EXHIBIT 10.1

IDEXX LABORATORIES, INC.

 

1998 STOCK INCENTIVE PLAN

 

(as of May 15, 2002)

 

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 and directors (and any
individuals who have accepted an offer for employment) are eligible to be
granted options ("Options") to purchase shares of the Company's common stock,
$.10 par value per share ("Common Stock"), under the Plan. Each person who has
been granted an Option 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 Options 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 Option 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 Option. 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.

           (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 or the executive officers referred to in Section 3(c) to the extent that
the Board's powers or authority under the Plan have been delegated to such
Committee or executive officers.

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           (c)      Delegation to Executive Officers. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to grant Options to employees or officers of the Company or
any of its present or future subsidiary corporations and to exercise such other
powers under the Plan as the Board may determine, provided that the Board shall
fix the terms of the Options to be granted by such executive officers (including
the exercise price of such Options, which may include a formula by which the
exercise price will be determined) and the maximum number of shares subject to
Options that the executive officers may grant; provided further, however, that
no executive officer shall be authorized to grant Options to any "executive
officer" of the Company (as defined by Rule 3b-7 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) or to any "officer" of the Company
(as defined by Rule 16a-1 under the Exchange Act).

4.        Stock Available under the Plan

           (a)      Number of Shares. Subject to adjustment under Section 6,
Options may be granted under the Plan for up to 4,100,000 shares of Common
Stock. If any Option expires or is terminated, surrendered or canceled without
having been fully exercised, the unused Common Stock covered by such Option
shall again be available for the grant of Options 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 Option
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.        Terms of Stock Options

           (a)      General. The Board may grant Options 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".

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           (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.

           (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.

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6.        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), and (iii) the number
and class of securities and exercise price per share subject to each outstanding
Option shall be appropriately adjusted by the Company (or substituted Options
may be granted, 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 6(a) applies and Section 6(c) also applies to any event, Section
6(c) shall be applicable to such event, and this Section 6(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 all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date.

           (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.

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           (d)      Acceleration of Options. Immediately prior to the
consummation of a Change of Control, each then outstanding Option under the Plan
shall become immediately exercisable as to twenty-five percent (25%) of the
number of shares as to which such Option would otherwise not then be exercisable
(rounded down to the nearest whole share), and the number of shares as to which
each such Option shall become exercisable on each vesting date set forth in the
applicable option agreement shall be reduced by 25%. In addition, all Options
held by a Participant that are not terminated pursuant to Section 6(c) above
shall immediately become exercisable in full if and when, within 24 months after
a Change of Control, such Participant'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 (as defined below).

                     (1)      Definition of Change of Control. "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 (A) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (B) 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 (d)(1), the following acquisitions shall not constitute a Change of
Control: (1) any acquisition directly from the Company, (2) any acquisition by
the Company, (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or (4) any acquisition by any corporation pursuant to a transaction
which satisfies the criteria set forth in clauses (A), (B) and (C) of subsection
(d)(1)(C) of this Section 6; or

                               (B)      Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequently to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, 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

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                               (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, (A) 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 60% 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 6(d)(1)(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, (B) 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, 30% 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 (C) at least half of
the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent 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.

                       (2)      Definition of Cause. "Cause" shall mean:

                                 (A)      the failure of the Participant to
perform substantially the Participant'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 Participant by the Participant's manager or the
Board which specifically identifies the manner in which such manager or the
Board, as applicable, believes that the Participant has not substantially
performed the Participant's duties, or

                                 (B)      the engaging by the Participant in
illegal conduct or gross misconduct which is injurious to the Company."

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7.        General Provisions Applicable to Options

           (a)      Transferability of Options. Except as the Board may
otherwise determine or provide in an Option, Options 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 Option shall be evidenced by a written
instrument in such form as the Board shall determine. Each Option 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 Option may be made alone or in addition or in relation to any other Option.
The terms of each Option need not be identical, and the Board need not treat
Participants uniformly.

           (d)      Termination of Status. The Board shall determine the effect
on an Option 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 Option.

           (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 Options to such Participant no later than
the date of the event creating the tax liability. Except as the Board may
otherwise provide in an Option, Participants may satisfy such tax obligations in
whole or in part by delivery of shares of Common Stock, including shares
retained from the Option 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 Option. The Board may amend, modify or
terminate any outstanding Option, including but not limited to, substituting
therefor another Option 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 the action, taking
into account any related action, would not materially and adversely affect the
Participant. In addition, neither the Board nor the Company may amend the terms
of any issued and outstanding Options to reduce the exercise price, other than
pursuant to Section 6 of the Plan, without the prior approval of the Company's
stockholders.

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           (g)      Conditions on Delivery of Stock. The Company will not be
obligated to deliver any shares of Common Stock upon exercise of any Option
until (i) all conditions of the Option 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.

8.        Miscellaneous

           (a)      No Right To Employment or Other Status. No person shall have
any claim or right to be granted an Option, and the grant of an Option 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 Option.

           (b)      No Rights As Stockholder. Subject to the provisions of the
applicable Option, no Participant or Designated Beneficiary shall have any
rights as a stockholder with respect to any shares of Common Stock to be issued
upon exercise of an Option 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.

           (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
Options shall be granted under the Plan after the completion of ten years from
the date the Plan was approved by the Board, but Options previously granted may
extend beyond that date.

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           (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 Option 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 Option (to the
extent that such amendment to the Plan was required to grant such Option 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)). In addition, the second sentence of
Section 7(f) of the Plan may not be amended by the Board without the prior
approval of the Company's stockholders.

           (e)      Governing Law. The provisions of the Plan and all Options
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.

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