Exhibit 10.3

 
Heska Corporation
 
1997 Employee Stock Purchase Plan
 
AS AMENDED AND RESTATED, EFFECTIVE May 4, 2010
 

 

 
 

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TABLE OF CONTENTS
 

 

 
Page
   
SECTION 1.    PURPOSE OF THE PLAN
1
   
SECTION 2.    ADMINISTRATION OF THE PLAN
1
   (a) 
Committee Composition
1
   (b) 
Committee Responsibilities
1
   
SECTION 3.    ENROLLMENT AND PARTICIPATION
1
   (a) 
Offering Periods
1
   (b)  
Accumulation Periods
1
   (c) 
Enrollment
1
   (d) 
Duration of Participation
1
   (e) 
Applicable Offering Period
2
   
SECTION 4.    EMPLOYEE CONTRIBUTIONS
2
   (a)  
Frequency of Payroll Deductions
2
   (b) 
Amount of Payroll Deductions
3
   (c) 
Changing Withholding Rate
3
   (d)
Discontinuing Payroll Deductions
3
   (e) 
Limit on Number of Elections
3
   
SECTION 5.    WITHDRAWAL FROM THE PLAN
3
   (a)
Withdrawal
3
   (b)
Failure to Participate
3
   (c)
Re-Enrollment After Withdrawal
4
 
 
SECTION 6.    CHANGE IN EMPLOYMENT STATUS
4
   (a) 
Termination of Employment
4
   (b)
 Leave of Absence
4
   (c)
 Death
4
   
SECTION 7.    PLAN ACCOUNTS AND PURCHAE OF SHARES
4
   (a)
Plan Accounts
4
   (b)
Purchase Price
4
   (c) 
Number of Shares Purchased
4
   (d) 
Available Shares Insufficient
5
   (e)
Issuance of Stock
5
   (f)
Unused Cash Balances
5

 
 
 
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SECTION 8.    LIMITATIONS ON STOCK OWNERSHIP
5
   (a) 
Five Percent Limit
5
   (b)
$25,000 Limit
6
   
SECTION 9.    RIGHTS NOT TRANSFERABLE
6
   
SECTION 10.  NO RIGHTS AS AN EMPLOYEE
6
   
SECTION 11.  NO RIGHTS AS A STOCKHOLDER
6
   
SECTION 12.  STOCK OFFERED UNDER THE PLAN
6
   (a)
Authorized Shares
6
   (b)
Anti-Dilution Adjustments
6
   (c)
Reorganizations
7
   
SECTION 13.  AMENDMENT OR DISCONTINUANCE
7
   
SECTION 14.  DEFINITIONS
7
   (a)
Accumulation Period
7
   (b)
Board
7
   (c)
Change in Control
7
   (d) 
Code
8
   (e)
Committee
8
   (f) 
Company
8
   (g) 
Compensation
8
   (h) 
Eligible Employee
8
   (i) 
Exchange Act
8
   (j)
Fair Market Value
8
   (k)
Offering Period
9
   (l) 
Participant
9
   (m) 
Participating Company
9
   (n)
Plan
9
   (o)
Plan Account
9
   (p) 
Purchase Price
9
   (q) 
Stock
9
   (r)
Subsidiary
9
   
SECTION 15.  EXECUTION
9

 
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Heska Corporation
1997 Employee Stock Purchase Plan
As Amended and Restated, Effective May 4, 2010
 
 
SECTION 1.  
PURPOSE OF THE PLAN.

 
The Plan was adopted by the Board on April 23, 1997.  The purpose of the Plan is
to provide Eligible Employees with an opportunity to increase their proprietary
interest in the success of the Company by purchasing Stock from the Company on
favorable terms and to pay for such purchases through payroll deductions.  The
Plan is intended to qualify under section 423 of the Code.
 
The Plan was amended and restated on May 16, 2002, February 6, 2004, February
24, 2005 and June 17, 2008.  The Plan is now amended and restated, effective May
4, 2010.
 
SECTION 2.  
ADMINISTRATION OF THE PLAN.

 
(a) Committee Composition.  The Plan shall be administered by the
Committee.  The Committee shall consist exclusively of one or more directors of
the Company, who shall be appointed by the Board.
 
(b) Committee Responsibilities.  The Committee shall interpret the Plan and make
all other policy decisions relating to the operation of the Plan.  The Committee
may adopt such rules, guidelines and forms as it deems appropriate to implement
the Plan.  The Committee’s determinations under the Plan shall be final and
binding on all persons.
 
SECTION 3.  
ENROLLMENT AND PARTICIPATION.

 
(a) Offering Periods.  While the Plan is in effect, two overlapping Offering
Periods shall commence in each calendar year.  Beginning on July 1, 2008, the
Offering Periods shall consist of the five-year periods commencing on each
January 1 and July 1.
 
(b) Accumulation Periods.  While the Plan is in effect, two Accumulation Periods
shall commence in each calendar year.  Beginning on July 1, 2008, the
Accumulation Periods shall consist of the six-month periods commencing on each
January 1 and July 1.
 
(c) Enrollment.  Any individual who, on the day preceding the first day of an
Offering Period, qualifies as an Eligible Employee may elect to become a
Participant in the Plan for such Offering Period by executing the prescribed
form, which shall be filed with the Company at the prescribed location prior to
the commencement of such Offering Period.
 
(d) Duration of Participation.  Once enrolled in the Plan, a Participant shall
continue to participate in the Plan until he or she ceases to be an Eligible
Employee, withdraws from the Plan under Section 5(a) or is withdrawn from the
Plan under Section 5(b).  A Participant who withdrew from the Plan under
Section 5(a) or was withdrawn from the Plan under Section 5(b) may again become
a Participant, if he or she then is an Eligible Employee, by following the
procedure described in Subsection (c) above.
 
 
 
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(e) Applicable Offering Period.  One Offering Period may apply to a Participant
at one time.  The applicable Offering Period for a given Participant shall be
determined as follows:
 
(i) Once a Participant is enrolled in the Plan for an Offering Period, such
Offering Period shall continue to apply to him or her until the earliest of (A)
the end of such Offering Period, (B) the end of his or her participation under
Subsection (d) above, (C) enrollment by the Participant in a subsequent Offering
Period following a written request on the prescribed form to enroll in an
immediately subsequent Offering Period filed with the Company at the prescribed
location prior to the commencement of such subsequent Offering Period, which
shall only be effective if such Participant has designated on the enrollment
form filed with the Company at the prescribed location prior to the commencement
of such subsequent Offering Period that he or she elects to have withheld at
least 1% of Compensation in the first month of such subsequent Offering Period
or (D) automatic enrollment in a subsequent Offering Period under Paragraph (ii)
below.
 
(ii) In the event that the Fair Market Value of Stock on the last trading day
before the commencement of the Offering Period in which the Participant is
enrolled is higher than on the last trading day before the commencement of any
subsequent Offering Period, the Participant shall automatically be enrolled for
such subsequent Offering Period if the Participant has designated on the
enrollment form filed with the Company at the prescribed location prior to the
commencement of such subsequent Offering Period that he or she elects to have
withheld at least 1% of Compensation in the first month of such subsequent
Offering Period, unless the Participant has filed a written request on the
prescribed form not to be enrolled in such subsequent Offering Period with the
Company at the prescribed location prior to the commencement of such subsequent
Offering Period.
 
(iii) When a Participant reaches the end of an Offering Period but his or her
participation is to continue as the Participant has not discontinued payroll
deductions under Section 4(d) at the end of such Offering Period, then such
Participant shall be enrolled automatically for the Offering Period that
commences immediately thereafter unless such Participant does not comply with
the five percent limit outlined in Section 8(a) and in which case such
Participant shall be enrolled automatically in the next available Offering
Period in which such Participant complies with the five percent limit outlined
in Section 8(a) unless such Participant has ceased to participate in the Plan
under Section 3(d).
 
 
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SECTION 4.  
EMPLOYEE CONTRIBUTIONS.

 
(a) Frequency of Payroll Deductions.  A Participant may purchase shares of Stock
under the Plan solely by means of payroll deductions.  Payroll deductions, as
designated by the Participant pursuant to Subsection (b) below, shall occur on
each payday during participation in the Plan.
 
(b) Amount of Payroll Deductions.  An Eligible Employee shall designate on the
prescribed form the portion of his or her Compensation that he or she elects to
have withheld for the purchase of Stock.  Such portion shall be a whole
percentage of the Eligible Employee’s Compensation, but not less than 1% nor
more than 10%.  Any other provision of the Plan notwithstanding, no Participant
shall have more than $25,000 withheld in the aggregate during all Accumulation
Periods ending in the same calendar year.  If a Participant is precluded by this
Subsection (b) from making additional payroll deductions, then his or her
payroll deductions shall be discontinued automatically and shall resume at the
beginning of the earliest Accumulation Period ending in the next calendar year
(if he or she then is an Eligible Employee).
 
(c) Changing Withholding Rate.  If a Participant wishes to change the rate of
payroll withholding, he or she may do so by filing the prescribed form with the
Company at the prescribed location at any time.  The new withholding rate shall
be effective as soon as reasonably practicable after such form has been received
by the Company.  The new withholding rate shall be a whole percentage of the
Eligible Employee’s Compensation, but not less than 1% nor more than 10%.
 
(d) Discontinuing Payroll Deductions.  If a Participant wishes to discontinue
employee contributions entirely, he or she may do so by filing the prescribed
form with the Company at the prescribed location at any time.  Payroll
withholding shall cease as soon as reasonably practicable after such form has
been received by the Company.  (In addition, employee contributions may be
discontinued automatically pursuant to Section 4(b) or 8(b).)  A Participant who
has discontinued employee contributions may resume such contributions by filing
the prescribed form with the Company at the prescribed location.  Payroll
withholding shall resume as soon as reasonably practicable after such form has
been received by the Company.
 
(e) Limit on Number of Elections.  No Participant shall make more than two
elections under Subsection (c) or (d) above, combined, during any Accumulation
Period.
 
SECTION 5.  
WITHDRAWAL FROM THE PLAN.

 
(a) Withdrawal.  A Participant may elect to withdraw from the Plan by filing the
prescribed form with the Company at the prescribed location at any time before
the last day of an Accumulation Period.  As soon as reasonably practicable
thereafter, payroll deductions shall cease and the entire amount credited to the
Participant’s Plan Account shall be refunded to him or her in cash, without
interest.  No partial withdrawals shall be permitted.
 
(b) Failure to Participate.  A participant who did not purchase Stock under the
Plan during an Accumulation Period due to a decision to discontinue employee
contributions under Section 4(d) shall be deemed as failing to participate in
the Plan and shall be withdrawn from the Plan automatically.  As soon as
reasonably practicable thereafter, the entire amount credited to the
Participant’s Plan Account shall be refunded to him or her in cash, without
interest.
 
 
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(c) Re-Enrollment After Withdrawal.  A former Participant who has withdrawn or
was withdrawn from the Plan shall not be a Participant until he or she
re-enrolls in the Plan under Section 3(c).  Re-enrollment may be effective only
at the commencement of an Offering Period.
 
SECTION 6.  
CHANGE IN EMPLOYMENT STATUS.

 
(a) Termination of Employment.  Termination of employment as an Eligible
Employee for any reason, including death, shall be treated as an automatic
withdrawal from the Plan under Section 5(a).  (A transfer from one Participating
Company to another shall not be treated as a termination of employment.)
 
(b) Leave of Absence.  For purposes of the Plan, employment shall not be deemed
to terminate when the Participant goes on a military leave, a sick leave or
another bona fide leave of absence, if the leave was approved by the Company in
writing and if continued crediting of service for such purpose is expressly
required by the terms of such leave or by applicable law (as determined by the
Company).  Employment, however, shall be deemed to terminate 90 days after the
Participant goes on a leave, unless a contract or statute protects his or her
right to return to work.  Employment shall be deemed to terminate in any event
when the approved leave ends, unless the Participant immediately returns to
work.
 
(c) Death.  In the event of the Participant’s death, unless otherwise prohibited
by law, the amount credited to his or her Plan Account shall be paid to a
beneficiary designated by him or her for this purpose on the prescribed form or,
if none, to the Participant’s estate.  Such form shall be valid only if it was
filed with the Company at the prescribed location before the Participant’s death
and is not otherwise prohibited by law.
 
SECTION 7.  
PLAN ACCOUNTS AND PURCHASE OF SHARES.

 
(a) Plan Accounts.  The Company shall maintain a Plan Account on its books in
the name of each Participant.  Whenever an amount is deducted from the
Participant’s Compensation under the Plan, such amount shall be credited to the
Participant’s Plan Account.  Amounts credited to Plan Accounts shall not be
trust funds and may be commingled with the Company’s general assets and applied
to general corporate purposes.  No interest shall be credited to Plan Accounts.
 
(b) Purchase Price.  The Purchase Price for each share of Stock purchased at the
close of an Accumulation Period shall be 85% of the Fair Market Value of such
share on the last trading day in such Accumulation Period.
 
(c) Number of Shares Purchased.  As of the last day of each Accumulation Period,
each Participant shall be deemed to have elected to purchase the number of
shares of Stock calculated in accordance with this Subsection (c), unless the
Participant has previously elected to withdraw from the Plan in accordance with
Section 5(a).  The amount then in the Participant’s Plan Account shall be
divided by the Purchase Price, and the number of shares that results shall be
purchased from the Company with the funds in the Participant’s Plan
Account.  The foregoing notwithstanding, no Participant shall purchase more than
2,500 shares of Stock with respect to any Accumulation Period nor more than the
amounts of Stock set forth in Sections 8(b) and 12(a).  Any fractional share, as
calculated under this Subsection (c), shall be rounded down to the next lower
whole share.
 
 
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(d) Available Shares Insufficient.  In the event that the aggregate number of
shares that all Participants elect to purchase during an Accumulation Period
exceeds the maximum number of shares remaining available for issuance under
Section 12(a), then the number of shares to which each Participant is entitled
shall be determined by multiplying the number of shares available for issuance
by a fraction, the numerator of which is the number of shares that such
Participant has elected to purchase and the denominator of which is the number
of shares that all Participants have elected to purchase.
 
(e) Issuance of Stock.  Certificates representing the shares of Stock purchased
by a Participant under the Plan shall be issued to him or her as soon as
reasonably practicable after the close of the applicable Accumulation Period,
except that the Committee may determine that such shares shall be held for each
Participant’s benefit by a broker designated by the Committee (unless the
Participant has elected that certificates be issued to him or her).  Shares may
be registered in the name of the Participant or jointly in the name of the
Participant and his or her spouse as joint tenants with right of survivorship or
as community property.
 
(f) Unused Cash Balances.  An amount remaining in the Participant’s Plan Account
that represents the Purchase Price for any fractional share shall be carried
over in the Participant’s Plan Account to the next Accumulation Period.  Any
amount remaining in the Participant’s Plan Account that represents the Purchase
Price for whole shares that could not be purchased by reason of Subsection (c)
above, Section 8(b) or Section 12(a) shall be refunded to the Participant in
cash, without interest.
 
SECTION 8.  
LIMITATIONS ON STOCK OWNERSHIP.

 
(a) Five Percent Limit.  Any other provision of the Plan notwithstanding, no
Participant shall be granted a right to purchase Stock under the Plan if such
Participant, immediately after his or her election to purchase such Stock, would
own stock possessing 5% or more of the total combined voting power or value of
all classes of stock of the Company or any parent or Subsidiary of the
Company.  For purposes of this Subsection (a), the following rules shall apply:
 
(i) Ownership of stock shall be determined after applying the attribution rules
of section 424(d) of the Code;
 
(ii) Each Participant shall be deemed to own any stock that he or she has a
right or option to purchase under this or any other plan; and
 
(iii) Each Participant shall be deemed to have the right to purchase 25,000
shares of Stock under this Plan with respect to each Offering Period.
 
 
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(b) $25,000 Limit.  Any other provision of the Plan notwithstanding, no
Participant shall purchase Stock with a Fair Market Value (determined at the
time such purchase right option is granted) in excess of $25,000 during any
calendar year under this Plan and all other employee stock purchase plans of the
Company or any parent or Subsidiary of the Company.  For purposes of this
Subsection (b), employee stock purchase plans not described in section 423 of
the Code shall be disregarded.  If a Participant is precluded by this Subsection
(b) from purchasing additional Stock under the Plan, then his or her employee
contributions shall automatically be discontinued and shall resume at the
beginning of the earliest Accumulation Period ending in the next calendar year
(if he or she has remained a continuous Participant).  
 
SECTION 9.  
RIGHTS NOT TRANSFERABLE.

 
The rights of any Participant under the Plan, or any Participant’s interest in
any Stock or moneys to which he or she may be entitled under the Plan, shall not
be transferable by voluntary or involuntary assignment or by operation of law,
or in any other manner other than by beneficiary designation or the laws of
descent and distribution.  If a Participant in any manner attempts to transfer,
assign or otherwise encumber his or her rights or interest under the Plan, other
than by beneficiary designation or the laws of descent and distribution, then
such act shall be treated as an election by the Participant to withdraw from the
Plan under Section 5(a).
 
SECTION 10.  
NO RIGHTS AS AN EMPLOYEE.

 
Nothing in the Plan or in any right granted under the Plan shall confer upon the
Participant any right to continue in the employ of a Participating Company for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Participating Companies or of the Participant, which
rights are hereby expressly reserved by each, to terminate his or her employment
at any time and for any reason, with or without cause.
 
SECTION 11.  
NO RIGHTS AS A STOCKHOLDER.

 
A Participant shall have no rights as a stockholder with respect to any shares
of Stock that he or she may have a right to purchase under the Plan until such
shares have been purchased on the last day of the applicable Accumulation
Period.
 
SECTION 12.  
STOCK OFFERED UNDER THE PLAN.

 
(a) Authorized Shares.  The aggregate number of shares of Stock available for
purchase under the Plan shall be 3,250,000, subject to adjustment pursuant to
this Section 12.
 
(b) Anti-Dilution Adjustments.  The aggregate number of shares of Stock offered
under the Plan, the 2,500-share limitation described in Section 7(c) and the
price of shares that any Participant has elected to purchase shall be adjusted
proportionately as directed by the Committee for any increase or decrease in the
number of outstanding shares of Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, any other increase
or decrease in such shares effected without receipt or payment of consideration
by the Company, the distribution of the shares of a Subsidiary to the Company’s
stockholders or a similar event.
 
 
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(c) Reorganizations.  Any other provision of the Plan notwithstanding,
immediately prior to the effective time of a Change in Control, the Offering
Period and Accumulation Period then in progress shall terminate, shares shall be
purchased pursuant to Section 7 and any remaining unused balance in a given
Participant’s Plan Account shall be returned to such Participant.  In the event
of a merger or consolidation to which the Company is a constituent corporation
and which does not constitute a Change in Control, the Plan shall continue
unless the plan of merger or consolidation provides otherwise.  The Plan shall
in no event be construed to restrict in any way the Company’s right to undertake
a dissolution, liquidation, merger, consolidation or other reorganization.
 
SECTION 13.  
AMENDMENT OR DISCONTINUANCE.

 
The Board shall have the right to amend, suspend or terminate the Plan at any
time and without notice.  Except as provided in Section 12, any increase in the
aggregate number of shares of Stock to be issued under the Plan shall be subject
to approval by a vote of the stockholders of the Company.  In addition, any
other amendment of the Plan shall be subject to approval by a vote of the
stockholders of the Company to the extent required by an applicable law or
regulation.
 
SECTION 14.  
DEFINITIONS.

 
(a) “Accumulation Period” means a six-month period during which contributions
may be made toward the purchase of Stock under the Plan, as determined pursuant
to Section 3(b).
 
(b) “Board” means the Board of Directors of the Company, as constituted from
time to time.
 
(c) “Change in Control” means:
 
(i) The consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if more than 50% of the
combined voting power of the continuing or surviving entity’s securities
outstanding immediately after such merger, consolidation or other reorganization
is owned by persons who were not stockholders of the Company immediately prior
to such merger, consolidation or other reorganization; or
 
(ii) The sale, transfer or other disposition of all or substantially all of the
Company’s assets or the complete liquidation or dissolution of the Company.
 
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company’s incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transaction.
 
 
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(d) “Code” means the Internal Revenue Code of 1986, as amended.
 
(e) “Committee” means a committee of the Board, as described in Section 2.
 
(f) “Company” means Heska Corporation, a Delaware corporation.
 
(g) “Compensation” means (i) the total compensation paid in cash to a
Participant by a Participating Company, including salaries, wages, bonuses,
incentive compensation, commissions and overtime pay, plus (ii) any pre-tax
contributions made by the Participant under Section 401(k) or 125 of the
Code.  Compensation shall exclude moving or relocation allowances, car
allowances, imputed income attributable to cars or life insurance, fringe
benefits, contributions to employee benefit plans and similar items.  The
Committee shall determine whether a particular item is included in Compensation.
 
(h) “Eligible Employee” means any employee of a Participating Company whose
customary employment is for more than five months per calendar year and for more
than 20 hours per week.  The foregoing notwithstanding, an individual shall not
be considered an Eligible Employee if his or her participation in the Plan is
prohibited by the law of any country which has jurisdiction over him or her or
if he or she is subject to a collective bargaining agreement that does not
provide for participation in the Plan.
 
(i) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
(j) “Fair Market Value” means the market price of Stock, determined by the
Committee as follows:
 
(i) If Stock is normally listed on the Nasdaq Stock Market, then the Fair Market
Value shall be equal to the last transaction price reported by the Nasdaq Stock
Market;
 
(ii) If provision (i) above is not applicable and Stock is normally listed on a
stock exchange, then the Fair Market Value shall be equal to the last
transaction price reported by such stock exchange;
 
(iii) If provisions (i) and (ii) above are not applicable and Stock was traded
over-the-counter on the date in question, then the Fair Market Value shall be
equal to the last transaction price reported by the principal automated
inter-dealer quotation system on which Stock is quoted or, if the Stock is not
quoted on any such system, by the “Pink Sheets” published by the National
Quotation Bureau, Inc.; and
 
(iv) If none of the foregoing provisions is applicable or may be implemented,
then the Fair Market Value shall be determined by the Committee in good faith on
such basis as it deems appropriate.
 
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices as reported directly to the Company by the Nasdaq Stock
Market or a comparable exchange or as reported in The Wall Street Journal.  Such
determination shall be conclusive and binding on all persons.
 
 
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(k) “Offering Period” means the five-year period with respect to which the right
to purchase Stock may be granted under the Plan and during which contributions
may be made toward the purchase of Stock under the Plan, as determined pursuant
to Section 3(a).
 
(l) “Participant” means an Eligible Employee who elects to participate in the
Plan, as provided in Section 3(c).
 
(m) “Participating Company” means (i) the Company and (ii) each present or
future Subsidiary designated by the Committee as a Participating Company.
 
(n) “Plan” means this Heska Corporation 1997 Employee Stock Purchase Plan, as it
may be amended from time to time.
 
(o) “Plan Account” means the account established for each Participant pursuant
to Section 7(a).
 
(p) “Purchase Price” means the price at which Participants may purchase Stock
under the Plan, as determined pursuant to Section 7(b).
 
(q) “Stock” means the Common Stock of the Company.
 
(r) “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company, if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
 
SECTION 15.  
EXECUTION.

 
To record the most recent amendment of the Plan by the Board or its Committee on
May 4, 2010, the Company has caused its authorized officer to execute the same.
 
Heska Corporation

By:       /s/ Robert B. Grieve
Title:  Chairman and Chief Executive Officer

 

 
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