Fill and Sign the To Approve an Employee Stock Option Plan Which Recognizes Eight Levels of Form

§18.105 To approve an Employee Stock Option Plan which recognizes eight levels of responsibility within the corporation and which provides that each eligible employee shall receive a stock option to purchase that number of shares of corporation Common Stock that is equal to the number derived by dividing the option value corresponding to his or her level of responsibility by the initial grant price (fair market value on date of grant) according to a schedule which ranges from Technical and Administrative Personnel levels one through four with option values from $1,250 through $5,000 to Chief Executive Officer level eight with an option value of $100,000. Options are exercisable for up to (a) 50% of the shares covered by the option at any time after the corporation’s gross revenues meet or exceed a 30% increase for each of two consecutive calendar years ending following the grant of the option and (b) 100% of the shares covered by the option at any time after the corporation’s gross revenues meet or exceed a 40% increase for each of two consecutive calendar years following the grant of the stock option (with a copy of the Employee Stock Option Plan) 2. PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY’S EMPLOYEES’ STOCK OPTION PLAN The Board of Directors of the Company adopted the Company’s Employees’ Stock Option Plan (the “Employees’ Plan”) to be effective on January 2, 1992, subject to approval by the Company’s shareholders. The Employees’ Plan is designed to enable and encourage key employees of the Company a nd its subsidiaries to acquire or increase their ownership of shares of Common Stock on reasonable terms. The Board of Directors believes that the Employees’ Plan will foster in pa rticipants a strong incentive to put forth maximum effort for the continued success and growth of the Company for the benefit of customers and stockholders, aid in retaining individuals who put forth such efforts, and assist in attracting the best available individuals in the future. The full text of the Employees’ Plan is set forth in Exhibit A to this Proxy State ment, and the following description of the Employees’ Plan is qualified by reference to the text thereof. Administration. The Employees’ Plan will be administered by the Stock Option Committee of the Board of Directors (the “Committee”). Members of the Committee must be di rectors who are not eligible to receive stock options under the Employees’ Plan and who were not parti cipants in any comparable plan sponsored by the Company or its affiliates during the one-year period preceding membership on the Committee. The Option Value level at which officers of the Company and its subsidiaries may receive stock options will be made only in accordance with the recommendation of the Committee. The Option Value level at which employe es who are not officers may receive stock options will be made in accordance with the recommendat ion of another committee consisting of the Chief Executive Officer of the Company and such othe r officers of the Company as the Chief Executive Officer may designate (the “Operati ng Committee”). Eligibility . Any full-time employee of the Company or a subsidiary, or any part-time employee of the Company or a subsidiary approved by the Operating Committee, is eligible to parti cipate in the Employees’ Plan. On March 9, 1992, there were 150 employees of the Company eligible to receive options under the Employees’ Plan.Shares Subject to the Employees’ Plan. A maximum of 200,000 shares of Common Stock may be awarded under the Employees’ Plan. Shares which are authorized but unissued will be utiliz ed under the Employees’ Plan. The number of shares is subject to adjustments for changes in capitalization or in connection with certain corporate transactions. Any shares subject to options which lapse without being exercised may again be used for a grant of a stock option under t he Employees’ Plan. Grants of Options. The Employees’ Plan recognizes eight levels of responsibility within the Company. On the date that the Employees’ Plan is approved by the shareholders of the Company, each eligible employee shall receive a stock option to purchase that numbe r of shares of Common Stock which is equal to the number derived by dividing the Option Value corresponding to his or her level of responsibility by the Initial Grant Price (as defined in t he Employees’ Plan) according to the schedule set forth below. Thereafter, each eligible e mployee shall receive a stock option to purchase that number of shares of Common Stock which i s equal to the number derived by dividing the dollar amount corresponding to his or her level of responsibility by the Fair Market Value (as defined in the Employees’ Plan) of a share of Common Stock on the first business day of each calendar year according to the following schedule: Employment Category Level Option Value Chief Executive Officer 8 $100,000 Executive Officers 7 37,500 Laboratory Directors and 6 31,250 Medical Directors Managers/Section Heads 5 10,000 Technical and 4 5,000 Administrative 3 3,750 Personnel 2 2,500 Levels 1 1,250 Assuming the Initial Grant Price of a share of Common Stock is $13.875 (the price on January 2, 1992), a total of 96,417 shares would be issuable upon exercise of options granted to 162 eligible employees on that date, including 7,208, 2,703, 2,703, 2,253, 26,129, to Messrs. Reed, Aleck, Duys, and Ms. Richkind, and all executive officers as a group, respectively. Exercise Schedule . The stock option shall be exercisable for up to (i) 50% of the shares covered by the stock option at any time after the Company’s gross revenues (as determined in a ccordance with generally accepted accounting principles applied on a consistent basis) meet or exceed a 30% increase for each of two consecutive calendar years ending subsequent to the grant of the option and thereafter until the earlier of the period ending on December 31 of the fourt h year subsequent to the year in which the option was granted or the termination of the stock opti on in accordance with the Employees’ Plan, and (ii) 100% of the shares covered by the stock option at any time after the Company’s gross revenues (as determined in accordance with generall y accepted accounting principles applied on a consistent basis) meet or exceed a 40% increase for each of two consecutive calendar years ending subsequent to the grant of the stock option and thereafter until the earlier of the period ending on December 31 of the fourth calendar year subsequent to the year in which the stock option was granted or the termination of the stoc k option in accordance with the Employees’ Plan. Purchase Price . The purchase price of the shares subject to each stock option shall be the Fair Market Value thereof on the date the stock option is granted except in the case of persons owning more than 10% of the Company’s outstanding stock whose exercise price must be not less than 110% of the fair market value of the stock on the date of grant. Transferability . Stock options granted under the Employees’ Plan are not transferable by the optionee otherwise than by will or the laws of descent and distribution or pursuant to a qual ified domestic relations order and are exercisable during the optionee’s lifetime only by him or her. Stockholder Status . Recipients of stock options under the Employees’ Plan have no rights as stockholders by virtue of the grant of a stock option except with respect to shares of Common Stock actually issued or delivered to such recipient. Termination, Suspension, or Modification of the Employees’ Plan . The Board of Directors, without further approval of the shareholders, may at any time terminate or suspend the Plan. Any such termination or suspension of the Employees’ Plan shall not affect stock options alre ady granted, and such stock options shall remain in full force and effect as if the Empl oyees’ Plan had not been terminated or suspended. The Board of Directors, without further approval of the shareholders, may amend the Employees’ Plan at any time in any respect as the Board of Directors deems advisable, subject to any required stockholder or regulatory approval and to a ny conditions established by the terms of such amendment, provided that in no event shall the Employees’ Plan be amended more than once every six (6) months other than to comport wit h changes in the Internal Revenue Code of 1986, the Employee Retirement Income Security Act, or the rules promulgated by the Securities and Exchange Commission. Federal Income Tax Consequences . An option granted under the Employees’ Plan will satisfy the formal prerequisites for an “incentive stock option,” as defined in the Internal Re venue Code of 1986 (the “Code”). Accordingly, an employee will generally realize no taxable income when an option is granted, or when it is exercised and Common Stock is transferred to that employee. Moreover, an employee will generally realize only capital gain or loss upon a subsequent disposition of Common Stock acquired by exercise of an Employees’ Plan option, as measured by the difference between the exercise price and the fair market value of such stock when it is disposed of. For its part, the Company will generally not be entitled to take a business expense deduction in connection with either a grant or an exercise of an Employees’ Plan option. Moreover, the Company will be considered to have received only the option price upon a transfer of Common Stock to an employee under the Employees’ Plan, irrespective of the value of such stock at that time. The foregoing tax consequences pertain only if: (a) the holder of an Employees’ Plan opti on is deemed (under the Code) to be an employee of the Company or its subsidiary when that option is exercised; and (b) Common Stock acquired by exercise of an option is held for at least one year after that exercise. To the extent that one or the other of these conditions is not satisfied, then the employee must recognize ordinary income as of the date of exercise, measured by the difference between the exercise price and the fair market value of the purchased Common Stock at that time. To the extent of the employee’s recognition of ordinary income, the Company m ay then take a business deduction in that amount. The tax consequences of a compensatory transfer of property, are determined under complex rules that are subject to change. Moreover, a taxpayer’s particular situation may render some variation of the general rules to be applicable in a given case. The adoption of this proposal requires the affirmative vote of the holders of a majority of t he outstanding shares of Common Stock. The Board of Directors and the management recommend a vote “FOR” the proposal.