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Exhibit
10.2
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT
AGREEMENT is made as of January 1, 2007, (this "Agreement") by and
between IDEXX Laboratories, Inc., a Delaware corporation (the
"Company"), and William C. Wallen (the "Executive").
The Board of
Directors of the Company (the "Board") has determined that it is in
the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the
Executive, notwithstanding the possibility, threat or occurrence of
a Change of Control (as defined below) of the Company. The Board
believes it is imperative to diminish the inevitable distraction of
the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to
encourage the Executive’s full attention and dedication to
the Company currently and in the event of any threatened or pending
Change of Control, and to provide the Executive with compensation
and benefits arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives
and in consideration of the mutual covenants and promises contained
in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the
parties to this Agreement, the Company and Executive agree as
follows:
1.
Certain Definitions .
(a)
The "Effective Date" shall mean the first date during the Change of
Control Period (as defined in Section 1(b)) on which a Change of
Control (as defined in Section 2) occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control
occurs and if the Executive’s employment with the Company is
terminated prior to the date on which the Change of Control occurs,
and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party
who has taken steps reasonably calculated to effect a Change of
Control or (ii) otherwise arose in connection with or anticipation
of a Change of Control, then for all purposes of this Agreement the
"Effective Date" shall mean the date immediately prior to the date
of such termination of employment.
(b)
The "Change of Control Period" shall mean the period commencing on
the date hereof and ending on September 30, 2008; provided,
however, that commencing on October 1, 2008, and on each annual
anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate one year from such
Renewal Date, unless at least 120 days prior to the Renewal Date
the Company shall give notice to the Executive that the Change of
Control Period shall not be so extended.
2.
Change of Control . For the purpose of this Agreement, a
"Change of Control" shall mean:
(a)
The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 30% or more of either (i) the
then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting
power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (iv) any acquisition by any
corporation pursuant to a transaction which satisfies the criteria
set forth in clauses (i), (ii) and (iii) of subsection (c) of this
Section 2; or
(b)
A change in the composition of the Board, as a result of which
fewer than one-half of the incumbent directors are directors who
either (i) had been directors of the Company 24 months prior to
such change or (ii) were elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the
directors who had been directors of the Company 24 months prior to
such change and who were still in office at the time of the
election or nomination, but excluding, for purposes of this clause
(ii), any such individual whose initial assumption of office occurs
as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(c)
Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of
the Company (a "Business Combination"), in each case, unless,
immediately following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than a majority of, respectively, the
then-outstanding shares of common stock and the combined voting
power of the then-outstanding voting securities entitled to vote
generally in the election of directors, of the corporation
resulting from such Business Combination (which as used in this
Section 2(c) shall include, without limitation, a corporation which
as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person
(excluding any corporation resulting from such Business Combination
or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination, or the
combined voting power of the then-outstanding voting securities of
such corporation and (iii) at least half of the members of the
board of directors of the corporation resulting from such Business
Combination were members of the Company’s Board at the time
of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d)
Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company or the sale of
substantially all of the assets of the Company.
3.
Employment Period . The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the
Effective Date and ending on the earlier of (i) the second
anniversary of such date or (ii) the termination of the
Executive’s employment pursuant to Section 5 hereof (the
"Employment Period"). Except as provided in Section 1(a), nothing
in this Agreement shall, prior to the Effective Date, impose upon
the Company any obligation to retain the Executive as an employee.
In addition, nothing in this Agreement shall restrict the Executive
from terminating his employment with the Company, and no such
termination by the Executive shall be deemed a breach of this
Agreement.
4.
Terms of Employment .
(a)
Position and Duties .
(i)
During the Employment Period, (A) the Executive’s position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day
period immediately preceding the Effective Date and (B) the
Executive’s services shall be performed at the location where
the Executive was employed immediately preceding the Effective Date
or any office or location less than 35 miles from such
location.
(ii)
During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to
the Executive hereunder, to use the Executive’s reasonable
best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions, and (C) manage personal investments, so long as such
activities do not significantly interfere with the performance of
the Executive’s responsibilities as an employee of the
Company or the terms of this Agreement. It is expressly understood
and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the
Company.
(b)
Compensation
.
(i)
Base Salary . During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times the
highest monthly base salary paid or payable, including any base
salary which has been earned but deferred, to the Executive by the
Company and its affiliated companies in respect of the twelve-month
period immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base Salary shall
be reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter
at least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after
any such increase and the term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so increased.
As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common
control with the Company.
(ii)
Annual Bonus . In addition to Annual Base Salary, during the
Employment Period, the Executive shall be entitled to receive such
annual bonus as may be determined by the Board of Directors, but in
no event shall the target bonus opportunity, expressed as a
percentage of Annual Base Salary, be less than the target bonus
opportunity in respect of the full fiscal year immediately
preceding the Effective Date.
(iii)
Incentive Plans . During the Employment Period, the
Executive shall be entitled to participate in all incentive plans,
practices, policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with benefits which are less favorable, in the
aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(iv)
Welfare Benefit, Savings and Retirement Plans . During the
Employment Period, the Executive and/or the Executive’s
family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit, savings and
retirement plans, practices, policies and programs provided by the
Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee
life, group life, split-dollar life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company, but in no event
shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate,
than the most favorable of such plans, practices, policies and
programs in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time
after the Effective Date to other peer executives of the Company
and its affiliated companies.
(v)
Expenses . During the Employment Period, the Executive shall
be entitled to receive reimbursement for all reasonable expenses
incurred by the Executive in accordance with the policies,
practices and procedures of the Company in effect immediately prior
to the Effective Date.
(vi)
Vacation . During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the plans,
policies, programs and practices of the Company and its affiliated
companies, but in no event shall such plans, practices, policies
and programs provide the Executive with benefits which are less
favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any
time during the 120-day period immediately preceding the Effective
Date or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
(c)
Equity Awards . Immediately prior to the consummation of a
Change of Control each then outstanding award for common stock of
the Company, including without limitation any stock option, stock
appreciation right, restricted stock unit award, restricted stock
award or other stock-based award (an "Award"), held by the
Executive shall become immediately exercisable, vested, realizable,
or deliverable, or free from restrictions applicable to the Award
as to twenty-five percent (25%) of the number of shares as to which
each such Award would otherwise be subject to restrictions or not
then be exercisable, vested, realizable, or deliverable (rounded
down to the nearest whole share), and the number of shares as to
which each such Award shall become exercisable, vested, realizable,
deliverable and free from restrictions on each vesting date set
forth in the Executive’s applicable Award agreement shall be
reduced by 25%. In addition, all such Awards held by the Executive
shall immediately become fully exercisable, vested, realizable,
deliverable and free from restrictions if and when, within 24
months after a Change of Control, the Executive’s employment
with the Company (or the acquiring or succeeding entity) is
involuntarily terminated by the Company (or such acquiring or
succeeding entity) other than for Cause or is terminated by the
Executive for Good Reason. Notwithstanding the provisions of this
Section 4(c), if any such outstanding Award is terminated in
connection with a Change of Control, such Award shall become fully
exercisable, vested, realizable, deliverable and free from
restrictions immediately before the occurrence of the Change of
Control.
5.
Termination of Employment .
(a)
Death or Disability . The Executive’s employment shall
terminate automatically upon the Executive’s death during the
Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of Disability set forth below),
it may give to the Executive written notice in accordance with
Section 12(b) of this Agreement of its intention to terminate the
Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30
th day after receipt of such notice by the Executive
(the "Disability Effective Date"), provided that, within the 30
days after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties. For purposes
of this Agreement, "Disability" shall mean the absence of the
Executive from the Executive’s duties with the Company on a
full-time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness which is determined to
be total and permanent by a physician selected by the Company or
its insurers and acceptable to the Executive or the
Executive’s legal representative.
(b)
Cause . Subject to Section 5(d), the Company may terminate
the Executive’s employment during the Employment Period for
Cause. For purposes of this Agreement, "Cause" shall mean:
(i)
the willful failure of the Executive to perform substantially the
Executive’s duties with the Company (other than any such
failure resulting from incapacity due to physical or mental
illness), which failure is not cured within 30 days after a written
demand for substantial performance is delivered to the Executive by
the Board which specifically identifies the manner in which the
Board believes that the Executive has not substantially performed
the Executive’s duties, or
(ii)
the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or
omission was in the best interests of the Company.
(c)
Good Reason . The Executive’s employment may be
terminated by the Executive with or without Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:
(i)
the assignment to the Executive of any duties inconsistent in any
material respect with the Executive’s position (including
status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in a
material diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated and
inadvertent action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by the
Executive; provided that, for the avoidance of doubt, if at any
time, without the consent of the Executive, the Executive shall
cease to be the Chief Scientific Officer of the Company, the entity
surviving any Business Combination (if not the Company), or the
Person that ultimately controls the Company or such surviving
entity, then a material diminution of the Executive’s
position, duties, authority and responsibilities shall be deemed to
have occurred;
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