EX-10.7 U.S. SUPPLY AGREEMENT



 



Exhibit 10.7


Confidential Materials omitted and filed separately with the



Securities and Exchange Commission. Asterisks denote omissions.


AGREEMENT



THIS AGREEMENT is made effective as of the 16th day of October, 2003, between
IDEXX Operations, Inc., a Delaware corporation whose principal place of
business is at 6100 East Shelby Drive, Memphis, Tennessee 38141, U.S.A.
(“IDEXX”) and Ortho-Clinical Diagnostics, Inc., a New York corporation with
offices at 100 Indigo Creek Drive, Rochester, New York, U.S.A. (“OCD”).


WHEREAS, OCD has been a supplier of analyzers for human applications and dry
slides, and IDEXX has been a supplier of analyzers for animal applications;


WHEREAS, OCD and IDEXX Laboratories, Inc. (“IDEXX Parent”), the parent company
of IDEXX, entered into a supply agreement effective as of January 1, 1999 (the
“Prior US Agreement”) with respect to the supply of VITROS slides in the United
States and Asia for use on the VETTEST Analyzer (as defined below); and


WHEREAS, OCD and IDEXX Europe B.V. (“IDEXX BV”) entered into a supply agreement
effective as of January 1, 1999 with respect to the supply of VITROS slides in
Europe for use on the VETTEST Analyzer (the “Prior Europe Agreement”), and
intend to amend and restate the Prior Europe Agreement shortly after the date
hereof to make certain modifications thereto; and


WHEREAS, OCD, IDEXX Parent and IDEXX BV entered into that certain Operations
Agreement effective as of January 1, 1999 (the “Operations Agreement”); and


WHEREAS, OCD, IDEXX Parent and IDEXX BV entered into that certain Amendment,
Release and Settlement Agreement dated as of September 12, 2002 (the
“Settlement Agreement”) for purposes of, among other things, amending the Prior
US Agreement, the Prior Europe Agreement and the Operations Agreement and
resolving certain disputes between the parties; and


WHEREAS, OCD and IDEXX desire to expand their relationship in order to create a
New Analyzer (as defined below) for animal applications, which will expand the
sales of OCD’s dry slides and IDEXX’s analyzers, and to make IDEXX products
more competitive;


WHEREAS, OCD and IDEXX through this Agreement desire to combine certain of
their respective skills and intellectual property and to invest significant
capital to create the New Analyzer and related panel holder design, which is
expected to provide a better product offering to customers;


 






 


WHEREAS, this Agreement will ensure IDEXX of a continuing supply of Dry Slides
necessary for its continued sale of analyzers, including the New Analyzer.


WHEREAS, OCD and IDEXX now desire to enter into new arrangements for the supply
and development of diagnostic slides and analyzers, the terms and conditions of
which are documented herein;


NOW THEREFORE, the parties hereby agree as follows:



	1.	 	DEFINITIONS



In this Agreement the following expressions shall have the meaning set opposite
them.



	 	 	 
	“Agreements”	 	
This Agreement and the Europe Agreement.
	 	 	 
	“Analyzers”	 	
The VETTEST Analyzer and the New Analzyer.
	 	 	 
	“Commencement Date”	 	
October 16, 2003.
	 	 	 
	“Dry Slide”	 	
A chemical composition, comprising a layered, coated dry film, specifically
formulated to analyze for a body constituent, which composition is immediately
hydrated by any undiluted bodily fluid, including without limitation a VITROS slide.
For avoidance of doubt, the term “Dry Slide” shall not include any assay based on
immunomagnetic particle technology or any assay for which the analyte is DNA or RNA.
	 	 	 
	“Effective Rebate Rate”	 	
For any year, the weighted average percentage reduction in the purchase price of any
slides purchased in such year that IDEXX is entitled to receive pursuant to Section
7.03 hereunder. The calculation of the Effective Rebate Rate is illustrated in
Schedule 7.
	 	 	 
	“Europe Agreement”	 	
The Prior Europe Agreement, until such time as it is amended and restated as
contemplated by the preamble; from and after such time, the “Europe Agreement” shall
mean the Prior Europe Agreement as so amended and restated.
	 	 	 
	“Exclusivity Territory”	 	
The United States of America and its possessions (including Puerto Rico), Canada,
Australia, New Zealand, Japan, India, South Korea and Taiwan.



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	“Existing Special [**] Slides”	 	
VETTEST slides that have been [**], as of the date of this Agreement, pursuant to
Section 4 of the Operations Agreement.
	 	 	 
	“IDEXX BV”	 	
IDEXX Europe B.V., a Netherlands corporation.
	 	 	 
	“New Analyzer”	 	
A new chemistry analyzer that uses OCD Dry Slides for veterinary applications, as
contemplated by Article 3 of this Agreement, and any updates or modifications to such
analyzer.
	 	 	 
	“New Chemistry Slides”	 	
As defined in Section 5.06.
	 	 	 
	“New Slide/Panel Design”	 	
A new slide format for VETTEST slides to be used in conjunction with the New
Analyzer, as well as a panel holder for such slides, as contemplated by Article 3,
and any updates or modifications to such design.
	 	 	 
	“New Slides”	 	
VETTEST slides that are formatted and packaged in accordance with the New Slide/Panel
Design, as contemplated by Article 3.
	 	 	 
	“New Special [**] Slides”	 	
VETTEST slides that have been [**] pursuant to Section 7.04 of this Agreement.
	 	 	 
	“PANELS/PROFILES”	 	
Packages of VETTEST slides for VETTEST Analyzers consisting of two or more sets of
slides of specified chemistries. The initial PANEL and the initial PROFILES shall
consist of the slides set forth on Schedule 3 attached hereto, with any changes or
additional PANELS/PROFILES to be mutually agreed upon by the parties as specified in
Schedule 3.
	 	 	 
	“Prime Rate”	 	
For any day in any calendar month, the prime rate of interest as published in the
Wall Street Journal on the last business day of the immediately preceding month.
	 	 	 
	“Proportionate Share”	 	
The percentage obtained by dividing (i) the number of VETTEST slides purchased by
IDEXX in a given period, by (ii) the total number of VETTEST slides



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purchased by IDEXX and its affiliates during such period.
	 	 	 
	“Special [**] Slides”	 	
Existing Special [**] Slides and New Special [**] Slides.
	 	 	 
	“Term”	 	
As defined in Section 18.01.
	 	 	 
	“Territory”	 	
Worldwide, except the European Union, Africa, and the countries listed on Schedule 10
attached hereto.
	 	 	 
	“VETTEST Analyzer”	 	
The analyzer currently marketed as the VETTEST VT 8008 analyzer and any updates or
modifications to such analyzer.
	 	 	 
	“VETTEST slides”	 	
Dry Slides currently manufactured by OCD, specially designed, bar coded, labeled,
and/or packaged for one or more of the Analyzers in accordance with the terms of this
Agreement and supplied by OCD in accordance with the terms and conditions of this
Agreement.
	 	 	 
	“VETTEST tips”	 	
Metering tips sourced by OCD for use with the VETTEST Analyzer, specially packaged
and supplied to IDEXX in accordance with the terms of this Agreement.
	 	 	 
	“VITROS slides”	 	
The Dry Slides currently manufactured by OCD for use in any current VITROS analyzer,
including without limitation the DT60.



All references to currency in this Agreement shall mean U.S. Dollars unless
otherwise specifically indicated.



	2.	 	EFFECTIVE DATE OF AGREEMENT
	 
	 	 	2.01 This Agreement shall become effective upon the Commencement Date.
This Agreement shall apply solely within the Territory; except that
Sections 3.04, 3.05 and 3.06 shall apply worldwide.
	 
	3.	 	DEVELOPMENT OF NEW ANALYZER AND NEW SLIDE/PANEL DESIGN




	 	3.01	 	IDEXX and its affiliates shall, at their expense, and with
cooperation from OCD as set forth below, devote chemistry instrument
development resources to the development and launch of the New
Analyzer. IDEXX and its affiliates shall use



4






 







	 	 	 	commercially reasonable efforts to achieve commercial launch of
such analyzer within the United States within [**] years of the
Commencement Date. IDEXX shall have control and management of New
Analyzer development, and sole approval of New Analyzer
specifications.
	 
	 	3.02	 	IDEXX and its affiliates shall, at their expense, design,
develop and validate the New Slide/Panel Design, together with the
injection molding tooling for the panel holder and associated label
content and art work. IDEXX shall have control and management of
New Slide/Panel Design development, and sole approval of New
Slide/Panel Design specifications.
	 
	 	3.03	 	The parties recognize that the design, development and
validation of the New Analyzer and the New Slide/Panel Design (the
“Development Program”) will benefit from the cooperation of both
parties as set forth in this Article 3. Accordingly, OCD agrees,
until the third anniversary of the Commencement Date (the
“Development Period”), to make technical personnel reasonably
available from time to time upon the reasonable request of IDEXX and
upon reasonable notice, (i) up to a maximum of 250 hours per
calendar quarter, to provide consulting services with respect to
development of the New Analyzer, including rendering advice,
reviewing proposed instrument designs and making recommendations and
(ii) up to a maximum of 250 hours per calendar quarter, to provide
consulting services with respect to development of the New
Slide/Panel Design, including rendering advice, reviewing proposed
slide format and panel holder designs and making recommendations.
In connection with such consulting services, OCD may, but shall not
be obligated to, disclose materials or other information to IDEXX
that OCD considers to be proprietary or confidential. IDEXX agrees
that, except as otherwise expressly agreed by OCD in writing, (a)
IDEXX shall not acquire any rights to such materials or information,
other than as set forth in paragraphs 3.04 through 3.07 below and
(b) such materials and information shall be subject to the
non-disclosure provisions of Schedule 2 and shall not be used by
IDEXX for any purpose for as long as they remain subject to those
provisions.
	 
	 	3.04	 	Ownership of any inventions resulting from the activities of
the parties during the Development Period and directly in connection
with the Development Program shall vest in the party or parties
which, by virtue of the United States patent law, is/are entitled to
apply for and obtain patents for said invention. Such inventions
the ownership of which (determined as aforesaid) vests (a) solely in
IDEXX are hereinafter referred to as “IDEXX Inventions”, (b) solely
in OCD are hereinafter referred to as “OCD Inventions” and (c)
jointly in IDEXX and OCD are hereinafter referred to as “Joint
Inventions”.
	 
	 	 	 	IDEXX shall be responsible for filing, prosecuting and maintaining
patent applications and patents relating to Joint Inventions;
provided that IDEXX will reasonably consult with OCD regarding any
such applications; and provided



5






 





	 	 	 	further that if IDEXX elects not to file, prosecute or maintain any
such patent application or patent in any country, OCD will have the
right, but not the obligation, at its expense, to file, prosecute
and maintain such patent or patent application. All patent
applications relating to Joint Inventions shall be drafted and
prosecuted by an outside law firm mutually agreed upon by IDEXX and
OCD.
	 
	 	 	 	Except as otherwise set forth in the immediately preceding
paragraph, the parties agree to execute and do all things necessary
to vest the title and interest in such property rights in the
relevant party as set out above, at the expense of said relevant
party, which shall pay the costs of the prosecution of all
applications for intellectual property rights to which it becomes
entitled under this Agreement. A party agreed to be not
responsible for the preparation and filing of patent applications
on Joint Inventions shall have the right to review such
applications a reasonable time prior to filing.
	 
	 	3.05	 	As used herein, “Background Technology” shall mean all
technical information, know-how, processes, techniques, discoveries
and inventions (patented, patentable or otherwise) owned by OCD that
are not OCD Inventions or Joint Inventions, which OCD in its
discretion provides IDEXX to facilitate IDEXX’s development of the
New Analyzer or New Slide/Panel Design. To the extent the New
Analyzer or New Slide/Panel Design include any Background Technology
provided by OCD, OCD hereby grants IDEXX and its affiliates a
non-exclusive, worldwide, perpetual, royalty-free, fully paid
license, with the right to assign in connection with any assignment
of this Agreement, but without the right to sublicense, to make,
have made, use, sell, offer to sell and import New Analyzers and the
New Slide/Panel Design using Background Technology in the field of
Dry Slide diagnostic testing of non-human animals. The licenses
granted by this Section 3.05 are subject to any rights of third
parties in or to such intellectual property, and are limited to
intellectual property that relates to equipment, instrumentation or
packaging, rather than slides or reagents. Subject only to the
licenses granted by this Section 3.05, OCD shall, retain all right,
title and interest in and to the Background Technology,
notwithstanding that any such technology is provided to IDEXX or
included in the New Analyzer or New Slide/Panel Design. For
avoidance of doubt, IDEXX and its affiliates shall have no right to
use Background Technology other than in connection with the New
Analyzer or the New Slide/Panel Design.
	 
	 	3.06	 	IDEXX hereby grants OCD and its affiliates a non-exclusive,
worldwide, perpetual, royalty-free, fully paid license, with the
right to assign in connection with any assignment of this Agreement,
but without the right to sublicense, to make, have made, use, sell,
offer to sell and import products and services using IDEXX
Inventions, in the field of human Dry Slide diagnostic testing. The
licenses granted to OCD in this paragraph are subject to any rights
of third parties in or to such intellectual property, and are
limited to intellectual property that relates to equipment,
instrumentation or packaging, rather than slides or reagents.



6






 





	 	 	 	For the avoidance of doubt, the licenses granted to OCD in this
paragraph shall include the right for OCD to use IDEXX Inventions
on any non-human animal species for the development of a product
for marketing into the field of human Dry Slide diagnostic testing.
	 
	 	 	 	OCD hereby grants IDEXX and its affiliates a non-exclusive,
worldwide, perpetual, royalty-free, fully paid license, with the
right to assign in connection with any assignment of this
Agreement, but without the right to sublicense, to make, have made,
use, sell, offer to sell and import New Analyzers and the New
Slide/Panel Design using OCD Inventions, in the field of Dry Slide
diagnostic testing of non-human animals. The licenses granted to
IDEXX in this paragraph are subject to any rights of third parties
in or to such intellectual property, and are limited to
intellectual property that relates to equipment, instrumentation or
packaging, rather than slides or reagents.
	 
	 	3.07	 	OCD hereby agrees that neither it nor its affiliates shall,
prior to December 31, 2018, grant any third party the license to
make, have made, use, sell, offer to sell and import products and
services using Joint Inventions in the field of diagnostic testing
of non-human animals; provided, the foregoing restrictions shall not
prohibit the assignment by OCD of its interest in such Joint
Inventions in connection with any assignment of this Agreement, nor,
to the extent that any of the following actions may be deemed to be
a license, shall they prohibit OCD from collaborating with any third
party in the development of products using Joint Inventions in such
field, from having any products using Joint Inventions made by any
third party for sale in such field, or from selling any products
using Joint Inventions into such field through any third party
distributor or sales agent.
	 
	 	 	 	IDEXX hereby agrees that neither it nor its affiliates shall, prior
to December 31, 2018, grant any third party the license to make,
have made, use, sell, offer to sell and import products and
services using Joint Inventions in field of human diagnostic
testing; provided, the foregoing restrictions shall not prohibit
the assignment by IDEXX of its interest in such Joint Inventions in
connection with any assignment of this Agreement, nor, to the
extent that any of the following actions may be deemed to be a
license, shall they prohibit IDEXX from collaborating with any
third party in the development of products using Joint Inventions
in such field, from having any products using Joint Inventions made
by any third party for sale in such field, or from selling any
products using Joint Inventions into such field through any third
party distributor or sales agent.
	 
	 	 	 	The provisions of this Section 3.07 do not diminish any of the
parties’ respective obligations under Article 9 of this Agreement.
	 
	 	3.08	 	(a) IDEXX shall develop detailed specifications for the New
Slide/Panel Design, and the parties shall meet promptly thereafter
to review such specifications (the “Design Review”). In connection
with the Design Review,



7






 







	 	 	 	IDEXX shall also provide OCD with a good faith forecast of the
number of New Slides that IDEXX and IDEXX BV anticipate ordering
during each of the first five years following the date of the first
commercial sale of the New Analyzer (the “Design Forecast”). In
addition, IDEXX shall provide OCD with its good faith estimate of
its and IDEXX BV’s annual requirements for New Slides during the
subsequent three years. Within 60 days after the Design Review, or
such other period as the parties may agree, OCD shall provide IDEXX
a detailed summary showing OCD’s good faith estimate of (1) the
cost to install a production line (including without limitation
design costs, engineering costs, equipment costs and validation
costs) for the New Slide/Panel Design (“Automation Costs”) and (2)
the ongoing expenses per New Slide associated with the formatting
and packaging of New Slides that are in excess of OCD’s current
expenses for manufacturing and packaging the current
VITROS-formatted slides in 50-count cartridges (“Incremental
Manufacturing Costs”).




	 	 	 	(b) Automation Costs shall exclude the cost of any injection
molding tooling associated with the New Slide/Panel Design, for
which IDEXX shall be solely responsible. The parties shall
mutually agree on the selection of a third party vendor for such
tooling. IDEXX shall own such tooling. After installation, OCD
shall be solely responsible for the maintenance and repair of any
such tooling.
	 
	 	 	 	(c) Incremental Manufacturing Costs shall be based on the average
annual volumes of New Slides set forth in the Design Forecast
during the first five years following the date of the first
commercial sale of the New Analyzer, and will include the cost of
direct labor and materials (including without limitation plastic
components and all packaging materials), facility allocation and
reasonable overhead, and will exclude depreciation of any
Automation Costs.
	 
	 	 	 	(d) If OCD’s estimated Automation Costs are $[**] or less, and
OCD’s estimated Incremental Manufacturing Costs are $[**] or less
per New Slide, then OCD shall manufacture and package New Slides in
accordance with IDEXX’s specifications for the New Slide/Panel
Design and supply them to IDEXX for the Term as provided in this
Agreement. In this case, OCD shall be solely responsible for all
Automation Costs and all costs of manufacturing such slides,
including Incremental Manufacturing Costs, regardless of whether
OCD’s actual costs are different than the estimates provided to
IDEXX.
	 
	 	 	 	(e) If OCD’s estimated Automation Costs are greater than $[**], or
OCD’s estimated Incremental Manufacturing Costs are greater than
$[**] per New Slide, then OCD may elect to be solely responsible
for all such costs, in which case OCD shall manufacture and package
New Slides in accordance with IDEXX’s specifications for the New
Slide/Panel Design and supply them to IDEXX for the Term as
provided in this Agreement. In this case, OCD shall be solely
responsible for all Automation Costs and all costs of manufacturing
such slides,



8






 





	 	 	 	including Incremental Manufacturing Costs, regardless of whether
OCD’s actual costs are different than the estimates provided to
IDEXX.
	 
	 	 	 	(f) If OCD does not elect to be solely responsible for all costs as
provided in paragraph (e) of this Section 3.08, then IDEXX shall
have the option of either (1) changing the New Slide/Panel Design
to reduce OCD’s costs, such that paragraph (d) of this Section 3.08
applies, or (2) assuming the entire amount (or such lesser portion
as the parties mutually agree) of OCD’s estimated Automation Costs
that exceeds $[**] and assuming the entire amount (or such lesser
portion as the parties mutually agree) of OCD’s estimated
Incremental Manufacturing Costs that exceeds $[**] per New Slide,
or (3) performing the formatting and packaging of New Slides
independently, as more particularly described below.
	 
	 	 	 	(g) If IDEXX elects to assume a portion of OCD’s Automation Costs
or Incremental Manufacturing Costs as set forth in clause (2) of
paragraph (f) of this Section 3.08, then (1) in the event actual
Automation Costs exceed the amount contemplated by the parties
under clause (2) of paragraph (f) of this Section 3.08, IDEXX and
OCD shall [**] of such excess Automation Costs and (2) OCD shall be
solely responsible for all costs of manufacturing and packaging New
Slides, including Incremental Manufacturing Costs, that are not
assumed by IDEXX, regardless of whether OCD’s actual costs are
different than it had estimated when the parties agreed to the
portion to be assumed by IDEXX, and OCD shall supply such slides to
IDEXX for the Term as provided in this Agreement.
	 
	 	 	 	(h) If IDEXX elects to perform the formatting and packaging of the
New Slides independently of OCD, then (1) in lieu of New Slides,
OCD shall supply IDEXX with VITROS slides in the format currently
manufactured for the VITROS mainframe analyzers and/or the VETTEST
Analyzer (i.e., VITROS slides packaged in 50-count cartridges,
before further formatting and packaging for VETTEST Analyzer
requirements), as applicable for New Slides, for the Term as
provided in this Agreement, and all references in this Agreement to
New Slides or to VETTEST slides, to the extent referring to OCD’s
obligation to supply New Slides, shall mean such VITROS slides
packaged in 50-count cartridges and (2) solely with respect to New
Slides, the prices for Tiers 2 and 3 in the table set forth in
Section 7.02 shall be reduced by $[**] per New Slide.
	 
	 	 	 	(i) The parties acknowledge that the specifications for the New
Slide/Panel Design may change after the initial Design Review in
accordance with IDEXX’s requirements. If OCD has elected to
perform the formatting and packaging of the New Slides, then all
incremental costs resulting from such change in specifications, to
the extent that they cause Automation Costs to exceed $[**] or
Incremental Manufacturing Costs to exceed $[**] per New Slide,
shall be borne by the parties as they may agree. If the parties
cannot so agree, then IDEXX may make the election provided for in
paragraph (h) of this Section 3.08, in which case IDEXX shall
reimburse OCD for OCD’s Automation Costs incurred and take



9






 





	 	 	 	ownership of any capital equipment and related design materials
funded as Automation Costs and developed in connection with OCD’s
new production line for the New Slide/Panel Design to the date of
IDEXX’s election, and OCD shall cooperate with IDEXX in the
transfer of such equipment and materials to IDEXX. If IDEXX has
elected to perform the formatting and packaging of the New Slides
independently of OCD, and if such change in specifications could
reasonably result in a significant reduction in Automation Costs or
Incremental Manufacturing Costs, then IDEXX shall notify OCD of
such fact and OCD shall have the option to request that the parties
conduct a further Design Review in accordance with paragraph (a) of
this Section 3.08, and OCD shall be permitted to re-estimate its
Automation Costs and Incremental Manufacturing Costs, to require
that the parties conduct the cost review, as otherwise provided in
this Section 3.08, and to make the election in paragraph 3.08(e).
	 
	 	 	 	(j) If IDEXX and IDEXX BV shall not have attained [**]% of the
Design Forecast during the first five years following the date of
the first commercial sale of the New Analyzer, then IDEXX shall
reimburse OCD for an amount equal to the product of (a) the
Automation Costs borne by OCD, times (b) a fraction, the numerator
of which is the number of slides by which IDEXX’s and IDEXX BV’s
actual purchases of New Slides falls short of the Design Forecast
and the denominator of which is the Design Forecast; provided that,
for avoidance of doubt, there shall be no change in the price of
New Slides as a result of the failure to attain such percentage of
the Design Forecast.
	 
	 	 	 	(k) If OCD elects to format and package New Slides, and if in the
future the through-put capacity of such packaging line is
insufficient to meet IDEXX’s and IDEXX BV’s forecasted demand, any
additional capital investment or other costs required to meet such
demand (other than for injection molding tooling), whether by
increasing the through-put capacity of the packaging line or adding
a new packaging line, shall be borne by the parties in the same
relative proportions as all previous Automation Costs; and IDEXX
shall bear the costs for required injection molding tooling.
	 
	 	 	 	(l) Notwithstanding anything in this Section 3.08 to the contrary,
if the Design Forecast indicates that IDEXX and IDEXX BV expect to
purchase fewer than [**] New Slides hereunder during the first five
years following the date of first commercial sale of the New
Analyzer, then OCD may in its sole discretion elect to be released
from any obligation to format and package the New Slides, in which
event IDEXX’s sole options hereunder shall be either (1) to reduce
OCD’s costs to a level that is acceptable to OCD in light of the
Design Forecast, or (2) to perform the formatting and packaging of
New Slides independently, as more particularly described in
paragraph 3.08(h) above.




	 	3.09	 	IDEXX acknowledges that it has not relied upon any guarantee
or assurance from OCD, express or implied, regarding the technical
feasibility of the New Analyzer



10






 







	 	 	 	or the New Slide/Panel Design in deciding to engage in the
development of the New Analyzer and New Slide/Panel Design, and
that OCD shall have no liability with respect to IDEXX’s
termination of any of its other product development activities.




	4.	 	AGREEMENT TO SUPPLY




	 	4.01	 	Subject to the terms and conditions of this Agreement, OCD
undertakes to manufacture for IDEXX and to supply to IDEXX VETTEST
slides, VETTEST tips and Vetrol controls. OCD shall supply VETTEST
slides in compliance with the VETTEST Slide Quality Assurance
Procedures set out in Schedule 1. All slides supplied to IDEXX
hereunder are supplied solely for sale within the Territory;
provided that IDEXX may make limited sales to IDEXX BV solely for
purposes of adjusting inventory levels according to unanticipated
changes in regional demand. For the avoidance of doubt, nothing in
this Agreement shall obligate OCD, with respect to any particular
chemistry, to furnish IDEXX with slides for such chemistry in any
slit format that OCD does not currently manufacture for such
chemistry, or that would otherwise be uneconomical for OCD to supply
to IDEXX (other than the slit formats for such chemistry that OCD
then sells or has agreed in writing to sell to IDEXX).
	 
	 	4.02	 	(a) Notwithstanding any other provision of this Agreement, if
after [**] the annual volume of VETTEST slides purchased by IDEXX
and IDEXX BV is less than [**] slides, then OCD may in its sole
discretion elect to be released from any obligation to format and
package the New Slides and/or package other VETTEST slides, in which
event IDEXX’s sole options hereunder shall be either (x) to accept
an increase in slide prices for New Slides and/or other VETTEST
slides that is adequate to compensate OCD for any increase in its
costs due to such reduction in volume, or (y) with respect to slides
for which IDEXX does not accept a price increase under the preceding
clause (x), to perform the formatting and packaging of New Slides
and/or the packaging of other VETTEST slides, as applicable,
independently of OCD.




	 	 	 	(b) If IDEXX elects to perform the formatting and packaging of New
Slides, then (1) in lieu of New Slides OCD shall supply IDEXX with
VITROS slides in the format currently manufactured for the VITROS
mainframe analyzers and/or the VETTEST Analyzer (i.e., VITROS
slides packaged in 50-count cartridges, before further formatting
and packaging for VETTEST Analyzer requirements), as applicable for
New Slides, for the Term as provided in this Agreement, and all
references in this Agreement to New Slides or to VETTEST slides, to
the extent referring to OCD’s obligation to supply New Slides,
shall mean such VITROS slides packaged in 50-count cartridges, (2)
the prices for Tiers 2 and 3 in the table set forth in Section 7.02
shall be reduced by $[**] per New Slide, (3) IDEXX shall take
ownership of any capital equipment and related design materials
funded as Automation Costs and developed in connection with OCD’s
new production



11






 





	 	 	 	line for the New Slide/Panel Design, and OCD shall cooperate with
IDEXX in the transfer of such equipment and materials to IDEXX and
(4) IDEXX shall reimburse OCD for the book value of such equipment.
	 
	 	 	 	(c) If IDEXX elects to perform the packaging of VETTEST slides
other than New Slides, then (1) in lieu of such other VETTEST
slides OCD shall supply IDEXX with VITROS slides in the format
currently manufactured for the VETTEST Analyzer (i.e., VITROS
slides packaged in 50-count cartridges, before further formatting
and packaging for VETTEST Analyzer requirements) for the Term as
provided in this Agreement, and all references in this Agreement to
VETTEST slides, to the extent referring to OCD’s obligation to
supply such slides (other than New Slides), shall mean such VITROS
slides packaged in 50-count cartridges, (2) the prices for Tiers 1,
2 and 3 in the table set forth in Section 7.02 shall be reduced by
$[**] per slide for VETTEST slides (other than New Slides), (3)
IDEXX shall take ownership of OCD’s packaging lines for VETTEST
slides (other than New Slides), except equipment which OCD requires
for the packaging of slides for the VITROS DT60 (or next generation
OCD analyzer), but in any event including the VETTEST “panel
assembly machine” (PAM) line which is used currently to package
PANELS/PROFILES, and OCD shall cooperate with IDEXX in the transfer
of such packaging line(s) to IDEXX and (4) IDEXX shall reimburse
OCD for the book value of such transferred equipment.
	 
	 	 	 	(d) In either case if IDEXX elects to perform the formatting and
packaging of New Slides and/or the packaging of other VETTEST
slides independently, the parties shall cooperate to determine an
appropriate timetable for the transfer of responsibilities to
IDEXX, such that the supply of slides to IDEXX shall continue
without interruption.
	 
	 	 	 	(e) For the avoidance of doubt, nothing in this Agreement shall
obligate OCD to transfer to IDEXX any capital equipment used by OCD
in the manufacture of VITROS slides.




	5.	 	FORECASTS, COMMITMENTS AND ORDERS




	 	5.01	 	Attached hereto as Schedule 4 are aggregate Purchase
Commitments by IDEXX and IDEXX BV for VETTEST slides for the VETTEST
Analyzer for calendar years 2003 through and including 2010. The
Purchase Commitments constitute the aggregate anticipated minimum
aggregate purchase quantities by IDEXX and IDEXX BV for single
chemistry VETTEST slides and PANELS/PROFILES slides in the indicated
calendar years.
	 
	 	 	 	Existing Special [**] Slides, New Special [**] Slides and New
Chemistry Slides shall be excluded from the determination of
IDEXX’s and IDEXX BV’s slide purchases for purposes of achieving
their aggregate Purchase Commitments under Section 5.01 of this
Agreement or the Europe Agreement, as the case may be.



12






 





	 	 	 	Failure by IDEXX and IDEXX BV to purchase, in the aggregate, at
least the indicated Purchase Commitment quantities of each type of
slides in any year may subject IDEXX to the requirement to make a
payment to OCD as set forth in Section 5.02 below, but such failure
shall in no event otherwise be deemed to be a breach of this
Agreement.
	 
	 	5.02	 	If IDEXX and IDEXX BV fail to purchase in the aggregate the
quantities of slides for the VETTEST Analyzer set forth as Purchase
Commitments on Schedule 4 in a particular calendar year, unless
there has been a Material Adverse Change (as defined in the
following paragraph), IDEXX shall pay, or shall cause IDEXX BV to
pay, to OCD within 30 days after the end of such calendar year [**]%
of the product of (i) the number of each type of slides (single or
PANELS/PROFILES) by which IDEXX and IDEXX BV have in the aggregate
fallen short of the Purchase Commitment and (ii) the lowest
per-slide price for the applicable type of slides under either of
the Agreements.
	 
	 	 	 	For the purposes of this Section 5.02, “Material Adverse Changes”
shall mean material changes in the veterinary clinical chemistry
markets which result from (a) the commercial introduction into the
veterinary market, other than by IDEXX or its affiliates, of a
technology not previously available in the veterinary clinical
chemistry market, (b) the eradication of one or more diseases, or
the development of new disease therapies, treatments or
diagnostics, which significantly reduces demand for veterinary
clinical chemistry testing or (c) the inability or unwillingness of
OCD to supply VETTEST or VITROS slides in accordance with IDEXX’s
Annual Purchase Forecasts pursuant to Section 5.04 below. Whether
a Material Adverse Change has occurred will be determined by
reference to the effect of a change in the veterinary clinical
chemistry market on IDEXX and IDEXX BV taken as a whole, and not on
either individually.
	 
	 	 	 	The parties shall discuss in good faith any assertion by IDEXX or
IDEXX BV that a Material Adverse Change has occurred or is
continuing. If the parties agree that a Material Adverse Change
has occurred or is continuing, they shall negotiate in good faith
with respect to appropriate reductions in Purchase Commitments,
VETTEST slide prices (including single and PANELS/PROFILES slides)
and/or amounts which would otherwise be payable pursuant to the
first sentence of this Section 5.02 to appropriately allocate the
effects of such Material Adverse Change on the parties.
	 
	 	5.03	 	Order and delivery of VETTEST slides (including
PANELS/PROFILES) shall be made in multiples of 100 boxes. Unless
otherwise agreed between the parties in any particular case, IDEXX
shall place orders for slides four times per calendar year, for
delivery in each calendar quarter of the year. Each order shall
specify a business day delivery date for each delivery, which shall
be not less than three months after the order date. Unless
otherwise agreed between the parties in any



13






 







	 	 	 	particular case the number of deliveries shall be limited to four
per year. IDEXX shall order quantities for delivery in any quarter
in accordance with its good faith estimates of actual demand, with
allowance for reasonable inventory management requirements and
consistent with IDEXX’s stated desire to minimize its inventory
levels.
	 
	 	 	 	Order and delivery of the VETTEST tips shall be made in multiples
of 10,000 tips (20 cartons each containing 500 tips). Unless
otherwise agreed between the parties in any particular case, the
number of orders and deliveries of the VETTEST tips and Vetrols
shall be limited to two in each year. OCD shall deliver the
VETTEST tips and Vetrols in the ordered quantities in each year.
	 
	 	5.04	 	Not later than October 1 of each year, commencing October 1,
2003, IDEXX shall notify OCD of the aggregate forecasted
requirements of IDEXX for the subsequent calendar year for each of
the VETTEST slides (single slides and PANELS/PROFILES slides for the
VETTEST Analyzer and New Slides) (each such notification, an “Annual
Purchase Forecast”). The aggregate order quantities in the
subsequent year for each of the VETTEST slides shall be within ±25%
of such aggregate Annual Purchase Forecast unless the parties
otherwise agree. As long as slide orders do not exceed the
applicable Annual Purchase Forecast by more than 25%, OCD shall
deliver the slides in accordance with the orders. The Annual
Purchase Forecasts constitute non-binding forecasts for OCD’s
planning purposes and shall also be the basis for determining
estimated slide pricing pursuant to Section 7.02 below and the cash
rebate pursuant to Section 7.03 below.
	 
	 	 	 	In addition to the Annual Purchase Forecast, IDEXX shall furnish to
OCD updated quarterly forecasts of the aggregate requirements of
IDEXX for VETTEST slides in the four succeeding calendar quarters.
The parties understand that such forecasts are merely estimates to
assist OCD in production planning and are not to be considered
orders or binding in any way.
	 
	 	 	 	The parties shall further coordinate with one another to keep OCD
apprised of IDEXX’s current and anticipated inventories of stock
keeping units and relevant conditions in the veterinary market.
The provisions of this paragraph shall terminate immediately upon
delivery by OCD of a notice of termination of Section 9.04.
	 
	 	5.05	 	In the event that IDEXX in any year notifies OCD that it
wishes to order quantities which exceed the quantities mentioned in
Section 5.04 above by more than 25%, OCD will endeavor to supply the
excess quantities and notify IDEXX of the extent of its ability to
so supply.
	 
	 	5.06	 	It is understood and agreed that orders for the VETTEST
slides shall include only those chemistries set forth in Schedule 5 hereto, as amended from time to time by



14






 







	 	 	 	agreement of the parties. IDEXX may at any time request that the
additional chemistries listed on Schedule 8 hereof, in the form
they are available at the Commencement Date to the human market on
VITROS slides, be added as VETTEST slides to Schedule 5 (any
VETTEST slides so added, containing such additional chemistries,
are referred to herein as “New Chemistry Slides”). Prior to adding
a New Chemistry Slide on Schedule 5, the parties will negotiate in
good faith to determine the initial price for such slides in
accordance with the immediately following paragraph and shall set
forth such price on Schedule 6. IDEXX shall have the right, from
time to time, to elect to remove any New Chemistry Slides from
Schedule 5, and Schedule 5 and Schedule 6 shall be updated to
reflect such removal. IDEXX acknowledges that neither this nor any
other provision of this Agreement shall obligate OCD to supply
IDEXX with any slide or other product based on any technology that
is not incorporated in the VITROS slides or VETTEST slides that OCD
sells as of the date hereof.
	 
	 	 	 	Until [**], the price per slide for any New Chemistry Slides shall
be the greater of $[**] and [**] (as determined by OCD in good
faith and taking into account IDEXX’s and IDEXX BV’s good faith
forecast for the quantity of the chemistry in question). For
orders placed for delivery during each calendar year beginning with
[**], if [**] of any New Chemistry Slide is determined to be
greater than $[**] (as determined by OCD in good faith and taking
into account IDEXX’s and IDEXX BV’s good faith forecast for the
quantity of the chemistry in question), then the minimum price per
slide for such New Chemistry Slides shall be [**]; provided, that
so long as IDEXX and IDEXX BV order [**] or more of such slides in
the aggregate in any calendar year, the minimum price per slide for
such New Chemistry Slides shall not exceed $[**]. OCD shall have
the right, from time to time and in good faith, to revise its
determination of [**] of any New Chemistry Slide that is priced on
Schedule 6 if IDEXX’s and IDEXX BV’s aggregate actual annual orders
of such slide fall below [**], and Schedule 6 shall be updated to
reflect such revised [**].
	 
	 	 	 	In the event that a chemistry listed in Schedule 5 should become
known by OCD to be unavailable at any future date during the Term,
OCD will so notify IDEXX at the earliest practicable date, and the
parties shall cooperate to determine an appropriate course of
action.




	6.	 	DELIVERY




	 	6.01	 	Following acknowledgement by OCD of each order placed by
IDEXX and on or before the delivery due date, OCD shall complete
delivery of the appropriate quantity of slides and tips within ±
10%. Deviations of delivery quantities from order quantities within
the ± 10% range may be compensated by IDEXX in the first subsequent
order placed, subject to Section 5. In the event of a price
increase for one or more of the VETTEST slides, such compensating
quantity of such slides shall be processed at the previous lower
price.



15






 







	 	6.02	 	Order and delivery for all purchases hereunder shall be
F.O.B. OCD’s facility in the U.S.A.
	 
	 	6.03	 	Unless otherwise advised in writing by OCD to IDEXX, OCD
shall pack the VETTEST slides in accordance with OCD’s standard
shipping configuration which is known to IDEXX and which at the
Commencement Date contains approximately 60 cases per pallet, each
case containing 100 boxes of slides.
	 
	 	6.04	 	The parties shall reasonably cooperate to identify and
implement potential savings for both parties, consistent with the
principles of lean manufacturing across the value chain, in all
processes in their relationship, including without limitation
improvements relating to slide manufacturing, packaging, ordering,
build schedules, component purchasing, delivery schedules, quality
testing and calibration processes, and product distribution
processes (including direct shipment to IDEXX distributors and
end-users), and including without limitation, identifying and
implementing processes to reduce the number of slide lots supplied
to IDEXX and to reduce IDEXX calibration time; provided, that
neither party shall be obligated to implement a process change for
which its net costs exceed its net benefits.




	7.	 	PRICES




	 	7.01	 	Subject to the provisions of Sections 3.08 and 4.02 that
contemplate OCD’s delivery of slides in 50-count cartridges if IDEXX
elects to format and/or package slides independently, all references
to pricing for VETTEST slides in this agreement refer to the
completed and packaged product in form ready for delivery to an
end-user. The initial prices for each of the VETTEST slides
(including the PANELS/ PROFILES) shall be as set forth in Schedule 5
hereto. Such prices are broken out to provide prices for each
individual product code for the following geographic regions
(additional regions may be added, and changes within regions may be
agreed to, from time to time in writing by the parties):




	 	US—United States, Canada and all other countries not
identified in this Section 7.01;




	 	Asian—Brunei, China, Hong Kong, Indonesia, Japan, Korea,
Malaysia, Philippines, Singapore, Taiwan, Thailand, Viet Nam.




	 	Australia/New Zealand




	 	 	 	IDEXX agrees that OCD may audit IDEXX’s books and records to verify
sales of VETTEST slides in any region.



16






 







	 	7.02	 	(a) The prices set forth in Schedule 5 shall remain in effect
for orders placed through December 31, [**].




	 	 	 	(b) For orders placed for delivery during each calendar year
beginning with [**], the price for each VETTEST slide listed on
Schedule 5 (whether New Slides, single chemistry VETTEST slides for
the VETTEST Analyzer, or per slide in PANELS/PROFILES, and, for
avoidance of doubt, including New Chemistry Slides, subject to
Section 5.06), within the respective volume tiers set forth below
(aggregating for this purpose purchases by IDEXX and IDEXX BV)
shall be as set forth for such volume tier; provided, that Existing
Special [**] Slides and New Special [**] Slides shall not be priced
by reference to the volume tiers but will be priced as otherwise
set forth below. For purposes of determining purchase volumes, up
to [**] Existing Special [**] Slides shall be included in the
determination, and all other Existing Special [**] Slides and New
Special [**] Slides shall be excluded from the determination. The
stated price shall apply only to slides purchased within the
corresponding volume tier, and only with respect to the quantities
within such tier.




	 	 	 	 	 
	Annual Volume Tier	 	Price per Slide
	
	 	

	Tier 1: Up to [**]
	 	$	[**]	 
	Tier 2: In excess of [**], but not exceeding [**]
	 	$	[**]	 
	Tier 3: In excess of [**]
	 	$	[**]	 




	 	 	 	For all orders for Existing Special [**] Slides, the price per
slide shall be as agreed between the parties pursuant to Section 4
of the Operations Agreement.
	 
	 	 	 	For all orders for New Special [**] Slides, the price per slide
shall be as agreed between the parties pursuant to Section 7.04 of
this Agreement.
	 
	 	 	 	Notwithstanding the foregoing, the price per slide for any New
Chemistry Slide that is priced on Schedule 6 shall never be lower
than the greater of (a) the minimum price as determined in
accordance with Section 5.06 and identified on Schedule 6 as
amended from time to time and (b) the price that would otherwise
apply pursuant to the pricing tiers set forth above.
	 
	 	 	 	Promptly after IDEXX and IDEXX BV provide their aggregate Annual
Purchase Forecast for a calendar year pursuant to Section 5.04 and
Section 5.04 of the Europe Agreement, the parties shall calculate
the weighted average price of slides included in such forecast (the
“First Estimated Blended Price”).



17






 





	 	 	 	Upon determination of the First Estimated Blended Price applicable
to a calendar year, for each order placed by IDEXX for delivery
during the first three calendar quarters of such year, the amount
invoiced and paid per slide listed on Schedule 5 shall be the First
Estimated Blended Price.
	 
	 	 	 	Before IDEXX places its order for the fourth calendar quarter of
the year, the parties shall review IDEXX’s and IDEXX BV’s
respective fourth-quarter orders and re-calculate the weighted
average price of slides based on IDEXX’s and IDEXX BV’s aggregate
actual orders for the first three quarters and their orders for the
fourth quarter (the “Second Estimated Blended Price”). If the
Second Estimated Blended Price is different than the First
Estimated Blended Price, the amount invoiced and paid per slide
listed on Schedule 5 shall be the Second Estimated Blended Price.
In addition, either party may calculate the resulting adjustment
(up or down) for each slide delivered for the first three quarters
to reflect the difference between the First Estimated Blended Price
and the Second Estimated Blended Price, such that the amount paid
by IDEXX for all slides delivered during the first three calendar
quarters shall equal the Second Estimated Blended Price. If the
adjustment is an upwards adjustment, then IDEXX shall pay OCD the
aggregate amount of such adjustment, together with interest on such
amount (calculated as set forth below), within 30 days of OCD’s
request for such payment. If the adjustment is a downwards
adjustment, then OCD shall pay IDEXX the aggregate amount of such
adjustment, together with interest on such amount (calculated as
set forth below), within 30 days of IDEXX’s request for such
payment (or, at IDEXX’s option, apply such amount as a credit
against IDEXX’s third or fourth quarter invoice).
	 
	 	 	 	Within 30 days after the end of the year (or 30 days after IDEXX
and IDEXX BV complete payment in full for all slides purchased
during the year, if later), the parties shall perform a final
calculation of the weighted average price based on all slides
ordered by IDEXX and IDEXX BV and delivered during the year (the
“Final Blended Price”). If the Final Blended Price is different
than the Second Estimated Blended Price, then IDEXX or OCD, as the
case may be, shall make a final payment to the other, so that the
final amount paid by IDEXX per slide for all slides ordered and
delivered during the year shall equal the Final Blended Price. The
party obligated to make such final payment shall do so within 30
days after the determination of the Final Blended Price.
	 
	 	 	 	Any adjustment payments made pursuant to either of the immediately
preceding paragraphs, and any overdue payments by OCD or IDEXX of
any amounts owed to the other pursuant to this Section 7.02, shall
bear interest at a rate per annum equal to the Prime Rate. Such
interest shall be calculated based on a 365-day year and the actual
number of days elapsed since the due date for the applicable
payment to which it relates.



18






 





	 	 	 	For avoidance of doubt, the blended price calculations of this
Section 7.02 shall apply only to chemistries listed on Schedule 5,
and only after calendar year [**].




	 	 	 	(c) OCD may, at its option, increase all prices for slides ordered
for delivery (i) on or after January 1, [**] by an amount not to
exceed [**]% of the “PPI Increase” (as defined below), provided
that OCD may not increase prices under this clause (i) unless the
PPI Increase is greater than [**]%; and (ii) on or after January 1,
[**]by an amount (x) as provided in the preceding clause (i) or (y)
by an amount not to exceed [**]% of the PPI Increase, provided that
OCD may not increase prices under this subclause (y) unless the PPI
Increase is greater than [**]%. OCD may calculate the PPI Increase
each year beginning in [**], and any resulting price increase shall
be effective for orders placed for delivery during the following
calendar year and thereafter, unless and until increased again in
accordance with the procedures set forth in this paragraph. For
purposes of this Agreement, the “PPI Increase” shall be calculated
by dividing (x) the average monthly “PPI” level for the most recent
12-month period ending with and including June of the year in which
the PPI Increase is being calculated (each such period, a
“Measurement Period”), by (y) the average monthly PPI level for the
12-month period immediately preceding that described in clause (x)
(the “Baseline Period” with respect to such Measurement Period),
then subtracting 1 and converting the remaining fraction into a
percentage. All calculations shall be based on the latest version
of the PPI level published as of the date the calculation is made.
For purposes of this Agreement, “PPI” means the United States
Producer Price Index – [**] (not seasonally adjusted), current
series identification [**], as published by the Bureau of Labor
Statistics on its Web site (www.bls.gov/ppi), or if not available
from such Web site, then as published by the Bureau of Labor
Statistics in its monthly periodical “Producer Price Indexes.” OCD
shall give IDEXX written notice of any price increase pursuant to
this paragraph 7.02(c) at least 120 days before the beginning of
the calendar year for which a price increase is to take effect;
otherwise, the prices shall remain unaffected by such increase for
such year.
	 
	 	 	 	(d) With respect to slides ordered for delivery on or after January
1, [**], if OCD’s aggregate cost of [**] (as defined below) for the
most recent Measurement Period has increased on a per VETTEST slide
basis as compared with the applicable Baseline Period by an amount
that exceeds the PPI Increase for such Measurement Period as
applied to the [**] for such Baseline Period, on a per VETTEST
slide basis, then OCD shall be permitted to increase the price of
each slide sold to IDEXX by the amount of such excess. “[**]”
means [**] that are [**]. Schedule 9 attached hereto contains an
example, for illustration purposes only, of the calculations
described in this paragraph 7.02(d) and in paragraph 7.02(e).
	 
	 	 	 	(e) With respect to slides ordered for delivery on or after January
1, [**], if IDEXX’s share of Special Event Costs (as defined below)
for the most recent



19






 





	 	 	 	Measurement Period has increased on a per VETTEST slide basis as
compared with the applicable Baseline Period by an amount that
exceeds [**] above the PPI Increase for such Measurement Period as
applied to IDEXX’s share of Special Event Costs for such Baseline
Period, on a per VETTEST slide basis, then OCD shall be permitted
to increase the price of each slide sold to IDEXX by the amount of
such excess. “Special Event Costs” means the aggregate net amount
of (i) [**] with respect to [**] on which [**], (ii) [**] in the
[**], and (iii) [**] as a result of [**]. “IDEXX’s share” of any
of the foregoing shall mean the [**] that is attributable to the
[**].
	 
	 	 	 	(f) OCD shall give IDEXX written notice of any price increase
pursuant to paragraph 7.02(d) or 7.02(e) at least 120 days before
the beginning of the calendar year for which a price increase is to
take effect; otherwise, the prices shall remain unaffected by such
increase for such year. Any price increase pursuant to paragraph
7.02(d) or 7.02(e) shall be effective for orders placed for
delivery during the following calendar year and thereafter, unless
and until (i) increased again in accordance with the procedures set
forth in such paragraphs or (ii) there occurs a decrease in any of
the costs upon which the price increase was based (or any such cost
that was relevant in one measuring period is not relevant in
subsequent periods, for example, certain validation or other
one-time costs incurred for compliance purposes), in which event
IDEXX’s price per slide shall be reduced to the extent of such
decrease (or one-time cost). In addition, OCD agrees to consider
in good faith any request by IDEXX to reimburse OCD pursuant to
paragraph 7.02(e) by a process other than an increase in slide
prices, such as a lump sum payment or series of payments.
Furthermore, with respect to any one-time cost or other temporary
cost lasting no more than one year, IDEXX shall have the right to
make such reimbursement in equal periodic payments (no less
frequently than quarterly) over a period that is no longer than one
year.
	 
	 	 	 	(g) OCD shall give IDEXX reasonable detail as to its incremental
[**] costs and incremental Special Event Costs on which it seeks to
base a price increase pursuant to paragraph 7.02(d) or 7.02(e) or
otherwise pass on to IDEXX pursuant to paragraph 7.02(f); provided,
however, that IDEXX shall not have any right to obtain any details
concerning OCD’s actual costs (other than such incremental cost
differences used in such calculation).
	 
	 	 	 	(h) At any time after OCD’s aggregate annual sales volume of VITROS
slides and VETTEST slides shall have declined more than [**]% from
[**], the parties shall, at OCD’s request, discuss appropriate
pricing of slides under this Agreement. Neither party shall be
obligated to agree to any price change under this Section 7.02(h).
	 
	 	 	 	(i) OCD agrees that IDEXX shall have the right, no more than once
per calendar year, to cause a nationally recognized independent
accounting firm to conduct an audit, on reasonable advance notice
and during normal business hours,



20






 





	 	 	 	of OCD’s books and records to the extent reasonably necessary to
confirm OCD’s price increase calculations under this Section 7.02.
Any report prepared by such independent accounting firm shall
contain such firm’s conclusion concerning the validity of OCD’s
price increase; provided, however, that such report shall not
contain, and IDEXX shall not have any right to obtain, any details
concerning OCD’s actual costs (other than incremental cost
differences used in the calculation of OCD price increases).
	 
	 	 	 	(j) IDEXX agrees that OCD may audit IDEXX’s books and records
relating to orders of VETTEST slides to confirm the pricing
calculations under this Section 7.02.




	 	7.03	 	The provisions of this Section 7.03 shall apply only to
purchases of VETTEST slides for the VETTEST Analyzer during calendar
years [**]. IDEXX shall be entitled to receive its Proportionate
Share (based on sales during a calendar year) of a cash rebate in
the amount set forth below if the total aggregate slide purchases by
IDEXX and IDEXX BV, in calendar year [**], exceed the aggregate
quantities set forth below:




	 	 	 	 	 	 	 
	 	 	 	 	Incremental Cash Rebate –
	Annual Slide Purchases	 	% Off Purchase Price
	 	0 	[**]
	 	 	[**]	%
	 	 	[**]
	 	 	[**]	%
	 	 	[**]
	 	 	[**]	%
	 	 	[**]
	 	 	[**]	%
	 	 	[**]
	 	 	[**]	%
	 	 	[**]
	 	 	[**]	%
	        [**] and above
	 	 	[**]	%




	 	 	 	The rebate amounts set forth above constitute a percentage
reduction in the purchase price of any slides (including both
single slides and PANELS/PROFILES slides) purchased above the
corresponding quantity. The percentage amounts are incremental (as
opposed to cumulative) and relate only to the quantities set forth
opposite it. For example, if IDEXX and IDEXX BV were to purchase,
in the aggregate, [**] slides in calendar year [**], they would not
be entitled to a [**]% price reduction on all slides that they
purchased in such year, rather, they would be entitled to receive
(i) [**] purchase price reduction on the first [**] slides
purchased, (ii) a [**]% purchase price reduction on all slides
purchased over [**], up to and including [**], (iii) an [**]%
purchase price reduction on all slides purchased over [**] up to
and including [**], and (iv) a [**]% purchase price reduction on
all slides purchased over [**] up to and including the [**] slides
that they purchased. The foregoing notwithstanding, it is
understood and agreed that if IDEXX and IDEXX BV do not, in the
aggregate, achieve the aggregate Purchase Commitments set forth in
Section 5 in any calendar year, then they shall not be entitled to
receive a rebate for such year.



21






 





	 	 	 	In the beginning of calendar year [**], OCD shall calculate an
estimated Effective Rebate Rate (the “Estimated Rebate Rate”) based
on the lesser of (i) IDEXX’s and IDEXX BV’s aggregate Annual
Purchase Forecast for such year and (ii) [**]% of the total
aggregate number of slides that IDEXX and IDEXX BV together
purchased in [**]. The Estimated Rebate Rate for calendar year
[**] shall be such that the average VETTEST slide price for [**],
after giving effect to the rebate, shall be $[**]. Not later than
thirty (30) days after the end of each of the first three calendar
quarters of [**] (or thirty days after IDEXX and IDEXX BV complete
payment in full for slides purchased during such quarter, if
later), OCD shall pay to IDEXX its Proportionate Share (based on
purchases during the preceding quarter) of an amount equal to the
aggregate estimated rebate payment that IDEXX and IDEXX BV would
together be entitled to receive in such quarter (the “Estimated
Rebate Payment”). The Estimated Rebate Payment for any such
quarter shall be calculated by (i) multiplying the Estimated Rebate
Rate in effect during such quarter by the total aggregate purchase
price for the VETTEST slides purchased by IDEXX and IDEXX BV during
such quarter and (ii) subtracting from such amount an amount equal
to [**]% of the total calculated in clause (i) above. The
foregoing notwithstanding, if, in calendar year [**], (i) IDEXX’s
and IDEXX BV’s total aggregate slide orders for the immediately
preceding calendar year were less than [**]% of their aggregate
Annual Purchase Forecast for such preceding calendar year or (ii)
OCD determines, in its reasonable discretion, at any time after the
end of the second calendar quarter of such calendar year, or IDEXX
indicates at any time, that IDEXX and IDEXX BV are reasonably
unlikely to meet their aggregate Annual Purchase Forecast for such
year, then OCD shall have the right to recalculate the Estimated
Rebate Rate based on IDEXX’s and IDEXX BV’s aggregate Purchase
Commitment for such year (such recalculated rate being hereinafter
referred to as the “New Estimated Rebate Rate”). If OCD elects to
recalculate the Estimated Rebate Rate pursuant to the immediately
preceding sentence, (i) OCD shall notify IDEXX in writing which
notice shall set forth the New Estimated Rebate Rate, (ii) OCD
shall calculate all remaining quarterly Estimated Rebate Payments
(which may include the Estimated Rebate Payment for the second
calendar quarter) using the New Estimated Rebate Rate and (iii) all
such Estimated Rebate Payments shall be made in accordance with
this sub-clause 7.03, except that such Estimated Rebate Payments
shall be less the amount by which the aggregate Estimated Rebate
Payments received by IDEXX and IDEXX BV during the then current
calendar year exceed the aggregate Estimated Rebate Payments they
would have received during such calendar year if the New Estimated
Rebate Rate were in effect from the first day of such calendar
year.
	 
	 	 	 	Notwithstanding any provision in this Agreement to the contrary,
OCD shall not be required to pay to IDEXX its Proportionate Share
of any Estimated Rebate Payments in any calendar year if (A) any
amounts payable to OCD from IDEXX pursuant to this Agreement are
overdue, unless such amounts are being disputed



22






 





	 	 	 	in good faith by IDEXX, or (B) OCD determines in its reasonable
judgment that IDEXX and IDEXX BV are reasonably unlikely to meet
their aggregate Purchase Commitments for such year. In the case of
clause (B) above, OCD shall have the right to make such
determination at any time after the end of the second calendar
quarter of calendar year [**], as the case may be (or such earlier
time as IDEXX or IDEXX BV indicates (through an Annual Purchase
Forecast or otherwise) that their aggregate slide purchases are
reasonably likely to be less than their aggregate Purchase
Commitment for such year), provided that OCD has consulted with
IDEXX and given IDEXX an opportunity (which opportunity shall be
available for a period of not less than 5 business days nor more
than 10 business days) to demonstrate its and IDEXX BV’s intent and
ability to meet their aggregate Purchase Commitments for such year.
For the avoidance of doubt, OCD’s obligation to make any Estimated
Rebate Payments shall be suspended during the period referred to in
the immediately preceding sentence and the days in such period
shall not be counted when determining the date by which the next
scheduled Estimated Rebate Payment is due and payable. If, after
fulfilling the requirements set forth in this paragraph, OCD makes
the determination described in clause (B) above, OCD (i) shall
promptly notify IDEXX in writing of its determination and (ii)
shall thereafter have the right to cease making Estimated Rebate
Payments for the remainder of such calendar year.
	 
	 	 	 	Not later than thirty (30) business days after the end of the last
calendar quarter of calendar year [**], as the case may be (or
thirty days after IDEXX and IDEXX BV complete payment in full for
slides purchased during such quarter, if later), OCD shall pay to
IDEXX its Proportionate Share (based on purchases during such
calendar year) of the amount by which (i) the Effective Rebate Rate
multiplied by the total aggregate purchase price for VETTEST slides
purchased by IDEXX and IDEXX BV during such calendar year exceeds
(ii) the total aggregate amount of the Estimated Rebate Payments
made by OCD to IDEXX and IDEXX BV during such calendar year. If
the amount in clause (ii) above exceeds the amount in clause (i)
above, OCD shall deliver to IDEXX a written notice of such fact (a
“Reimbursement Notice”) and IDEXX shall pay to OCD, within thirty
(30) days of receipt of such notice an amount in cash equal to its
Proportionate Share of the amount of such excess.
	 
	 	 	 	Notwithstanding the foregoing, if IDEXX and IDEXX BV do not achieve
their aggregate Purchase Commitment in calendar year [**], as the
case may be, then IDEXX shall return all Estimated Rebate Payments
received from OCD for such year no later than thirty (30) days
after the end of such calendar year.
	 
	 	 	 	An illustrative representation of the foregoing rebate calculation
methodology is attached hereto as Schedule 7.
	 
	 	 	 	Notwithstanding any other provision of this Section 7.03, if any
amounts payable to OCD from IDEXX pursuant to this Agreement are
overdue, other than amounts



23






 





	 	 	 	that are being disputed in good faith by IDEXX, then OCD shall be
entitled to withhold such overdue amount (plus any accrued
interest) from any rebate payments to which IDEXX may be entitled.
Any overdue payments by OCD or IDEXX of any amounts owed to the
other pursuant to this Section 7.03 shall bear interest at a rate
per annum equal to the Prime Rate. Such interest shall be payable
at the same time as the payment to which it relates and shall be
calculated daily on the basis of a year of 365 days and the actual
number of days elapsed.
	 
	 	 	 	OCD shall prepare a remittance advice to accompany each rebate
payment (or Reimbursement Notice), which shall set forth the
reporting period for which the payment is made (or demanded) and a
summary sheet which shall detail OCD’s calculation of the rebate
(or reimbursement). If IDEXX disagrees with the rebate or
reimbursement calculation, IDEXX shall promptly notify OCD, and the
parties, together with IDEXX BV if appropriate, shall review the
calculations together in good faith to agree on any appropriate
corrections or adjustments.
	 
	 	 	 	Any Special [**] Slides and any New Chemistry Slides shall be
excluded from the determination of any rebate entitlement under
Section 7.03 of this Agreement or the Europe Agreement, as the case
may be, and the rebates described in Section 7.03 shall not apply
to such slides.
	 
	 	7.04	 	If IDEXX provides OCD with specific documentation regarding
[**] that would require IDEXX and IDEXX BV, collectively, to
purchase, in any calendar year, a number of slides over and above
their most recent aggregate Annual Purchase Forecast for such year,
[**] for slides, [**] for slides [**] by this Agreement, OCD agrees,
within two weeks of its receipt of all additional information that
OCD may reasonably request regarding such [**], to inform IDEXX as
to whether or not OCD [**] in respect of [**], the number of slides
[**] for such slides, and any other related terms and conditions
that OCD deems applicable. OCD shall consider such requests in good
faith. OCD agrees that [**] IDEXX or IDEXX BV pursuant to [**],
remain in effect with respect to [**] until such time as [**], as
the case may be.




	8.	 	INVOICES AND PAYMENT




	 	8.01	 	OCD shall invoice IDEXX in respect of each order for the
VETTEST slides upon completion by OCD of the delivery of such order.
Each order shall be billed by OCD under one invoice in US dollars
and payment shall be made by IDEXX in US dollars not later than
thirty (30) days following the date of invoice.




	9.	 	EXCLUSIVITY




	 	9.01	 	OCD undertakes not to sell or otherwise supply, and to cause
its affiliates not to sell or otherwise supply, any Dry Slides
(whether or not such slides are finished or complete) bar-coded for
use in any Analyzers to any person, firm or company



24






 







	 	 	 	other than IDEXX or its affiliates. The provisions of this Section
9.01 shall survive the termination of this Agreement unless all of
the following shall be true: (i) prior to such termination IDEXX
(or its permitted assignees) and its affiliates shall have ceased
to market the VETTEST slides, (ii) such cessation shall not have
been a consequence of action by OCD, and (iii) OCD shall have
complied with its obligations under this Agreement prior to such
termination.
	 
	 	9.02	 	IDEXX undertakes not to market, and to cause its affiliates
not to market, any Dry Slide for any chemistry identified on
Schedule 5, as amended from time to time, other than Dry Slides
obtained by such person directly from OCD, to the extent that the
desired chemistries are available from OCD; provided that, for
purposes of adjusting inventory levels according to unanticipated
changes in regional demand, IDEXX may purchase from IDEXX BV VETTEST
slides that IDEXX BV obtained directly from OCD.
	 
	 	9.03	 	(a) In consideration of the mutual obligations and
commitments of the parties, IDEXX shall not actively promote, and
shall cause IDEXX Parent and the other persons listed on Schedule 11
not to actively promote, the sale within the Exclusivity Territory
of any Dry Slide for any chemistry identified on Schedule 5, as
amended from time to time, or any instruments for use with any such
Dry Slides, to any person (other than OCD and its affiliates) other
than for use in the field of diagnostic testing of non-human
animals. IDEXX may in its discretion terminate this provision at
any time on [**] years’ prior written notice to OCD; provided that
such notice may not be delivered until after June 30, [**].




	 	 	 	(b) Should OCD sell or cause to be sold for use in the field of
diagnostic testing of non-human animals any product whose scope
includes four or more of the chemistries identified on Schedule 5,
then IDEXX may, in its sole discretion, terminate the provisions of
Section 9.03(a) immediately upon written notice to OCD. If IDEXX
delivers such notice of termination of Section 9.03(a) under this
Section 9.03(b), then OCD may in its discretion terminate the
provisions of Section 9.04(a) of this Agreement immediately upon
written notice to IDEXX.




	 	9.04	 	(a) In consideration of the mutual obligations and
commitments of the parties, OCD shall not actively promote, and
shall cause the other persons (which for purposes of this clause may
be divisions of OCD’s affiliates) listed on Schedule 12 not to
actively promote, the sale within the Exclusivity Territory of any
Dry Slide for any chemistry identified on Schedule 5, as amended
from time to time, or any instruments for use with any such Dry
Slides, to any person (other than IDEXX and its affiliates) for use
in the field of diagnostic testing of non-human animals; provided
that this provision shall not apply to (i) any instruments weighing
more than 200 pounds, or to any slides sold for use on such
instruments, unless and until the parties have executed the
distribution agreement contemplated by Section 10.04 hereof and (ii)
Ortho-Clinical Diagnostics K.K. until January 1, 2004. OCD may in
its discretion terminate this provision at any time on [**]



25






 





	 	 	 	years’ prior written notice to IDEXX; provided that such notice may
not be delivered until after June 30, [**]. The minimum purchase
obligations of IDEXX shall terminate upon delivery of such a notice
of termination.




	 	 	 	(b) Should IDEXX fail to sell at least [**] units of the New
Analyzer before December 31, [**], then OCD may in its discretion
terminate the provisions of Section 9.04(a) immediately upon
written notice to IDEXX delivered after December 31, [**];
provided, that if OCD does not deliver such notice before IDEXX
sells [**] units of the New Analyzer, then the provisions of this
Section 9.04(b) shall be of no further effect. If IDEXX can
demonstrate that it has expended in excess of $[**] on the
development of the New Analyzer from the Effective Date through
December 31, [**], then IDEXX shall be given an additional [**] to
sell the requisite [**] units of the New Analyzer. If OCD delivers
such notice of termination of Section 9.04(a) under this Section
9.04(b), then IDEXX may in its discretion terminate the provisions
of Section 9.03 of this Agreement immediately upon written notice
to OCD.
	 
	 	 	 	(c) Should IDEXX sell or cause to be sold for use in the field of
diagnostic testing of non-human animals any product, other than the
New Analyzer, whose scope includes four or more of the chemistries
identified on Schedule 5, then OCD may, in its sole discretion,
terminate the provisions of Section 9.04(a) immediately upon
written notice to IDEXX. If OCD delivers such notice of
termination of Section 9.04(a) under this Section 9.04(c), then
IDEXX may in its discretion terminate the provisions of Section
9.03(a) of this Agreement immediately upon written notice to OCD.
	 
	 	 	 	(d) Notwithstanding any other provision of this Section 9.04, OCD
and its affiliates shall continue to have the right to sell,
directly or through distributors, VITROS analyzers and VITROS
slides to all persons that are current VITROS end-user customers as
of the Commencement Date, and to renew or extend the term of any
contracts with such end-user customers or, solely for the purpose
of sales to such end-user customers, with such distributors.




	 	9.05	 	OCD shall use commercially reasonable efforts to (i) ensure
that no OCD Dry Slides (including without limitation VITROS slides
to which bar coding for use in any Analyzer has been added) are
supplied, marketed, distributed or sold, by anyone other than IDEXX
or its affiliates and their respective authorized distributors, for
use in the Analyzers and (ii) promptly enjoin or otherwise terminate
any such supplying, marketing, distribution or sale.
Notwithstanding the foregoing, OCD’s obligation to use commercially
reasonable efforts for the purposes of this Section 9.05 shall not
include any obligation to reduce non-VETTEST VITROS slide prices.
	 
	 	 	 	OCD shall, where permitted by applicable law, use commercially
reasonable efforts to include a provision in future supply and
distributor contracts, that if a



26






 





	 	 	 	customer opens a mainframe slide cartridge and otherwise repackages
or modifies OCD slides for a use other than for which the slides
are sold by OCD, such activity, if not ceased upon notice, shall
give OCD the right to terminate such contract. OCD will use
commercially reasonable efforts to exercise such right where the
customer does not cease such activity after due notice and a
reasonable opportunity to cure. OCD and IDEXX shall also
reasonably cooperate in efforts to stop any such unauthorized slide
repackaging or modification, where the modified or repackaged
slides are supplied, marketed or sold for use in Analyzers.
	 
	 	 	 	In the event of a breach by OCD of this Section 9.05, OCD shall pay
IDEXX, as IDEXX’s exclusive remedy for such breach, an amount equal
to $[**] per slide sold for use in the Analyzers in breach of this
Section 9.05.
	 
	 	9.06	 	Within ninety (90) days of the date that either party (for
purposes of this Section 9.06, the “Introducing Party”) (i) builds
or acquires a prototype of any veterinary clinical chemistry
diagnostic instrument that is designed to analyze [**] or more of
the chemistries identified on Schedule 5 (a “Veterinary Diagnostic Product”) or (ii) has expended $[**] on a formal development
project, or the acquisition of technology, for a Veterinary
Diagnostic Product, such Introducing Party shall provide to the
other party written notice of such decision. In addition, IDEXX
agrees to provide such a notice if IDEXX Parent or IDEXX BV takes
any of the actions described in clauses (i) or (ii) of this
paragraph.
	 
	 	9.07	 	During the Term of this Agreement, neither party shall
directly recruit or otherwise directly solicit for employment (or
instruct any third party so to do) any U.S. sales representative or
first line sales manager of the other party ; provided that the
foregoing shall not prohibit any advertisement or general
solicitation or recruitment activity (or any hiring pursuant
thereto) that is not specifically targeted at such persons.




	10.	 	MARKETING ARRANGEMENTS




	 	10.01	 	IDEXX will be responsible for all marketing arrangements for
the Analyzers and the VETTEST slides. IDEXX may appoint any of
OCD’s medical/surgical dealers as distributors of or agents for the
Analyzers and the VETTEST slides but will not be obliged to do so.
	 
	 	10.02	 	IDEXX will be responsible for the establishment of dealer
performance criteria for all dealers including OCD’s
medical/surgical dealers (if any are appointed by IDEXX as
distributors of the Analyzers and the VETTEST slides).
	 
	 	10.03	 	IDEXX will keep OCD informed of and consult with OCD as to
marketing arrangements for the Analyzers and the VETTEST slides but
will not be obligated to OCD beyond the terms of this Agreement in
connection with such marketing arrangements.



27






 







	 	10.04	 	OCD hereby grants to IDEXX the exclusive right to
distribute, solely in the veterinary market, under the terms set
forth in this Section 10.4, VITROS slides and VITROS analyzers that
run solely VITROS slides. The parties also agree to use good faith,
commercially reasonable efforts to negotiate a definitive
distribution agreement not later than December 31, 2003. OCD agrees
to refer any inquiries for VITROS analyzers in the veterinary market
to IDEXX, and shall not accept any orders for such analyzers in the
veterinary market. IDEXX agrees to refer any inquiries for VITROS
analyzers outside the veterinary market to OCD, and shall not accept
any orders for such analyzers outside the veterinary market.
Notwithstanding any other provision of this Section 10.04, OCD and
its affiliates shall continue to have the right to sell, directly or
through distributors, VITROS analyzers and VITROS slides to all
persons that are current VITROS end-user customers as of the
Commencement Date, and to renew or extend the term of any contracts
with such customers or, solely for the purpose of sales to such
customers, with such distributors.
	 
	 	 	 	The parties shall discuss terms for any sales opportunity in the
veterinary market in good faith, on a case-by-case basis. OCD
shall be responsible, at its sole expense, for providing warranty
and out-of-warranty service and support to any customers to whom
IDEXX sells a VITROS analyzer; provided that such analyzer is then
covered by a maintenance agreement between OCD and that customer.
IDEXX shall not modify or customize any VITROS product supplied
hereunder, or remove or alter any product labels or re-label any
products, packaging or related materials for VITROS product
supplied hereunder. OCD shall provide IDEXX, without charge, with
such training in the marketing and sale of VITROS products and with
such marketing and technical assistance and product information as
OCD may, in its discretion, consider necessary to assist with the
promotion and sale of the products; provided that OCD’s training
obligation shall be limited to training employees of IDEXX to
train other IDEXX employees and sales agents.
	 
	 	 	 	IDEXX shall defend and indemnify OCD from and against all damages,
liabilities, costs and expenses (including reasonable attorneys’
fees and costs) arising out of any claim resulting from (a) any
negligent act or omission or any willful misconduct by IDEXX in
connection with the VITROS products supplied by OCD under this
Section 10.04 or (b) any statement, representation or warranty made
by IDEXX or any of its agents with respect to a VITROS product that
is not contained in the labeling or package insert and is not
otherwise approved by OCD in writing or (c) any breach of IDEXX’s
covenants in the preceding paragraph. OCD shall defend and
indemnify IDEXX from and against all damages, liabilities, costs
and expenses (including reasonable attorneys’ fees and costs)
arising out of any claim (i) for injuries or death to persons or
animals or damage to or destruction of tangible property arising
out of the use of VITROS products sold under this Section 10.04
(whether claimed by reason of breach of warranty, negligence,



28






 





	 	 	 	product defect or other similar cause of action, regardless of the
form in which any such claim is made) or (ii) that any VITROS
product sold under this Section 10.04 infringes a patent,
copyright, trademark or trade secret of a third party; provided
that this clause (ii) shall not apply to any claim arising out of
the use of any product in conjunction with products not supplied by
OCD. The indemnity procedures set forth in Section 16.06 shall
apply to this Section 10.04.
	 
	 	 	 	The provisions of this Section 10.04 shall apply only within the
Exclusivity Territory. Furthermore, the provisions of this Section
10.04 granting IDEXX exclusivity or restricting sales or marketing
by or on behalf of OCD shall, (a) automatically terminate
immediately upon the termination of Section 9.04(a) and (b) not
apply to (i) any instruments weighing more than 200 pounds, or to
any slides sold for use on such instruments, unless and until the
parties have executed the distribution agreement contemplated by
this Section 10.04 and (ii) Ortho-Clinical Diagnostics K.K. until
January 1, 2004.




	11.	 	SALES SUPPORT




	 	11.01	 	IDEXX will be responsible for all necessary sales support
for the Analyzers and the VETTEST slides.
	 
	 	11.02	 	OCD’s sole obligation in respect of sale support shall be at
its own expense to assist IDEXX in resolving specific problems
resulting from the failure of VETTEST slides to conform to
specifications.




	12.	 	TESTING




	 	12.01	 	01 OCD shall disclose to IDEXX its quality assurance procedures
used in final evaluation of the VETTEST slides and full particulars
thereof as set out in the VETTEST Slide Quality Assurance Procedures
forming Schedule 1 to this Agreement. OCD shall operate such
quality assurance procedures in accordance with Schedule 1.
	 
	 	12.02	 	Upon prior written notice from IDEXX, OCD shall grant
authorized representatives of IDEXX access to that part of OCD
production facilities which conducts final evaluation of the VETTEST
slides for the purpose of enabling such representatives to monitor
the application by OCD of the VETTEST Slide Quality Assurance
Procedures set out in Schedule 1. Such access shall be granted by
OCD to IDEXX and IDEXX BV no more than twice in any twelve-month
period. With respect to VETTEST slides for use in the New Analyzer,
IDEXX shall be permitted to monitor those stages of the production
process that are unique to VETTEST slides for the New Analyzer, but
with respect to VETTEST slides for the VETTEST Analyzer, such access
shall be limited to OCD’s final evaluation facilities. All
information obtained as a result of the audits contemplated by this
Section 12.02 shall be subject to the provisions of Schedule 2.



29






 







	13.	 	BAR CODING AND PACKAGING




	 	13.01	 	The VETTEST slides shall be printed by OCD with special bar
coding for use in Analyzers.
	 
	 	13.02	 	OCD shall package the VETTEST slides and tips for the
VETTEST Analyzer in the physical manner as used for the VITROS
slides and tips at the time of packaging of such VETTEST slides and
tips. In the event of a change in VITROS slide or tip packaging
which has an impact on such VETTEST slide or tip packaging, OCD
shall notify IDEXX as early as practicable of the relevant
particulars of such change.
	 
	 	13.03	 	Except as authorized by Section 14.01 below, the label
content and art work associated with VETTEST slides and package
materials (including without limitation package materials for the
New Slides) shall not include any trademarks, trade names, or trade
dress of OCD. IDEXX shall furnish such label content and art work
to OCD on a timely basis, and such label content and art work shall
not be changed at any time during the Term without the prior
agreement of the parties.




	14.	 	TRADE MARKS AND TRADE NAMES




	 	14.01	 	01 OCD expressly authorizes IDEXX to use the phrase
“manufactured by Ortho-Clinical Diagnostics, Inc. for IDEXX (IDEXX
ADDRESS)” on package materials for VETTEST slides (including without
limitation package materials for the New Slides). No other uses of
OCD’s trademarks, trade names or trade dress are authorized by this
Agreement.
	 
	 	14.02	 	IDEXX shall neither acquire, nor claim any right, title or
interest in or to any of OCD’s trade marks or trade names by virtue
of this Agreement or through advertising and sale of the Analyzers
or the VETTEST slides or otherwise.




	15.	 	PATENT INDEMNITIES




	 	15.01	 	OCD shall indemnify and hold IDEXX harmless for all loss,
damage, cost and expense whatsoever, including legal fees, patent
attorney’s fees and court costs that IDEXX may incur or become
liable for as a result of any action, suit or claim alleging
infringement of any patent held by a third party arising from the
use and/or sale of the VETTEST slides or tips to the extent that
such action, suit, or claim relates in a material way to the
specification for the VITROS slides or tips. If as a result of any
judgment or settlement it is determined that a claim or claims of a
third party patent is infringed by the use and/or sale of the
VETTEST slides or tips as aforesaid and IDEXX is required to make
any payments to any third party as a result thereof, IDEXX may
off-set all such payments against any present and/or future payments
to be made to OCD hereunder.



30






 





	 	15.02	 	IDEXX shall indemnify and hold OCD harmless for all loss,
damage, cost and expense whatsoever, including legal fees, patent
attorney’s fees and court costs that OCD may incur or become liable
for as a result of any action, suit or claim alleging infringement
of any patent held by a third party arising from (a) the
manufacture, use or sale of the VETTEST slides or tips to the extent
that the VETTEST slides or tips differ from the VITROS slides or
tips, (b) the manufacture, use or sale of the New Slide/Panel
Design, or (c) the manufacture, use or sale of any Analyzer.
	 
	 	15.03	 	All claims for indemnity under this Article 15 shall be
subject to the rights, obligations and procedures set forth in
Section 16.06 below.




	16.	 	WARRANTY, LIABILITY AND INDEMNIFICATION




	 	16.01	 	OCD hereby warrants that:
	 


	 	(a)	 	the VETTEST slides delivered to IDEXX shall be in
compliance with Schedule 1, and
	 
	 	(b)	 	OCD shall pack and ship products under this
Agreement in a manner consistent with OCD’s usual practices,
which shall be sufficient to protect the products from damage
during normal shipping and handling.
	 


	 	16.02	 	In the event of a breach on the part of OCD of Section 16.01
above, OCD’s liability shall be limited to the replacement of the
VETTEST slides or tips found to be defective, including shipping
costs for return of defective slides or tips and delivery of
replacement slides or tips.
	 
	 	16.03	 	OCD’s liability as stated in Section 16.02 shall be subject
to the following conditions:
	 


	 	(a)	 	IDEXX shall notify OCD promptly of any
noncompliance contrary to Section 16.01(a) or damage contrary
to Section 16.01(b).
	 
	 	(b)	 	IDEXX and its transferees shall not alter or
modify the VETTEST slides or packaging of the VETTEST slides
or tips without prior approval of OCD.
	 


	 	16.04	 	Except as provided in this Section 16 there are no other
warranties, express or implied, including warranties for fitness for
any particular use or of merchantability.
	 
	 	16.05	 	Subject to Section 15, IDEXX shall indemnify and hold
harmless OCD from and against any claim, loss, damage, or expense
(including attorney’s fees) with



31






 







	 	 	 	respect to any physical injury to persons, animals or property
arising out of or in connection with IDEXX’s use or sale of any
Analyzer or the VETTEST slides, and any claim of infringement of
any trademark (except OCD’s own trademark), trade dress, trade
secret, or copyright. IDEXX shall notify OCD (a) at the
commencement of any action or suit based on any such claim and (b)
in the event of any injunction or other order prohibiting the sale
or use of any Analyzer or VETTEST slide.
	 
	 	16.06	 	Any party claiming indemnification under this Agreement (the
“Indemnitee”) shall notify the party from which indemnification is
claimed (the “Indemnifying Party”) in writing promptly upon becoming
aware of any claim to which such indemnification may apply. Failure
to provide such notice shall constitute a waiver of the Indemnifying
Party’s indemnity obligations hereunder if, and only to the extent
that, the Indemnifying Party is materially damaged thereby. The
Indemnifying Party shall have the right to assume and control the
defense of the claim at its own expense. If the right to assume and
have sole control of the defense is exercised, the Indemnitee shall
have the right to participate in, but not to control, such defense
at its own expense. If the Indemnifying Party does not assume the
defense of the claim, the Indemnitee may defend the claim at the
Indemnifying Party’s expense. The Indemnitee will not settle or
compromise the claim without the prior written consent of the
Indemnifying Party. The Indemnifying Party will not, without the
consent of the Indemnitee (which consent will not be unreasonably
withheld), settle or compromise the claim in any manner which would
have an adverse effect on the Indemnitee, unless (x) prior to such
settlement or compromise the Indemnifying Party acknowledges in
writing its obligation to pay in full the amount of the settlement
or compromise and the Indemnitee is furnished with security
reasonably satisfactory to it that the Indemnifying Party can in
fact pay such amount, (y) such settlement or compromise includes a
full release of such claim against the Indemnitee and (z) such
settlement or compromise provides for no relief or remedy other than
money damages. The Indemnitee shall reasonably cooperate with the
Indemnifying Party and will make available to the Indemnifying Party
all pertinent information under the control of the Indemnitee.



17.     SECRECY



	 	17.01	 	Each of IDEXX, IDEXX Parent and OCD agrees to protect
confidential information disclosed to it upon terms set out in
Schedule 2 attached hereto.




	18.	 	PERIOD OF AGREEMENT




	 	18.01	 	Subject to the terms and conditions set forth herein, the
term (the “Term”) of the Agreement shall be the period from the
Commencement Date until December 31, 2018.



32






 







	19.	 	TERMINATION




	 	19.01	 	This Agreement may be terminated by either party in any of
the following events:
	 


	 	(a)	 	If the other party is guilty of gross or
persistent breaches of the terms of this Agreement, which
breaches are not remedied to the satisfaction of the other
party after ninety (90) days notice in writing to do so. Any
such breach shall entitle the innocent party to terminate this
Agreement by notice in writing which notice shall be effective
at the end of ninety (90) days following the date of such
notice.
	 
	 	(b)	 	If the other party becomes insolvent or compounds
with its creditors or goes into liquidation (other than for
the purposes of corporate reorganization) then the innocent
party may terminate this Agreement by notice in writing which
shall have immediate effect.
	 
	 	(c)	 	If such party elects to cease marketing Dry Slide
diagnostic products, then it shall have the right, by notice
given at any time after January 1, [**], to terminate this
Agreement upon[**] years’ prior written notice.
	 


	 	19.02	 	Changes in the equity ownership or corporate reorganizations
of either party shall not be grounds for termination of this
Agreement, except that if more than [**]% of the outstanding capital
stock of IDEXX or IDEXX Parent is owned or controlled by a
competitor of OCD, OCD may in its discretion terminate the
provisions of Sections 9.04 and 10.04 of this Agreement immediately
upon written notice to IDEXX. If OCD delivers such notice of
termination under this Section 19.02, then IDEXX may in its
discretion terminate the provisions of Section 9.03 of this
Agreement immediately upon written notice to OCD.
	 
	 	19.03	 	This Agreement shall terminate automatically upon any
termination of the Europe Agreement.
	 
	 	19.04	 	The provisions of this Agreement dealing with rights and
obligations after termination of this Agreement, including without
limitation Sections 3.04, 3.05, 3.06, 3.07, 15, 16, 17, 21, 22, 23,
24, 25, 26, 29 and 30, shall survive the expiration or termination
of this Agreement and continue to be enforceable to the extent
necessary to achieve the logical and intended purposes of such
provisions.




	20.	 	FORCE MAJEURE




	 	20.01	 	Neither party shall be liable for any failure or delay in
performing any of its respective obligations under this Agreement
to the extent that such failure or delay is due to any cause beyond
its reasonable control (a “Force Majeure Event”). The
non-performing party shall give the other party prompt written
notice of such inability to perform and shall use commercially
reasonable efforts to resume



33






 







	 	 	 	performance as soon as reasonably practicable. If as a result of a
Force Majeure Event OCD is unable, using commercially reasonable
efforts, to meet its supply obligations to IDEXX hereunder for a
period exceeding twenty-four months, or if IDEXX reasonably
determines that it will not be feasible for OCD through the use of
commercially reasonable efforts to resume the supply of VETTEST
slides within twenty-four months, then either party may terminate
this Agreement immediately upon written notice to the other party.




	21.	 	GOVERNING LAW; JURISDICTION




	 	21.01	 	The construction, validity and performance of this Agreement
shall be governed in all respects by the laws of the State of New
York, USA. Any legal actions relating to this Agreement must be
brought in the court of appropriate jurisdiction in the State of New
York, which shall have exclusive jurisdiction, and the parties
hereby waive any claim of lack of jurisdiction or inconvenient
forum. The prevailing party in any litigation under this Agreement
shall be entitled to an award of its costs, including reasonable
attorneys’ fees and expenses. Each party hereto waives its right to
trial of any issue by jury. Each party hereto waives any claim to
punitive, exemplary or multiplied damages from the other. Each
party hereto waives any claim of consequential damages from the
other.




	22.	 	SEVERABILITY




	 	22.01	 	Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction. If
the final judgment of a court of competent jurisdiction declares
that any term or provision hereof is invalid or unenforceable, then
the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the
scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.




	23.	 	WAIVERS




	 	23.01	 	Failure of either party to this Agreement to insist upon
strict observance or compliance with all its terms and conditions in
one or more instances shall not be deemed to be a waiver of its
right to insist upon such observance or compliance with such term or
condition or with any other terms or conditions hereof in the
future.



34






 





	24.	 	PRIOR AGREEMENTS; INTERPRETATION




	 	24.01	 	As of the Commencement Date, this Agreement shall take
effect in substitution for the Prior US Agreement, the Operations
Agreement (except as otherwise provided in Section 7.04 of this
Agreement), Section B (Amendments) of the Settlement Agreement, and
all or any other previous agreements relating to the subject matter
hereof whether the same are formal agreements or agreements that
would be inferred from the parties’ correspondence or conduct, and
all such substituted agreements shall be deemed to have been
terminated by mutual consent on the Commencement Date; provided,
however, that nothing contained herein shall be deemed to modify or
terminate the Europe Agreement, except that the Purchase Commitments
and Annual Purchase Forecasts referred to in Section 5 and in
Schedule 4 of this Agreement and the Europe Agreement represent the
aggregate commitments and forecasts of IDEXX and IDEXX BV and not
the individual commitments and forecasts of IDEXX BV under the
Europe Agreement or IDEXX under this Agreement.




	25.	 	ENTIRE AGREEMENT




	 	25.01	 	This Agreement, together with the Europe Agreement, the
Settlement Agreement (other than Section B thereof), and that
certain memorandum agreement dated September 12, 2003 regarding
slide packaging (as amended to date), constitutes the complete
agreement of the parties concerning the subject matter hereof and
thereof during the Term, and, with respect to all periods from and
after the Commencement Date, supersedes all prior agreements between
the parties regarding its subject matter.




	26.	 	ALTERATION OR MODIFICATION




	 	26.01	 	No alteration, amendment or modification to this Agreement
or the attached Schedules shall be of any force or effect unless in
writing and signed by both parties. No modification shall be
effected by the acknowledgement or acceptance of purchase order
forms or order confirmations or invoices or other documents
containing different conditions.




	27.	 	ASSIGNMENT




	 	27.01	 	This Agreement shall not be capable of assignment by either
party to a company of which it owns less than a majority or which
owns less than a majority of the party save in the case of (i) an
assignment at OCD’s sole discretion to an acquiror of OCD’s dry
slide business or (ii) an assignment at IDEXX’s sole discretion to
an acquiror of IDEXX’s VETTEST and New Analyzer business; provided
that no assignment shall release the assigning party from any
obligations hereunder. In the case of an assignment under the
preceding clause (ii) to an entity which is a competitor of OCD’s
diagnostics business, OCD may in its discretion terminate



35






 





	 	 	 	the provisions of Section 9.04 of this Agreement immediately upon
written notice to IDEXX. If OCD delivers such notice of
termination of Section 9.04 under this Section 27.01, then IDEXX’s
assignee may in its discretion terminate the provisions of Section
9.03 of this Agreement immediately upon written notice to OCD.
	 
	 	 	 	This Agreement shall be binding on and inure to the benefit of the
parties hereto and their permitted successors and assigns.




	28.	 	GOVERNING LANGUAGE




	 	28.01	 	[Reserved]




	29.	 	NOTICES




	 	29.01	 	Any notice, statement or other communication to be given by
one party to the other hereunder may be given by registered mail,
airmail, nationally recognized courier, facsimile or telex to the
party concerned at the addresses set out below:
	 
	 	 	 	Ortho-Clinical Diagnostics, Inc.

1001 US Highway 202

Raritan, New Jersey 08869, USA

For the attention of: Vice President and General Manager, Americas
	 
	 	 	 	With a copy to:

Johnson & Johnson

One Johnson & Johnson Plaza

New Brunswick, New Jersey 08933, USA

For the attention of: Office of General Counsel
	 
	 	 	 	IDEXX Operations, Inc.

6100 East Shelby Drive

Memphis, Tennessee 38141, USA

For the attention of: President
	 
	 	 	 	With a copy to:

IDEXX Laboratories, Inc.

One IDEXX Drive

Westbrook, Maine 04092, USA

For the attention of: Office of General Counsel
	 
	 	29.02	 	Any notice, payment or communication so given or made shall
be deemed to have been received at the time when in the ordinary
course of transmission the same should have reached its destination.
Either party may change its address for the



36






 





	 	 	 	purpose of this Agreement by giving notice of such change to the
other party pursuant to the provisions of this Section. For
purposes of this Section 29, notice given by OCD to IDEXX BV under
the Europe Agreement shall be deemed given to IDEXX.




	30.	 	GUARANTY




	 	30.01	 	IDEXX Parent hereby guarantees to OCD the due performance
and observance by IDEXX of all of the provisions of the Agreement to
be performed and observed by it under this Agreement, for which
IDEXX Parent shall be jointly and severally liable, without
requiring any notice of non-payment, non-performance or
non-observance, or proof of notice or demand, all of which IDEXX
Parent hereby waives. OCD may proceed against IDEXX Parent
separately or jointly, before, after or simultaneously with
proceeding against IDEXX for default. This guaranty shall not be
terminated, affected or impaired in any way by reason of (i) the
assertion by OCD against IDEXX of any of the rights or remedies
reserved to OCD under this Agreement, (ii) the commencement by OCD
of any proceedings against IDEXX, (iii) the granting by OCD of any
extensions of time or indulgence to IDEXX, (iv) any change in or
amendment to this Agreement, or (v) any payment or performance being
invalid in connection with any bankruptcy, insolvency,
reorganization or similar proceedings in respect to IDEXX. This
guaranty is absolute and unconditional and shall continue in full
force and effect as to any renewal, extension, amendment, addition,
assignment or transfer or other modification of this Agreement,
whether or not IDEXX Parent shall have been notified of or consented
to any such action, and regardless of bankruptcy or insolvency of
IDEXX or the actual or purported rejection by a trustee in such
bankruptcy of this Agreement or any limitation on any claim in such
bankruptcy for damages resulting from the actual or purported
termination of this Agreement or the enforceability in such
bankruptcy of this Agreement. IDEXX Parent hereby agrees that this
guaranty shall continue to be effective or shall be reinstated, as
the case may be, if at any time payment of any sum hereby guaranteed
is rescinded or must be otherwise restored or returned by OCD upon
the insolvency, bankruptcy or reorganization of IDEXX, or otherwise,
all as though such payment had not been made.



37






 




     IN WITNESS WHEREOF and intending to be legally bound, the parties hereto
have caused this Agreement to be duly executed in duplicate by their respective
authorized representatives the day and year first written above.



	 	 	 	 
	ORTHO-CLINICAL 	IDEXX OPERATIONS, INC.
	DIAGNOSTICS, INC.	 	 
	 	 	 	 
	By: 	 /s/ Tony Zezzo	By: 	
 /s/ Conan R. Deady
	 	
	 	


	 	Tony Zezzo,	 	
Conan R. Deady,
	 	Vice President and General Manager,	 	
Vice President
	 	Americas	 	 
	 	 	 
	 	 	 	
Solely as to Sections 17 and 30
	 	 	 	
IDEXX LABORATORIES, INC.
	 	 	 	 
	 	 	By: 	
 /s/ Jonathan W. Ayers
	 	 	 	


	 	 	 	
Jonathan W. Ayers,
	 	 	 	
President and Chief Executive Officer



38






 



Schedule 1 – VetTest® Slide Quality Assurance Procedures



VETTEST Slides for the VETTEST Analyzer:


Introduction


The following procedure constitutes a generic overview of the quality assurance
provisions for finishing of VITROS slides and applies in like manner to product
release for the VETTEST slides.


VETTEST Slide Quality Assurance


VETTEST slides will be produced to the same quality standards as VITROS and DT
60 slides for OCD’s human market unless otherwise agreed to by IDEXX.


Bar Coding


Bar code printing on the VETTEST slides will render the VETTEST slides
incompatible with use in VITROS analyzers. OCD will reserve certain number
sequences for generation of the bar code patterns on the VETTEST slides.


New Slides:


Specifications to be determined by IDEXX as part of the Development Program
and, together with quality assurance procedures, reasonably agreed in writing
by the parties for purposes of this Schedule 1.


39






 


Schedule 2



     Section 1. Obligation to Keep Information Confidential. Each party
agrees to hold, and to cause its respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence
the terms of the Agreements, and all documents and information concerning the
other party, whether oral or written, furnished or made known to such party in
connection with either of the Agreements or any project or discussion under, or
related to, either of the Agreements; provided that no party shall be required
to keep any information confidential (i) if such party is compelled to disclose
such information by judicial or administrative process or by other requirements
of law (including without limitation the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended) and such party has
provided prior written notice to the other party and given such other party
reasonable opportunity to contest disclosure or (ii) to the extent such
information can be shown to have been (A) previously known to such party on a
nonconfidential basis, (B) in the public domain through no fault of such party,
(C) later lawfully acquired from a third party source or (D) independently
developed by such party without reference to confidential information. The
foregoing notwithstanding, any party may disclose information concerning the
other party or the Agreements to its and its affiliates’ officers, directors,
employees, accountants, counsel, consultants, advisors and agents in connection
with its performance of this Agreement so long as such persons are informed by
such party of the confidential nature of such information and are directed by
such party to treat such information confidentially, it being understood and
agreed that such party shall be responsible for any failure to treat such
information confidentially by such persons. The obligation of each party to
hold any information in confidence shall be satisfied if it exercises the same
care with respect to such information as it would to preserve the
confidentiality of its own similar information. The confidentiality provisions
of this Schedule 2 shall remain in effect for so long as this Agreement is in
effect and for a period of three (3) years thereafter.


     Section 2. Public Announcements. No party to this Agreement shall
originate any news release or other public announcement, written or oral,
relating to this Agreement or the Europe Agreement, without the prior written
consent of the other party, except to the extent such news release or other
public announcement is required by law; provided that in the event an
announcement is required by law, the party issuing same shall still be required
to use its commercially reasonable efforts to consult with the other party or
parties named or referred to in such announcement prior to its release as the
circumstances reasonably permit, in order to allow such other party or parties
to comment on the use of their names or the references to them and, after its
release, shall provide such other party or parties with a copy thereof. If a
party has previously reviewed and approved a public announcement, its further
approval shall not be required with respect to those provisions of subsequent
announcements that are substantially similar in scope and substance to
provisions that have been previously approved. In no event shall IDEXX or
IDEXX Parent use the name “Johnson & Johnson” or “J&J” in any publicity
relating to this Agreement or the Europe Agreement, whether written or oral,
other than to state that OCD is “a Johnson & Johnson company” or a
(wholly-owned) subsidiary of Johnson & Johnson.


40






 


     Section 3. Governing Law. The construction, validity and performance of
this Schedule 2 shall be governed in all respects by the laws of the State of
New York, USA.


     Section 4.
Notices. Any notices required to be given under this
Schedule 2 shall be given in the manner specified by Section 29 of the Agreement.



41










 



Schedule 3 - Panels/Profiles

(Applicable only to VETTEST Analyzer)



The initial PANEL shall be the “Pre-Anesthetic Panel” consisting of four sets
of the following six VETTEST slides:



	 	 	 
	BUN	 	
Urea Nitrogen
	ALT	 	
Alanine aminotransferase
	GLU	 	
Glucose
	TP	 	
Total protein
	CREA	 	
Creatinine
	ALKP	 	
Alkaline phosphatase



The initial PROFILES shall be the “General Health Profile” and the “Large
Animal Profile”, each consisting of two sets of 12 VETTEST slides as follows:



	 	 	 	 	 	 	 
	General Health Profile	 	Large Animal Profile
	 
	ALB	 	
Albumin
	 	ALB
	 	Albumin
	ALKP	 	
Alkaline phosphatase
	 	ALKP
	 	Alkaline phosphatase
	ALT(SGPT)	 	
Alanine aminotransferase
	 	AST
	 	AST
	AMYL	 	
Amylase
	 	Ca2+
	 	Calcium
	Ca2+	 	
Calcium
	 	CK
	 	CK
	CHOL	 	
Cholesterol
	 	GGT
	 	Gamma GT
	CREA	 	
Creatinine
	 	GLU
	 	Glucose
	GLU	 	
Glucose
	 	PHOS
	 	Inorganic phosphate
	PHOS	 	
Inorganic phosphate
	 	LDH
	 	LDH
	TBIL	 	
Total bilirubin
	 	MG
	 	Magnesium
	TP	 	
Total protein
	 	TP
	 	Total Protein
	BUN	 	
Urea Nitrogen
	 	BUN
	 	Urea Nitrogen



Packaging for the Pre-Anesthetic Panels, the General Health Profiles and the
Large Animal Profiles for the VETTEST Analyzer has been previously agreed upon
by the parties, and any changes to the slide composition or packaging of the
initial PANEL or the initial PROFILES shall be negotiated in good faith and
mutually agreed upon by OCD and IDEXX. The slide composition, packaging and
initial pricing of any additional PANELS/PROFILES shall be mutually agreed upon
by OCD and IDEXX. Unless otherwise agreed by the parties in writing with
respect to one or more specific PANELS or PROFILES, all purchases by IDEXX or
IDEXX BV of VETTEST slides packaged as PANELS/PROFILES shall be credited
against the Annual Purchase Forecasts and Purchase Commitments for such slides
under this Agreement and the Europe Agreement.


New Slide/Panel Design for the New Analyzer shall be as developed by IDEXX
under Article 3.


42






 


Schedule 4 - Purchase Commitments




	 	 	 	 	 
	 	 	Minimum Slide Purchase
	Year	 	Commitment ([**])
	
	 	

	2003
	 	 	[**]	 
	2004
	 	 	[**]	 
	2005
	 	 	[**]	 
	2006
	 	 	[**]	 
	2007
	 	 	[**]	 
	2008
	 	 	[**]	 
	2009
	 	 	[**]	 
	2010
	 	 	[**]	 



43






 



Schedule 5 - Products and Prices

(as of the Commencement Date)




	 	 	 	 	 	 	 	 	 	 
	Sales Region	 	US Sales	 	Asian Sales
	
	 	
	 	

	Customer Number
	 	 	164 9706	 	 	 	318 3258	 




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	US Pricing	 	 	 	 
	 	 	 	 	 	 	
	 	 	 	 
	 	 	 	 	 	 	>1500	 	 	 	 	 	 	 	 
	Single Slides (Bx 25)	 	Catalog Number	 	bxs*	 	<1500 bxs*	 	Asian Pricing
	
	 	
	 	
	 	
	 	

	Albumin
	 	 	822 7134	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Alk Phos
	 	 	831 5459	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	ALT
	 	 	808 3750	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Ammonia
	 	 	181 6842	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Amylase
	 	 	820 8191	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	AST
	 	 	811 3979	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Calcium
	 	 	804 8191	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Cholesterol
	 	 	835 4888	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	CK
	 	 	835 8582	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Creatinine
	 	 	818 3477	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	ECO2
	 	 	853 8670	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Gamma GT
	 	 	826 1315	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Glucose
	 	 	813 0536	 	 	$	[**]	 	 	$	[**]	 	 	$	  [**]	 
	LDH
	 	 	835 1082	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Lipase
	 	 	196 6191	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Magnesium
	 	 	108 0266	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Phosphorus
	 	 	807 0856	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Total Bilirubin
	 	 	838 0396	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Total Protein
	 	 	193 7093	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Triglycerides
	 	 	192 2285	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Urea Nitrogen
	 	 	150 7326	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	Uric Acid
	 	 	100 0793	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Profile Slides (Bx 24)	 	Catalog Number	 	US Pricing	 	Asian Pricing
	
	 	
	 	
	 	

	General Health Profile
	 	 	160 7175	 	 	$	[**]	 	 	$	[**]	 
	Pre-Anesthetic Panel
	 	 	801 5109	 	 	$	[**]	 	 	$	[**]	 
	Large Animal Profile
	 	 	680 0071	 	 	$	[**]	 	 	$	[**]	 




	 	 	 	 	 	 	 	 	 
	Other	 	Catalog Number	 	WW Pricing
	
	 	
	 	

	Vetrols
	 	 	869 9852	 	 	$	[**]	 
	Tips
	 	 	175 7384	 	 	$	[**]	 




	*	 	per chemistry per order



44






 






Schedule 5 - Products and Prices (continued)



Sales Region: Australia/New Zealand



Customer No.: 314 8251




	 	 	 	 	 	 	 	 	 
	Single Slides (Box of 25)	 	Catalog Number	 	Australia/NZ Pricing
	
	 	
	 	

	Albumin
	 	 	822 7134	 	 	$	[**]	 
	Alk Phos
	 	 	831 5459	 	 	$	[**]	 
	ALT
	 	 	808 3750	 	 	$	[**]	 
	Ammonia
	 	 	181 6842	 	 	$	[**]	 
	Amylase
	 	 	820 8191	 	 	$	[**]	 
	AST
	 	 	811 3979	 	 	$	[**]	 
	Calcium
	 	 	804 8191	 	 	$	[**]	 
	Cholesterol
	 	 	835 4888	 	 	$	[**]	 
	CK
	 	 	835 8582	 	 	$	[**]	 
	Creatinine
	 	 	818 3477	 	 	$	[**]	 
	ECO2
	 	 	853 8670	 	 	$	[**]	 
	Gamma GT
	 	 	826 1315	 	 	$	[**]	 
	Glucose
	 	 	813 0536	 	 	$	[**]	 
	LDH
	 	 	835 1082	 	 	$	[**]	 
	Lipase
	 	 	196 6191	 	 	$	[**]	 
	Magnesium
	 	 	108 0266	 	 	$	[**]	 
	Phosphorus
	 	 	807 0856	 	 	$	[**]	 
	Total Bilirubin
	 	 	838 0396	 	 	$	[**]	 
	Total Protein
	 	 	193 7093	 	 	$	[**]	 
	Triglycerides
	 	 	192 2285	 	 	$	[**]	 
	Urea Nitrogen
	 	 	150 7326	 	 	$	[**]	 
	Uric Acid
	 	 	100 0793	 	 	$	[**]	 




	 	 	 	 	 	 	 	 	 
	Profile Slides (Box of 24)	 	Catalog Number	 	Australia/NZ Pricing
	
	 	
	 	

	General Health Profile
	 	 	160 7175	 	 	$	[**]	 
	Pre-Anesthetic Panel
	 	 	801 5109	 	 	$	[**]	 
	Large Animal Profile
	 	 	680 0071	 	 	$	[**]	 




	 	 	 	 	 	 	 	 	 
	Other	 	Catalog Number	 	WW Pricing
	
	 	
	 	

	Vetrols
	 	 	869 9852	 	 	$	[**]	 
	Tips
	 	 	175 7384	 	 	$	 [**]	 



45






 



Schedule 6 – Minimum Prices for New Chemistries



46






 





Schedule 7 - Illustrative Rebate Calculations



The Estimated Rebate Payments will be calculated for each of the first three calendar quarters using the Effective Rebate Rate, as described more
fully in sub-clause 7.03 of the Agreement. Any required adjustments will be made at the end of the fourth calendar quarter, in accordance with
sub-clause 7.03 of the Agreement.


Example: The aggregate Annual Purchase Forecast for IDEXX and IDEXX BV in a given year is [**] slides; pricing is $[**]/slide; blended rebate
percentage rate is [**]%, as follows:



	 	 	[**] slides * [**]% = [**] slides
	 
	 	 	[**] slides * [**]% = [**] slides
	 
	 	 	[**] slides * [**]% = [**] slides
	 
	 	 	[**] slides * [**]% = [**] slides
	 
	 	 	[**] slides * [**]% = [**] slides
	 
	 	 	Total Slides Eligible for Rebate = [**] slides
	 
	 	 	Effective Rebate = Total slides eligible for rebate / total purchases = [**] = [**]%



Actual aggregate volume purchased by IDEXX and IDEXX BV equals volume projected at the beginning of the year.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Actual Qtrly.	 	 	 	 	 	 	 	 	 	Calculated	 	[**]%	 	
	 	 	Vol.	 	Purchases	 	Effective Rebate	 	Rebate Each	 	Holdback	 	Rebate Paid
	 	 	([**])	 	($[**])	 	% ([**] Vol.)	 	Qtr. ([**])	 	([**])	 	([**])
	 	 	
	 	
	 	
	 	
	 	
	 	

	1st Qtr
	 	 	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	2nd Qtr
	 	 	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	3rd Qtr
	 	 	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	4th Qtr
	 	 	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	 
	 	 	[**]	 	 	$	[**]	 	 	 	 	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	 
	 	 	 	 	 	 	 	 	 	True-up:	 	$	[**]	 	 	 	 	 	 	$	[**]	 
	 
	 	 	 	 	 	 	 	 	 	Total:	 	$	[**]	 	 	 	 	 	 	$	[**]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	 	 	 	 	 	 	 	
	 



Actual aggregate volume purchased by IDEXX and IDEXX BV is greater than volume projected at the beginning of the year.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Actual Qtrly.	 	 	 	 	 	 	 	 	 	Calculated	 	[**]%		 
	 	 	Vol.	 	Purchases	 	Effective Rebate	 	Rebate Each	 	Holdback	 	Rebate Paid
	 	 	([**])	 	($[**])	 	% ([**] Vol.)	 	Qtr.([**])	 	([**])	 	([**])
	 	 	
	 	
	 	
	 	
	 	
	 	

	1st Qtr
	 	 	[**]	 	 	$	 [**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	2nd Qtr
	 	 	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	3rd Qtr
	 	 	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	4th Qtr
	 	 	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	 
	 	 	[**]	 	 	$	[**]	 	 	 	 	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	 
	 	 	 	 	 	 	 	 	 	True-up:	 	$	[**]	 	 	 	 	 	 	$	[**]	 
	 
	 	 	 	 	 	 	 	 	 	Total:	 	$	[**]	 	 	 	 	 	 	$	[**]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	 	 	 	 	 	 	 	
	 



47






 



Actual aggregate volume purchased by IDEXX and IDEXX BV is lower than volume projected at the beginning of the year.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Actual Qtrly.	 	 	 	 	 	 	 	 	 	Calculated	 	[**]%		 
	 	 	Vol.	 	Purchases	 	Effective Rebate	 	Rebate Each	 	Holdback	 	Rebate Paid
	 	 	([**])	 	($[**])	 	% ([**] Vol.)	 	Qtr. ([**])	 	([**])	 	([**])
	 	 	
	 	
	 	
	 	
	 	
	 	

	1st Qtr
	 	 	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	2nd Qtr
	 	 	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	3rd Qtr
	 	 	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	4th Qtr
	 	 	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	 
	 	 	[**]	 	 	$	[**]	 	 	 	 	 	 	$	[**]	 	 	$	[**]	 	 	$	[**]	 
	 
	 	 	 	 	 	 	 	 	 	True-up:	 	$	[**]	 	 	 	 	 	 	$	[**]	 
	 
	 	 	 	 	 	 	 	 	 	Total:	 	$	[**]	 	 	 	 	 	 	$	[**]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	 	 	 	 	 	 	 	
	 



Calculation of IDEXX’s Proportionate Share of rebate (assuming Actual aggregate
volume purchased by IDEXX and IDEXX BV equals volume projected at the beginning
of the year):


Assumptions:




	•	 	Number of slides purchased by IDEXX and its wholly-owned subsidiaries other than IDEXX BV: [**] slides
	 
	•	 	Total number of slides purchase by IDEXX and its wholly-owned subsidiaries: [**] slides
	 
	•	 	Total rebate earned: $[**]



Calculation:



IDEXX’s rebate equals: [**] slides / [**] slides * $[**], or $[**].


48






 



Schedule 8 – Eligible New Chemistry Slides



[**]



49






 



Schedule 9 - Example of Cost Adjustment Calculations



(Assumes PPI = [**]%)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Scenario 1	 	Scenario 2
	 	 	 	 	 	 	 	 	 	 	
	 	

	 	 	% of OCD
’s	 	Year 1	 	% Change	 	Year 2	 	$ Change	 	% Change	 	Year 2	 	$ Change
	Costs	 	Usage	 	Cost	 	In Cost	 	Cost	 	in Cost	 	in Cost	 	Cost	 	in Cost
	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	

	[**]
	 	 	[**]	%	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 
	[**]
	 	 	[**]	%	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	-$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 
	[**]
	 	 	[**]	%	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 
	[**]
	 	 	[**]	%	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 
	[**]
	 	 	 	 	 	$	[**]	 	 	 	[**]	 	 	$	[**]	 	 	$	[**]	 	 	 	[**]	 	 	$	[**]	 	 	$	[**]	 
	 
	 	Total	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 
	 
	 	Total (x[**])	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 	 	 	[**]	%	 	$	[**]	 	 	$	[**]	 



Scenario 1 Conclusion: [**]Cost Adjustment Required (Other Costs Increased by < [**]% over PPI)



	 	 	 	 	 	 
	Adjustment Calculation [**]:
	 	 	 	 
	Actual [**]
	 	$	[**]	 
	Less: PPI Change ([**]% of $[**])
	 	$	[**]	 
	 	Total Adjustment
	 	$	[**]	 



Scenario 2 Conclusion: [**] Costs Adjustments Required



	 	 	 	 	 	 
	Adjustment
Calculation [**]:

	 	 	 	 
	
Same as above
	 	$	[**]	 
	Adjustment for [**] Costs:
	 	 	 	 
	Actual Cost Change
	 	$	[**]	 
	Less: “PPI Plus [**]%” Change ([**]% *$[**])
	 	$	[**]	 
	 	Adjustment
	 	$	[**]	 
	 	Total Adjustment
	 	$	[**]	 
	 
	 	 	
	 



* - [**] Costs - [**] $[**], or $[**]/slide @ [**] slides



50






 



Schedule 10 – Excluded Countries




	 	 	 
	Albania	 	
Liechtenstein
	Andorra	 	
Lithuania
	Armenia	 	
Macedonia
	Azerbaijan	 	
Malta
	Bahrain	 	
Monaco
	Belarus	 	
Norway
	Bosnia and Herzegovina	 	
Oman
	Bulgaria	 	
Pakistan
	Croatia	 	
Poland
	Cyprus	 	
Qatar
	Czech Republic	 	
Romania
	Estonia	 	
Russia
	Faroes Islands	 	
San Marino
	Georgia	 	
Saudi Arabia
	Hungary	 	
Slovakia
	Iceland	 	
Slovenia
	Iran	 	
Switzerland
	Iraq	 	
Syria
	Israel	 	
Tajikistan
	Jordan	 	
Turkey
	Kazakhstan	 	
Turkmenistan
	Kuwait	 	
Ukraine
	Kyrgyzstan	 	
United Arab Emirates
	Latvia	 	
Uzbekestan
	Lebanon	 	
Yemen



51






 



Schedule 11 – IDEXX Entities



IDEXX Laboratories Canada Corporation (Canada)

IDEXX Laboratories Pty. Ltd. (Australia)

IDEXX Laboratories (NZ) Ltd. (New Zealand)

IDEXX Laboratories, KK (Japan)

IDEXX Laboratories (Taiwan) Inc. (Taiwan)



52






 



Schedule 12 – OCD Entities



Ortho-Clinical Diagnostics, a division of Janssen-Ortho Inc. (Canada)

Ortho-Clinical Diagnostics, a division of Johnson & Johnson Medical Pty. Limited (Australia)

Ortho-Clinical Diagnostics K.K. (Japan)

Ortho-Clinical Diagnostics, a division of Johnson & Johnson Limited (India)

Ortho-Clinical Diagnostics, a division of Johnson & Johnson Pte. Ltd. (Singapore)




53