) "Phase 2
Commencement Date" shall mean the date that Tenant is obligated to pay Base
Monthly Rent with respect to the entire Phase 2 Premises. Landlord shall, in
good faith, use diligent and continuous efforts to complete the renovation of
the Building's lobby by September 30, 1998. Notwithstanding anything herein to
the contrary, the status of the completion of the lobby of the Building shall
not affect Tenant's obligation to pay Base Monthly Rent.

(i) GENERAL. Whenever it is provided by the terms of this Lease that
Tenant is required to make any payment to Landlord other than of Base Annual
Rent, such payment shall be deemed to be additional rent ("Additional Rent").
Unless otherwise expressly specified herein, Additional Rent shall be paid by
Tenant upon Tenant's receipt from Landlord of a statement showing the amount
owed. Additional Rent shall include, but not be limited to:

(ii) OPERATING EXPENSES. Throughout the Lease Term, Tenant agrees to
pay to Landlord, as Additional Rent, Tenant's Proportionate Share, as set forth
in Section 1(a)(4), of operating expenses. The term "operating expenses" shall
mean any and all expenses incurred by Landlord in connection with fulfilling its
obligations under Section 11(b) of this Lease, including but not limited to:
(1) wages and salaries of all employees engaged in the management, operation or
maintenance of the Building, including taxes, insurance and benefits relating
hereto; (2) all supplies and materials used in the operation or maintenance of
the Building (it being understood and agreed that any equipment or tool that
costs in excess of Two Thousand Five Hundred and No/100 Dollars ($2,500.00) that
is used by Landlord in the operation or maintenance of the Building shall be
amortized over the useful life of such item in accordance with generally
accepted accounting principles); (3) cost of all maintenance and service
agreements for the Building and the equipment therein, including but not limited
to controlled access and energy management services; (4) cost of all insurance
relating to the Building and common areas, including the cost of casualty,
liability and rent loss insurance applicable to the Building and Landlord's
personal property used in connection therewith; (5) general and special repairs
and maintenance; (6) management fees in the fixed amounts that are set forth in
Section 4(c)(iv) below; (7) legal, accounting, auditing and other professional
fees, to the extent not excluded from operating expenses pursuant to this
Section 4(c)(ii) below; (8) the cost of any additional services not provided to
the Building at the Commencement Date of the Lease Term, but thereafter provided
by Landlord in accordance with the terms of this Lease; (9) costs of cleaning
supplies; (10) costs of utility services such as electricity, gas, water and
sewage, to the extent

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incurred by Landlord in connection with performing services it is obligated to
perform under the terms of this Lease; (11) the cost of any capital improvements
or alterations made to the exterior common areas of the Building after the
Commencement Date that reduce other operating expenses (it being understood that
the amount expended on such capital item shall be commensurate with the
anticipated savings that will occur over the useful life of such item) or are
required under any governmental law or regulation that was not applicable to the
Building at the time it was constructed, such cost to be amortized over the
useful life of such capital improvement in accordance with generally accepted
accounting principles, together with interest on the unamortized balance at the
rate paid by Landlord on funds borrowed for the purposes of constructing said
capital improvements [or in the event that Landlord elects not to borrow funds
to construct such capital improvements, at the "prime rate" as such rate is set
forth in the WALL STREET JOURNAL (or a reasonably comparable publication in the
event the WALL STREET JOURNAL is no longer being published) as of the date the
expenditure was incurred]; (12) transportation district fees, parking district
fees, and the cost of other amenities required by law; (13) "real estate taxes"
(as hereinafter defined); (14) cost of providing trash and snow removal; (15)
cost of decoration of exterior common areas; (16) costs of landscaping; (17)
cost of maintenance and operation of the parking area; and (18) costs and fees
charged and/or assessed in connection with any business improvement district
that is applicable to the Building. Notwithstanding anything in this Lease to
the contrary, the preceding list is for definitional purposes only and shall not
impose any obligation upon Landlord to incur such expenses or provide such
services. Landlord shall not pass through to Tenant as an operating expense any
service or other obligation to be provided by Tenant pursuant to Section 11(a).
In the event that all or any of the services (or other obligations of Landlord,
including real estate taxes, which are to be passed through to Tenant as an
operating expense) that are being provided by Landlord are provided by
contractors or vendors who are providing such services (or such other
obligations) to other real property that is owned, operated or managed by
Landlord or any party that is related to or affiliated with Landlord, and the
same are being provided under a contract which includes the Building and such
other real property, then the cost of the same shall be allocated on a
proportionate square footage basis by Landlord between the Building and such
other real property [i.e., the amount of the cost of such service (or such other
obligation) that is allocated to the Building shall be a fraction, the numerator
of which shall be equal to the number of rentable square feet of area contained
in the Building, and the denominator of which shall be equal to the number of
rentable square feet of area contained in the other real property and in the
Building]. It is expressly understood and agreed that the cost of providing
services (or other obligations of Landlord which are to be passed through to
Tenant as an operating expense) to the Building and the "Adjacent Building" (as
defined in Section 43 below) under any contract which covers both the Building
and the Adjacent Building shall be allocated as follows: (x) 51.8% of the cost
shall be allocated to the Building; and (y) 48.2% of the cost shall be allocated
to the Adjacent Building. Operating expenses shall be reduced by all cash
discounts, trade discounts or quantity discounts received by Landlord or
Landlord's managing agent in the purchase of any goods, utilities or services in
connection with the prudent operation of the Building. If Landlord charges a
user fee for use of a building amenity or facility, then operating expenses
shall be deemed reduced by the amount of such fees. Despite the foregoing, in
no event shall operating expenses be reduced by any amount that is being charged
by Landlord or any parking operator in connection with any parking facilities.
Landlord shall diligently and in good faith pursue all insurance, breach of
warranty or other claims which would reasonably result in a reduction of
operating expenses. In no event shall Building tenants be required to pay, in
the aggregate, more than 100% of the actual operating expenses of the Building
for any calendar year, and Tenant shall not be required to pay more than 100% of
Tenant's Proportionate Share of the total operating expenses actually incurred
for any calendar year. "Operating expenses" shall not include any of the
following, except to the extent that such costs and expenses are included in
operating expenses as described above: costs of painting or decorating tenant
space; leasing brokerage commissions; interest and amortization of mortgages;
ground rent; or the costs of special services or utilities separately charged to
individual tenants of the Building. Despite the foregoing, operating expenses
shall also not include any of the following:

(a) all costs and expenses incurred by Tenant or any other
tenants of the Building and paid for or payable directly by Tenant or such other
tenants either to third parties or to Landlord under agreements for direct
payment or reimbursement for benefits or services;

(b) leasing commissions, attorneys' fees, costs, disbursements
and other expenses incurred in connection with negotiations or disputes with, or
leasing to, tenants or prospective tenants of the Building;

(d) Interest, points, fees and principal payments on loans to
Landlord or secured by mortgages or deeds of trust covering the Building or the
Project or a portion thereof and other debt costs, if any, or amortization on
any mortgage or mortgages or any other debt instrument encumbering the Building
or the Project;

(e) rental under any ground lease or other underlying lease or
easement (it being expressly understood and agreed that vault rentals, if any,
shall be included in operating expenses);

(f) any marketing costs and expenses incurred in connection with
the marketing of the Building or any rentable space therein;

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(g) any expenses for repairs or maintenance which are actually
recovered under warranties and service contracts;

(h) legal expenses arising out of (i) the negotiation, review,
preparation or termination of leases, occupancy agreements, assignments of
leases or sublease agreements, (ii) the interpretation of leases or other
occupancy agreements, or assignment or sublease agreements (iii) the enforcement
of the provisions of any lease or other occupancy agreement affecting the
Building, including, without limitation this Lease, (iv) any action against a
present or former tenant or occupant under a lease or other occupancy agreement,
including, without limitation, eviction, distraint, levy and collection actions;

(i) costs in connection with a change in ownership or financing or
refinancing of the Building provided, however, such provision shall not limit
any "real estate taxes" (as defined below) from being included as operating
expenses;

(j) the cost of any item paid to any entity or person related to or
affiliated with Landlord to the extent such cost exceeds the amount payable for
such services at then existing market rates to unrelated persons or entities;

(k) deductions for income tax purposes attributable to depreciation
of the Building or any improvements on the land or the Building equipment;

(l) any cost incurred directly in connection with the investigation,
remediation, clean-up, containment, abatement or removal of Hazardous Materials
(as such term is hereinafter defined) present on, about, under or at the Project
on the date hereof, or which are stored, used or released by Landlord, its
employees or agents after the date hereof or which migrate onto the Project. As
used herein, the term "Hazardous Materials" includes any "hazardous substance"
as that term is defined in the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. SS9604 et seq.), as amended
("CERCLA") and any "hazardous waste" as that term is defined in the Resource
Conservation and Recovery Act (42 U.S.C. SS6901 et seq., as amended) ("RCRA")
(collectively, "Hazardous Materials");

(m) Costs incurred by Landlord which pursuant to the express terms of
any retail tenant's lease are payable by such retail tenant directly to a
utility company or other entity with respect to retail space in the Building;

(n) Costs and expenses incurred by Landlord associated with the
operation of the business of the legal entity or entities which constitute
Landlord (as opposed to operation of the Building), including, without
limitation, sale and financing matters, legal entity accounting, income taxation
matters, costs of selling, syndicating, financing, mortgaging or hypothecating
any of Landlord's interest in the Building or the Project, and disputes with
employees or persons who own an interest in Landlord;

(o) Wages, salaries or other compensation and benefits of any
off-site employees of Landlord or its managing agent, provided, however,
operating expenses shall include Landlord's reasonable allocation (based on time
spent in connection with the Building) of compensation paid for the wages,
salary, and other compensation and benefits paid to such employees, if off-site,
who are assigned part-time to the operation, management, maintenance, or repair
of the Building;

(p) Any other costs or expenses for which Landlord actually receives
reimbursement from any source (other than the payment of operating expenses),
including without limitation, insurance, condemnation awards or warranties, or
any cost or expense for which Landlord would have received reimbursement from an
insurance company had Landlord been insured as required under the terms of this
Lease;

(q) Any expenditures which under generally accepted accounting
principles are treated as capital expenditures, except as otherwise expressly
set forth in this Lease;

(r) Fines, penalties, late payment charges and interest arising from
the acts or inaction of Landlord or failure timely to make tax and/or other
payments;

(s) Capital costs incurred by Landlord for the repair of damage to
the Building, or for the restoration of all or any portion of the Building after
the occurrence of a casualty and any other costs reimbursable by insurance
proceeds or to the extent reimbursed by any other third party, together with
associated deductible amounts;

(t) Expenses resulting from the breach of this Lease by Landlord, or
the negligence of Landlord, its agents, contractors, employees, or other tenants
of the Building or the Project;

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(u) Fees for services rendered to the Building, the Project or the
common areas by entities controlled by or under common control with Landlord to
the extent such fees exceed the market rate payable for comparable services if
rendered by unrelated third parties, provided, however, that a management fee in
the amount set forth in Section 4(c)(iv) below shall be a permissible operating
expense;

(v) Charitable or political contributions, advertising and
promotional expenditures, including the costs of staging special events;

(w) Assessments to the extent paid in less than the maximum permitted
number of installments;

(x) Depreciation of the Building or the Project, or the fixtures or
equipment therein;

(y) The cost of services or other obligations performed by Landlord
to the extent Tenant is obligated to perform such services or other obligations
pursuant to Section 11(a) or Section 19;

(z) Except as provided for herein, the costs and expenses of
utilities provided to any property other than the Building;

(aa) The costs and expenses of bringing the Building, including the
common areas, into compliance with the ADA, to the extent the Building is not in
compliance with the ADA as of the date of this Lease;

(bb) The costs and expenses of causing the base building systems of
the Building to be Year 2000 Compliant (hereinafter defined);

(cc) In the event that Landlord provides any services to other
buildings that are located in the immediate vicinity of the Building, but
Landlord does not provide such services to the Building, the cost of such
services shall not be passed through to Tenant as an operating expense;

(dd) Any cost that Landlord is obligated to pay under Section 7(m) of
this Lease;

(ee) Any cost to remediate or remove Hazardous Materials that are
caused by occupants of the Adjacent Building; and

(ff) Costs incurred by Landlord in (x) suing any insurance company in
connection with damage to the Building, and/or (y) suing any governmental
authority in connection with a condemnation of the Building.

The term "real estate taxes" shall mean all taxes and assessments, general
and special, ordinary and extraordinary, foreseen and unforeseen, now or
hereafter assessed, levied or imposed upon the Building, and the land on which
it is built, including, without limitation, vault fees and charges, arena taxes,
front foot benefit charges and adequate public facility costs and assessments,
together with (i) any tax, assessment, or other imposition in the nature of a
real estate tax, (ii) any ad valorem tax on rent or any tax on income if imposed
in lieu of or in addition to real estate taxes and assessments, and (iii) any
taxes and assessments which may hereafter be substituted for real estate taxes,
including by way of illustration only, any tax, assessment or other imposition
(whether a business rental or other tax) now or hereafter levied for Tenant's
use or occupancy of or conduct of business at the Demised Premises, on Tenant's
improvements to or furniture, fixtures or equipment in the Demised Premises, or
imposed upon the rent payments. "Real estate taxes" shall also include all
costs incurred by Landlord in contesting the validity or amount of any such
taxes. Real estate taxes shall not include any federal, state or local tax on
income or any inheritance, estate, succession, transfer, recordation, gift,
franchise, corporation, unincorporated business, profit, excess profit, or
license fees, or any fines, penalties and/or interest on late payments of any
real estate taxes. Tenant shall not be responsible for more than twelve (12)
calendar months of Real Estate Taxes in any one (1) year.

In the event that Tenant requests that Landlord contest real estate taxes,
Landlord will, in good faith, consider such request and contest the amount of
such real estate taxes if, in Landlord's reasonable determination, there is a
reasonable likelihood of reducing the amount of real estate taxes payable with
respect to the Building, regardless of whether such contest will adversely
affect the real estate tax assessment on any other building that is located in
the immediate vicinity of the Building and which is owned or managed by
Landlord. In the event that Landlord contests real estate taxes with respect to
any period during which Tenant has paid to Landlord operating expenses, and in
connection with such contest, Landlord receives a refund of any real estate
taxes that were previously paid by Landlord with respect to such period, then
Landlord shall pay to Tenant, after deducting all costs and amounts incurred by
Landlord in connection with such tax contest, Tenant's share of such refund.

As of the date of this Lease, the Building and the Adjacent Building are
assessed as part of the same tax parcel. To the extent that the Building and
the Adjacent Building are not separately assessed for real estate tax purposes
in

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the future, the real estate taxes for the Building and the Adjacent Building
(including the land under each building, the exterior common areas and the
balance of the land which forms the tax parcel) shall be allocated as follows:
(i) 51.8% of the real estate taxes shall be allocated to the Building; and (ii)
48.2% of the real estate taxes shall be allocated to the Adjacent Building.

(iii) LANDLORD'S ENFORCEMENT COSTS. Additional Rent shall include
any and all expenses incurred by Landlord, including reasonable attorneys' fees,
for the collection of monies due from Tenant and the enforcement of Tenant's
obligations under the provisions of this Lease. When Landlord, at Tenant's
expense, performs an obligation of Tenant pursuant to the terms of this Lease,
the costs and expenses (including overhead) incurred by Landlord in performance
of such obligations shall be Additional Rent.

(iv) Landlord and Tenant agree that the management fees that are
payable by Tenant as a part of operating expenses shall be as follows:

PERIOD ANNUAL MANAGEMENT FEE MONTHLY MANAGEMENT FEE

07/1/98 - 12/31/98 ------------- $3,000.00

01/1/99 - 12/31/99 $67,663.75 $5,638.65

01/1/00 - 12/31/00 $69,693.66 $5,807.81

01/1/01 - 12/31/01 $71,784.47 $5,982.04

01/1/02 - 12/31/02 $73,938.00 $6,161.50

01/1/03 - 12/31/03 $76,156.15 $6,346.35

01/1/04 - 12/31/04 $78,440.83 $6,536.73

01/1/05 - 12/31/05 $80,794.05 $6,732.84

01/1/06 - 12/31/06 $83,217.87 $6,934.82

01/1/07 - 12/31/07 $85,714.41 $7,142.87

01/1/08 - 12/31/08 $88,285.84 $7,357.15

(d) ADDITIONAL RENT ESTIMATES AND ADJUSTMENTS.

(i) Within sixty (60) days after the date of this Lease,
Landlord shall deliver to Tenant an estimated budget of the operating expenses
for the first Lease Year of the Lease Term. Landlord and Tenant shall meet at a
mutually agreeable time to discuss the budget and Landlord shall, in good faith,
consider all of Tenant's requested changes to the budget. Thereafter, in order
to provide for current monthly payments of Additional Rent, Landlord shall (x)
submit to Tenant a "Proposed Budget" (as defined below) on an annual basis, and
(y) submit to Tenant prior to January 1st of each year a written statement of
Landlord's estimate of the amount described in Section 4(c)(ii) above, together
with the amount of Tenant's Additional Rent which is estimated to result
herefrom. Tenant shall pay each month one-twelfth (1/12th) of Tenant's
Proportionate Share of Landlord's estimate of the operating expenses pursuant to
Section 4(d)(ii). Landlord's annual estimate of increases in operating expenses
shall not exceed one hundred ten percent (110%) of the actual operating expenses
that were incurred for the Building during the prior calendar year unless
Landlord provides Tenant with reasonable evidence which would reasonably justify
such increase. Landlord may revise its estimate of operating expenses at any
time during a calendar year by written notice to Tenant, setting forth such
revised estimate and Tenant's Proportionate Share of the estimated operating
expenses. In such event, all monthly payments made by Tenant after such notice
shall be in an amount calculated on the basis of such revised estimate.

(ii) At least within thirty (30) days prior to the commencement
of the second (2nd) Lease Year, and at least thirty (30) days prior to the
beginning of each Lease Year thereafter during the Lease Term, Landlord shall
furnish to Tenant a detailed proposed budget ("Proposed Budget") of operating
expenses for the following twelve (12) month period. The Proposed Budget shall
contain a reasonably detailed description of the services Landlord (in its own
capacity or through affiliated entities or third party services providers) shall
provide to the Building, proposed purchases of materials, and anticipated real
estate taxes and other costs and expenses that Landlord expects to include in
operating expenses. Landlord shall provide to Tenant, within fifteen (15)
business days after Tenant's written request, such supporting documentation as
Tenant shall reasonably request for the purpose of verifying the reasonable
accuracy and general reasonableness of such Proposed Budget. Representatives of
Landlord and Tenant shall meet on a mutually agreeable date within thirty (30)
days

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after delivery of the Proposed Budget for the purpose of discussing Tenant's
requested changes to the Proposed Budget. Landlord shall, in good faith,
consider all of Tenant's requested changes to the Proposed Budget.

(iii) If payment of Additional Rent begins on a date other than
January 1st under this Lease, in order to provide for current payments of
Additional Rent through December 31st of that partial calendar year, Landlord
shall submit to Tenant a statement of Landlord's estimate of Tenant's Additional
Rent for that partial year, stated in monthly increments. Tenant shall make the
monthly incremental payments of estimated Additional Rent, together with its
installments of operating expenses.

(iv) Within one hundred twenty (120) days after the end of each
calendar year, Landlord will submit to Tenant a statement of the actual
operating expenses for the preceding calendar year. In the event that Landlord
fails to timely deliver such statement to Tenant, then Landlord shall deliver
such statement to Tenant on the earlier to occur of the following dates: (i)
the date that is fifteen (15) business days after the date that Tenant requests
such statement in writing, or (ii) as soon after the expiration of the one
hundred twenty (120) day period as is reasonably practicable. Tenant shall pay
Landlord, within thirty (30) days of Tenant's receipt of such statement,
Tenant's Proportionate Share of the excess, if any, of actual operating expenses
over the projected operating expenses. If the amount paid by Tenant during the
previous year exceeded Tenant's share of actual operating expenses for the year,
the excess shall be credited toward payment of the next installment of operating
expenses to be paid by Tenant after Tenant receives said statement from
Landlord. If the amount paid by Tenant during the last calendar year of the
Lease Term exceeds Tenant's share of actual operating expenses for such year,
Landlord shall pay Tenant the excess amount within thirty (30) days after
Landlord's submission to Tenant of the aforesaid operating expense statement for
such calendar year.

(v) Within one hundred twenty (120) days after receipt of
Landlord's statement showing actual figures for the year, Tenant shall have the
right to request a statement of operating expenses of the Building and copies of
real estate tax bills, which shall be supplied to Tenant within a reasonable
time after Tenant's written request. No such request shall extend the time for
payments as set forth in Section 4(c) or Section 4(d)(iii) above. Unless Tenant
asserts specific error(s) and supports such errors, in writing, within sixty
(60) days after Landlord has complied with Tenant's request, Tenant shall waive
the right to contest the statement of actual figures for the year submitted by
Landlord. If Tenant timely asserts specific error(s) and supports such errors,
in writing, and it shall be determined that there is an error in Landlord's
statement, Tenant shall be entitled to a credit for any overpayment.

(vi) Landlord shall retain the books and records substantiating
the operating expenses and real estate taxes for a period of at least one (1)
year from the date Landlord submits a statement of such operating expenses and
real estate taxes to Tenant. In addition to Tenant's rights under Section
4(e)(iv), Landlord shall, upon Tenant's written request which shall be made no
later than ninety (90) days after receipt of Landlord's statement of the
operating expenses pursuant to Sections 4(d)(iii) and 4(d)(iv) above, permit
Tenant and/or Tenant's certified public accountant to inspect and audit
Landlord's records pertaining to Landlord's calculation of operating expenses;
provided, however, that Tenant shall not be entitled to delay any payment under
this Lease during the pendency of any such inspection or audit. Such inspection
or audit shall be made at a time and date specified in Tenant's request for
same, which date shall in no event be less than fifteen (15) days after
Landlord's receipt of Tenant's request for the same. Despite the foregoing, as
an express condition of Tenant's certified public accountant conducting such
inspection or audit, Tenant and Tenant's certified public accountant shall
certify in writing to Landlord that such certified public accountant (i) is
being compensated by Tenant on an hourly basis to conduct such audit, and (ii)
is not being compensated, in whole or in part, on a contingency basis or a
percentage of savings basis. Tenant shall bear all costs of any such
inspection. Tenant shall keep the results of any such audit confidential,
except to the extent (x) reasonably required to be revealed in any legal action
between Landlord and Tenant relating to operating expenses, or (y) as may be
required by law. Despite the foregoing, in the event such audit discloses that
Landlord has overstated the operating expenses for the Building during any
calendar year, (i) Landlord shall, within thirty (30) days thereafter, refund
such overpayment to Tenant, and (ii) by more than ten percent (10%), Landlord
shall pay to Tenant interest at the annual rate of twelve percent (12%) on the
amount of such overpayment.

(e) TAXES ON TENANT'S PROPERTY. Tenant shall be liable for, and shall
pay before delinquency, all taxes levied against any personal property or
trade fixtures placed by Tenant in or about the Demised Premises. Tenant
shall have the right to (i) contest any such taxes, provided that Tenant
posts such reasonable security as Landlord or its mortgagee may request in
connection with such protest, or (ii) pay such taxes under protest in
accordance with the last sentence of this Section 4(e). If any such taxes on
Tenant's personal property or trade fixtures are levied against Landlord or
Landlord's property, or if the assessed value of the Demised Premises is
increased by the inclusion therein of a value placed upon such personal property
or trade fixtures of Tenant, and if Landlord, after written notice to Tenant,
pays the taxes based upon such increased assessments (which Landlord shall have
the right to do regardless of the validity thereof, but under protest if
requested by Tenant), Tenant shall upon demand repay to Landlord a sum equal to
the taxes levied against Landlord or the portion of such taxes resulting from
such increase in the assessment; provided that, in any such event, Tenant shall
have the right, at Tenant's sole cost and expense, to bring suit to recover the
amount of any such taxes so paid under protest, and any amount so recovered
shall belong to Tenant.

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(f) PAYMENT OF RENT. Any rent payable for a portion of a month shall be
prorated based upon a thirty (30) day calendar month. Any Base Annual Rent or
Additional Rent which is not paid within five (5) days after the same is due
shall bear interest at eighteen percent (18%) per annum or the highest legal
rate, whichever is lower, from the due date until the date received by Landlord.
No payment by Tenant or receipt by Landlord of lesser amounts of rent than those
herein stipulated shall be deemed to be other than on account of the earliest
unpaid stipulated rent. No endorsement or statement on any check or any letter
accompanying any check or payment as rent shall be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
provided in this Lease. In addition, in the event Base Annual Rent or
Additional Rent is not paid within five (5) days of its due date, Landlord, at
its sole option, may assess a late charge equal to five percent (5%) of the Base
Monthly Rent or Additional Rent, as applicable, as liquidated damages for the
additional administrative charges incurred by Landlord as a result of such late
payment. Despite the foregoing, Landlord shall waive such late charge on the
first (1st) two (2) occasions during any twelve (12) month period in which
Tenant does not timely pay Base Annual Rent or Additional Rent, provided that
Tenant pays such installment of Base Annual Rent or Additional Rent to Landlord
within ten (10) days after the date Tenant receives notice that such amount is
past due. If Landlord receives from Tenant two or more returned or "bounced"
checks in any twelve (12) month period, Landlord may require all future rent by
cashier's or certified check.

(g) SURVIVAL OF RENT OBLIGATION. The obligation of Tenant with respect to
the payment of Additional Rent shall survive the termination of this Lease or
assignment thereof.

5. INTENTIONALLY DELETED.

6. CONSTRUCTION OF PREMISES AND OCCUPANCY.

(a) Landlord, at its expense, shall take all steps necessary to cause the
Building and the common areas (including, without limitation, all Building
bathrooms, all Building stairwell door hardware, all elevators and elevator
lobbies, the main lobby, all fire and safety systems that are located in the
existing elevator lobby and in the main lobby of the Building, and all areas of
ingress to and egress from the Building) to comply with Title III of the
Americans with Disabilities Act of 1990, as amended, 42 U.S.C. SS 12101, et seq.
(together with regulations promulgated pursuant thereto, the "ADA"); provided,
however, that to the extent any non-compliance is a result of the use or
occupancy of the Demised Premises or any action or inaction of Tenant, then such
compliance work shall be completed by Tenant at Tenant's cost. Tenant, at its
sole cost and expense, shall be solely responsible for taking any and all
measures which are required to cause the Demised Premises to comply with the ADA
(including means of ingress and egress thereto) and the business conducted
therein. Any Alterations made or constructed by Tenant for the purpose of
complying with the ADA or which otherwise require compliance with the ADA shall
be done in accordance with this Lease; provided, that Landlord's consent to such
Alterations shall not constitute either Landlord's assumption, in whole or in
part, of Tenant's responsibility for compliance with the ADA, or representation
or confirmation by Landlord that such Alterations comply with the provisions of
the ADA. Landlord shall renovate the bathrooms that are located in the Building
so that the bathroom facilities that are located in the Building will be in
compliance with the ADA. Landlord and Tenant shall, in good faith, coordinate
with each other in connection with the performance of Landlord's work under this
Section 6(a) and Tenant's Work. Landlord shall use diligent efforts to cause
all work to be performed by Landlord under this Section 6(a) to be completed by
October 31, 1998.

(b) Landlord, at its expense, shall renovate the main lobby of the
Building in a manner consistent with first class office buildings located in the
Rockville, Maryland vicinity. Landlord has provided Tenant with conceptual
design plans for the renovation of the lobby. Landlord shall, in good faith,
consider all reasonable changes that Tenant requests be made to such conceptual
design plans, provided in no event shall Landlord be required to incorporate any
such changes to the extent that such changes would increase the cost of making
such renovations unless Tenant agrees in writing to pay the increased cost.
Landlord shall, in good faith, use diligent efforts to cause such lobby
renovation to be substantially completed within ninety (90) days after the date
that Landlord and Tenant have mutually agreed upon the construction drawings for
such renovation.

(c) Landlord, at its expense, shall perform, or cause to be performed, the
following improvements to the common areas of the exterior of the Building: (i)
landscape the exterior common areas of the Building in accordance with plans
approved by Tenant; (ii) seal all paved areas surrounding the Building, (iii)
restripe the parking lot; (iv) provide adequate lighting for the exterior of the
Building; and (v) repair any damage that exists in the exterior of the Building
and in the parking areas. Landlord shall use diligent efforts to cause all work
to be performed under this Section 6(c) to be completed by October 31, 1998.

(d) Upon delivery of the Demised Premises to Tenant (i) the loading dock
roll up doors will be in good working order, and (ii) the base building systems
for the Building (i.e., elevators, life safety equipment, electrical system,
plumbing systems, hot water heaters, chillers, pumps and related central
heating, ventilation and air conditioning system to include balancing of central
airshafts) shall be in good working order with preventive maintenance up to date
and shall be Year 2000 Compliant. "Year 2000 Compliant" with respect to any
base building system shall mean that, on and after January 1, 2000, such system
will continue to operate in good working order without the requirement that any
additional expenditure be made

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to retrofit, update or otherwise repair or replace such system due to a
malfunction or design flaw that would impair such system solely by reason of the
change from the year 1999 to the year 2000.

(e) Landlord's work that is described in this Section 6 ("Landlord's
Work") shall be performed in a good and workmanlike manner in accordance with
good construction practices.

(f) Tenant, at Tenant's sole cost and expense, shall cause the "Tenant's
Work" (as defined in Exhibit C) to be performed in accordance with the
provisions of the Work Agreement that is attached to and made a part hereof as
Exhibit C.

(g) Tenant shall be responsible for obtaining all permits or licenses
necessary for its lawful occupancy of the Demised Premises, including, without
limitation, a Use and Occupancy permit for the Demised Premises. This
requirement shall not relieve Tenant of its liability for Base Annual Rent from
the Rent Commencement Date in the event all of said permits have not been
acquired prior thereto. Notwithstanding the foregoing, Landlord represents and
warrants to Tenant that as of the date of this Lease, the Building is zoned I-3.
A description of the uses permitted under the I-3 zoning as of the date of this
Lease, as set forth in the Rockville, Maryland, zoning codes, is attached to and
made a part of this Lease as Exhibit K.

(h) Except as expressly provided to the contrary in this Section 6, Tenant
is leasing the Demised Premises in its "as-is" condition as of the date of this
Lease. In the event that the Demised Premises cannot, at the commencement of
the Lease, be lawfully used for general office purposes (as opposed to Tenant's
specific purposes) as a result of the Demised Premises failing to be in
compliance with any applicable governmental law, then Tenant shall cause the
necessary work to be performed to the Demised Premises so that it can lawfully
be used for general office purposes. Tenant shall pay the first Fifty Thousand
and No/100 Dollars ($50,000.00) of the cost of making such alterations or
repairs and, subject to the sentence which immediately follows this sentence,
Landlord shall pay all actual, reasonable and out-of-pocket costs that are
incurred by Tenant in excess of Fifty Thousand and No/100 Dollars ($50,000.00)
in making such repairs and alterations. To the extent that any such alterations
or repairs are required as a result of Tenant's use of the Demised Premises for
uses other than office purposes, or as a result of alterations or improvements
that Tenant is making to the Demised Premises, then, Tenant, at Tenant's sole
cost, shall perform such alterations or repairs.

(i) Landlord and Tenant shall, within sixty (60) days after the date of
this Lease, jointly inspect the Building and prepare a punchlist of those items
of work to be performed by Landlord under Section 6(d) of this Lease which
remain unfinished as of the date of such inspection. Landlord shall, in good
faith, use commercially reasonable efforts to complete the items that are set
forth on the punchlist within thirty (30) days after the date of the punchlist.
In addition, Landlord and Tenant shall, within thirty (30) days after completion
of each and every other item of Landlord's Work to be completed pursuant to this
Section 6, jointly inspect such work and prepare a punchlist of those items of
work which remain unfinished as of the date of such inspection. Landlord shall,
in good faith, use commercially reasonable efforts to complete the items set
forth on such punchlist within thirty (30) days after the date of such
punchlist.

7. USE OF DEMISED PREMISES.

(a) USE. Tenant may use and occupy the Demised Premises for the purposes
specified in Section 1(a)(12) and for no other purposes whatsoever. Tenant
shall not use or permit the Demised Premises to be used for any other purpose or
purposes without the prior written consent of Landlord, which consent may be
granted or withheld in Landlord's reasonable discretion. Attached to and made a
part hereof as Exhibit L hereto are the following: (i) a letter dated July 6,
1998 (the "Use Permit Letter") from Sondra Harans Block, Assistant City Attorney
for the City of Rockville, Maryland to Patricia A. Harris, Esquire; and (ii) a
letter dated June 5, 1998 (the "Initial Letter"), from Sondra Harans Block,
Assistant City Attorney for the City of Rockville, Maryland to William Komiers,
Esquire. The Initial Letter and the Use Permit Letter (collectively, the
"County Letter") state that there is an existing use permit (No. U-279-83) (the
"Use Permit") which governs the permitted use of the Building. Notwithstanding
anything in this Lease to the contrary, (i) Tenant acknowledges that Landlord
has not made any representations to Tenant as to whether Tenant's intended
use(s) of the Building complies with the Use Permit, and (ii) Tenant shall not
use the Demised Premises (or any portion thereof) or permit any party to use the
Demised Premises (or any part thereof) for any purpose which would (x) violate
the Use Permit, or (y) violate any applicable governmental law, code, rule,
statute, regulation or order. Upon Tenant's request, Landlord shall (at no cost
to Landlord) cooperate with Tenant in connection with any reasonable
modifications that Tenant desires that the City of Rockville make to the Use
Permit, provided such modifications are consistent with the zoning of the
Building.

(b) COMPLIANCE. Subject to the provisions of Section 6 of this Lease,
Tenant shall, at Tenant's sole expense, (i) comply with all laws, orders,
ordinances, and regulations of federal, state, county, and municipal authorities
having jurisdiction over the Demised Premises, (ii) comply with any directive,
order or citation made pursuant to law by any public officer requiring abatement
of any nuisance or which imposes upon Landlord or Tenant any duty or obligation
arising from Tenant's occupancy or use of the Demised Premises or from
conditions which have been created by or at the request or insistence of Tenant,
or required by reason of a breach of any of Tenant's obligations hereunder or by
or through other fault of Tenant; (iii) comply with all insurance requirements
applicable to the Demised Premises; and (iv) cause the Demised

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Premises to comply with the ADA. If Tenant receives notice of any such
directive, order, citation or of any violation of any law, order, ordinance,
regulation or any insurance requirement, Tenant shall promptly notify Landlord
in writing of such alleged violation and furnish Landlord with a copy of such
notice. In furtherance of the foregoing, and provided Tenant shall first have
obtained Landlord's prior written consent in accordance with the provisions of
Section 12 of the Lease (which Tenant agrees to promptly request), Tenant shall,
at Tenant's sole cost and expense, make such changes, alterations, renovations
or modifications to the Demised Premises in accordance with the provisions of
Section 12 of the Lease (except for structural repairs) which are necessitated
or required by any such law, ordinance, rule, regulation, directive or insurance
requirement.

(i) LEGAL. Tenant shall not use or permit the Demised Premises or
any part thereof to be used in violation of any present or future applicable
law, regulation or ordinance, or of the certificate of occupancy issued for the
Building or the Demised Premises, and shall immediately discontinue any use of
the Demised Premises which is declared by any governmental authority having
jurisdiction to be in violation of law or said certificate of occupancy. Tenant
shall refrain from and discontinue such use immediately upon receipt of written
notice from Landlord.

(ii) FIRE AND SAFETY. Tenant agrees that any increases of fire
insurance premiums on the Building or contents caused by the occupancy of Tenant
and any expense or cost incurred in consequence of negligence or the willful
action of Tenant, Tenant's employees, agents, servants, invitees, or licensees
shall be deemed Additional Rent and paid as accrued. Tenant covenants to
Landlord that throughout the entire Lease Term Tenant's use of the Demised
Premises shall be in compliance with NFPA 45 - "Standard on Fire Protection for
Laboratories Using Chemicals" 1996 Edition ("NFPA 45"), a copy of which is
attached to and made a part hereof as Exhibit "G".

(c) ENVIRONMENTAL PROTECTION. Tenant and Tenant's employees and agents
shall not dispose of any hazardous waste ("hazardous waste"), as such term is
used in the RESOURCE CONSERVATION AND RECOVERY ACT, 40 CFR, Parts 260-262, the
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980,
or in any other federal, state or local law governing hazardous waste, as such
laws may be amended from time to time (hereinafter collectively referred to as
the "Act"), at, upon, under or within the Demised Premises or the Building or
into the plumbing or sewer or water system servicing the Demised Premises and/or
the Building, nor shall Tenant, its agents or employees cause or permit the
discharge, spillage, uncontrolled loss, seepage or filtration of any hazardous
waste at, upon, under or within the Demised Premises or the Building or into the
plumbing or sewer or water system servicing the same. All hazardous waste that
is located in the Demised Premises shall be used, stored, kept and disposed of
by Tenant in accordance with the Act. Prior to the date that Tenant occupies
any portion of the Demised Premises, Tenant will provide Landlord with (x) a
material safety data sheet (a "MSDS") for each chemical that Tenant will use
and/or store in the Demised Premises and (y) a site map indicating where each
chemical will be stored and/or used in the Demised Premises. Tenant shall, on a
semi-annual basis, provide Landlord with an updated site map. Prior to
introducing any new chemical into the Demised Premises, Tenant shall provide
Landlord with a MSDS for such chemical. Throughout the Lease Term, Tenant shall
(x) on a quarterly basis, check the acid neutralization tanks that are to be
located in the Demised Premises (it being understood and agreed that if
operations indicate a need for more frequent review of the neutralization tanks,
Tenant shall check the neutralization tanks more frequently), (y) keep the
neutralization tanks in a clean and good working condition, and (x) within
fifteen (15) days after the end of each quarter, provide Landlord with a copy of
the log (the "Neutralization Log") which shows the maintenance history of each
neutralization tank. Subject to the provisions of Section 12 below, Tenant
shall, at its sole cost, cause the air system serving the Demised Premises to be
modified to provide that (i) the air that enters the laboratory portion of the
Demised Premises will not be introduced into the air which enters the balance of
the Building, including the non-laboratory portions of the Demised Premises, or
into the air which enters into any adjacent building, (ii) the air in the
laboratory portion of the Demised Premises will be under negative pressure, and
(iii) in the event such negative pressure system is not working properly, an
alarm will go off which notifies Tenant of such failure. All deliveries and
removal of hazardous waste and chemicals into, and out of, the Demised Premises,
as applicable, shall be accomplished by Tenant through the loading dock and the
freight elevator(s) serving the Building. Tenant shall comply in all respects
with the requirements of the Act and related regulations.

(d) HAZARDOUS WASTE DOCUMENTATION. Tenant shall promptly notify and
provide Landlord with true, correct, complete and legible copies of all of the
following environmental items related to the Demised Premises that may be filed
or prepared by or on behalf of, delivered to, or served upon Tenant or Tenant's
agents: Neutralization Logs, MSDS, disposal manifests, reports filed pursuant
to self-reporting requirements or any applicable law or this Lease, permit
applications, permits, monitoring reports, community exposure warnings and any
notices, orders, reports, notices, listings, complaints, pleadings, plans and
correspondence (even those that may be characterized as confidential) relating
to the use, discharge, generation, release, disposal, investigation, clean-up,
remediation and abatement of hazardous waste. In the event of a release of any
hazardous waste in, on or about the Demised Premises, Tenant shall promptly
provide Landlord with copies of all reports and correspondence with or from all
governmental agencies, authorities or any other person relating to the release.

(e) RIGHT TO INSPECT. Subject to the provisions of Section 17
below, Landlord and its agents, shall have the right, upon reasonable prior
notice, but not the obligation, to inspect, investigate, sample or monitor the
Demised Premises, at any reasonable time and from time to time, to determine
whether Tenant is in compliance with the terms of this Section 7. If Tenant is
not in compliance, Landlord shall so notify Tenant and such notice shall specify
a reasonable period of time within

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which Tenant must cure its breach of its obligation to comply with the terms of
this Section 7. In the event that Tenant fails to comply with the terms of this
Section 7 within the period of time set forth in Landlord's notice, as
aforesaid, Landlord shall have the right but not the obligation (in addition and
not in limitation of any other right or remedy) to immediately enter the Demised
Premises and discharge Tenant's obligations hereunder. Any sum reasonably
incurred shall be due and payable by Tenant upon demand as Additional Rent.

(f) RIGHT TO PARTICIPATE. Landlord shall have the right, but not the
obligation, to join and participate in support of Tenant and at Tenant's
expense, in any proceedings or actions initiated against Tenant in connection
with claims or causes of actions related to the use, storage, generation,
release, transportation, or disposal of hazardous waste, in, on, from or about
the Demised Premises.

(g) TENANT'S OBLIGATION. Tenant hereby agrees that it is and shall be
fully responsible for all costs, expenses or liabilities (including, but not
limited to, those incurred by Landlord) which may occur from Tenant's use,
storage, disposal, release, spill, discharge or emissions of hazardous waste by
Tenant whether or not the same may be permitted by this Lease. Tenant shall
defend, indemnify and hold harmless Landlord, from and against any claims,
demands, administrative orders, judicial orders, penalties, fines, liabilities,
settlements, damages, costs or expenses (including, without limitation, costs of
investigation of site conditions, any clean-up, remediation, removal or
restoration work, loss or restriction on use of rentable space or of any amenity
of the Demised Premises, reasonable attorneys' fees, court costs and litigation
expenses) of whatever kind or nature arising out of, or in any way related to
the use, storage, disposal, release, discharge, spill or emissions of any
hazardous waste.

(h) TERMINATION AUDIT. Approximately sixty (60) days prior to the
expiration of the Lease Term, Landlord, at Tenant's sole cost, shall cause an
environmental audit and physical assessment report (the "Environmental Audit")
to be prepared with respect to the Demised Premises by an independent, qualified
reputable engineer or consultant. If such Environmental Audit reveals that
Tenant, or any agent, contractor, employee or invitee of Tenant has caused there
to be present any Hazardous Materials in, on or about the Demised Premises or
the soil and ground water thereunder, then, Tenant shall, at its sole cost,
perform all remedial work required by appropriate governmental agencies.
Furthermore, if Tenant is unable to complete such remedial operations prior to
the Lease expiration or termination date, Landlord shall grant Tenant an access
easement for the purpose of Tenant conducting additional environmental testing
and/or remediation operations, at Tenant's expense. Upon notice to Tenant,
Landlord may elect that Tenant do either or a combination of both of the
following acts:

(i) Tenant may remain in exclusive possession of the affected portion
of the Demised Premises for the period of time that Tenant, acting diligently
and in good faith, determines to be reasonably necessary to perform
investigation and/or remediation to the extent required by governmental agencies
having jurisdiction over the Demised Premises. During such period of
possession, Tenant shall not use the Demised Premises for the purpose of
conducting business, it being understood and agreed that such possession shall
be for the sole purpose of performing investigation and/or remediation as set
forth above. Tenant shall pay Landlord as compensation a monthly amount equal
to the amount of Base Monthly Rent and Additional Rent paid under this Lease
immediately prior to termination or expiration of the Lease, payable in advance;
or

(ii) In the event that Landlord and Tenant reasonably determine that
the Demised Premises can be used by Landlord or a tenant in a commercially
reasonable manner, Tenant shall have access to the Demised Premises at no cost
for such period of time that Landlord and Tenant determine to be necessary to
perform investigations and/or remediation; in such event, Tenant shall attempt
to minimize interruptions of any business of Landlord or any tenant on the
Demised Premises.

(i) INDEMNIFICATION. Tenant shall indemnify, defend, protect and hold
harmless Landlord from and against all costs, expenses, liabilities, losses,
damages, injunctions, suits, fines, penalties, claims, and demands, including
reasonable attorneys' fees, arising out of any violation of or default in the
covenants of (x) this Section 7 and (y) Section 10(g) below. The provisions of
Sections 7(b), (c), (d), (e), (f), (g), (h) and (l) of this Lease, and the
provisions of Section 10(g) below, shall survive the expiration of the Lease
Term.

(j) MOVING AND DELIVERIES. No freight, furniture or other bulky matter of
any description shall be received into the Building or carried in the elevators,
except at times and by routes authorized by Landlord. Tenant shall give
Landlord at least forty-eight (48) hours telephonic notice prior to moving any
freight, furniture or other bulky material into or out of the Building. All
moving of furniture, material and equipment shall be under the direct control
and supervision of Landlord, who shall, however, not be responsible for any
damage to or charges for moving same. Tenant shall promptly remove from the
public areas within or adjacent to the Building any of Tenant's property
delivered or deposited there, and shall be responsible for any damage to the
Building or the Demised Premises caused by its moving and deliveries. The
foregoing provisions of this Section 7(j) shall not be applicable unless
Landlord has either subleased a portion of the Demised Premises from Tenant or
Landlord has recaptured a portion of the Demised Premises.

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(k) EXCESSIVE FLOOR LOAD. Tenant will not, without Landlord's prior
written approval, install in the Demised Premises any fixtures, equipment or
machinery that will place a load upon the floor exceeding the designed floor
load capacity. Notwithstanding the foregoing, Landlord shall not unreasonably
withhold, condition or delay its consent to any alteration required to increase
the floor load capacity of any floor of the Building to accommodate Tenant's
needs. Tenant shall be liable for all damage done to the Building by installing
or removing a safe or any other article of Tenant's office equipment, or
machinery or fixtures or other personal property or due to its being in the
Demised Premises. Landlord may repair any such damage at Tenant's expense, and
Tenant shall pay the cost therefor to Landlord upon demand, as Additional Rent.

(l) PLUMBING SYSTEM. Tenant shall not use any materials in the Demised
Premises or dispose of any materials in the drains, plumbing and pipes which
serve the Demised Premises and/or the Building (collectively, the "Plumbing
System"), which would in any manner harm the Plumbing System or any part
thereof. Tenant shall be liable for all damage done to the Plumbing System, to
the Building and/or to the surrounding environment which is caused by Tenant's
disposal of any materials in the Plumbing System.

(m) EXISTING HAZARDOUS WASTE. Landlord, at its sole cost and expense,
shall be responsible for the removal or encapsulation of Hazardous Materials
located in, on, around or under the Building or the Project prior to the date of
this Lease. Tenant shall have no obligation to investigate, remediate, clean
up, or remove any Hazardous Material which migrates onto the land on which the
Building is located, provided, however, if Tenant or Tenant's contractors,
agents or employees cause such hazardous waste to be located on any land which
neighbors, adjoins or is in the vicinity of the Building, and such Hazardous
Materials migrate onto the land on which the Building is located, then Tenant
shall be responsible for remediating and removing such hazardous waste.

8. RULES AND REGULATIONS. Tenant covenants on behalf of itself, its
employees, agents, contractors, licensees and invitees to comply with the rules
and regulations set forth in Exhibit "D", which is attached hereto and made a
part hereof (the "Rules and Regulations"). Landlord shall have the right, in
its sole discretion, to make reasonable additions and amendments to the Rules
and Regulations from time to time and Tenant covenants that Tenant, its
employees, agents, contractors, licensees and invitees will comply with
additions and amendments to the Rules and Regulations upon Landlord's provision
to Tenant of a written copy of the same. Any default by Tenant, or any other
party set forth above, of any of the provisions of the Rules and Regulations as
set forth on Exhibit "D" or as amended, from time to time, shall be considered
to be a default under the terms of this Lease. Nothing contained in this Lease
shall be construed to impose upon Landlord any duty or obligation to enforce the
Rules and Regulations, or any amendments or additions thereto, against any other
tenant, and Landlord shall have no liability to Tenant or any other party for
violations of the Rules and Regulations by any party whatsoever. If there is
any inconsistency between this Lease and the Rules and Regulations, the Lease
shall govern.

9. SUBLETTING AND ASSIGNMENT.

(a) CONSENT. Tenant will not sublet the Demised Premises or any part
thereof or transfer possession or occupancy thereof to any person, firm or
corporation, or transfer or assign this Lease, without the prior written consent
of Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed. Notwithstanding the foregoing, it shall not be unreasonable for
Landlord to withhold its consent on the basis that (i) the proposed assignee's
or subtenant's net worth and/or net income is not consistent with the
creditworthiness standards that are applied in evaluating proposed assignees and
proposed subtenants by owners of first class office buildings located in the
Rockville, Maryland vicinity, or (ii) the proposed assignee or subtenant is a
party by whom any suit or action could be defended on the grounds of sovereign
immunity, or (iii) the proposed assignee's or subtenant's proposed use of the
Demised Premises is not in keeping with the provisions of Section 1(a)12 of this
Lease, or (iv) in the event that the proposed assignee or sublessee will be
using the applicable portion of the Demised Premises for laboratory purposes,
such party does not have substantial experience in managing and operating a
laboratory facility which is similar to the laboratory facility that is then
located in the Demised Premises. Tenant shall not, without the prior written
consent of the Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed, grant any franchise, concession, license or permit
arrangement with respect to the Demised Premises or any portion thereof. No
subletting or assignment hereof shall be effected by operation of law unless
with the prior written consent of Landlord, to the extent that such consent is
otherwise required by the terms of this Lease. Despite the foregoing, Tenant
shall have no right to enter into a leasehold mortgage or any other type of
financing arrangement which would encumber the Lease without obtaining
Landlord's prior consent, which consent shall be withheld or granted by Landlord
in the exercise of its sole and absolute discretion. A sale, transfer,
assignment or other conveyance of a general partnership interest in Tenant, if
Tenant is a partnership or joint venture, or a transfer of more than a fifty
percent (50%) stock interest, if Tenant is a corporation, shall be an assignment
for purposes hereof.

(b) SUBSIDIARIES AND CORPORATE TRANSFERS. Notwithstanding anything to the
contrary contained in this Lease, Tenant (and any party to whom Tenant, in
accordance with the terms of this Lease has assigned its entire interest under
this Lease), may, upon thirty (30) days prior notice to Landlord, assign its
entire interest under this Lease or sublet all or any portion of the Demised
Premises to a wholly owned corporation or entity or controlled subsidiary or
parent of Tenant or to any successor to Tenant by purchase, merger,
consolidation or reorganization (hereinafter collectively referred to as

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<PAGE>

"Corporate Transfer") without the consent of Landlord, provided (i) Tenant is
not then in default under this Lease; (ii) if such proposed Transferee is a
successor to Tenant by purchase, said proposed Transferee shall acquire all or
substantially all of the stock or assets of Tenant's business or, if such
proposed Transferee is a successor to Tenant by merger, consolidation or
reorganization, the continuing or surviving corporation shall own all or
substantially all of the assets of Tenant; and (iii) such proposed transferee
assumes all the obligations of Tenant hereunder. Tenant shall give Landlord
written notice at least thirty (30) days prior to the effective date of such
Corporate Transfer. As used herein, the term "controlled subsidiary" shall mean
a corporation the stock of which is at least fifty-one percent (51%) owned by
Tenant (in the case of a corporation whose stock is not publicly traded) or a
corporation the stock of which is at least twenty percent (20%) owned by Tenant
(in the case of a corporation whose stock is publicly traded). The sale or
transfer of stock of Tenant (or any successor) on any national stock exchange
(i.e., American Stock Exchange, New York Stock Exchange and NASDAQ, or any
successor to any of the foregoing) shall not be deemed an assignment of this
Lease. Notwithstanding anything in this Lease to the contrary, any assignment
or subletting shall (i) be on a form reasonably acceptable to Landlord and (ii)
shall be subject to the terms of this Lease. Tenant shall not modify, extend or
amend a sublease previously consented to by Landlord without obtaining
Landlord's consent thereto.

(c) ASSIGNMENT. In the event Tenant desires to assign this Lease, Tenant
shall give to Landlord written notice of Tenant's desire to do so, which notice
shall be accompanied by the "Required Information" (as hereinafter defined).
Within sixty (60) days of receipt of said notice and the Required Information,
Landlord shall have the right to terminate this Lease on a date to be agreed
upon by Landlord and Tenant. In the event that Landlord elects to so terminate
the Lease, then Landlord shall deliver to Tenant a notice of termination.
Tenant shall have the right, exercisable within ten (10) days after the date
that Landlord delivers such termination notice, to rescind Tenant's notice of
its desire to assign this Lease. In the event that Tenant timely delivers such
rescission notice, (i) Tenant shall be deemed to have withdrawn its notice of
its intent to assign the Lease, and (ii) Landlord shall have no right to
terminate this Lease on such occasion. Despite the foregoing, Landlord shall
have no right to terminate this Lease in connection with an assignment of this
Lease under Section 9(b) of this Lease. In the event of any subsequent
assignment of this Lease which is not governed by the provisions of
Section 9(b) of this Lease, the provisions of Section 9(c) of this Lease shall
be applicable to such assignment.

(d) SUBLETTING. In the event Tenant desires to sublet all or any part of
the Demised Premises, Tenant shall give to Landlord written notice of Tenant's
desire to do so, which notice shall be accompanied by the Required Information.
Within thirty (30) days of receipt of said notice and Required Information,
Landlord shall have the right (i) with Tenant's consent, to terminate this Lease
and to enter into a new lease with Tenant for that portion of the Demised
Premises Tenant desires to retain, upon terms to be mutually agreed upon; or
(ii) to sublease from Tenant at the same rental rate then being paid by Tenant
and subsequently to relet that portion of the Demised Premises that Tenant
desires to relinquish. If Landlord exercises its right to terminate this Lease
or to sublet a portion of the Demised Premises, Tenant agrees that Landlord
shall have access to the Demised Premises thirty (30) days prior to the
effective termination or sublease commencement date to show the same to
prospective tenants. Despite the foregoing, Landlord shall not have the right
to recapture any proposed space which Tenant desires to sublease unless the
rentable square footage of such space, when aggregated with the rentable square
footage that Tenant is then subleasing in the Building, would equal or exceed
fifty percent (50%) of the rentable square footage that Tenant is then leasing
in the Building. Despite the foregoing, Landlord shall have no right to
recapture from Tenant, or to sublease from Tenant, any portion of the Demised
Premises that is either being subleased by Tenant pursuant to the express
provisions of Section 9(b) of this Lease, or is being subleased by Tenant for a
term that (when aggregated with all renewal or extension options) does not
exceed three (3) years. In the event of any subsequent subletting of any
portion of the Demised Premises, such subletting shall be subject to the
provisions of Section 9(d) hereof.

(e) REQUIRED INFORMATION. If Tenant should desire to assign this Lease or
sublet the Demised Premises (or any part thereof), Tenant shall give Landlord
written notice no later than fifteen (15) days in advance of the proposed
effective date of such proposed assignment or sublease, which notice shall
specify the following information (such information shall be collectively
referred to as the "Required Information"): (i) the name, current address and
business of the proposed assignee or sublessee, (ii) the amount and location of
the space within the Demised Premises proposed to be so subleased, (iii) the
proposed effective date and duration of the assignment or subletting, and (iv)
the proposed rent and other consideration to be paid to Tenant by such assignee
or sublessee. Tenant also shall promptly supply Landlord with financial
statements and other information as Landlord may reasonably request to evaluate
the proposed assignment or sublease.

(f) FEES; DOCUMENTS. Tenant agrees to reimburse Landlord for reasonable
legal fees and any other reasonable expenses and costs incurred by Landlord in
connection with any proposed assignment or subletting, which costs and expenses
in no event shall exceed $1,000 for any proposed assignment or subletting.
Tenant shall deliver to Landlord copies of all documents executed in connection
with any proposed assignment or subletting, which documents shall be in form and
substance reasonably satisfactory to Landlord and which documents, (i) in the
case of a permitted assignment, shall require such assignee to assume
performance of all terms of this Lease on Tenant's part to be performed, and
(ii) in the case of permitted subletting, shall require such sublessee to comply
with all terms of this Lease on Tenant's part to be performed. No acceptance by
Landlord of any Base Monthly Rent or any other sum of money from any assignee,
sublessee or other category of transferee shall be deemed to constitute
Landlord's consent to any assignment, sublease, or transfer.

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(g) NO RELEASE. Any attempted assignment or sublease by Tenant in
violation of the terms and provisions of this Section 9 shall be void and shall
constitute a material breach of this Lease. In the event Landlord consents to
any assignment or sublease on one occasion, such consent shall not affect
Tenant's obligation to comply with the provisions of Section 9 of this Lease
with respect to any future assignment or sublease.

(h) TENANT LIABILITY. In the event of any subletting of all or any
portion of the Demised Premises or assignment of this Lease by Tenant, with or
without Landlord's consent, Tenant shall remain primarily liable to Landlord for
the payment of the rent stipulated herein and for the performance of all other
covenants and conditions contained herein.

(i) PROFIT. If any sublease or assignment (whether by operation of law or
otherwise, including without limitation an assignment pursuant to the provisions
of the Bankruptcy Code or any other insolvency law) provides that the subtenant
or assignee thereunder is to pay any amount in excess of the rental and other
charges due under this Lease, then whether such excess be in the form of an
increased monthly or annual rental, a lump sum payment, payment for the lease of
Tenant's fixtures, leasehold improvements, furniture and other personal
property, or any other form (and if the subleased or assigned space does not
constitute the entire Demised Premises, the existence of such excess shall be
determined on a pro-rata basis), Tenant shall pay to Landlord fifty percent
(50%) of any "Profit" (as defined below) applicable to the sublease or
assignment, which amount shall be paid by Tenant to Landlord as additional rent
upon such terms as shall be specified by Landlord and in no event later than ten
(10) days after any receipt thereof by Tenant. "Profit" shall be defined as the
difference between (i) any and all consideration received by Tenant in the
aggregate from any assignment of the Lease and/or subletting of the Demised
Premises, and (ii) the sum of (A) the rent and charges due to Landlord from
Tenant under the terms of this Lease, (B) Tenant's reasonable attorneys' fees
and brokerage costs in connection with such assignment or subletting, (C)
Tenant's actual and reasonable cost of performing alterations to the Demised
Premises in connection with such assignment or subletting, (D) the actual and
reasonable amount of any rent abatement that is granted in connection with such
assignment or subletting, (E) the actual and reasonable amount of improvement
allowance that is paid in connection with such assignment or subletting, and (F)
to the extent that leasehold improvements that were actually paid by Tenant with
respect to the premises in question exceed the "Improvements Allowance" (as
defined in Exhibit C) (and if the subleased or assigned space does not
constitute the entire Demised Premises, the existence of such excess shall be
determined on a pro-rata basis), the unamortized excess cost of such leasehold
improvements, which amortization shall be calculated in equal installments on a
monthly basis during the initial term of this Lease. Acceptance by Landlord of
any payments due under this Section shall not be deemed to constitute approval
by Landlord of any sublease or assignment, nor shall such acceptance waive any
rights of Landlord hereunder. Landlord shall have the right to inspect and
audit Tenant's books and records relating to any sublease or assignment.
Notwithstanding anything to the contrary in this Lease, this Section 9 shall not
be applicable to an assignment of the Lease (whether by operation of law or
otherwise) or a subletting of the Demised Premises by Tenant to a wholly-owned
subsidiary or a controlled subsidiary or parent; provided, however, in no event
shall Tenant enter into an assignment of this Lease or subletting of any portion
of the Demised Premises to a wholly-owned subsidiary or a controlled subsidiary
or parent as part of a "step transaction" for the purpose of avoiding or
circumventing the provisions of Section 9(i) of this Lease.

(j) In the event Tenant assigns this Lease to any party in accordance with
the terms of this Lease, (i) such assignee shall for purposes of this Lease, be
the "Tenant", and (ii) The Perkin-Elmer Corporation (and any successor thereto)
shall remain fully liable for the performance of Tenant's obligations under this
Lease.

10. SERVICES AND UTILITIES.

(a) CHARGES. Tenant shall throughout the Lease Term, and any extension
thereof, be entirely responsible for the expenses of the business conducted in
the Demised Premises. Such expenses shall include, but are not limited to, all
costs and expenses paid or incurred by Tenant in connection with the ownership,
cleaning, management, and operation of its business conducted in the Building,
which costs shall, subject to the provisions of Section 11(b) of this Lease,
include, but not be limited to heating, cooling, and ventilating the Building,
including maintenance, repair of such mechanical equipment; water, gas and
electric consumption; janitorial service; insurance as hereinafter defined; and
all other utility costs and other costs as herein provided.

(b) INTERRUPTION OF SERVICES. Landlord shall have the right to cause an
interruption in services and/or utilities provided to the Building only in the
event that such interruption is reasonably necessary for Landlord to perform its
obligations under the terms of this Lease, and provided that (i) Landlord give
Tenant at least forty eight (48) hours' prior written notice of such
interruption, (ii) Tenant shall have the right to prescribe the time of day
during which Landlord may cause such interruption, (iii) such interruption shall
in no event continue for more than twelve (12) consecutive hours, and (iv)
Landlord shall not unreasonably interfere with Tenant's use and enjoyment of the
Demised Premises or with the conduct of Tenant's business. In no event shall
Landlord be liable to Tenant for any such interruption or failure in the supply
of any utilities to the Demised Premises. Despite the foregoing, in the event
that (i) as a result of Landlord's negligence or intentional misconduct the
services to be provided by Landlord under Section 10(a) of this Lease shall not
be furnished for more than five (5) consecutive days, and (ii) Tenant, in its
reasonable business judgment, determines that it is unable to use and occupy the
Demised Premises (or any part thereof) as a result thereof, then commencing on
the sixth (6th) day that such services are not being provided the Base Annual
Rent Tenant is obligated to pay hereunder shall abate with respect to that

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part of the Demised Premises which Tenant does not use and occupy. Such
abatement shall immediately cease on the date that such services are restored.
In the event that any such failure to furnish such services is caused by
Tenant's acts or omissions, Tenant shall not be entitled to an abatement of Base
Annual Rent. In the event of a failure of Landlord to perform any repairs or
maintenance required to be performed by Landlord under this Lease [which failure
would cause an interruption in essential services being provided to the Demised
Premises (i.e., electricity, water, sewer, heating, ventilating and air
conditioning)], and if such failure is not cured by Landlord within a reasonable
period after Landlord is first given notice of such failure by Tenant, Tenant
may deliver to Landlord and to Landlord's lender(s) written notice stating that
Tenant intends to perform such repair or maintenance. Prior to Tenant
undertaking any action to cure or remedy such event or condition, Tenant shall
first allow Landlord and Landlord's lender(s) ten (10) business days following
receipt by Landlord and Landlord's lender(s) of such written notice to cure or
remedy the event or condition specified in Tenant's notice; provided, however,
that if such event or condition cannot be cured within the ten (10) day business
period, such period shall be extended for a reasonable additional time, so long
as Landlord or Landlord's lender(s) commence to cure such event or condition
within the ten (10) business day period and proceed diligently thereafter to
effect such cure. If Landlord or Landlord's lender(s) fail to cure or remedy
such event or condition within such time period, then Tenant may cure or remedy
such event or condition and deliver an invoice to Landlord for the reasonable
and actual out-of-pocket costs and expenses incurred by Tenant therefor.
Landlord shall pay to Tenant the amount of such invoice within thirty (30) days
after delivery by Tenant, and the amount of such invoice, when paid by Landlord,
shall be included within operating expenses. In the event of an interruption in
utility services that are being provided to the Demised Premises, upon Tenant's
request, Landlord shall, at Tenant's cost, cooperate with Tenant to attempt to
cause such utility company to provide such utility services to the Demised
Premises.

(d) SEPARATE METERING. Tenant shall cause the utilities to be supplied to
the Building to be separately metered to record Tenant's consumption of
electricity and other utilities. Tenant agrees to pay the costs of all
utilities directly to the utility companies providing services to Tenant
promptly upon demand therefor.

(e) EXCESSIVE HEAT GENERATION. Landlord shall not be liable for any
failure to maintain comfortable atmospheric conditions in all or any portion of
the Demised Premises, due to heat generated by any equipment or machinery
installed by Tenant (with or without Landlord's consent) that exceeds generally
accepted engineering design practices for normal office purposes. If Tenant
desires additional cooling to offset excessive heat generated by such equipment
or machinery, Tenant shall pay for auxiliary cooling equipment and its operating
costs, including without limitation electricity, gas, oil and water, or for
excess electrical consumption by the existing cooling system, as appropriate.

(f) INTENTIONALLY DELETED.

(g) LABORATORY WASTE. Tenant shall comply, at its sole cost and expense,
with all orders, requirements and conditions now or hereafter imposed by any
ordinances, laws, orders and/or regulations (hereinafter collectively called
"regulations") of any governmental body having jurisdiction over the Demised
Premises or the Building, whether required of Landlord or otherwise, regarding
the collection, sorting, separation and recycling of waste products, garbage,
chemicals, refuse and trash (hereinafter collectively called "waste products"),
including, but not limited to, the separation of such waste products into
receptacles reasonably approved by Landlord and the removal of such receptacles
in accordance with any collection schedules prescribed by such regulations.
Notwithstanding anything herein to the contrary, (i) Landlord shall have no
obligation to accept from Tenant any waste products that are generated in
connection with the use of the Demised Premises for laboratory purposes, and
(ii) Tenant shall arrange for laboratory waste product collection, at Tenant's
sole cost and expense, utilizing a contractor reasonably satisfactory to
Landlord who is federally licensed, which waste product collection shall be in
accordance with all applicable governmental laws, codes, rules, regulations,
orders and statutes. Tenant shall pay all costs, expenses, fines, penalties
and/or damages that may be imposed on Landlord or Tenant by reason of Tenant's
failure to comply with any such regulations. Tenant shall maintain at the
Demised Premises copies of all bills of lading, transportation manifests,
disposal certificates and other evidence of disposal of such waste products in
accordance with all applicable governmental laws, rules, codes, orders and
regulations and shall provide Landlord with a copy of same upon Landlord's
demand. Landlord shall permit Tenant to maintain an appropriate container for
laboratory waste and other hazardous materials near the Loading Dock area, which
container shall be stored in a locked and secure area. Tenant shall maintain
such container in accordance with all applicable laws and regulations.

(h) PEST CONTROL. On or before August 1, 1998, Landlord, at its sole cost
and expense, shall cause a pest control company to initially service the
Building. After such initial servicing of the Building, Tenant shall be
obligated to provide such services with respect to the interior of the Demised
Premises in accordance with the terms of this Lease, and Landlord shall be
obligated to provide such services with respect to the exterior common areas of
the Building.

11. MAINTENANCE AND REPAIRS.

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(a) TENANT'S RESPONSIBILITY. Subject to the provisions of Section 11(b)
below, Tenant shall be responsible for the full cost of all maintenance and
repair of the Building and Building systems (including, without limitation, the
mechanical, electrical, plumbing, life safety, and heating, ventilating and air
conditioning system), including the doors, interior glass, floors, interior
walls, ceilings, and equipment and fixtures located in the Building and any
pipes, wires, and conduits located in or traversing the Building which serve the
Building. All repairs and maintenance required to be performed by Tenant shall
be made or performed as soon as reasonably practicable upon the occurrence of
the necessity therefor, and shall be made or performed in a first class manner,
using first class materials, by a contractor approved by Landlord and bonded
unless waived by Landlord, and shall be made or performed in accordance with (i)
all laws and all applicable governmental codes and requirements, and (ii)
insurance requirements. Tenant, at its sole expense, will throughout the term
of this Lease obtain and keep in force a maintenance contract with a qualified
service company to regularly inspect and perform maintenance services to the (i)
elevators that serve the Building, and (ii) the heating, ventilating and air
conditioning system that serves the Building. Tenant shall furnish Landlord
with a copy of said maintenance contract(s), and of renewals or replacements
thereof. Tenant shall also be responsible for causing its laboratory waste (but
not ordinary trash) to be removed from the Demised Premises and disposed of in
accordance with all applicable laws and regulations. If Tenant refuses after
written notice from Landlord to commence and complete repairs or maintenance
necessary to satisfy the provisions of this Section, the Landlord may, but shall
not be required to, make and complete said repairs or maintenance and Tenant
shall pay the cost therefor (including overhead) to Landlord upon demand, as
Additional Rent. Tenant shall perform its obligations under Section 11(a) of
this Lease, in a first class manner which is consistent with how other buildings
that are located in Rockville, Maryland, and which are comparable to the
Building, are maintained and repaired.

(b) LANDLORD'S RESPONSIBILITY. Landlord shall maintain the foundation,
roof and exterior walls of the Building and the exterior common areas (i.e.,
parking lot, landscaping, sidewalks, and exterior lighting) in good condition
and repair, and shall promptly replace all exterior glass in the event of
breakage. In addition, Landlord shall be responsible for collection and
disposal of Tenant's trash (excluding laboratory waste and hazardous materials),
pest control with respect to the exterior of the Project, and snow and ice
removal. Such maintenance and services shall be performed in a first class
manner which is consistent with how owners of other buildings that are located
in Rockville, Maryland, and which are comparable to the Building, perform such
maintenance. Subject to the provisions of this Section 11(b), Landlord, at its
sole cost and expense (and not as an operating expense) shall be obligated to
replace (i) any broken exterior glass windows, which shall include both the
inner and exterior pane (but not any interior glass, which interior glass shall
be Tenant's obligation to maintain, repair and replace), and (ii) the base
Building elevators (excluding any elevator that Tenant installs in the Building)
and the base Building chillers (excluding any heating, ventilating or air
conditioning equipment or systems that Tenant installs in the Building) to the
extent that the same cannot be repaired on a commercially reasonable basis
(i.e., it would be commercially reasonable to replace rather than expend the
funds to repair such item). In the event any such replacement is required as a
result of Tenant's willful misconduct, or as a result of Tenant's failure to
maintain any such elevator or chiller in accordance with how owners of other
first-class buildings that are located in Rockville, Maryland maintain elevators
and chillers, then Tenant, at Tenant's sole cost and expense, shall be obligated
to perform such replacement. In the event that Tenant or any agent, employee or
contractor of Tenant breaks any exterior glass window, then Tenant, at Tenant's
sole cost, shall be responsible for replacing such exterior glass window.

(c) ADA NOTIFICATION. Within twenty (20) days after receipt, Tenant or
Landlord, as the case may be, shall advise the other party in writing, and
provide copies of (as applicable) any notices alleging violation of the ADA or
any environmental law relating to any portion of the Building or of the Demised
Premises, any claims made or threatened in writing regarding noncompliance with
the ADA or such environmental law and relating to any portion of the Building or
of the Demised Premises, or any governmental or regulatory actions or
investigations instituted or threatened regarding noncompliance with the ADA or
environmental law and relating to any portion of the Building or of the Demised
Premises.

(d) MAINTENANCE PROGRAM AND CONTRACTS. Tenant shall establish, on an
annual basis, and implement a cleaning, maintenance and repair program for the
Building, which program shall be subject to Landlord's reasonable approval on an
annual basis. Tenant shall enter into and furnish to Landlord within sixty (60)
days after the date of this Lease, and at least thirty (30) days prior to the
commencement of each Lease Year thereafter, the following: (i) a heating,
ventilating and air conditioning contract which covers all heating, ventilating
and air conditioning equipment and systems which serve the Building, including,
without limitation, the chillers, and all supplemental equipment and systems
which may be installed by Tenant in accordance with the terms of this Lease;
(ii) an elevator contract which covers all elevators that are located in the
Building, including any elevator that may be installed by Tenant in accordance
with the terms of this Lease; (iii) an electrical preventative maintenance
contract which includes the switch gear; (iv) a fire alarm and life safety
system contract; (v) a pest control contract; and (vi) such other maintenance
and preventative contracts with respect to the Building as Landlord may, from
time to time, reasonably require. All such contracts, and the contractors who
are performing the same, shall be subject to Landlord's prior written approval,
which approval shall not be unreasonably withheld.

12. ALTERATIONS.

(a) LANDLORD'S CONSENT. Tenant will not make any alterations,
installations, changes, replacements, additions or improvements, structural or
otherwise (collectively, "Alterations") in or to the Demised Premises or any
part thereof, without

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the prior written consent of Landlord. Despite the foregoing, Tenant shall be
permitted to make cosmetic changes to the interior (i.e., painting and
carpeting) of the Demised Premises without obtaining Landlord's consent,
provided the same do not affect the structure, the Building systems or the
exterior of the Building. Subject to the provisions of Section 12(d) and
Section 16 of this Lease, all Alterations made to, or installed by or for Tenant
in, the Demised Premises shall be and remain Landlord's property (excluding case
work, furniture, personal property, telephone and telecommunications systems and
equipment, computer systems and equipment, fire suppression equipment,
laboratory equipment, moveable trade fixtures and all other items of Tenant's
equipment, whether or not affixed to the Building) and shall not be removed
without Landlord's written consent. Any construction up-gradings required by
any governmental authority as a result of said Alterations, either in the
Demised Premises or in any other part of the Building, will be paid for by
Tenant. Tenant shall not install any equipment of any nature whatsoever which
may adversely affect the structure of the Building, or which may necessitate any
changes, replacements or additions to the water system, plumbing system, heating
system, air-conditioning system or the electrical system of the Demised
Premises, without the prior written consent of Landlord, which consent shall not
be unreasonably withheld, conditioned or delayed. Notwithstanding anything
herein to the contrary, Tenant shall not make any Alterations to the exterior of
the Building without obtaining Landlord's prior written consent, which consent
may be withheld in the exercise of Landlord's sole and absolute discretion. In
the event that Landlord grants its consent to any Alterations, Tenant shall pay
all costs to make such changes, replacements or additions. Upon completion of
any such Alterations, Tenant shall deliver to Landlord as-built plans which
reflect such Alterations, which as-built plans shall be on "CAD". Any approved
Alterations shall be made by licensed and bonded contractors and mechanics
approved by Landlord, in accordance with (i) the applicable laws and ordinances
of any public authority having jurisdiction over the Building, (ii) the building
code and zoning regulations of any such authority, (iii) plans and
specifications that have been approved by Landlord in writing, and (iv) any
rules and regulations established from time to time by the Underwriters
Association of the local area. Prior to commencing construction of any approved
Alterations, Tenant shall obtain any necessary building permits and shall
deliver copies of such permits to Landlord. Tenant shall pay to Landlord, upon
ten (10) days notice, as Additional Rent, Landlord's reasonable and actual
out-of-pocket costs of reviewing the proposed Alteration.

(b) LIENS. In making any approved Alterations, Tenant shall promptly pay
all contractors, materialmen and laborers, so as to minimize the possibility of
a lien attaching to the Building, or attaching to any portion of the real
property on which said Building is located. Should any such lien be filed,
Tenant shall bond against or discharge the same within thirty (30) days after
the said filing. If Tenant shall fail to bond against or discharge any such
lien within such thirty (30) day period, then Landlord may, at its option,
discharge such lien at Tenant's expense in which event Tenant shall reimburse
Landlord for all costs (including legal expenses) of discharging such lien upon
demand, as Additional Rent.

(c) INDEMNIFICATION. Tenant will defend, indemnify and hold Landlord
harmless from and against any and all expenses, liens, claims or damages,
including attorneys' fees, for injury to person or property which may or might
arise, directly or indirectly, by reason of the making of any Alterations. If
any Alteration requiring Landlord's consent is effected without the prior
written consent of Landlord, Landlord may remove or correct the same and Tenant
shall be liable for any and all expenses of this work. All rights given to
Landlord herein shall be in addition to any other right or remedy of Landlord
contained in this Lease.

(d) REMOVAL OF ALTERATIONS. In the event that Tenant desires to know
whether Landlord will require Tenant to remove any Alterations from the Demised
Premises at the expiration of the Lease Term, then, at the time Tenant delivers
a written request to Landlord which requests Landlord's approval of such
Alterations, Tenant shall have the right to deliver to Landlord a notice which
specifically requests that Landlord advise Tenant whether Landlord will require
Tenant to remove such proposed Alterations at the expiration of the Lease Term.
In the event that Landlord receives such a written request, and in the event
that Landlord is willing to grant its consent to such Alterations, Landlord
shall advise Tenant, in writing, at the time the Alterations are approved,
whether or not Tenant will be required to remove the same at the expiration of
the Lease Term.

13. SIGNS AND ADVERTISEMENTS.

(a) Except as provided in the last sentence of this Section 13(a) and
except as provided in Sections 13(b) and 15(c) below, no sign, advertisement or
notice shall be inscribed, painted, affixed or displayed on any part of the
outside or the inside of the Building, or inside of the Demised Premises where
it may be visible from outside or from the public areas of the Building, except
with Landlord's prior written consent, and then only in such location, number,
size, color and style (i.e., Building standard lettering) as is authorized by
Landlord. If any such sign, advertisement or notice is exhibited without first
obtaining Landlord's written consent, Landlord shall have the right to remove
same, and Tenant shall be liable for any and all expenses incurred by Landlord
in connection with said removal. Tenant may install signage on the interior of
the Demised Premises without obtaining Landlord's consent, provided such signage
is not visible from the exterior of the Building.

(b) Subject to the provisions of this Section 13(b), Tenant, at Tenant's
sole cost and expense, shall have the right to erect and maintain its company
name and/or logo: (i) on the roof of the Building (the "Roof Sign"), and (ii)
on a monument sign (the "Monument Sign"). The size, location, color, design,
method of installation, and method of illumination (if applicable) of the Roof
Sign and the Monument Sign shall be subject to: (i) Landlord's prior written
consent,

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and (ii) all applicable governmental rules, codes, orders, laws, and statutes
(collectively, the "Governmental Laws"). Tenant, at Tenant's sole cost and
expense, shall maintain the Roof Sign and the Monument Sign in a first-class
manner in accordance with the Governmental Laws.

14. COMMON AREAS.

(a) COMMON AREAS DEFINED. In this Lease, "common areas" means all areas,
facilities and improvements provided, from time to time, in the Building for the
mutual convenience and use of tenants or other occupants of the Building, their
respective agents, employees, and invitees and shall include, if provided, but
shall not be limited to, the lobbies and hallways, the public restrooms,
stairwells, the parking areas and facilities, access roads, driveways, retaining
walls, sidewalks, walkways, landscaped areas, and exterior lighting facilities.

(b) LANDLORD'S CONTROL. Landlord shall, as between Landlord and Tenant,
at all times during the term of the Lease have the sole and exclusive control,
management and direction of the exterior common areas, and may at any time and
from time to time during the term exclude and restrain any person from use or
occupancy thereof, excepting, however, Tenant and other tenants of Landlord and
bona fide invitees of either who make use of said areas in accordance with the
rules and regulations established by Landlord from time to time with respect
thereto. Subject to Tenant's Parking Rights, the rights of Tenant in and to the
common areas shall at all times be subject to the rights of others to use the
same in common with Tenant, and it shall be the duty of Tenant to keep all of
said areas free and clear of any obstructions created or permitted by Tenant or
resulting from Tenant's operation. Landlord may at any time and from time to
time close all or any portion of the common areas to make repairs or changes or
to such extent as may, in the opinion of Landlord, be necessary to prevent a
dedication thereof or the accrual of any rights to any person or to the public
therein, to close temporarily any or all portions of the said areas to
discourage non-customer parking, and to do and perform such other acts in and to
said areas as, in the exercise of good business judgment, Landlord shall
determine to be advisable with a view to the improvement of the convenience and
use thereof by tenants, their employees, agents, and invitees. In exercising
its rights under this Section 11(b), Landlord shall use reasonable efforts to
minimize any disruption of Tenant's business.

(c) CHANGES AND ADDITIONS. Landlord reserves the right at any time and
from time to time, as often as Landlord deems desirable, without incurring any
liability to Tenant or otherwise affecting Tenant's obligations under this
Lease, make changes, alterations, additions, improvements, repairs, relocations
or replacements in or to the Building and the fixtures and equipment thereof, as
well as in or to the street entrances, halls, passages, stairways and other
common facilities thereof, and, upon prior notice to Tenant, to change the name
by which the Building is commonly known and/or the Building's address. Landlord
may from time to time, after obtaining Tenant's prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed, install,
use, maintain, repair and replace pipes, ducts, conduits, wires and appurtenant
meters and equipment for service to other parts of the Building, above the
ceiling surfaces, below the floor surfaces, within the walls and in the central
core areas, and to relocate any pipes, ducts, conduits, wires and appurtenant
meters and equipment included in the Demised Premises which are located in the
Demised Premises or located elsewhere outside the Demised Premises, and to
expand and/or build additional stories on the Building. Despite the foregoing,
subject to all Applicable Laws, and subject to the provisions of Section 21
below, in exercising Landlord's rights under this Section 14(c), (i) Landlord
shall, in good faith, use reasonable efforts to minimize any interference with
the operations of Tenant's business at the Demised Premises, and (ii) in no
event shall Landlord reduce the number of "Parking Rights" (as defined in
Section 15(a) below). Nothing contained herein shall be deemed to relieve
Tenant of any duty, obligation or liability with respect to making any repair or
improvement or complying with any law, order or requirement of any government or
other authority and nothing contained herein shall be deemed or construed to
impose upon Landlord any obligation, responsibility or liability whatsoever, for
the care, supervision or repair of the Building, or any part thereof, other than
as expressly provided in this Lease.

15. PARKING.

(a) PARKING RIGHTS. Landlord shall make available (or cause to be made
available) to Tenant at all times during the Lease Term three and seven-tenths
(3.7) monthly parking contracts for every one thousand (1,000) square feet of
rentable area of the Demised Premises to park an automobile (collectively, the
"Parking Rights") in the parking facilities for the Building (the "Parking
Facilities"). Subject to the provisions of Section 15(c) below, Parking Rights
shall (i) be assigned in a manner reasonably acceptable to Tenant, and (ii) be
on a self-park basis.

(b) INTENTIONALLY DELETED.

(c) TENANT'S PARKING AREA. The parties intend that the parking spaces
that are designated as "Tenant's Parking Area" on Exhibit I hereto (the
"Tenant's Parking Area") shall be designated for the use of Tenant and its
invitees, employees and contractors. It is expressly understood that Landlord
and its employees and contractors may park their vehicles in the Tenant's
Parking Area during those periods of time that Landlord or its employees and
contractors are performing their obligations under this Lease, provided,
however, that in no event shall Landlord and its employees and contractors
simultaneously use an unreasonably excessive number of parking spots in Tenant's
Parking Area. Subject to the following

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provisions of this Section 15(c), Tenant, at Tenant's sole cost and expense,
shall have the right to (i) designate a reasonable number of the parking spaces
that are located in Tenant's Parking Area as being reserved, and (ii) erect
signage which indicates such parking spaces as being reserved. The size,
location, color, design, content and method of installation of such signage
shall be subject to (i) Landlord's prior written consent, and (ii) the
Governmental Laws. Tenant, at Tenant's sole cost and expense, shall maintain
such signage in a first-class manner in accordance with the Governmental Laws.
Notwithstanding anything in this Lease to the contrary, Landlord shall have no
obligation to monitor or police the parking of vehicles within the Tenant's
Parking Area.

16. SURRENDER AND INSPECTION.

(a) SURRENDER. Subject to the provisions of Sections 12(d) and 16(e) of
this Lease, upon the Expiration Date or other termination of the term of this
Lease, Tenant shall quit and surrender the Demised Premises to the Landlord in
as good order and condition as when received, ordinary wear and tear excepted,
and Tenant shall remove all of its case work, fixtures, machinery, laboratory
equipment and other personal property from the Demised Premises by the
Expiration Date or other termination of this Lease. Tenant's obligation to
observe or perform this covenant shall survive the expiration or other
termination of this Lease. To the extent any machinery or laboratory equipment
is affixed to the Building, Tenant agrees to repair any damage to the Building
caused by the removal of such machinery and equipment.

(b) INSPECTION. Tenant shall have the right to be present at time of
final inspection of the Demised Premises to determine if any damages were done
thereto, if Tenant notifies Landlord by certified mail of its intention to move,
date of moving and new address. The notice of Tenant's desire to be present at
the final inspection of the Demised Premises shall be given at least fifteen
(15) days prior to the date of moving. Upon receipt of such notice, Landlord
shall notify Tenant of time and date when the Demised Premises are to be
inspected. The inspection shall occur within five (5) days before or five (5)
days after Tenant's date of moving, said inspection date to be designated by
Landlord. Tenant shall be deemed to have been advised of its rights under this
Section by execution of this Lease.

(c) ALTERATIONS. Subject to the provisions of Sections 12(d) and 16(e) of
this Lease, (i) all Alterations, including, without limitation, wall-to-wall
carpet, blinds, draperies and drapery accessories, to or within the Demised
Premises (whether made with or without Landlord's consent), shall remain upon
the Demised Premises and be surrendered with the Demised Premises at the
expiration of the Lease Term, and (ii) should Landlord elect that any
Alterations made by Tenant upon the Demised Premises be removed at the
expiration of the Lease Term, the same shall be removed by Tenant, at Tenant's
sole cost and expense. Notwithstanding the foregoing, Tenant shall have the
right to remove upon expiration of the Lease Term case work, furniture, personal
property, telephone and telecommunications systems and equipment, computer
systems and equipment, fire suppression equipment, laboratory equipment,
moveable trade fixtures and all other items of Tenant's equipment, whether or
not affixed to the Building. To the extent that, upon expiration of the Lease
Term, Tenant does not remove Alterations which it is obligated to remove,
Landlord shall have the right to cause same to be removed at Tenant's sole cost
and expense. Tenant agrees to reimburse Landlord for the cost of such removal.

(d) FIXTURES AND PERSONAL PROPERTY REMAINING. If Tenant does not remove
Tenant's furniture, equipment, machinery, trade fixtures, floor coverings and
all other items of personal property of every kind and description from the
Demised Premises prior to the Expiration Date, then Tenant shall be conclusively
presumed to have conveyed the same to Landlord under this Lease as a bill of
sale without further payment or credit by Landlord to Tenant.

(e) INITIAL IMPROVEMENTS . Notwithstanding anything herein to the
contrary, Tenant shall have no obligation to remove the following improvements
and/or Alterations that are being performed to the Building as part of Tenant's
Work: (i) the elevator that is being installed by Tenant in the Building; (ii)
extra electrical capacity that is being added to the Building; (iii) the two (2)
chillers (and two (2) air handler units) that are being installed on the roof,
provided each such chiller is independently capable of providing heating,
ventilating and air conditioning for the entire fourth (4th) floor of the
Building, for use as general office purposes; (iv) back-up generator; and (v)
fiber optic cable.

17. ACCESS.

(a) ACCESS TO BUILDING. Tenant shall have access to the Building
twenty-four (24) hours per day, seven (7) days per week, by means of a key or an
electronic controlled access system, which system shall be installed by Tenant.

(b) LANDLORD'S ACCESS TO DEMISED PREMISES. Upon reasonable prior notice,
Landlord, its agents, employees and contractors shall have the right to enter
the Demised Premises at all reasonable times (a) to make inspections or to make
repairs to the Demised Premises or other premises as Landlord may deem
necessary; (b) to exhibit the Demised Premises to prospective tenants during the
last twelve (12) months of the Lease Term; and (c) for any purpose whatsoever
relating to the safety, protection or preservation of the Building. To the
extent that any such entry is made in a situation that is not an emergency, at
Tenant's option, Tenant shall have the right to provide a representative of
Tenant to accompany Landlord in connection with any such entry. Landlord shall
use reasonable efforts to minimize interference to Tenant's business when making
repairs. In the event of an emergency, Landlord or its designees shall be
permitted to enter the Demised Premises

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unaccompanied and without notice; provided that Landlord shall have, prior to
such entry, used reasonably diligent efforts under the circumstances to have a
Tenant representative accompany Landlord or its designee, Landlord hereby
acknowledging that Tenant's use of the Demised Premises includes the use of the
Demised Premises for laboratory purposes. Landlord shall at all times retain a
key with which to unlock all of the doors in the Demised Premises. If an
emergency necessitates immediate access to the Demised Premises, Landlord may
use whatever force is necessary to enter the Demised Premises and any such entry
to the Demised Premises shall not constitute a forcible or unlawful entry to the
Demised Premises, an unlawful detainer of the Demised Premises, or an eviction
of Tenant from the Demised Premises, or any portion thereof. Any access by
Landlord or its agents and invitees hereunder (excluding access in the event of
an emergency) shall be subject to compliance with such reasonable
confidentiality and security procedures as are reasonably imposed on Tenant's
business operations and Tenant's standard operating procedures. Landlord
reserves the right, after consultation with Tenant, to stop service of a
Building system when necessary by reason of accident or emergency.

(c) RESTRICTED ACCESS. No additional locks, other devices or systems,
including without limitation alarm systems, which would restrict access to the
Building shall be placed upon any doors without the prior written consent of
Landlord.

(d) ACCESS SYSTEM CREDIT. Landlord shall provide Tenant with an allowance
of Thirteen Thousand and 00/100 Dollars ($13,000.00) (the "Access System
Allowance") toward the cost of installing an access system for the Building.
Despite the foregoing, subject to the terms of the sentence which immediately
follows this sentence, in the event the cost of the access system that is
installed by Tenant exceeds the amount of the Access System Allowance, then
Tenant shall bear the entire amount of such excess cost. Landlord, at its cost,
shall install walls and entry doors between the basement service corridor and
the elevator lobby.

18. LIABILITY.

(a) PERSONAL PROPERTY. All personal property of Tenant in the Demised
Premises or in the Building shall be at the sole risk of Tenant. Landlord and
its agents shall not be liable for any damage thereto, unless such damage is
directly attributable to the willful or negligent acts of Landlord, its agents
or employees. Landlord and its agents shall not be liable for any accident or
damage to property of Tenant resulting from the use or operation of elevators or
of the heating, cooling, electrical or plumbing apparatus, unless caused by and
due to the willful or negligent acts of Landlord, its agents or employees.
Landlord shall not, in any event, be liable for damages to property resulting
from water, steam or other causes. Tenant hereby expressly releases Landlord
and its agents from any liability incurred or claimed by reason of damage to
Tenant's property.

(b) TENANT'S LIABILITY. Any and all injury, breakage or damage of any
type whatsoever to the Demised Premises or to other portions of the Building,
arising from any act or omission of Tenant or its agents, employees, licensees,
invitees or contractors, shall be repaired by Landlord at the sole expense of
Tenant. Tenant shall reimburse Landlord for the costs such repairs within five
(5) business days of receipt of written notice from Landlord of such costs.
This provision shall be construed as an additional remedy granted to Landlord
and not in limitation of any other rights and remedies which Landlord may have
in said circumstances. Tenant shall reimburse Landlord for all expenses,
damages or fines, incurred or suffered by Landlord by reason of any breach,
violation or nonperformance by Tenant, or its agents, servants, or employees, of
any covenant or provision of this Lease or the Rules and Regulations promulgated
by Landlord hereunder from time to time, or by reason of damage to persons or
property caused by moving property of or for Tenant in or out of the Building,
or by the installation or removal of furniture or other property of or for
Tenant, or by reason of or arising out of the carelessness, negligence or
improper conduct of Tenant, or its agents, servants, employees, invitees or
licensees.

(c) CRIMINAL ACTS OF THIRD PARTIES. Landlord shall not be liable in any
manner to Tenant, its agents, employees, licensees or invitees for any injury or
damage to Tenant, Tenant's agents, employees, licensees or invitees or their
property caused by the criminal or intentional misconduct of third parties. All
claims against Landlord for any such damage or injury are hereby expressly
waived by Tenant, and Tenant hereby agrees to hold harmless and indemnify
Landlord from all such damages and the expense of defending all claims made by
Tenant's agents, contractors, employees, licensees or invitees arising out of
such acts.

(d) TENANT'S INDEMNITY. Tenant shall indemnify Landlord, Landlord's
Rental Agent, and their respective agents and employees and save them harmless
from and against any and all claims, actions, damages, liabilities and expense
in connection with loss of life, personal injury and/or damage to property
arising from or out of any occurrence in, upon or at the Demised Premises, or
the occupancy or use by Tenant of the Demised Premises or any part thereof, or
occasioned wholly or in part by any act or omission of the Tenant, its agents,
contractors, employees, invitees or licensees. In the event that Landlord,
Landlord's Rental Agent, or their respective agents or employees shall, without
fault on its or their part, be made a party to any litigation commenced by or
against Tenant, then Tenant shall protect and hold the same harmless and shall
pay all costs, expenses and reasonable attorneys' fees incurred or paid in
connection with such litigation.

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(e) LANDLORD'S INDEMNITY. Landlord hereby agrees to indemnify and hold
Tenant harmless from and against any cost, damage, claim, liability or expense
(including reasonable attorneys' fees) incurred by or claimed against Tenant as
a result of, or arising from, the negligence or willful misconduct of Landlord,
its employees and agents, and not resulting from the negligence or willful
misconduct of Tenant and its agents, officers, directors and employees; provided
however that, in no event shall Landlord be liable for any punitive or
consequential damages suffered by Tenant as a result of any act or omission by
Landlord.

(f) SURVIVAL. The provisions of Section 18 shall survive the expiration
or sooner termination of this Lease.

19. INSURANCE.

(a) [Intentionally deleted]

(b) COVERAGES. Tenant shall have issued, pay the premiums therefor, and
maintain in full force and effect during the Lease Term:

(i) COMMERCIAL GENERAL LIABILITY. A commercial general liability
insurance policy or policies protecting the Landlord and Tenant in the amount of
(x) Five Million and No/100 Dollars ($5,000,000.00) combined, single limit
coverage for bodily injury or property damage, which amount may be increased
from time to time by the Landlord in its reasonable determination, and (y) Five
Hundred Thousand and 00/100 Dollars ($500,000.00) fire legal liability coverage,
which amount may be increased from time to time by Landlord in its reasonable
discretion;

(ii) BROAD FORM PROPERTY. Broad form property insurance, including
theft, vandalism and malicious mischief, written at replacement cost value and
with replacement cost endorsement, covering all leasehold improvements installed
in the Demised Premises by Tenant or at Tenant's request and all of Tenant's
personal property in the Demised Premises (including, without limitation,
inventory, trade fixtures, floor coverings, furniture and other property
removable by Tenant under the provisions of this Lease);

(iii) WORKERS' COMPENSATION. If and to the extent required by law,
workers' compensation and employer's liability or similar insurance in form and
amounts required by law; and

(iv) ADDITIONAL INSURANCE. Such additional insurance as any mortgagee
of the Building may require.

(c) POLICY REQUIREMENTS. All insurance required of Tenant under this
Lease shall be issued by insurance companies authorized to do business in the
jurisdiction where the Building is located. Such companies shall have a
policyholder rating of at least "A" and be assigned a financial size category of
at least "Class XII" as rated in most recent edition of "Best's Key Rating
Guide" for insurance companies. The insurance required of Tenant under Section
19(a)(i) hereof shall insure performance by Tenant of the indemnity provisions
of Section 18 hereof and shall contain an assumed contractual liability
endorsement that refers expressly to this Lease. All insurance required of
Tenant under this Lease shall: (i) be written as primary policy coverage and
non-contributing with respect to any coverage which Landlord may carry (it being
understood and agreed that any insurance that Landlord may carry shall be excess
insurance); (ii) name Landlord, Landlord's Rental Agent and any mortgagee of the
Building as additional insureds, as their respective interests may appear
(except with respect to workers' compensation insurance), and (iii) contain an
endorsement for cross liability and severability of interests. Each policy
shall contain an endorsement requiring thirty (30) days' written notice from the
insurance company to Landlord before cancellation or any change in the coverage,
scope or amount of any policy. Each policy, or a certificate showing it is in
effect, together with evidence of payment of premiums, shall be deposited with
Landlord at the commencement of the Lease Term, and renewal certificates or
copies of renewal policies shall be delivered to Landlord at least thirty (30)
days prior to the expiration date of any policy.

(d) NO LIMITATION OF LIABILITY. Neither the issuance of any insurance
policy required under this Lease nor the minimum limits specified herein shall
be deemed to limit or restrict in any way Tenant's liability arising under or
out of this Lease.

(e) NOTICE OF FIRE AND ACCIDENT. Tenant shall give Landlord immediate
notice in case of fire, theft, or accidents in the Demised Premises, and in case
of fire, theft or accidents in the Building if involving Tenant, its agents,
employees or invitees.

(f) WAIVER OF SUBROGATION. Landlord and Tenant mutually covenant and
agree that each party, in connection with any all-risk property insurance
policies required to be furnished in accordance with the terms and conditions of
this Lease, or in connection with any all-risk property insurance policies which
they obtain insuring such insurable interest as Landlord or Tenant may have in
its own properties, whether personal or real, shall expressly waive any right of
subrogation on the part of the insurer against the Landlord (and any mortgagee
requested by Landlord) or Tenant as the same may be applicable, which right to
the extent not prohibited or violative of any such policy is hereby expressly
waived, and Landlord

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and Tenant each mutually waive all right of recovery against each other, their
agents, or employees for any loss, damage or injury of any nature whatsoever to
property for which either party is required by this Lease to carry insurance.

(g) LANDLORD'S INSURANCE. Landlord shall maintain in full force and
effect throughout the Lease Term (a) a commercial general liability insurance
policy in the amount of Five Million and No/100 Dollars ($5,000,000.00) combined
single limit for bodily injury or property damage, and (b) property insurance
with respect to the Building in an amount equal to the full replacement value of
the Building. All insurance required of Landlord under this Lease shall be
issued by insurance companies authorized to do business in Maryland. Such
companies shall have a policyholder rating of at least "A" and be assigned a
financial size category of at least "Class XII" as rated in the most recent
edition of "Best Key Rating Guide" for insurance companies. Upon Tenant's
written request, Landlord shall provide Tenant with a certificate of insurance
evidencing that Landlord is maintaining such insurance. Upon Tenant's written
request, Landlord and Tenant shall discuss in good faith whether it makes sense
for economic reasons for Tenant to provide the insurance that is required under
this Section 19(g).

20. DAMAGE BY CASUALTY.

(a) DAMAGE TO DEMISED PREMISES. If the Demised Premises shall be damaged
by fire or other casualty, then, except as otherwise provided in subparagraphs
(b), (c), (d) and (e) hereof, Landlord, at Landlord's expense, shall promptly
restore the Demised Premises, and Tenant, at Tenant's sole expense, shall
promptly restore all leasehold improvements installed in the Demised Premises or
in, on, or about the Building by Tenant or at Tenant's request (including,
without limitation, any improvements, Alterations or modifications to the
Demised Premises and/or Building that are made by, or on behalf of, Tenant after
the date of this Lease) and its own furniture, furnishings, trade fixtures and
equipment. Landlord shall not be liable for any delay which may arise by reason
of adjustment of insurance on the part of Landlord, or on account of labor
problems, or any other cause beyond Landlord's reasonable control, or for any
inconvenience, interruption or injury to the business of Tenant resulting from
such damage, or in any delay in repairing such damage. If the damage or
destruction is such as to make the Demised Premises or any substantial part
thereof untenantable, and provided that such damage or destruction is not due in
whole or part to the act or omission of Tenant or Tenant's agents, employees or
invitees, the Base Annual Rent and operating expenses shall abate
proportionately (based on proportion of the number of square feet rendered
untenantable to the total number of square feet of the Demised Premises), from
the date of the damage or destruction until the date the Demised Premises has
been restored by Landlord.

(b) SUBSTANTIAL DAMAGE. If the Demised Premises are substantially damaged
or are rendered substantially untenantable by fire or other casualty, or if
Landlord's architect certifies that the Demised Premises cannot be repaired
within one hundred eighty (180) working days of normal working hours,
said period commencing with the start of the repair work, or if more than
fifty percent (50%) of the gross leasable area of the Building is rendered
untenantable, then Landlord may, within ninety (90) days after such fire
or other casualty, terminate this Lease by giving Tenant a notice in
writing of such decision, and thereupon the term of this Lease shall expire by
lapse of time upon the third day after such notice is given, and Tenant shall
vacate the Demised Premises and surrender the same to Landlord. Upon the
termination of this Lease under the conditions hereinbefore provided, Tenant's
liability for Base Annual Rent and Additional Rent, to the extent not abated
under Section 20(a) of this Lease, shall cease as of the date of such
termination.

(c) TENANT'S RIGHT OF TERMINATION. In the event (i) the Demised Premises
is damaged by fire or other casualty, (ii) such damage was not caused by Tenant
or any of its subtenants, assignees, contractors, agents or employees, and (iii)
such damage is not capable of being repaired within three hundred sixty-five
(365) days of the date of the damage, or is not repaired within three hundred
sixty-five (365) days after the date of the damage, then Tenant shall have the
right, exercisable upon written notice to Landlord within ten (10) days after
the date that Tenant is notified by Landlord that the Demised Premises is not
capable of being repaired within such three hundred sixty-five (365) day period,
or within ten (10) days after the expiration of such three hundred sixty-five
(365) day period, as applicable, to terminate this Lease. In the event that
Tenant timely delivers such notice of termination to Landlord, then, unless
Landlord, within thirty (30) days after its receipt of such termination notice,
delivers the Demised Premises (excluding those improvements that Tenant is
responsible to restore pursuant to Section 20(a) above) to Tenant in
substantially the same condition that existed immediately prior to such damage,
then this Lease shall terminate and the parties shall be relieved of all further
liability hereunder. In the event Tenant fails to timely exercise such
termination right, Tenant shall be deemed to have irrevocably waived its right
to terminate this Lease on account of such damage.

(d) INSURANCE PROCEEDS. The proceeds payable under all casualty insurance
policies maintained by Landlord on the Demised Premises shall belong to and be
the property of Landlord, and Tenant shall not have any interest in such
proceeds. Tenant agrees to look to Tenant's casualty insurance policies for the
restoration and replacement of all of the improvements installed in the Demised
Premises by Tenant or at Tenant's request and Tenant's fixtures, equipment and
furnishings in the Demised Premises, and in the event of termination of this
Lease, for any reason, following any such damage or destruction, Tenant shall
promptly assign to Landlord or otherwise pay to Landlord, upon Landlord's
request, the proceeds of said insurance and such other additional funds so that
the total amount assigned and/or paid by Tenant to Landlord shall be sufficient
to restore (whether or not any such restoration is actually to occur) all
improvements, fixtures,

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equipment and furnishings (excepting only Tenant's trade fixtures, equipment,
and furnishings) existing therein immediately prior to such damage or
destruction. Notwithstanding anything to the contrary in this Section 20 or in
any other provision of this Lease, any obligation (under this Lease or
otherwise) of Landlord to restore all or any portion of the Demised Premises
shall be subject to Landlord's receipt of approval of the same by the
mortgagee(s) of Landlord (and any other approvals required by applicable laws),
as well as receipt from any such mortgagee(s) of such fire and other hazard
insurance policy proceeds as may have been assigned to any such mortgagee; it
being agreed that if Landlord has not received such approval(s) and proceeds
within one hundred and eighty (180) days after any such casualty, then Landlord
shall have the option to terminate this Lease, at any time thereafter, upon
notice to Tenant.

(e) Notwithstanding anything set forth in this Section 20 to the contrary,
in the event that, during the final twelve (12) months of the Lease Term, the
Demised Premises is damaged and thirty-five (35%) or more of the Demised
Premises is thereby rendered untenantable or not reasonably usable, either party
may, by notice to the other within thirty (30) days after the occurrence of such
damage, elect to terminate this Lease. If either party elects to terminate this
Lease, this Lease shall terminate on the thirtieth (30th) day after the date the
termination notice is so delivered to the non-terminating party.

21. CONDEMNATION.

(a) Landlord shall give Tenant notice of the commencement of any
condemnation or eminent domain proceeding affecting the Demised Premises
promptly following Landlord's receipt of written notice thereof. In the event
the whole of the Demised Premises, or thirty-five percent (35%) or more of the
Demised Premises, shall be taken for any public or quasi-public purpose by any
lawful power or authority by exercise of the right of appropriation,
condemnation or eminent domain, or sold under threat of such taking, Tenant or
Landlord may terminate this Lease effective as of the date possession is
required to be surrendered to said authority.

(b) In the event of a partial taking of the Building for any public or
quasi-public purpose by any lawful power or authority by exercise of right of
appropriation, condemnation, or eminent domain, or in the event the Building is
sold to prevent such taking, then without regard as to whether any portion of
the Demised Premises occupied by Tenant was so taken, Landlord may elect to
terminate this Lease as of such taking if such taking is, in the reasonable
discretion of Landlord, of a material nature such as to make it uneconomical to
continue this Lease in effect.

(c) In the event this Lease terminates in connection with a taking, rent
shall be apportioned as of the date that possession is required to be
surrendered to the governmental authority. Tenant shall not assert any claim
against Landlord or the taking authority for any compensation arising out of or
related to such taking or sale in lieu thereof. In the event of any taking or
sale in lieu thereof, Landlord shall be entitled to receive the entire amount of
any award without deduction for any estate or interest of Tenant and Tenant
hereby assigns to Landlord all of Tenant's rights, title and interest in and to
any such award. If this Lease is not terminated, the Base Annual Rent and
Additional Rent payable by Tenant pursuant to Section 4 shall be adjusted (based
on the ratio that the number of square feet of rentable area taken from the
Demised Premises bears to the number of rentable square feet in the Demised
Premises immediately prior to such taking) as of the date possession is required
to be surrendered to said authority. Nothing contained in this Section shall be
deemed to give Landlord any interest in any award made to Tenant for the taking
of personal property and fixtures belonging to Tenant, as long as such award is
made in addition to and separately stated from any award made to Landlord for
the Demised Premises and the Building. Landlord shall have no obligation to
contest any taking.

(d) If, upon any taking of the nature described in this Section 21, this
Lease continues in effect, the Landlord shall promptly proceed to restore the
Demised Premises, the Building and the Project to substantially their same
condition prior to such partial taking. To the extent such restoration is
feasible (as determined by Landlord in its sole discretion), the Rent shall be
abated proportionately based upon the extent to which Tenant's use of the
Demised Premises has decreased on the basis of the percentage of the rental
value of the Demised Premises after such taking and the rental value of the
Demised Premises prior to such taking and taking into account the different
rental values for the laboratory, warehouse and office portions of the Demised
Premises.

22. DEFAULTS AND REMEDIES.

(a) DEFAULT. Each of the following shall be deemed a default by Tenant
and a breach of this Lease:

(i) A failure by Tenant to pay when due Base Annual Rent or
Additional Rent herein reserved, which failure continues for a period of ten
(10) days after written notice;

(ii) An assignment of this Lease or subletting of the Demised
Premises in violation of Section 9; and

(iii) A failure by Tenant in the observance or performance of any
other term, covenant, agreement or condition of this Lease on the part of Tenant
to be observed or performed, including the Rules and Regulations, after thirty
(30) days written notice from Landlord identifying the specific failure or
violation, provided, however, that in the event the

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violation identified is incapable of being cured within such thirty (30) day
period for reasons which are beyond the reasonable control of Tenant, then such
thirty (30) day cure period shall be extended for an additional reasonable
amount of time necessary for Tenant to effect such cure, as long as Tenant
proceeds diligently to effect such cure upon its receipt of Landlord's written
notice;

(iv) A failure by Tenant in the performance of any obligation under
Section 19 hereof;

(v) An Event of Bankruptcy as defined in Section 23;

(vi) Tenant's causing or permitting the Demised Premises to be
vacant or an abandonment of the Demised Premises;

Notwithstanding anything to the contrary in Section 22(a)(i) of this Lease,
(x) Landlord shall not be required to give Tenant more than two (2) such notices
during any twelve (12) month period, and (y) upon the occurrence of the third
(3rd) failure by Tenant during any such twelve (12) month period to pay Base
Annual Rent or Additional Rent when due, Tenant shall automatically be deemed in
default of this Lease.

(b) REMEDIES. Upon default by Tenant of any of the terms or covenants of
this Lease, Landlord shall be entitled to remedy such default as follows:

(i) Landlord shall have the right, immediately or at any time
thereafter, without further notice to Tenant, to enter the Demised Premises,
without terminating this Lease or being guilty of trespass, and do any and all
acts as Landlord may deem necessary, proper or convenient to cure such default,
for the account and at the expense of Tenant, and Tenant agrees to pay to
Landlord as Additional Rent all damage and/or expense incurred by Landlord in so
doing.

(ii) Landlord shall have the right to enter upon and take
possession of the Demised Premises without terminating this Lease, with or
without legal process, and remove Tenant, any occupant and any property
therefrom, using such force as may be necessary, without being guilty of
trespass and without relinquishing any right of Landlord against Tenant, and, if
Landlord elects, relet the Demised Premises on such terms as Landlord deems
commercially reasonable.

(iii) Landlord shall have the right to terminate this Lease and
Tenant's right to possession of the Demised Premises and, with or without legal
process, take possession of the Demised Premises and remove Tenant, any occupant
and any property therefrom, using such force as may be necessary, without being
guilty of trespass and without relinquishing any right of Landlord against
Tenant.

(iv) Landlord may elect by written notice to Tenant to be
indemnified for loss of rent by a lump sum payment representing the then present
value of the amount of rent and additional charges which would have been paid in
accordance with this Lease for the remainder of the Lease Term minus the then
present value of the aggregate fair market rent and additional charges payable
for the Demised Premises for the remainder of the Lease Term (if less than the
rent and additional charges payable hereunder), estimated as of the date of the
termination, and taking into account reasonable projections of vacancy and time
required to re-lease the Demised Premises. [For the purposes of calculating the
rent which would have been paid hereunder for the lump sum payment calculations
described hereto and in Section 22(b)(v) below, the last full year's
additional charges under Sections 4(c) and 4(d) is to be deemed constant for
each year thereafter. The Federal Reserve discount rate (or equivalent) shall
be used in calculating present values.] Should the parties be unable to agree
on a fair market rent, the matter shall be submitted, upon the demand of either
party, to the Washington, D.C. office of the American Arbitration Association
("AAA"), with a request for arbitration in accordance with the rules of the AAA
by a single arbitrator who shall be an MAI appraiser with at least ten (10)
years experience as an appraiser of major office buildings in Rockville,
Maryland. The parties agree that a decision of the arbitrator shall be
conclusive and binding upon them. If, at the end of the Lease Term, the rent
which Landlord has actually received from the Demised Premises is less than the
aggregate fair market rent estimated as aforesaid, Tenant shall thereupon pay
Landlord the amount of such difference.

(v) Landlord may elect to recover, and Tenant shall thereupon pay,
as liquidated damages under this Section 22(b), an amount equal to the sum of:
(i) [the lesser of: (A) the aggregate of the Base Annual Rent under Section 4(a)
and additional charges under Sections 4(c) and 4(d) for the balance of the Lease
Term had it not been terminated, and (B) the aggregate Base Annual Rent and
additional charges under Sections 4(c) and 4(d) that would have been payable
under this Lease during the twelve (12) month period that immediately follows
the termination date]; (ii) the amount of Base Annual Rent and additional
charges of any kind accrued and unpaid at the time of termination; and (iii)
the amount of any recovery by Landlord under the foregoing provisions of this
Section 22(b) to the time of payment of such liquidated damages [but reduced by
any amounts of reimbursement under the first sentence of Section 22(b)(vi)].
Notwithstanding anything herein to the contrary, liquidated damages hereunder
shall not be in lieu of any claims for reimbursement under clauses (A) and (B)
of the first sentence of Section 22(b)(vi) of this Lease.

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(vi) Landlord shall be entitled to recover damages from Tenant in
an amount equal to the Base Annual Rent and Additional Rent which is due and
payable hereunder as of the date of such default, together with the amount
herein covenanted to be paid as Base Annual Rent and Additional Rent during the
remainder of the term, together with (A) all expenses of any proceedings
(including, but not limited to, reasonable legal expenses and attorneys' fees)
which may be necessary in order for Landlord to recover possession of the
Demised Premises, and (B) the expenses of re-renting of the Demised Premises
(including, but not limited to, any commissions paid to any real estate agent,
advertising expense and the costs of such alterations, repairs, replacements and
decoration or re-decoration as Landlord, in its sole judgment, considers
advisable and necessary for the purpose of re-renting the Demised Premises).
Landlord shall in no event be liable in any way whatsoever for failure to
re-rent the Demised Premises or, in the event that the Demised Premises are
re-rented, for failure to collect the rent thereof under such re-renting. No
act or thing done by Landlord shall be deemed to be an acceptance of a surrender
of the Demised Premises, unless Landlord shall execute a written agreement of
surrender with Tenant. Tenant's liability hereunder shall not be terminated by
the execution of a new lease of the Demised Premises by Landlord. In the event
Landlord does not exercise its option to accelerate the payment of Base Annual
Rent as provided in Sections 20(b)(iv) and (v) above, then Tenant agrees to
pay to Landlord, upon demand, the amount of damages herein provided after the
amount of such damages for any month shall have been ascertained; provided,
however, that any expenses incurred by Landlord shall be deemed to be a part of
the damages for the month in which they were incurred. Separate actions may be
maintained each month or at other times by Landlord against Tenant to recover
the damages then due, without waiting until the end of the Lease Term to
determine the aggregate amount of such damages. Tenant hereby expressly waives
any and all notices (other than those notices specially outlined in this Lease)
to cure or vacate or to quit the Demised Premises provided by current or future
law. TENANT HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS OF REDEMPTION GRANTED BY
OR UNDER ANY PRESENT OR FUTURE LAWS IN THE EVENT OF TENANT BEING EVICTED OR
BEING DISPOSSESSED FOR ANY CAUSE, OR IN THE EVENT OF LANDLORD OBTAINING
POSSESSION OF THE DEMISED PREMISES BY REASON OF THE DEFAULT BY TENANT OF ANY OF
THE COVENANTS AND CONDITIONS OF THIS LEASE. If, under the provisions hereof,
applicable summary process shall be served, and a compromise or settlement
therefor shall be made, such action shall not be constituted as a waiver by
Landlord of any breach of any covenant, condition or agreement herein contained.

(c) RIGHT OF LANDLORD TO CURE TENANT'S DEFAULT. If Tenant defaults in the
making of any payment to any third party, or doing any act required to be made
or done by Tenant relating to the Demised Premises, then Landlord may, but shall
not be required to, make such payment or do such act. The amount of any
resulting expense or cost to Landlord, including reasonable attorneys' fees,
with interest thereon at the rate of eighteen percent (18%) per annum or the
highest legal rate, whichever is lower, accruing from the date paid by Landlord,
shall be paid by Tenant to Landlord and shall constitute Additional Rent
hereunder, due and payable by Tenant upon receipt of a written statement of
costs from Landlord. The making of such payment or the doing of such act by
Landlord shall not operate to cure Tenant's default, nor shall it prevent
Landlord from the pursuit of any remedy to which Landlord would otherwise be
entitled.

(d) INTENTIONALLY DELETED.

(e) INTENTIONALLY DELETED.

(f) LANDLORD'S REMEDIES CUMULATIVE. All rights and remedies of Landlord
herein enumerated shall be cumulative. In the event of any breach by Tenant of
any of the covenants or provisions of this Lease, then, regardless of whether
the Lease Term has commenced, this Lease has been terminated, or Landlord has
recovered possession of the Demised Premises, Landlord shall have the right of
injunction and the right to invoke any remedy allowed at law or in equity, and
mention in this Lease of any particular remedy shall not preclude Landlord from
any other remedy at law or in equity.

(g) ATTORNEY'S FEES. In the event that Landlord incurs any fees or
expenses to enforce the provisions of this Lease, including, without limitation,
attorneys' fees and litigation costs, then Tenant shall pay to Landlord such
fees and expenses on demand as Additional Rent.

(h) MITIGATION OF DAMAGES.

(i) Both Landlord and Tenant shall each use commercially
reasonable efforts to mitigate any damages resulting from a default of the other
party under this Lease.

(ii) Landlord's obligation to mitigate damages after a default by
Tenant under this Lease shall be satisfied in full if Landlord undertakes to
lease the Demised Premises to another tenant (a "Substitute Tenant") in
accordance with the following criteria: (a) Landlord shall have no obligation
to solicit or entertain negotiations with any other prospective tenants for the
Demised Premises until Landlord obtains full and complete possession of the
Demised Premises including, without limitation, the final and unappealable legal
right to relet the Demised Premises free of any claim of Tenant; (b) Landlord
shall not be obligated to offer the Demised Premises to a prospective tenant
when other premises in the Building suitable for that prospective tenant's use
are (or soon will be) available; (c) Landlord shall not be obligated to lease
the Demised Premises to a Substitute Tenant for a rental less than the current
fair market rental then prevailing for similar

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uses in comparable buildings in the same market area as the Building, nor shall
Landlord be obligated to enter into a new lease under other terms and conditions
that are unacceptable to Landlord under Landlord's then current leasing policies
for comparable space in the Building; (d) Landlord shall not be obligated to
enter into a lease with any proposed tenant whose use would: (1) violate any
restriction, covenant or requirement contained in the lease of another tenant of
the Building; (2) adversely affect the reputation of the Building; or (3) be
incompatible with the operation of the Building as a first class building; (e)
Landlord shall not be obligated to enter into a lease with any proposed
Substitute Tenant which does not have, in Landlord's reasonable opinion,
sufficient financial resources or operating experience to operate the Demised
Premises in a first class manner; (f) Landlord shall not be required to expend
any amount of money to alter, remodel or otherwise make the Demised Premises
suitable for use by a proposed Substitute Tenant unless: (1) Tenant pays any
such sum to Landlord in advance of Landlord's execution of a substitute lease
with such tenant (which payment shall not be in lieu of any damages or other
sums to which Landlord may be entitled as a result of Tenant's default under
this Lease); or (2) Landlord, in Landlord's sole discretion, determines that any
such expenditure is financially justified in connection with entering into any
such substitute lease.

(iii) Upon compliance with the above criteria regarding the
releasing of the Demised Premises after a default by Tenant, Landlord shall be
deemed to have fully satisfied Landlord's obligation to mitigate damages under
this Lease and under any law or judicial ruling in effect on the date of this
Lease or at the time of Tenant's default, and Tenant waives and releases, to the
fullest extent legally permissible, any right to assert in any action by
Landlord to enforce the terms of this Lease, any defense, counterclaim, or
rights of set off or recoupment respecting the mitigation of damages by
Landlord, unless and to the extent Landlord maliciously or in bad faith fails to
act in accordance with the requirements of this Section 22(h).

(iv) Tenant's right to seek damages from Landlord as a result of a
default by Landlord under the Lease shall be conditioned on Tenant taking all
actions reasonably required, under the circumstances, to minimize any loss or
damage to Tenant's property or business, or to any of Tenant's officers,
employees, agents, invitees, or other third parties that may be caused by any
such default of Landlord.

(i) WAIVER OF DISTRAINT RIGHTS. Landlord hereby waives all statutory or
common law liens or rights of distraint available under applicable law.

23. BANKRUPTCY.

(a) The following shall be Events of Bankruptcy under this Lease: (i)
Tenant's becoming insolvent, as that term is defined in Title 11 of the United
States Code (the "Bankruptcy Code"), or under the insolvency laws of any state,
district, commonwealth or territory of the United States (the "Insolvency
Laws"); (ii) The appointment of a receiver or custodian for any or all of
Tenant's property or assets, or the institution of a foreclosure action upon any
of Tenant's real or personal property; (iii) The filing of a voluntary petition
under the provisions of the Bankruptcy Code or Insolvency Laws; (iv) The filing
of an involuntary petition against Tenant as the subject debtor under the
Bankruptcy Code or Insolvency Laws, which either (A) is not dismissed within
sixty (60) days of filing, or (B) results in the issuance of an order for relief
against the debtor; or (v) Tenant's making or consenting to an assignment for
the benefit of creditors or a common law composition of creditors.

(b) Upon occurrence of an Event of Bankruptcy, Landlord shall have all
rights and remedies available to Landlord pursuant to Section 22 and pursuant to
the Bankruptcy Code and the Insolvency Laws; provided, however, that while a
case in which Tenant is the subject debtor under the Bankruptcy Code is pending,
Landlord shall not exercise its rights and remedies pursuant to Section 22 so
long as (i) the Bankruptcy Code prohibits the exercise of such rights and
remedies, and (ii) Tenant or its Trustee in Bankruptcy (hereinafter referred to
as "Trustee") (A) cures all defaults under this Lease, (B) compensates Landlord
for monetary damages incurred as a result of such defaults, including reasonable
attorneys' fees, (C) provides adequate assurance of future performance on the
part of Tenant as debtor in possession or on the part of the assignee tenant;
and (D) complies with all other requirements of the Bankruptcy Code.

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24. LENDER REQUIREMENTS.

(a) SUBORDINATION. Subject to the provisions of Section 24(d) hereof,
this Lease is subject and subordinate to any mortgage, deed of trust, ground
lease, master lease (each such mortgage or deed of trust shall hereinafter be
referred to as the "Deed of Trust") which hereafter affects the real property of
which the Demised Premises form a part, and to all renewals, modifications,
consolidations, replacements and extensions thereof. In the event that this
Lease becomes subordinate to any such Deed of Trust, this Lease shall not have
priority to (i) the prior right, claim and lien of such mortgages in, to and
upon any award or other compensation heretofore or hereafter to be made for any
taking by eminent domain of any part of the Demised Premises, and to the right
of disposition thereof in accordance with the provisions of the said mortgages,
(ii) the prior right, claim and lien of such mortgages in, to and upon any
proceeds payable under all policies of fire and rent insurance upon the Demised
Premises and to the right of disposition thereof in accordance with the terms of
the said mortgages, and (iii) any lien, right, power or interest, if any, which
may have arisen or intervened in the period between the recording of the
mortgages and the execution of this Lease, or any lien or judgment which may
arise any time under the terms of this Lease. In the event that this Lease
becomes subordinate to any Deed of Trust hereafter affecting the real property
of which the Demised Premises form a part, Tenant agrees to execute and deliver,
within fifteen (15) days after Landlord's written request, such further
instrument or instruments confirming such subordination as shall be desired by
Landlord or by any ground lessor, mortgagee or proposed mortgagee. Tenant shall
be liable for any loss incurred by Landlord resulting from Tenant's failure to
timely execute and deliver any instrument requested by Landlord confirming such
subordination, and shall reimburse Landlord for the amount of any such loss upon
demand, as Additional Rent. Tenant further agrees that, at the option of the
holder of any mortgage or of the trustee under any deed of trust affecting the
real property of which the Demised Premises form a part, this Lease may be made
superior to said mortgage or first deed of trust by the insertion therein of a
declaration that this Lease is superior thereto, with such exceptions as to
proceeds of insurance and takings or other matters as such holder or trustee may
specify.

(b) ATTORNMENT. Subject to the provisions of Section 24(d) hereof, in the
event any proceedings are brought for the foreclosure of, or in the event of
exercise of the power of sale under, any deed of trust to secure debt given by
Landlord and covering the Demised Premises, the party secured by any such deed
of trust shall have the right to recognize this Lease and, in the event of any
foreclosure sale under such deed of trust, this Lease shall continue in full
force and effect at the option of the party secured by such deed of trust or the
purchaser under any such foreclosure sale. If such party elects to recognize
this Lease, then (x) Tenant shall attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as the owner and landlord under
this Lease, and (y) such party, as landlord: (i) shall recognize Tenant's rights
to continue to occupy the Demised Premises and exercise and enjoy all of its
rights hereunder, and so long as Tenant complies with the terms and provisions
of this Lease; (ii) shall not be bound by payments of Base Annual Rent or
Additional Rent more than one (1) month in advance of their due date; (iii)
shall have no obligation for the return of any security deposit not actually
received by such party; (iv) shall not be bound by any amendment or modification
to the Lease to which such party has not consented in writing; (v) shall not be
subject to any claim, defense or set off which could be asserted against any
predecessor Landlord; and (vi) shall have no liability for any default by any
predecessor Landlord, other than liability for defaults under the Lease and then
only to the extent that such defaults exist on or after the date such party
comes into possession of or acquires fee simple title to the Building of record.

(c) NOTICE OF DEFAULT. Tenant agrees to give any mortgagee(s) and/or
trust deed holder(s), by certified or registered mail, postage prepaid, return
receipt requested, a copy of any notice of any failure by Landlord to fulfill
any of its obligations under this Lease, provided that prior to such notice
Tenant has been notified in writing (by way of notice of assignment of rents and
leases, or otherwise) of the addresses of such mortgagee(s) and/or trust deed
holder(s). Tenant further agrees that the mortgagee(s) and/or trust deed
holder(s) shall have such time as may be necessary to cure such failure as long
as any mortgagee(s) and/or trust deed holder(s) has commenced and is diligently
pursuing the remedies necessary to cure such failure (including, but not limited
to, time to take possession and/or commence foreclosure proceedings, if
necessary, to effect such cure). Notwithstanding anything herein to the
contrary, so long as any mortgagee(s) and/or trust deed holder(s) has commenced
and is diligently pursuing the remedies necessary to cure such failure
(including, but not limited to, taking possession and/or commencing foreclosure
proceedings, if necessary, to effect such cure), Tenant shall have no right to
terminate this Lease as a result of any such failure by Landlord.

(d) NON-DISTURBANCE. Landlord represents that as of the date of this
Lease, the Building is not encumbered by any mortgage, deed of trust, ground
lease or master lease. In the event that in the future Landlord encumbers the
Building with a Deed of Trust, Tenant shall not be obligated to subordinate its
interest under this Lease to such Deed of Trust unless and until, the holder of
such First Trust executes and delivers, for the benefit of Tenant, a
commercially reasonable non-disturbance agreement. Notwithstanding anything
herein to the contrary, Tenant hereby agrees that the form of non-disturbance
agreement that is attached to and made a part hereof as Exhibit J is a
commercially reasonable form of non-disturbance agreement, and if such form of
non-disturbance agreement is executed and delivered to Tenant by the holder of a
First Trust, Tenant shall be obligated to subordinate its interest under this
Lease to the lien of such First Trust.

(e) FINANCIAL STATEMENTS. In the event that (i) Tenant ceases filing
quarterly and annual financial information with the Securities and Exchange
Commission, or (ii) such information is not freely available to the general
public, Tenant

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shall, from time to time thereafter, upon not less than fifteen (15) days prior
written notice by Landlord, deliver to Landlord such quarterly and annual
financial statements of Tenant as Landlord may reasonably request. As used in
Section 24(e), "Tenant" shall mean The Perkin-Elmer Corporation and each
successor-in-interest to The Perkin-Elmer Corporation. To the extent that any
such information is included in the consolidated financial statements of The
Perkin-Elmer Corporation, then Tenant shall not be obligated to provide any
separate financial statements (other than the consolidated statements).

(f) ASSIGNMENT OF RENTS. If, at any time and from time to time, Landlord
assigns this Lease or the rents payable hereunder to the holder of any mortgage
or deed of trust on the Demised Premises or the Building, or to any other party
for the purpose of securing financing (the holder of any such mortgage and any
other such financing party are referred to herein as the "Financing Party"),
whether such assignment is conditional in nature or otherwise, the following
provisions shall apply:

(i) Such assignment to the Financing Party shall not be deemed an
assumption by the Financing Party of any obligations of Landlord hereunder
unless such Financing Party shall, by written notice to Tenant, specifically
otherwise elect.

(ii) Except as provided in (i) above, the Financing Party shall be
treated as having assumed Landlord's obligations hereunder [subject to Sections
24(b) and 34 of this Lease] only upon foreclosure of its mortgage or deed of
trust (or voluntary conveyance by deed in lieu thereof) and the taking of
possession of the Demised Premises from and after foreclosure.

(iii) Tenant hereby agrees to enter into such agreements or
instruments as may, from time to time, be requested in confirmation of the
foregoing.

25. ESTOPPEL CERTIFICATES. Tenant agrees, at any time and from time to time,
upon not less than ten (10) business days prior written notice by Landlord, to
execute, acknowledge and deliver to Landlord a written estoppel certificate (a)
certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications, stating the nature of same), (b) stating the
Commencement Date of the Lease Term, (c) stating the amounts of Base Annual Rent
and Additional Rent and the dates to which the Base Annual Rent and Additional
Rent have been paid by Tenant, (d) stating the amount of any Security Deposit,
(e) stating whether or not to the best knowledge of Tenant, Landlord is in
default in the performance of any covenant, agreement or condition contained in
this Lease, and, if so, specifying each such default of which Tenant may have
knowledge, (f) stating that Tenant has no right to set off and no defense
against payment of the Base Annual Rent or Additional Rent, (g) stating the
address to which notices to Tenant should be sent, and (h) certifying such other
matters as may be requested by Landlord. Any such certificate delivered
pursuant hereto may be relied upon by an owner of the Building, any prospective
purchaser of the Building, any mortgagee or prospective mortgagee of the
Building or of Landlord's interest therein, or any prospective assignee of any
such mortgage. Failure to deliver the aforesaid certificate within the five (5)
days shall be conclusive upon Tenant for the benefit of Landlord and any
successor to Landlord that this Lease is in full force and effect and has not
been modified except as may be represented by the party requesting the
certificate. Tenant shall be liable for any loss incurred by Landlord resulting
from Tenant's failure to timely execute and deliver any estoppel certificate
requested by Landlord, and shall reimburse Landlord for the amount of any such
loss upon demand, as Additional Rent.

26. TENANT HOLDOVER.

(a) WITH LANDLORD CONSENT. If Tenant continues, with the knowledge and
written consent of Landlord obtained at least thirty (30) days prior to the
expiration of the Lease Term, to remain in the Demised Premises after the
expiration of the Lease Term, and in that event, Tenant shall, by virtue of this
agreement become a tenant by the month at Base Monthly Rent which is one hundred
three percent (103%) of the Base Monthly Rent applicable to the last month of
the Lease Term, and otherwise subject to the terms, covenants and conditions
herein specified, commencing said monthly tenancy with the first day next after
the end of the Lease Term.

(b) WITHOUT LANDLORD CONSENT. In the event that Tenant, without the
consent of Landlord, shall hold over the expiration of the term hereby created,
then Tenant shall become a tenant of sufferance only, at a monthly rent which is
one hundred fifty percent (150%) of the Base Monthly Rent applicable to the last
month of the Lease Term, and otherwise subject to the terms, covenants and
conditions herein specified. Tenant expressly agrees to hold Landlord harmless
from all loss and damages, direct and consequential, which Landlord may suffer
in defense of claims by other parties against Landlord arising out of the
holding over by Tenant, including, without limitation, attorneys' fees which may
be incurred by Landlord in defense of such claims. Acceptance of rent by
Landlord subsequent to the expiration of the Lease Term shall not constitute
consent to any holding over. Landlord shall have the right to apply all payment
received after the expiration date of this Lease toward payment for use and
occupancy of the Demised Premises subsequent to the expiration of the Lease Term
and toward any other sums owed by Tenant to Landlord. Landlord, at its option,
may forthwith re-enter and take possession of the Demised Premises without
process, or by any legal process in force.

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27. INTENTIONALLY DELETED.

28. QUIET ENJOYMENT. Subject to the terms of this Lease, so long as Tenant
shall observe and perform all the covenants and agreements binding on it
hereunder Tenant shall at all times during the term herein granted, peacefully
and quietly have and enjoy possession of the Demised Premises without any
encumbrance or hindrance or molestation by Landlord, except as provided for
elsewhere under this Lease.

29. MECHANICS LIENS. Tenant will not permit to be created or to remain
undischarged any lien, encumbrance or charge (arising out of any work done or
materials or supplies furnished, or claimed to have been done or furnished, by
any contractor, mechanic, laborer or materialman or any mortgage, conditional
sale, security agreement or chattel mortgage, or otherwise by or for Tenant)
which might be or become a lien or encumbrance or charge upon the Building or
any part thereof or the income therefrom. Tenant will not suffer any other
matter or thing whereby the estate, rights and interests of Landlord in the
Building or any part thereof might be impaired. If any lien, or notice of lien
on account of an alleged debt of Tenant or any notice of contract by a party
engaged by Tenant or Tenant's contractor to work on the Demised Premises shall
be filed against the Building or any part thereof, Tenant, within ten (10) days
after notice of the filing thereof, will cause the same to be discharged of
record by payment, deposit, bond, order of a court of competent jurisdiction or
otherwise. If Tenant shall fail to cause such lien or notice of lien to be
discharged within the period aforesaid, then, in addition to any other right or
remedy, Landlord may, but shall not be obligated to, discharge the same either
by paying the amounts claimed to be due or by procuring the discharge of such
lien by deposit or by bonding proceedings and in any such event Landlord shall
be entitled, if Landlord so elects, to compel the prosecution of an action for
the foreclosure of such lien by the lienor and to pay the amount of the judgment
in favor of the lienor with interest, costs and allowances. Any amount so paid
by Landlord and all costs and expenses, including reasonable attorneys' fees,
incurred by Landlord in connection therewith, shall constitute Additional Rent
payable by Tenant under this Lease and shall be paid by Tenant to Landlord on
demand. Nothing herein contained shall obligate Tenant to pay or discharge any
lien created by Landlord.

30. TIME. Landlord and Tenant acknowledges that time is of the essence in the
performance of any and all obligations, terms, and provisions of this Lease.

31. POSTPONEMENT OF PERFORMANCE. In the event that either party hereto shall
be delayed or hindered in or prevented from the performance of any act required
hereunder by reason of strikes, labor troubles, inability to procure labor or
materials, failure of power, restrictive governmental laws or regulations,
riots, insurrection, war, acts of God, fire or other casualty or other reason of
a similar or dissimilar nature beyond the reasonable control of the party
delayed in performing work or doing acts required under the terms of this Lease,
then performance of such act shall be excused for the period of the delay and
the period for the performance of any such act shall be extended for a period
equivalent to the period of such delay. The provisions of this Section shall
not operate to excuse Tenant from the prompt payment of Base Annual Rent or
Additional Rent or from surrendering the Demised Premises, and shall not operate
to extend the term of this Lease. Delays or failures to perform resulting from
lack of funds shall not be deemed delays beyond the reasonable control of a
party.

32. LANDLORD'S RESERVED RIGHTS. The Landlord reserves the rights to show the
Demised Premises to prospective tenants or brokers during the last three hundred
sixty (360) days of the term of this Lease; to show the Demised Premises to
prospective purchasers at all reasonable times provided that prior notice is
given to Tenant in each case and that Tenant's use and occupancy of the Demised
Premises shall not be materially inconvenienced by any such action of Landlord;
and to place and maintain a "FOR RENT" sign reasonably acceptable to Tenant on
the doors or in the windows of the Demised Premises during the last three
hundred sixty (360) days of the term of this Lease. Notwithstanding the
foregoing, Tenant shall have the right to deny access to prospective purchasers
and tenants (other than purchasers and tenants who have entered into a written
letter of intent, or a contract, or a lease to purchase or lease the Demised
Premises, as applicable) to sensitive and/or secure areas of the Demised
Premises as designated by Tenant.

33. NO WAIVER. No provision of this Lease shall be deemed to have been waived
by Landlord, unless such waiver be in writing signed by Landlord. No waiver by
Landlord of any breach by Tenant of any of the terms, covenants, agreements, or
conditions of this Lease shall be deemed to constitute a waiver of any
succeeding breach thereof, or a waiver of any breach of any of the other terms,
covenants, agreements, and conditions herein contained. No custom or practice
which may occur or develop between the parties in connection with the terms of
this Lease shall be construed to waive or lessen Landlord's right to insist upon
strict performance of the terms of this Lease, without a written notice thereof
from Landlord to Tenant. No employee of Landlord or of Landlord's agents shall
have any authority to accept the keys of the Demised Premises prior to
termination of the Lease, and the delivery of keys to any employee of Landlord
or Landlord's agents shall not operate as a termination of the Lease or a
surrender of the Demised Premises. The receipt by Landlord of any payment of
Base Annual Rent or Additional Rent with knowledge of the breach of any covenant
of this Lease shall not be deemed a waiver of such breach. The failure of
Landlord to enforce any of the Rules and Regulations made a part of this Lease,
or hereafter adopted, against Tenant or any other tenant in the Building shall
not be deemed a waiver of any such Rules and Regulations.

34. LIMITATION OF LANDLORD'S LIABILITY. In consideration of the benefits
accruing hereunder, Tenant and all successors and assigns of Tenant covenant and
agree that in the event of any actual or alleged failure, breach or default
hereunder by

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Landlord: (a) the sole and exclusive remedy shall be against the interest of
Landlord in the Building; (b) neither Landlord nor (if Landlord is a
partnership) any partner of Landlord nor (if Landlord is a corporation) any
shareholder of Landlord, nor Rental Agent specified in Section 1(a)8 hereof nor
(if Rental Agent is a partnership) any partner of Rental Agent nor (if Rental
Agent is a corporation) any shareholder of Rental Agent shall be personally
liable with respect to any claim arising out of or related to this Lease; (c) no
partner or shareholder of Landlord nor any partner or shareholder of Rental
Agent shall be sued or named as a party in any suit or action (except as may be
necessary to secure jurisdiction of Landlord); (d) no service of process shall
be made against any partner or shareholder of Landlord nor against any partner
or shareholder of Rental Agent (except as may be necessary to secure
jurisdiction of Landlord); (e) any judgment granted against any partner or
shareholder of Landlord or against any partner or shareholder of Rental Agent
may be vacated and set aside at any time as if such judgment had never been
granted; and (f) these covenants and agreements are enforceable both by Landlord
and also by any partner or shareholder of Landlord and by any partner or
shareholder of Rental Agent.

35. TRANSFER OF THE BUILDING. In the event of the sale or other transfer of
Landlord's right, title and interest in the Demised Premises or the Building
(except in the case of a sale-leaseback financing transaction in which Landlord
is the lessee), Landlord shall transfer and assign to such purchaser or
transferee all amounts of pre-paid Base Annual Rent. Tenant shall have no right
to terminate this Lease nor to abate Base Annual Rent nor to deduct from, nor
set-off, nor counterclaim against Base Annual Rent because of any sale or
transfer (including, without limitation, any sale-leaseback) by Landlord or its
successors or assigns). In the event of the transfer and assignment by Landlord
of its interest in this Lease, and the transferee's agreement to assume
Landlord's obligations under this Lease, Landlord shall thereby be released from
any further responsibility hereunder, and Tenant agrees to look solely to such
successor in interest of the Landlord for performance of such obligations. The
term "Landlord" as used in this Lease shall mean the owner of the Building, at
the time in question. In the event of a transfer (whether voluntary or
involuntary) by such owner of its interest in the Building, such owner shall
thereupon be released and discharged from all covenants and obligations of the
Lease thereafter accruing, but such covenants and obligations shall be binding
during the Lease Term upon each new owner for the duration of such owner's
ownership. Upon any sale or other transfer as above provided (other than a
sale-leaseback), or upon any assignment of Landlord's interest herein [except as
provided in Section 24(f)], it shall be deemed and construed conclusively,
without further agreement between the parties, that the purchaser or other
transferee or assignee has assumed and agreed to perform the obligations of
Landlord thereafter accruing.

36. WAIVER OF COUNTERCLAIM AND TRIAL BY JURY. LANDLORD AND TENANT WAIVE THEIR
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY
EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND
TENANT, TENANT'S USE OF OR OCCUPANCY OF THE DEMISED PREMISES, AND ANY EMERGENCY
STATUTORY OR ANY OTHER STATUTORY REMEDY. TENANT SHALL NOT INTERPOSE ANY
COUNTERCLAIM OR COUNTERCLAIMS OR CLAIMS (EXCEPT THOSE MANDATORY COUNTERCLAIMS
THAT WOULD BE WAIVED IF NOT RAISED) FOR SET-OFF, RECOUPMENT OR DEDUCTION OF BASE
ANNUAL RENT OR ADDITIONAL RENT IN A SUMMARY PROCEEDING FOR NONPAYMENT OF BASE
ANNUAL RENT OR ADDITIONAL RENT OR OTHER ACTION OR SUMMARY PROCEEDING BASED ON
TERMINATION, HOLDOVER OR OTHER DEFAULT IN WHICH LANDLORD SEEKS REPOSSESSION OF
THE DEMISED PREMISES FROM TENANT.

37. NOTICES.

(a) ADDRESSES FOR NOTICES. All notices required or desired to be given
hereunder by either party to the other shall be in writing and be given in
person, by reputable overnight carrier which provides receipt of delivery, or by
certified or registered mail and addressed as specified in Section 1(a). Either
party may, by like written notice, designate a new address to which such notices
shall be directed.

(b) EFFECTIVE DATE OF NOTICE. Notice shall be deemed to be effective when
delivered in person or by Federal Express, or when delivery is refused, or three
(3) days after mailing, unless otherwise stipulated herein.

38. BROKERS. Landlord and Tenant each represents and warrants to the other
that it has not employed any brokers in connection with this Lease transaction,
except the brokers named in Section 1(a)(21). Said brokers shall be paid a
brokerage commission pursuant to a separate agreement between Landlord and said
brokers, and Landlord and Tenant each shall indemnify and hold harmless the
other from and against any claims for brokerage or other commission arising by
reason of a breach by the indemnifying party of the aforesaid representation and
warranty.

39. CONSTRUCTION ALLOWANCE OFFSET. In the event that Landlord fails to
disburse any applicable portion of the "Improvements Allowance" (as defined in
Exhibit C) to Tenant within thirty (30) days after the date that such amount is
payable to Tenant under Exhibit C, then, provided Landlord has not delivered a
written notice to Tenant within such thirty (30) day period which, in good
faith, disputes that the applicable portion for the Improvements Allowance is
payable, then, Tenant shall have the right, upon five (5) days notice to
Landlord, to deduct such unpaid portion of the Improvements Allowance from the
next installment(s) of Base Monthly Rent then coming due hereunder.

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40. MISCELLANEOUS PROVISIONS.

(a) GOVERNING LAW. The laws of the jurisdiction in which the Building is
located shall govern the validity, performance and enforcement of this Lease.

(b) SUCCESSORS. All rights, remedies and liabilities herein given to or
imposed upon either of the parties hereto, shall extend to their respective
heirs, executors, administrators, successors and assigns. This provision shall
not be deemed to grant Tenant any right to assign this Lease or to sublet the
Demised Premises.

(c) NO PARTNERSHIP. Nothing contained in this Lease shall be deemed or
construed to create a partnership or joint venture of or between Landlord and
Tenant, or to create any other relationship between the parties other than that
of Landlord and Tenant.

(d) NO REPRESENTATIONS BY LANDLORD. Neither Landlord nor any employee or
agent of Landlord has made any representations or promises with respect to the
Demised Premises or the Building except as herein expressly set forth, and no
rights, privileges, easements or licenses are granted to Tenant except as herein
expressly set forth.

(e) EXHIBITS. It is agreed and understood that any Exhibits referred to
herein, and attached hereto, form an integral part of this Lease and are hereby
incorporated by reference.

(f) PRONOUNS. Feminine or neuter pronouns shall be substituted for those
of the masculine form, and the plural shall be substituted for the singular
number, in any place or places herein in which the content may require such
substitution or substitutions. Landlord and Tenant herein for convenience have
been referred to in neuter form.

(g) CAPTIONS. All section and paragraph captions herein are for the
convenience of the parties only, and neither limit nor amplify the provisions of
this Lease.

(h) LANDLORD'S APPROVAL. Whenever Landlord's consent or approval is
required under the terms of this Lease, Landlord may grant or deny such consent
or approval in its sole discretion unless otherwise specified herein.

(i) INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision of this
Lease or applications thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remaining terms and provisions of this
Lease, or the application of such term or provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Lease shall be valid and
enforced to the fullest extent permitted by law.

(j) COUNTERPARTS. This Lease may be executed in several counterparts, but
all counterparts shall constitute one and the same legal document.

(k) ENTIRE AGREEMENT; MODIFICATION. This Lease and all Exhibits hereto
contain all the agreements and conditions made between the parties and may not
be modified orally or in any other manner than by an agreement in writing,
signed by the parties hereto.

(l) AUTHORITY. Landlord and Tenant hereby covenant each for itself, that
it has full right, power and authority to enter into this Lease upon the terms
and conditions herein set forth. If Tenant signs as a corporation, each of the
persons executing this Lease on behalf of Tenant does hereby covenant and
warrant that Tenant is a duly authorized and existing corporation, qualified to
do business in the jurisdiction in which the Demised Premises is located, that
the corporation has full right and authority to enter into this Lease, and that
each and both of the persons signing on behalf of the corporation were
authorized to do so. If Tenant signs as a partnership, each of the persons
executing this Lease on behalf of Tenant does hereby covenant and warrant that
Tenant is a duly formed and validly existing partnership, that the partnership
has full right and authority to enter into this Lease, and that each of the
persons signing on behalf of the partnership were authorized to do so.

(m) EXAMINATION OF LEASE. Submission of this Lease for examination or
signature by Tenant shall not constitute reservation of or option for Lease, and
the same shall not be effective as a Lease or otherwise until execution and
delivery by both Landlord and Tenant.

(n) RECOVERY OF ATTORNEYS' FEES. In the event of any action or proceeding
brought by either party against the other under this Lease, the prevailing party
shall be entitled to recover from the other party the fees of its attorneys in
such action or proceeding in such amount as the court may judge to be reasonable
for such attorney's fees.

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(o) COVENANTS. The parties hereto agree that all the provisions of this
Lease are to be construed as covenants and agreements as though the words
importing such covenants and agreements were used in each separate provision
hereof.

(p) INTERPRETATION. Although the printed provisions of this Lease were
drawn by Landlord, this Lease shall not be construed for or against Landlord or
Tenant, but this Lease shall be interpreted in accordance with the general tenor
of the language in an effort to reach the intended result.

(q) CONFIDENTIALITY. As used herein, "Confidential Information" shall
mean any information or documentation furnished to Landlord by Tenant pursuant
to the terms of this Lease and which is reasonably designated by Tenant as being
confidential, or any confidential information or confidential documentation that
Landlord otherwise obtains in connection with its rights to access the Demised
Premises under this Lease. Landlord shall not disclose any Confidential
Information to any third party other than (i) in connection with any legal
dispute between Landlord and Tenant (i.e., as part of a court pleading, or as
part of an examination of a witness or as part of any oral argument), and (ii)
as required by law. To the extent such action does not involve a legal dispute
between Landlord and Tenant, in the event that Landlord is required in any
proceeding to disclose any Confidential Information, Landlord shall give Tenant
immediate oral notice of such request so that Tenant may challenge such
disclosure requirement or seek a protective order. To the extent such action
does not involve a legal dispute between Landlord and Tenant, Landlord shall
cooperate with Tenant in seeking the same. Landlord agrees that money damages
would not be a sufficient remedy for any breach of this confidentiality
provision, and that in addition to all other remedies, Tenant shall be entitled
to seek injunctive relief as a remedy for any such breach. The terms of this
Section 40(q) shall survive the expiration or earlier termination of this Lease.

41. RIGHT OF FIRST PURCHASE OFFER.

(a) In the event that (i) Landlord, in the exercise of its sole and
absolute discretion, elects to sell the Building, (ii) this Lease shall be in
full force and effect, (iii) Tenant shall not then be in default under this
Lease, and (iv) Tenant shall be then occupying at least fifty percent (50%) of
the Demised Premises, then, prior to offering to sell the Building to any party,
Landlord shall deliver to Tenant a written contract which contains the terms and
conditions upon which Landlord is willing to sell the Building. In the event
that Tenant desires to purchase the Building (including, for purposes of this
Section 41, the underlying land and adjacent land upon which parking spaces can
be located so that the parking for the Building complies with applicable law),
Landlord and Tenant shall thereafter, negotiate in good faith for a period of
thirty (30) days after the date of delivery of such contract, the terms and
conditions upon which the parties would be willing to enter into an agreement
for the purchase and sale of the Building. In the event that Landlord and
Tenant agree on the terms and conditions of an agreement of purchase and sale of
the Building during such thirty (30) day period, the parties shall, in good
faith, during the same thirty (30) day period, attempt to execute and deliver a
contract containing such agreed upon terms and conditions (such fully executed
contract shall hereinafter be referred to as the "Executed Contract"). Such
Executed Contract shall provide for the payment by Tenant to Landlord of five
percent (5%) of the purchase price that is set forth in the Executed Contract,
which payment shall be (i) non-refundable, and (ii) in immediately available
federal funds. Notwithstanding anything herein to the contrary, in the event
that Landlord and Tenant do not execute and deliver the Executed Contract within
the applicable thirty (30) day period, and Landlord thereafter sells the
Building within twelve (12) months thereafter, then, subject to the provisions
of Section 41(c) and Section 41(g) below, (i) the provisions of this Section 41
shall be null and void and of no further force or effect, and (ii) Landlord
shall have no further obligation to offer to sell the Building or any portion
thereof to Tenant. In the event that Landlord does not sell the Building within
such twelve (12) month period, then, subject to the provisions of Section 41(g)
below, the provisions of this Section 41 shall again be in full force and
effect.

(b) In the event that Landlord and Tenant execute and deliver the
Executed Contract prior to the expiration of the thirty (30) day period, then,
Landlord shall sell the Building to Tenant, and Tenant shall purchase the
Building from Landlord, in accordance with the terms of the Executed Contract.

(c) In the event that (i) Landlord and Tenant do not execute and deliver
the Executed Contract within the applicable thirty (30) day period and (ii) at
the expiration of such period, Landlord markets the Building for a stated price
or a price range, then prior to marketing the Building for such stated price or
at such price range, Landlord shall advise Tenant, in writing (the "Market Price
Offer"), of the stated price or price range at which Landlord intends to
initially market the Building. Upon Tenant's receipt of the Market Price Offer,
Landlord and Tenant shall negotiate in good faith for a period of five (5) days
the terms and conditions upon which Landlord would be willing to sell the
Building to Tenant, and Tenant would be willing to purchase the Building from
Landlord. In the event that Tenant and Landlord agree in writing on the terms
and conditions on which Landlord would sell the Building to Tenant and Tenant
would purchase the Building from Landlord within five (5) days after the date
that Landlord delivers the Market Price Offer to Tenant, then the provisions of
Section 41(d) below shall be applicable. Notwithstanding anything herein to the
contrary, in the event that Landlord and Tenant do not agree, in writing, on the
terms and conditions upon which Landlord would sell the Building to Tenant, and
Tenant would purchase the Building from Landlord, prior to the expiration of the
applicable five (5) day period, then (i) the provisions of Section 41 of this
Lease shall be null and void and of no further force and effect, and (ii)
Landlord shall have the right to sell the Building to any party or parties,
including Tenant. Notwithstanding the foregoing, in the event that

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Landlord does not sell the Building within twelve (12) months after the
expiration of such five (5) day period, then, subject to the provisions of
Section 41(g) below, this Section 41 shall again be of full force and effect.

(d) In the event that Landlord and Tenant agree, in writing, within five
(5) days after the date that Landlord delivers the Market Price Offer to Tenant,
on the terms and conditions upon which Landlord would sell the Building to
Tenant, and Tenant would purchase the Building from Landlord, then prior to the
expiration of such five (5) day period, Landlord and Tenant shall enter into a
written contract, which contract shall contain the terms and conditions (the
"Sales Terms") which the parties have previously agreed to in writing during the
five (5) day period. If Landlord and Tenant shall execute and deliver the
contract within the applicable five (5) day period, and Tenant shall
simultaneously therewith, pay to Landlord, in immediately available federal
funds, a non-refundable payment equal to five percent (5%) of the purchase price
(the "Downpayment"), then Landlord shall sell to Tenant, and Tenant shall
purchase from Landlord, the Building in accordance with the terms of such
contract. In the event that Tenant fails to either execute the contract within
the applicable five (5) day period, or fails to deliver to Landlord the
Downpayment within the applicable five (5) day period, then (i) the provisions
of Section 41 shall be null and void and of no further force or effect, and (ii)
Landlord shall have the right to sell the Building to any party or parties,
including Tenant. Notwithstanding the foregoing, in the event that Landlord does
not sell the Building within twelve (12) months after the expiration of such
five (5) day period, then, subject to the provisions of Section 41(g) below,
this Section 41 shall again be of full force and effect.

(e) Notwithstanding anything herein to the contrary, if upon expiration of
the applicable thirty (30) day period, the Landlord markets the Building, but
such initial marketing does not contain a stated price or price range, but
instead requests that interested parties submit a bid or offer that contains the
purchase price that such party is willing to pay to purchase the Building, then,
subject to the provisions of Section 41(g) below, Landlord shall solicit a bid
from Tenant and the provisions of Sections 41(c) and (d) shall not be applicable
to any sale that takes place within twelve (12) months following the expiration
of such thirty (30) day period, and Landlord shall have the right to sell the
Building to any party or parties, including Tenant.

(f) Notwithstanding anything herein to the contrary, the provisions of
this Section 41 shall be subject and subordinate to the lien of any mortgage or
deed of trust which may in the future encumber the Building.

(g) Notwithstanding anything herein to the contrary, in the event that
prior to the date that occurs twelve (12) months after the date that Tenant's
right of first negotiation lapses under this Section 41 Landlord enters into a
contract to sell the Building to another party, and such sale is consummated
within one hundred eighty (180) days thereafter, the provisions of this Section
41 shall be of no further force or effect.

42. RIGHT OF FIRST LEASE OFFER.

(a) As of the date of this Lease, (i) there exists a parcel of real
property which is located adjacent to the land underlying the Building, which
real property is more particularly depicted on the drawing which is attached to
and made a part of this Lease as Exhibit "H" (such real property shall
hereinafter be referred to as the "Other Property"), and (ii) Landlord does not
own the Other Property. In the event that Landlord or any affiliate of Landlord
(each of whom shall be referred to as the "Landlord" for purposes of this
Section 42), acquires the Other Property, then the provisions of this Section 42
shall be applicable to such Other Property.

(b) In the event that (i) Landlord, in the exercise of its sole and
absolute discretion, elects to lease at least fifty thousand (50,000) square
feet or more of rentable area (such rentable area shall hereinafter be referred
to as the "Available Space") that will be located in one (1) or more buildings
to be situated on the Other Property, (ii) this Lease shall be in full force and
effect, (iii) Tenant shall not then be in default under this Lease, (iv) Tenant
shall be then occupying at least fifty percent (50%) of the Demised Premises,
and (v) Landlord and a potential occupant of the Available Space shall have
exchanged written offers or proposals with respect to the Available Space (I.E.,
one party has delivered a written offer or proposal to the other party and the
other party has responded in writing to such offer or proposal), and the
responding offer or proposal (such responding offer or proposal shall
hereinafter be referred to as the "Responding Offer") sets forth a base rent
that is within twenty (20%) of the base rent that is set forth in the initial
offer or proposal, then, prior to leasing the Available Space to any party,
Landlord shall deliver to Tenant a written notice (the "Leasing Offer"), which
contains the terms and conditions upon which Landlord is willing to lease the
Available Space to Tenant. In the event that Tenant desires to lease the
Available Space, then Landlord and Tenant shall, in good faith, for a period of
ten (10) days after the delivery of the Leasing Offer, negotiate the terms and
conditions upon which the parties would be willing to enter into a lease with
respect to the Available Space. In the event that Landlord and Tenant are
unable to agree on such terms within such ten (10) day period, then, provided
that Landlord actually enters into a lease with respect to the Available Space
(or any part thereof) within twelve (12) months after the date of the Leasing
Offer, the provisions of this Section 42 shall be null and void and of no
further force or effect, and Landlord shall have no further obligation to offer
to lease to Tenant the Available Space. By way of illustration, in the event
that (i) the Responding Offer were to describe the Available Space as being two
hundred thousand (200,000) square feet of rentable area, and (ii) Tenant desired
to lease the Available Space, then Tenant would be

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obligated to lease the entire two hundred thousand (200,000) square feet of
rentable area (in whole and not in part) on terms and conditions that are
mutually acceptable to Landlord and Tenant.

(c) In the event that during the applicable ten (10) day period Landlord
and Tenant agree upon the terms and conditions of a lease with respect to the
Available Space, then, for ten (10) days after the expiration of such ten (10)
day period, Tenant and Landlord shall, in good faith, negotiate the final terms
and conditions of a lease with respect to the Available Space, which lease shall
contain the terms and conditions negotiated by Landlord and Tenant pursuant to
Section 42(b). Notwithstanding anything herein to the contrary, if the parties
shall fail to execute and deliver a lease which contains the terms and
conditions of such lease within such ten (10) day period, then Landlord shall
have the right, at Landlord's option, to offer to lease and to lease such
Available Space (or any portion thereof) to others upon such terms and
conditions as shall be acceptable to Landlord.

(d) As used in this Section 42, "Landlord" shall be deemed to include
Meridian Rockville Plaza, LLC ("Meridian"), any party that is affiliated with or
related to Meridian, and any party that succeeds to Landlord's interest under
the Lease. In the event that Meridian sells the Building, the provisions of
this Section 42 shall survive with respect to Meridian and any party that is
related to or affiliated with Meridian. Notwithstanding anything herein to the
contrary, the provisions of this Section 42 shall be subject and subordinate to
the lien of any mortgage or deed of trust which may in the future encumber the
Other Property.

43. EXPANSION IN ADJACENT BUILDING.

(a) Provided that Tenant is not then in default and is then in occupancy
of at least fifty percent (50%) of the Demised Premises at the time of an
"Offer" (as hereinafter defined) and at the time of the commencement of the
Lease Term as to the "Expansion Space" (as hereinafter defined), then during the
Lease Term, Tenant shall have the right to receive from Landlord, prior to the
leasing of said Expansion Space by Landlord to any party other than the occupant
of such space pursuant to an Initial Lease [as defined in Section 43(e)], an
offer to lease the Expansion Space (the "Offer"). "Expansion Space" means only
that office space which is located in the building located at 15 West Gude
Drive, Rockville, Maryland 20852 (the "Adjacent Building") and which has been
previously leased by Landlord (or an affiliate of, or related party to,
Landlord) to another tenant, as said space may become available for lease after
the expiration or termination of the Initial Lease with respect thereto
(including all extensions and renewal terms which are expressly contained in any
such Initial Lease for such space). The Expansion Space shall be offered to and
accepted (if at all) by Tenant on the terms and conditions that are set forth in
the Offer, or on such other terms and conditions that Landlord and Tenant have
mutually agreed upon, in writing, prior to the date which occurs twenty (20)
calendar days after the date that Landlord delivers the Offer.

(b) In the event that Tenant desires to lease the Expansion Space, then
Landlord and Tenant shall, in good faith, for a period of twenty (20) days after
the date that Landlord delivers the Offer to Tenant, negotiate the terms and
conditions upon which the parties would be willing to enter into a lease with
respect to the Expansion Space. In the event that Landlord and Tenant agree, in
writing, within twenty (20) calendar days after the date that Landlord delivers
the Offer to Tenant, on the terms and conditions which Landlord will lease to
Tenant, and Tenant will lease from Landlord, the Expansion Space, then the
provisions of Section 43(c) shall be applicable. Notwithstanding anything
herein to the contrary, if Landlord and Tenant do not mutually agree, in
writing, within twenty (20) calendar days after the date that Landlord delivers
the Offer to Tenant, upon the terms and conditions which Landlord will lease the
Expansion Space to Tenant, and Tenant will lease the Expansion Space from
Landlord, then Landlord shall be free to offer to lease and to lease such
Expansion Space to others, and, provided that Landlord enters into a lease
agreement with respect to the Expansion Space (or any part thereof) within
twelve (12) months after such twenty (20) day period, Tenant's right to lease
said Expansion Space shall be void and of no force or effect until the next time
that such space becomes available after having been leased by Landlord, and
Landlord may lease said Expansion Space (or any part thereof) to others upon
such terms and for such periods as shall be acceptable to Landlord.

(c) In the event that Landlord and Tenant agree, in writing, within twenty
(20) days after the date that Landlord delivers the Offer to Tenant, on the
terms and conditions (the "Expansion Terms") which Landlord will lease to
Tenant, and Tenant will lease from Landlord, the Expansion Space, then Landlord
and Tenant shall negotiate all of the terms and conditions of a lease setting
forth the Expansion Terms within twenty (20) days after Landlord and Tenant
agree on the Expansion Terms. Notwithstanding anything herein to the contrary,
if the parties shall fail to execute and deliver a lease which contains the
Expansion Terms prior to the expiration of such twenty (20) day period, then
Landlord shall have the right to lease such Expansion Space (or any part
thereof) to others upon such terms and conditions as shall be acceptable to
Landlord.

(d) During the period that any Offer is outstanding, Landlord may proceed
with negotiations with prospective tenants other than Tenant with respect to any
or all of the Expansion Space in question, provided that Landlord may only enter
into unconditional leases with respect to any such Expansion Space upon
complying with all of the terms and

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conditions regarding Tenant's right of offer, as set forth in this Section 43.
Tenant may only lease each Expansion Space hereunder in whole but not in part.

(e) Landlord and Tenant acknowledge that, as of the date of this Lease,
the Adjacent Building is vacant, and Landlord is in the process of identifying
potential tenants for the Adjacent Building. Each lease of space in the
Adjacent Building shall be referred to herein as an "Initial Lease." The term
"Initial Lease" shall not include any later amendments or modifications to such
lease, but shall include all rights, remedies and options (including extension,
renewal and expansion rights and options) of the tenants under those Initial
Leases. Notwithstanding anything herein to the contrary, all rights granted to
Tenant pursuant to this Section 43 with respect to the Adjacent Building shall
be subject and subordinate to the express terms of any expansion, renewal or
option rights set forth in the Initial Leases.

(f) The provisions of this Section 43 shall be applicable during the Lease
Term and during any extension or renewal of the Lease Term that is entered into
by Landlord and Tenant.

44. RIGHT OF FIRST PURCHASE OFFER - ADJACENT BUILDING.

(a) In the event that (i) Landlord, in the exercise of its sole and
absolute discretion, elects to sell the Adjacent Building, (ii) this Lease shall
be in full force and effect, (iii) Tenant shall not then be in default under
this Lease, and (iv) Tenant shall be then occupying at least fifty percent (50%)
of the Demised Premises, then, prior to offering to sell the Adjacent Building
to any party, Landlord shall deliver to Tenant a written contract which contains
the terms and conditions upon which Landlord is willing to sell the Adjacent
Building. In the event that Tenant desires to purchase the Adjacent Building
(including, for purposes of this Section 44, the underlying land and adjacent
land upon which parking spaces can be located so that the parking for the
building complies with applicable law), Landlord and Tenant shall thereafter,
negotiate in good faith for a period of thirty (30) days after the date of
delivery of such contract, the terms and conditions upon which the parties would
be willing to enter into an agreement for the purchase and sale of the Adjacent
Building. In the event that Landlord and Tenant agree on the terms and
conditions of an agreement of purchase and sale of the Adjacent Building during
such thirty (30) day period, the parties shall, in good faith, during the same
thirty (30) day period, attempt to execute and deliver a contract containing
such agreed upon terms and conditions (such fully executed contract shall
hereinafter be referred to as the "Adjacent Building Executed Contract"). Such
Adjacent Building Executed Contract shall provide for the payment by Tenant to
Landlord of five percent (5%) of the purchase price that is set forth in the
Adjacent Building Executed Contract, which payment shall be (i) non-refundable,
and (ii) in immediately available federal funds. Notwithstanding anything
herein to the contrary, in the event that Landlord and Tenant do not execute and
deliver the Adjacent Building Executed Contract within the applicable thirty
(30) day period, and Landlord thereafter sells the Adjacent Building within
twelve (12) months thereafter, then, subject to the provisions of Section 44(c)
and Section 44(g) below, (i) the provisions of this Section 44 shall be null and
void and of no further force or effect, and (ii) Landlord shall have no further
obligation to offer to sell the Adjacent Building or any portion thereof to
Tenant. In the event that Landlord does not sell the Adjacent Building within
such twelve (12) month period, then, subject to the provisions of Section 44(g)
below, the provisions of this Section 44 shall again be in full force and
effect.

(b) In the event that Landlord and Tenant execute and deliver the
Adjacent Building Executed Contract prior to the expiration of the thirty (30)
day period, then, Landlord shall sell the Adjacent Building to Tenant, and
Tenant shall purchase the Adjacent Building from Landlord, in accordance with
the terms of the Adjacent Building Executed Contract.

(c) In the event that (i) Landlord and Tenant do not execute and deliver
the Adjacent Building Executed Contract within the applicable thirty (30) day
period and (ii) at the expiration of such period, Landlord intends to market the
Adjacent Building for a stated price or a price range, then prior to marketing
the Adjacent Building for such stated price or at such price range, Landlord
shall advise Tenant, in writing (the "Adjacent Building Market Price Offer"), of
the stated price or price range at which Landlord intends to initially market
the Adjacent Building. Upon Tenant's receipt of the Adjacent Building Market
Price Offer, Landlord and Tenant shall negotiate in good faith for a period of
five (5) days the terms and conditions upon which Landlord would be willing to
sell the Adjacent Building to Tenant, and Tenant would be willing to purchase
the Adjacent Building from Landlord. In the event that Tenant and Landlord
agree in writing on the terms and conditions on which Landlord would sell the
Adjacent Building to Tenant and Tenant would purchase the Adjacent Building from
Landlord within five (5) days after the date that Landlord delivers the Adjacent
Building Market Price Offer to Tenant, then the provisions of Section 44(d)
below shall be applicable. Notwithstanding anything herein to the contrary, in
the event that Landlord and Tenant do not agree, in writing, on the terms and
conditions upon which Landlord would sell the Adjacent Building to Tenant, and
Tenant would purchase the Adjacent Building from Landlord, prior to the
expiration of the applicable five (5) day period, then (i) the provisions of
Section 44 of this Lease shall be null and void and of no further force and
effect, and (ii) Landlord shall have the right to sell the Adjacent Building to
any party or parties, including Tenant. Notwithstanding the foregoing, in the
event that Landlord does not sell the Adjacent Building within twelve (12)
months after the expiration of such five (5) day period, then, subject to the
provisions of Section 44(g) below, this Section 44 shall again be of full force
and effect.

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<PAGE>

(d) In the event that Landlord and Tenant agree, in writing, within five
(5) days after the date that Landlord delivers the Adjacent Building Market
Price Offer to Tenant, on the terms and conditions which Landlord would sell the
Adjacent Building to Tenant, and Tenant would purchase the Adjacent Building
from Landlord, then prior to the expiration of such five (5) day period,
Landlord and Tenant shall enter into a written contract, which contract shall
contain the terms and conditions (the "Adjacent Building Sales Terms") which the
parties have previously agreed to in writing during the five (5) day period. If
Landlord and Tenant shall execute and deliver the contract within the applicable
five (5) day period, and Tenant shall simultaneously therewith, pay to Landlord,
in immediately available federal funds, a non-refundable payment equal to five
percent (5%) of the purchase price (the "Adjacent Building Downpayment"), then
Landlord shall sell to Tenant, and Tenant shall purchase from Landlord, the
Adjacent Building in accordance with the terms of such contract. In the event
that Tenant fails to either execute the contract within the applicable five (5)
day period, or fails to deliver to Landlord the Adjacent Building Downpayment
within the applicable five (5) day period, then (i) the provisions of Section 44
shall be null and void and of no further force or effect, and (ii) Landlord
shall have the right to sell the Adjacent Building to any party or parties,
including Tenant. Notwithstanding the foregoing, in the event that Landlord does
not sell the Adjacent Building within twelve (12) months after the expiration of
such five (5) day period, then, subject to the provisions of Section 44(g)
below, this Section 44 shall again be of full force and effect.

(e) Notwithstanding anything herein to the contrary, if upon expiration of
the thirty (30) day period following the applicable thirty (30) day period
Landlord markets the Adjacent Building, but such initial marketing does not
contain a stated price or price range, but instead requests that interested
parties submit a bid or offer that contains the purchase price that such party
is willing to pay to purchase the Adjacent Building, then, Landlord shall
solicit a bid from Tenant and subject to the provisions of Section 44(g) below,
the provisions of Sections 41(c) and (d) shall not be applicable to any sale
that takes place within twelve (12) months following the expiration of such
thirty (30) day period, and Landlord shall have the right to sell the Adjacent
Building to any party or parties, including Tenant.

(f) Notwithstanding anything herein to the contrary, the provisions of
this Section 44 shall be subject and subordinate to the lien of any mortgage or
deed of trust which may in the future encumber the Adjacent Building.

(g) Notwithstanding anything herein to the contrary, in the event that
prior to the date that occurs twelve (12) months after the date that Tenant's
right of first negotiation lapses under this Section 44, Landlord enters into a
contract to sell the Adjacent Building to another party, and such sale is
consummated within one hundred eighty (180) days thereafter, the provisions of
this Section 44 shall be of no further force or effect.

45. RIGHT OF FIRST PURCHASE OFFER - OTHER PROPERTY.

(a) In the event that (i) Landlord, in the exercise of its sole and
absolute discretion, elects to sell the Other Property, (ii) this Lease shall be
in full force and effect, (iii) Tenant shall not then be in default under this
Lease, and (iv) Tenant shall be then occupying at least fifty percent (50%) of
the Demised Premises, then, prior to offering to sell the Other Property to any
party, Landlord shall deliver to Tenant a written contract which contains the
terms and conditions upon which Landlord is willing to sell the Other Property.
In the event that Tenant desires to purchase the Other Property (including, for
purposes of this Section 45, the underlying land and adjacent land upon which
parking spaces can be located so that the parking for the building complies with
applicable law), Landlord and Tenant shall thereafter, negotiate in good faith
for a period of thirty (30) days after the date of delivery of such contract,
the terms and conditions upon which the parties would be willing to enter into
an agreement for the purchase and sale of the Other Property. In the event that
Landlord and Tenant agree on the terms and conditions of an agreement of
purchase and sale of the Other Property during such thirty (30) day period, the
parties shall, in good faith, during the same thirty (30) day period, attempt to
execute and deliver a contract containing such agreed upon terms and conditions
(such fully executed contract shall hereinafter be referred to as the "Other
Property Executed Contract"). Such Other Property Executed Contract shall
provide for the payment by Tenant to Landlord of five percent (5%) of the
purchase price that is set forth in the Other Property Executed Contract, which
payment shall be (i) non-refundable, and (ii) in immediately available federal
funds. Notwithstanding anything herein to the contrary, in the event that
Landlord and Tenant do not execute and deliver the Other Property Executed
Contract within the applicable thirty (30) day period, and Landlord thereafter
sells the Other Property within twelve (12) months thereafter, then, subject to
the provisions of Section 45(c) and Section 45(g) below, (i) the provisions of
this Section 45 shall be null and void and of no further force or effect, and
(ii) Landlord shall have no further obligation to offer to sell the Other
Property or any portion thereof to Tenant. In the event that Landlord does not
sell the Other Property within such twelve (12) month period, then subject to
the provisions of Section 45(g) below, the provisions of this Section 45 shall
again be in full force and effect.

(b) In the event that Landlord and Tenant execute and deliver the Other
Property Executed Contract prior to the expiration of the thirty (30) day
period, then, Landlord shall sell the Other Property to Tenant, and Tenant shall
purchase the Other Property from Landlord, in accordance with the terms of the
Other Property Executed Contract.

(c) In the event that (i) Landlord and Tenant are unable to agree on the
terms and conditions of the contract within the applicable thirty (30) day
period, and (ii) at the expiration of such period, Landlord intends to market
the Other Property for a stated price or a price range, then prior to marketing
the Other Property for such stated price or at such price range, Landlord shall
advise Tenant, in writing (the "Other Property Market Price Offer"), of the
stated price or price range at

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which Landlord intends to initially market the Other Property. Upon Tenant's
receipt of the Other Property Market Price Offer, Landlord and Tenant shall
negotiate in good faith for a period of five (5) days the terms and conditions
upon which Landlord would be willing to sell the Other Property to Tenant, and
Tenant would be willing to purchase the Other Property from Landlord. In the
event that Tenant and Landlord agree in writing on the terms and conditions on
which Landlord would sell the Other Property to Tenant and Tenant would purchase
the Other Property from Landlord within five (5) days after the date that
Landlord delivers the Other Property Market Price Offer to Tenant, then the
provisions of Section 45(d) below shall be applicable. Notwithstanding anything
herein to the contrary, in the event that Landlord and Tenant do not agree, in
writing, on the terms and conditions upon which Landlord would sell the Other
Property to Tenant, and Tenant would purchase the Other Property from Landlord,
prior to the expiration of the applicable five (5) day period, then (i) the
provisions of Section 45 of this Lease shall be null and void and of no further
force and effect, and (ii) Landlord shall have the right to sell the Other
Property to any party or parties, including Tenant. Notwithstanding the
foregoing, in the event that Landlord does not sell the Other Property within
twelve (12) months after the expiration of such five (5) day period, then,
subject to the provisions of Section 45(g) below, this Section 45 shall again be
of full force and effect.

(d) In the event that Landlord and Tenant agree, in writing, within five
(5) days after the date that Landlord delivers the Other Property Market Price
Offer to Tenant, on the terms and conditions which Landlord would sell the Other
Property to Tenant, and Tenant would purchase the Other Property from Landlord,
then prior to the expiration of such five (5) day period, Landlord and Tenant
shall enter into a written contract, which contract shall contain the terms and
conditions (the "Other Property Sales Terms") which the parties have previously
agreed to in writing during the five (5) day period. If Landlord and Tenant
shall execute and deliver the contract within the applicable five (5) day
period, and Tenant shall simultaneously therewith, pay to Landlord, in
immediately available federal funds, a non-refundable payment equal to five
percent (5%) of the purchase price (the "Other Property Downpayment"), then
Landlord shall sell to Tenant, and Tenant shall purchase from Landlord, the
Other Property in accordance with the terms of such contract. In the event that
Tenant fails to either execute the contract within the applicable five (5) day
period, or fails to deliver to Landlord the Other Property Downpayment within
the applicable five (5) day period, then (i) the provisions of Section 45 shall
be null and void and of no further force or effect, and (ii) Landlord shall have
the right to sell the Other Property to any party or parties, including Tenant.
Notwithstanding the foregoing, in the event that Landlord does not sell the
Other Property within twelve (12) months after the expiration of such five (5)
day period, then, subject to the provisions of Section 45(g) below, this Section
45 shall again be of full force and effect.

(e) Notwithstanding anything herein to the contrary, if upon expiration of
the applicable thirty (30) day period, the Landlord markets the Other Property,
but such initial marketing does not contain a stated price or price range, but
instead requests that interested parties submit a bid or offer that contains the
purchase price that such party is willing to pay to purchase the Other Property,
then Landlord shall solicit a bid from Tenant and, subject to the provisions of
Section 45(g) below, the provisions of Sections 41(c) and (d) shall not be
applicable to any sale that takes place within twelve (12) months following the
expiration of such thirty (30) day period, and Landlord shall have the right to
sell the Other Property to any party or parties, including Tenant.

(f) As used in this Section 45, "Landlord" shall be deemed to include
Meridian Rockville Plaza, LLC ("Meridian"), any party that is affiliated with or
related to Meridian, and any party that succeeds to Landlord's interest under
the Lease. In the event that Meridian sells the Building, the provisions of
this Section 45 shall survive with respect to Meridian and any party that is
related to or affiliated with Meridian. Notwithstanding anything herein to the
contrary, the provisions of this Section 45 shall be subject and subordinate to
the lien of any mortgage or deed of trust which may in the future encumber the
Other Property.

(g) Notwithstanding anything herein to the contrary, in the event that
prior to the date that occurs twelve (12) months after the date that Tenant's
right of first negotiation lapses under this Section 45, Landlord enters into a
contract to sell the Other Property to another party, and such sale is
consummated within one hundred eighty (180) days thereafter, the provisions of
this Section 45 shall be of no further force or effect.

(h) Tenant shall cooperate (at no cost to Tenant) with Landlord's efforts
in acquiring the Other Property and shall exclusively work with Landlord in
obtaining the Other Property. Tenant shall not compete with Landlord in
acquiring the Other Property or in acquiring any interest in the Other Property.
Tenant shall not "team" or joint venture with any other party to purchase or
lease the Other Property or any part thereof.

46. PACKAGE SALE.

(a) In the event that (i) Landlord has delivered to Tenant a notice under
Sections 41 and/or 44, and/or 45 of this Lease which stated that Landlord
intended to sell, as part of the same transaction (the "Package Transaction"),
two (2) or more of the following properties: the Building, the Adjacent Building
and the Other Property, (ii) Landlord and Tenant did not enter into and deliver
a contract to purchase and sell the applicable properties within the applicable
time frame provided for under such Sections of the Lease, (iii) the applicable
properties that Landlord desired to sell were not sold to another party, and
(iv) Landlord, in the exercise of its sole and absolute discretion, either
elects to market only one (1) of such

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properties that was formerly a part of the Package Transaction or Landlord
elects to market two (2) or more of the Building, the Adjacent Building and/or
the Other Property, and at least one (1) of such properties was not a part of
the Package Transaction (the property or properties that Landlord elects, in its
sole discretion, to so market under the foregoing provisions of this Section 46
shall hereinafter be referred to as the "Available Property"), then the
provisions of Section 46(b) below shall be applicable.

(b) In the event that (i) the provisions of Section 46 are applicable,
(ii) this Lease shall be in full force and effect, (iii) Tenant shall not then
be in default under this Lease, and (iv) Tenant shall be then occupying at least
fifty percent (50%) of the Demised Premises, then, prior to offering to sell the
Available Property to any party, Landlord shall deliver to Tenant a written
contract which contains the terms and conditions upon which Landlord is willing
to sell the Available Property. In the event that Tenant desires to purchase
the Available Property (including, for purposes of this Section 46, the
underlying land and adjacent land upon which parking spaces can be located so
that the Available Property complies with applicable law), Landlord and Tenant
shall thereafter, negotiate in good faith for a period of five (5) days after
the date of delivery of such contract, the terms and conditions upon which the
parties would be willing to enter into an agreement for the purchase and sale of
the Available Property. In the event that Landlord and Tenant agree on the
terms and conditions of an agreement of purchase and sale of the Building during
the same five (5) day period, the parties shall, in good faith, during such five
(5) day period, attempt to execute and deliver a contract containing such agreed
upon terms and conditions (such fully executed contract shall hereinafter be
referred to as the "Available Property Executed Contract"). Such Available
Property Executed Contract shall provide for the payment by Tenant to Landlord
of five percent (5%) of the purchase price that is set forth in the Available
Property Executed Contract, which payment shall be (i) non-refundable, and (ii)
in immediately available federal funds. Notwithstanding anything herein to the
contrary, in the event that Landlord and Tenant do not execute and deliver the
Available Property Executed Contract prior to the expiration of the five (5) day
period provided for above, and Landlord thereafter sells the Available Property
within twelve (12) months thereafter, then, subject to the provisions of Section
46(f) below, (i) the provisions of this Section 46 shall be null and void and of
no further force or effect, and (ii) Landlord shall have no further obligation
to offer to sell the Available Property or any portion thereof to Tenant. In
the event that Landlord does not sell the Available Property within such twelve
(12) month period, then, subject to the provisions of Section 46(f) below, the
provisions of this Section 46 shall again be in full force and effect.

(c) In the event that Landlord and Tenant execute and deliver the
Available Property Executed Contract prior to the expiration of the five (5) day
period, then, Landlord shall sell the Available Property to Tenant, and Tenant
shall purchase the Available Property from Landlord, in accordance with the
terms of the Available Property Executed Contract.

(d) In the event that Landlord and Tenant agree, in writing, within five
(5) days after the date that Landlord delivers the contract for the Available
Property, on the terms and conditions which Landlord would sell the Available
Property to Tenant, and Tenant would purchase the Available Property from
Landlord, then prior to the expiration of such five (5) day period, Landlord and
Tenant shall enter into a written contract, which contract shall contain the
terms and conditions (the "Available Property Sales Terms") which the parties
have previously agreed to in writing during the five (5) day period. If Landlord
and Tenant shall execute and deliver the contract within the applicable five (5)
day period, and Tenant shall simultaneously therewith, pay to Landlord, in
immediately available federal funds, a non-refundable payment equal to five
percent (5%) of the purchase price (the "Available Property Downpayment"), then
Landlord shall sell to Tenant, and Tenant shall purchase from Landlord, the
Available Property in accordance with the terms of such contract. In the event
that Tenant fails to either execute the contract within the applicable five (5)
day period, or fails to deliver to Landlord the Available Property Downpayment
within the applicable five (5) day period, then (i) the provisions of Section 46
shall be null and void and of no further force or effect, and (ii) Landlord
shall have the right to sell the Available Property to any party or parties,
including Tenant. Notwithstanding the foregoing, in the event that Landlord does
not sell the Available Property within twelve (12) months after the expiration
of such five (5) day period, then, subject to the provisions of Section 46(f)
below, this Section 46 shall again be of full force and effect.

(e) Notwithstanding anything herein to the contrary, the provisions of
this Section 46 shall be subject and subordinate to the lien of any mortgage or
deed of trust which may in the future encumber the Building.

(f) Notwithstanding anything herein to the contrary, in the event that
prior to the date that occurs twelve (12) months after the date that Tenant's
right of first negotiation lapses under this Section 46 Landlord enters into a
contract to sell the Available Property to another party, and such sale is
consummated within one hundred eighty (180) days thereafter, the provisions of
this Section 46 shall be of no further force or effect.

(g) Notwithstanding anything herein to the contrary, in the event of any
conflict between the terms of Sections 41, 44 and/or 45 of this Lease and the
terms of Section 46 of this Lease, the terms of Section 46 of this Lease shall
govern and control (i.e., if Landlord is obligated to provide Tenant with a
written notice under this Section 46 with respect to any Available Property,
Landlord shall not be required to also send Tenant a written notice under
Sections 41, 44 or 45 of this Lease, and Tenant's right of first negotiation
with respect to such property on such occasion shall be governed by the
provisions of this Section 46).

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47. LOADING DOCK.

(a) Tenant acknowledges that the loading dock that is located in the
Building serves as the only loading dock for both the Building and the Adjacent
Building. Landlord hereby grants to Tenant the right to use the loading dock
twenty four (24) hours per day, seven (7) days per week, during the Lease Term,
provided, however, the loading dock shall be available for the reasonable use of
tenants and occupants (and their agents, contractors, employees, and delivery
personnel) of the Adjacent Building during the hours of 8:00 a.m. through 6:00
p.m., Monday through Friday (the "Standard Hours") (except for legal holidays).
In addition, Tenant shall make the loading dock available for use by contractors
providing janitorial or char services to the Adjacent Building during periods
that are reasonably acceptable to Landlord and Tenant on Monday through Friday
of each week (the "Char Service Hours") and Tenant shall make the loading dock
available at other times for reasonable periods of time upon receiving at least
twenty-four (24) hours' prior notice. In the event that Landlord requests that
the loading dock be made available on a regular basis for use by the tenants
and/or occupants of the Adjacent Building for hours that exceed the Standard
Hours and the Char Service Hours, then (i) Tenant shall employ security
personnel who will supervise access to the loading dock during such hours, (ii)
Landlord shall reimburse Tenant for Tenant's reasonable, out-of-pocket costs of
employing such security personnel for such after-hours usage and (iii) operating
expenses that are charged to Tenant under this Lease shall not include any
amount that is payable by Landlord under this sentence.

(b) Landlord and Tenant have agreed to make certain improvements in the
Building in the areas adjacent to, and in the vicinity of the loading dock, so
that occupants and tenants of the Adjacent Building (and their agents,
contractors, employees and delivery personnel) will not have access to the
Demised Premises.

(c) Throughout the Lease Term, Tenant, at Tenant's sole cost and expense,
shall employ security personnel who will supervise access to the loading dock on
a non-discriminatory basis. Such security personnel shall be physically present
at the loading dock area during the hours of 8:00 a.m. through 6:00 p.m., Monday
through Friday (except for legal holidays) and during the Char Service Hours.
To the extent that access to the loading dock is requested by Landlord or any
party acting by or through Landlord, including, without limitation, occupants
and tenants of the Adjacent Building, during any hours other than are set forth
above, the cost of employing security personnel to supervise such access shall
be borne by the party who requests such access (i.e., if a tenant of the
Adjacent Building moves into the Building on a Sunday, the cost of the security
personnel who supervises such move shall be borne by such tenant).

(d) The security personnel that is so employed by Tenant shall have no
obligation to receive or account for any merchandise, equipment or property that
is delivered, or is intended for delivery, to the Adjacent Building.

(e) Landlord and Tenant shall, in good faith, cooperate with each other in
connection with the use of such loading dock.

48. FENCE. Tenant has advised Landlord that Tenant intends to install a fence
around a portion of the exterior of the Building which limits access to certain
exterior entrances to the Building (i.e., the entrances to the Building which
are located on the lower level of the Building near the cafeteria that is
located in the Building). Tenant, at Tenant's sole cost and expense, shall have
the right to install such fence, provided (a) the size, color, height, design,
location, method of installation of, and plans and specifications for, such
fence shall be subject to Landlord's prior written approval, and (b) such fence
is installed and maintained by Tenant in a first class manner in accordance with
all Governmental Laws.

49. SUBORDINATION OF LIEN. Upon Tenant's prior written request, Landlord
agrees to subordinate its interest in any equipment, trade fixtures or personal
property of Tenant that is located in the Demised Premises to the lien of any
bona fide equipment lease or bona fide financing arrangement.

50. SATELLITE DISH.

(a) Subject to the satisfaction of all the conditions in this Section,
Tenant shall have the right to install in an area designated by Landlord on the
roof of the Building a satellite dish antenna, together with the cables
extending from such antenna to the Demised Premises. Tenant shall not be
entitled to install such an antenna (i) which is greater than 3.5 meters in
diameter, (ii) which is more than ten (10) feet in height, (iii) if such
installation would adversely affect (or in a manner that would adversely affect)
any warranty with respect to the roof, (iv) (A) if such installation would
adversely affect (or in a manner that would adversely affect) the structure or
any of the building systems of the Building, or (B) without Landlord's prior
written consent, if such installation would require (or in a manner that would
require) any structural alteration to the Building, (v) if such installation
would violate (or in a manner that would violate) any applicable federal, state
or local law, rule or regulation, (vi) unless sufficient room therefor exists at
the time of the proposed installation, (vii) unless Tenant has obtained at
Tenant's expense, and has submitted to Landlord copies of, all permits and
approvals relating to such antenna and such installation, (viii) unless such
antenna is white or of a beige or lighter color (or is otherwise appropriately
screened), (ix) unless such antenna is installed, at Tenant's sole cost and
expense, by a qualified contractor chosen by Tenant and approved in advance by
Landlord, which approvals shall not be unreasonably withheld, conditioned or
delayed, (x) to the extent that the installation and/or use of said antenna and
related equipment would interfere with any existing tenant of the Building's

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use of its telecommunication equipment, and (xi) unless Tenant obtains
Landlord's prior consent to the manner in which such installation work is to be
done. All plans and specifications concerning such installation shall be
subject to Landlord's prior written approval, which approval shall not be
unreasonably withheld, conditioned or delayed.

(b) Tenant shall not have access to any such antenna without Landlord's
prior written consent, which consent shall be granted to the extent necessary
for Tenant to perform its maintenance obligations hereunder and only if Tenant
is accompanied by Landlord's representative (if Landlord so requests).

(c) At all times during the Lease Term, Tenant shall maintain said antenna
in good condition and in a manner that avoids interference with or disruption to
Landlord and other tenants of the Building. At the expiration or earlier
termination of the Lease Term (of if Tenant discontinues use of such antenna),
Tenant shall remove such antenna and related equipment from the Building.

(d) Upon ten (10) days' prior written notice to Tenant, Landlord shall
have the right to require Tenant to relocate the antenna, if in Landlord's
opinion such relocation is necessary or desirable. Any such relocation shall be
performed by Tenant at Tenant's expense, and in accordance with all of the
requirements of this Section. Nothing in this Section shall be construed as
granting Tenant any line of sight easement with respect to such satellite dish
antenna; provided, however, that if Landlord requires that such antenna be
relocated in accordance with the preceding two (2) sentences, then Landlord
shall use reasonable efforts to provide either (a) the same line of sight for
such antenna as was available prior to such relocation, or (b) a line of sight
for such antenna which is functionally equivalent to that available prior to
such relocation.

(e) In granting Tenant the right hereunder, Landlord makes no
representation as to the legality of such antenna or its installation. If any
federal, state, county, regulatory or other authority requires the removal or
relocation of such antenna, Tenant shall remove or relocate such antenna at
Tenant's sole cost and expense, and Landlord shall under no circumstances be
liable to Tenant therefor.

(f) Tenant shall indemnify and hold Landlord harmless from and against all
costs, damages, claims, liabilities and expenses (including reasonable
attorneys' fees) suffered by or claimed against Landlord, directly or
indirectly, based on, arising out of or resulting from any act or omission with
respect to the installation, use, operation, maintenance, repair or disassembly
of such antenna and related equipment.

IN WITNESS WHEREOF, the parties have executed this Lease the day and year
first above written.

WITNESS/ATTEST: LANDLORD:

MERIDIAN ROCKVILLE PLAZA, LLC, a
Maryland limited liability company

By: By: (SEAL)
-------------------------------- -------------------------------
Title: Title:
----------------------------- ----------------------------
Date:
------------------------------

WITNESS/ATTEST: TENANT:

THE PERKIN-ELMER CORPORATION,
a New York corporation

By: By: (SEAL)
-------------------------------- -------------------------------
Title: Title:
----------------------------- ----------------------------
Date:
------------------------------

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<PAGE>

SECRETARY'S CERTIFICATE

(Corporate Tenant)

I, _____________________________, Secretary of The Perkin-Elmer
Corporation, a New York corporation, do hereby certify that the foregoing and
annexed Lease was executed and delivered pursuant to and in strict conformity
with, the provisions of a resolution of the Board of Directors of said
(professional) corporation (association) passed at a regularly called meeting of
said Board of Directors, and that a quorum was present at said meeting (or
adopted by unanimous written consent of said Board of Directors, in lieu of a
meeting), in conformity with the laws of the state of incorporation of said
corporation.

------------------------------------
Secretary

Date:
-------------------------------

[Corporate Seal]

Page 44

<PAGE>
Exhibit 10.4

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (this "Amendment") is made and entered into
as of October ____, 1998, by and between MERIDIAN ROCKVILLE PLAZA, LLC, a
Delaware limited liability company ("Landlord"), and THE PERKIN-ELMER
CORPORATION, a New York corporation ("Tenant").

RECITALS:

A. Landlord is the owner of: (i) a building having a street address of 45
West Gude Drive, Rockville, Maryland 20852 (the "Building"); and (ii) a building
which is located adjacent to the Building, which building has a street address
of 15 West Gude Drive, Rockville, Maryland 20852 (the "Adjacent Building").

B. Landlord and Tenant have previously entered into an Office Building
Lease dated July 10, 1998 (the "Lease"), with respect to premises containing
approximately 113,960 rentable square feet (the "Original Premises") located in
the Building.

C. Tenant has requested and Landlord has agreed, to lease to Tenant,
approximately 54,246 rentable square feet of space (the "Expansion Premises")
located on the lower level and on the first and second floors of the Adjacent
Building (i.e., approximately 4,730 square feet located on the lower level,
approximately 23,947 square feet located on the first floor and approximately
25,569 square feet located on the second floor), which Expansion Premises is
more particularly depicted on Exhibit A, which is attached to and made a part
hereof.

NOW, THEREFORE, in consideration of the sum of Ten and 00/100 Dollars
($10.00), and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by Landlord and Tenant, Landlord and Tenant
covenant and agree as follows:

1. LEASE OF EXPANSION PREMISES. Subject to the terms of this Amendment,
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the
Expansion Premises.

2. TERM. The term of the Lease with respect to the Expansion Premises
shall be coterminous with the Lease Term with respect to the Original Premises.

3. CONSTRUCTION OF EXPANSION PREMISES.

(a) Notwithstanding anything herein to the contrary, Tenant is
leasing the Expansion Premises in its "as-is" condition as of the date of this
Amendment.

(b) Upon delivery of the Expansion Premises to Tenant, the base
building systems for the Adjacent Building (i.e., elevators, life safety
equipment, electrical system, plumbing systems, hot water heaters, chillers,
pumps and related central heating, ventilation and air conditioning system to
include balancing of central airshafts) shall be in good working order

<PAGE>
2

with preventive maintenance up to date and shall be Year 2000 Compliant. "Year
2000 Compliant" with respect to any base building system shall mean that, on and
after January 1, 2000, such system will continue to operate in good working
order without the requirement that any additional expenditure be made to
retrofit, update or otherwise repair or replace such system due to a malfunction
or design flaw that would impair such system solely by reason of the change from
the year 1999 to the year 2000.

(c) Landlord and Tenant shall, within sixty (60) days after the date
of this Amendment, jointly inspect the Adjacent Building and prepare a punchlist
of those items of work to be performed by Landlord under Section 6(b) of this
Amendment which remain unfinished as of the date of such inspection. Landlord
shall, in good faith, use commercially reasonable efforts to complete the items
that are set forth on the punchlist within thirty (30) days after the date of
the punchlist.

(d) In connection with Tenant's leasing of the Expansion Premises,
the amount of the "Improvements Allowance" [as defined in Section 3(b) of
Exhibit C to the Lease] is hereby increased by Eight Hundred Sixty-Five Thousand
Four Hundred Twenty-Two and 00/100 Dollars ($865,422.00) (the "Supplemental
Allowance") to Two Million Six Hundred Fifty-One Thousand Eight Hundred
Eighty-One and 00/100 Dollars ($2,651,881.00). It is expressly understood and
agreed that the time period for Tenant to utilize the Supplemental Allowance
shall be extended until December 31, 2000.

4. BASE ANNUAL RENT. In addition to the Base Annual Rent payable
with respect to the Original Premises, Tenant shall pay to Landlord, as
Additional Rent, Base Annual Rent with respect to the Expansion Premises (the
"Expansion Premises Base Annual Rent") as follows:

Expansion Premises Expansion Premises
Period Base Annual Rent Base Monthly Rent
------ ---------------- -----------------

Subject to Section 4(b) of
the Lease, Phase 2
Commencement Date
until 12/31/99 --------- $99,931.29
1/01/00-12/31/00 $1,235,150.70 $102,929.22
1/01/01-12/31/01 $1,272,205.20 $106,017.09
1/01/02-12/31/02 $1,310,371.30 $109,197.60
1/01/03-12/31/03 $1,349,682.40 $112,473.52
1/01/04-12/31/04 $1,390,172.80 $115,847.72
1/01/05-12/31/05 $1,431,877.90 $119,323.15
1/01/06-12/31/06 $1,474,834.20 $122,902.84
1/01/07-12/31/07 $1,519,079.20 $126,589.92
1/01/08-12/31/08 $1,564,651.50 $130,387.62

<PAGE>
3

All installments of Expansion Premises Base Annual Rent shall be payable in
accordance with the provisions of the Lease governing the payment of Base Annual
Rent.

5. PHASE 2 PREMISES. The term "Phase 2 Premises" [as defined in Section
4(b) of the Lease] shall be deemed to include the Expansion Premises. Until the
"Phase 2 Commencement Date" [as defined in Section 4(b) of the Lease] has
occurred, Base Monthly Rent with respect to the Expansion Premises shall be
determined based upon (a) a rate of Twelve and 75/100 Dollars ($12.75) per
rentable square feet of area contained within the lower level of the Adjacent
Building, and (b) a rate of Twenty-Three and 00/100 Dollars ($23.00) per
rentable square foot of area contained within the first and second floors of the
Adjacent Building.

6. USE. Tenant shall use the Expansion Premises in accordance with the
provisions of Section 7(a) of the Lease.

7. OPERATING EXPENSES.

(a) The provisions of Sections 4(c)(ii), 4(c)(iv), and 4(d) of the Lease
shall not be applicable to the Expansion Premises.

(b) Throughout the Lease Term, Tenant agrees to pay to Landlord, as
Additional Rent, "Tenant's Expansion Premises Proportionate Share" (as defined
below) of any increase in operating expenses over the "Base Operating Expense
Amount" (as defined below). As used herein, (i) "Expansion Premises
Proportionate Share" shall mean 51.47% and (ii) "Base Operating Expense Amount"
shall mean the operating expenses for the Adjacent Building during calendar year
1999. The term "operating expenses" shall mean any and all expenses incurred by
Landlord in connection with owning, managing, operating, maintaining, servicing,
insuring and repairing the Adjacent Building and the land thereunder and the
parking lot and other related exterior appurtenances, including but not limited
to: (1) wages and salaries of all employees engaged in the management, operation
or maintenance of the Adjacent Building, including taxes, insurance and benefits
relating hereto; (2) all supplies, materials, equipment and tools used in the
operation or maintenance of the Adjacent Building; (3) cost of all maintenance
and service agreements for the Adjacent Building and the equipment therein,
including but not limited to controlled access and energy management services,
window cleaning and elevator maintenance; (4) cost of all insurance relating to
the Adjacent Building, including the cost of casualty, liability and rent loss
insurance applicable to the Adjacent Building and Landlord's personal property
used in connection therewith; (5) general and special repairs and maintenance;
(6) management fees; (7) legal, accounting, auditing and other professional
fees; (8) the cost of any additional services not provided to the Adjacent
Building at the Commencement Date of the Lease Term, but thereafter provided by
Landlord in the prudent management of the Adjacent Building; (9) intentionally
deleted; (10) costs for char service and cleaning supplies for the common areas
of the Adjacent Building (but expressly excluding char service and cleaning
supplies for the Expansion Premises); (11) costs for utility services such as
electricity, gas, water and sewage,

<PAGE>
4

including the cost of heating and cooling the Adjacent Building; (12) the cost
of any capital improvements or alterations made to the Adjacent Building after
the Commencement Date of the Lease Term, that reduce other operating expenses,
or which are required under any governmental law or regulation that was not
applicable to the Adjacent Building at the time the Lease was executed, such
cost to be amortized over such reasonable period as Landlord shall determine,
together with interest on the unamortized balance at the rate paid by Landlord
on funds borrowed for the purposes of constructing said capital improvements
(or, in the event that Landlord elects not to borrow funds to construct such
capital improvements, at the rate that Landlord would have paid had it borrowed
funds for the purpose of constructing said improvements); (13) transportation
district fees, parking district fees, and the cost of other amenities required
by law; (14) "real estate taxes" (as hereinafter defined); (15) cost of Adjacent
Building office expenses, including telephone, rent, stationery and supplies;
(16) costs of all elevator and escalator (if installed in the Adjacent Building)
maintenance and operation; (17) cost of providing security; (18) cost of
providing garbage and snow removal and pest control; (19) cost of decoration of
common areas; (20) cost of landscaping; (21) cost of maintenance and operation
of the parking area; (22) costs and fees charged and/or assessed in connection
with any business improvement district that is applicable to the Adjacent
Building; and (23) costs of removing trash from the Adjacent Building that is
generated in connection with the use of the Expansion Premises. Notwithstanding
anything in this Lease to the contrary, the preceding list is for definitional
purposes only and shall not impose any obligation upon Landlord to incur such
expenses or provide such services. In the event that all or any of the services
(or other obligations of Landlord, including real estate taxes, which are to be
passed through to Tenant as an operating expense) that are being provided by
Landlord are provided by contractors or vendors who are providing such services
(or such other obligations) to other real property that is owned, operated or
managed by Landlord or any party that is related to or affiliated with Landlord,
and the same are being provided under a contract which includes the Adjacent
Building and such other real property, then the cost of the same shall be
allocated on a proportionate square footage basis by Landlord between the
Adjacent Building and such other real property [i.e., the amount of the cost of
such service (or such other obligation) that is allocated to the Adjacent
Building shall be a fraction, the numerator of which shall be equal to the
number of rentable square feet of area contained in the Adjacent Building, and
the denominator of which shall be equal to the number of rentable square feet of
area contained in the other real property and in the Adjacent Building]. It is
expressly understood and agreed that the cost of providing services (or other
obligations of Landlord which are to be passed through to Tenant as an operating
expense) to the Building and the Adjacent Building under any contract which
covers both the Building and the Adjacent Building shall be allocated as
follows: (x) 51.8% of the cost shall be allocated to the Building; and (y) 48.2%
of the cost shall be allocated to the Adjacent Building. Operating expenses
shall be reduced by all cash discounts, trade discounts or quantity discounts
received by Landlord or Landlord's managing agent in the purchase of any goods,
utilities or services in connection with the prudent operation of the Adjacent
Building. If Landlord charges a user fee for use of a building amenity or
facility, then operating expenses shall be deemed reduced by the amount of such
fees. Despite the foregoing, in no event shall operating expenses be reduced by
any amount that is being charged by Landlord or any parking operator in
connection with any parking

<PAGE>
5

facilities. Landlord shall diligently and in good faith pursue all insurance,
breach of warranty or other claims which would reasonably result in a reduction
of operating expenses. Subject to the provisions of Section 7(c) below, Tenant
shall not be required to pay more than 100% of Tenant's Expansion Premises
Proportionate Share of the total operating expenses actually incurred for any
calendar year. "Operating expenses" shall not include any of the following,
except to the extent that such costs and expenses are included in operating
expenses as described above: costs of painting or decorating tenant space;
leasing brokerage commissions; interest and amortization of mortgages; ground
rent; or the costs of special services or utilities separately charged to
individual tenants of the Adjacent Building. Despite the foregoing, operating
expenses shall also not include any of the following:

(i) All costs and expenses incurred by Tenant or any other tenants
of the Adjacent Building and paid for or payable directly by Tenant or such
other tenants either to third parties or to Landlord under agreements for direct
payment or reimbursement for benefits or services;

(ii) Leasing commissions, attorneys' fees, costs, disbursements and
other expenses incurred in connection with negotiations or disputes with, or
leasing to, tenants or prospective tenants of the Adjacent Building;

(iii) Salaries and benefits paid to officers and executives of
Landlord who are above the level of property manager;

(iv) Interest, points, fees and principal payments on loans to
Landlord or secured by mortgages or deeds of trust covering the Adjacent
Building or the Project or a portion thereof and other debt costs, if any, or
amortization on any mortgage or mortgages or any other debt instrument
encumbering the Adjacent Building or the Project;

(v) Rental under any ground lease or other underlying lease or
easement (it being expressly understood and agreed that vault rentals, if any,
shall be included in operating expenses);

(vi) Any marketing costs and expenses incurred in connection with
the marketing of the Adjacent Building or any rentable space therein;

(vii) Any expenses for repairs or maintenance which are actually
recovered under warranties and service contracts;

(viii) Legal expenses arising out of (i) the negotiation, review,
preparation or termination of leases, occupancy agreements, assignments of
leases or sublease agreements, (ii) the interpretation of leases or other
occupancy agreements, or assignment or sublease agreements (iii) the enforcement
of the provisions of any lease or other occupancy agreement affecting the
Adjacent Building, (iv) any action against a present or former tenant or

<PAGE>
6

occupant under a lease or other occupancy agreement, including, without
limitation, eviction, distraint, levy and collection actions;

(ix) Costs in connection with a change in ownership or financing or
refinancing of the Adjacent Building provided, however, such provision shall not
limit any "real estate taxes" (as defined below) from being included as
operating expenses;

(x) The cost of any item paid to any entity or person related to
or affiliated with Landlord to the extent such cost exceeds the amount payable
for such services at then existing market rates to unrelated persons or
entities;

(xi) Deductions for income tax purposes attributable to
depreciation of the Adjacent Building or any improvements on the land or the
Adjacent Building equipment;

(xii) Any cost incurred directly in connection with the
investigation, remediation, clean-up, containment, abatement or removal of
Hazardous Materials (as such term is hereinafter defined) present on, about,
under or at the Project on the date hereof, or which are stored, used or
released by Landlord, its employees or agents after the date hereof or which
migrate onto the Project. As used herein, the term "Hazardous Materials"
includes any "hazardous substance" as that term is defined in the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. SS9604 et
seq.), as amended ("CERCLA") and any "hazardous waste" as that term is defined
in the Resource Conservation and Recovery Act (42 U.S.C. SS6901 et seq., as
amended) ("RCRA") (collectively, "Hazardous Materials");

(xiii) Costs incurred by Landlord which pursuant to the express terms
of any retail tenant's lease are payable by such retail tenant directly to a
utility company or other entity with respect to retail space in the Adjacent
Building;

(xiv) Costs and expenses incurred by Landlord associated with the
operation of the business of the legal entity or entities which constitute
Landlord (as opposed to operation of the Adjacent Building), including, without
limitation, sale and financing matters, legal entity accounting, income taxation
matters, costs of selling, syndicating, financing, mortgaging or hypothecating
any of Landlord's interest in the Adjacent Building or the Project, and disputes
with employees or persons who own an interest in Landlord;

(xv) Wages, salaries or other compensation and benefits of any
off-site employees of Landlord or its managing agent, provided, however,
operating expenses shall include Landlord's reasonable allocation (based on time
spent in connection with the Adjacent Building) of compensation paid for the
wages, salary, and other compensation and benefits paid to such employees, if
off-site, who are assigned part-time to the operation, management, maintenance,
or repair of the Adjacent Building;

<PAGE>
7

(xvi) Any other costs or expenses for which Landlord actually
receives reimbursement from any source (other than the payment of operating
expenses), including without limitation, insurance, condemnation awards or
warranties, or any cost or expense for which Landlord would have received
reimbursement from an insurance company had Landlord been insured as required
under the terms of this Lease;

(xvii) Any expenditures which under generally accepted accounting
principles are treated as capital expenditures, except as otherwise expressly
set forth herein;

(xviii) Fines, penalties, late payment charges and interest arising
from the acts or inaction of Landlord or failure timely to make tax and/or other
payments;

(xix) Capital costs incurred by Landlord for the repair of damage to
the Adjacent Building, or for the restoration of all or any portion of the
Adjacent Building after the occurrence of a casualty and any other costs
reimbursable by insurance proceeds or to the extent reimbursed by any other
third party, together with associated deductible amounts;

(xx) Expenses resulting from the breach of this Lease by Landlord,
or the negligence of Landlord, its agents, contractors, employees, or other
tenants of the Adjacent Building or the Project;

(xxi) Fees for services rendered to the Adjacent Building, the
Project or the common areas by entities controlled by or under common control
with Landlord to the extent such fees exceed the market rate payable for
comparable services if rendered by unrelated third parties;

(xxii) Charitable or political contributions, advertising and
promotional expenditures, including the costs of staging special events;

(xxiii) Assessments to the extent paid in less than the maximum
permitted number of installments;

(xxiv) Depreciation of the Adjacent Building or the Project, or the
fixtures or equipment therein;

(xxv) Except as provided for herein, the costs and expenses of
utilities provided to any property other than the Adjacent Building;

(xxvi) The costs and expenses of bringing the Adjacent Building,
including the common areas, into compliance with the ADA, to the extent the
Adjacent Building is not in compliance with the ADA as of the date of this
Lease;

<PAGE>
8

(xxvii) The costs and expenses of causing the base building systems
of the Adjacent Building to be Year 2000 Compliant (hereinafter defined);

(xxviii) In the event that Landlord provides any services to other
buildings that are located in the immediate vicinity of the Adjacent Building,
but Landlord does not provide such services to the Adjacent Building, the cost
of such services shall not be passed through to Tenant as an operating expense;

(xxix) Any cost to remediate or remove Hazardous Materials that are
caused by occupants of the Adjacent Building;

(xxx) Costs incurred by Landlord in (x) suing any insurance
company in connection with damage to the Adjacent Building, and/or (y) suing any
governmental authority in connection with a condemnation of the Adjacent
Building; and

(xxxi) Cost of providing char and janitorial service to the
Expansion Premises.

The term "real estate taxes" shall mean all taxes and assessments,
general and special, ordinary and extraordinary, foreseen and unforeseen, now or
hereafter assessed, levied or imposed upon the Adjacent Building, and the land
on which it is built, including, without limitation, vault fees and charges,
arena taxes, front foot benefit charges and adequate public facility costs and
assessments, together with (i) any tax, assessment, or other imposition in the
nature of a real estate tax, (ii) any ad valorem tax on rent or any tax on
income if imposed in lieu of or in addition to real estate taxes and
assessments, and (iii) any taxes and assessments which may hereafter be
substituted for real estate taxes, including by way of illustration only, any
tax, assessment or other imposition (whether a business rental or other tax) now
or hereafter levied for Tenant's use or occupancy of or conduct of business at
the Expansion Premises, on Tenant's improvements to or furniture, fixtures or
equipment in the Expansion Premises, or imposed upon the rent payments. "Real
estate taxes" shall also include all costs incurred by Landlord in contesting
the validity or amount of any such taxes.

(c) If the average occupancy rate for the Adjacent Building during any
calendar year is less than ninety percent (90%), or if any tenant is separately
paying for (or does not require) electricity or janitorial services furnished to
its premises, then operating expenses for such year shall be deemed to include
all additional expenses, as reasonably estimated by Landlord, which would have
been incurred during such year if such average occupancy rate had been ninety
percent (90%) and if Landlord paid for electricity and janitorial services
furnished to such premises.

(d) (i) In order to provide for current monthly payments of Additional
Rent, Landlord shall submit to Tenant prior to January 1st of each year a
written statement of Landlord's estimate of the amount of the increases
described in Section 7(b) above, together with

<PAGE>
9

the amount of Tenant's Additional Rent which is estimated to result from such
increases. Tenant shall pay each month one-twelfth (1/12th) of Tenant's
Expansion Premises Proportionate Share of Landlord's estimate of the increase in
each year of operating expenses over the Base Operating Expense Amount.
Landlord may revise its estimate of operating expenses at any time during a
calendar year by written notice to Tenant, setting forth such revised estimate
and Tenant's Expansion Premises Proportionate Share of the estimated operating
expense increases. In such event, all monthly payments made by Tenant after
such notice shall be in an amount calculated on the basis of such revised
estimate.

(ii) If payment of Additional Rent begins on a date other than
January 1st under this Lease, in order to provide for current payments of
Additional Rent through December 31st of that partial calendar year, Landlord
shall submit to Tenant a statement of Landlord's estimate of Tenant's Additional
Rent for that partial year, stated in monthly increments resulting from
increases described in Section 7(b). Tenant shall make the monthly incremental
payments of estimated Additional Rent, together with its installments of
operating expenses.

(iii) After the end of each calendar year, Landlord will as soon as
practicable submit to Tenant a statement of the actual increases incurred in
operating expenses for the preceding calendar year over the Base Operating
Expense Amount. Tenant shall pay Landlord, within thirty (30) days of Tenant's
receipt of such statement, Tenant's Expansion Premises Proportionate Share of
the excess, if any, of actual operating expenses over the projected operating
expenses. If the amount paid by Tenant during the previous year exceeded
Tenant's share of actual operating expenses for the year, the excess shall be
credited toward payment of the next installment of operating expenses to be paid
by Tenant after Tenant receives said statement from Landlord. If the amount
paid by Tenant during the last calendar year of the Lease Term exceeds Tenant's
share of actual operating expenses for such year, Landlord shall pay Tenant the
excess amount within thirty (30) days after Landlord's submission to Tenant of
the aforesaid operating expense statement for such calendar year.

(iv) Within ten (10) days after receipt of Landlord's statement
showing actual figures for the year, Tenant shall have the right to request a
statement of operating expenses of the Adjacent Building and copies of real
estate tax bills, which shall be supplied to Tenant within a reasonable time
after Tenant's written request. No such request shall extend the time for
payments as set forth in Section 7(b) or Section 7(d)(iii) above. Unless Tenant
asserts specific error(s) and supports such errors, in writing, within fifteen
(15) days after Landlord has complied with Tenant's request, Tenant shall waive
the right to contest the statement of actual figures for the year submitted by
Landlord. If Tenant timely asserts specific error(s) and supports such errors,
in writing, and it shall be determined that there is an error in Landlord's
statement, Tenant shall be entitled to a credit for any overpayment.

(e) Tenant shall be liable for, and shall pay at least ten (10) days
before delinquency, all taxes levied against any personal property or trade
fixtures placed by Tenant in

<PAGE>
10

or about the Expansion Premises. If any such taxes on Tenant's personal
property or trade fixtures are levied against Landlord or Landlord's property,
or if the assessed value of the Expansion Premises is increased by the inclusion
therein of a value placed upon such personal property or trade fixtures of
Tenant, and if Landlord, after written notice to Tenant, pays the taxes based
upon such increased assessments (which Landlord shall have the right to do
regardless of the validity thereof, but under protest if requested by Tenant),
Tenant shall upon demand repay to Landlord a sum equal to the taxes levied
against Landlord or the portion of such taxes resulting from such increase in
the assessment; provided that, in any such event, Tenant shall have the right,
at Tenant's sole cost and expense, to bring suit to recover the amount of any
such taxes so paid under protest, and any amount so recovered shall belong to
Tenant.

(f) The provisions of Section 7 of this Amendment shall not be
applicable to the Original Premises.

8. SERVICES AND UTILITIES.

(a) The provisions of Sections 10(a), (b), (c), (d), (e), (f) and
(h) of the Lease shall not be applicable to the Expansion Premises.

(b) BUILDING STANDARD SERVICES AND UTILITIES. Landlord shall
furnish to the Expansion Premises sufficient electric current for routine and
normal requirements for lighting and typical office equipment and machinery,
such as typewriters, calculators, personal computers, small copiers and similar
items, subject to the limitations of Section 8(e), water for lavatory and
drinking purposes, and automatically operated elevator service, all without
additional cost to Tenant. Landlord further agrees to furnish heating and
cooling to the Expansion Premises during the appropriate seasons of the year,
during the "Adjacent Building Operating Hours" (as defined below), exclusive of
the Adjacent Building Holidays, with holidays falling on Saturday observed both
on said day and on the preceding Friday, and holidays falling on Sunday observed
on the following Monday.

(c) OVERTIME SERVICES. Should Tenant require heating and cooling
services beyond the Adjacent Building Operating Hours, Landlord will furnish
such additional service at the then-prevailing hourly rate (which shall include,
without limitation, Landlord's actual cost of supplying heating and cooling
services, wear and tear on the heating and cooling equipment and machinery, and
Landlord's administrative and engineering costs), as established by Landlord
from time to time, provided that Tenant gives Landlord no less than twenty-four
(24) business hours advance written notice of the need therefor. The hourly
rate established by Landlord from time to time for such additional service shall
be consistent with the then hourly rate being charged by landlords of similar
buildings, which contain similar heating and cooling systems and equipment
(i.e., similar type of system, of a similar age and utility) that are located in
the vicinity of the Adjacent Building. Despite the foregoing, it is expressly
understood and agreed that (i) the hourly rate for a building whose heating and
cooling system must be run on a "building-wide" basis will be higher than a
building whose heating and cooling system can be run on a "zone by zone" or
"floor by floor" basis, and (ii) the hourly rate for a building whose heating
and cooling

<PAGE>
11

system is consistently run on an overtime basis may, as a result of the
increased wear and tear caused by such use, be higher than the hourly rate for a
building whose heating and cooling system is only occasionally run on an
overtime basis.

(d) INTERRUPTION OF SERVICE. In no event shall Landlord be liable
to Tenant for any interruption or failure in the supply of any utilities to the
Expansion Premises. Landlord reserves the right to interrupt service of the
heat, elevator, plumbing, air conditioning, cooling, electric, and sewer and
water systems, when necessary, by reason of accident, or of repairs, alterations
or improvements which in the judgment of Landlord are desirable or necessary to
be made, until such repairs, alterations or improvements shall have been
completed; and Landlord shall have no responsibility or liability for failure to
supply heat, plumbing, air conditioning, cooling, electric, and sewer and water
service, or other service or act for the benefit of Tenant, when prevented from
so doing by strikes, accidents or by any other causes beyond Landlord's
reasonable control, or by orders or regulations of any federal, state, county,
or municipal authority, or by any failure to receive suitable fuel supply, or
inability despite exercise of reasonable diligence to obtain the regularly-used
fuel or other suitable substitute; and Tenant agrees that Tenant shall have no
claim for damages nor shall there be any abatement of Base Annual Rent in the
event that any of said systems or service shall be discontinued or shall fail to
function for any reason. Despite the foregoing, in the event that (i) as a
result of Landlord's negligence or intentional misconduct the services to be
provided by Landlord under Section 8(b) of this Amendment shall not be furnished
for more than five (5) consecutive days, and (ii) Tenant, in its reasonable
business judgment, determines that it is unable to use and occupy the Expansion
Premises (or any part thereof) as a result thereof, then commencing on the sixth
(6th) day that such services are not being provided the Base Annual Rent Tenant
is obligated to pay hereunder with respect to the Expansion Premises shall abate
with respect to that part of the Expansion Premises which Tenant does not use
and occupy. Such abatement shall immediately cease on the date that such
services are restored. In the event that any such failure to furnish such
services is caused by Tenant's acts or omissions, Tenant shall not be entitled
to an abatement of Base Annual Rent.

(e) EXCESSIVE ELECTRICAL USAGE.

(i) Tenant will not install or operate in the Expansion
Premises any heavy duty electrical equipment or machinery, without obtaining the
prior written consent of Landlord. Landlord may require, as a condition of its
consent to the installation of such equipment or machinery, payment by Tenant,
as Additional Rent, for such excess consumption of electricity as may be
occasioned by the operation of said equipment or machinery. Landlord may make
periodic inspections of the Expansion Premises at reasonable times to determine
that Tenant's electrically operated equipment and machinery complies with the
provisions of this Section and Section 8(f) below.

(ii) Landlord shall have the right to require that one or
more separate meters or submeters be installed to record the consumption or use
of electricity, or to cause a

<PAGE>
12

reputable independent electrical engineer to survey and determine the quantity
of electricity consumed by such excessive use. The cost of any such survey or
meters and of installation, maintenance and repair thereof shall be paid by
Tenant. Tenant agrees to pay Landlord (or the utility company, if direct
service is provided by the utility company), promptly upon demand therefor, for
all such electricity consumption as shown by said meters, or a flat monthly
charge determined by the survey, as applicable, at the rates charged for such
service by the local public utility company. If Tenant's cost of electricity
based on meter readings is to be paid to Landlord, Tenant shall pay a service
charge related thereto.

(f) EXCESSIVE HEAT GENERATION. Landlord shall not be liable for
its failure to maintain comfortable atmospheric conditions in all or any portion
of the Expansion Premises, due to heat generated by any equipment or machinery
installed by Tenant (with or without Landlord's consent) that exceeds
generally-accepted engineering design practices for normal office purposes. If
Tenant desires additional cooling to offset excessive heat generated by such
equipment or machinery, Tenant shall pay for auxiliary cooling equipment and its
operating costs, including without limitation electricity, gas, oil and water,
or for excess electrical consumption by the existing cooling system, as
appropriate.

(g) SECURITY. In the event that Landlord, in the exercise of its
sole and absolute discretion, elects to provide any security measures, such
security measures: (i) shall be for protection of the Adjacent Building only;
and (ii) shall not be relied upon by Tenant to protect Tenant, its property, its
employees or their property.

(h) As used herein, (i) "Adjacent Building Holidays" means: New
Year's Day, Martin Luther King Day, Memorial Day, President's Day, the Fourth of
July, Labor Day, Veterans Day, Thanksgiving Day, Christmas Day and any other
federal holiday that may exist in the future; and (ii) "Adjacent Building
Operating Hours" means 8:00 a.m. to 6:00 p.m. Monday-Friday, and 9:00 a.m. to
1:00 p.m. on Saturday.

(i) Notwithstanding anything herein to the contrary, it is
expressly acknowledged and agreed that (x) Landlord shall have no obligation to
provide char or janitorial services to the Expansion Premises, and (y) Tenant,
at its sole cost and expense, shall provide char and janitorial services to the
Expansion Premises (including, without limitation, any bathrooms that are
located on the lower level, the first floor and/or the second floor of the
Adjacent Building).

(j) The provisions of Section 8 of this Amendment shall not be
applicable to the Original Premises.

9. CHANGES AND ADDITIONS.

(a) The provisions of Section 14(c) of the Lease shall not be
applicable to the Adjacent Building.

<PAGE>
13

(b) Landlord reserves the right at any time and from time to time,
as often as Landlord deems desirable, without the same constituting an actual or
constructive eviction and without incurring any liability to Tenant or otherwise
affecting Tenant's obligations under the Lease, to make changes, alterations,
additions, improvements, repairs, relocations or replacements in or to the
Adjacent Building and the fixtures and equipment thereof, as well as in or to
the street entrances, halls, passages, stairways and other common facilities
thereof, and to change the name by which the Adjacent Building is commonly known
and/or the Adjacent Building's address. Landlord reserves the right from time
to time to install, use, maintain, repair and replace pipes, ducts, conduits,
wires and appurtenant meters and equipment for service to other parts of the
Adjacent Building, above the ceiling surfaces, below the floor surfaces, within
the walls and in the central core areas, and to relocate any pipes, ducts,
conduits, wires and appurtenant meters and equipment included in the Expansion
Premises which are located in the Expansion Premises or located elsewhere
outside the Expansion Premises, and to expand and/or build additional stories on
the Adjacent Building. Landlord further reserves the right at any time to
alter, expand or reduce the parking facilities, to change the means of ingress
thereto and egress therefrom, and to impose charges for parking in such
facilities. Nothing contained herein shall be deemed to relieve Tenant of any
duty, obligation or liability with respect to making any repair, replacement or
improvement or complying with any law, order or requirement of any government or
other authority and nothing contained herein shall be deemed or construed to
impose upon Landlord any obligation, responsibility or liability whatsoever, for
the care, supervision or repair of the Adjacent Building, or any part thereof,
other than as expressly provided in this Lease.

10. INTENTIONALLY DELETED.

11. INTERPRETATION. From and after the "Expansion Premises Commencement
Date" (as hereinafter defined), except where the context plainly requires
otherwise, and except as otherwise provided for herein, the term "Demised
Premises" shall mean the Original Premises and the Expansion Premises, and all
references in the Lease to the term "Demised Premises" shall mean the Original
Premises and the Expansion Premises. All capitalized terms that are not defined
in this Amendment shall have the meanings ascribed to such terms in the Lease.

12. PARKING. Landlord shall make available (or cause to be made
available) to Tenant at all times during the Lease Term three and seven-tenths
(3.7) monthly parking contracts for every one thousand (1,000) square feet of
rentable area of the Expansion Premises to park an automobile (collectively, the
"Parking Rights") in the parking facilities for the Adjacent Building (the
"Adjacent Building Parking Rights"). Except as provided in the sentence which
immediately follows this sentence, the Adjacent Building Parking Rights shall
(i) be unassigned, and (ii) be on a self-park or attendant parking basis (or a
combination thereof) as determined by the garage operator. In the event that
Landlord, in its sole discretion, designates any of the parking spaces that are
located directly in front of the lobby of the Adjacent Building as

<PAGE>
14

"reserved spaces", then, as part of the Adjacent Building Parking Rights, Tenant
shall have the exclusive right to use one-half (2) of such reserved parking
spaces.

13. SIGNAGE. Tenant, at Tenant's sole cost and expense, shall have the
right to erect and maintain its company name and/or logo on a monument sign (the
"Adjacent Building Monument Sign"). The size, location, color, design, method
of installation, and method of illumination (if applicable) of the Adjacent
Building Monument Sign shall be subject to: (i) Landlord's prior written
consent, and (ii) all applicable government rules, codes, orders, laws, and
statutes (collectively, the "Governmental Laws"). Tenant, at Tenant's sole cost
and expense, shall maintain the Adjacent Building Monument Sign in a first-class
manner in accordance with the Governmental Laws.

14. SUPPLEMENTAL ACCESS SYSTEM.

(a) Subject to the provisions of Section 12 of the Lease, Landlord
hereby grants Tenant the right, at Tenant's sole cost and expense, to install
supplemental access devices and equipment in the Adjacent Building to supplement
any access system that Landlord may, from time to time, in its discretion,
provide in connection with access to the Adjacent Building.

(b) Subject to the terms of this Section 14(b), Tenant shall be
permitted, at its sole cost and expense, to locate a security guard directly in
front of the entrance to the Expansion Premises that is located on the first
floor of the Adjacent Building. Tenant's security guard shall: (i) not carry
any firearms; (ii) not interfere with access by any party to any portion of the
Adjacent Building that is not leased to Tenant; (iii) comply with all rules and
regulations that are promulgated by Landlord from time to time with respect to
the Adjacent Building; (iv) shall comply with all Governmental Laws; and (v) not
identify itself, or hold itself out to be, an employee, agent, or contractor of
Landlord or the Adjacent Building. Tenant shall indemnify and hold Landlord
harmless from and against all damage, liability, cost and expense, including,
without limitation, attorneys' fees and litigation costs, caused as a result of
Tenant's security guard's (x) presence or activities in or about the Adjacent
Building, and/or (y) negligence or misconduct.

15. NEW LEASE.

(a) In the event that Landlord and Tenant enter into a written
agreement whereby Landlord leases to Tenant, and Tenant leases from Landlord,
the balance of the rentable area of the Adjacent Building so that Tenant is
leasing the entire Adjacent Building, then the parties shall, upon either
party's request, enter into a written agreement whereby (i) Tenant leases the
Adjacent Building on a triple net basis, and (ii) the applicable provisions of
the Lease (as amended by this Amendment) shall be appropriately modified to
reflect (x) that Tenant is leasing the entire Adjacent Building and that the
maintenance, repair and replacement obligations with respect to the Adjacent
Building shall be allocated between Landlord and Tenant in the same manner that
they were allocated between Landlord and Tenant under the Lease with respect to
the Building, (y) that Tenant will be responsible for the payment of one hundred
percent

<PAGE>
15

(100%) of the operating expenses and real estate taxes for the Building and the
Adjacent Building, and (z) that the amount of the management fee that is
included as part of operating expenses under the Lease shall be appropriately
increased to reflect the rentable square footage of the Adjacent Building.

(b) Notwithstanding anything herein to the contrary, in the event
that Landlord desires to sell the Building or the Adjacent Building such that
the two buildings will be owned by two (2) different parties, then, upon written
notice from Landlord, Tenant will enter into a separate lease with Landlord (or
its successor) for each of the Expansion Premises and the Original Premises,
which leases will contain the same economic terms as are currently contained in
the Lease (as amended by this Amendment) as appropriately allocated to the
Original Premises and the New Premises.

16. BROKERS. Landlord and Tenant each represents and warrants to the
other that, except for Julien J. Studley, Inc. and Insignia Barnes Morris, it
has not employed any broker in connection with this Amendment. Landlord and
Tenant shall each indemnify and hold harmless the other from and against any
claims for brokerage or other commission arising by reason of a breach by the
indemnifying party of the aforesaid representation and warranty.

17. GOVERNING DOCUMENT. Except as otherwise amended by this Amendment,
the Lease shall remain in full force and effect. In the event of any conflict
between the terms and conditions of the Lease, and the terms and conditions of
this Amendment, the terms and conditions of this Amendment shall govern and
control.

18. INCORPORATION OF RECITALS. The Recitals set forth herein are
incorporated in and made a part of this Amendment.

19. COUNTERPARTS. This Amendment may be executed in two (2) or more
counterpart copies, all of which counterparts shall have the same force and
effect as if all parties hereto had executed a single copy of this Amendment.

20. NO OPTION. The submission of this Amendment by Landlord to Tenant for
examination shall not constitute a reservation of or option for the Expansion
Premises. This Amendment shall become effective only upon execution thereof by
both parties and delivery thereof to Tenant.

<PAGE>
16

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.

ATTEST/WITNESS: LANDLORD:
MERIDIAN ROCKVILLE PLAZA, LLC, a
Maryland limited liability company

______________________________ By: _______________________________
Name: _____________________________
Title: ____________________________
Date:______________________________

ATTEST/WITNESS: TENANT:
THE PERKIN-ELMER CORPORATION, a
New York corporation

______________________________ By: _______________________________
Name: _____________________________
Title: ____________________________
Date:______________________________

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of The Perkin-Elmer
Corporation of our report dated July 31, 1998, which appears on page 62 of the
1998 Annual Report to Shareholders of The Perkin-Elmer Corporation, which is
incorporated by reference in its Annual Report on Form 10-K for the year ended
June 30, 1998. We also consent to the incorporation by reference of our report
on the Financial Statement Schedule, which appears on page 25 of such Annual
Report on Form 10-K. We also consent to the reference to us under the heading
"Experts" in such Prospectus.

PricewaterhouseCoopers LLP

Stamford, CT
January 28, 1999

<PAGE>
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