-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N6qEv5CVPNYsHLTz3pqQaLYAsruQMdyqlHK1EuMozrz5LjxKR30eOhl/N3bAUao8 2UMJzcXkfwzwmm3HHY4XiA== /in/edgar/work/0000874716-00-000014/0000874716-00-000014.txt : 20001114 0000874716-00-000014.hdr.sgml : 20001114 ACCESSION NUMBER: 0000874716-00-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDEXX LABORATORIES INC /DE CENTRAL INDEX KEY: 0000874716 STANDARD INDUSTRIAL CLASSIFICATION: [2835 ] IRS NUMBER: 010393723 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19271 FILM NUMBER: 760890 BUSINESS ADDRESS: STREET 1: ONE IDEXX DR CITY: WESTBROOK STATE: ME ZIP: 04092 BUSINESS PHONE: 2078560300 MAIL ADDRESS: STREET 1: ONE IDEXX DR CITY: WESTBROOK STATE: ME ZIP: 04092 FORMER COMPANY: FORMER CONFORMED NAME: IDEXX CORP / DE DATE OF NAME CHANGE: 19600201 10-Q 1 0001.txt IDEXX LABORATORIES, INC. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number: 0-19271 IDEXX LABORATORIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 01-0393723 (State of incorporation) (I.R.S. Employer Identification No.) ONE IDEXX DRIVE, WESTBROOK, MAINE 04092 (Address of principal executive (Zip Code) offices) (207) 856-0300 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of October 31, 2000, 33,207,321 shares of the registrant's Common Stock, $.10 par value, were outstanding. 2 IDEXX LABORATORIES, INC. AND SUBSIDIARIES INDEX PAGE PART I -- FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets September 30, 2000 and December 31, 1999 3 Consolidated Statements of Operations Three and Nine Months Ended September 30, 2000 and September 30, 1999 4 Consolidated Statements of Cash Flows Nine Months Ended September 30, 2000 and September 30, 1999 5 Notes to Consolidated Financial Statements 6-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-14 PART II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 16 SIGNATURES 17 FORWARD LOOKING INFORMATION This Quarterly Report on Form 10-Q includes certain forward-looking statements about the business of IDEXX Laboratories, Inc. and its subsidiaries (the "Company"). Such forward-looking statements are subject to risks and uncertainties that could cause the Company's actual results to vary materially from those indicated in such forward-looking statements. These risks and uncertainties are discussed in more detail in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I of this report. 3 PART I -- FINANCIAL INFORMATION Item 1. -- FINANCIAL STATEMENTS IDEXX LABORATORIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In Thousands, Except Per Share Amounts) (Unaudited)
ASSETS SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ CURRENT ASSETS: Cash and cash equivalents, $6,991 of which is restricted as of September 30, 2000 $ 38,726 $ 58,576 Short-term investments 47,278 46,835 Accounts receivable, less reserves of $4,791 and $4,828 in 2000 and 1999, respectively 62,361 58,353 Inventories 62,870 47,488 Deferred income taxes 14,946 14,679 Other current assets 7,986 6,484 -------- -------- Total current assets 234,167 232,415 LONG-TERM INVESTMENTS 3,045 25,517 PROPERTY AND EQUIPMENT, AT COST: Land 1,189 1,196 Buildings and improvements 4,550 4,528 Leasehold improvements 18,566 18,522 Machinery and equipment 37,223 34,630 Office furniture and equipment 32,319 28,630 Construction-in-progress 3,644 1,152 -------- -------- 97,491 88,658 Less-Accumulated depreciation and amortization 55,738 49,108 -------- -------- 41,753 39,550 OTHER ASSETS, Net 75,395 60,500 -------- -------- $354,360 $357,982 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 17,914 $ 21,819 Accrued expenses 50,631 38,011 Notes Payable 8,525 3,543 Deferred revenue 10,886 10,268 -------- -------- Total current liabilities 87,956 73,641 STOCKHOLDERS' EQUITY: Common stock, $0.10 par value Authorized 60,000 shares Issued and outstanding 40,158 shares in 2000 and 39,584 shares in 1999 4,016 3,958 Additional paid-in capital 294,339 284,459 Retained earnings 90,450 63,619 Accumulated other comprehensive income (loss) (5,334) (3,473) Treasury Stock (6,314 shares in 2000 and 3,899 shares in 1999), at cost (117,067) (64,222) -------- -------- Total stockholders' equity 266,404 284,341 -------- -------- $354,360 $357,982 ======== ========
See accompanying notes to consolidated financial statements. 4 IDEXX LABORATORIES, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In Thousands, Except Per Share Amounts) (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED ------------------ ----------------- SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER 30, 30, 30, 30, 2000 1999 2000 1999 --------- --------- --------- --------- Revenue $90,384 $86,422 $274,813 $267,593 Cost of revenue 47,431 44,935 140,557 136,598 ------- ------- -------- -------- Gross Profit 42,953 41,487 134,256 130,995 Expenses: Sales and marketing 13,585 13,732 44,678 43,322 General and administrative 9,104 9,502 29,941 32,696 Research and development 6,750 6,302 20,736 20,983 ------- ------- -------- -------- Income from operations 13,514 11,951 38,901 33,994 Interest income, net 1,199 1,643 3,911 4,288 ------- ------- -------- -------- Income before provision for income taxes 14,713 13,594 42,812 38,282 Provision for income taxes 5,444 5,166 15,981 14,547 ------- ------- -------- -------- Net income $9,269 $8,428 $26,831 $23,735 ======= ======= ======== ======== Net income per common share: Basic: $0.27 $0.22 $0.77 $0.61 ======= ======= ======== ======== Net income per common share: Diluted: $0.26 $0.21 $0.73 $0.58 ======= ======= ======== ========
See accompanying notes to consolidated financial statements. 5 IDEXX LABORATORIES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In Thousands) (Unaudited)
NINE MONTHS ENDED ----------------- SEPTEMBER 30 SEPTEMBER 30 2000 1999 ------------- ------------- Cash Flows from Operating Activities: Net income $26,831 $23,735 Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions: Depreciation and amortization 14,102 12,849 Provision for (benefit of) deferred income taxes 1,075 (2,214) Changes in assets and liabilities: Accounts receivable (4,017) (7,923) Inventories (22,390) 6,567 Other current assets (333) 2,188 Accounts payable (2,162) (15,597) Accrued expenses 5,310 14,307 Deferred revenue 618 (1,015) ------- -------- Net cash provided by operating activities 19,034 32,897 ------- ------- Cash Flows from Investing Activities: Purchases of property and equipment (11,697) (6,093) Decrease (increase) in investments, net 22,028 (35,399) Increase in other assets (769) (1,433) Acquisition of businesses, net of cash acquired (11,945) (1,257) Disposition of businesses 10,400 -- ------- ------- Net cash provided by (used in) investing activities 8,017 (44,182) ------- -------- Cash Flows from Financing Activities: Payment of notes payable (3,231) (1,593) Proceeds from the exercise of stock options 8,299 5,990 Purchase of treasury stock (50,367) (27,256) -------- -------- Net cash used in financing activities (45,299) (22,859) -------- -------- Net effect of Exchange Rate Changes (1,602) (242) -------- -------- Net decrease in Cash and Cash Equivalents (19,850) (34,386) Cash and Cash Equivalents, beginning of period 58,576 109,063 ------- ------- Cash and Cash Equivalents, end of period $38,726 $74,677 ======= ======= Supplemental Disclosure of Cash Flow Information: Interest paid during the period $ 351 $ 133 ======= ======= Income taxes paid during the period $ 9,527 $ 5,261 ======= =======
See accompanying notes to consolidated financial statements. 6 IDEXX LABORATORIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 1. Basis of Presentation The accompanying unaudited, consolidated financial statements of IDEXX Laboratories, Inc. ("IDEXX" or the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the requirements of Form 10-Q. The accompanying interim consolidated financial statements reflect, in the opinion of the Company's management, all adjustments necessary for a fair presentation of the financial position and results of operations. The results of operations for the nine months ended September 30, 2000 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company's 1999 Annual Report to the Shareholders, as filed on Form 10-K with the Securities and Exchange Commission. 2. New Accounting Pronouncements In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133"). SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities and requires that an entity recognize all derivatives as either assets or liabilities on the balance sheet and measure 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. SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 - an amendment of FASB Statement No. 133 was issued in June 1999 and deferred the effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000 and is applicable on both an interim and annual basis. Companies are not required to apply this statement retroactively to prior periods. The Company does not believe that implementation of this statement will have a material impact on the financial statements. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101, "Revenue Recognition" ("SAB 101"), which provides interpretive guidance on the recognition, presentation and disclosure of revenue in financial statements. The Company has implemented those guidelines with no material impact on earnings. 3. Inventories Inventories include material, labor and overhead, and are stated at the lower of cost (first-in, first-out) or market. The components of inventories are as follows (in thousands): SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ Raw materials $14,945 $ 6,385 Work-in-process 3,615 4,190 Finished goods 44,310 36,913 ------- ------- $62,870 $47,488 ======= ======= 4. Comprehensive income
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER 30, 2000 30, 1999 30, 2000 30, 1999 --------- --------- --------- --------- Net income $9,269 $8,428 $26,831 $23,735 Other comprehensive income(loss): Foreign currency translation adjustments (983) 765 (1,861) (276) ------ ------ ------- ------- Comprehensive income $8,286 $9,193 $24,970 $23,459 ====== ====== ======= ======= 7 5. Earnings per share The following is a reconciliation of shares outstanding for basic and diluted earnings per share (in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER 30, 2000 30, 1999 30, 2000 30, 1999 --------- --------- --------- --------- Basic: Weighted average shares outstanding 34,396 39,096 35,028 39,109 ====== ====== ====== ====== Diluted: Weighted average shares outstanding 34,396 39,096 35,028 39,109 Dilutive effect of stock options issued to employees 1,537 770 1,449 1,410 Shares assumed issued for the acquisition of Blue Ridge Pharmaceuticals, Inc. 115 115 115 115 ------ ------ ------ ------ 36,048 39,981 36,592 40,634 ====== ====== ====== ======
6. Commitments and contingencies From time to time the Company has received notices alleging that the Company's products infringe third-party proprietary rights. In particular, the Company has received notices claiming that certain of the Company's immunoassay products infringe third-party patents, although the Company is not aware of any pending litigation with respect to such claims. Patent litigation frequently is complex and expensive, and the outcome of patent litigation can be difficult to predict. There can be no assurance that the Company will prevail in any infringement proceedings that have been or may be commenced against the Company. 8 7. Acquisitions and Divestitures Acquisitions Sierra Laboratories On March 9, 2000 the Company, through its wholly-owned subsidiary, IDEXX Veterinary Services, Inc., acquired the veterinary laboratory business of Sierra Veterinary Laboratory LLC ("Sierra"), based in Los Angeles, California, for $178,000 in cash. In addition, the Company agreed to make future payments in each of the next four years based on the results of operations, which will be treated as additional purchase price. The Company has accounted for this acquisition under the purchase method of accounting and has included the results of operations in its consolidated results since the acquisition date. Pro forma information has not been presented because of immateriality. Veterinary Pathology Services On July 1, 2000, the Company, through its wholly-owned subsidiary, IDEXX Laboratories Pty. Ltd., acquired Veterinary Pathology Services Pty. Ltd., a veterinary laboratory business with locations in Adelaide, Brisbane and Sydney, Australia for Australian Dollars 5.6 million (US $3.1 million) in cash. The Company has accounted for this acquisition under the purchase method of accounting and has included the results of operations in its consolidated results since the acquisition date. Pro forma information has not been presented because of immateriality. Genera Technologies Limited On August 11, 2000, the Company acquired Genera Technologies Limited, a U.K. based manufacturer of test kits for cryptosporidium in water, for $8.7 million in cash and $8.3 million in notes payable to the former principal shareholder of which $7.0 million is secured by cash in escrow. The Company also agreed to make additional payments to the shareholder of up to $2.5 million based upon performance of the business after the acquisition. The Company has accounted for this acquisition under the purchase method of accounting and has included the results of operations in its consolidated results since the acquisition date. Pro forma information has not been presented because of immateriality. Divestitures Through a series of transactions completed in late 1999 and the first quarter of 2000, the Company disposed of substantially all of its businesses related to food microbiology testing. As a result of these transactions, the Company recorded an immaterial loss in 1999 and an immaterial gain in 2000. Pro forma information has not been presented because of immateriality. IDEXX Food Safety Net Services, Inc. On December 21, 1999, the Company sold substantially all the assets in the business of IDEXX Food Safety Net Services, Inc. to Food Safety Net Services, Ltd. for $350,000 cash, a $195,000 note payable and the assumption of certain liabilities. The note bears interest at 6% and is due in twelve quarterly installments. In addition, the Company entered into a non-compete agreement for five years. Food Products and Acumedia Manufacturers, Inc. During February 2000, the Company sold certain assets and the rights to its Lightning(R), Simplate(R), and Bind(R) product lines and its subsidiary, Acumedia Manufacturers, Inc. ("Acumedia"), for aggregate consideration of $10,400,000 in cash, a $450,000 note payable, and the assumption of certain liabilities. The Company also will receive up to an additional $1,000,000 based on revenue realized from the Acumedia business between the sale date and February 17, 2001. The note bears interest at 7% and is due on February 17, 2001. In addition, the company entered into non-compete agreements for up to five years. 8. Segment Reporting The Company conducts business principally in three major operating segments. The Company's operating segments include the Companion Animal Group ("CAG"), the Food and Environmental Division ("FED") and other. The separate financial information of each segment is presented consistent with the way results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The CAG develops, designs, and distributes products and performs services for veterinarians. The CAG also manufactures certain biology based test kits for veterinarians. FED develops, designs, manufactures and distributes products and performs services to detect disease and contaminants in food animals, food and water. Both the CAG and FED distribute products and services worldwide. Other is primarily comprised of corporate research and development and interest income. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies except that most interest income and expense are not allocated to individual operating segments and income taxes are provided on each segment using the overall effective tax rate. 9 The following is the segment information in accordance with this statement (in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER 30, 2000 30, 1999 30, 2000 30, 1999 --------- --------- --------- --------- Revenue: CAG $72,735 $66,770 $223,018 $209,580 FED 17,649 19,652 51,795 58,013 Other -- -- -- -- ------- ------- -------- -------- Total revenue $90,384 $86,422 $274,813 $267,593 ======= ======= ======== ======== Net income: CAG $ 5,755 $ 4,702 $ 16,725 $ 16,508 FED 3,062 2,778 8,550 5,130 Other 452 948 1,556 2,097 ------- ------- -------- -------- Total net income $ 9,269 $ 8,428 $ 26,831 $ 23,735 ======= ======= ======== ========
9. Stock Repurchase Program On July 21, 2000, the Company's Board of Directors approved an increase in the number of shares of its Common Stock that the Company was authorized to repurchase from 6.0 million shares to 10.0 million shares. The Company may make such purchases in the open market or in negotiated transactions. During the nine months ended September 30, 2000, the Company repurchased approximately 2.4 million shares for $52.8 million. Between August 19, 1999 and September 30, 2000, the Company repurchased approximately 6.3 million shares under this program for $117.1 million. 10 Item 2. IDEXX LABORATORIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company operates primarily through two business units: the Companion Animal Group ("CAG") and the Food and Environmental Division ("FED"). CAG comprises the Company's veterinary diagnostic products and services, its animal health pharmaceuticals business, and its veterinary informatics and internet business. FED comprises the Company's products and services for food animal, food and water testing. Through a series of transactions completed in late 1999 and the first quarter of 2000, the Company disposed of substantially all of its businesses related to food microbiology testing. FED now comprises the Company's water and dairy testing business and its production animal diagnostic services business. COMPANION ANIMAL GROUP QUARTER ENDED SEPTEMBER 30, 2000 COMPARED TO QUARTER ENDED SEPTEMBER 30, 1999 Revenue for CAG increased $6.0 million, or 9% to $72.7 million during the third quarter of 2000 from $66.8 million in the same period of the prior year. The increase is primarily attributable to an increase in sales of veterinary reference laboratory services, consumables used in the Company's veterinary instruments and feline and canine test kits. The increase in veterinary reference laboratory services sales is partially attributable to incremental revenues from laboratories acquired after June 1999, including the laboratory businesses of Tufts University School of Veterinary Medicine acquired on December 1, 1999 and Veterinary Pathology Services Pty. Ltd ("VPS") acquired on July 1, 2000. The increase in consumables sales is attributable primarily to an increase in instrument placements, including through the Company's rental program, and to a lesser degree to increased customer utilization per instrument. These increases are partially offset by a decrease in sales of veterinary practice information management systems. International revenue increased $.4 million, or 3% compared to the same quarter of 1999. This increase is attributable primarily to increased sales of veterinary reference laboratory services resulting from the purchase of VPS, partially offset by unfavorable foreign exchange rates. International sales declined to 22% of total CAG sales compared to 23% in the third quarter of 1999. CAG's gross margin decreased from 46% to 45% due primarily to unfavorable exchange rates and to increased sales of lower margin veterinary reference laboratory services and unabsorbed fixed costs associated with decreased sales of practice information management systems. These decreases are partially offset by increased sales of higher gross margin consumables. 11 Operating expenses during the third quarter increased $.8 million, or 3% over the same period in 1999. The increase is attributable primarily to research and development expenses related to the development of new diagnostic platforms and to an increase in sales and marketing programs related to veterinary consumables. These increases are partially offset by settlement gains on foreign currency contracts designated as hedges. NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1999 Revenue for CAG increased $13.3 million, or 6% to $223.0 million during the first nine months of 2000 from $209.6 million in the same period of the prior year. The increase is attributable primarily to an increase in sales of veterinary reference laboratory services, veterinary consumables and feline diagnostic kits. The increase in sales of veterinary reference laboratory services is attributable partially to incremental revenues generated from acquisitions discussed above. These increases are partially offset by a decrease in sales of veterinary practice information management systems. International revenue increased $2.3 million, or 5% compared to the same period of 1999. The increase is attributable to increased sales of veterinary reference laboratory services and canine diagnostic test kits partially offset by unfavorable foreign exchange rates. The increase in sales of veterinary reference laboratory services resulted mainly from the purchase of VPS in Australia described above. CAG's gross margin decreased from 48% to 47%. The reduction in the gross margin percentage is due primarily to increased sales of lower gross margin veterinary reference laboratory services, higher cost of veterinary instrument service and unabsorbed fixed costs associated with decreased sales of veterinary practice information management systems, partially offset by increased sales of higher margin veterinary consumables. Operating expenses during the nine months ended September 30, 2000 increased $4.3 million, or 6% over the same period in 1999. The increase is attributable primarily to an increase in sales and marketing expenses associated with the pharmaceutical product line and research and development expenses related to the Company's Internet portal/application service provider for animal health professionals and to development of new diagnostic platforms. The increases are partially offset by decreased pharmaceutical research and development expenses and settlement gains on foreign currency contracts designated as hedges. FOOD AND ENVIRONMENTAL DIVISION QUARTER ENDED SEPTEMBER 30, 2000 COMPARED TO QUARTER ENDED SEPTEMBER 30, 1999 Revenue for FED decreased $2.0 million, or 10% to $17.6 million during the third quarter of 2000 from $19.7 million for the same period in the prior year. The decrease is primarily attributable to the divestiture of the food microbiology testing product lines discussed above and decreased sales of dairy test products. These decreases are partially offset by an increase in sales of water testing products, including incremental sales from the acquisition of Genera Technologies Limited ("Genera") in July 2000, and by additional sales of livestock test kits. International revenue decreased $.5 million, or 7% compared to the same quarter of 1999. The decrease is attributable primarily to the divestiture of the food microbiology testing product lines discussed above and unfavorable foreign exchange rates, partially offset by increased sales of livestock test kits and water testing products, including incremental sales from the acquisition of Genera. FED's gross margin increased to 57% from 55% due to the divestiture of the lower gross margin food microbiology testing product lines and increased sales of higher gross margin water testing products, partially offset by unfavorable foreign exchange rates. Operating expenses during the third quarter decreased $1.1 million, or 17% over the same period in 1999 primarily due to the elimination of operating expenses associated with the divested food microbiology testing products business. NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1999 Revenue for FED decreased $6.1 million, or 10% to $51.8 million during the first nine months of 2000 from the same period in the prior year. The decrease is attributable primarily to the divestiture of the food microbiology testing product lines and decreased sales of dairy test products. These decreases are partially offset by an increase in sales of water testing products and livestock test kits. International revenue decreased $.7 million, or 3% from the same period in 1999. The decrease is attributable primarily to the divestiture of the food microbiology testing product lines and unfavorable foreign exchange rates, partially offset by increased sales of dairy, livestock, and water testing products, including incremental sales from the purchase of Genera discussed above. FED's gross margin increased to 58% from 54% due to the divestiture of the lower gross margin food microbiology testing product lines and increased sales of higher gross margin water testing products, partially offset by unfavorable foreign exchange rates. Operating expenses during the first nine months of 2000 decreased $6.2 million, or 27% from the same period in the prior year, due primarily to the elimination of operating expenses associated with the food microbiology testing products business and to an immaterial gain on the sale. INTEREST INCOME, NET Net interest income is $1.2 million for the quarter ended September 30, 2000 compared with $1.6 million for the same period in the prior year. The decrease in interest income is principally the result of lower invested cash balances due to the use of cash for the Company's share repurchase program and the purchase of VPS and Genera, partially offset by higher effective interest rates. Net interest income declined to $3.9 million for the nine months ended September 30, 2000 from $4.3 million for the same period in the prior year for the reasons described above. PROVISION FOR INCOME TAXES The Company's effective tax rate is 37.0% and 37.3% for the three- and nine- month periods ended September 30, 2000, respectively, compared with 38% for the same periods in 1999. The reduction in the effective tax rate is the result of continued realization of tax benefit resulting from business operations in jurisdictions with lower effective income tax rates. 12 LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2000, the Company has cash, cash equivalents, and short-term investments of $86.0 million and working capital of $146.2 million. As of September 30, 2000, $7.0 million in cash is in escrow as security for the Company's obligations and promissory notes in an equivalent aggregate principal amount issued in connection with the acquisition of Genera. During the quarter ended September 30, 2000 the Company repurchased 1.4 million shares of its common stock for $33.5 million, of which transactions representing 100,000 shares have not settled as of September 30, 2000 and the $2.5 million purchase price is reflected as a current liability. For the nine months ended September 30, 2000 the Company repurchased approximately 2.4 million shares for $52.8 million. The Company believes that current cash and short-term investments and funds expected to be generated from operations will be sufficient to fund the Company's operations for the foreseeable future. FUTURE OPERATING RESULTS The future operating results of the Company are subject to a number of factors, including without limitation the following: The Company's business has grown significantly over the past several years as a result of both internal growth and acquisitions of products and businesses. The Company has consummated a number of acquisitions since 1992, including five acquisitions in 1997, two acquisitions in 1998, two acquisitions in 1999 and three acquisitions during the first nine months of 2000, and plans to make additional acquisitions. Identifying and pursuing acquisition opportunities, integrating acquired products and businesses, and managing growth require a significant amount of management time and skill. There can be no assurance that the Company will be effective in identifying and effecting attractive acquisitions, assimilating acquisitions or managing future growth. The Company's future success will depend in part on its ability to continue to develop new products and services both for its existing markets and for any new markets the Company may enter in the future. In recent years sales of the Company's chemistry and hematology analyzers have declined as the Company has achieved increasing market penetration. Future growth in sales of the Company's analyzers and associated consumables will depend in part on the Company's ability to introduce new systems with new features and capabilities. The Company is currently devoting significant resources to the development of such systems. The Company also plans to devote significant resources to the growth of many of its other businesses, including its animal health pharmaceuticals business and the Company's Internet portal/application service provider for animal health professionals. There can be no assurance that the Company will successfully complete the development and commercialization of products and services for existing and new businesses or that such products and services, if commercialized, will meet revenue and profit expectations. The markets in which the Company competes are subject to rapid and substantial technological change. The Company encounters, and expects to continue to encounter, intense competition in the sale of its current and future products and services. In particular, the Company has encountered increasing competition in the market for its analyzers and for canine heartworm diagnostics. Many of the Company's competitors and potential competitors, including large pharmaceutical companies, have substantially greater capital, manufacturing, marketing, and research and development resources than the Company. The Company has experienced and may experience in the future significant fluctuations in its quarterly operating results. Factors such as the introduction and market acceptance of new products and services, the mix of products and services sold and the mix of domestic versus international revenue could contribute to this quarterly variability. In addition, because many of the Company's products are sold through distributors, fluctuations may occur due to distributor purchasing patterns, which may be beyond the Company's control. The Company operates with relatively little backlog and has few long-term customer contracts and substantially all of its product and service revenue in each quarter results from orders received in that quarter, which makes the Company's financial performance more susceptible to an unexpected downturn in business and more unpredictable. In addition, the Company's expense levels are based in part on expectations of future revenue levels, and a shortfall in expected revenue could therefore result in a disproportionate decrease in the Company's net income. The Company's success is heavily dependent upon its proprietary technologies. The Company relies on a combination of patent, trade secret, trademark and copyright law to protect its proprietary rights. There can be no assurance that 13 patent applications filed by the Company will result in patents being issued, that any patents owned or licensed by the Company will afford protection against competitors with similar technologies, or that the Company's non-disclosure agreements will provide meaningful protection for the Company's trade secrets and other proprietary information. Moreover, in the absence of patent protection, the Company's business may be adversely affected by competitors who independently develop substantially equivalent technologies. In addition, the Company may be required to obtain licenses to additional technologies from third parties in order to continue to sell certain products. There can be no assurance that any technology licenses which the Company desires or is required to obtain will be available on commercially reasonable terms. From time to time the Company receives notices alleging that the Company's products infringe third-party proprietary rights. In particular, the Company has received notices claiming that certain of the Company's immunoassay products infringe third-party patents. Patent litigation frequently is complex and expensive and the outcome of patent litigation can be difficult to predict. There can be no assurance that the Company will prevail in any infringement proceedings that may be commenced against the Company, and an adverse outcome may preclude the Company from selling certain products or require the Company to pay damages or make additional royalty or other payments with respect to such sales. In addition, from time to time other types of lawsuits are brought against the Company, wherein an adverse outcome could adversely affect the Company's results of operations. The development, manufacturing, distribution and marketing of certain of the Company's products and provision of its services, both in the United States and abroad, are subject to regulation by various domestic and foreign governmental agencies, including the U.S. Department of Agriculture, U.S. Food and Drug Administration ("FDA") and U.S. Environmental Protection Agency. Commercialization of animal health pharmaceuticals requires submission of substantial clinical, manufacturing and other data to the FDA and regulatory approval can take several years. Delays in obtaining, or the failure to obtain, any necessary regulatory approvals could have a material adverse effect on the Company's future product and service sales and operations. Any acquisitions of new products, services and technologies may subject the Company to additional areas of government regulations. Certain components used in the Company's products are currently available from only one source and others are available from only a limited number of sources. The Company's inability to develop alternative sources if and as required in the future, or to obtain sufficient sole or limited source components as required, could result in cost increases or reductions or delays in product shipments. Certain technologies licensed by the Company and incorporated into its products are also available only from a single source, and the Company's business may be adversely affected by the expiration or termination of any such licenses or any challenges to the technology rights underlying such licenses. In addition, the Company currently purchases or is contractually required to purchase certain of the products that it sells, including its chemistry and hematology analyzers and associated consumables, from single sources. Failure of such sources to supply product to the Company would have a material adverse effect on the Company's business. For the nine months ended September 30, 2000, international revenue was $70.8 million and accounted for 26% of total revenue, and the Company expects that its international business will continue to account for a significant portion of its total revenue. Foreign regulatory bodies often establish product standards different from those in the United States, and designing products in compliance with such foreign standards may be difficult or expensive. Other risks associated with foreign operations include possible disruptions in transportation of the Company's products, the differing product and service needs of foreign customers, difficulties in building and managing foreign operations, fluctuations in the value of foreign currencies, import/export duties and quotas, and unexpected regulatory, economic or political changes in foreign markets. The development, manufacture, distribution and marketing of the Company's products and provision of its services involve an inherent risk of product liability claims and associated adverse publicity. Although the Company currently maintains liability insurance, there can be no assurance that the coverage limits of the Company's insurance policies will be adequate. Such insurance is expensive, difficult to obtain and may not be available in the future on acceptable terms or at all. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's market risk consists primarily of foreign currency exchange risk. The Company operates subsidiaries in 13 foreign countries and transacts business in local currencies. The Company hedges its cash flows on intercompany sales to minimize foreign currency exposure. 14 The primary purpose of the Company's foreign currency hedging activities is to protect against the volatility associated with foreign currency transactions. Corporate policy prescribes the range of allowable hedging activity. The Company primarily utilizes forward exchange contracts and options with a duration of less than 12 months. Gains and losses related to qualifying hedges of foreign currency from commitments or anticipated transactions are deferred in prepaid expenses and are included in the basis of the underlying transaction. Based on the Company's overall currency rate exposure at September 30, 2000, including derivative and other foreign currency sensitive instruments, the effect of a 5% change in exchange rates on balances denominated in foreign currencies that are not the functional currencies would not be material to the results of operations. However, the effects of a 5% change in exchange rates, if not offset by hedge contracts or related price adjustments, would have a material impact on the results of operations. PART II -- OTHER INFORMATION Item 1. -- LEGAL PROCEEDINGS Item 6. -- Exhibits and Reports on Form 8-K (a) Exhibits 3.2 Amended and Restated By-Laws of the Company 10.1 European Supply Agreement, effective as of January 1, 1999, between the Company and Ortho-Clinical Diagnostics, Inc. 10.2 U.S. Supply Agreement, effective as of January 1, 1999, between the Company and Ortho-Clinical Diagnostics, Inc. 27 Financial Data Schedule for the Quarterly Report on Form 10-Q for the nine-month period ended September 30, 2000. (b) Reports on Form 8-K The Company filed no reports on Form 8-K during the fiscal quarter for which this report is filed. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IDEXX LABORATORIES, INC. Date: November 13, 2000 /s/ Merilee Raines ------------------------- Merilee Raines Vice President, Finance and Treasurer (Principal Financial Officer) EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE IDEXX LABORATORIES, INC. CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000874716 IDEXX LABORATORIES, INC. 1,000 U.S. DOLLARS 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1 38,726 47,278 67,152 4,791 62,870 234,167 97,491 55,738 354,360 87,956 0 0 0 4,016 262,388 354,360 208,341 274,813 86,641 140,557 94,711 644 167 42,812 15,981 26,831 0 0 0 26,831 .77 .73
EX-10.1 3 0003.txt CONFIDENTIAL MATERIAL 1 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION (*Denotes Omission) EXHIBIT 10.1 (REDACTED) AGREEMENT THIS AGREEMENT is made effective as of the 1st day of January, 1999, between IDEXX Europe B.V., a corporation organized under the law of The Netherlands whose principal place of business is at Koolhovenlaan 20, 1119 NE - Schiphol- Rijk, The Netherlands ("IDEXX") and Ortho-Clinical Diagnostics, Inc., a New York corporation with offices at 100 Indigo Creek Drive, Rochester, New York, U.S.A. ("OCD"). WHEREAS, OCD and IDEXX desire to enter into supply arrangements with respect to VITROS slides for use on the VETTEST analyzer; NOW THEREFORE, the parties hereby agree as follows: 1. DEFINITIONS In this Agreement the following expressions shall have the meaning set opposite them. "Agreements" This Agreement and the US Agreement. "Applicable Percentage" The percentage obtained by dividing (i) the unit volume of slide sales for a particular chemistry in a given period, BY (ii) the unit volume of slide sales for all chemistries listed on SCHEDULE 5 for such period (as such SCHEDULE 5 may from time to time be revised). Applicable Percentages of unit volume sales shall be determined based on sales in the most recently completed fiscal quarter, and the sum of the Applicable Percentages shall always be 100%. "Commencement Date" January 1, 1999. "Corresponding Slide" Any VITROS slide which provides the same blood chemistry measurement as a particular VETTEST slide (e.g., a DT60 Glucose slide is a Corresponding Slide for a VETTEST Glucose slide). "DT60" The DT60 analyzer developed by OCD for human biomedical purposes and using the VITROS slides. "Effective Rebate Rate" For any year, the weighted average percentage reduction in the purchase price of any slides purchased in such year that IDEXX is entitled to receive pursuant to Section 7.03 hereunder. The 2 calculation of the Effective Rebate Rate is illustrated in SCHEDULE 6. "IDEXX US" IDEXX Laboratories, Inc., a Delaware corporation. "PANELS/PROFILES" Packages of VETTEST slides consisting of two or more sets of slides of specified chemistries. The initial PANEL and the initial PROFILES shall consist of the slides set forth on SCHEDULE 3 attached hereto, with any changes or additional PANELS/PROFILES to be mutually agreed upon by the parties as specified in SCHEDULE 3. "Prime Rate" For any day in any calendar month, the prime rate of interest as published in the WALL STREET JOURNAL on the last business day of the immediately preceding month. "Proportionate Share" The percentage obtained by dividing (i) the number of VETTEST slides purchased by IDEXX in a given period, BY (ii) the total number of VETTEST slides purchased by IDEXX and its affiliates during such period. "Term" The period from January 1, 1999 until December 31, 2010. "US Agreement" The Agreement effective as of January 1, 1999 between OCD and IDEXX US, as amended and from time to time in effect. "VETTEST analyzer" The VETTEST VT 8008 analyzer developed by or on behalf of VETTEST S.A., predecessor of IDEXX US, for veterinary purposes and using VITROS slides; including (i) any updates or modifications to such analyzer, or (ii) other chemistry testing instrument which, in the case of clause (i) and (ii), is designed by IDEXX US to be the bridging instrument to a next-generation veterinary chemistry analyzer *************** *******************************. ****************** ************************************ ********************** 3 "VETTEST slides" VITROS or other OCD chemistry slides specially bar coded, labeled, and/or packaged for the VETTEST analyzer in accordance with the terms of this Agreement and supplied by OCD in accordance with the terms and conditions of this Agreement. "VETTEST tips" Metering tips manufactured by OCD for use with VITROS 700 Analyzer specially packaged and supplied to IDEXX in accordance with the terms of this Agreement. "VITROS slides" The slides developed by OCD for use in any VITROS analyzer. "Weighted Average List Price" The product obtained by multiplying (i) the Applicable Percentage for each Corresponding Slide or VETTEST slide, as the case may be, BY (ii) the average price such Corresponding Slide is sold to distributors by OCD, or the price then in effect under this Agreement for a VETTEST slide, as the case may be and THEN (iii) aggregating the total of such multiplication calculations for all chemistries listed on SCHEDULE 5 (as such SCHEDULE 5 may from time to time be revised). All references to currency in this Agreement shall mean U.S. Dollars unless otherwise specifically indicated. 2. EFFECT OF AGREEMENT 2.01 This Agreement shall become effective upon the Commencement Date. 3. OCD RIGHT OF FIRST REFUSAL 3.01 IDEXX shall not enter into any negotiations with any third party concerning human biomedical applications of the VETTEST analyzer without first offering to OCD the opportunity to negotiate marketing rights for the human biomedical applications of the VETTEST analyzer. 4 4. AGREEMENT TO SUPPLY 4.01 Subject to the terms and conditions of this Agreement, OCD undertakes to manufacture for IDEXX and to supply to IDEXX VETTEST slides, VETTEST tips and Vetrol controls. OCD shall supply VETTEST slides in compliance with the VETTEST Slide Quality Assurance Procedures set out in SCHEDULE 4. 5. FORECASTS, COMMITMENTS AND ORDERS 5.01 Attached hereto as SCHEDULE 4 are aggregate Purchase Commitments by IDEXX and IDEXX US for VETTEST slides for calendar years 1999 through and including 2006. The Purchase Commitments constitute the aggregate anticipated minimum aggregate purchase quantities by IDEXX and IDEXX US for single chemistry VETTEST slides and PANELS/PROFILES slides in the indicated calendar years. For calendar years 2007 through and including 2010, IDEXX shall advise, or shall cause IDEXX US to advise, OCD of the aggregate Purchase Commitment for IDEXX and IDEXX US for each such year not later than October 1 of the preceding year, and upon receipt by OCD, such Purchase Commitments shall be deemed to be incorporated into SCHEDULE 4. IDEXX's and IDEXX US's aggregate Purchase Commitment for the period 2007 through and including 2010 shall be not less than *********** slides. During each of calendar years 2000 through and including 2002, IDEXX and IDEXX US shall purchase, in the aggregate, not less than ************* *********** single slides; during each of calendar years 2003 through and including 2006, IDEXX and IDEXX US shall purchase, in the aggregate, not less than ****************** single slides; and during each of the calendar years 2007 through and including 2010, IDEXX and IDEXX US shall purchase, in the aggregate, a minimum number of single slides equal to **** of the total Purchase Commitment for such year. Failure by IDEXX and IDEXX US to purchase, in the aggregate, at least the indicated Purchase Commitment quantities of each type of slides in any year may subject IDEXX to the requirement to make a payment to OCD as set forth in sub-Clause 5.02 below, but such failure shall in no event otherwise be deemed to be a breach of this Agreement. 5.02 If IDEXX and IDEXX US fail to purchase in the aggregate the quantities of slides set forth as Purchase Commitments on SCHEDULE 4 in a particular calendar year, unless there has been a Material Adverse Change (as defined in the following paragraph) IDEXX shall pay, or shall cause IDEXX US to pay, to OCD within 30 days after the end of such calendar year ***** of the product of (i) the number of each type of slides (single or PANELS/PROFILES) by which IDEXX and IDEXX US have in the aggregate fallen short of the Purchase Commitment and (ii) the 5 lowest per-slide price for the applicable type of slides under either of the Agreements. For the purposes of this sub-Clause 5.02, "MATERIAL ADVERSE CHANGES" shall mean material changes in the veterinary clinical chemistry markets which result from (a) non-invasive diagnostic testing other than any such testing which is introduced by IDEXX or its affiliates, (b) invasive diagnostic testing other than any such testing which is introduced by IDEXX or its affiliates, (c) the eradication of one or more diseases, or the development of new disease therapies, treatments or diagnostics, which significantly reduces demand for veterinary clinical chemistry testing, (d) decreased commitment by or ability of OCD to supply VETTEST or VITROS slides, and (e) the availability in one or more significant markets of slides compatible with the VETTEST analyzer from sources other than IDEXX or its affiliates, which availability is not promptly enjoined or otherwise terminated by OCD. Whether a Material Advance Change has occurred will be determined by reference to the effect of a change in the veterinary clinical chemistry market on IDEXX and IDEXX US taken as a whole, and not on either individually. The parties shall discuss in good faith any assertion by IDEXX or IDEXX US that a Material Adverse Change has occurred or is continuing. If the parties agree that a Material Adverse Change has occurred or is continuing, they shall negotiate in good faith with respect to appropriate reductions in Purchase Commitments, VETTEST slide prices (including single and PANELS/PROFILES slides) and/or amounts which would otherwise be payable pursuant to the first sentence of this sub- Clause 5.02 to appropriately allocate the effects of such Material Adverse Change on the parties. 5.03 IDEXX shall place orders for slides at least three calendar months prior to the required delivery date. Unless otherwise agreed between the parties in any particular case, orders for slides shall be placed by IDEXX three times per year and each order shall specify a business day delivery date for each delivery. 5.04 Not later than October 1 of each calendar year commencing October 1, 1999, IDEXX shall notify, or shall cause IDEXX US to notify, OCD of the aggregate forecasted requirements of IDEXX and IDEXX US for the subsequent year for each of the VETTEST slides (single slides and PANELS/PROFILES slides) (each such notification, a "PURCHASE FORECAST"), and the aggregate order quantities in the subsequent year for each of the VETTEST slides shall be within +/- 25% of such aggregate Purchase Forecast unless the parties otherwise agree. As long as slide orders are within the indicated range of +/- 25% of the applicable Purchase Forecast, OCD shall deliver the slides in accordance with the orders. The Purchase Forecasts constitute non-binding forecasts, which shall be the basis for determining IDEXX's, and IDEXX US's aggregate quarterly cash rebate pursuant to sub-Clause 7.03 below. 6 5.05 In the event that IDEXX or IDEXX US in any year notifies OCD that they wish to order quantities which exceed the quantities mentioned in sub- Clause 5.04 above by more than 25%, OCD will endeavor to supply the excess quantities and notify IDEXX or IDEXX US, as appropriate, of the extent of its ability to so supply. 5.06 It is understood and agreed that orders for the VETTEST slides shall include only those chemistries set forth in SCHEDULE 5 hereto. In the event that a chemistry listed in SCHEDULE 5 should become known by OCD to be unavailable at any future date during the Term, OCD will so notify IDEXX at the earliest practicable date and will cooperate with IDEXX to ameliorate the possible adverse effects upon IDEXX of such unavailability. 5.07 Order and delivery of VETTEST slides (including PANELS/PROFILES) shall be made in multiples of 100 boxes. The number of orders and deliveries shall be limited to three in each year unless otherwise agreed to in writing by the parties. Order and delivery of the VETTEST tips shall be made in multiples of 10,000 tips (20 cartons each containing 500 tips). The number of orders and deliveries of the VETTEST tips and Vetrols shall be limited to two in each year. OCD shall deliver the VETTEST tips and Vetrols in the ordered quantities in each year. 6. DELIVERY 6.01 Following acknowledgement by OCD of each order placed by IDEXX and on or before the delivery due date, OCD shall complete delivery of the appropriate quantity of slides and tips within +/- 10%. Deviations of delivery quantities from order quantities within the +/- 10% range may be compensated by IDEXX in the first subsequent order placed, subject to Clause 5. In the event of a price increase for one or more of the VETTEST slides, such compensating quantity of such slides shall be processed at the previous lower price. 6.02 Order and delivery for all purchases hereunder shall be F.O.B. Rochester, New York, USA. 6.03 Unless otherwise advised in writing by OCD to IDEXX, OCD shall pack the VETTEST slides in accordance with OCD's standard shipping configuration which is known to IDEXX and which at the Commencement Date contains approximately 60 cases per pallet, each case containing 100 boxes of slides. 7 7. PRICES 7.01 The initial prices for each of the VETTEST slides (including the PANELS/ PROFILES) shall be as set forth in SCHEDULE 5 hereto. Such prices are broken out to provide prices for each individual product code for the following geographic region (additional regions may be added, and changes within regions may be agreed to, from time to time in writing by the parties): European--Australia, Europe, New Zealand, South Africa; IDEXX agrees that OCD may audit IDEXX's books and records to verify sales of VETTEST slides in any region. 7.02 The prices set forth in SCHEDULE 5 shall remain in effect for orders placed through December 31, 2000. Thereafter, the prices may be adjusted upon 90 days written notice to IDEXX, subject to the next sentence of this sub-Clause 7.02, effective as of January 1 of each year for orders placed on or after that date by an amount not to exceed *** of the annual change (increase or decrease) in the US Consumer Price Index as reported by the United States Bureau of Labor Statistics, for the calendar year since the immediately preceding price adjustment. Notwithstanding the preceding sentence, if the aggregate quantities of the single slide and PANELS/PROFILES slide purchases of IDEXX and IDEXX US exceed **** of the Purchase Forecasts for a particular year as set forth on SCHEDULE 4, there shall be no price increase for the immediately succeeding year. 7.03 Beginning with slide purchases made during calendar year 2000 (which, for the avoidance of doubt, shall not include any slides shipped by OCD in calendar year 2000 to fulfill IDEXX's and IDEXX US's total aggregate 1999 purchase order of ***************), IDEXX shall be entitled to receive its Proportionate Share (based on sales during a calendar year) of a cash rebate in the amount set forth below if the total aggregate slide purchases by IDEXX and IDEXX US, in any calendar year, exceed the aggregate quantities set forth below: Annual Slide Purchases Incremental Cash Rebate - % Off Purchase Price ************** *** *********************** *** *********************** *** *********************** *** *********************** *** *********************** *** ******************** *** The rebate amounts set forth above constitute a percentage reduction in the purchase price of any slides (including both single slides and 8 PANELS/PROFILES slides) purchased above the corresponding quantity. The percentage amounts are incremental (as opposed to cumulative) and relate only to the quantities set forth opposite it. For example, if IDEXX and IDEXX US were to purchase, in the aggregate, ********** slides in any one calendar year, they would not be entitled to a *** price reduction on all slides that they purchased in such year, rather, they would be entitled to receive (i) ** purchase price reduction on the first ********* slides purchased, (ii) a *** purchase price reduction on all slides purchased over **********, up to and including **********, (iii) an *** purchase price reduction on all slides purchased over ****************** up to and including **********, and (iv) a *** purchase price reduction on all slides purchased over ****************** up to and including the ********** slides that they purchased. The foregoing notwithstanding, it is understood and agreed that if IDEXX and IDEXX US do not, in the aggregate, achieve the aggregate Purchase Commitments set forth in Section 5 in any calendar year, then they shall not be entitled to receive a rebate for such year. In the beginning of each calendar year, beginning with calendar year 2000, OCD shall calculate an estimated Effective Rebate Rate (the "ESTIMATED REBATE RATE") based on the lesser of (i) IDEXX's and IDEXX US's aggregate Purchase Forecast for such year and (ii) **** of the total aggregate number of slides that IDEXX and IDEXX US together purchased in the immediately preceding calendar year. Not later than thirty (30) days after the end of each of the first three calendar quarters in any calendar year (or thirty days after IDEXX and IDEXX US complete payment in full for slides purchased during such quarter, if later), OCD shall pay to IDEXX its Proportionate Share (based on purchases during the preceding quarter) of an amount equal to the aggregate estimated rebate payment that IDEXX and IDEXX US would together be entitled to receive in such quarter (the "ESTIMATED REBATE PAYMENT"). The Estimated Rebate Payment for any quarter shall be calculated by (i) multiplying the Estimated Rebate Rate in effect during such quarter by the total aggregate purchase price for the VETTEST slides purchased by IDEXX and IDEXX US during such quarter and (ii) subtracting from such amount an amount equal to *** of the total calculated in clause (i) above. The foregoing notwithstanding, if, in any calendar year, (i) IDEXX's and IDEXX US's total aggregate slide orders for the immediately preceding calendar year were less than *** of their aggregate Purchase Forecast for such preceding calendar year or (ii) OCD determines, in its reasonable discretion, at anytime after the end of the second calendar quarter of such calendar year, that IDEXX and IDEXX US are reasonably unlikely to meet their aggregate Purchase Forecast for such year, then OCD shall have the right to recalculate the Estimated Rebate Rate based on IDEXX's and IDEXX US's aggregate Purchase Commitment for such year (such recalculated rate being hereinafter referred to as the "NEW ESTIMATED REBATE RATE"). If OCD elects to recalculate the Estimated Rebate Rate pursuant to the immediately preceding sentence, (i) OCD shall notify IDEXX in writing which notice shall set forth the New Estimated Rebate Rate, (ii) OCD shall calculate all remaining quarterly Estimated Rebate Payments (which may include the Estimated Rebate Payment for the second 9 calendar quarter) using the New Estimated Rebate Rate and (iii) all such Estimated Rebate Payments shall be made in accordance with this sub-clause 7.03, except that such Estimated Rebate Payments shall be less the amount by which the aggregate Estimated Rebate Payments received by IDEXX and IDEXX US during the then current calendar year exceed the aggregate Estimated Rebate Payments they would have received during such calendar year if the New Estimated Rebate Rate were in effect from the first day of such calendar year. Notwithstanding any provision in this Agreement to the contrary, OCD shall not be required to pay to IDEXX its Proportionate Share of any Estimated Rebate Payments in any calendar year if (A) any amounts payable to OCD from IDEXX pursuant to this Agreement are overdue, unless such amounts are being disputed in good faith by IDEXX, or (B) OCD determines in its reasonable judgment that IDEXX and IDEXX US are reasonably unlikely to meet their aggregate Purchase Commitments for such year. In the case of clause (B) above, OCD shall have the right to make such determination at any time after the end of the second calendar quarter of any calendar year (or at the beginning of such calendar year if IDEXX's and IDEXX US's aggregate Purchase Forecast for such year is less than their aggregate Purchase Commitment for such year) provided that OCD has consulted with IDEXX and given IDEXX an opportunity (which opportunity shall be available for a period of not less than 5 business days nor more than 10 business days) to demonstrate its and IDEXX US's intent and ability to meet their aggregate Purchase Commitments for such year. For the avoidance of doubt, OCD's obligation to make any Estimated Rebate Payments shall be suspended during the period referred to in the immediately preceding sentence and the days in such period shall not be counted when determining the date by which the next scheduled Estimated Rebate Payment is due and payable. If, after fulfilling the requirements set forth in this paragraph, OCD makes the determination described in clause (B) above, OCD (i) shall promptly notify IDEXX in writing of its determination and (ii) shall thereafter have the right to cease making Estimated Rebate Payments for the remainder of such calendar year. Not later than thirty (30) business days after the end of the last calendar quarter of any calendar year (or thirty days after IDEXX and IDEXX US complete payment in full for slides purchased during such quarter, if later), OCD shall pay to IDEXX its Proportionate Share (based on purchases during such calendar year) of the amount by which (i) the Effective Rebate Rate multiplied by the total aggregate purchase price for VETTEST slides purchased by IDEXX and IDEXX US during such calendar year exceeds (ii) the total aggregate amount of the Estimated Rebate Payments made by OCD to IDEXX and IDEXX US during such calendar year. If the amount in clause (ii) above exceeds the amount in clause (i) above, OCD shall deliver to IDEXX a written notice of such fact (a "REIMBURSEMENT NOTICE") and IDEXX shall pay to OCD, within thirty (30) days of receipt of such notice an amount in cash equal to its Proportionate Share of the amount of such excess. 10 Notwithstanding the foregoing, (i) if any amounts payable to OCD from IDEXX pursuant to this Agreement are overdue, other than amounts that are being disputed in good faith by IDEXX, then OCD shall be entitled to withhold such overdue amount (plus any accrued interest) from any rebate payments to which IDEXX may be entitled and (ii) if IDEXX and IDEXX US do not achieve their aggregate Purchase Commitment in any given calendar year, then IDEXX shall return all Estimated Rebate Payments received from OCD for such year no later than thirty (30) days after the end of such calendar year. Any overdue payments by OCD or IDEXX of any amounts owed to the other pursuant to this sub-clause 7.03 shall bear interest at a rate per annum equal to *** **********. Such interest shall be payable at the same time as the payment to which it relates and shall be calculated daily on the basis of a year of 365 days and the actual number of days elapsed. OCD shall prepare a remittance advice to accompany each rebate payment (or Reimbursement Notice), which shall set forth the reporting period for which the payment is made (or demanded) and a summary sheet which shall detail OCD's calculation of the rebate (or reimbursement). If IDEXX disagrees with the rebate or reimbursement calculation, IDEXX shall promptly notify OCD, and the parties, together with IDEXX US if appropriate, shall review the calculations together in good faith to agree on any appropriate corrections or adjustments. An illustrative representation of the foregoing rebate calculation methodology is attached hereto as SCHEDULE 6. 7.04 OCD agrees to provide to IDEXX on a regular basis during the Term the current average price at which OCD sells each Corresponding Slide to its distributors. At IDEXX's request, but not more often than once per calendar year, OCD shall calculate the Weighted Average List Price for all Corresponding Slides. If the Weighted Average List Price for VETTEST SLIDES purchased by IDEXX and its affiliates exceeds the Weighted Average List Price for Corresponding Slides by more than 10%, then all of the VETTEST single and PANELS/PROFILES slide prices to IDEXX shall be reduced by the percentage by which the Weighted Average List Price for Corresponding Slides is less than the Weighted Average List Price for VETTEST slides purchased by IDEXX and its affiliates. Such reduction shall be effective from the later of (i) twelve months prior to the date on which IDEXX requests OCD to calculate the Weighted Average List Price for Corresponding Slides or (ii) the date on which the average price at which OCD sells each Corresponding Slides to its distributors resulted in the Weighted Average List Price for VETTEST Slides exceeding the Weighted Average List Price for Corresponding Slides by more than 10%. 11 Either party may request that an accounting firm of international reputation, other than the principal accounting firm of either party, audit the other's books and records to verify the Weighted Average List Price and actual unit volume sales of Corresponding Slides or VETTEST slides, as the case may be. Such auditor shall report to the parties only (a) the Weighted Average List Price and (b) the Applicable Percentage for each Corresponding Slide or VETTEST slide, as the case may be. The prices and percentages contained in such auditor's report shall be deemed to be the Weighted Average List Price and Applicable Percentages for Corresponding Slides or VETTEST slides, as the case may be, respectively, hereunder until modified in accordance with this sub-Clause 7.04. The fees and expenses of such auditor shall be borne equally by the parties. 7.05 If OCD is entitled to a price increase pursuant to sub-Clause 7.02 and IDEXX is entitled to a price decrease pursuant to sub-Clause 7.04, the net percentage increase or decrease in price shall be used to calculate slide prices for the next calendar year. 8. INVOICES AND PAYMENT 8.01 OCD shall invoice IDEXX in respect of each order for the VETTEST slides upon completion by OCD of the delivery of such order. Each order shall be billed by OCD under one invoice in US dollars and payment shall be made by IDEXX in US dollars not later than thirty (30) days following the date of invoice. 9. EXCLUSIVITY 9.01 OCD undertakes during the Term not to sell or otherwise supply VETTEST slides, or VITROS slides bar-coded for use in the VETTEST Analyser (whether or not finished or complete) to any person, firm or company other than IDEXX or its affiliates. 9.02 IDEXX undertakes during the Term to purchase slides for use in the VETTEST analyzer only from OCD or affiliates of IDEXX, to the extent that the desired chemistries are available from OCD. 9.03 In view of IDEXX's expertise in the veterinary market, IDEXX shall concentrate its efforts on distributing VETTEST slides to customers in the veterinary market. 9.04 This Agreement shall not in any way restrict OCD from selling VITROS slides to any customer in or outside the veterinarian market. 9.05 This Agreement shall not restrict OCD from developing an analyzer other than the DT60 for sale by OCD to the veterinarian market for use with VITROS slides. 12 9.06 This Agreement shall not restrict OCD from selling VITROS slides to other manufacturers wishing to develop and market an analyzer for use with VITROS slides for applications outside the veterinarian market. 9.07 In view of OCD's expertise in the human biomedical market, OCD shall concentrate its efforts on distributing VITROS slides to customers in the human biomedical market. 10. MARKETING ARRANGEMENTS 10.01 IDEXX will be responsible for all marketing arrangements for the VETTEST analyzer and the VETTEST slides. IDEXX may appoint any of OCD's medical/surgical dealers as distributors of or agents for the VETTEST analyzer and the VETTEST slides but will not be obliged to do so. 10.02 IDEXX will be responsible for the establishment of dealer performance criteria for all dealers including OCD's medical/surgical dealers (if any are appointed by IDEXX as distributors of the VETTEST analyzer and the VETTEST slides). 10.03 IDEXX will keep OCD informed of and consult with OCD as to marketing arrangements for the VETTEST analyzer and the VETTEST slides but will not be obligated to OCD beyond the terms of this Agreement in connection with such marketing arrangements. 11. SALES SUPPORT 11.01 IDEXX will be responsible for all necessary sales support for the VETTEST analyzer and the VETTEST slides. 11.02 OCD's sole obligation in respect of sale support shall be at its own expense to assist IDEXX in resolving specific problems exhibited by the VETTEST slides. 12. TESTING 12.01 OCD shall disclose to IDEXX its quality assurance procedures used in final evaluation of the VETTEST slides and full particulars thereof as set out in the VETTEST Slide Quality Assurance Procedures forming SCHEDULE 4 to this Agreement. OCD shall operate such quality assurance procedures in accordance with SCHEDULE 4. 12.02 Upon prior written notice from IDEXX, OCD shall grant authorized representatives of IDEXX access to that part of OCD production facilities which conducts final evaluation of the VETTEST slides for the purpose of enabling such representatives to monitor the application by OCD of the VETTEST Slide Quality Assurance Procedures set out in SCHEDULE 4. Such access shall be granted by OCD to IDEXX 13 and IDEXX US no more than twice in any twelve-month period, and shall be limited to such final evaluation facilities. 13. BAR CODING AND PACKAGING 13.01 The VETTEST slides shall be printed by OCD with special bar coding for use in the VETTEST analyzer. 13.02 OCD shall package the VETTEST slides and tips in the physical manner as used for the VITROS slides and tips at the time of packaging of the VETTEST slides and tips. In the event of a change in VITROS slide or tip packaging which has an impact on the VETTEST slide or tip packaging, OCD shall notify IDEXX as early as practicable of the relevant particulars of such change. 13.03 OCD shall furnish on a timely basis to IDEXX drawings and information describing the geometry and the materials of labels for the VETTEST slide wrap, the slide and tip cartons, and the case for the purpose of developing the label content and art work for such packaging. IDEXX shall be responsible for developing all such label content and artwork, which shall require the approval of OCD. The parties shall cooperate to settle the form and appearance of label content and artwork which, save as authorized by sub-Clause 14.01 below, shall not include any trademarks, trade names, or trade dress of OCD. IDEXX shall furnish such label content and art work to OCD on a timely basis, and such label content and art work shall not be changed at any time during the Term without the prior agreement of the parties. 13.04 OCD shall be responsible for incorporating the artwork described in sub-Clause 13.03 above into the packaging of the VETTEST slides and tips. 14. TRADE MARKS AND TRADE NAMES 14.01 OCD expressly authorizes IDEXX to use the phrase "manufactured by Ortho-Clinical Diagnostics, Inc. for IDEXX (IDEXX ADDRESS)" on packaging of the VETTEST slides. No other uses of OCD's trademarks, trade names or trade dress are authorized by this Agreement. 14.02 IDEXX shall neither acquire, nor claim any right, title or interest in or to any of OCD's trade marks or trade names by virtue of this Agreement or through advertising and sale of the VETTEST analyzer or the VETTEST slides or otherwise. 15. PATENT INDEMNITIES 15.01 OCD shall hold IDEXX harmless for all loss, damage, cost and expense whatsoever, including legal fees, patent attorney's fees and court 14 costs that IDEXX may incur or become liable for as a result of any action, suit or claim alleging infringement of any patent held by a third party arising form the use and/or sale of the VETTEST slides or tips to the extent that such action, suit, or claim relates in a material way to the specification for the VITROS slides or tips or to any OCD patent. If as a result of any judgment or settlement it is determined that a claim or claims of a third party patent is infringed by the use and/or sale of the VETTEST slides or tips as aforesaid and IDEXX is required to make any payments to any third party as a result thereof, IDEXX may off-set all such payments against any present and/or future payments to be made to OCD hereunder. 15.02 IDEXX shall hold OCD harmless for all loss, damage, cost and expense whatsoever, including legal fees, patent attorney's fees and court costs that OCD may incur or become liable for as a result of any action, suit or claim alleging infringement of any patent held by a third party arising from either the manufacture, use or sale of the VETTEST slides or tips to the extent that the VETTEST slides or tips differ from the VITROS slides or tips or the manufacture use or sale of the VETTEST analyzer. 16. WARRANTY, LIABILITY AND INDEMNIFICATION 16.01 OCD hereby warrants that: (a) the VETTEST slides delivered to IDEXX shall be in compliance with SCHEDULE 4, and (b) the packaging of the VETTEST slides and tips shall be undamaged at delivery. 16.02 In the event of a breach on the part of OCD of sub-Clause 16.01 above, OCD's liability shall be limited to the replacement of the VETTEST slides or tips found to be defective, including shipping costs for return of defective slides or tips and delivery of replacement slides or tips. 16.03 OCD's liability as stated in sub-Clause 16.02 shall be subject to the following conditions: (a) IDEXX shall notify OCD promptly of any noncompliance contrary to sub-Clause 16.01(a) or damage contrary to sub-Clause 16.01(b). (b) IDEXX and its transferees shall not alter or modify the VETTEST slides or packaging of the VETTEST slides or tips without prior approval of OCD. 15 16.04 Except as provided in this Clause 16 there are no other warranties, express or implied, including warranties for fitness for any particular use of merchantability. 16.05 Subject to Clause 15, IDEXX hereby indemnifies and holds harmless OCD from any against any claim, loss, damage, or expense (including attorney's fees) with respect to any physical injury to persons, animals or property arising out of or in connection with IDEXX's use or sale of the VETTEST analyzer or the VETTEST slides, including any claimed infringement of any trademark (except OCD's own trademark), trade dress, trade secret, or copyright, and IDEXX shall assume the defense of any action or suit brought against OCD and the disposition of such action or suit. IDEXX shall notify OCD at the commencement of any such action or suit and in the event of any adverse judgment which prevents the sale or use of the VETTEST analyzer or the VETTEST slides. In addition, IDEXX shall obtain advance written approval of OCD prior to entering into any settlement of any such action or suit, which limits OCD's rights under this Agreement. 17. SECRECY 17.01 Each of IDEXX and OCD agrees to protect confidential information disclosed to it upon terms set out in SCHEDULE 2 attached hereto. 18. PERIOD OF AGREEMENT 18.01 This Agreement shall commence on the Commencement Date and, subject to satisfaction of the quantity requirements set out in Clause 5 above, shall continue throughout the Term. 18.02 Between twelve (12) and six (6) calendar months prior to the end of the Term, the parties shall meet to extend this Agreement. Such extension is to be for a term of five (5) years and include provision for further extension. 19. TERMINATION 19.01 This Agreement may be terminated by either party in any of the following events: (a) If the other party is guilty of gross or persistent breaches of the terms of this Agreement, which breaches are not remedied to the satisfaction of the other party after ninety (90) days notice in writing to do so. Any such breach shall entitle the innocent party to terminate this Agreement by notice in writing which notice shall be effective at the end of ninety (90) days following the date of such notice. (b) If the other party becomes insolvent or compounds with its creditors or goes into liquidation (other than for the purposes 16 of corporate reorganization) then the innocent party may terminate this Agreement by notice in writing which shall have immediate effect. 19.02 Changes in the equity ownership or corporate reorganizations of either party shall not be grounds for termination of this Agreement, except that OCD may terminate this Agreement at its sole discretion in the event that more than 40% of the outstanding capital stock of IDEXX is transferred to a competitor of the diagnostic division of OCD. 19.03 OCD shall have the right to terminate this Agreement upon five years' prior written notice to IDEXX in the event OCD elects to cease the manufacture and sale of dry slide diagnostic products. The minimum purchase obligations of IDEXX shall terminate upon delivery of such a notice of termination. 19.04 IDEXX shall have the right to terminate any obligations it may have pursuant to sub-Clauses 5.01 and 5.02 and SCHEDULE 4 of this Agreement upon prior written notice to OCD of four full calendar years. Upon the commencement of the first full calendar year of a notice period pursuant to the preceding sentence, sub-Clauses 7.03, 7.04 and 7.05 and the last sentence of sub-Clause 7.02 shall be terminated, except for any previously accrued obligation of OCD to provide a credit rebate pursuant to sub-Clause 7.03 for the immediately preceding calendar year. 19.05 This Agreement shall terminate automatically upon any termination of the US Agreement. 20. FORCE MAJEURE 20.01 In the event of force majeure, OCD shall be entitled to extend the time of delivery for any outstanding order by the period during which such force majeure prevails, plus a reasonable start-up period. Force majeure shall include any circumstances beyond OCD's control. 20.02 Upon the cessation of the force majeure event, then without prejudice to any lawful reduction in the obligations of OCD by reason of the occurrence of such force majeure, OCD shall use its best endeavors to make up any lost time. 21. GOVERNING LAW 21.01 The construction, validity and performance of this Agreement shall be governed in all respects by the laws of the State of New York, USA. 17 22. SEVERABILITY 22.01 Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, then the parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. 23. WAIVERS 23.01 Failure of either party to this Agreement to insist upon strict observance or compliance with all its terms and conditions in one or more instances shall not be deemed to be a waiver of its right to insist upon such observance or compliance with such term or condition or with any other terms or conditions hereof in the future. 24. PRIOR AGREEMENTS; INTERPRETATION 24.01 This Agreement shall take effect in substitution for all or any previous Agreements relating to the subject matter hereof whether the same are formal agreements or agreements that would be inferred from the parties' correspondence or conduct and all or any such agreements shall be deemed to have been terminated by mutual consent on the Commencement Date; provided, however, that nothing contained herein shall be deemed to modify or terminate the US Agreement, except that the Purchase Commitments and Purchase Forecasts referred to in Clause 5 and in SCHEDULE 4 of this Agreement and the US Agreement represent the aggregate commitments and forecasts of IDEXX and IDEXX US and not the individual commitments and forecasts of IDEXX US under the US Agreement or IDEXX under this Agreement. 25. ENTIRE AGREEMENT 25.01 This Agreement constitutes the complete agreement of the parties concerning the arrangements between the parties and the parties shall not be liable for or bound in any manner by any representations, guarantees or commitments except as expressly provided herein. 18 26. ALTERATION OR MODIFICATION 26.01 No alteration, amendment or modification to this Agreement or the attached Schedules shall be of any force or effect unless in writing and signed by both parties, except that during the Term of this Agreement, SCHEDULES 3, 4 and 5 may from time to time be amended by written agreement signed by IDEXX and IDEXX US and the OCD Clinical Products' representative designated in Clause 29 of the Agreement. No modification shall be effected by the acknowledgement or acceptance of purchase order forms or order confirmations or invoices or other documents containing different conditions. 27. ASSIGNMENT 27.01 This Agreement shall not be capable of assignment by either party to a company of which it owns less than a majority or which owns less than a majority of the party save in the case of (i) an assignment at OCD's sole discretion as a result of OCD's divestiture of its VITROS business or (ii) a sale by IDEXX and IDEXX US of all or substantially all of their assets to an entity which is not a competitor of the diagnostic division of OCD. 28. GOVERNING LANGUAGE 28.01 [Reserved] 29. NOTICES 29.01 Any notice, statement or other communication to be given by one party to the other hereunder may be given by registered mail, airmail or telex to the party concerned at the addresses set out below: Ortho-Clinical Diagnostics, Inc. 1001 US Highway 202 Raritan, New Jersey 08869, USA For the attention of: Vice President, Sales & Marketing With a copy to: Johnson & Johnson One Johnson & Johnson Plaza New Brunswick, New Jersey 08933, USA For the attention of: Office of General Counsel 19 IDEXX Europe B.V. Koolhovenlaan 20 1119 NE - Schiphol-Rijk The Netherlands For the attention of: IDEXX Director of European Finance and Administration With a copy to: IDEXX Laboratories, Inc. One IDEXX Drive Westbrook ME 04092 For the attention of: President and Office of General Counsel It is understood that by written notice to IDEXX signed by OCD, OCD may from time to time during the Term of this Agreement change its OCD Clinical Products representative designated (i) to receive notice hereunder and (ii) to amend certain Schedules hereto as set forth in Clause 26 of this Agreement. 29.02 Any notice, payment or communication so given or made shall be deemed to have been received at the time when in the ordinary course of transmission the same should have reached its destination. Either party may change its address for the purpose of this Agreement by giving notice of such change to the other party pursuant to the provisions of this Clause. For purposes of this Clause 29.02, notice given by OCD to IDEXX US under the US Agreement shall be deemed given to IDEXX. 30. DISPUTES Any and all disputes, controversies or differences between the parties hereto arising out of or in relation to or in connection with this Agreement, or the breach hereof, which cannot be settled amicably through negotiations between the parties hereto, shall be submitted to and settled by arbitration. Such arbitration shall be conducted in New York, New York in accordance with the rules then obtaining of the American Arbitration Association ("AAA") by a panel of three arbitrators selected from the National Panel of Arbitrators of the AAA. If the parties cannot agree on three arbitrators, the AAA shall select one or more arbitrators as necessary to complete the panel. Reasonable discovery shall be permitted in connection with the arbitration proceeding, and the arbitrators shall apply the substantive laws of the State of New York except that the interpretation and enforcement of this arbitration provision shall be governed by the Federal Arbitration Act. Any award rendered in any such arbitration shall be final and binding upon both parties hereto and judgment upon the award rendered by the panel of arbitrators may be entered in any court having jurisdiction over the party against whom the award is to be enforced. Each party shall bear its own costs in connection with any such arbitration, and any costs of the arbitrators or the AAA shall be borne equally by the parties. The 20 arbitrators shall have no authority to assess or award punitive, incidental or consequential damages, and each party hereby waives its rights to any such damages. 31. 1999 REBATE If during calendar year 1999 IDEXX and IDEXX US sell worldwide, in the aggregate, any of the total slide volumes set forth below (counting both single slides and PANELS/PROFILES slides), IDEXX shall be entitled to a cash rebate in the amount of its Proportionate Share (based on sales during 1999) of the amount set forth opposite such sales volume: 1999 Worldwide Slide Sales Total Cash Rebate *********** ** *********************** ************ *********************** ************ *********** ************ The cash rebates above are not incremental or cumulative. For the avoidance of doubt, the maximum rebate payment that IDEXX and IDEXX US could qualify for in the aggregate under this Clause 31 is ************. IDEXX shall provide OCD with aggregate estimated sales volume information for calendar year 1999 not later than December 15, 1999. Not later than January 31, 2000, IDEXX shall provide OCD with aggregate 1999 actual slide sales volume information and, at any time that OCD may reasonably request, any other supporting information or documentation that OCD may reasonably request. OCD shall calculate IDEXX's rebate accordingly, and shall remit to IDEXX its Proportionate Share of the total rebate amount not later than (i) February 15, 2000 or, if later, (ii) five (5) business days after receipt by OCD, to its reasonable satisfaction, of all information which it requested pursuant to the immediately preceding sentence. Any overdue payments by OCD shall bear interest at a rate per annum equal to **********. Such interest shall be payable at the same time as the payment to which it relates and shall be calculated daily on the basis of a year of 365 days and the actual number of days elapsed. 21 IN WITNESS WHEREOF and intending to be legally bound, the parties hereto have caused this Agreement to be duly executed in duplicate by their respective authorized representatives the day and year first written above. ORTHO-CLINICAL IDEXX EUROPE B.V. DIAGNOSTICS, INC. By: /s/ David A. Rowan By: /s/ Yvonne van Kuijk ----------------------------- ----------------------------- David A. Rowan, Yvonne van Kuijk, Vice President, Corporate Accounts Managing Director By: /s/ Catherine M. Burzik ----------------------------- Catherine M. Burzik President, Americas Ortho-Clinical Diagnostics, Inc. By: /s/ Bruce Given, M.D. ----------------------------- Bruce Given, M.D. President, International Ortho-Clinical Diagnostics 22 SCHEDULE 1 - VETTEST(R) SLIDE QUALITY ASSURANCE PROCEDURES INTRODUCTION The following procedure constitutes a generic overview of the quality assurance provisions for finishing of VITROS slides and applies in like manner to product release for the VETTEST slides. VETTEST SLIDE QUALITY ASSURANCE VETTEST slides will be produced to the same quality standards as VITROS and DT 60 slides for OCD's human market unless otherwise agreed to by IDEXX. BAR CODING Bar code printing on the VETTEST slides will render the VETTEST slides incompatible with use in VITROS analyzers. OCD will reserve certain number sequences for generation of the bar code patterns on the VETTEST slides. 23 SCHEDULE 2 Section 1. OBLIGATION TO KEEP INFORMATION CONFIDENTIAL. Each party agrees to hold, and will use its best efforts to cause its respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence all documents and information concerning the other party, whether oral or written, furnished or made known to such party in connection with the performance of the Supply Agreement; PROVIDED that no party shall be required to keep any information confidential (i) if such party is compelled to disclose such information by judicial or administrative process or by other requirements of law and such party has provided prior written notice to the other party and given such other party reasonable opportunity to contest disclosure or (ii) to the extent such information can be shown to have been (A) previously known to such party on a nonconfidential basis, (B) in the public domain through no fault of such party, (C) later lawfully acquired from a third party source or (D) independently developed by such party without reference to confidential information. The foregoing notwithstanding, any party may disclose information concerning the other party to its officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with its performance of the Supply Agreement so long as such persons are informed by such party of the confidential nature of such information and are directed by such party to treat such information confidentially, it being understood and agreed that such party shall be responsible for any failure to treat such information confidentially by such persons. The obligation of each party to hold any information in confidence shall be satisfied if it exercises the same care with respect to such information as it would to preserve the confidentiality of its own similar information. Section 2. DURATION. These confidentiality provisions of this SCHEDULE 2 shall remain in effect for so long as the Supply Agreement is in effect and for a period of three (3) years thereafter. Section 3. GOVERNING LAW. The construction, validity and performance of this SCHEDULE 2 shall be governed in all respects by the laws of the State of New York, USA. Section 4. NOTICES. Any notices required to be given under this SCHEDULE2 shall be given in the manner specified by sub-Clause 29 of the Supply Agreement. 24 SCHEDULE 3 - PANELS/PROFILES The initial PANEL shall be the "Young Presurgical Panel" consisting of four sets of the following six VETTEST slides:
BUN Urea Nitrogen ALT Alanine aminotransferase GLU Glucose TP Total protein CREA Creatinine ALKP Alkaline phosphatase
The initial PROFILES shall be the "General Health Profile" and the "Large Animal Profile", each consisting of two sets of 12 VETTEST slides as follows:
General Health Profile Large Animal Profile ALB Albumin ALB Albumin ALKP Alkaline phosphatase ALKP Alkaline phosphatase ALT Alanine Aminotransferase AST AST (SGPT) AMYL Amylase Ca2+ Calcium Ca2+ Calcium CK CK CHOL Cholesterol GGT Gamma GT CREA Creatinine GLU Glucose GLU Glucose PHOS Inorganic phosphate PHOS Inorganic phosphate LDH LDH TBIL Total bilirubin MG Magnesium TP Total protein TP Total Protein BUN Urea Nitrogen BUN Urea Nitrogen
Packaging for the Young Presurgical Panels, the General Health Profiles and the Large Animal Profiles has been previously agreed upon by the parties, and any changes to the slide composition or packaging of the initial PANEL or the initial PROFILES shall be negotiated in good faith and mutually agreed upon by OCD and IDEXX. The slide composition, packaging and initial pricing of any additional PANELS/PROFILES shall be mutually agreed upon by OCD and IDEXX. Unless otherwise agreed by the parties in writing with respect to one or more specific PANELS or PROFILES, all purchases by IDEXX or IDEXX US of VETTEST slides packaged as PANELS/PROFILES shall be credited against the Purchase Forecasts and Purchase Commitments for such slides under this Agreement and the US Agreement. 25 SCHEDULE 4 - PURCHASE COMMITMENTS
Year Minimum Slide Purchase ---- ---------------------- Commitment (in millions) ------------------------ 1999 ** 2000 ** 2001 ** 2002 ** 2003 ** 2004 ** 2005 ** 2006 ** 2007 See Agreement sub-Clause 2008 5.01 2009 2010
26
SCHEDULE 5 - PRODUCTS AND PRICES (AS OF JANUARY 1, 1999) Sales Region: Europe --------------------- *********************** Single Slides (Box of 25) Catalog Number European Pricing - ------------------------- -------------- ---------------- Albumin ******** ****** Alk Phos ******** ****** ALT ******** ****** Ammonia ******** ****** Amylase ******** ****** AST ******** ****** Calcium ******** ****** Cholesterol ******** ****** CK ******** ****** Creatinine ******** ****** ECO2 ******** ****** Gamma GT ******** ****** Glucose ******** ****** LDH ******** ****** Lipase ******** ****** Magnesium ******** ****** Phosphorus ******** ****** Total Bilirubin ******** ****** Total Protein ******** ****** Triglycerides ******** ****** Urea Nitrogen ******** ****** Uric Acid ******** ****** Profile Slides (Box of 24) Catalog Number European Pricing - -------------------------- -------------- ---------------- General Health Profile ******** ****** Young Presurgical Panel ******** ****** Large Animal Profile ******** ****** Other Catalog Number WW Pricing - ----- -------------- ---------- Vetrols ******** ****** Tips ******** ******
27 SCHEDULE 6 - ILLUSTRATIVE REBATE CALCULATIONS The Estimated Rebate Payments will be calculated for each of the first three calendar quarters using the Effective Rebate Rate, as described more fully in sub-clause 7.03 of the Agreement. Any required adjustments will be made at the end of the fourth calendar quarter, in accordance with sub-clause 7.03 of the Agreement. EXAMPLE: THE AGGREGATE PURCHASE FORECAST FOR IDEXX AND IDEXX US IN A GIVEN YEAR IS ** MILLION SLIDES; PRICING IS *****/SLIDE; BLENDED REBATE PERCENTAGE RATE IS ****, AS FOLLOWS: ********************** million slides * *** = *** million slides *********************** million slides * *** = *** million slides *********************** million slides * *** = *** million slides *********************** million slides * *** = *** million slides ************************ million slides * *** = ***** million slides -------------------------------------------------------------------- Total Slides Eligible for Rebate = ***** million slides EFFECTIVE REBATE = TOTAL SLIDES ELIGIBLE FOR REBATE / TOTAL PURCHASES = **************** ACTUAL AGGREGATE VOLUME PURCHASED BY IDEXX AND IDEXX US EQUALS VOLUME PROJECTED AT THE BEGINNING OF THE YEAR.
Actual Purchases Effective Calculated 20% Holdback Rebate Paid Qtrly. ($MM) Rebate Rebate Each (millions) (millions) Vol. %(80MM Vol.) Qtr.(millions) (millions) 1st Qtr ** **** **** **** **** **** 2nd Qtr ** ***** **** **** **** **** 3rd Qtr ** ***** **** **** **** **** 4th Qtr ** ***** **** **** **** **** -- ----- ---- ---- ---- ** ***** **** **** **** True-up: **** **** ---- ---- Total: **** **** ============== =========
ACTUAL AGGREGATE VOLUME PURCHASED BY IDEXX AND IDEXX US IS GREATER THAN VOLUME PROJECTED AT THE BEGINNING OF THE YEAR.
Actual Purchases Effective Calculated 20% Holdback Rebate Paid Qtrly. ($MM) Rebate Rebate Each (millions) (millions) Vol. %(80MM Vol.) Qtr.(millions) (millions) 1st Qtr * **** **** **** **** **** 2nd Qtr ** ***** **** **** **** **** 3rd Qtr ** ***** **** **** **** **** 4th Qtr ** ***** **** **** **** **** -- ----- ---- ---- ---- ** ***** **** **** **** True-up: **** **** ---- ---- Total: **** **** ============== ==========
28 ACTUAL AGGREGATE VOLUME PURCHASED BY IDEXX AND IDEXX US IS LOWER THAN VOLUME PROJECTED AT THE BEGINNING OF THE YEAR.
Actual Purchases Effective Calculated 20% Holdback Rebate Paid Qtrly. ($MM) Rebate Rebate Each (millions) (millions) Vol. %(80MM Vol.) Qtr. (millions) (millions) 1st Qtr ** **** **** **** **** **** 2nd Qtr ** ***** **** **** **** **** 3rd Qtr ** ***** **** **** **** **** 4th Qtr ** ***** **** **** **** **** -- ----- ---- ---- ---- ** ***** **** **** **** True-up: ****** **** ------ ---- Total: **** **** ============== ===========
CALCULATION OF IDEXX'S PROPORTIONATE SHARE OF REBATE (ASSUMING ACTUAL AGGREGATE VOLUME PURCHASED BY IDEXX AND IDEXX US EQUALS VOLUME PROJECTED AT THE BEGINNING OF THE YEAR): ASSUMPTIONS: Number of slides purchased by IDEXX: ********** slides Total number of slides purchase by IDEXX US and its wholly-owned subsidiaries: ********** slides Total rebate earned: ************ CALCULATION: IDEXX's rebate equals: ***************************************************** EX-3.2 4 0004.txt AMENDED AND RESTATED BY-LAWS 1 EXHIBIT 3.2 ----------- AMENDED AND RESTATED BY-LAWS OF IDEXX LABORATORIES, INC. (AMENDED THROUGH OCTOBER 17, 2000) 2 BY-LAWS TABLE OF CONTENTS ARTICLE I - Stockholders 4 Section 1.1 Place of Meetings 4 Section 1.2 Annual Meeting 4 Section 1.3 Special Meetings 4 Section 1.4 Notice of Meetings 4 Section 1.5 Voting List 4 Section 1.6 Quorum 4 Section 1.7 Adjournments 5 Section 1.8 Voting and Proxies 5 Section 1.9 Action of Meeting 5 Section 1.10 Introduction of Business at Meeting 5 Section 1.11 Action without Meeting 6 ARTICLE 2 - Directors 7 Section 2.1 General Powers 7 Section 2.2 Number; Election and Qualification 7 Section 2.3 Classes of Directors 7 Section 2.4 Terms in Office 7 Section 2.5 Allocation of Directors Among Classes in the Event of Increases or Decreases in the Number of Directors 7 Section 2.6 Tenure 8 Section 2.7 Vacancies 8 Section 2.8 Resignation 8 Section 2.9 Regular Meetings 8 Section 2.10 Special Meetings 8 Section 2.11 Notice of Special Meetings 8 Section 2.12 Meetings by Telephone Conference Calls 8 Section 2.13 Quorum 9 Section 2.14 Action at Meeting 9 Section 2.15 Action by Consent 9 Section 2.16 Removal 9 Section 2.17 Committees 9 Section 2.18 Compensation of Directors 9 Section 2.19 Amendments to Article 10 ARTICLE 3 - Officers 10 Section 3.1 Enumeration 10 Section 3.2 Election 10 Section 3.3 Qualification 10 Section 3.4 Tenure 10 Section 3.5 Resignation and Removal 10 Section 3.6 Vacancies 10 3 Section 3.7 Chairman of the Board and Vice Chairman of the Board 11 Section 3.8 President 11 Section 3.9 Vice President 11 Section 3.10 Secretary and Assistant Secretaries 11 Section 3.11 Treasurer and Assistant Treasurers 11 Section 3.12 Salaries 12 ARTICLE 4 - Capital Stock 12 Section 4.1 Issuance of Stock 12 Section 4.2 Certificates of Stock 12 Section 4.3 Transfers 12 Section 4.4 Lost, Stolen or Destroyed Certificates 13 Section 4.5 Record Date 13 ARTICLE 5 - General Provisions 13 Section 5.1 Fiscal Year 13 Section 5.2 Corporate Seal 13 Section 5.3 Waiver of Notice 13 Section 5.4 Voting of Securities 14 Section 5.5 Evidence of Authority 14 Section 5.6 Certificate of Incorporation 14 Section 5.7 Transactions with Interested Parties 14 Section 5.8 Severability 15 Section 5.9 Pronouns 15 ARTICLE 6 - Amendments 15 Section 6.1 By the Board of Directors 15 Section 6.2 By the Stockholders 15 4 BY-LAWS OF IDEXX LABORATORIES, INC. ARTICLE 1 - STOCKHOLDERS 1.1 PLACE OF MEETINGS. All meetings of stockholders shall be held at such place within or without the State of Delaware as may be designated from time to time by the Board of Directors or the President or, if not so designated, at the registered office of the corporation. The Board of Directors may, in its sole discretion, determine that a meeting shall not be held any place but may instead be held solely by means of remote communication in a manner consistent with the General Corporation Law of Delaware. 1.2 ANNUAL MEETING. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held on a date and at a time designated by the Board of Directors or the President (which date shall not be a legal holiday in the place where the meeting is to be held). If no annual meeting is held in accordance with the foregoing provisions, the Board of Directors shall cause the meeting to be held as soon thereafter as convenient. If no annual meeting is held in accordance with the foregoing provisions, a special meeting may be held in lieu of the annual meeting, and any action taken at that special meeting shall have the same effect as if it had been taken at the annual meeting, and in such case all references in these By-Laws to the annual meeting of the stockholders shall be deemed to refer to such special meeting. 1.3 SPECIAL MEETINGS. Special meetings of stockholders may be called at any time by the Chairman of the Board or the President. Business transacted at any special meeting of the stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. 1.4 NOTICE OF MEETINGS. Except as otherwise provided by law, written notice of each meeting of stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. Without limiting the manner by which notice otherwise may be given to stockholders, any notice shall be effective if given by a form of electronic transmission consented to (in a manner consistent with the Delaware General Corporation Law) by the stockholder to whom the notice is given. The notices of all meetings shall state the place, if any, date and time of the meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called. If notice is given by mail, such notice shall be deemed given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. If notice is given by electronic transmission, such notice shall be deemed given at the time specified in Section 232 of the Delaware General Corporation Law. 1.5 VOTING LIST. The officer who has charge of the stock ledger of the corporation shall prepare, at least 10 days before every meeting of 5 stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the corporation. If the meeting is to be held at a place, then the list shall also be produced and kept at the time and place of the meeting during the whole time of the meeting, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. 1.6 QUORUM. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the holders of a majority of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at the meeting, present in person, present by means of remote communication in a manner, if any, authorized by the Board of Directors in its sole discretion or represented by proxy, shall constitute a quorum for the transaction of business. A quorum once established at a meeting shall not be broken by the withdrawal of enough votes to leave less than a quorum. 1.7 ADJOURNMENTS. Any meeting of stockholders may be adjourned to any other time and to any other place at which a meeting of stockholders may be held under these By-laws by the stockholders present or represented at the meeting and entitled to vote, although less than a quorum, or, if no stockholder is present, by any officer entitled to preside at or to act as Secretary of such meeting. It shall not be necessary to notify any stockholder of any adjournment of less than 30 days if the time and place, if any, of the adjourned meeting and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, the corporation may transact any business, which might have been transacted at the original meeting. 1.8 VOTING AND PROXIES. Each stockholder shall have one vote for each share of stock entitled to vote held of record by such stockholder and a proportionate vote for each fractional share so held, unless otherwise provided by law or in the Certificate of Incorporation. Each stockholder of record entitled to vote at a meeting of stockholders may vote in person or may authorize another person or persons to vote for him by proxy executed or transmitted in a manner permitted by the General Corporation Law of Delaware by the stockholder or his authorized agent and delivered to the Secretary (including by electronic transmission) of the corporation. No such proxy shall be voted or acted upon after three years from the date of its execution, unless the proxy expressly provides for a longer period. 6 1.9 ACTION IN A MEETING. When a quorum is present at any meeting, the holders of a majority of the stock present or represented and voting on a matter (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, the holders of a majority of the stock of that class present or represented and voting on a matter) shall decide any matter to be voted upon by the stockholders at such meeting other than the election of directors, except when a different vote is required by express provision of law, the Certificate of Incorporation or these By-Laws. Any election by stockholders of directors shall be determined by a plurality of the votes cast by the stockholders entitled to vote at the election. 1.10 INTRODUCTION OF BUSINESS AT MEETING. Except as otherwise provided by law, at any annual or special meeting of stockholders only such business shall be conducted as shall have been properly brought before the meeting. In order to be properly brought before the meeting, such business must have been either (A) specified in the written notice of the meeting (or any supplement thereto) given to stockholders of record on the record date for such meeting by or at the direction of the Board of Directors, (B) brought before the meeting at the direction of the Board of Directors or the chairman of the meeting or (C) specified in a written notice given by or on behalf of a stockholder of record on the record date for such meeting entitled to vote thereat or a duly authorized proxy for such stockholder, in accordance with all of the following requirements. A notice referred to in clause (C) hereof must be delivered personally to or mailed to and received at the principal executive office of the corporation, addressed to the attention of the Secretary, not more than ten (10) days after the date of the initial notice referred to in clause (A) hereof, in the case of business to be brought before a special meeting of stockholders, and not less than thirty (30) days prior to the first anniversary date of the initial notice referred to in clause (A) hereof to the previous year's annual meeting, in the case of business to be brought before an annual meeting of stockholders, provided, however, that such notice shall not be required to be given more than sixty (60) days prior to an annual meeting of stockholders. Such notice referred to in clause (C) hereof shall set forth (i) a full description of each such item of business proposed to be brought before the meeting, (ii) the name and address of the person proposing to bring such business before the meeting, (iii) the number and class of shares held of record, held beneficially and represented by proxy by such person as of the record date for meeting (if such date has been made publicly available) and as of the date of such notice, (iv) if any item of such business involves nomination for director, all information regarding each such nominee that would be required to be set forth in a definitive proxy statement filed with the Securities Exchange Commission pursuant to Section 14 of the Securities Act of 1934, as amended, or any successor thereto, and the written consent of each such nominee to serve if elected, and (v) all other information that would be required to be filed with the Securities and Exchanged Commission if, with respect to the business proposed to be brought before the meeting, the person proposing such business was a participant in a solicitation subject to Section 14 of the Securities Exchange Act of 1934, as amended, or any successor thereto. No business shall be brought before any meeting of stockholders of the corporation otherwise than as provided in this paragraph. 7 Notwithstanding the foregoing provisions, the Board of Directors shall be obligated to include information as to any nominee for director in any proxy statement or other communication sent to stockholders. The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that any proposed item of business was not brought before the meeting in accordance with the foregoing procedure and, if he should so determine, he shall so declare to the meeting and the defective item of business shall be disregarded. 1.11 ACTION WITHOUT MEETING. Until the closing of a firm commitment, underwritten public offering of the corporation's Common Stock (a "Public Offering"), any action required or permitted to be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Effective upon the closing of a Public Offering, stockholders of the corporation may not take any action by written consent in lieu of a meeting. Notwithstanding any other provision of law, the Certificate of Incorporation, as amended, or these By-Laws, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast at any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Section 1.11. 1.12 CONDUCT OF MEETINGS. (a) CHAIRMAN OF MEETING. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in the Chairman's absence by the Vice Chairman of the Board, if any, or in the Vice Chairman's absence by the President, or in the President's absence by a Vice President, or in the absence of all of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen by vote of the stockholders at the meeting. The Secretary shall act as secretary of the meeting, but in the Secretary's absence the chairman of the meeting may appoint any person to act as secretary of the meeting. (b) RULES AND PROCEDURES. The Board of Directors of the corporation may adopt by resolution such rules, regulations and procedures for the conduct of any meeting of stockholders of the corporation as it shall deem appropriate including, without limitation, such guidelines and procedures as it may deem appropriate regarding the participation by means of remote communication of stockholders and proxyholders not physically present at a meeting. Except to the extent inconsistent with such rules, regulations and procedures as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe 8 such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting of stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as shall be determined; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. ARTICLE 2 - DIRECTORS 2.1 GENERAL POWERS. The business and affairs of the corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the corporation except as otherwise provided by law or the Certificate of Incorporation. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled. 2.2 NUMBER; ELECTION AND QUALIFICATION. The number of directors which shall constitute the whole Board of Directors shall be determined by resolution of the stockholders or the Board of Directors, but in no event shall be less than three. The number of directors may be decreased at any time and from time to time by a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation, removal or expiration of the term of one or more directors. The directors shall be elected at the annual meeting of stockholders by such stockholders as have the right to vote on such election. Directors need not be stockholders of the corporation. 2.3 CLASSES OF DIRECTORS. The Board of Directors shall be and is divided into three classes: Class I, Class II and Class III. No one class shall have more than one director more than any other class. If a fraction is contained in the quotient arrived at by dividing the authorized number of directors by three, then if such fraction is one-third, the extra director shall be a member of Class I and, if such fraction is two thirds, one of the extra directors shall be a member of Class I and the other extra director shall be a member of Class II, unless otherwise provided for from time to time by resolution adopted by a majority of the Board of Directors. 2.4 TERMS IN OFFICE. Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, however, that each initial director in Class I shall serve for a term ending on the date of the annual meeting next following the end of the corporation's fiscal year ending December 31, 1993; each initial director in Class II shall serve for a term ending on 9 the date of the annual meeting next following the end of the corporation's fiscal year ending December 31, 1992; and each initial director in Class III shall serve for a term ending on the date of the annual meeting next following the end of the corporation's fiscal year ending December 31, 1991. 2.5 ALLOCATION OF DIRECTORS AMONG CLASS IN THE EVENT OF INCREASES OR DECREASES IN THE NUMBER OF DIRECTORS. In the event of any increase or decrease in the authorized number of directors, (i) each director then serving as such shall nevertheless continue as director of the class of which he is a member until the expiration of his current term or his prior death, retirement or resignation and (ii) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to ensure that no one class has more than one director more than any other class. To the extent possible, consistent with the foregoing rule, any newly created directorships shall be added to those classes whose terms of office are to expire at the latest dates following such allocation, and any newly eliminated directorships shall be subtracted from those classes whose terms of office are to expire at the earliest dates following such allocation, unless otherwise provided for from time to time by resolution adopted by a majority of the directors then in office, although less than a quorum. 2.6 TENURE. Notwithstanding any provisions to the contrary contained herein, each director shall hold office until his successor is elected and qualified, or until his earlier death, resignation or removal. 2.7 VACANCIES. Unless and until filled by the stockholders, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board, may be filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office, and a director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next annual meeting of stockholders and until his successor is elected and qualified, or until his earlier death, resignation or removal. 2.8 RESIGNATION. Any director may resign by delivering his written resignation to the corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. 2.9 REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such time and place, either within or without the State of Delaware, as shall be determined from time to time by the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board of Directors may be held without notice immediately after and at the same place as the annual meeting of stockholders. 10 2.10 SPECIAL MEETINGS. Special meetings of the Board of Directors may be held at any time and place, within or without the State of Delaware, designated in a call by the Chairman of the Board, President, two or more directors, or by one director in the event that there is only a single director in the office. 2.11 NOTICE OF SPECIAL MEETINGS. Notice of any special meeting of directors shall be given to each director by the Secretary or by the officer or one of the directors calling the meeting. Notice shall be duly given to each director (i) by giving notice to such director in person or by telephone at least 48 hours in advance of the meeting, (ii) by sending a telegram or telex, or delivering written notice by hand, to his last known business or home address at least 48 hours in advance of the meeting, or (iii) by mailing written notice to his last known business or home address at least 72 hours in advance of the meeting. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purposes of the meeting. 2.12 MEETINGS BY TELEPHONE CONFERENCE CALLS. Directors or any members of any committee designated by the directors may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting. 2.13 QUORUM. A majority of the total number of the whole Board of Directors shall constitute a quorum at all meetings of the Board of Directors. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each such director so disqualified; provided, however, that in no case shall less than one-third (1/3) of the number so fixed constitute a quorum. In the absence of a quorum at any such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present. 2.14 ACTION AT MEETING. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of those present shall be sufficient to take any action, unless a different vote is specified by law, the Certificate of Incorporation or these By-Laws. 2.15 ACTION BY CONSENT. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board Directors may be taken without a meeting, if all members of the Board or committee, as the case may be, consent to the action in writing, and the written consents are filed with the minutes of proceedings of the Board or committee. 2.16 REMOVAL. Any one or more or all of the directors may be removed, with or without cause, by the holders of at least seventy-five percent (75%) of the shares then entitled to vote at an election of directors. 11 2.17 COMMITTEES. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors and subject to the provisions of the General Corporation Law of the State of Delaware, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it. Each such committee shall keep minutes and make such reports as the Board of Directors may from time to time request. Except as the Board of Directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these By-Laws for the Board of Directors. 2.18 COMPENSATION OF DIRECTORS. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from serving the corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service. 2.19 AMENDMENTS TO ARTICLE. Notwithstanding any other provisions of law, the Certificate of Incorporation or these By-Laws, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast at any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article 2. ARTICLE 3 - OFFICERS 3.1 ENUMERATION. The officers of the corporation shall consist of a President, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors shall determine, including a Chairman of the Board, a Vice-Chairman of the Board, and one or more Vice Presidents, Assistant Treasurers, and Assistant Secretaries. The Board of Directors may appoint such other officers, as it may deem appropriate. 3.2 ELECTION. The President, Treasurer and Secretary shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Other officers may be appointed by the Board of Directors at such meeting or at any other meeting. 12 3.3 QUALIFICATION. No officer need be a stockholder. Any two or more offices may be held by the same person. 3.4 TENURE. Except as otherwise provided by law, by the Certificate of Incorporation or by these By-Laws, each officer shall hold office until his successor is elected and qualified, unless a different term is specified in the vote choosing or appointing him, or until his earlier death, resignation or removal. 3.5 RESIGNATION AND REMOVAL. Any officer may resign by delivering his written resignation to the corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Any officer may be removed at any time, with or without cause, by vote of a majority of the entire number of directors then in office. Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise, unless such compensation is expressly provided in a duly authorized written agreement with the corporation. 3.6 VACANCIES. The Board of Directors may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled for such period as it may determine any offices other than those of President, Treasurer and Secretary. Each such successor shall hold office for the unexpired term of his predecessor and until his successor is elected and qualified, or until his earlier death, resignation or removal. 3.7 CHAIRMAN OF THE BOARD AND VICE-CHAIRMAN OF THE BOARD. The Board of Directors may appoint a Chairman of the Board and may designate the Chairman of the Board as Chief Executive Officer. If the Board of Directors appoints a Chairman of the Board, he shall perform such duties and possess such powers as are assigned to him by the Board of Directors. If the Board of Directors appoints a Vice-Chairman of the Board, he shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board, and shall perform such other duties and possess such other powers as may from time to time be vested in him by the Board of Directors. 3.8 PRESIDENT. The President shall, subject to the direction of the Board of Directors, have general charge and supervision of the business of the corporation. Unless otherwise provided by the Board of Directors, he shall preside at all meetings of the stockholders, if he is a director, at all meetings of the Board of Directors. Unless the Board of Directors has designated the Chairman of the Board or another officer as Chief Executive Officer, the President shall be the Chief Executive Officer of the corporation. The President shall perform such other duties and shall have such other powers as the Board of Directors may from time to time prescribe. 13 3.9 VICE PRESIDENTS. Any Vice President shall perform such duties and possess such powers as the Board of Directors or the President may from time to time prescribe. In the event of the absence, inability or refusal to act of the President, the Vice President (or if there shall be more than one, the Vice Presidents in the order determined by the Board of Directors) shall perform the duties of the President and when so performing shall have all the powers of and be subject to all the restrictions upon the President. The Board of Directors may assign to any Vice President, the title of Executive Vice President, Senior Vice President or any other title selected by the Board of Directors. 3.10 SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall perform such duties and shall have such powers as the Board of Directors or the President may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the secretary, including without limitation the duty and power to give notices of all meetings of stockholders and special meetings of the Board of Directors, to attend all meetings of stockholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents. Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the President or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors), shall perform the duties and exercise the powers of the Secretary. In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the person presiding at the meeting shall designate a temporary secretary to keep a record of the meeting. 3.11 TREASURER AND ASSISTANT TREASURERS. The Treasurer shall perform such duties and shall have such powers as may from time to time be assigned to him by the Board of Directors or the President. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the corporation, to deposit funds of the corporation in depositories selected in accordance with these By-Laws, to disburse such funds as ordered by the Board of Directors, to make proper accounts of such funds, and to render as required by the Board of Directors statements of all such transactions and of the financial condition of the corporation. The Assistant Treasurers shall perform such duties and possess such powers as the Board of Directors, the President or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors), shall perform the duties and exercise the powers of the Treasurer. 14 3.12 SALARIES. Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors. ARTICLE 4 - CAPITAL STOCK 4.1 ISSUANCE OF STOCK. Unless otherwise voted by the stockholders and subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the corporation or the whole or any part of any unissued balance of the authorized capital stock of the corporation held in its treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board of Directors in such manner, for such consideration and on such terms as the Board of Directors may determine. 4.2 CERTIFICATES OF STOCK. Every holder of stock of the corporation shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors, certifying the number and class of shares owned by him in the corporation. Each such certificate shall be signed by, or in the name of the corporation by, the Chairman or Vice-Chairman, if any, of the Board of Directors, or the President or a Vice President, and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation. Any or all of the signatures on the certificate may be a facsimile. Each certificate for shares of stock which are subject to any restriction on transfers pursuant to the Certificate of Incorporation, the By-Laws, applicable securities laws or any agreement among any number of shareholders or among such holders and the corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction. 4.3 TRANSFERS. Except as otherwise established by rules and regulations adopted by the Board of Directors, and subject to applicable law, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Certificate of Incorporation or by these By-Laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred on the books of the corporation in accordance with the requirements of these By-Laws. 4.4 LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen, or destroyed, upon such terms and conditions as the Board of Directors may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity as the Board of Directors may require for the protection of the corporation or any transfer agent or registrar. 15 4.5 RECORD DATE. The Board of Directors may fix in advance a date as a record date for the determination of the stockholders entitled to notice of or to vote at any meeting of stockholders, or entitled to receive payment of any dividend or other distribution or allotment of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action. Such record date shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action to which such record date relates. If no record date is fixed, 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 before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating to such purpose. 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 of Directors may fix a new record date for the adjourned meeting. ARTICLE 5 - GENERAL PROVISIONS 5.1 FISCAL YEAR. Except as from time to time otherwise designated by the Board of Directors, the fiscal year of the corporation shall begin on the first day of January in each year and end on the last day of December in each year. 5.2 CORPORATE SEAL. The corporate seal shall be in such form as shall be approved by the Board of Directors. 5.3 WAIVER OF NOTICE. Whenever notice is required to be given by law, by the Certificate of Incorporation or by these By-Laws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice whether before, at or after the time stated in such waiver, or the attendance of such person at such meeting, shall be deemed equivalent to such notice. 5.4 VOTING OF SECURITIES. Except as the directors may otherwise designate, the President or Treasurer may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this corporation (with or without power of substitution) at, any meeting of stockholders or shareholders of any other corporation or organization, the securities of which may be held by this corporation. 5.5 EVIDENCE OF AUTHORITY. A certificate by the Secretary, or an Assistant Secretary, or a temporary Secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action. 16 5.6 CERTIFICATE OF INCORPORATION. All references in these By-Laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the corporation, as amended and in effect from time to time. 5.7 TRANSACTIONS WITH INTERESTED PARTIES. No contract or transaction between the corporation and one or more of the directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors which authorizes the contract or transaction or solely because his or their votes are counted for such purpose, if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee of the Board of Directors, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. 5.8 SEVERABILITY. Any determination that any provision of these By-Laws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these By-Laws. 5.9 PRONOUNS. All pronouns used in these By-Laws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require. 17 ARTICLE 6 - AMENDMENTS 6.1 BY THE BOARD OF DIRECTORS. Except as is otherwise set forth in these By- Laws, these By-Laws may be altered, amended or repealed or new by-laws may be adopted by the affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present. 6.2 BY THE STOCKHOLDERS. Except as otherwise set forth in these By-Laws, these By-Laws may be altered, amended or repealed or new by-laws may be adopted by the affirmative vote of the holders of a majority of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at any regular meeting of stockholders, or at any special meeting of stockholders, provided notice of such alteration, amendment, repeal or adoption of new by-laws shall have been stated in the notice of such special meeting. EX-10.2 5 0005.txt CONFIDENTIAL MATERIAL CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION (*Denotes Omission) EXHIBIT 10.2 (REDACTED) AGREEMENT THIS AGREEMENT is made effective as of the 1st day of January, 1999, between IDEXX Laboratories, Inc., a Delaware corporation whose principal place of business is at One IDEXX Drive, Westbrook, Maine, U.S.A. ("IDEXX") and Ortho- Clinical Diagnostics, Inc., a New York corporation with offices at 100 Indigo Creek Drive, Rochester, New York, U.S.A. ("OCD"). WHEREAS, OCD and IDEXX desire to enter into supply arrangements with respect to VITROS slides for use on the VETTEST analyzer; NOW THEREFORE, the parties hereby agree as follows: 1. DEFINITIONS In this Agreement the following expressions shall have the meaning set opposite them. "Agreements" This Agreement and the Europe Agreement. "Applicable Percentage" The percentage obtained by dividing (i) the unit volume of slide sales for a particular chemistry in a given period, BY (ii) the unit volume of slide sales for all chemistries listed on SCHEDULE 5 for such period (as such SCHEDULE 5 may from time to time be revised). Applicable Percentages of unit volume sales shall be determined based on sales in the most recently completed fiscal quarter, and the sum of the Applicable Percentages shall always be 100%. "Commencement Date" January 1, 1999. "Corresponding Slide" Any VITROS slide which provides the same blood chemistry measurement as a particular VETTEST slide (e.g., a DT60 Glucose slide is a Corresponding Slide for a VETTEST Glucose slide). "DT60" The DT60 analyzer developed by OCD for human biomedical purposes and using the VITROS slides. "Effective Rebate Rate" For any year, the weighted average percentage reduction in the purchase price of any slides purchased in such year that IDEXX is entitled to receive pursuant to Section 7.03 hereunder. The 2 calculation of the Effective Rebate Rate is illustrated in SCHEDULE 6. "Europe Agreement" The Agreement effective as of January 1, 1999 between OCD and IDEXX BV, as amended and from time to time in effect. "IDEXX BV" IDEXX Laboratories B.V., a Netherlands corporation. "PANELS/PROFILES" Packages of VETTEST slides consisting of two or more sets of slides of specified chemistries. The initial PANEL and the initial PROFILES shall consist of the slides set forth on SCHEDULE 3 attached hereto, with any changes or additional PANELS/PROFILES to be mutually agreed upon by the parties as specified in SCHEDULE 3. "Prime Rate" For any day in any calendar month, the prime rate of interest as published in the WALL STREET JOURNAL on the last business day of the immediately preceding month. "Proportionate Share" The percentage obtained by dividing (i) the number of VETTEST slides purchased by IDEXX in a given period, BY (ii) the total number of VETTEST slides purchased by IDEXX and its affiliates during such period. "Term" The period from January 1, 1999 until December 31, 2010. "VETTEST analyzer" The VETTEST VT 8008 analyzer developed by or on behalf of VETTEST S.A., predecessor of IDEXX BV, for veterinary purposes and using VITROS slides; including (i) any updates or modifications to such analyzer, or (ii) other chemistry testing instrument which, in the case of clause (i) and (ii), is designed by IDEXX BV to be the bridging instrument to a next-generation veterinary chemistry analyzer *************** **********************************. ****************** *************************************** ********************************** 3 "VETTEST slides" VITROS or other OCD chemistry slides specially bar coded, labeled, and/or packaged for the VETTEST analyzer in accordance with the terms of this Agreement and supplied by OCD in accordance with the terms and conditions of this Agreement. "VETTEST tips" Metering tips manufactured by OCD for use with VITROS 700 Analyzer specially packaged and supplied to IDEXX in accordance with the terms of this Agreement. "VITROS slides" The slides developed by OCD for use in any VITROS analyzer. "Weighted Average List Price" The product obtained by multiplying (i) the Applicable Percentage for each Corresponding Slide or VETTEST slide, as the case may be, BY (ii) the average price such Corresponding Slide is sold to distributors by OCD, or the price then in effect under this Agreement for a VETTEST slide, as the case may be and THEN (iii) aggregating the total of such multiplication calculations for all chemistries listed on SCHEDULE 5 (as such SCHEDULE 5 may from time to time be revised). All references to currency in this Agreement shall mean U.S. Dollars unless otherwise specifically indicated. 2. EFFECT OF AGREEMENT 2.01 This Agreement shall become effective upon the Commencement Date. 3. OCD RIGHT OF FIRST REFUSAL 3.01 IDEXX shall not enter into any negotiations with any third party concerning human biomedical applications of the VETTEST analyzer without first offering to OCD the opportunity to negotiate marketing rights for the human biomedical applications of the VETTEST analyzer. 4 4. AGREEMENT TO SUPPLY 4.01 Subject to the terms and conditions of this Agreement, OCD undertakes to manufacture for IDEXX and to supply to IDEXX VETTEST slides, VETTEST tips and Vetrol controls. OCD shall supply VETTEST slides in compliance with the VETTEST Slide Quality Assurance Procedures set out in SCHEDULE 4. 5. FORECASTS, COMMITMENTS AND ORDERS 5.01 Attached hereto as SCHEDULE 4 are aggregate Purchase Commitments by IDEXX and IDEXX BV for VETTEST slides for calendar years 1999 through and including 2006. The Purchase Commitments constitute the aggregate anticipated minimum aggregate purchase quantities by IDEXX and IDEXX BV for single chemistry VETTEST slides and PANELS/PROFILES slides in the indicated calendar years. For calendar years 2007 through and including 2010, IDEXX shall advise, or shall cause IDEXX BV to advise, OCD of the aggregate Purchase Commitment for IDEXX and IDEXX BV for each such year not later than October 1 of the preceding year, and upon receipt by OCD, such Purchase Commitments shall be deemed to be incorporated into SCHEDULE 4. IDEXX's and IDEXX BV's aggregate Purchase Commitment for the period 2007 through and including 2010 shall be not less than *********** slides. During each of calendar years 2000 through and including 2002, IDEXX and IDEXX BV shall purchase, in the aggregate, not less than ************* *********** single slides; during each of calendar years 2003 through and including 2006, IDEXX and IDEXX BV shall purchase, in the aggregate, not less than ****************** single slides; and during each of the calendar years 2007 through and including 2010, IDEXX and IDEXX BV shall purchase, in the aggregate, a minimum number of single slides equal to **** of the total Purchase Commitment for such year. Failure by IDEXX and IDEXX BV to purchase, in the aggregate, at least the indicated Purchase Commitment quantities of each type of slides in any year may subject IDEXX to the requirement to make a payment to OCD as set forth in sub-Clause 5.02 below, but such failure shall in no event otherwise be deemed to be a breach of this Agreement. 5.02 If IDEXX and IDEXX BV fail to purchase in the aggregate the quantities of slides set forth as Purchase Commitments on SCHEDULE 4 in a particular calendar year, unless there has been a Material Adverse Change (as defined in the following paragraph) IDEXX shall pay, or shall cause IDEXX BV to pay, to OCD within 30 days after the end of such calendar year ***** of the product of (i) the number of each type of slides (single or PANELS/PROFILES) by which IDEXX and IDEXX BV have in the aggregate fallen short of the Purchase Commitment and (ii) the 5 lowest per-slide price for the applicable type of slides under either of the Agreements. For the purposes of this sub-Clause 5.02, "MATERIAL ADVERSE CHANGES" shall mean material changes in the veterinary clinical chemistry markets which result from (a) non-invasive diagnostic testing other than any such testing which is introduced by IDEXX or its affiliates, (b) invasive diagnostic testing other than any such testing which is introduced by IDEXX or its affiliates, (c) the eradication of one or more diseases, or the development of new disease therapies, treatments or diagnostics, which significantly reduces demand for veterinary clinical chemistry testing, (d) decreased commitment by or ability of OCD to supply VETTEST or VITROS slides, and (e) the availability in one or more significant markets of slides compatible with the VETTEST analyzer from sources other than IDEXX or its affiliates, which availability is not promptly enjoined or otherwise terminated by OCD. Whether a Material Advance Change has occurred will be determined by reference to the effect of a change in the veterinary clinical chemistry market on IDEXX and IDEXX BV taken as a whole, and not on either individually. The parties shall discuss in good faith any assertion by IDEXX or IDEXX BV that a Material Adverse Change has occurred or is continuing. If the parties agree that a Material Adverse Change has occurred or is continuing, they shall negotiate in good faith with respect to appropriate reductions in Purchase Commitments, VETTEST slide prices (including single and PANELS/PROFILES slides) and/or amounts which would otherwise be payable pursuant to the first sentence of this sub- Clause 5.02 to appropriately allocate the effects of such Material Adverse Change on the parties. 5.03 IDEXX shall place orders for slides at least three calendar months prior to the required delivery date. Unless otherwise agreed between the parties in any particular case, orders for slides shall be placed by IDEXX three times per year and each order shall specify a business day delivery date for each delivery. 5.04 Not later than October 1 of each calendar year commencing October 1, 1999, IDEXX shall notify, or shall cause IDEXX BV to notify, OCD of the aggregate forecasted requirements of IDEXX and IDEXX BV for the subsequent year for each of the VETTEST slides (single slides and PANELS/PROFILES slides) (each such notification, a "PURCHASE FORECAST"), and the aggregate order quantities in the subsequent year for each of the VETTEST slides shall be within +/- 25% of such aggregate Purchase Forecast unless the parties otherwise agree. As long as slide orders are within the indicated range of +/- 25% of the applicable Purchase Forecast, OCD shall deliver the slides in accordance with the orders. The Purchase Forecasts constitute non-binding forecasts which shall be the basis for determining IDEXX's and IDEXX BV's aggregate quarterly cash rebate pursuant to sub-Clause 7.03 below. 6 5.05 In the event that IDEXX or IDEXX BV in any year notifies OCD that they wish to order quantities which exceed the quantities mentioned in sub- Clause 5.04 above by more than 25%, OCD will endeavor to supply the excess quantities and notify IDEXX or IDEXX BV, as appropriate, of the extent of its ability to so supply. 5.06 It is understood and agreed that orders for the VETTEST slides shall include only those chemistries set forth in SCHEDULE 5 hereto. In the event that a chemistry listed in SCHEDULE 5 should become known by OCD to be unavailable at any future date during the Term, OCD will so notify IDEXX at the earliest practicable date and will cooperate with IDEXX to ameliorate the possible adverse effects upon IDEXX of such unavailability. 5.07 Order and delivery of VETTEST slides (including PANELS/PROFILES) shall be made in multiples of 100 boxes. The number of orders and deliveries shall be limited to three in each year unless otherwise agreed to in writing by the parties. Order and delivery of the VETTEST tips shall be made in multiples of 10,000 tips (20 cartons each containing 500 tips). The number of orders and deliveries of the VETTEST tips and Vetrols shall be limited to two in each year. OCD shall deliver the VETTEST tips and Vetrols in the ordered quantities in each year. 6. DELIVERY 6.01 Following acknowledgement by OCD of each order placed by IDEXX and on or before the delivery due date, OCD shall complete delivery of the appropriate quantity of slides and tips within +/- 10%. Deviations of delivery quantities from order quantities within the +/- 10% range may be compensated by IDEXX in the first subsequent order placed, subject to Clause 5. In the event of a price increase for one or more of the VETTEST slides, such compensating quantity of such slides shall be processed at the previous lower price. 6.02 Order and delivery for all purchases hereunder shall be F.O.B. Rochester, New York, USA. 6.03 Unless otherwise advised in writing by OCD to IDEXX, OCD shall pack the VETTEST slides in accordance with OCD's standard shipping configuration which is known to IDEXX and which at the Commencement Date contains approximately 60 cases per pallet, each case containing 100 boxes of slides. 7. PRICES 7.01 The initial prices for each of the VETTEST slides (including the PANELS/ PROFILES) shall be as set forth in SCHEDULE 5 hereto. Such prices are broken out to provide prices for each individual product code for the following geographic region (additional regions may be 7 added, and changes within regions may be agreed to, from time to time in writing by the parties): US--United States, Canada and all other countries not identified in this sub-Clause 7.01; Asian--Brunei, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, Viet Nam. IDEXX agrees that OCD may audit IDEXX's books and records to verify sales of VETTEST slides in any region. 7.02 The prices set forth in SCHEDULE 5 shall remain in effect for orders placed through December 31, 2000. Thereafter, the prices may be adjusted upon 90 days written notice to IDEXX, subject to the next sentence of this sub-Clause 7.02, effective as of January 1 of each year for orders placed on or after that date by an amount not to exceed *** of the annual change (increase or decrease) in the US Consumer Price Index as reported by the United States Bureau of Labor Statistics, for the calendar year since the immediately preceding price adjustment. Notwithstanding the preceding sentence, if the aggregate quantities of the single slide and PANELS/PROFILES slide purchases of IDEXX and IDEXX BV exceed **** of the Purchase Forecasts for a particular year as set forth on SCHEDULE 4, there shall be no price increase for the immediately succeeding year. 7.03 Beginning with slide purchases made during calendar year 2000 (which, for the avoidance of doubt, shall not include any slides shipped by OCD in calendar year 2000 to fulfill IDEXX's and IDEXX BV's total aggregate 1999 purchase order of ****************), IDEXX shall be entitled to receive its Proportionate Share (based on sales during a calendar year) of a cash rebate in the amount set forth below if the total aggregate slide purchases by IDEXX and IDEXX BV, in any calendar year, exceed the aggregate quantities set forth below: Annual Slide Purchases Incremental Cash Rebate - % Off Purchase Price ************** ** *********************** *** *********************** *** *********************** *** *********************** *** *********************** *** ******************** *** The rebate amounts set forth above constitute a percentage reduction in the purchase price of any slides (including both single slides and 8 PANELS/PROFILES slides) purchased above the corresponding quantity. The percentage amounts are incremental (as opposed to cumulative) and relate only to the quantities set forth opposite it. For example, if IDEXX and IDEXX BV were to purchase, in the aggregate, ********** slides in any one calendar year, they would not be entitled to a *** price reduction on all slides that they purchased in such year, rather, they would be entitled to receive (i) ** purchase price reduction on the first ******** slides purchased, (ii) a *** purchase price reduction on all slides purchased over ********, up to and including **********, (iii) an *** purchase price reduction on all slides purchased over ********** million up to and including **********, and (iv) a *** purchase price reduction on all slides purchased over **************** up to and including the ********** slides that they purchased. The foregoing notwithstanding, it is understood and agreed that if IDEXX and IDEXX BV do not, in the aggregate, achieve the aggregate Purchase Commitments set forth in Section 5 in any calendar year, then they shall not be entitled to receive a rebate for such year. In the beginning of each calendar year, beginning with calendar year 2000, OCD shall calculate an estimated Effective Rebate Rate (the "ESTIMATED REBATE RATE") based on the lesser of (i) IDEXX's and IDEXX BV's aggregate Purchase Forecast for such year and (ii) **** of the total aggregate number of slides that IDEXX and IDEXX BV together purchased in the immediately preceding calendar year. Not later than thirty (30) days after the end of each of the first three calendar quarters in any calendar year (or thirty days after IDEXX and IDEXX BV complete payment in full for slides purchased during such quarter, if later), OCD shall pay to IDEXX its Proportionate Share (based on purchases during the preceding quarter) of an amount equal to the aggregate estimated rebate payment that IDEXX and IDEXX BV would together be entitled to receive in such quarter (the "ESTIMATED REBATE PAYMENT"). The Estimated Rebate Payment for any quarter shall be calculated by (i) multiplying the Estimated Rebate Rate in effect during such quarter by the total aggregate purchase price for the VETTEST slides purchased by IDEXX and IDEXX BV during such quarter and (ii) subtracting from such amount an amount equal to *** of the total calculated in clause (i) above. The foregoing notwithstanding, if, in any calendar year, (i) IDEXX's and IDEXX BV's total aggregate slide orders for the immediately preceding calendar year were less than *** of their aggregate Purchase Forecast for such preceding calendar year or (ii) OCD determines, in its reasonable discretion, at anytime after the end of the second calendar quarter of such calendar year, that IDEXX and IDEXX BV are reasonably unlikely to meet their aggregate Purchase Forecast for such year, then OCD shall have the right to recalculate the Estimated Rebate Rate based on IDEXX's and IDEXX BV's aggregate Purchase Commitment for such year (such recalculated rate being hereinafter referred to as the "NEW ESTIMATED REBATE RATE"). If OCD elects to recalculate the Estimated Rebate Rate pursuant to the immediately preceding sentence, (i) OCD shall notify IDEXX in writing which notice shall set forth the New Estimated Rebate Rate, (ii) OCD shall calculate all remaining quarterly Estimated Rebate Payments (which may include the Estimated Rebate Payment for the second 9 calendar quarter) using the New Estimated Rebate Rate and (iii) all such Estimated Rebate Payments shall be made in accordance with this sub-clause 7.03, except that such Estimated Rebate Payments shall be less the amount by which the aggregate Estimated Rebate Payments received by IDEXX and IDEXX BV during the then current calendar year exceed the aggregate Estimated Rebate Payments they would have received during such calendar year if the New Estimated Rebate Rate were in effect from the first day of such calendar year. Notwithstanding any provision in this Agreement to the contrary, OCD shall not be required to pay to IDEXX its Proportionate Share of any Estimated Rebate Payments in any calendar year if (A) any amounts payable to OCD from IDEXX pursuant to this Agreement are overdue, unless such amounts are being disputed in good faith by IDEXX, or (B) OCD determines in its reasonable judgment that IDEXX and IDEXX BV are reasonably unlikely to meet their aggregate Purchase Commitments for such year. In the case of clause (B) above, OCD shall have the right to make such determination at any time after the end of the second calendar quarter of any calendar year (or at the beginning of such calendar year if IDEXX's and IDEXX BV's aggregate Purchase Forecast for such year is less than their aggregate Purchase Commitment for such year) provided that OCD has consulted with IDEXX and given IDEXX an opportunity (which opportunity shall be available for a period of not less than 5 business days nor more than 10 business days) to demonstrate its and IDEXX BV's intent and ability to meet their aggregate Purchase Commitments for such year. For the avoidance of doubt, OCD's obligation to make any Estimated Rebate Payments shall be suspended during the period referred to in the immediately preceding sentence and the days in such period shall not be counted when determining the date by which the next scheduled Estimated Rebate Payment is due and payable. If, after fulfilling the requirements set forth in this paragraph, OCD makes the determination described in clause (B) above, OCD (i) shall promptly notify IDEXX in writing of its determination and (ii) shall thereafter have the right to cease making Estimated Rebate Payments for the remainder of such calendar year. Not later than thirty (30) business days after the end of the last calendar quarter of any calendar year (or thirty days after IDEXX and IDEXX BV complete payment in full for slides purchased during such quarter, if later), OCD shall pay to IDEXX its Proportionate Share (based on purchases during such calendar year) of the amount by which (i) the Effective Rebate Rate multiplied by the total aggregate purchase price for VETTEST slides purchased by IDEXX and IDEXX BV during such calendar year exceeds (ii) the total aggregate amount of the Estimated Rebate Payments made by OCD to IDEXX and IDEXX BV during such calendar year. If the amount in clause (ii) above exceeds the amount in clause (i) above, OCD shall deliver to IDEXX a written notice of such fact (a "REIMBURSEMENT NOTICE") and IDEXX shall pay to OCD, within thirty (30) days of receipt of such notice an amount in cash equal to its Proportionate Share of the amount of such excess. 10 Notwithstanding the foregoing, (i) if any amounts payable to OCD from IDEXX pursuant to this Agreement are overdue, other than amounts that are being disputed in good faith by IDEXX, then OCD shall be entitled to withhold such overdue amount (plus any accrued interest) from any rebate payments to which IDEXX may be entitled and (ii) if IDEXX and IDEXX BV do not achieve their aggregate Purchase Commitment in any given calendar year, then IDEXX shall return all Estimated Rebate Payments received from OCD for such year no later than thirty (30) days after the end of such calendar year. Any overdue payments by OCD or IDEXX of any amounts owed to the other pursuant to this sub-clause 7.03 shall bear interest at a rate per annum equal to *** **********. Such interest shall be payable at the same time as the payment to which it relates and shall be calculated daily on the basis of a year of 365 days and the actual number of days elapsed. OCD shall prepare a remittance advice to accompany each rebate payment (or Reimbursement Notice), which shall set forth the reporting period for which the payment is made (or demanded) and a summary sheet which shall detail OCD's calculation of the rebate (or reimbursement). If IDEXX disagrees with the rebate or reimbursement calculation, IDEXX shall promptly notify OCD, and the parties, together with IDEXX BV if appropriate, shall review the calculations together in good faith to agree on any appropriate corrections or adjustments. An illustrative representation of the foregoing rebate calculation methodology is attached hereto as SCHEDULE 6. 7.04 OCD agrees to provide to IDEXX on a regular basis during the Term the current average price at which OCD sells each Corresponding Slide to its distributors. At IDEXX's request, but not more often than once per calendar year, OCD shall calculate the Weighted Average List Price for all Corresponding Slides. If the Weighted Average List Price for VETTEST SLIDES purchased by IDEXX and its affiliates exceeds the Weighted Average List Price for Corresponding Slides by more than 10%, then all of the VETTEST single and PANELS/PROFILES slide prices to IDEXX shall be reduced by the percentage by which the Weighted Average List Price for Corresponding Slides is less than the Weighted Average List Price for VETTEST slides purchased by IDEXX and its affiliates. Such reduction shall be effective from the later of (i) twelve months prior to the date on which IDEXX requests OCD to calculate the Weighted Average List Price for Corresponding Slides or (ii) the date on which the average price at which OCD sells each Corresponding Slides to its distributors resulted in the Weighted Average List Price for VETTEST Slides exceeding the Weighted Average List Price for Corresponding Slides by more than 10%. 11 Either party may request that an accounting firm of international reputation, other than the principal accounting firm of either party, audit the other's books and records to verify the Weighted Average List Price and actual unit volume sales of Corresponding Slides or VETTEST slides, as the case may be. Such auditor shall report to the parties only (a) the Weighted Average List Price and (b) the Applicable Percentage for each Corresponding Slide or VETTEST slide, as the case may be. The prices and percentages contained in such auditor's report shall be deemed to be the Weighted Average List Price and Applicable Percentages for Corresponding Slides or VETTEST slides, as the case may be, respectively, hereunder until modified in accordance with this sub-Clause 7.04. The fees and expenses of such auditor shall be borne equally by the parties. 7.05 If OCD is entitled to a price increase pursuant to sub-Clause 7.02 and IDEXX is entitled to a price decrease pursuant to sub-Clause 7.04, the net percentage increase or decrease in price shall be used to calculate slide prices for the next calendar year. 8. INVOICES AND PAYMENT 8.01 OCD shall invoice IDEXX in respect of each order for the VETTEST slides upon completion by OCD of the delivery of such order. Each order shall be billed by OCD under one invoice in US dollars and payment shall be made by IDEXX in US dollars not later than thirty (30) days following the date of invoice. 9. EXCLUSIVITY 9.01 OCD undertakes during the Term not to sell or otherwise supply the VETTEST slides, or any VITROS slides bar-coded for use in the VETTEST Analyzer (whether or not finished or complete) to any person, firm or company other than IDEXX or its affiliates. The provisions of this Clause 9.01 shall survive the termination of this Agreement UNLESS all of the following shall be true: (i) prior to such termination IDEXX (or its permitted assignees), and its affiliates shall have ceased to market the VETTEST slides, (ii) such cessation shall not have been a consequence of action by OCD, and (iii) OCD shall have complied with its obligations under this Agreement prior to such termination. 9.02 IDEXX undertakes during the Term to purchase slides for use in the VETTEST analyzer only from OCD or IDEXX BV, to the extent that the desired chemistries are available from OCD. 9.03 IDEXX shall use its best endeavors to ensure that the VETTEST slides are sold to end users for use in the veterinary market and not in the human biomedical market. 12 9.04 This Agreement shall not restrict OCD from selling VITROS slides to the veterinarian market. 9.05 This Agreement shall not restrict OCD from developing an analyzer other than the DT60 for sale by OCD to the veterinarian market for use with VITROS slides. 9.06 This Agreement shall not restrict OCD from selling VITROS slides to other manufacturers wishing to develop and market an analyzer for use with VITROS slides for applications outside the veterinarian market. 9.07 OCD shall use all commercially reasonable efforts to (i) ensure that neither VITROS slides (including without limitation VITROS slides to which bar coding for use in the VETTEST analyzer has been added) nor any other product manufactured by or for Johnson & Johnson or its affiliates is supplied, marketed, distributed or sold for use in the VETTEST analyzer and (ii) promptly enjoin or otherwise terminate any such supplying, marketing, distribution or sale. The commercial reasonableness of OCD's efforts shall be determined solely with regard to the relationship between the parties set forth in this Agreement, and not with regard to OCD's or Johnson & Johnson's business as a whole. Notwithstanding the foregoing, OCD's obligation to use commercially reasonable efforts for the purposes of this sub-Clause 9.07 shall not include any obligation to reduce non-VETTEST VITROS slide prices. OCD shall include a provision in future supply and distributor contracts that if a customer opens a mainframe slide cartridge and uses the slides individually, or otherwise repackages or modifies OCD slides for a use other than for which the slides are sold by OCD, such activity, if not ceased upon notice, shall give OCD the right to terminate such contract. OCD will exercise such right where the customer does not cease such activity after due notice. OCD and IDEXX shall also reasonably cooperate in efforts to stop any such unauthorized slide repackaging or modification, where the modified or repackaged slides are supplied, marketed or sold for use in VETTEST analyzer. The failure of OCD to exert commercially reasonable efforts as contemplated by this sub-Clause 9.07 shall in no event be deemed to be a breach of this Agreement by OCD but shall give IDEXX the right, as its exclusive remedy for such failure, to terminate any obligations it may have pursuant to sub-Clause 5.01, the first two of paragraphs of sub-Clause 5.02 and Schedule 4 [7] of this Agreement, effective immediately upon written notice to OCD. 13 10. MARKETING ARRANGEMENTS 10.01 IDEXX will be responsible for all marketing arrangements for the VETTEST analyzer and the VETTEST slides. IDEXX may appoint any of OCD's medical/surgical dealers as distributors of or agents for the VETTEST analyzer and the VETTEST slides but will not be obliged to do so. 10.02 IDEXX will be responsible for the establishment of dealer performance criteria for all dealers including OCD's medical/surgical dealers (if any are appointed by IDEXX as distributors of the VETTEST analyzer and the VETTEST slides). 10.03 IDEXX will keep OCD informed of and consult with OCD as to marketing arrangements for the VETTEST analyzer and the VETTEST slides but will not be obligated to OCD beyond the terms of this Agreement in connection with such marketing arrangements. 11. SALES SUPPORT 11.01 IDEXX will be responsible for all necessary sales support for the VETTEST analyzer and the VETTEST slides. 11.02 OCD's sole obligation in respect of sale support shall be at its own expense to assist IDEXX in resolving specific problems exhibited by the VETTEST slides. 12. TESTING 12.01 OCD shall disclose to IDEXX its quality assurance procedures used in final evaluation of the VETTEST slides and full particulars thereof as set out in the VETTEST Slide Quality Assurance Procedures forming SCHEDULE 4 to this Agreement. OCD shall operate such quality assurance procedures in accordance with SCHEDULE 4. 12.02 Upon prior written notice from IDEXX, OCD shall grant authorized representatives of IDEXX access to that part of OCD production facilities which conducts final evaluation of the VETTEST slides for the purpose of enabling such representatives to monitor the application by OCD of the VETTEST Slide Quality Assurance Procedures set out in SCHEDULE 4. Such access shall be granted by OCD to IDEXX and IDEXX BV no more than twice in any twelve-month period, and shall be limited to such final evaluation facilities. 13. BAR CODING AND PACKAGING 13.01 The VETTEST slides shall be printed by OCD with special bar coding for use in the VETTEST analyzer. 14 13.02 OCD shall package the VETTEST slides and tips in the physical manner as used for the VITROS slides and tips at the time of packaging of the VETTEST slides and tips. In the event of a change in VITROS slide or tip packaging which has an impact on the VETTEST slide or tip packaging, OCD shall notify IDEXX as early as practicable of the relevant particulars of such change. 13.03 OCD shall furnish on a timely basis to IDEXX drawings and information describing the geometry and the materials of labels for the VETTEST slide wrap, the slide and tip cartons, and the case for the purpose of developing the label content and art work for such packaging. IDEXX shall be responsible for developing all such label content and art work, which shall require the approval of OCD. The parties shall cooperate to settle the form and appearance of label content and art work which, save as authorized by sub-Clause 14.01 below, shall not include any trademarks, trade names, or trade dress of OCD. IDEXX shall furnish such label content and art work to OCD on a timely basis, and such label content and art work shall not be changed at any time during the Term without the prior agreement of the parties. 13.04 OCD shall be responsible for incorporating the art work described in sub-Clause 13.03 above into the packaging of the VETTEST slides and tips. 14. TRADE MARKS AND TRADE NAMES 14.01 OCD expressly authorizes IDEXX to use the phrase "manufactured by Ortho-Clinical Diagnostics, Inc. for IDEXX (IDEXX ADDRESS)" on packaging of the VETTEST slides. No other uses of OCD's trademarks, trade names or trade dress are authorized by this Agreement. 14.02 IDEXX shall neither acquire, nor claim any right, title or interest in or to any of OCD's trade marks or trade names by virtue of this Agreement or through advertising and sale of the VETTEST analyzer or the VETTEST slides or otherwise. 15. PATENT INDEMNITIES 15.01 OCD shall hold IDEXX harmless for all loss, damage, cost and expense whatsoever, including legal fees, patent attorney's fees and court costs that IDEXX may incur or become liable for as a result of any action, suit or claim alleging infringement of any patent held by a third party arising form the use and/or sale of the VETTEST slides or tips to the extent that such action, suit, or claim relates in a material way to the specification for the VITROS slides or tips or to any OCD patent. If as a result of any judgment or settlement it is determined that a claim or claims of a third party patent is infringed by the use and/or sale of the VETTEST slides or tips as aforesaid and 15 IDEXX is required to make any payments to any third party as a result thereof, IDEXX may off-set all such payments against any present and/or future payments to be made to OCD hereunder. 15.02 IDEXX shall hold OCD harmless for all loss, damage, cost and expense whatsoever, including legal fees, patent attorney's fees and court costs that OCD may incur or become liable for as a result of any action, suit or claim alleging infringement of any patent held by a third party arising from either the manufacture, use or sale of the VETTEST slides or tips to the extent that the VETTEST slides or tips differ from the VITROS slides or tips or the manufacture use or sale of the VETTEST analyzer. 16. WARRANTY, LIABILITY AND INDEMNIFICATION 16.01 OCD hereby warrants that: (a) the VETTEST slides delivered to IDEXX shall be in compliance with SCHEDULE 4, and (b) the packaging of the VETTEST slides and tips shall be undamaged at delivery. 16.02 In the event of a breach on the part of OCD of sub-Clause 16.01 above, OCD's liability shall be limited to the replacement of the VETTEST slides or tips found to be defective, including shipping costs for return of defective slides or tips and delivery of replacement slides or tips. 16.03 OCD's liability as stated in sub-Clause 16.02 shall be subject to the following conditions: (a) IDEXX shall notify OCD promptly of any noncompliance contrary to sub-Clause 16.01(a) or damage contrary to sub-Clause 16.01(b). (b) IDEXX and its transferees shall not alter or modify the VETTEST slides or packaging of the VETTEST slides or tips without prior approval of OCD. 16.04 Except as provided in this Clause 16 there are no other warranties, express or implied, including warranties for fitness for any particular use of merchantability. 16.05 Subject to Clause 15, IDEXX hereby indemnifies and holds harmless OCD from any against any claim, loss, damage, or expense (including attorney's fees) with respect to any physical injury to persons, animals or property arising out of or in connection with IDEXX's use or sale of the VETTEST analyzer or the VETTEST slides, including any claimed infringement of any trademark (except OCD's own trademark), trade dress, trade secret, or copyright, and IDEXX shall assume the 16 defense of any action or suit brought against OCD and the disposition of such action or suit. IDEXX shall notify OCD at the commencement of any such action or suit and in the event of any adverse judgment which prevents the sale or use of the VETTEST analyzer or the VETTEST slides. In addition, IDEXX shall obtain advance written approval of OCD prior to entering into any settlement of any such action or suit which limits OCD's rights under this Agreement. 17. SECRECY 17.01 Each of IDEXX and OCD agrees to protect confidential information disclosed to it upon terms set out in SCHEDULE 2 attached hereto. 18. PERIOD OF AGREEMENT 18.01 This Agreement shall commence on the Commencement Date and, subject to satisfaction of the quantity requirements set out in Clause 5 above, shall continue throughout the Term. 18.02 Between twelve (12) and six (6) calendar months prior to the end of the Term, the parties shall meet to extend this Agreement. Such extension is to be for a term of five (5) years and include provision for further extension. 19. TERMINATION 19.01 This Agreement may be terminated by either party in any of the following events: (a) If the other party is guilty of gross or persistent breaches of the terms of this Agreement, which breaches are not remedied to the satisfaction of the other party after ninety (90) days notice in writing to do so. Any such breach shall entitle the innocent party to terminate this Agreement by notice in writing which notice shall be effective at the end of ninety (90) days following the date of such notice. (b) If the other party becomes insolvent or compounds with its creditors or goes into liquidation (other than for the purposes of corporate reorganization) then the innocent party may terminate this Agreement by notice in writing which shall have immediate effect. 19.02 Changes in the equity ownership or corporate reorganizations of either party shall not be grounds for termination of this Agreement, except that OCD may terminate this Agreement at its sole discretion in the event that more than 40% of the outstanding capital stock of IDEXX is transferred to a competitor of the diagnostic division of OCD. 17 19.03 OCD shall have the right to terminate this Agreement upon five years' prior written notice to IDEXX in the event OCD elects to cease the manufacture and sale of dry slide diagnostic products. The minimum purchase obligations of IDEXX shall terminate upon delivery of such a notice of termination. 19.04 IDEXX shall have the right to terminate any obligations it may have pursuant to sub-Clauses 5.01 and 5.02 and SCHEDULE 4 [7] of this Agreement upon prior written notice to OCD of either (a) two full calendar years, if IDEXX commits to OCD that it shall not supply competing clinical chemistry diagnostic products to the veterinarian's office market, or (b) four full calendar years. Upon the commencement of the first full calendar year of a notice period pursuant to the preceding sentence, sub-Clauses 7.03, 7.04 and 7.05 and the last sentence of sub-Clause 7.02 shall be terminated, except for any previously accrued obligation of OCD to provide a credit rebate pursuant to sub-Clause 7.03 for the immediately preceding calendar year. 19.05 This Agreement shall terminate automatically upon any termination of the Europe Agreement. 20. FORCE MAJEURE 20.01 In the event of force majeure, OCD shall be entitled to extend the time of delivery for any outstanding order by the period during which such force majeure prevails, plus a reasonable start-up period. Force majeure shall include any circumstances beyond OCD's control. 20.02 Upon the cessation of the force majeure event, then without prejudice to any lawful reduction in the obligations of OCD by reason of the occurrence of such force majeure, OCD shall use its best endeavors to make up any lost time. 21. GOVERNING LAW 21.01 The construction, validity and performance of this Agreement shall be governed in all respects by the laws of the State of New York, USA. 22. SEVERABILITY 22.01 Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, then the parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, 18 or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed. 23. WAIVERS 23.01 Failure of either party to this Agreement to insist upon strict observance or compliance with all its terms and conditions in one or more instances shall not be deemed to be a waiver of its right to insist upon such observance or compliance with such term or condition or with any other terms or conditions hereof in the future. 24. PRIOR AGREEMENTS; INTERPRETATION 24.01 This Agreement shall take effect in substitution for all or any previous Agreements relating to the subject matter hereof whether the same are formal agreements or agreements that would be inferred from the parties' correspondence or conduct and all or any such agreements shall be deemed to have been terminated by mutual consent on the Commencement Date; provided, however, that nothing contained herein shall be deemed to modify or terminate the Europe Agreement, except that the Purchase Commitments and Purchase Forecasts referred to in Clause 5 and in SCHEDULE 4 of this Agreement and the Europe Agreement represent the aggregate commitments and forecasts of IDEXX and IDEXX BV and not the individual commitments and forecasts of IDEXX BV under the Europe Agreement or IDEXX under this Agreement. 25. ENTIRE AGREEMENT 25.01 This Agreement, together with the Europe Agreement and that certain Operations Agreement of even date among the parties and IDEXX BV, constitutes the complete agreement of the parties concerning the arrangements between the parties and supersedes all prior agreements between the parties, including without limitation that certain Supply Agreement dated January 15, 1992 and all amendments thereto; and the parties shall not be liable for or bound in any manner by any representations, guarantees or commitments except as expressly provided herein. 26. ALTERATION OR MODIFICATION 26.01 No alteration, amendment or modification to this Agreement or the attached Schedules shall be of any force or effect unless in writing and signed by both parties, except that during the Term of this Agreement, SCHEDULES 3, 4 and 5 may from time to time be amended by written agreement signed by IDEXX and IDEXX BV and the OCD Clinical 19 Products' representative designated in Clause 29 of the Agreement. No modification shall be effected by the acknowledgement or acceptance of purchase order forms or order confirmations or invoices or other documents containing different conditions. 27. ASSIGNMENT 27.01 This Agreement shall not be capable of assignment by either party to a company of which it owns less than a majority or which owns less than a majority of the party save in the case of (i) an assignment at OCD's sole discretion as a result of OCD's divestiture of its VITROS business or (ii) a sale by IDEXX and IDEXX BV of all or substantially all of their assets to an entity which is not a competitor of the diagnostic division of OCD. 28. GOVERNING LANGUAGE 28.01 [Reserved] 29. NOTICES 29.01 Any notice, statement or other communication to be given by one party to the other hereunder may be given by registered mail, airmail or telex to the party concerned at the addresses set out below: Ortho-Clinical Diagnostics, Inc. 1001 US Highway 202 Raritan, New Jersey 08869, USA For the attention of: Vice President, Sales & Marketing With a copy to: Johnson & Johnson One Johnson & Johnson Plaza New Brunswick, New Jersey 08933, USA For the attention of: Office of General Counsel IDEXX Laboratories, Inc. One IDEXX Drive Westbrook, Maine 04092, USA For the attention of: President and Office of General Counsel It is understood that by written notice to IDEXX signed by OCD, OCD may from time to time during the Term of this Agreement change its representative designated (i) to receive notice hereunder and (ii) to amend certain Schedules hereto as set forth in Clause 26 of this Agreement. 20 29.02 Any notice, payment or communication so given or made shall be deemed to have been received at the time when in the ordinary course of transmission the same should have reached its destination. Either party may change its address for the purpose of this Agreement by giving notice of such change to the other party pursuant to the provisions of this Clause. For purposes of this Clause 29.02, notice given by OCD to IDEXX BV under the Europe Agreement shall be deemed given to IDEXX. 30. DISPUTES Any and all disputes, controversies or differences between the parties hereto arising out of or in relation to or in connection with this Agreement, or the breach hereof, which cannot be settled amicably through negotiations between the parties hereto, shall be submitted to and settled by arbitration. Such arbitration shall be conducted in New York, New York in accordance with the rules then obtaining of the American Arbitration Association ("AAA") by a panel of three arbitrators selected from the National Panel of Arbitrators of the AAA. If the parties cannot agree on three arbitrators, the AAA shall select one or more arbitrators as necessary to complete the panel. Reasonable discovery shall be permitted in connection with the arbitration proceeding, and the arbitrators shall apply the substantive laws of the State of New York except that the interpretation and enforcement of this arbitration provision shall be governed by the Federal Arbitration Act. Any award rendered in any such arbitration shall be final and binding upon both parties hereto and judgment upon the award rendered by the panel of arbitrators may be entered in any court having jurisdiction over the party against whom the award is to be enforced. Each party shall bear its own costs in connection with any such arbitration, and any costs of the arbitrators or the AAA shall be borne equally by the parties. The arbitrators shall have no authority to assess or award punitive, incidental or consequential damages, and each party hereby waives its rights to any such damages. 31. 1999 REBATE If during calendar year 1999 IDEXX and IDEXX BV sell worldwide, in the aggregate, any of the total slide volumes set forth below (counting both single slides and PANELS/PROFILES slides), IDEXX shall be entitled to a cash rebate in the amount of its Proportionate Share (based on sales during 1999) of the amount set forth opposite such sales volume: 1999 Worldwide Slide Sales Total Cash Rebate *********** ** *********************** ************ *********************** ************ *********** ************ 21 The cash rebates above are not incremental or cumulative. For the avoidance of doubt, the maximum rebate payment that IDEXX and IDEXX BV could qualify for in the aggregate under this Clause 31 is ************. IDEXX shall provide OCD with aggregate estimated sales volume information for calendar year 1999 not later than December 15, 1999. Not later than January 31, 2000, IDEXX shall provide OCD with aggregate 1999 actual slide sales volume information and, at any time that OCD may reasonably request, any other supporting information or documentation that OCD may reasonably request. OCD shall calculate IDEXX's rebate accordingly, and shall remit to IDEXX its Proportionate Share of the total rebate amount not later than (i) February 15, 2000 or, if later, (ii) five (5) business days after receipt by OCD, to its reasonable satisfaction, of all information which it requested pursuant to the immediately preceding sentence. Any overdue payments by OCD shall bear interest at a rate per annum equal to **********. Such interest shall be payable at the same time as the payment to which it relates and shall be calculated daily on the basis of a year of 365 days and the actual number of days elapsed. 22 IN WITNESS WHEREOF and intending to be legally bound, the parties hereto have caused this Agreement to be duly executed in duplicate by their respective authorized representatives the day and year first written above. ORTHO-CLINICAL IDEXX LABORATORIES, INC. DIAGNOSTICS, INC. By: /s/ David A. Rowan By: /s/ Louis W. Pollock ---------------------------- ----------------------------- David A. Rowan, Louis W. Pollock, Vice President, Corporate Accounts President, Professional Office Diagnostics Division By: /s/ Catherine M. Burzik ---------------------------- Catherine M. Burzik President, Americas Ortho-Clinical Diagnostics, Inc. 23 SCHEDULE 1 - VETTEST(R) SLIDE QUALITY ASSURANCE PROCEDURES INTRODUCTION The following procedure constitutes a generic overview of the quality assurance provisions for finishing of VITROS slides and applies in like manner to product release for the VETTEST slides. VETTEST SLIDE QUALITY ASSURANCE VETTEST slides will be produced to the same quality standards as VITROS and DT 60 slides for OCD's human market unless otherwise agreed to by IDEXX. BAR CODING Bar code printing on the VETTEST slides will render the VETTEST slides incompatible with use in VITROS analyzers. OCD will reserve certain number sequences for generation of the bar code patterns on the VETTEST slides. 24 SCHEDULE 2 Section 1. OBLIGATION TO KEEP INFORMATION CONFIDENTIAL. Each party agrees to hold, and will use its best efforts to cause its respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence all documents and information concerning the other party, whether oral or written, furnished or made known to such party in connection with the performance of the Agreement; PROVIDED that no party shall be required to keep any information confidential (i) if such party is compelled to disclose such information by judicial or administrative process or by other requirements of law and such party has provided prior written notice to the other party and given such other party reasonable opportunity to contest disclosure or (ii) to the extent such information can be shown to have been (A) previously known to such party on a nonconfidential basis, (B) in the public domain through no fault of such party, (C) later lawfully acquired from a third party source or (D) indepedently developed by such party without reference to confidential information. The foregoing notwithstanding, any party may disclose information concerning the other party to its officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with its performance of the Agreement so long as such persons are informed by such party of the confidential nature of such information and are directed by such party to treat such information confidentially, it being understood and agreed that such party shall be responsible for any failure to treat such information confidentially by such persons. The obligation of each party to hold any information in confidence shall be satisfied if it exercises the same care with respect to such information as it would to preserve the confidentiality of its own similar information. Section 2. DURATION. The confidentiality provisions of this SCHEDULE 2 shall remain in effect for so long as the Agreement is in effect and for a period of three (3) years thereafter. Section 3. GOVERNING LAW. The construction, validity and performance of this SCHEDULE 2 shall be governed in all respects by the laws of the State of New York, USA. Section 4. NOTICES. Any notices required to be given under this SCHEDULE 2 shall be given in the manner specified by sub-Clause 29 of the Agreement. 25 SCHEDULE 3 - PANELS/PROFILES The initial PANEL shall be the "Young Presurgical Panel" consisting of four sets of the following six VETTEST slides: BUN Urea Nitrogen ALT Alanine aminotransferase GLU Glucose TP Total protein CREA Creatinine ALKP Alkaline phosphatase
The initial PROFILES shall be the "General Health Profile" and the "Large Animal Profile", each consisting of two sets of 12 VETTEST slides as follows: General Health Profile Large Animal Profile ALB Albumin ALB Albumin ALKP Alkaline phosphatase ALKP Alkaline phosphatase ALT(SGPT) Alanine aminotransferase AST AST AMYL Amylase Ca2+ Calcium Ca2+ Calcium CK CK CHOL Cholesterol GGT Gamma GT CREA Creatinine GLU Glucose GLU Glucose PHOS Inorganic phosphate PHOS Inorganic phosphate LDH LDH TBIL Total bilirubin MG Magnesium TP Total protein TP Total Protein BUN Urea Nitrogen BUN Urea Nitrogen
Packaging for the Young Presurgical Panels, the General Health Profiles and the Large Animal Profiles has been previously agreed upon by the parties, and any changes to the slide composition or packaging of the initial PANEL or the initial PROFILES shall be negotiated in good faith and mutually agreed upon by OCD and IDEXX. The slide composition, packaging and initial pricing of any additional PANELS/PROFILES shall be mutually agreed upon by OCD and IDEXX. Unless otherwise agreed by the parties in writing with respect to one or more specific PANELS or PROFILES, all purchases by IDEXX or IDEXX BV of VETTEST slides packaged as PANELS/PROFILES shall be credited against the Purchase Forecasts and Purchase Commitments for such slides under this Agreement and the Europe Agreement. 26 SCHEDULE 4 - PURCHASE COMMITMENTS
Year Minimum Slide Purchase Commitment (in millions) 1999 ** 2000 ** 2001 ** 2002 ** 2003 ** 2004 ** 2005 ** 2006 ** 2007 See Agreement sub-Clause 2008 5.01 2009 2010 27
SCHEDULE 5 - PRODUCTS AND PRICES (AS OF JANUARY 1, 1999) Sales Region US Sales Asian Sales - ------------ -------- ----------- Customer Number ******** ******** US Pricing Single Slides (Bx 25) Catalog Number >1500 bxs* <1500 bxs* Asian Pricing - --------------------- -------------- ---------- ---------- ------------- Albumin ******** ****** ****** ****** Alk Phos ******** ****** ****** ****** ALT ******** ****** ****** ****** Ammonia ******** ****** ****** ****** Amylase ******** ****** ****** ****** AST ******** ****** ****** ****** Calcium ******** ****** ****** ****** Cholesterol ******** ****** ****** ****** CK ******** ****** ****** ****** Creatinine ******** ****** ****** ****** ECO2 ******** ****** ****** ****** Gamma GT ******** ****** ****** ****** Glucose ******** ****** ****** ****** LDH ******** ****** ****** ****** Lipase ******** ****** ****** ****** Magnesium ******** ****** ****** ****** Phosphorus ******** ****** ****** ****** Total Bilirubin ******** ****** ****** ****** Total Protein ******** ****** ****** ****** Triglycerides ******** ****** ****** ****** Urea Nitrogen ******** ****** ****** ****** Uric Acid ******** ****** ****** ****** Profile Slides (Bx 24) Catalog Number US Pricing Asian Pricing - ---------------------- -------------- ---------- ------------- General Health Profile ******** ****** ****** Young Presurgical Panel ******** ****** ****** Large Animal Profile ******** ****** ****** Other Catalog Number WW Pricing - ----- -------------- ---------- Vetrols ******** ****** Tips ******** ******
* per chemistry per order 28 SCHEDULE 6 - ILLUSTRATIVE REBATE CALCULATIONS The Estimated Rebate Payments will be calculated for each of the first three calendar quarters using the Effective Rebate Rate, as described more fully in sub-clause 7.03 of the Agreement. Any required adjustments will be made at the end of the fourth calendar quarter, in accordance with sub-clause 7.03 of the Agreement. EXAMPLE: THE AGGREGATE PURCHASE FORECAST FOR IDEXX AND IDEXX BV IN A GIVEN YEAR IS ** MILLION SLIDES; PRICING IS *****/SLIDE; BLENDED REBATE PERCENTAGE RATE IS ****, AS FOLLOWS: ********************** million slides * *** = *** million slides *********************** million slides * *** = *** million slides *********************** million slides * *** = *** million slides *********************** million slides * *** = *** million slides ************************ million slides * *** = ***** million slides -------------------------------------------------------------------- Total Slides Eligible for Rebate = ***** million slides EFFECTIVE REBATE = TOTAL SLIDES ELIGIBLE FOR REBATE / TOTAL PURCHASES = **********. ACTUAL AGGREGATE VOLUME PURCHASED BY IDEXX AND IDEXX BV EQUALS VOLUME PROJECTED AT THE BEGINNING OF THE YEAR.
- -------------------------------------------------------------------------------- Actual Purchases Effective Calculated 20% Holdback Rebate Paid Qtrly. ($MM) Rebate Rebate Each (millions) (millions) Vol. %(80MM Vol.) Qtr. (millions) (millions) - -------------------------------------------------------------------------------- 1st Qtr ** **** **** **** **** **** 2nd Qtr ** ***** **** **** **** **** 3rd Qtr ** ***** **** **** **** **** 4th Qtr ** ***** **** **** **** **** -- ----- ---- ---- ---- ** ***** **** **** **** True-up: ***** **** ----- ---- Total: **** **** =============== ===========
ACTUAL AGGREGATE VOLUME PURCHASED BY IDEXX AND IDEXX BV IS GREATER THAN VOLUME PROJECTED AT THE BEGINNING OF THE YEAR.
- -------------------------------------------------------------------------------- Actual Purchases Effective Calculated 20% Holdback Rebate Paid Qtrly. ($MM) Rebate Rebate Each (millions) (millions) Vol. %(80MM Vol.) Qtr. (millions) (millions) - -------------------------------------------------------------------------------- 1st Qtr * **** **** **** **** **** 2nd Qtr ** ***** **** **** **** **** 3rd Qtr ** ***** **** **** **** **** 4th Qtr ** ***** **** **** **** **** -- ----- ---- ---- ---- ** ***** **** **** **** True-up: **** **** ---- ---- Total: **** **** ======== ========
29 ACTUAL AGGREGATE VOLUME PURCHASED BY IDEXX AND IDEXX BV IS LOWER THAN VOLUME PROJECTED AT THE BEGINNING OF THE YEAR.
- -------------------------------------------------------------------------------- Actual Purchases Effective Calculated 20% Holdback Rebate Paid Qtrly. ($MM) Rebate Rebate Each (millions) (millions) Vol. %(80MM Vol.) Qtr. (millions) (millions) - -------------------------------------------------------------------------------- 1st Qtr ** **** **** **** **** **** 2nd Qtr ** ***** **** **** **** **** 3rd Qtr ** ***** **** **** **** **** 4th Qtr ** ***** **** **** **** **** -- ----- ---- ---- ---- ** ***** **** **** **** True-up: ****** **** ------ ---- Total: **** **** =============== =====
CALCULATION OF IDEXX'S PROPORTIONATE SHARE OF REBATE (ASSUMING ACTUAL AGGREGATE VOLUME PURCHASED BY IDEXX AND IDEXX BV EQUALS VOLUME PROJECTED AT THE BEGINNING OF THE YEAR): ASSUMPTIONS: Number of slides purchased by IDEXX and its wholly-owned subsidiaries other than IDEXX BV: ********** slides Total number of slides purchase by IDEXX and its wholly-owned subsidiaries: ********** slides Total rebate earned: ************ CALCULATION: IDEXX's rebate equals:********************************************************* -----END PRIVACY-ENHANCED MESSAGE-----