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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
IDEXX Laboratories, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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IDEXX LABORATORIES, INC.
One IDEXX Drive
Westbrook, ME 04092
April 13, 1998
To all IDEXX stockholders:
We invite you to attend our Annual Stockholders' Meeting on Friday, May 15,
1998 at 9:00 a.m. The meeting will be held at the Portland Marriott, 200 Sable
Oaks Drive, South Portland, Maine.
The attached notice and proxy statement describe the business to be
conducted at the meeting, including the election of three directors. Nominees
for three-year terms on our Board are E. Robert Kinney, James L. Moody, Jr., and
Erwin F. Workman, Jr., Ph.D. We are also seeking stockholder approval for the
1998 Stock Incentive Plan.
While 1997 was a difficult year for IDEXX, we are moving into 1998 with
renewed optimism about our business. We have addressed many challenges and have
continued to invest significantly in future growth opportunities. Among the many
steps that we have taken to improve future performance have been the addition of
several senior executives, including Jeffrey J. Langan, who joined IDEXX in
November 1997 as President and Chief Operating Officer. Mr. Langan and Dr. Mary
L. Good were elected to the Board of Directors late last year. During 1997 and
early 1998 we resolved two patent litigation matters that had consumed valuable
management time and Company resources. We also made several acquisitions,
expanded the scope of our business and have undertaken a number of business
restructuring efforts that we believe will result in improved future operating
performance. Another initiative undertaken by the Company in early 1997 was the
repricing of certain stock options in response to a substantial decline in the
market price of our Common Stock. This has helped us to retain and motivate many
talented employees, and is discussed in more detail in the Proxy Statement.
We are grateful for the continued support of our stockholders as we move
beyond the unique challenges of 1997 toward our goal of creating exceptional
long-term value for employees, customers and stockholders. Our management team
and Board of Directors appreciate and encourage stockholder participation at the
Annual Meeting. Whether or not you plan to attend the meeting, it is important
that your shares be represented. Please take a moment now to sign, date and
return your proxy in the envelope provided even if you plan to attend the
meeting.
Sincerely,
David E. Shaw, Chairman and
Chief Executive Officer
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IDEXX LABORATORIES, INC.
One IDEXX Drive
Westbrook, Maine 04092
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, MAY 15, 1998
The Annual Meeting of Stockholders of IDEXX Laboratories, Inc. (the
"Company") will be held at the Portland Marriott, 200 Sable Oaks Drive, South
Portland, Maine, on Friday, May 15, 1998 at 9:00 a.m., local time, to consider
and act upon the following matters:
1. To elect three Class III Directors for a three-year term;
2. To approve the Company's 1998 Stock Incentive Plan covering 1,800,000
shares of the Company's Common Stock, as described in the Proxy
Statement;
3. To ratify the selection by the Board of Directors of Arthur Andersen LLP
as the Company's independent public accountants for the current fiscal
year; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on March 26, 1998 will be
entitled to notice of and to vote at the meeting or any adjournment thereof. The
stock transfer books of the Company will remain open.
By Order of the Board of Directors,
Richard B. Thorp, Secretary
Westbrook, Maine
April 13, 1998
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WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY
IS MAILED IN THE UNITED STATES.
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IDEXX LABORATORIES, INC.
One IDEXX Drive
Westbrook, Maine 04092
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of IDEXX Laboratories, Inc. (the "Company")
for use at the Annual Meeting of Stockholders to be held on May 15, 1998 and at
any adjournment of that meeting (the "Annual Meeting"). All proxies will be
voted in accordance with the stockholders' instructions and, if no choice is
specified, the proxies will be voted in favor of the matters set forth in the
accompanying Notice of Meeting. Any proxy may be revoked by a stockholder at any
time before its exercise by delivery of written revocation or a subsequently
dated proxy to the Secretary of the Company or by voting in person at the Annual
Meeting.
At the close of business on March 26, 1998, the record date for the
determination of stockholders entitled to vote at the Annual Meeting, there were
outstanding and entitled to vote an aggregate of 38,432,862 shares of common
stock, $.10 par value per share, of the Company (the "Common Stock").
Stockholders are entitled to one vote per share.
The Company's Annual Report for 1997 was mailed to stockholders, along with
these proxy materials, on or about April 13, 1998.
VOTES REQUIRED
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Annual Meeting shall constitute a quorum
for the transaction of business at the Annual Meeting. Shares of Common Stock
present in person or represented by proxy (including shares which abstain or do
not vote with respect to one or more of the matters presented for stockholder
approval) will be counted for purposes of determining whether a quorum exists at
the Annual Meeting.
The affirmative vote of the holders of a plurality of the votes cast by the
stockholders entitled to vote at the Annual Meeting is required for the election
of Directors. The affirmative vote of the holders of a majority of the shares of
Common Stock voting on the matter is required to (i) approve the Company's 1998
Stock Incentive Plan, and (ii) ratify the selection of Arthur Andersen LLP as
the Company's independent auditors for the current year. Shares which abstain
from voting as to a particular matter, and shares held in "street name" by
brokers or nominees who indicate on their proxies that they do not have
discretionary authority to vote such shares as to a particular matter, will not
be counted as votes in favor of such matter, and also will not be counted as
votes cast or shares voting on such matter. Accordingly, abstentions and "broker
non-votes" will have no effect on the voting on the matters being presented for
stockholder action at the Annual Meeting.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information, as of March 31, 1998,
with respect to the beneficial ownership of the Common Stock by (i) each person
known by the Company to beneficially own more than five percent of the
outstanding shares of Common Stock, (ii) each Director of the Company, (iii)
each executive officer of the Company named in the Summary Compensation Table
set forth under the caption "Executive Compensation" below and (iv) all current
Directors and executive officers of the Company as a group:
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY COMMON STOCK
BENEFICIAL OWNER OWNED(1) OUTSTANDING(2)
- ---------------- ---------------- --------------
The Crabbe Huson Group, Inc.(3)........................ 2,798,300 7.28%
121 S.W. Morrison, Suite 1400
Portland, Oregon 97204
Massachusetts Financial Services Company(4)............ 2,074,600 5.40%
500 Boylston Street
Boston, Massachusetts 02116-3741
State of Wisconsin Investment Board(5)................. 1,969,200 5.17%
P.O. Box 7842
Madison, Wisconsin 53707
Mary L. Good(6)........................................ 2,796 *
John R. Hesse(7)....................................... 49,416 *
E. Robert Kinney(8).................................... 130,668 *
James L. Moody, Jr.(9)................................. 81,168 *
Kenneth Paigen, Ph.D.(10).............................. 43,204 *
William F. Pounds(11).................................. 90,608 *
David E. Shaw(12)...................................... 1,338,476 3.39%
Erwin F. Workman, Jr., Ph.D.(13)....................... 572,369 1.47%
Ralph K. Carlton(14)................................... 21,000 *
Louis W. Pollock(15)................................... 82,970 *
Brad R. MacKinnon(16).................................. 116,037 *
Ernst R. Bachofner(17)................................. 14,602 *
All current Directors and executive officers as a Group
(13 persons)(18)..................................... 2,413,675 6.02%
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* Less than 1%.
(1) The inclusion herein of any shares of Common Stock deemed beneficially
owned does not constitute an admission of beneficial ownership of those
shares. Unless otherwise indicated, each person listed above has sole
voting and investment power with respect to the shares listed. Any
reference below to stock options held by the person or entity in question
refers to stock options which are currently exercisable or exercisable
within 60 days after March 31, 1998.
(2) Number of shares deemed outstanding includes 38,433,102 shares outstanding
as of March 31, 1998, plus any shares subject to options held by the person
or entity in question that are currently exercisable or exercisable within
60 days after March 31, 1998.
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(3) Based upon information derived from a Schedule 13G filed by The Crabbe
Huson Group, Inc. ("Crabbe Huson") pursuant to Section 13 of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules promulgated
thereunder reporting its beneficial ownership of shares as of December 31,
1997. According to the Schedule 13G, Crabbe Huson shares the power to vote
and dispose of these shares.
(4) Based upon information derived from a Schedule 13G filed by Massachusetts
Financial Services Company ("MFSC") pursuant to Section 13 of the Exchange
Act and the rules promulgated thereunder reporting its beneficial ownership
of shares as of December 31, 1997. According to the Schedule 13G, MFSC has
the sole power to vote 1,994,700 shares and the sole power to dispose of
2,074,600 shares.
(5) Based upon information derived from a Schedule 13G filed by the State of
Wisconsin Investment Board ("SWIB") pursuant to Section 13 of the Exchange
Act and the rules promulgated thereunder reporting its beneficial ownership
of shares as of December 31, 1997. According to the Schedule 13G, SWIB has
the sole power to vote and dispose of these shares.
(6) Consists of options to purchase 2,796 shares of Common Stock.
(7) Includes options to purchase 16,500 shares of Common Stock.
(8) Includes options to purchase 26,668 shares of Common Stock. Also includes
4,000 shares of Common Stock held by Mr. Kinney's wife, as to which shares
Mr. Kinney disclaims beneficial ownership.
(9) Includes options to purchase 33,168 shares of Common Stock.
(10) Includes options to purchase 41,004 shares of Common Stock. Also includes
2,000 shares of Common Stock held by Dr. Paigen's daughter, as to which
shares Dr. Paigen disclaims beneficial ownership.
(11) Includes options to purchase 19,833 shares of Common Stock.
(12) Includes options to purchase 1,006,460 shares of Common Stock.
(13) Includes options to purchase 430,060 shares of Common Stock. Also includes
595 shares of Common Stock held by Dr. Workman's son, as to which shares
Dr. Workman disclaims beneficial ownership.
(14) Consists of options to purchase 21,000 shares of Common Stock.
(15) Includes options to purchase 79,020 shares of Common Stock. Also includes
174 shares of Common Stock held in an individual retirement account for Mr.
Pollock's wife, as to which shares Mr. Pollock disclaims beneficial
ownership.
(16) Includes options to purchase 99,150 shares of Common Stock. Also includes
5,780 shares of Common Stock held in custodial accounts for Mr. MacKinnon's
children, as to which shares Mr. MacKinnon disclaims beneficial ownership.
Mr. MacKinnon served as an executive officer until May 1997.
(17) Includes options to purchase 11,200 shares of Common Stock. Also includes
2,000 shares of Common Stock held by a trust corporation for the benefit of
Mr. Bachofner. Mr. Bachofner served as an executive officer until May 1997.
(18) Includes options to purchase 1,676,509 shares of Common Stock.
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ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides that the Board
of Directors is classified into three classes (designated Class I Directors,
Class II Directors and Class III Directors), with members of each class holding
office for staggered three-year terms. There are currently three Class I
Directors, whose terms expire at the 2000 Annual Meeting of Stockholders, three
Class II Directors, whose terms expire at the 1999 Annual Meeting of
Stockholders, and three Class III Directors, whose terms expire at the 1998
Annual Meeting of Stockholders (in all cases subject to the election and
qualification of their successors and to their earlier death, resignation or
removal).
The persons named in the enclosed proxy will vote to elect E. Robert
Kinney, James L. Moody, Jr. and Erwin F. Workman, Jr., Ph.D. as Class III
Directors, unless authority to vote for the election of all or any of the
nominees is withheld by marking the proxy to that effect. Each of the nominees
is currently a Class III Director of the Company. Each nominee has indicated his
willingness to serve, if elected, but if any should be unable or unwilling to
serve, proxies may be voted for a substitute nominee designated by the Board of
Directors.
There are no family relationships among the executive officers or Directors
of the Company.
NOMINEES
Set forth below for each Director of the Company (including the three
nominees for Class III Director) is the following information: name and age,
positions with the Company, principal occupation and business experience during
the past five years, directorships of other publicly-held companies, and the
year of commencement of such Director's term as a Director of the Company:
NOMINEES FOR CLASS III DIRECTORS
E. ROBERT KINNEY, age 81, has been a Director of the Company since 1986.
Mr. Kinney was President of IDS Mutual Funds Group, a complex of open-end
investment companies, from 1982 until 1987. Prior to joining IDS Mutual Funds
Group, he was the Chief Executive Officer of General Mills, Inc.
JAMES L. MOODY, JR., age 66, has been a Director of the Company since 1992.
Mr. Moody was Chairman of the Board of Hannaford Bros. Co., an operator of
supermarkets, from 1984 until 1997, and served as Chief Executive Officer of
Hannaford Bros. Co. from 1973 until 1992. He is also a director of Penobscot
Shoe Company, Staples, Inc., UNUM Corporation, Empire Company Limited (a
Canadian corporation), and a trustee of various funds of the Colonial Group of
Mutual Funds.
ERWIN F. WORKMAN, JR., PH.D., age 51, has been a Director of the Company
since October 1993. Dr. Workman has served as Executive Vice President and Chief
Scientific Officer of the Company since November 1997. Dr. Workman joined the
Company as a Vice President in 1984, and he became Senior Vice President in
December 1991, Executive Vice President in May 1992 and served as President and
Chief Operating Officer from 1993 to November 1997. Prior to joining the
Company, he was Manager of Research and Development for the Hepatitis and AIDS
Business Unit within the diagnostic division of Abbott Laboratories.
CLASS II DIRECTORS
(TERMS EXPIRE AT 1999 ANNUAL MEETING)
JOHN R. HESSE, age 64, has been a Director of the Company since 1984. Mr.
Hesse has been President of Private Equity Managers, Inc. since 1980 and
Chairman of the Board of Directors and President of International Garden
Products, Inc. since January 1996.
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KENNETH PAIGEN, PH.D., age 70, has been a Director of the Company since
1992. Dr. Paigen has been Director of The Jackson Laboratory, a nonprofit
genetics research institute, since 1989. From 1982 until 1989, Dr. Paigen was a
Professor at the University of California-Berkeley.
JEFFREY J. LANGAN, age 53, has been a Director and President and Chief
Operating Officer of the Company since November 1997. From April 1996 until
November 1997 Mr. Langan was President and Chief Executive Officer of Thermedics
Detection Inc. Prior to joining Thermedics Detection, Mr. Langan was employed by
Hewlett Packard Company from 1973 to 1996, where he held several General Manager
positions, including General Manager of the Healthcare Information Management
Division and General Manager of the Clinical Systems Business Unit.
CLASS I DIRECTORS
(TERMS EXPIRE AT 2000 ANNUAL MEETING)
DAVID E. SHAW, age 46, has been Chairman of the Board of Directors and
Chief Executive Officer of IDEXX Laboratories, Inc. since he founded the Company
in 1983. Mr. Shaw also served as President of the Company from 1983 until
October 1993.
WILLIAM F. POUNDS, age 70, has been a Director of the Company since 1990.
Dr. Pounds has been a Professor at the Sloan School of Management, Massachusetts
Institute of Technology, since 1961 and was President of Rockefeller Financial
Services from September 1981 until May 1991. Dr. Pounds is a director of Putnam
Mutual Funds and The Sun Company, Inc.
MARY L. GOOD, PH.D., age 66, has been a Director of the Company since
December 1997. Dr. Good has been a managing member of Venture Capital Investors,
LLC since July 1997. Dr. Good was the Under Secretary for Technology for the
Technology Administration in the United States Department of Commerce from
August 1993 until June 1997, and was Senior Vice President - Technology at
AlliedSignal Inc. from 1988 until August 1993. Dr. Good is a director of Biogen,
Inc.
BOARD AND COMMITTEE MEETINGS
The Company has a standing Audit Committee which provides the opportunity
for direct contact between the Company's independent auditors and the Board. The
Audit Committee met four times during 1997, to review the activities and the
effectiveness of the auditors during the annual audit and related matters, to
discuss the Company's internal accounting control policies and procedures and to
consider and recommend the selection of the Company's independent auditors. The
current Audit Committee members are Messrs. Hesse (Chairman) and Kinney and Dr.
Paigen.
The Company has a standing Compensation Committee which provides
recommendations to the Board regarding compensation programs of the Company,
administers the Company's stock option plans, and authorizes stock option grants
under the 1991 Stock Option Plan. The Compensation Committee met nine times
during 1997. The current members of the Compensation Committee are Dr. Pounds
(Chairman) and Messrs. Kinney and Moody.
The Company does not have a nominating committee or a committee serving a
similar function. Nominations are made by and through the full Board of
Directors.
The Board of Directors met ten times and acted twice by written consent
during 1997. Each Director attended at least 75% of the aggregate of the number
of Board meetings and the number of meetings held by all committees on which he
served.
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DIRECTORS' COMPENSATION
The Company has not paid cash director's fees to its Directors. Directors
who are not officers or employees of the Company have received stock options
pursuant to formula plans, as described below, and expense reimbursement for
attending Board and Committee meetings. Directors who are officers or employees
of the Company do not receive any additional compensation for their services as
Directors.
Under the Company's 1997 Director Option Plan (the "1997 Director Plan"),
Directors who are not officers or employees of the Company or of any subsidiary
of the Company are entitled to receive non-statutory options to purchase 6,500
shares of Common Stock at each annual meeting through and including the Annual
Meeting of Stockholders held in 2002. Options granted under the 1997 Director
Plan vest and become exercisable on the first anniversary of the date of grant
or, if earlier, the date of the next annual meeting. In addition, eligible
Directors elected to the Board other than at an annual meeting are granted an
option for a pro rata number of shares of Common Stock. In general, options
granted under the 1997 Director Plan are not transferable and are exercisable
during the lifetime of the Director only while he or she is serving as a
Director of the Company or within 90 days after he or she ceases to serve as a
Director of the Company; provided, however, that the Board has the discretion to
allow options to be transferable to family members, trusts for the benefit of
family members, and charitable organizations. If a Director dies or becomes
disabled while serving as a Director, options are exercisable for a one-year
period thereafter. No option is exercisable after ten years from the date of the
grant. The option price per share is equal to the fair market value of a share
of Common Stock on the date the option is granted.
As of March 31, 1998, options to purchase 35,296 shares of Common Stock had
been granted and were outstanding under the 1997 Director Plan and 264,704
shares of Common Stock were available for issuance pursuant to options to be
granted under the 1997 Director Plan.
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EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth certain information concerning the
compensation for each of the last three fiscal years of (i) the Company's Chief
Executive Officer, (ii) three other most highly compensated executive officers
during the fiscal year ended December 31, 1997 who were serving as executive
officers as of December 31, 1997 and (iii) two former executive officers of the
Company who would have been among the executive officers covered by clause (ii)
but for the fact that they were not serving as executive officers on December
31, 1997 (collectively, the "Named Executive Officers"). No other executive
officers met the definition of "highly compensated" during 1997 under Securities
and Exchange Commission regulations.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------- ------------
OTHER ANNUAL SECURITIES
COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#) COMPENSATION($)(2)
--------------------------- ---- --------- -------- ------------ ---------- ------------------
David E. Shaw................. 1997 $390,200 -- -- 135,000(3) $ 3,176
Chairman of the Board 1996 $349,038 $210,000 -- 150,000 $ 3,000
of Directors and Chief 1995 $299,038 $180,000 -- 120,500 $ 3,000
Executive Officer
Erwin F. Workman, Jr.,
Ph.D........................ 1997 $293,500 -- -- 108,000(4) $ 3,302
Executive Vice President and 1996 $249,519 $150,000 -- 100,000 $ 3,000
Chief Scientific Officer 1995 $224,519 $135,000 -- 60,500 $ 3,000
Ralph K. Carlton.............. 1997 $214,900 -- $25,000(5) 105,000(6) --
Senior Vice President,
Finance
and Administration and
Chief Financial Officer
Ernst R. Bachofner(7)......... 1997 $168,800 -- -- 35,000(8) $ 3,174
Former Vice President 1996 $124,231 $ 48,000 $13,077(9) 30,000 $26,147(10)
Louis W. Pollock.............. 1997 $165,900 -- -- 35,350(11) $ 3,175
Vice President 1996 $149,519 $ 60,000 -- 30,500 $ 3,000
1995 $126,929 $ 57,150 -- 20,200 $ 3,000
Brad R. MacKinnon(12)......... 1997 $163,900 -- -- 39,000(13) $ 3,170
Division Vice President 1996 $149,519 $ 67,000 -- 30,000 $ 3,167
1995 $125,726 $ 56,250 -- 20,200 $ 2,946
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(1) Other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where such perquisites and other
personal benefits constituted less than the lesser of $50,000 or 10 percent
of the total salary and bonus for the Named Executive Officer for such
year.
(2) Consists of the Company's matching contribution under the IDEXX Retirement
and Incentive Savings Plan.
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(3) Represents options issued in exchange for options to purchase 270,000
shares in connection with the Company's 1997 option repricing program.
Excludes options to purchase 120,000 shares issued in February 1997 but
later cancelled in exchange for options to purchase 60,000 shares (which
are reflected in the table) in connection with the Company's 1997 option
repricing program. See "Compensation Committee Report on Executive
Compensation - 1997 Option Repricing Program."
(4) Represents options issued in exchange for options to purchase 180,000
shares in connection with the Company's 1997 option repricing program.
Excludes options to purchase 80,000 shares issued in February 1997 but
later cancelled in exchange for options to purchase 48,000 shares (which
are reflected in the table) in connection with the Company's 1997 option
repricing program. See "Compensation Committee Report on Executive
Compensation - 1997 Option Repricing Program."
(5) Represents a relocation allowance paid to Mr. Carlton upon his joining the
Company in February 1997.
(6) Represents options issued in exchange for options to purchase 150,000
shares in connection with the Company's 1997 option repricing program. All
of the cancelled options were granted in February 1997, but are excluded
from the table. See "Compensation Committee Report on Executive
Compensation - 1997 Option Repricing Program."
(7) Mr. Bachofner served as an executive officer of the Company until May 1997.
(8) Represents options issued in exchange for options to purchase 50,000 shares
in connection with the Company's 1997 option repricing program. Excludes
options to purchase 20,000 shares issued in February 1997 but later
cancelled in exchange for options to purchase 14,000 shares (which are
reflected in the table) in connection with the Company's 1997 option
repricing program. See "Compensation Committee Report on Executive
Compensation - 1997 Option Repricing Program."
(9) Represents a relocation allowance paid to Mr. Bachofner upon his joining
the Company in April 1996.
(10) Consists of $808 of Company matching contributions under the IDEXX
Retirement and Incentive Savings Plan and $25,339 of consulting fees paid
by the Company to Mr. Bachofner prior to his becoming an employee of the
Company.
(11) Represents options issued in exchange for options to purchase 50,500 shares
in connection with the Company's 1997 option repricing program. Excludes
options to purchase 20,000 shares issued in February 1997 but later
cancelled in exchange for options to purchase 14,000 shares (which are
reflected in the table) in connection with the Company's 1997 option
repricing program. See "Compensation Committee Report on Executive
Compensation - 1997 Option Repricing Program."
(12) Mr. MacKinnon served as an executive officer of the Company until May 1997.
(13) Includes options issued in exchange for options to purchase 55,000 shares
in connection with the Company's 1997 option repricing program. Excludes
options to purchase 25,000 shares issued in February 1997 but later
cancelled in exchange for options to purchase 17,500 shares (which are
reflected in the table) in connection with the Company's 1997 option
repricing program. See "Compensation Committee Report on Executive
Compensation - 1997 Option Repricing Program."
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Option Grants
The following table sets forth certain information concerning grants of
stock options made during the fiscal year ended December 31, 1997 to each of the
Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS EXERCISE ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO OR PRICE APPRECIATION FOR
OPTIONS EMPLOYEES BASE OPTION TERM(4)
GRANTED IN FISCAL PRICE EXPIRATION ---------------------------
NAME (#)(1) YEAR(2) ($/SH)(3) DATE 5%($) 10%($)
---- ---------- ---------- --------- ---------- ----------- -------------
David E. Shaw(5)................... 7,692* 0.33 $17.350 2/4/07 $ 27,586.53 $ 120,314.37
52,308* 2.23 $17.350 2/4/07 $187,597.01 $ 817,495.23
7,693** 0.33 $17.350 2/13/06 $ 20,105.07 $ 97,708.71
67,307** 2.87 $17.350 2/13/06 $175,901.71 $ 854,865.46
Erwin F. Workman, Jr., Ph.D.(5).... 40,308* 1.72 $17.350 2/4/07 $144,560.30 $ 629,953.31
7,692* 0.33 $17.350 2/4/07 $ 27,586.53 $ 120,214.37
52,307** 2.23 $17.350 2/13/06 $136,700.36 $ 664,350.63
7,693** 0.33 $17.350 2/13/06 $ 20,105.07 $ 97,708.71
Ralph K. Carlton................... 66,540* 2.84 $17.350 2/4/07 $238,638.55 $1,039,919.95
38,460* 1.64 $17.350 2/4/07 $137,932.65 $ 601,071.86
Louis W. Pollock................... 70** 0.01 $17.350 5/24/06 $ 201.74 $ 944.72
280** 0.01 $17.350 5/24/06 $ 806.98 $ 3,778.89
15,099** 0.65 $17.350 2/13/06 $ 39,460.09 $ 191,772.23
5,600* 0.24 $17.350 2/4/07 $ 20,083.80 $ 87,519.56
8,400* 0.36 $17.350 2/4/07 $ 30,125.70 $ 131,279.34
5,901** 0.25 $17.350 2/13/06 $ 15,421.81 $ 74,948.54
Ernst R. Bachofner(6).............. 21,000* 0.90 $17.350 4/1/06 $ 57,524.04 $ 274,513.50
Brad R. MacKinnon(7)............... 400 0.02 $15.875 7/29/07 $ 3,993.48 $ 10,120.26
100 0.01 $15.875 7/29/07 $ 998.37 $ 2,530.07
10,508* 0.45 $17.350 2/4/07 $ 37,685.81 $ 164,224.21
5,904** 0.25 $17.350 2/13/06 $ 15,429.65 $ 74,986.64
6,992* 0.30 $17.350 2/4/07 $ 25,076.06 $ 109,274.43
15,096** 0.64 $17.350 2/13/06 $ 39,452.25 $ 191,734.13
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* Indicates repriced options granted in exchange for options granted in 1997
that were cancelled later in 1997 in connection with the Company's 1997
option repricing program; the cancelled options are not reflected in the
table. See "Compensation Committee Report on Executive Compensation -- 1997
Option Repricing Program."
** Indicates repriced options granted in exchange for options granted prior to
1997 that were cancelled in connection with the Company's 1997 option
repricing program. See "Compensation Committee Report on Executive
Compensation -- 1997 Option Repricing Program."
9
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(1) Excludes options granted in 1997 that were cancelled in connection with the
1997 option repricing program. See "Compensation Committee Report on
Executive Compensation -- 1997 Option Repricing Program." Options granted in
connection with the Company's 1997 option repricing program become
exercisable on the same schedule, and have the same expiration date, as the
options for which they were exchanged, except that repriced options were not
exercisable prior to October 31, 1997. Exchanged options generally vested in
equal installments over a five-year period commencing on the first
anniversary of the date of grant and expired 10 years from the date of
grant. The other options described in the table also vest over a five-year
period and expire 10 years from the date of grant. See "Compensation
Committee Report on Executive Compensation -- 1997 Option Repricing
Program."
(2) Excludes options granted in 1997 that were cancelled in connection with the
1997 option repricing program. See "Compensation Committee Report on
Executive Compensation - 1997 Option Repricing Program."
(3) The exercise price is equal to the fair market value of the Common Stock on
the date of grant, except that the exercise price of options granted in
connection with the Company's 1997 option repricing program have an exercise
price of $17.35 per share, which is higher than the market value of the
Common Stock on April 30, 1997 ($13.00), the date of grant.
(4) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date. Actual gains, if any, on stock option exercises will depend
on the future performance of the Common Stock and the date on which the
options are exercised.
(5) Upon a change in control of the Company, vesting of options granted to Mr.
Shaw and Dr. Workman accelerates and such options become fully exercisable.
See "Executive Compensation - Employment Agreements."
(6) Mr. Bachofner served as an executive officer until May 1997.
(7) Mr. MacKinnon served as an executive officer until May 1997.
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Option Exercises and Year-End Values
The following table sets forth certain information concerning stock options
exercised during the fiscal year ended December 31, 1997 by each of the Named
Executive Officers and the number and value of unexercised options held by each
of the Named Executive Officers on December 31, 1997:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES VALUE FISCAL YEAR-END(#) FISCAL YEAR-END($)(3)
ACQUIRED ON REALIZED ------------------------- -------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
David E. Shaw................. 0(2) $ 0 1,101,360/264,340 $12,079,625/$275,062
Erwin F. Workman, Jr.,
Ph.D........................ 20,000 $725,500 368,360/180,340 $ 2,789,625/$167,562
Ralph K. Carlton.............. 0 $ 0 0/105,000 $ 0/$ 0
Ernst R. Bachofner(4)......... 0 $ 0 4,200/ 30,800 $ 0/$ 0
Louis W. Pollock.............. 0 $ 0 64,710/ 68,040 $ 158,375/$ 41,937
Brad R. MacKinnon(5).......... 10,000 $112,912 84,610/ 69,760 $ 487,434/$ 31,418
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(1) Represents the difference between the exercise price and the fair market
value of the Common Stock on the date of exercise.
(2) Excludes 200,000 shares purchased by Mr. Shaw upon an option exercise that
was later rescinded by the Company.
(3) Based on the fair market value of the Common Stock on December 31, 1997
($15.938) less the option exercise price.
(4) Mr. Bachofner served as an executive officer until May 1997.
(5) Mr. MacKinnon served as an executive officer until May 1997.
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Employment Agreements
In April 1997 the Company entered into employment agreements with Mr. Shaw
and Dr. Workman establishing the terms of employment of such officers in the
event of a change in control of the Company, including the payment of certain
compensation and benefits in the event that, following a change in control, the
employment of either officer is terminated by the Company or its successor
without cause or by the officer for good reason. For purposes of the agreements,
a "change in control" is deemed to occur, subject to certain exceptions, upon
(i) the acquisition by a person or entity of 20% or more of the outstanding
Common Stock or the combined voting power of the Company's then-outstanding
voting securities, (ii) individuals who comprise the Board of Directors as of
the date of the agreements (the "Incumbent Directors"), and individuals who are
subsequently elected to the Board who are approved by the Incumbent Directors,
ceasing to constitute at least a majority of the Board, (iii) consummation of a
merger, consolidation, reorganization or sale of assets unless following such
transaction (1) the beneficial owners of the Company's Common Stock and other
voting securities immediately prior to such transaction own, in substantially
the same proportions, more than 60% of the outstanding common stock and
then-outstanding voting securities of the entity resulting from such
transaction, (2) no person or entity owns 20% or more of the outstanding common
stock or the combined voting power of the then-outstanding voting securities of
the resulting entity, and (3) at least half of the members of the board of
directors of the resulting entity were members of the Incumbent Board at the
time of execution of the initial agreement, or of the action of the Board,
providing for the transaction. Upon the occurrence of a change in control, all
outstanding options to purchase Common Stock owned by the officers would become
immediately exercisable in full.
Upon termination of employment following a change in control by the Company
or its successor without cause or by the officer for good reason, the officer
would receive in addition to salary and benefits through the date of termination
(i) a pro-rated bonus payment for the portion of the year of termination prior
to the date of termination, (ii) benefits for a period of 36 months following
termination and (iii) an amount equal to three times the sum of (1) the
officer's annual base salary plus (2) the highest annual bonus received by the
officer. For this purpose "annual base salary" is defined as the officer's base
salary, but not less than 12 times the highest monthly base salary paid within
the 12 months prior to the change of control, and "highest annual bonus" is
defined as the higher of (A) the highest annual bonus paid to the officer for
the three fiscal years preceding the change in control and (B) the annual bonus
paid or payable for the most recently completed fiscal year following the change
in control.
The employment agreements become effective upon a change in control and
terminate three years thereafter. Prior to a change in control, the Company has
no obligation to retain the officer as an employee. No compensation is payable
by the Company to the officers upon any termination of employment prior to a
change in control, except that compensation substantially equivalent to that
described in the preceding paragraph will be payable prior to a change in
control if the termination of the officer's employment (i) is at the request of
a third party who has taken steps reasonably calculated to effect a change in
control or (ii) otherwise arose in connection with or anticipation of a change
in control.
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Option Repricing
The following table sets forth certain information concerning all stock
options repriced between the date of the Company's initial public offering and
December 31, 1997 that were held by an executive officer of the Company at the
time of the repricing:
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK PRICE AT NEW REMAINING AT
OPTIONS AT TIME OF TIME OF EXERCISE DATE OF REPRICING
NAME AND POSITION DATE REPRICED(1) REPRICING REPRICING PRICE (IN MONTHS)
- ----------------- ---- ----------- ------------ --------- -------- -----------------
David E. Shaw....................... 4/30/97 75,000 $13.00 $45.25 $17.35 106
Chairman of the Board of Directors 4/30/97 60,000 $13.00 $32.12 $17.35 117
and Chief Executive Officer
Erwin F. Workman, Jr., Ph.D......... 4/30/97 60,000 $13.00 $45.25 $17.35 106
Executive Vice President and 4/30/97 48,000 $13.00 $32.12 $17.35 117
Chief Scientific Officer
Ralph K. Carlton.................... 4/30/97 105,000 $13.00 $32.12 $17.35 117
Senior Vice President and Chief
Financial Officer
Louis W. Pollock.................... 4/30/97 21,000 $13.00 $45.25 $17.35 106
Vice President 4/30/97 350 $13.00 $45.00 $17.35 109
4/30/97 14,000 $13.00 $32.12 $17.35 117
Ernst R. Bachofner.................. 4/30/97 21,000 $13.00 $44.25 $17.35 107
Former Vice President 4/30/97 14,000 $13.00 $32.12 $17.35 117
Brad R. MacKinnon................... 4/30/97 21,000 $13.00 $45.25 $17.35 106
Division Vice President 4/30/97 17,500 $13.00 $32.12 $17.35 117
Merilee Raines...................... 4/30/97 14,000 $13.00 $45.25 $17.35 106
Vice President, Finance and 4/30/97 14,000 $13.00 $32.12 $17.35 117
Treasurer
Henry Bobe.......................... 4/30/97 21,000 $13.00 $34.50 $17.35 115
Former Vice President
- ---------------
(1) Represents the number of shares underlying repriced options issued under the
Company's 1997 option repricing program. For the named individuals, the
number of shares underlying such repriced options was from 30% to 50% less
than the number of shares underlying the options for which such repriced
options were exchanged. See "Compensation Committee Report on Executive
Compensation -- 1997 Option Repricing Program."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of copies of reports filed with respect to 1997 by
reporting persons of the Company pursuant to Section 16(a) of the Exchange Act,
or written representations from certain reporting persons that no Form 5 filing
was required for such persons for such period, the Company believes that all
filings required to be made by reporting persons of the Company were timely made
in accordance with the requirements of the Exchange Act.
13
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee, which is responsible for determining the compensation
package of each executive officer and recommending it to the Board of Directors.
The Compensation Committee is currently comprised of three non-employee
Directors.
The Company's executive compensation program is intended to promote the
achievement of the Company's business goals and, thereby, to maximize corporate
performance and stockholder returns. Executive compensation consists of a
mixture of base salary, performance bonuses and stock-based incentives. The
Compensation Committee believes it is important to have bonuses constitute a
portion of each executive's compensation package in order to tie an individual's
compensation level to individual and corporate performance, and believes it is
important to have stock incentives constitute a portion of each executive's
compensation package in order to help align executive and stockholder interests.
In determining levels of compensation, the Compensation Committee considers a
number of factors such as: (i) corporate performance, (ii) individual
performance, and (iii) the Company's need to attract and retain key executive
personnel who will contribute to the creation of stockholder value. In assessing
corporate performance, the Committee primarily measures the Company's
performance against a Board-approved budget.
Base Salary. Generally, each executive officer's base salary is reviewed
on an annual basis. In setting base salary, the Compensation Committee considers
the factors described above, as well as recommendations from the Company's Chief
Executive Officer. The Committee does not, however, use a specific formula based
on a ranking of the indicated criteria, but instead makes a subjective
evaluation of each executive officer's contributions and potential in light of
such criteria. In February 1997, the Compensation Committee increased Mr. Shaw's
base salary from $350,000 to $400,000, in recognition of the Company's
performance and his contributions to the Company and attainment of individual
goals during 1996. Mr. Shaw's salary was reduced, however, by 5% to an annual
rate of $380,000 in July 1997 due to the Company's performance against its
financial objectives during the first half of 1997. All other Named Executive
Officers' base salaries were also reduced at least 5% in July 1997 as a result
of the Company's performance during the first half of 1997.
Performance Bonuses. The payment of bonuses to executive officers is
directly related to their achievement of corporate and individual performance
goals. The Compensation Committee's policy is that the payment of bonuses will
not necessarily be authorized unless the Company meets or exceeds its budget
objectives for the fiscal year. The amount of the bonus paid, if any, varies
among the executive officers depending on their success in achieving individual
performance goals and on their contribution to the achievement of corporate
performance goals, with principal emphasis placed by the Compensation Committee
on corporate goals.
At the beginning of each year, Mr. Shaw proposes a budget for the year to
the Board of Directors for approval. This budget includes corporate-wide goals,
including financial objectives for revenues, expenses, gross margin, net income
and earnings per share, goals jointly established by Mr. Shaw and each of the
other executive officers for their individual areas of responsibility, and a
proposal regarding the overall size of the target bonus pool for the year. The
individual and corporate goals included in the budget generally represent
objective measures of performance. These goals include quantifiable financial
objectives, such as the achievement of revenue or operating profit targets, and
other milestones in research, development, marketing and other areas. For 1997,
the Board of Directors initially approved a target bonus pool equal to
approximately 50% of the base salaries of all eligible bonus pool participants,
which included all executive officers and certain other key members of
management.
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14
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During 1997, Mr. Shaw met with each executive officer to review his
progress in achieving these goals and reported the Company's progress against
its budget to the Board of Directors. After the end of the year, Mr. Shaw
performed a final performance review with each executive officer and then
presented bonus recommendations to the Compensation Committee for approval.
At its meeting in January 1998, the Compensation Committee reviewed the
Company's actual 1997 corporate performance against the five key financial
objectives referred to above from the 1997 budget. The Compensation Committee
determined that in 1997, the Company failed to achieve its financial objectives.
The Committee then considered a report by Mr. Shaw with respect to each
executive officer's performance against his individual goals and made a
subjective evaluation of each executive officer's performance. On the basis of
its assessment, the Compensation Committee determined that no bonuses would be
paid to any bonus pool participants in light of the Company's disappointing 1997
performance against budget objectives.
Equity-Based Compensation. Grants of options under the Company's 1991
Stock Option Plan are intended to directly relate executive compensation to
corporate performance and to help align long-term interests of the Company's
executive officers and stockholders. The exercise price of all options granted
during 1997 under this plan was greater than or equal to the fair market value
of the Company's Common Stock on the date of grant.
The Compensation Committee considers options to be an important method of
providing an incentive for executive officers to remain with, and to continue to
make significant contributions to, the Company. Therefore, in granting options,
the Compensation Committee makes a subjective determination after considering
the number and value of options held by each executive officer which will vest
in each future period, in addition to the other factors described above. The
Compensation Committee also seeks to maintain equitable relationships between
executive officers who have similar levels of responsibility. In February 1997,
options were granted to each of the Named Executive Officers in recognition of
their performance during 1996 and/or anticipated future contributions to the
Company, including options for 120,000 shares granted to Mr. Shaw. In connection
with the April 1997 stock option repricing described below, Mr. Shaw exchanged
the 120,000 share option granted in February 1997 for a new option to purchase
60,000 shares of the Company's Common Stock.
Under the Company's employee stock purchase plans, all eligible employees
of the Company, including executive officers, may purchase shares of Common
Stock through payroll deductions at a price equal to 85% of the fair market
value of the Common Stock at the beginning or end of the applicable purchase
period, whichever is lower. Offerings under these plans generally occur over a
six-month period and an aggregate of up to 450,000 shares may be issued under
the plans.
1997 Option Repricing Program. Competition for key employees in the
diagnostics industry is intense and the use of significant stock options for
retention and motivation of such personnel is widespread in the biotechnology
and related industries. The Compensation Committee believes that stock options
are a critical component of the compensation offered by the Company to promote
long-term retention of key employees, motivate high levels of performance and
recognize employee contributions to the success of the Company. In the first
quarter of 1997, the market price of the Company's Common Stock decreased
substantially from a high of $37.75 to a low of $12.00 in late March following
the Company's announcement on March 24 that its financial performance during the
first half of 1997 would be below market expectations. In light of this
substantial decline in market price and concerns about potential employee
turnover, the Compensation Committee believed that the large numbers of
outstanding stock options with an exercise price in excess of the actual market
price were no longer an effective tool to encourage employee retention or to
motivate high levels of performance. As a result, the Compensation Committee
approved on March 27, 1997 an option repricing program.
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15
19
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All employees and consultants were eligible to participate in the repricing
program. Under the program, the eligible optionees were permitted to exchange
one or more of their existing stock options ("Old Options") with an exercise
price greater than the greater of $17.35 or the closing market price of the
Common Stock on April 30, 1997, the last day of the period during which
optionholders could elect to participate in the program, for new stock options
("Repriced Options"). The number of shares covered by the Repriced Options was
subject to reduction from the number of unexercised shares covered by the
applicable Old Option for certain members of management, with the percentage of
reduction ranging from 10% to 50% depending on position. Old Options held by Mr.
Shaw, Dr. Workman and other Named Executive Officers were subject to reductions
of 50%, 40% and 30%, respectively. Each exchanged Old Option was cancelled.
The exercise price of the Repriced Options was to be equal to the greater
of $17.35 (125% of the closing market price for the Common Stock on the day the
Compensation Committee approved the program) or the closing market price per
share on April 30, 1997 ($13.00). The exercise price for Repriced Options was
therefore equal to $17.35. The schedule on which a Repriced Option became
exercisable and the expiration date of the Repriced Option were, subject to the
exercise black-out period described below, identical to the applicable exchanged
and cancelled Old Option. Except as described below, each Repriced Option was
prohibited from being exercised, in whole or in part (notwithstanding any amount
that may have previously been exercisable), until October 31, 1997 at which time
the same number of shares that would have been exercisable on October 31, 1997
under the Old Option became exercisable under the Repriced Option. The
prohibition on exercise did not apply if an employee's employment was (a)
involuntarily terminated by the Company other than for cause or (b) terminated
as a result of death or disability.
Employment Agreements. In April 1997, the Compensation Committee approved
and the Company entered into Employment Agreements with each of Mr. Shaw and Dr.
Workman which provide for certain benefits to such officers in the event of a
change of control of the Company. The Compensation Committee's objective in
authorizing such agreements was to ensure that the Company would have the
benefit of Mr. Shaw and Dr. Workman's continued service notwithstanding the
possibility or occurrence of a change of control of the Company. Those
agreements are described in more detail under the heading "Executive
Compensation -- Employment Agreements."
Compliance with Internal Revenue Code Section 162(m). The Company does not
believe that Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), which disallows a tax deduction to public companies for certain
compensation in excess of $1,000,000 paid to the corporation's Chief Executive
Officer and four other most highly compensated executive officers, will
generally have an effect on the Company. The Company intends to continue to
periodically review the potential consequences of Section 162(m) and in the
future may decide to structure the performance-based portion of its executive
officer compensation to comply with certain exemptions provided in Section
162(m).
William F. Pounds (Chairman)
E. Robert Kinney
James L. Moody, Jr.
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16
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STOCK PERFORMANCE GRAPH
The following graph compares cumulative total stockholder return on the
Company's Common Stock since December 31, 1992 with the cumulative total return
of (i) the CRSP Total Return Index for The Nasdaq Stock Market (U.S. Companies)
(the "CRSP Nasdaq Index") and (ii) the Standard and Poor's Health Care Composite
Index (the "S&P Health Care Index"). This graph assumes the investment of $100
on December 31, 1992 in the Company's Common Stock, the CRSP Nasdaq Index and
the S&P Health Care Index and assumes dividends, if any, are reinvested.
Measurement points are the last trading days of the years ended December 31,
1993, 1994, 1995, 1996 and 1997.
[PERFORMANCE GRAPH OMITTED]
Dec. 31, 1992 Dec. 31, 1993 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1996 Dec. 31, 1997
IDEXX Laboratories, Inc. $100.00 $195.00 $220.00 $574.00 $440.00 $195.00
CRSP Nasdaq Index $100.00 $115.00 $112.00 $159.00 $195.00 $240.00
S&P Health Care Index $100.00 $ 89.00 $ 97.00 $150.00 $178.00 $252.00
17
21
APPROVAL OF THE 1998 STOCK INCENTIVE PLAN
On February 12, 1998, the Board of Directors of the Company adopted,
subject to the approval of the stockholders, the 1998 Stock Incentive Plan (the
"1998 Plan"). Up to 1,800,000 shares of the Common Stock (subject to adjustment
upon the occurrence of certain events) may be issued pursuant to awards
(collectively, "Awards") granted under the 1998 Plan.
The 1998 Plan is intended to supplement the Company's 1991 Stock Option
Plan (the "1991 Plan"). As of March 31, 1998, options to purchase an aggregate
of 5,153,801 shares of Common Stock were outstanding under the 1991 Plan and an
additional 487,124 shares were reserved for future option grants under such
Plan. On March 31, 1998, the closing price of the Common Stock on the NASDAQ
National Market was $18.00.
THE BOARD OF DIRECTORS BELIEVES THAT ADOPTION OF THE 1998 PLAN IS ESSENTIAL
TO THE ABILITY OF THE COMPANY TO MAINTAIN A COMPETITIVE POSITION IN ATTRACTING
AND RETAINING KEY PERSONNEL AND IS IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
ADOPTION OF THE 1998 PLAN AND THE RESERVATION OF 1,800,000 SHARES OF COMMON
STOCK FOR ISSUANCE THEREUNDER.
The 1998 Plan will become effective upon stockholder approval of the 1998
Plan at the Annual Meeting. If the 1998 Plan is not approved by the
stockholders, no Awards will be granted under the 1998 Plan.
SUMMARY OF PLAN
The following is a brief summary of the material terms of the 1998 Plan.
This summary is qualified in its entirety by reference to the 1998 Plan, a copy
of which may be obtained from the Secretary of the Company.
The 1998 Plan provides for the grant of "incentive stock options" intended
to qualify under Section 422 of the Code, nonstatutory stock options and
restricted stock Awards. Officers, employees (including individuals who have
accepted an offer for employment), directors, consultants and advisors of the
Company and its subsidiaries are eligible to be granted Awards under the 1998
Plan. Under present law, however, incentive stock options may be granted only to
employees. The maximum number of shares with respect to which an Award may be
granted to any participant under the 1998 Plan may not exceed 500,000 shares per
calendar year.
Stock option Awards give the recipient the right to purchase a specified
number of shares of Common Stock at a specified option price and subject to such
other terms and conditions as are specified in connection with the option grant.
Options granted under the 1998 Plan may not be granted at an exercise price less
than the fair market value of the Common Stock on the date of grant (or less
than 110% of the fair market value in the case of incentive stock options
granted to optionees holding more than 10% of the voting power of the Company).
Options may not be granted for a term in excess of ten years. The 1998 Plan
permits the Board to determine the manner of payment of the exercise price of
options, including through payment by cash, check or in connection with a
"cashless exercise" through a broker, by surrender to the Company of shares of
Common Stock, by delivery to the Company of a promissory note, or by any other
lawful means.
Restricted stock Awards entitle recipients to acquire shares of Common
Stock, subject to the right of the Company to repurchase all or part of such
shares from the recipient in the event that the conditions specified in the
applicable Award are not satisfied prior to the end of the applicable
restriction period established for such Award. The number of shares of Common
Stock subject to restricted stock Awards granted at below 100% of fair market
value may not exceed 10% of the total number of shares of Common Stock issuable
under the 1998 Plan.
18
22
The 1998 Plan is administered by the Board of Directors. The Board has the
authority to adopt, amend and repeal the administrative rules, guidelines and
practices relating to the 1998 Plan and to interpret the provisions of the 1998
Plan. The Board of Directors selects the recipients of Awards and determines (i)
the number of shares of Common Stock covered by options and the dates upon which
such options become exercisable, (ii) the exercise price of options, (iii) the
duration of options, and (iv) the number of shares of Common Stock subject to
any restricted stock Awards and the terms and conditions of such Awards,
including conditions for repurchase and the issue price. The Board of Directors
may delegate its authority under the 1998 Plan to one or more committees of the
Board, and has authorized the Compensation Committee to administer the granting
of stock options under the 1998 Plan.
The Board of Directors is required to make appropriate adjustments in
connection with the 1998 Plan and any outstanding Awards to reflect stock
dividends, stock splits and similar events. In the event of a merger or other
acquisition event (as defined in the 1998 Plan), the 1998 Plan provides for
outstanding options to be assumed or substitute awards granted, unless the
surviving corporation does not agree to such assumption or substitution, in
which case the Board of Directors shall accelerate the options or may instead
provide for a cash out of the value of the options. Upon the occurrence of an
acquisition event, the 1998 Plan provides that the rights of the Company under
each restricted stock Award shall inure to the benefit of the Company's
successor.
The 1998 Plan will expire by its terms on May 15, 2008, but Awards
previously granted may extend beyond that date. The Board of Directors may at
any time amend, suspend or terminate the 1998 Plan, except that no outstanding
Award designated as subject to Section 162(m) of the Code by the Board of
Directors after the date of such amendment shall become exercisable, realizable
or vested (as applicable to such Award) unless and until such amendment shall
have been approved by the Company's stockholders.
As of March 31, 1998, approximately 2,100 persons were eligible for Awards
under the 1998 Plan, including the Named Executive Officers. The granting of
Awards under the 1998 Plan is discretionary, and the Company cannot now
determine the number or type of Awards to be granted in the future to any
particular person or group.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under the
1998 Plan and with respect to the sale of Common Stock acquired under the 1998
Plan.
Incentive Stock Options. In general, a participant will not recognize
taxable income upon the grant or exercise of an incentive stock option. Instead,
a participant will generally recognize taxable income with respect to an
incentive stock option only upon the sale of Common Stock acquired through the
exercise of the option ("ISO Stock"). The exercise of an incentive stock option,
however, may subject the participant to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
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23
If the participant sells ISO Stock for more than the exercise price prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of the sale.
If the participant sells ISO Stock for less than the exercise price, then
the participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of the sale.
Nonstatutory Stock Options. As in the case of an incentive stock option, a
participant will not recognize taxable income upon the grant of a nonstatutory
stock option. Unlike the case of an incentive stock option, however, a
participant who exercises a nonstatutory stock option generally will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the Common Stock acquired through the exercise of the option (the "NSO
Stock") on the Exercise Date over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the excess of the sale price of the NSO Stock over
the participant's tax basis in the NSO Stock. This capital gain or loss will be
a long-term capital gain or loss if the participant has held the NSO Stock for
more than one year prior to the date of the sale.
Restricted Stock Awards. A participant will not recognize taxable income
upon the grant of a restricted stock Award, unless the participant makes an
election under Section 83(b) of the Code (a "Section 83(b) Election"). If the
participant makes a Section 83(b) Election within 30 days of the date of the
grant, then the participant will recognize ordinary compensation income, for the
year in which the Award is granted, in an amount equal to the difference between
the fair market value of the Common Stock at the time the Award is granted and
the purchase price paid for the Common Stock. If a Section 83(b) Election is not
made, the participant will recognize ordinary compensation income, at the time
that the forfeiture provisions or restrictions on transfer lapse, in an amount
equal to the difference between the fair market value of the Common Stock at the
time of such lapse and the original purchase price paid for the Common Stock.
The participant will have a basis in the Common Stock acquired equal to the sum
of the price paid and the amount of ordinary compensation income recognized.
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock Award, the participant will recognize a capital gain or loss equal to the
difference between the sale price of the Common Stock and the participant's tax
basis in the Common Stock. The gain or loss will be a long-term gain or loss if
the shares are held for more than one year. For this purpose, the holding period
shall begin just after the date on which the forfeiture provisions or
restrictions lapse if a Section 83(b) Election is not made, or just after the
Award is granted if a Section 83(b) Election is made.
Tax Consequences to the Company. The grant of a stock option or restricted
stock Award under the 1998 Plan will have no tax consequences to the Company.
Moreover, in general, neither the exercise of an incentive stock option nor the
sale of any Common Stock acquired under the 1998 Plan will have any tax
consequences to the Company. The Company generally will be entitled to a
business-expense deduction, however, with respect to any ordinary compensation
income recognized by a participant under the 1998 Plan, including as a result of
the exercise of a nonstatutory stock option, a Disqualifying Disposition, or a
Section 83(b) Election. Any such deduction will be subject to the limitations of
Section 162(m) of the Code.
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RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Arthur Andersen LLP as the
Company's independent auditors for the current fiscal year. Arthur Andersen LLP
has served as the Company's independent auditors since the Company's inception.
Although stockholder approval of the Board of Directors' selection of Arthur
Andersen LLP is not required by law, the Board of Directors believes that it is
advisable to give stockholders an opportunity to ratify this selection. If this
proposal is not approved at the Annual Meeting, the Board of Directors will
reconsider its selection of Arthur Andersen LLP.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so and will also be available to respond to appropriate questions from
stockholders.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's Directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews. The Company has retained MacKenzie Partners,
Inc. to assist in the solicitation of proxies for this year's Annual Meeting, at
a cost to the Company of approximately $3,000, plus reimbursement of reasonable
expenses. Brokers, custodians and fiduciaries will be requested to forward proxy
soliciting material to the owners of stock held in their names, and, as required
by law, the Company will reimburse them for their reasonable out-of-pocket
expenses in this regard.
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STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Westbrook, Maine not later than December 14, 1998 for inclusion in the proxy
statement for that meeting.
By Order of the Board of Directors,
Richard B. Thorp, Secretary
April 13, 1998
THE BOARD OF DIRECTORS HOPES THAT SHAREHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. SHAREHOLDERS WHO ATTEND
THE MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR
PROXIES.
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Appendix A
IDEXX LABORATORIES, INC.
1998 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this 1998 Stock Incentive Plan (the "Plan") of IDEXX
Laboratories, Inc., a Delaware corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's ability to
attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company's stockholders.
Except where the context otherwise requires, the term "Company" shall include
any present or future subsidiary corporations of IDEXX Laboratories, Inc. as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder (the "Code").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options or restricted stock awards (each, an "Award")
under the Plan. Each person who has been granted an Award under the Plan shall
be deemed a "Participant".
3. ADMINISTRATION, DELEGATION
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
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(b) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board to the
extent that the Board's powers or authority under the Plan have been delegated
to such Committee.
4. STOCK AVAILABLE FOR AWARDS
(a) NUMBER OF SHARES. Subject to adjustment under Section 7, Awards may be
made under the Plan for up to 1,800,000 shares of common stock, $.10 par value
per share, of the Company (the "Common Stock") . If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive Stock
Options (as hereinafter defined), to any limitation required under the Code.
Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 7, the
maximum number of shares of Common Stock with respect to which an Award may be
granted to any Participant under the Plan shall be 500,000 per calendar year.
The per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code.
5. STOCK OPTIONS
(a) GENERAL. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
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(c) EXERCISE PRICE. The Board shall establish the exercise price, which
shall in no event be less than 100% of the fair market value of the Common Stock
as determined (or in a manner approved) by the Board in good faith ("Fair Market
Value") at the time of grant, at the time each Option is granted and specify it
in the applicable option agreement.
(d) DURATION OF OPTIONS. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement. No option will be granted for a term in excess of 10 years.
(e) EXERCISE OF OPTION. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Board, together with
payment in full as specified in Section 5(f) for the number of shares for which
the Option is exercised.
(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise provide
in an option agreement, (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price, (ii) delivery by the Participant to
the Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price or (iii) delivery of shares of Common Stock
owned by the Participant valued at their Fair Market Value, which Common Stock
was owned by the Participant at least six months prior to such delivery;
(3) to the extent permitted by the Board, in its sole discretion (i)
by delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) by payment of such other lawful consideration
as the Board may determine; or
(4) any combination of the above permitted forms of payment.
6. RESTRICTED STOCK
(a) GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require
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forfeiture of such shares if issued at no cost) from the recipient in the event
that conditions specified by the Board in the applicable Award are not satisfied
prior to the end of the applicable restriction period or periods established by
the Board for such Award (each, "Restricted Stock Award").
(b) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
(c) LIMITATION ON NUMBER OF SHARES. Notwithstanding any provision of the
Plan, no more than 10% of the total number of shares issuable under the Plan may
be issued in the form of Restricted Stock Awards which are granted with an issue
price less than the Fair Market Value on the date of grant.
7. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS
(a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limits set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, and (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award shall be appropriately adjusted by the Company (or
substituted Awards may be made, if applicable) to the extent the Board shall
determine, in good faith, that such an adjustment (or substitution) is necessary
and appropriate. If this Section 7(a) applies and Section 7(c) also applies to
any event, Section 7(c) shall be applicable to such event, and this Section 7(a)
shall not be applicable.
(b) LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that (i) all then unexercised Options will (x) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or
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dissolution and (y) terminate effective upon such liquidation or dissolution,
except to the extent exercised before such effective date, and (ii) all
Restricted Stock Awards will become free of all restrictions as of a specified
time prior to the effective date of such liquidation or dissolution.
(c) ACQUISITION EVENTS
(1) DEFINITION. An "Acquisition Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of which
the Common Stock is converted into or exchanged for the right to receive cash,
securities or other property or (b) any exchange of shares of the Company for
cash, securities or other property pursuant to a statutory share exchange
transaction.
(2) CONSEQUENCES OF AN ACQUISITION EVENT ON OPTIONS. Upon the
occurrence of an Acquisition Event, or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board shall provide that all
outstanding Options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), provided that any options substituted for Incentive Stock Options
shall satisfy, in the determination of the Board, the requirements of Section
424(a) of the Code. Notwithstanding the foregoing, if the acquiring or
succeeding corporation (or an affiliate thereof) does not agree to assume, or
substitute for, such Options, then the Board shall upon written notice to the
Participants, provide that all then unexercised Options will become exercisable
in full as of a specified time (the "Acceleration Time") prior to the
Acquisition Event and will terminate immediately prior to the consummation of
such Acquisition Event, except to the extent exercised by the Participants
before the consummation of such Acquisition Event; provided, however, that, in
the event of an Acquisition Event under the terms of which holders of Common
Stock will receive upon consummation thereof a cash payment for each share of
Common Stock surrendered pursuant to such Acquisition Event (the "Acquisition
Price"), then the Board may instead provide that all outstanding Options shall
terminate upon consummation of such Acquisition Event and that each Participant
shall receive, in exchange therefor, a cash payment equal to the amount (if any)
by which (A) the Acquisition Price multiplied by the number of shares of Common
Stock subject to such outstanding Options (whether or not then exercisable),
exceeds (B) the aggregate exercise price of such Options.
(3) CONSEQUENCES OF AN ACQUISITION EVENT ON RESTRICTED STOCK AWARDS.
Upon the occurrence of an Acquisition Event, the repurchase and other rights of
the Company under each outstanding Restricted Stock Award shall inure to the
benefit of the Company's successor and shall apply to the cash, securities or
other property which the Common Stock was converted into or exchanged for
pursuant to such Acquisition
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Event in the same manner and to the same extent as they applied to the Common
Stock subject to such Restricted Stock Award.
8. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.
(b) DOCUMENTATION. Each Award shall be evidenced by a written instrument in
such form as the Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, Participants may satisfy such tax obligations in whole or
in part by delivery of shares of Common Stock, including shares retained from
the Award creating the tax obligation, valued at their Fair Market Value. The
Company may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind otherwise due to a Participant.
(f) AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that
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the action, taking into account any related action, would not materially and
adversely affect the Participant.
(g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(h) ACCELERATION. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part or that any Restricted Stock
Awards shall be free of restrictions in full or in part.
9. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date for
such stock dividend and the distribution date for such stock dividend shall be
entitled to receive, on the distribution date, the stock dividend with respect
to the shares of Common Stock acquired upon such Option exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on the record date for such stock dividend.
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(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on the
date on which it is approved by the Company's stockholders. No Awards shall be
granted under the Plan after the completion of ten years from the date the Plan
was approved by the Board, but Awards previously granted may extend beyond that
date.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that, to the extent required by
Section 162(m), no Award granted to a Participant designated as subject to
Section 162(m) by the Board after the date of such amendment shall become
exercisable, realizable or vested, as applicable to such Award (to the extent
that such amendment to the Plan was required to grant such Award to a particular
Participant), unless and until such amendment shall have been approved by the
Company's stockholders as required by Section 162(m) (including the vote
required under Seciton 162(m)).
(e) GOVERNING LAW. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.
Approved by the Board of Directors February 12, 1998.
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IDEXX LABORATORIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY
The undersigned, revoking all prior proxies, hereby appoint(s) David E.
Shaw, William F. Pounds and Richard B. Thorp, and each of them, with full power
of substitution, as proxies to represent and vote, as designated herein, all
shares of Common Stock of IDEXX Laboratories, Inc. (the "Company") which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company to be held at the Portland Marriott, 200
Sable Oaks Drive, South Portland, Maine, on Friday, May 15, 1998 at 9:00 a.m.,
local time, and at any adjournment thereof.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder(s). IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. Attendance of the undersigned at the
meeting or any adjournment thereof will not be deemed to revoke this proxy
unless the undersigned shall revoke this proxy in writing or affirmatively
indicate his intent to vote in person.
- -----
X Please mark votes as in this example.
- -----
1. To elect the following three Class III Directors:
NOMINEES: E. Robert Kinney, James L. Moody, Jr. and
Erwin F. Workman, Jr., Ph.D.
FOR WITHHELD
----- ----
----- ----
-----
----- --------------------------------------
For all nominees except as noted above
2. To approve the Company's 1998 Stock Incentive Plan covering 1,800,000
shares of the Company's Common Stock, as described in the Proxy Statement.
FOR AGAINST ABSTAIN
------ ------- -------
------ ------- -------
3. To ratify the selection of Arthur Andersen LLP as the Company's independent
auditors for the current year.
FOR AGAINST ABSTAIN
------ ------- -------
------ ------- -------
---------
MARK HERE IF YOU PLAN TO ATTEND THE MEETING
---------
---------
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
---------
Please sign exactly as name appears hereon. When shares are held by joint
owners, both should sign. When signing as an attorney, executor, administrator,
trustee or guardian, please give title as such. If a corporation or a
partnership, please sign by authorizing person.
Signature: _______________________________________ Date: __________________
Signature: _______________________________________ Date: __________________