Exhibit 10.16

EMPLOYMENT AGREEMENT
 
 
This Employment Agreement (the "Agreement") is made effective at the Effective
Date set forth below between Heska Corporation, a Delaware corporation ("Heska"
or the "Company"), and Kevin S. Wilson ("Executive").  Heska and Executive
collectively are referred to as the "Parties" and individually as a "Party."
 
RECITALS
 
Executive is currently the President and Chief Operating Officer of
Heska.  Executive and Heska are parties to an employment agreement dated
February 22, 2013 (the "Prior Agreement").
 
The Board of Directors of Heska (the "Board") desires to appoint Executive to
become Chief Executive Officer and President of Heska on the terms and
conditions set forth below.
 
Executive and Heska now wish to enter into this Agreement regarding the terms of
Executive's employment, which shall become effective upon execution and delivery
of this Agreement (the "Effective Date") and supersede the Prior Agreement.
 
NOW, THEREFORE, in consideration of the foregoing and of the mutual promises,
covenants, and agreements contained herein, the legal sufficiency of which is
acknowledged by the Parties, and intending to be legally bound, the Parties
agree as follows:
 
TERMS
 
1.  
Duties and Scope of Employment.

 
a.   Position and Duties.  Executive shall continue to serve as President and
Chief Operating Officer until immediately following the filing of Heska's Form
10-K for the fiscal year ended December 31, 2013 with the Securities and
Exchange Commission, after which time Executive will serve as President and
Chief Executive Officer of Heska.  Executive will render such business and
professional services in the performance of Executive's duties, consistent with
Executive's position within Heska, as will reasonably be assigned to Executive
by the Board.
 
b.   Board Membership.  The Board has determined to nominate Executive for
election to a 3-year term as a Board member at the Company's Annual Meeting of
Stockholders in 2014 (the "Annual Meeting").  At each meeting of Heska's
stockholders when Executive is up for Board election, Heska will nominate
Executive to serve as a member of the Board.  Executive's service as a member of
the Board will be subject to any required stockholder approval.  If elected,
Executive will serve on the Board without any additional compensation.
 
c.   Obligations.  During the Term of Agreement (as defined below), Executive
will devote all of his business efforts and time (excluding vacation, absence
due to illness and similar time off) as well as other such attention, skills,
time and business efforts as are necessary to responsibly act as Chief Executive
Officer and President of Heska; provided, however, that Executive may continue
to perform part-time management activities for Cuattro, LLC, Cuattro
 
 
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Software, LLC, Cuattro Medical, LLC, and Cuattro Veterinary, LLC; provided,
further, that such services do not adversely affect Executive's obligations to
Heska.  For the duration of the Term of Agreement, Executive agrees not to
actively engage in any other employment, occupation, or consulting activity, for
any direct or indirect remuneration, without the prior approval of the Board or
the Corporate Governance Committee of the Board; provided, however, that
Executive may, without the approval of the Board or the Corporate Governance
Committee of the Board, serve in any capacity with any civic, educational, or
charitable organization, provided, that such services do not interfere with
Executive's obligations to Heska.
 
2.   Term of Agreement.
 
a.   The period of Executive's employment under this Agreement is referred to
herein as the "Term of Agreement."  Subject to the provisions for earlier
termination of employment in Section 6 below, this Agreement will have a term of
forty-eight (48) months commencing on the Effective Date; provided, however,
that either Heska or Executive may terminate Executive's employment immediately
at any time subject to the provisions in Section 6 below.
 
b.   Executive may be entitled to severance benefits pursuant to Section 6
below, depending upon the circumstances of Executive's termination of
employment.  Executive will not be entitled to severance benefits if this
Agreement expires after the forty-eight-month term contemplated in Section 2(a)
above, regardless of the reason.  Upon the termination of Executive's employment
for any reason, Executive will be entitled to payment of all accrued but unpaid
compensation, expense reimbursements, and other benefits due to Executive
through Executive's termination date under any Heska-provided or paid plans,
policies, and arrangements.  Executive agrees to resign from all positions that
Executive holds with Heska, including, without limitation, his position as a
member of the Board, excluding any position(s) in Heska Imaging US, LLC to which
Executive is otherwise entitled pursuant to the Operating Agreement of Heska
Imaging US, LLC, immediately following the termination of Executive's employment
if the Board so requests.
 
3.   Compensation.
 
a.   Base Salary.  During the Term of Agreement, Heska will pay Executive an
annual salary of $275,000 as compensation for Executive's services (the "Base
Salary").  The Base Salary will be paid periodically in accordance with Heska's
normal payroll practices and will be subject to the usual, required withholdings
and deductions.  Except as set forth in Section 3(d)(ii), if applicable,
Executive's Base Salary shall not be subject to change during the Term of
Agreement; provided, however, that the Compensation Committee of the Board (the
"Committee") will have the authority, but not an obligation, to consider Base
Salary increases for Executive in special circumstances.
 
b.   Annual Bonus.
 
i.    From January 1, 2014 through the Effective Date, pursuant to the Prior
Agreement, Executive participated in the Management Incentive Plan (the "Bonus
Plan") established by the Committee (as defined herein), at a target percentage
that was 35% of Executive's Base Salary then in effect (the "Target
Bonus").  The actual bonus paid may be higher or lower than the Target Bonus for
over or under-achievement of Executive's performance goals, as determined by the
Committee in its sole discretion.  Executive's eligibility for such
 
 
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bonus through the Effective Date will not be superseded by this Agreement and
such bonus, if any, will accrue through the Effective Date and become payable in
accordance with the Committee's standard practices for paying executive
incentive compensation, provided, however, that any bonus payable under this
Section 3(b)(i) will be payable within two-and-one-half (2-1/2) months after the
end of the taxable year to which it relates or such longer period as may be
permitted by Treasury regulations in order to avoid application of Section 409A
of the Internal Revenue Code of 1986, as amended (the "Code") to such
bonus.  Any bonus paid pursuant to this Section will be subject to applicable
withholdings and deductions.
 
ii.   Except as set forth in Section 3(d)(iii), if applicable, Executive shall
not be eligible to participate in the Bonus Plan with respect to periods after
the Effective Date.
 
c.   Equity Grants.
 
i.   Except as set forth in Section 3(d)(iii), if applicable, during the Term of
Agreement, Executive will not be eligible to receive periodic equity grants
normally made to executives of the Company in the discretion of the Committee
from time to time; provided, however, that the Committee will have the
authority, but not an obligation, to consider equity grants to Executive in
special circumstances.
 
ii.   In lieu of such participation in the Bonus Plan and normal equity programs
of the Company:
 
A.    Initial Grant. On the Effective Date, Heska shall grant to Executive
110,000 shares of Heska Common Stock (the "Initial Grant"), which shall be
issued as shares of Restricted Stock ("Shares") in accordance with the Company's
1997 Stock Incentive Plan, as amended, (the "Plan") and pursuant to the terms
and conditions of the form of Award Agreement attached hereto as Exhibit A (the
"Award Agreement") which shall provide that such shares (the "Time-Vesting
Shares") will vest, subject to the terms and conditions of the Award Agreement,
as follows:  (i) 27,500 Shares shall vest on the six-month anniversary of the
Effective Date; and (ii) 27,500 additional Shares shall vest on each succeeding
one year anniversary of the Effective Date (each such date, a "Time-Vesting
Date"), until the Initial Grant is fully vested.
 
B.   Conditional Grant. At the Annual Meeting, Heska shall propose for approval
by its stockholders an additional 130,000 shares of Heska Common Stock to be
authorized for issuance under the Plan (the "Share Increase Proposal").  If the
Share Increase Proposal is approved by the stockholders at the Annual Meeting,
Heska shall grant to Executive, promptly after the Annual Meeting, 130,000
Shares, which shall be issued as shares of Restricted Stock in accordance with
the Plan and pursuant to the terms and conditions of the Award Agreement (the
"Conditional Grant"), which shall provide that said Shares will vest, as
follows:
 
(1)   Market Price Vesting.  Subject to the terms and conditions of the Award
Agreement, 13,000 shares shall vest on each date that the 90-Day Price first
equals or exceeds each of the following thresholds (the "Market-Vesting
Thresholds"):  (i) $12.60, (ii) $16.38, (iii) $21.24, (iv) $26.55 and (v) $31.95
(collectively, the "Market-Vesting Shares").  For purposes of this Agreement,
the "90-Day Price" shall mean, with respect to any date, the average of the
closing prices per share of the Company's Common Stock for the 90 trading days
ending on such date (inclusive) on the NASDAQ Stock Market, or if the Shares are
not traded on
 
 
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the NASDAQ Stock Market, the average of the high bid and low asked prices on
such trading days quoted on the NASDAQ OTC Bulletin Board or by the National
Quotation Bureau, Inc., or a comparable service as determined in the discretion
of the Committee.  In the event of a stock split, stock dividend or reverse
stock split affecting the Common Stock, the Committee shall adjust the
Market-Vesting Thresholds to appropriately reflect such event. Each
Market-Vesting Threshold is a distinct vesting trigger and multiple
Market-Vesting Threshold events may be achieved simultaneously; for the
avoidance of doubt and by way of illustration, if the 90-Day Price equals or
exceeds $16.38, then 26,000 shares would vest.
 
(2)   EBITDA Vesting.  Subject to the terms and conditions of the Award
Agreement, 13,000 shares shall vest on each Reporting Date that the Company's
Adjusted EBITDA for the preceding fiscal year first equals or exceeds each of
the following thresholds (the "EBITDA-Vesting Thresholds"):  (i) $2,460,000,
(ii) $3,200,000, (iii) $4,150,000, (iv) $5,180,000 and (v) $6,240,000
(collectively, the "EBITDA-Vesting Shares").  Each EBITDA-Vesting Threshold is a
distinct vesting trigger and multiple EBIDTA-Vesting Threshold events may be
achieved simultaneously; for the avoidance of doubt and by way of illustration,
if on Reporting Date for Fiscal Year 2014 the Adjusted EBITDA is $3,400,000,
then 26,000 shares would vest. For purposes of this Agreement, "Reporting Date"
means the date in each fiscal year that the Company's independent public
accountants issue their audit report on the Company's financial statements for
the preceding fiscal year (each, an "Audit Report").  For purposes of this
Agreement, "Adjusted EBITDA" means for any fiscal year, the following,
determined on a consolidated basis in accordance with generally-accepted
accounting principles for the Company and its subsidiaries, based on the Audit
Report for such year:  (x) consolidated net income plus (y) the sum of the
following, without duplication, to the extent deducted in determining such
consolidated net income:  (1) income and franchise tax expense, (2) interest and
other expense (net), (3) amortization and depreciation and (4) compensation
expense paid to the Company's Executive Chair, if any.
 
(3)   Financial Statement Restatement. Notwithstanding any provision of this
Agreement to the contrary, the Conditional Grant shall be subject to the terms
and conditions of this Section 3(c)(ii)(B)(3) in the event that the Company
issues a restatement of its audited financial statements (a "Restatement") after
any portion of the Conditional Grant has vested.  If (i) any portion of the
Conditional Grant vests based on achievement of an EBITDA-Vesting Threshold and
within 4 years thereafter the Company subsequently issues a Restatement
affecting Adjusted EBITDA for the corresponding fiscal year such that the
EBITDA-Vesting Threshold would not have been met, then such portion of the
Conditional Grant shall be deemed not to have vested, and (ii) if any portion of
the Conditional Grant vests based on achievement of a Market-Vesting Threshold,
and within 2 years thereafter  the Company issues a Restatement affecting
Adjusted EBITDA for the corresponding fiscal year such that the Adjusted EBITDA
set forth in the Restatement is less than the Adjusted EBITDA target
corresponding to such Market-Vesting Threshold as set forth on Exhibit B
attached hereto, then such portion of the Conditional Grant shall be deemed not
to have vested. If any portion of the Conditional Grant is deemed not to have
vested pursuant to the foregoing sentence (an "Unearned Grant"), then Executive
shall either (x) promptly return the Shares comprising the Unearned Grant to the
Company or (y) if Executive has sold such Shares, pay to the Company within one
(1) year from the date of the corresponding Restatement an amount equal to the
proceeds Executive received from any sale of such Shares not returned by
Executive pursuant to the foregoing clause (x). In addition to the foregoing,
Executive's compensation and equity awards shall remain subject to any
applicable law (including without limitation Section 302 of
 
 
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the Sarbanes Oxley Act and Section 954 of the Dodd Frank Act) or regulation in
effect from time to time.

d.   Non-Approval of Share Increase Proposal at Annual Meeting.  If the Heska
stockholders do not approve the Share Increase Proposal at the Annual Meeting,
the following provisions shall apply:
 
i.   Heska shall have no obligation to make the Conditional Grant to Executive
and Section 3(c)(ii)(B) shall be of no force or effect;
 
ii.   Executive's employment shall continue on the terms and conditions of this
Agreement, which shall continue in full force and effect according to its terms,
except that Executive's Base Salary shall be $400,000, to be paid periodically
in accordance with Heska's normal payroll practices, subject to the usual,
required withholdings and deductions.  Executive's salary will be subject to
review, and adjustments will be made at the sole discretion of the Committee and
based upon Heska's standard practices;
 
iii.   Executive shall participate in the Bonus Plan, or such other bonus
programs as established by the Committee, at a target percentage that is no less
than 50% of Executive's Base Salary then in effect (hereinafter, the "Target
Bonus").  The actual bonus paid may be higher or lower than the Target Bonus for
over or under-achievement of Executive's performance goals, as determined by the
Committee in its sole discretion.  Bonuses, if any, will accrue and become
payable in accordance with the Committee's standard practices for paying
executive incentive compensation, provided, however, that any bonus payable
under this Section (3)(d)(iii) will be payable within two-and-one-half (2-1/2)
months after the end of the taxable year to which it relates or such longer
period as may be permitted by Treasury regulations in order to avoid application
of Section 409A of the Code to such bonus.  Any bonus paid pursuant to this
Section will be subject to applicable withholdings and deductions.   Further,
Executive shall participate in the normal equity programs of the Company and any
other benefits offered to senior executives of Heska, including any Company
sponsored 401(k) or retirement plan, in accordance with (and subject to the
legal limitations on) benefit plans, policies, and arrangements that may exist
from time to time; and
 
iv.   The Initial Grant shall remain outstanding subject to vesting according to
its terms.
 
4.   Expenses.  In addition to the foregoing, Heska will reimburse Executive for
Executive's reasonable out-of-pocket travel, entertainment, and other expenses,
in accordance with Heska's expense reimbursement policies and practices in
effect at the time of the reimbursement request.  Executive shall submit such
requests not later than forty-five (45) days after incurring such expenses.
 
5.   Employee Benefits.  Except as set forth in Section 3(d)(iii), if
applicable, during the Term of Agreement, Executive will not be eligible to
participate in the Bonus Plan and normal equity programs of the Company;
provided, that Executive will be eligible to participate in other benefits
offered to other senior executives of Heska, including any Company sponsored
401(k) or retirement plan, in accordance with (and subject to the legal
limitations on) benefit plans, policies, and arrangements that may exist from
time to time.
 
 
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6.   Termination and Severance.
 
a.   Termination without Cause or for Good Reason other than In Connection with
a Change of Control.  If, at any time, Executive's employment is terminated by
Heska without Cause (as defined below), by Executive for Good Reason (as defined
below), or due to Executive's death or Disability (as defined below), and the
termination is not In Connection with a Change of Control (as defined below),
Executive will receive the following, subject to conditions and limitations set
forth in Section 7:
 
i.   A payment of an amount equal to six (6) months of Executive's Base Salary,
payable in accordance with Heska's standard payroll practices over the shorter
of the following periods (A) in equal installments over the period beginning on
the date of such termination and ending on the six-month anniversary thereof, or
(B) in equal installments on a monthly basis corresponding to the amount
Executive would normally receive as salary each month if Executive were still
employed with Heska, with a lump sum of any remaining balance of the amount
specified above on March 15 of the year following the year of termination.
 
ii.   Provided that Executive timely elects continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
Heska shall pay the COBRA premium for coverage for Executive and Executive's
eligible dependents under Heska's Benefit Plans (as defined below) for six (6)
months, or if earlier, until Executive becomes employed by another employer and
eligible for coverage under such other employer's welfare benefit plans (e.g.,
payments for medical COBRA premiums will cease when Executive becomes eligible
for another employer's medical plan).  For the balance of the period during
which Executive and Executive's eligible dependents are entitled to coverage
under COBRA, Executive shall be entitled to maintain coverage for Executive and
Executive's eligible dependents at Executive's sole expense.  Executive shall
notify Heska immediately upon Executive's acceptance of employment with another
employer.
 
iii.   Subject to Section 3(d)(i), if applicable, if, within one hundred eighty
(180) days after any such termination without Cause by Heska, (A) the Company
achieves one or more Market-Vesting Thresholds or (B) a Reporting Date occurs on
which the Company achieves one or more EBITDA-Vesting Thresholds, then any
Shares that would otherwise have then vested if such termination had not
occurred shall be deemed to vest.
 
b.   Termination without Cause or for Good Reason In Connection with a Change of
Control.  If, at any time, Executive's employment is terminated by Heska without
Cause or by Executive for Good Reason, and the termination is In Connection with
a Change of Control (as defined below), then, subject to the limitations set
forth in this Section 7, Executive will receive:
 
i.   A payment of an amount equal to twelve (12) months of Executive's Base
Salary, payable in equal installments in accordance with the standard payroll
schedule over the shorter of the following periods (A) the period beginning on
the date of such termination and ending on the one-year anniversary thereof, or
(B) the period beginning on the date of such termination and ending on March 15
of the year following the year of termination.
 
ii.   Provided that Executive timely elects continuation coverage under COBRA,
Heska shall pay the COBRA premium for coverage for Executive and Executive's
 
 
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eligible dependents under Heska's Benefit Plans (as defined below) for twelve
(12) months, or if earlier, until Executive becomes employed by another employer
and eligible for coverage under such other employer's welfare benefit plans
(e.g., payments for medical COBRA premiums will cease when Executive becomes
eligible for another employer's medical plan).  For the balance of the period
during which Executive and Executive's eligible dependents are entitled to
coverage under COBRA, Executive shall be entitled to maintain coverage for
Executive and Executive's eligible dependents at Executive's sole
expense.  Executive shall notify Heska immediately upon Executive's acceptance
of employment with another employer.
 
iii.   Accelerated vesting of Shares as follows:
 
A.   A portion of any Time-Vesting Shares that would otherwise have vested on
the first Time-Vesting Date following such termination if such termination had
not occurred shall vest as follows:  27,500 Shares, multiplied by a fraction,
the numerator of which is the number of days elapsed prior to such termination
in the vesting period ending on such Time-Vesting Date, and the denominator of
which is the total number of days in such vesting period.
 
B.   Subject to Section 3(d)(i), if applicable, Market-Vesting Shares that would
otherwise vest if the 90-Day Price were to equal the Change of Control Price
shall be deemed to vest.  For purposes of this Agreement, the "Change of Control
Price" means the net price per share of Heska Common Stock, determined by the
Committee in good faith, based on the fair market value of the total
consideration received by Heska and its stockholders in connection with the
transaction resulting in the Change of Control, net of fees, expenses and
commissions incurred by Heska in connection with such transaction and any
compensation or other payments made by Heska or its successor to Heska employees
as a result of such Change of Control.
 
C.   Subject to Section 3(d)(i), if applicable, EBITDA-Vesting Shares that would
otherwise vest if the Adjusted EBITDA calculated pursuant to this
Section 6(b)(iii)(C) were the Adjusted EBITDA on a Reporting Date shall be
deemed to vest.  For purposes of this Section 6(b)(iii)(C), the Adjusted EBITDA
shall be calculated in good faith by the Committee for the twelve-month period
ending on the last day of the month immediately preceding the Change of Control,
shall not be audited, and shall be adjusted to take into account normal,
recurring year end adjustments.
 
c.   Termination without Good Reason; Termination for Cause.  If, at any time,
Executive's employment with Heska terminates voluntarily by Executive without
Good Reason or is terminated for Cause by Heska, then (i) all further vesting of
Executive's outstanding equity awards will terminate immediately, (ii) all
payments of compensation by Heska to Executive hereunder will terminate
immediately (except as to amounts already earned), but Executive will be paid
all accrued but unpaid expense reimbursements, and other benefits due to
Executive through Executive's termination date under any Company-provided or
paid plans, policies, and arrangements, and (iii) Executive will not be entitled
to any severance.
 
d.   Excise Tax.  In the event that any benefits payable to Executive pursuant
to Section 6 of this Agreement ("Termination Benefits") (i) constitute
"parachute payments" within the meaning of Section 280G of the Code, or any
comparable successor provisions, and (ii) but for this Section 6(d), would be
subject to the excise tax imposed by Section 4999 of the Code, or any comparable
successor provisions (the "Excise Tax"), then Executive's Termination
 
 
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Benefits hereunder shall be either (A) provided to Executive in full, or
(B) provided to Executive as to such lesser extent which would result in no
portion of such benefits being subject to the Excise Tax, whichever of the
foregoing amounts, when taking into account applicable federal, state, local,
and foreign income and employment taxes, the Excise Tax, and any other
applicable taxes, results in the receipt by Executive, on an after-tax basis, of
the greatest amount of benefits, notwithstanding that all or some portion of
such benefits may be taxable under the Excise Tax.  Unless Heska and Executive
otherwise agree in writing, any determination required under this Section 6(d)
shall be made in writing in good faith by Heska's independent accountants.  In
the event of a reduction of benefits hereunder, Executive shall be given the
choice of which benefits to reduce.  If Executive does not provide written
identification to Heska of which benefits Executive chooses to reduce within ten
(10) days after written notice of the accountants' determination, and Executive
has not disputed the accountants' determination, then Heska shall select the
benefits to be reduced.  For purposes of making the calculations required by
this Section 6(d), the accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of the Code and other
applicable legal authority.  Heska and Executive shall furnish to the
accountants such information and documents as the accountants may reasonably
request in order to make a determination under this Section 6(d).  Heska shall
bear all costs the accountants may reasonably incur in connection with any
calculations contemplated by this Section 6(d).
 
7.  
Conditions to Receipt of Severance; Covenants; No Duty to Mitigate.

 
a.   Separation Agreement and Release of Claims.  The receipt of any severance
pursuant to Section 6 will be subject to Executive signing and not revoking a
confidential separation agreement and release of claims in a form reasonably
acceptable to Heska.  Such agreement will provide (among other things) that
Executive will not disparage Heska, its affiliates, parents, subsidiaries,
directors, executive officers, employees, agents, or representatives.  No
severance will be paid or provided until the confidential separation agreement
and release agreement becomes effective.  No severance will be paid or provided
if the Executive's confidential separation agreement and release agreement is
not signed and irrevocable within forty-five (45) days after the Executive's
termination date.  If Executive's date of termination and the last day of any
applicable statutory revocation period could fall in two separate taxable years,
regardless of when Executive actually executes and delivers the release,
payments will not commence until the later taxable year.
 
b.   Non-Competition.  Executive agrees not to engage in Competition (as defined
below) during the Term of Agreement and for twelve (12) months following the
termination or expiration date.  The geographic scope of this Section 7(b) is
the United States of America.  If Executive engages in Competition within such
period and within such geographic scope, all continuing payments and benefits to
which Executive otherwise may be entitled pursuant to Section 6 will cease
immediately.
 
c.   Non-Solicitation.  Executive agrees that, during the Term of Agreement and
for twenty-four (24) months following the termination or expiration date,
Executive, directly or indirectly, whether as employee, owner, sole proprietor,
partner, director, member, consultant, agent, founder, co-venturer, or
otherwise, (i) will not solicit, induce, or influence any person to modify his
or her employment or consulting relationship with Heska (the "No-Inducement"),
and (ii) will not intentionally divert business away from Heska by soliciting
business from any of Heska's customers and users who would otherwise have placed
the solicited order with Heska
 
 
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(the "No Solicit").  The geographic scope of this Section 7(c) is the United
States of America.  If Executive breaches the No-Inducement or No Solicit within
such period and within such geographic scope, all continuing payments and
benefits to which Executive otherwise may be entitled pursuant to Section 6 will
cease immediately.
 
d.   Remedies.  In the event of Executive's breach of Sections 7(b) or 7(c),
Heska shall have any and all remedies available to it in law or in equity,
including without limitation the right to seek recovery of any amounts paid or
Shares granted under Section 6 of this Agreement and injunctive relief, specific
performance, or any other equitable relief to prevent a breach and to secure the
enforcement of this Section.  Injunctive relief may be granted immediately upon
the commencement of any such action, and Heska need not post a bond to obtain
temporary or permanent injunctive relief.
 
e.   No Duty to Mitigate.  Executive is under no duty or requirement to mitigate
the amount of any payment contemplated by this Agreement, nor will any earnings
that Executive may receive from any other source reduce any such payment.
 
8.   Definitions.
 
a.   Benefit Plans.  For purposes of this Agreement, "Benefit Plans" means
plans, policies, or arrangements that Heska sponsors (or participates in) and
that immediately prior to Executive's termination of employment provide
Executive and Executive's eligible dependents with medical, dental, or vision
benefits.  Benefit Plans do not include any other type of benefit (including,
but not limited to, financial counseling, disability, life insurance, or
retirement benefits).  A requirement that Heska provide Executive and
Executive's eligible dependents with coverage under the Benefit Plans will not
be satisfied unless the coverage is no less favorable than that provided to
Executive and Executive's eligible dependents immediately prior to Executive's
termination of employment.
 
b.   Cause.  For purposes of this Agreement, "Cause" shall mean the occurrence
of one or more of the following: (i) conviction of, or entry of a plea of nolo
contendere to, any felony crime (including one involving moral turpitude), or
any crime which reflects so negatively on Heska to be detrimental to Heska's
image or interests, or any act of fraud or dishonesty that has such negative
reflection upon Heska; (ii) the repeated commitment of insubordination or
refusal to comply with any reasonable request of the Board related to the scope
or performance of Executive's duties; (iii) possession of any illegal drug on
Heska premises or being under the influence of illegal drugs or abusing
prescription drugs or alcohol while on Heska business, attending Heska-sponsored
functions, or on Heska premises; (iv) the gross misconduct or gross negligence
in the performance of Executive's responsibilities which, based upon good faith
and reasonable factual investigation of the Board, demonstrates Executive's
unfitness to serve; (v) material breach of Executive's obligations under this
Agreement; or (vi) material breach of any fiduciary duty of Executive to Heska,
which results in material damage to Heska or its business; provided, however,
that if any occurrence under subsections (ii), (iv), (v), and (vi) may be cured,
Heska will provide notice to Executive describing the nature of such event and
Executive will thereafter have thirty (30) days to cure such event, and if such
event is cured with that 30-day period, then grounds will no longer exist for
terminating Executive's employment for Cause.
 
 
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c.   Change of Control.  For purposes of this Agreement, "Change of Control"
means (i) a sale of all or substantially all of Heska's assets, (ii) any merger,
consolidation, or other business combination transaction of Heska with or into
another corporation, entity, or person, other than a transaction in which the
holders of at least a majority of the shares of voting capital stock of Heska
outstanding immediately prior to such transaction continue to hold (either by
such shares remaining outstanding or by their being converted into shares of
voting capital stock of the surviving entity) a majority of the total voting
power represented by the shares of voting capital stock of Heska (or the
surviving entity) outstanding immediately after such transaction, (iii) the
direct or indirect acquisition (including by way of a tender or exchange offer)
by any person, or persons acting as a group, of beneficial ownership or a right
to acquire beneficial ownership of shares representing a majority of the voting
power of the then outstanding shares of capital stock of Heska, (iv) a contested
election of Directors, as a result of which or in connection with which the
persons who were Directors before such election or their nominees cease to
constitute a majority of the Board, or (v) a dissolution or liquidation of
Heska.
 
d.   Competition.  For purposes of this Agreement, Executive will be deemed to
have engaged in "Competition" if Executive, without the written consent of the
Board or an authorized officer of any successor company to Heska, directly or
indirectly (1) provides services or assistance in any form to any individual,
entity, or company providing veterinary products for the companion animal health
industry or imaging products or services for the veterinary market in the United
States (a "Restricted Company"), whether such services or assistance is provided
as an employee, consultant, agent, corporate officer, director, or otherwise or
(2) participates in the financing, operation, management, or control of, a
Restricted Company.  A Restricted Company includes, Abaxis, Inc., IDEXX
Laboratories, Inc., scil animal health company GmbH, VCA Antech, Inc., Sound
Technologies, Inc. (currently a wholly owned subsidiary of VCA Antech, Inc.),
and the Synbiotics subsidiary of Zoetis (excluding the other operations of
Zoetis), or any successor thereto.  Notwithstanding the foregoing, nothing
contained in this Section 8(d) or in Section 7(b) above shall prohibit Executive
from being employed or engaged following the Term of Agreement in a corporate
function or senior management position (and holding commensurate equity
interests) in a division of a Restricted Company, so long as such division is
not in any way engaged in providing veterinary products for the companion animal
health industry or imaging products or services for the veterinary market in the
United States and Executive does not directly or indirectly provide services or
assistance to any division that does provide veterinary products for the
companion animal health industry or imaging products or services for the
veterinary market in the United States.
 
e.   Disability.  For purposes of this Agreement, "Disability" shall mean that,
by reason of any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, the Executive either (i) is unable
to perform the business and professional services in the performance of
Executive's duties, consistent with Executive's position within Heska, as prior
reasonably assigned to Executive by the Board, or (ii) is receiving income
replacement benefits for a period of not less than three (3) months under an
accident and health plan covering Heska employees.
 
f.   Good Reason.
 
i.   For purposes of this Agreement, "Good Reason" means the occurrence of any
of the following without Executive's express written consent:
 
 
-10-
 
 
A.   Executive's authority with Heska is, or Executive's duties or
responsibilities as President and Chief Executive Officer are, materially
diminished relative to Executive's authority, duties, and responsibilities as in
effect immediately prior to such change;
 
B.   a material diminution in Executive's Base Salary as in effect immediately
prior to such diminution; provided, that an across-the-board reduction in the
base compensation and benefits of all other executive officers of Heska by the
same percentage amount (or under the same terms and conditions) as part of a
general base compensation reduction and/or benefit reduction shall not
constitute such a qualifying material diminution;
 
C.   a material change in the geographic location of Executive's principal place
of employment such that the new location results in a commute for Executive that
is both (A) longer than Executive's commute prior to the relocation and
(B) greater than fifty (50) road miles each way from Executive's home in the
Beaver Creek, Colorado area;
 
D.   any material breach by Heska of any provision of this Agreement; and
 
E.   any acquiring company fails to assume or be bound by the terms of this
Agreement In Connection with a Change of Control.
 
ii.   The aforementioned occurrences shall not be deemed Good Reason unless
Executive gives Heska written notice of the existence of the condition which
Executive believes constitutes Good Reason (which notice must be given within
ninety (90) days of the initial existence of the condition) and such condition
remains uncured for a period of thirty (30) days after the date of such
notice.  An event of Good Reason shall occur automatically at the expiration of
such 30-day period if the relevant condition remains uncured at such time.
 
iii.   Failure of the Heska stockholders to approve the Share Increase Proposal
at the Annual Meeting shall not be deemed a breach of this Agreement by Heska
and shall not constitute Good Reason.
 
g.   In Connection with a Change of Control.  For purposes of this Agreement, a
termination of Executive's employment with Heska is "In Connection with a Change
of Control" if Executive's employment is terminated without Cause or for Good
Reason during the period beginning three (3) months prior to a Change of Control
and ending eighteen (18) months following a Change of Control.
 
9.    `Confidential Information.  Executive acknowledges that Executive has
executed Heska's standard employee Confidential Information and Invention
Agreement (the "Confidentiality Agreement").  During the Term of Agreement,
Executive agrees, if requested by Heska, to execute any updated versions of
Heska's form of employee confidential information agreement as may be required
of substantially all of Heska's executive officers.
 
10.   Executive's Representations and Warranties. Executive represents and
warrants that Executive is not a party to any other employment, non-competition,
or other agreement or restriction which could interfere with the Executive's
employment with Heska or Executive's or Heska's rights and obligations hereunder
and that Executive's acceptance of employment with Heska and the performance of
Executive's duties hereunder will not breach the provisions of any
 
 
-11-
 
 
contract, agreement, or understanding to which the Executive is party or any
duty owed by the Executive to any other person.
 
11.   Notices.  All notices, requests, demands, and other communications called
for hereunder will be in writing and will be deemed given (a) on the date of
delivery if delivered personally, (b) one (1) day after being delivered through
a nationally recognized overnight courier service, or (c) five (5) business days
after the date of mailing if sent certified or registered mail.  Notice to Heska
shall be sent to its principal place of business with a copy provided by
facsimile to the Chair of the Committee, and notice to Executive will be
delivered personally or sent to Executive's last known address provided to
Heska.
 
12.   Successors and Assigns.  This Agreement will be binding upon and inure to
the benefit of (a) the heirs, executors, and legal representatives of Executive
upon Executive's death and (b) any Successor of Heska.  Any such Successor (as
defined below) of Heska will be deemed substituted for Heska under the terms of
this Agreement for all purposes.  For purposes of this Section, "Successor"
means any person, firm, corporation, or other business entity which at any time,
whether by purchase, merger, or otherwise, directly or indirectly, acquires all
or substantially all of the assets or business of Heska.  None of the rights of
Executive to receive any form of compensation payable pursuant to this Agreement
may be assigned or transferred except by will or the laws of descent and
distribution.  Any other attempted assignment, transfer, conveyance, or other
disposition of Executive's right to compensation or other benefits will be null
and void.
 
13.   Integration.  This Agreement, together with the Confidentiality Agreement,
Heska's stock plans, and Executive's restricted stock agreements, represents the
entire agreement and understanding between the Parties as to the subject matter
herein and supersedes all prior or contemporaneous agreements whether written or
oral, including the Prior Agreement.    No waiver, alteration, or modification
of any of the provisions of this Agreement will be binding unless in a writing
that specifically references this Section and is signed by duly authorized
representatives of the Parties hereto.
 
14.   Interpretation.  Section titles and headings contained herein are inserted
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.  The determination of
the terms of, and the drafting of, this Agreement has been by mutual agreement
after negotiation, with consideration by and participation of all
Parties.  Accordingly, the Parties agree that rules relating to the
interpretation of contracts against the drafter of any particular clause shall
not apply in the case of this Agreement.
 
15.   Waivers.  Any term or provision of this Agreement may be waived, or the
time for its performance may be extended, by the Party or Parties entitled to
the benefit thereof.  Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any Party, it is
authorized in writing by an authorized representative of such Party.  The
failure of any Party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any Party thereafter to enforce each and every such provision.  No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
 
 
-12-
 
 
16.   Partial Invalidity.  Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.  The
parties agree that an arbitrator or court of competent jurisdiction shall reform
any invalid, illegal, or unenforceable provisions to ensure such provisions are
effective and valid under applicable law.
 
17.   Tax Matters.
 
a.   Except as provided in Section 6(d) above, Executive agrees that Executive
is responsible for any applicable taxes of any nature (including any penalties
or interest that may apply to such taxes) that are reasonably determined to
apply to any payment made to Executive hereunder (or any arrangement
contemplated hereunder), that Executive's receipt of any benefit hereunder is
conditioned on Executive's satisfaction of any applicable withholding or similar
obligations that apply to such benefit, and that any cash payment owed to
Executive hereunder will be reduced to satisfy any such withholding or similar
obligations that may apply thereto.
 
b.   Executive acknowledges that no representative or agent of Heska has
provided Executive with any tax advice of any nature, and Executive has
consulted with Executive's own legal, tax, and financial advisor(s) as to tax
and related matters concerning the compensation to be received under this
Agreement.
 
c.   Executive acknowledges that under Section 83 of the Code, as the shares of
Restricted Stock granted under this Agreement (the "Shares") vest, the fair
value of such Shares will be reportable as ordinary income at that
time.  Executive further understands that instead of being taxed when and as the
Shares vest, Executive may elect to be taxed as of the date the Shares are
granted to Executive, with respect to the fair value of all Shares on such
date.  Such election may only be made under Section 83(b) of the Code within
thirty (30) days after such date of grant.  Executive acknowledges that failure
to make this filing within the (30) day period will result in the recognition of
ordinary income as the Shares vest.  EXECUTIVE ACKNOWLEDGES THAT IT IS
EXECUTIVE'S SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY
ELECTION UNDER SECTION 83(b), EVEN IF EXECUTIVE REQUESTS THE COMPANY OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON EXECUTIVE'S BEHALF.  EXECUTIVE IS RELYING
SOLELY ON HIS OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO
FILE AN 83(b) ELECTION.
 
18.   Section 409A.
 
a.   This Agreement is intended to comply with Section 409A of the Code, as
amended ("Section 409A") and shall be construed accordingly.  It is the
intention of the Parties that payments or benefits payable under this Agreement
not be subject to the additional tax or interest imposed pursuant to Section
409A.  To the extent such potential payments or benefits are or could become
subject to Section 409A, the Parties shall cooperate to amend this Agreement
with the goal of giving Executive the economic benefits described herein in a
manner that does not result in such tax or interest being imposed; provided,
however, that no such amendment
 
 
-13-
 
 
shall materially increase the cost to, or impose any liability on Heska with
respect to any benefits contemplated or provided hereunder.  Executive shall, at
the request of Heska, take any reasonable action (or refrain from taking any
action), required to comply with any correction procedure promulgated pursuant
to Section 409A.
 
b.   If a payment that could be made under this Agreement would be subject to
additional taxes and interest under Section 409A, Heska in its sole discretion
may accelerate some or all of a payment otherwise payable under the Agreement to
the time at which such amount is includible in the income of Executive, provided
that such acceleration shall only be permitted to the extent permitted under
Treasury Regulation § 1.409A-3(j)(4)(vii) and the amount of such acceleration
does not exceed the amount permitted under Treasury Regulation
§ 1.409A-3(j)(vii).
 
c.   No payment to be made under this Agreement shall be made at a time earlier
than that provided for in this Agreement unless such payment is (i) an
acceleration of payment permitted to be made under Treasury Regulation §
1.409A-3(j)(4) or (ii) a payment that would otherwise not be subject to
additional taxes and interest under Section 409A.
 
d.   The right to each payment described in this Agreement shall be treated as a
right to a series of separate payments and a separately identifiable payment for
purposes of Section 409A.
 
e.   For purposes of Section 6 of this Agreement, "termination" (or any similar
term) when used in reference to Executive's employment shall mean "separation
from service" with Heska within the meaning of Section 409A(a)(2)(A)(i) of the
Code and applicable administrative guidance issued thereunder, and Executive
shall be considered to have terminated employment with Heska when, and only
when, Executive incurs a "separation from service" with Heska within the meaning
of Section 409A(a)(2)(A)(i) of the Code and applicable administrative guidance
issued thereunder.
 
f.   If Executive qualifies as a "specified employee" within the meaning of
Section 409A(a)(2)(B)(i) of the Code and would receive any payment sooner than
six (6) months after Executive's separation from service that, absent the
application of this Section 18(f), would be subject to additional tax imposed
pursuant to Section 409A as a result of such status as a specified employee,
then such payment shall instead be payable on the date that is the earliest of
(i) six (6) months after Executive's separation from service, (ii)  Executive's
death, or (iii) such other date as will not result in such payment being subject
to such additional tax.
 
19.   Governing Law; Waiver of Jury Trial.  This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Colorado
without regard to conflict of law principles.  The Parties hereto each waive
their respective rights to a jury trial of any and all such claims and causes of
action.
 
20.   Counterparts.  This Agreement may be executed in counterparts, and each
counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.
 
21.   Arbitration; Attorney's Fees.  Subject to Section 7(d) above, if any
dispute arises under this Agreement or by reason of any asserted breach of it,
or from the Parties' employment
 
 
-14-
 
 
relationship or any other relationship, either Party may elect to have the
dispute resolved through arbitration.  The arbitration shall be binding and
conducted pursuant to the rules of the American Arbitration Association under
its National Rules for the Resolution of Employment Disputes and the arbitrator
shall allocate the fees and expenses of such arbitration.  Regardless of whether
the dispute is resolved through arbitration or litigation, the prevailing Party
shall be entitled to recover all costs and expenses, including reasonable
attorneys' fees, incurred in enforcing or attempting to enforce any of the
terms, covenants and conditions, including costs incurred prior to commencement
of arbitration or legal action, and all costs and expenses, including reasonable
attorneys' fees, incurred in any appeal from an action brought to enforce any of
the terms, covenants or conditions.  For purposes of this section, "prevailing
Party" includes, without limitation, a Party who agrees to dismiss a suit or
proceeding upon the other's payment or performance of substantially the relief
sought.
 
22.   Survival.  Notwithstanding any provision of this Agreement to the
contrary, Sections 3(c)(ii)(B)(3) and 6 through 22 shall survive the expiration
or termination of this Agreement.
 

 
-15-
 
 

 
 
IN WITNESS WHEREOF, Heska has caused this Employment Agreement to be duly
executed by a representative thereunto duly authorized, and Executive has
hereunto set Executive's hand, all as of the day and year first above written.

HESKA CORPORATION
 
 
/s/ William A. Aylesworth            
William A. Aylesworth, Lead Director
Acting with Authority of the Board in its Entirety
Date:       March 26, 2014                                    
 

EXECUTIVE:

/s/ Kevin S. Wilson            
Kevin S. Wilson
 
Date:     March 26, 2014

 
-16-
 
 

 
EXHIBIT A

 
Form of Restricted Stock Agreement

 
-17-
 
 

HESKA CORPORATION
1997 STOCK INCENTIVE PLAN
RESTRICTED STOCK GRANT AGREEMENT

THIS AGREEMENT is made as of the _________ day of ____________, 2014 (the "Grant
Date") by and between Heska Corporation (the "Company"), and Kevin S. Wilson
(the "Executive"), in connection with the execution of an Employment Agreement
dated on or about the same date between the Company and Executive (the
"Employment Agreement").
 
In consideration of the mutual covenants and representations herein set forth,
the Company and Executive agree as follows:
 
SECTION 1.   GRANT OF STOCK.
 
1.1   Precedence of Plan.  This Agreement is subject to and shall be construed
in accordance with the terms and conditions of the Heska Corporation 1997 Stock
Incentive Plan (the "Plan"), as now or hereinafter in effect.  Any capitalized
terms that are used in this Agreement without being defined and that are defined
in the Plan shall have the meaning specified in the Plan.
 
1.2   Grant of Stock.  The Company hereby grants to Executive an aggregate of
110,000 shares of Restricted Stock (the "Shares"), subject to vesting as
provided in Section 2.
 
SECTION 2.   UNVESTED SHARES SUBJECT TO FORFEITURE.
 
2.1   Shares Subject to Forfeiture.  The Shares are subject to time-based
vesting requirements.
 
a.   The Shares will vest as follows: (a) 27,500 Shares will vest on the
six-month anniversary of the Grant Date; and (b) 27,500 additional Shares will
vest on each succeeding anniversary of the Grant Date, up to and including the
third anniversary of the grant date.
 
b.   In the event that Executive's employment with the Company is terminated
prior to vesting, Executive will forfeit all right to Shares that have not yet
vested.
 
c.   Notwithstanding the previous paragraph (b), if Executive is terminated by
the Company without Cause or voluntarily with Good Reason, and such termination
is In Connection with a Change of Control, a portion of any Shares that would
otherwise have vested on the vesting date next following such termination if
such termination had not occurred will vest as follows:  27,500 Shares,
multiplied by a fraction, the numerator of which is the number of days elapsed
prior to such termination in the vesting period ending on such vesting date, and
the denominator of which is the total number of days in such vesting period.
 
d.   For purposes of this Agreement, the following definitions will apply:
 
i.   "Cause" means the occurrence of one or more of the following: (i)
conviction of, or entry of a plea of nolo contendere to, any felony crime
(including one involving
 
 
 
 
 
moral turpitude), or any crime which reflects so negatively on the Company to be
detrimental to the Company's image or interests, or any act of fraud or
dishonesty that has such negative reflection upon the Company; (ii) the repeated
commitment of insubordination or refusal to comply with any reasonable request
of the Board related to the scope or performance of Executive's duties; (iii)
possession of any illegal drug on Company premises or being under the influence
of illegal drugs or abusing prescription drugs or alcohol while on Company
business, attending Company-sponsored functions, or on the Company premises;
(iv) the gross misconduct or gross negligence in the performance of Executive's
responsibilities which, based upon good faith and reasonable factual
investigation of the Board, demonstrates Executive's unfitness to serve; (v)
material breach of Executive's obligations under this Agreement; or (vi)
material breach of any fiduciary duty of Executive to the Company, which results
in material damage to the Company or its business; provided, however, that if
any occurrence under subsections (ii), (iv), (v), and (vi) may be cured, the
Company will provide notice to Executive describing the nature of such event and
Executive will thereafter have thirty (30) days to cure such event, and if such
event is cured with that 30-day period, then grounds will no longer exist for
terminating Executive's employment for Cause.
 
ii.   "Change of Control" means (i) a sale of all or substantially all of the
Company's assets, (ii) any merger, consolidation, or other business combination
transaction of the Company with or into another corporation, entity, or person,
other than a transaction in which the holders of at least a majority of the
shares of voting capital stock of the Company outstanding immediately prior to
such transaction continue to hold (either by such shares remaining outstanding
or by their being converted into shares of voting capital stock of the surviving
entity) a majority of the total voting power represented by the shares of voting
capital stock of the Company (or the surviving entity) outstanding immediately
after such transaction, (iii) the direct or indirect acquisition (including by
way of a tender or exchange offer) by any person, or persons acting as a group,
of beneficial ownership or a right to acquire beneficial ownership of shares
representing a majority of the voting power of the then outstanding shares of
capital stock of the Company, (iv) a contested election of Directors, as a
result of which or in connection with which the persons who were Directors
before such election or their nominees cease to constitute a majority of the
Board, or (v) a dissolution or liquidation of the Company.
 
iii.   "Good Reason" means the occurrence of any of the following without
Executive's express written consent:
 
(1)   Executive's authority with the Company is, or Executive's duties or
responsibilities as Chief Executive Officer and President are, materially
diminished relative to Executive's authority, duties, and responsibilities as in
effect immediately prior to such change;
 
(2)   a material diminution in Executive's Base Salary as in effect immediately
prior to such diminution; provided, that an across-the-board reduction in the
base compensation and benefits of all other executive officers of the Company by
the same percentage amount (or under the same terms and conditions) as part of a
general base compensation reduction and/or benefit reduction shall not
constitute such a qualifying material diminution;
 
 
-2-
 
 
(3)   a material change in the geographic location of Executive's principal
place of employment such that the new location results in a commute for
Executive that is both (A) longer than Executive's commute prior to the
relocation and (B) greater than fifty (50) road miles each way from Executive's
home in the Beaver Creek, Colorado area;
 
(4)   any material breach by the Company of any provision of the Employment
Agreement; and
 
(5)   any acquiring company fails to assume or be bound by the terms of the
Employment Agreement In Connection with a Change of Control.
 
The aforementioned occurrences shall not be deemed Good Reason unless Executive
gives the Company written notice of the existence of the condition which
Executive believes constitutes Good Reason (which notice must be given within
ninety (90) days of the initial existence of the condition) and such condition
remains uncured for a period of thirty (30) days after the date of such
notice.  An event of Good Reason shall occur automatically at the expiration of
such 30-day period if the relevant condition remains uncured at such time.
 
Failure of the Company's stockholders to approve the issuance of the stock
described as the "Conditional Grant" in the Employment Agreement shall not be
deemed to constitute termination for Good Reason.
 
iv.   "In Connection with a Change of Control" means that Executive's employment
is terminated without Cause or for Good Reason during the period beginning three
months prior to a Change of Control and ending eighteen months following a
Change of Control.
 
2.2   Restriction on Transfer.  Until the Shares are vested, the Shares may not
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated.
 
SECTION 3.   STOCKHOLDER RIGHTS
 
3.1   Stock Register and Certificates.  The Shares will be recorded in the stock
register of the Company in the name of Executive.  If applicable, a stock
certificate or certificates representing the Shares will be registered in the
name of Executive, but such certificates shall remain in the custody of the
Company.  Executive shall deposit with the Company a Stock Assignment Separate
from Certificate in the form attached below as Attachment 1, endorsed in blank,
so as to permit retransfer to the Company of all or a portion of the Shares that
are forfeited or otherwise do not become vested in accordance with the Plan and
this Agreement.
 
3.2   Exercise of Stockholder Rights.  Executive shall have the right to vote
the Shares (to the extent of the voting rights of said Shares, if any), to
receive and retain all regular cash dividends and such other distributions, as
the Board of Directors of the Company may, in its discretion, designate, pay or
distribute on such Shares, and to exercise all other rights, powers and
privileges of a holder of Common Stock with respect to such Shares, except as
set forth in this Agreement and the Plan.
 
3.3   Legends.  Certificates, if any, representing the Shares will contain the
following or other legends in the Company's discretion:
 
 
-3-
 
 
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
UPON AND OBLIGATIONS WITH RESPECT TO TRANSFER AND RIGHTS OF REPURCHASE AS SET
FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL REGISTERED HOLDER, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
 
SECTION 4.      RESPONSIBILITY FOR TAXES.
 
4.1   Section 83(b) Election.  Executive may complete and file with the Internal
Revenue Service an election pursuant to Section 83(b) of the Internal Revenue
Code to be taxed currently on the fair market value of the Shares without regard
to the vesting restrictions set forth in this Agreement.  Executive shall be
responsible for all taxes associated with the acceptance of the transfer of the
Shares, including any tax liability associated with the representation of fair
market value if the election is made pursuant to Code Section 83(b).
 
4.2   Withholding.  In accordance with Section 12 of the Plan, Executive agrees
to make arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise in connection with the Plan under
applicable federal, state, local or foreign law.  The Company in its discretion
may permit Executive to satisfy all or part of his withholding or income tax
obligations by having the Company withhold all or a portion of the Shares that
otherwise would be issued to him on vesting.
 
SECTION 5.   MISCELLANEOUS.
 
5.1   Not an Employment Contract.  This Agreement is not an employment contract
and nothing in this Agreement shall be deemed to create in any way whatsoever
any obligation on the part of Executive to remain in the service of the Company
in any capacity, or of the Company to continue Executive's service in any
capacity.
 
5.2   Effect on Employee Benefits.  Executive agrees that the Award will
constitute special incentive compensation that will not be taken into account as
"salary" or "compensation" or "bonus" in determining the amount of any payment
under any pension, retirement, profit sharing or other remuneration plan of the
Company unless so provided in such plan.
 
5.3   Further Assurances.  The parties agree to execute such further instruments
and to take such further action as may reasonably be necessary to carry out the
intent of this Agreement.
 
5.4   Entire Agreement.  This Agreement, including any exhibits, is the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior oral and written understandings of the parties.
 
5.5   Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware as applied to contracts
between Delaware residents to be wholly performed within the State of Colorado.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 
-4-
 
 
HESKA CORPORATION
EXECUTIVE                                                                                                  a
Delaware corporation

By:      _____________________________                                                
__________________________________          
Title:   _____________________________                                                      
Address  __________________________                                                     
___________________________

 
-5-
 
 

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED, I, _____________________, hereby sell, assign and transfer
unto
                                                                              (_______________)
shares of the Common Stock of Heska Corporation, standing in my name on the
books of said corporation represented by Certificate No. ________ herewith and
do hereby irrevocably constitute and appoint                          to
transfer said stock on the books of the within-named corporation with full power
of substitution in the premises.

Dated:  _____________ 20__.
Signature:

 
 
This Assignment Separate from Certificate was executed in conjunction with the
terms of a Restricted Stock Grant Agreement between the above assignor and Heska
Corporation, dated __________ __, 2014.

Instruction:
Please do not fill in any blanks other than the signature line.

 
 
 
 

HESKA CORPORATION
1997 STOCK INCENTIVE PLAN
RESTRICTED STOCK GRANT AGREEMENT

THIS AGREEMENT is made as of the _________ day of ____________, 2014 (the "Grant
Date") by and between Heska Corporation (the "Company"), and Kevin S. Wilson
(the "Executive"), in connection with the execution of an Employment Agreement
dated on or about the same date between the Company and Executive (the
"Employment Agreement").
 
In consideration of the mutual covenants and representations herein set forth,
the Company and Executive agree as follows:
 
SECTION 1.      GRANT OF STOCK.
 
1.1   Precedence of Plan.  This Agreement is subject to and shall be construed
in accordance with the terms and conditions of the Heska Corporation 1997 Stock
Incentive Plan (the "Plan"), as now or hereinafter in effect.  Any capitalized
terms that are used in this Agreement without being defined and that are defined
in the Plan shall have the meaning specified in the Plan.
 
1.2   Grant of Stock.  The Company hereby grants to Executive an aggregate of
130,000 shares of Restricted Stock (the "Shares"), subject to vesting as
provided in Section 2.
 
SECTION 2.   UNVESTED SHARES SUBJECT TO FORFEITURE.
 
2.1   Shares Subject to Forfeiture.
 
a.   Vesting Conditions.  The Shares will vest as follows:
 
i.   Market Price Vesting.  13,000 shares will vest on each date that the 90-Day
Price first equals or exceeds each of the following thresholds (the
"Market-Vesting Thresholds"):  (i) $12.60, (ii) $16.38, (iii) $21.24,
(iv) $26.55 and (v) $31.95 (collectively, the "Market-Vesting Shares").  In the
event of a stock split, stock dividend or reverse stock split affecting the
Common Stock, the Committee will adjust the Market-Vesting Thresholds to
appropriately reflect such event. Each Market-Vesting Threshold is a distinct
vesting trigger and multiple Market-Vesting Threshold events may be achieved
simultaneously; for the avoidance of doubt and by way of illustration, if the
90-Day Price equals or exceeds $16.38, then 26,000 shares would vest.
 
ii.   EBITDA Vesting.  13,000 shares will vest on each Reporting Date that the
Company's Adjusted EBITDA for the preceding fiscal year first equals or exceeds
each of the following thresholds (the "EBITDA-Vesting
Thresholds"):  (i) $2,460,000, (ii) $3,200,000, (iii) $4,150,000,
(iv) $5,180,000 and (v) $6,240,000 (collectively, the "EBITDA-Vesting
Shares").  Each EBITDA-Vesting Threshold is a distinct vesting trigger and
multiple EBIDTA-Vesting Threshold events may be achieved simultaneously; for the
avoidance of doubt and by way of illustration, if on the Reporting Date for
Fiscal Year 2014 the Adjusted EBITDA is $3,400,000, then 26,000 shares would
vest. For purposes of this Agreement, "Reporting Date" means the date in each
fiscal year that the Company's independent public accountants issue their
 
 
 
 
 
audit report on the Company's financial statements for the preceding fiscal year
(each, an "Audit Report").  For purposes of this Agreement, "Adjusted EBITDA"
means for any fiscal year, the following, determined on a consolidated basis in
accordance with generally-accepted accounting principles for the Company and its
subsidiaries, based on the Audit Report for such year:  (x) consolidated net
income plus (y) the sum of the following, without duplication, to the extent
deducted in determining such consolidated net income:  (1) income and franchise
tax expense, (2) interest and other expense (net), (3) amortization and
depreciation and (4) compensation expense paid to the Company's Executive Chair,
if any.
 
b.   Financial Statement Restatement. Notwithstanding any provision of this
Agreement to the contrary, in the event that the Company issues a restatement of
its audited financial statements (a "Restatement") after any portion of the
Shares have vested:
 
i.   If any portion of the Shares have vested based on achievement of an
EBITDA-Vesting Threshold and within 4 years thereafter the Company subsequently
issues a Restatement affecting Adjusted EBITDA for the corresponding fiscal year
such that the EBITDA-Vesting Threshold would not have been met, such portion of
the Shares will be deemed not to have vested, and
 
ii.   If any portion of the Shares have vested based on achievement of a
Market-Vesting Threshold, and within 2 years thereafter the Company issues a
Restatement affecting the Adjusted EBITDA for the corresponding fiscal year such
that the Adjusted EBITDA set forth in the Restatement is less than the Adjusted
EBITDA target corresponding to such Market-Vesting Threshold in the following
table, then such portion of the Shares will be deemed not to have vested:
 

 
Market-Vesting Threshold
Target Adjusted EBITDA
Level 1
$12.60
$2,460,000
Level 2
$16.38
$3,200,000
Level 3
$21.24
$4,150,000
Level 4
$26.55
$5,180,000
Level 5
$31.95
$6,240,000

iii.   If any portion of the Shares is deemed not to have vested pursuant to the
foregoing paragraphs (i) or (ii) (an "Unearned Grant"), then Executive shall
either (x) promptly return the Shares comprising the Unearned Grant to the
Company or (y) if Executive has sold such Shares, pay to the Company within one
year from the date of the corresponding Restatement an amount equal to the
proceeds Executive received from any sale of such Shares not returned by
Executive pursuant to the foregoing clause (x). In addition to the foregoing,
Executive's compensation and equity awards shall remain subject to any
applicable law (including without limitation Section 302 of the Sarbanes Oxley
Act and Section 954 of the Dodd Frank Act) or regulation in effect from time to
time.
 
c.   In the event that Executive's employment with the Company is terminated
prior to vesting, Executive will forfeit all right to Shares that have not yet
vested.
 
 
-2-
 
 
d.   Notwithstanding the previous paragraph (c):
 
i.   If Executive is terminated by the Company without Cause (other than in
connection with a Change in Control) and within 180 days after such termination
either (A) the Company achieves one or more Market-Vesting Thresholds or (B) a
Reporting Date occurs on which the Company achieves one or more EBITDA-Vesting
Threshholds, then any Shares that would have otherwise vested if such
termination had not occurred will be deemed to vest.
 
ii.   If Executive is terminated by the Company without Cause or voluntarily
with Good Reason, and such termination is In Connection with a Change of
Control, (y) Shares that would otherwise vest in accordance with the
Market-Vesting Threshold if the 90-Day Price were to equal the Change of Control
Price will be deemed to vest, and (z) Shares that would otherwise vest in
accordance with the EBITDA-Vesting Threshold will vest if the Committee
estimates that, as of the last day of the month immediately preceding the Change
of Control, if such date were a Reporting Date and taking into account the
twelve-month period ending on such date, the EBITDA-Vesting Threshold would be
met.
 
e.   Definitions.  For purposes of this Agreement, the following definitions
will apply:
 
i.   "90-Day Price" means, with respect to any date, the average of the closing
prices per share of the Company's Common Stock for the 90 trading days ending on
such date (inclusive) on the NASDAQ Stock Market, or if the Shares are not
traded on the NASDAQ Stock Market, the average of the high bid and low asked
prices on such trading days quoted on the NASDAQ OTC Bulletin Board or by the
National Quotation Bureau, Inc., or a comparable service as determined in the
discretion of the Committee.
 
ii.   "Cause" means the occurrence of one or more of the following: (i)
conviction of, or entry of a plea of nolo contendere to, any felony crime
(including one involving moral turpitude), or any crime which reflects so
negatively on the Company to be detrimental to the Company's image or interests,
or any act of fraud or dishonesty that has such negative reflection upon the
Company; (ii) the repeated commitment of insubordination or refusal to comply
with any reasonable request of the Board related to the scope or performance of
Executive's duties; (iii) possession of any illegal drug on Company premises or
being under the influence of illegal drugs or abusing prescription drugs or
alcohol while on Company business, attending Company -sponsored functions, or on
the Company premises; (iv) the gross misconduct or gross negligence in the
performance of Executive's responsibilities which, based upon good faith and
reasonable factual investigation of the Board, demonstrates Executive's
unfitness to serve; (v) material breach of Executive's obligations under this
Agreement; or (vi) material breach of any fiduciary duty of Executive to the
Company, which results in material damage to the Company or its business;
provided, however, that if any occurrence under subsections (ii), (iv), (v), and
(vi) may be cured, the Company will provide notice to Executive describing the
nature of such event and Executive will thereafter have thirty (30) days to cure
such event, and if such event is cured with that 30-day period, then grounds
will no longer exist for terminating Executive's employment for Cause.
 
 
-3-
 
 
iii.   "Change of Control" means (i) a sale of all or substantially all of the
Company's assets, (ii) any merger, consolidation, or other business combination
transaction of the Company with or into another corporation, entity, or person,
other than a transaction in which the holders of at least a majority of the
shares of voting capital stock of the Company outstanding immediately prior to
such transaction continue to hold (either by such shares remaining outstanding
or by their being converted into shares of voting capital stock of the surviving
entity) a majority of the total voting power represented by the shares of voting
capital stock of the Company (or the surviving entity) outstanding immediately
after such transaction, (iii) the direct or indirect acquisition (including by
way of a tender or exchange offer) by any person, or persons acting as a group,
of beneficial ownership or a right to acquire beneficial ownership of shares
representing a majority of the voting power of the then outstanding shares of
capital stock of the Company, (iv) a contested election of Directors, as a
result of which or in connection with which the persons who were Directors
before such election or their nominees cease to constitute a majority of the
Board, or (v) a dissolution or liquidation of the Company.
 
iv.   "Change of Control Price" means the net price per share of Company Common
Stock, determined by the Committee in good faith, based on the fair market value
of the total consideration received by the Company and its stockholders in
connection with the transaction resulting in the Change of Control, net of fees,
expenses and commissions incurred by the Company in connection with such
transaction and any compensation or other payments made by the Company or its
successor to Company employees as a result of such Change of Control.
 
v.   "Committee" means the Compensation Committee of the Board.
 
vi.   "Good Reason" means the occurrence of any of the following without
Executive's express written consent:
 
(1)   Executive's authority with the Company is, or Executive's duties or
responsibilities as President and Chief Executive Officer are, materially
diminished relative to Executive's authority, duties, and responsibilities as in
effect immediately prior to such change;
 
(2)   a material diminution in Executive's Base Salary as in effect immediately
prior to such diminution; provided, that an across-the-board reduction in the
base compensation and benefits of all other executive officers of the Company by
the same percentage amount (or under the same terms and conditions) as part of a
general base compensation reduction and/or benefit reduction shall not
constitute such a qualifying material diminution;
 
(3)   a material change in the geographic location of Executive's principal
place of employment such that the new location results in a commute for
Executive that is both (A) longer than Executive's commute prior to the
relocation and (B) greater than fifty (50) road miles each way from Executive's
home in the Beaver Creek, Colorado area;
 
(4)   any material breach by the Company of any provision of the Employment
Agreement; and
 
 
-4-
 
 
(5)   any acquiring company fails to assume or be bound by the terms of the
Employment Agreement In Connection with a Change of Control.
 
The aforementioned occurrences shall not be deemed Good Reason unless Executive
gives the Company written notice of the existence of the condition which
Executive believes constitutes Good Reason (which notice must be given within
ninety (90) days of the initial existence of the condition) and such condition
remains uncured for a period of thirty (30) days after the date of such
notice.  An event of Good Reason shall occur automatically at the expiration of
such 30-day period if the relevant condition remains uncured at such time.
 
vii.   "In Connection with a Change of Control" means that Executive's
employment is terminated without Cause or for Good Reason during the period
beginning three months prior to a Change of Control and ending eighteen months
following a Change of Control.
 
2.2   Restriction on Transfer.  Until the Shares are vested, the Shares may not
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated.
 
SECTION 3.   STOCKHOLDER RIGHTS
 
3.1   Stock Register and Certificates.  The Shares will be recorded in the stock
register of the Company in the name of Executive.  If applicable, a stock
certificate or certificates representing the Shares will be registered in the
name of Executive, but such certificates shall remain in the custody of the
Company.  Executive shall deposit with the Company a Stock Assignment Separate
from Certificate in the form attached below as Attachment 1, endorsed in blank,
so as to permit retransfer to the Company of all or a portion of the Shares that
are forfeited or otherwise do not become vested in accordance with the Plan and
this Agreement.
 
3.2   Exercise of Stockholder Rights.  Executive shall have the right to vote
the Shares (to the extent of the voting rights of said Shares, if any), to
receive and retain all regular cash dividends and such other distributions, as
the Board of Directors of the Company may, in its discretion, designate, pay or
distribute on such Shares, and to exercise all other rights, powers and
privileges of a holder of Common Stock with respect to such Shares, except as
set forth in this Agreement and the Plan.
 
3.3   Legends.  Certificates, if any, representing the Shares will contain the
following or other legends in the Company's discretion:
 
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
UPON AND OBLIGATIONS WITH RESPECT TO TRANSFER AND RIGHTS OF REPURCHASE AS SET
FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL REGISTERED HOLDER, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
 
SECTION 4.   RESPONSIBILITY FOR TAXES.
 
4.1   Section 83(b) Election.  Executive may complete and file with the Internal
Revenue Service an election pursuant to Section 83(b) of the Internal Revenue
Code to be taxed
 
 
-5-
 
 
currently on the fair market value of the Shares without regard to the vesting
restrictions set forth in this Agreement.  Executive shall be responsible for
all taxes associated with the acceptance of the transfer of the Shares,
including any tax liability associated with the representation of fair market
value if the election is made pursuant to Code Section 83(b).
 
4.2   Withholding.  In accordance with Section 12 of the Plan, Executive agrees
to make arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise in connection with the Plan under
applicable federal, state, local or foreign law.  The Company in its discretion
may permit Executive to satisfy all or part of his withholding or income tax
obligations by having the Company withhold all or a portion of the Shares that
otherwise would be issued to him on vesting.
 
SECTION 5.   MISCELLANEOUS.
 
5.1   Not an Employment Contract.  This Agreement is not an employment contract
and nothing in this Agreement shall be deemed to create in any way whatsoever
any obligation on the part of Executive to remain in the service of the Company
in any capacity, or of the Company to continue Executive's service in any
capacity.
 
5.2   Effect on Employee Benefits.  Executive agrees that the Award will
constitute special incentive compensation that will not be taken into account as
"salary" or "compensation" or "bonus" in determining the amount of any payment
under any pension, retirement, profit sharing or other remuneration plan of the
Company unless so provided in such plan.
 
5.3   Further Assurances.  The parties agree to execute such further instruments
and to take such further action as may reasonably be necessary to carry out the
intent of this Agreement.
 
5.4   Entire Agreement.  This Agreement, including any exhibits, is the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior oral and written understandings of the parties.
 
5.5   Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware as applied to contracts
between Delaware residents to be wholly performed within the State of Colorado.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
 
HESKA CORPORATION
EXECUTIVE                                                                                                    
a Delaware corporation

 
____________________________________           By: 
___________________________________                                                      
                          Title: ___________________________________                                                     
Address     ____________________________                                                 
____________________________

 
-6-
 
 

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED, I, _____________________, hereby sell, assign and transfer
unto
                                                                              (_________)
shares of the Common Stock of Heska Corporation, standing in my name on the
books of said corporation represented by Certificate No.________ herewith and do
hereby irrevocably constitute and appoint 
                         to transfer said stock on the books of the within-named
corporation with full power of substitution in the premises.

Dated:  ______________,  20__
Signature:

 
 
This Assignment Separate from Certificate was executed in conjunction with the
terms of a Restricted Stock Grant Agreement between the above assignor and Heska
Corporation, dated __________ __, 2014.

Instruction:
Please do not fill in any blanks other than the signature line.

 

 
 
 
 

 
EXHIBIT B

 
Market-Vesting Threshold
Target Adjusted EBITDA
 
$12.60
$2,460,000
 
$16.38
$3,200,000
 
$21.24
$4,150,000
 
$26.55
$5,180,000
 
$31.95
$6,240,000