Exhibit 10.11

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”), is made effective March 29, 2006
(the “Effective Date”), between Heska Corporation, a Delaware corporation
(“Heska”) and Robert B. Grieve, Ph.D. (“Executive”).

 

RECITALS

 

Executive is currently the Chairman of Heska Board of Directors (the “Board”),
and Chief Executive Officer (“CEO”) of Heska. Executive and Heska entered into
an employment agreement dated February 23, 2000 (the “Prior Agreement”).

 

Executive and Heska now wish to enter into this new agreement regarding the
terms of Executive’s employment, which shall become effective upon execution.

 

AGREEMENT

 

In consideration of the promises, covenants and agreements set forth below, it
is mutually agreed:

 

1.             DUTIES AND SCOPE OF EMPLOYMENT.

 

(A)           POSITION AND DUTIES. AS OF THE EFFECTIVE DATE, EXECUTIVE WILL
CONTINUE TO SERVE AS CEO AND CHAIRMAN OF HESKA. EXECUTIVE WILL RENDER SUCH
BUSINESS AND PROFESSIONAL SERVICES IN THE PERFORMANCE OF HIS DUTIES, CONSISTENT
WITH EXECUTIVE’S POSITION WITHIN HESKA, AS WILL REASONABLY BE ASSIGNED TO HIM BY
THE BOARD. THE PERIOD OF EXECUTIVE’S EMPLOYMENT UNDER THIS AGREEMENT IS REFERRED
TO HEREIN AS THE “TERM OF AGREEMENT.”

 

(B)           BOARD MEMBERSHIP. 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. EXECUTIVE’S CONTINUING SERVICE AS
CHAIRMAN WILL BE SUBJECT TO THE DISCRETION OF THE CORPORATE GOVERNANCE COMMITTEE
AND THE BOARD, AND ANY DECISION OF THE BOARD TO SEPARATE THE POSITIONS OF CEO
AND CHAIRMAN WILL NOT AFFECT OR TRIGGER ANY OTHER PROVISION OF THIS AGREEMENT.

 

(C)           OBLIGATIONS. DURING THE TERM OF AGREEMENT, EXECUTIVE WILL DEVOTE
EXECUTIVE’S FULL BUSINESS EFFORTS AND TIME 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 (WHICH APPROVAL WILL NOT BE UNREASONABLY WITHHELD);
PROVIDED, HOWEVER, THAT EXECUTIVE MAY, WITHOUT THE APPROVAL OF THE BOARD OR THE
CORPORATE GOVERNANCE COMMITTEE, SERVE IN ANY CAPACITY WITH ANY CIVIC,
EDUCATIONAL OR CHARITABLE ORGANIZATION, PROVIDED SUCH SERVICES DO NOT INTERFERE
WITH EXECUTIVE’S OBLIGATIONS TO HESKA.

 

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2.             AT-WILL EMPLOYMENT. SUBJECT TO THE PROVISIONS OF PARAGRAPHS 3, 4,
7 AND 8 BELOW, EXECUTIVE AND HESKA AGREE THAT EXECUTIVE’S EMPLOYMENT CONSTITUTES
“AT-WILL” EMPLOYMENT. EXECUTIVE AND HESKA ACKNOWLEDGE THAT THIS EMPLOYMENT
RELATIONSHIP MAY BE TERMINATED AT ANY TIME, UPON WRITTEN NOTICE TO THE OTHER
PARTY (WHICH IN THE CASE OF HESKA WILL MEAN THE BOARD), WITH OR WITHOUT GOOD
CAUSE OR FOR ANY OR NO CAUSE, AT THE OPTION EITHER OF HESKA OR EXECUTIVE.
HOWEVER, AS DESCRIBED IN THIS AGREEMENT, EXECUTIVE WILL BE ENTITLED TO SEVERANCE
BENEFITS DEPENDING UPON THE CIRCUMSTANCES OF EXECUTIVE’S TERMINATION OF
EMPLOYMENT. IN THE EVENT HESKA TERMINATES EXECUTIVE’S EMPLOYMENT FOR “CAUSE” AS
DEFINED IN SECTION 9(B) BELOW, SUCH WRITTEN NOTICE SHALL DETAIL THE REASONS FOR
TERMINATION. UPON THE TERMINATION OF EXECUTIVE’S EMPLOYMENT FOR ANY REASON, AND
WITHOUT DIMINUTION, EXECUTIVE WILL BE ENTITLED TO PAYMENT OF ALL ACCRUED BUT
UNPAID COMPENSATION, VACATION, EXPENSE REIMBURSEMENTS, AND OTHER BENEFITS DUE TO
EXECUTIVE THROUGH HIS TERMINATION DATE UNDER ANY COMPANY-PROVIDED OR PAID PLANS,
POLICIES, AND ARRANGEMENTS. EXECUTIVE AGREES TO RESIGN FROM ALL POSITIONS THAT
HE HOLDS WITH HESKA, INCLUDING, WITHOUT LIMITATION, HIS POSITION AS A MEMBER OF
THE BOARD, IMMEDIATELY FOLLOWING THE TERMINATION OF HIS EMPLOYMENT IF THE BOARD
SO REQUESTS.

 

3.             TERM OF AGREEMENT. THIS AGREEMENT WILL HAVE AN INITIAL TERM OF
THREE YEARS COMMENCING ON THE EFFECTIVE DATE. ON THE THIRD ANNIVERSARY OF THE
EFFECTIVE DATE, AND ON EACH ANNUAL ANNIVERSARY OF THE EFFECTIVE DATE THEREAFTER,
THIS AGREEMENT AUTOMATICALLY WILL RENEW FOR AN ADDITIONAL ONE-YEAR TERM UNLESS
HESKA PROVIDES EXECUTIVE WITH NOTICE OF NON-RENEWAL AT LEAST 180 DAYS PRIOR TO
THE DATE OF AUTOMATIC RENEWAL.

 

4.             CASH COMPENSATION; VACATION.

 

(A)           BASE SALARY. DURING FISCAL YEAR 2006, HESKA WILL PAY EXECUTIVE AN
ANNUAL SALARY OF $341,000 AS COMPENSATION FOR HIS SERVICES (THE “BASE SALARY”).
THE BASE SALARY WILL BE PAID PERIODICALLY IN ACCORDANCE WITH HESKA’S NORMAL
PAYROLL PRACTICES AND BE SUBJECT TO THE USUAL, REQUIRED WITHHOLDING. EXECUTIVE’S
SALARY WILL BE SUBJECT TO REVIEW, AND ADJUSTMENTS WILL BE MADE BY THE
COMPENSATION COMMITTEE OF THE BOARD (THE “COMMITTEE”) BASED UPON HESKA’S
STANDARD PRACTICES.

 

(B)           ANNUAL BONUS. DURING THE TERM OF AGREEMENT, EXECUTIVE WILL BE
ELIGIBLE TO PARTICIPATE IN THE MANAGEMENT INCENTIVE PLAN (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 ANNUAL 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. 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 4(B) WILL BE PAYABLE WITHIN TWO-AND-ONE-HALF 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 TO SUCH BONUSES.

 

(C)           VACATION. EXECUTIVE SHALL CONTINUE TO ACCRUE VACATION AND/OR PAID
TIME OFF AT THE SAME RATE AND ON THE SAME COMPENSATION BASIS THAT HE ACCRUED
VACATION AND/OR PAID TIME OFF AS OF JANUARY 1, 2006 (OR AT SUCH GREATER RATE
THAT MAY, UNDER HESKA POLICY ADOPTED FROM TIME TO TIME, APPLY TO HESKA’S
EXECUTIVE OFFICERS).

 

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5.             EXPENSES. IN ADDITION TO THE FOREGOING, HESKA WILL REIMBURSE
EXECUTIVE FOR HIS REASONABLE OUT-OF-POCKET TRAVEL, ENTERTAINMENT, AND OTHER
EXPENSES, IN ACCORDANCE WITH HESKA’S EXPENSE REIMBURSEMENT POLICIES AS IN EFFECT
FROM TIME TO TIME.

 

6.             EMPLOYEE BENEFITS. DURING THE TERM OF AGREEMENT, EXECUTIVE WILL
BE ELIGIBLE TO PARTICIPATE IN ACCORDANCE WITH THE TERMS OF ALL HESKA EMPLOYEE
BENEFIT PLANS, POLICIES, AND ARRANGEMENTS THAT ARE APPLICABLE TO OTHER SENIOR
EXECUTIVES OF HESKA, AS SUCH PLANS, POLICIES, AND ARRANGEMENTS MAY EXIST FROM
TIME TO TIME.

 

7.             SEVERANCE.

 

(A)           TERMINATION WITHOUT CAUSE OR FOR GOOD REASON OTHER THAN IN
CONNECTION WITH A CHANGE OF CONTROL. IF EXECUTIVE’S EMPLOYMENT IS TERMINATED BY
HESKA WITHOUT CAUSE, OR BY EXECUTIVE FOR GOOD REASON, OR IS TERMINATED DUE TO
THE DEATH OR DISABILITY (AS DEFINED IN SECTION 9(E) BELOW) OF EXECUTIVE, AND THE
TERMINATION IS NOT IN CONNECTION WITH A CHANGE OF CONTROL, EXECUTIVE WILL
RECEIVE SUBJECT TO SECTION 8:

 

(I)          A PAYMENT OF AN AMOUNT EQUAL TO 12 MONTHS OF HIS BASE SALARY,
PAYABLE IN ACCORDANCE WITH HESKA’S STANDARD PAYROLL PRACTICES OVER THE SHORTER
OF THE FOLLOWING PERIODS (I) IN EQUAL INSTALLMENTS OVER THE PERIOD BEGINNING ON
THE DATE OF SUCH TERMINATION AND ENDING ON THE ONE-YEAR ANNIVERSARY THEREOF, OR
(II) IN EQUAL INSTALLMENTS ON A MONTHLY BASIS CORRESPONDING TO THE AMOUNT HE
WOULD NORMALLY RECEIVE AS SALARY EACH MONTH IF HE WERE STILL EMPLOYED, 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)           COMPANY-PAID COVERAGE FOR EXECUTIVE AND EXECUTIVE’S ELIGIBLE
DEPENDENTS UNDER HESKA’S BENEFITS PLANS (AS DEFINED BELOW) FOR 12 MONTHS, OR IF
EARLIER, UNTIL EXECUTIVE BECOMES EMPLOYED BY ANOTHER EMPLOYER WHO PROVIDES
COMPARABLE BENEFITS;

 

(III)          A BONUS, IF ANY, THAT WOULD HAVE BEEN RECEIVED UNDER THE TERMS OF
THE BONUS PLAN BUT PRO-RATED FOR THE PERIOD BEGINNING JANUARY 1 AND ENDING ON
HIS SEPARATION DATE, TO BE PAID TO EXECUTIVE IN THE NEXT FISCAL YEAR WHEN
PAYMENTS ARE MADE TO OTHER PARTICIPANTS IN THE BONUS PLAN; AND

 

(IV)          12 MONTHS OF ACCELERATED VESTING OF EQUITY AWARDS HELD BY
EXECUTIVE AT THE TIME OF HIS TERMINATION. IN ADDITION, EXECUTIVE WILL HAVE UNTIL
THE LATER OF DECEMBER 31 OF THE CALENDAR YEAR IN WHICH, OR THE 15TH DAY OF THE
THIRD MONTH FOLLOWING THE DATE, THE AWARD WOULD OTHERWISE (BUT FOR THIS SECTION
7(A)(IV)) HAVE EXPIRED TO EXERCISE SUCH AWARD.

 

(B)           TERMINATION WITHOUT CAUSE OR FOR GOOD REASON IN CONNECTION WITH A
CHANGE OF CONTROL. IF 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, THEN, SUBJECT TO SECTION 8, EXECUTIVE WILL RECEIVE:

 

(I)            A PAYMENT OF AN AMOUNT EQUAL TO 24 MONTHS OF HIS BASE SALARY,
PAYABLE IN EQUAL INSTALLMENTS IN ACCORDANCE WITH THE STANDARD PAYROLL SCHEDULE
OVER THE

 

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SHORTER OF THE FOLLOWING PERIODS (I) THE PERIOD BEGINNING ON THE DATE OF SUCH
TERMINATION AND ENDING ON THE ONE-YEAR ANNIVERSARY THEREOF, OR (II) THE PERIOD
BEGINNING ON THE DATE OF SUCH TERMINATION AND ENDING ON MARCH 15 OF THE YEAR
FOLLOWING THE YEAR OF TERMINATION;

 

(II)           A LUMP SUM PAYMENT EQUAL TO THE HIGHER OF (A) TWO TIMES
EXECUTIVE’S TARGET BONUS FOR THE YEAR IN WHICH THE CHANGE OF CONTROL OCCURRED,
OR (B) THE HIGHEST ANNUAL BONUS PAID TO EXECUTIVE OVER THE PRECEDING 3 FISCAL
YEARS;

 

(III)          COMPANY-PAID COVERAGE FOR EXECUTIVE AND EXECUTIVE’S ELIGIBLE
DEPENDENTS UNDER HESKA’S BENEFITS PLANS FOR 24 MONTHS FOLLOWING THE TERMINATION
DATE, OR IF EARLIER, UNTIL EXECUTIVE BECOMES EMPLOYED BY ANOTHER EMPLOYER WHO
PROVIDES COMPARABLE BENEFITS; AND

 

(IV)          FULL (100%) ACCELERATION OF VESTING OF ANY UNVESTED EQUITY AWARDS
HELD BY EXECUTIVE AT THE TIME OF HIS TERMINATION. IN ADDITION, TO THE EXTENT
SUCH AWARDS ARE NOT (AFTER TAKING INTO ACCOUNT SUCH ACCELERATED VESTING)
TERMINATED IN CONNECTION WITH THE CLOSING OF THE CHANGE OF CONTROL, THEN
EXECUTIVE WILL HAVE UNTIL THE LATER OF DECEMBER 31 OF THE CALENDAR YEAR IN
WHICH, OR THE 15TH DAY OF THE THIRD MONTH FOLLOWING THE DATE, THE AWARD WOULD
OTHERWISE (BUT FOR THIS SECTION 7(B)(IV)) HAVE EXPIRED TO EXERCISE SUCH AWARD.

 

(C)           VOLUNTARY TERMINATION WITHOUT GOOD REASON; TERMINATION FOR CAUSE.
IF 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), AND (III) EXECUTIVE WILL NOT
BE ENTITLED TO ANY SEVERANCE BUT EXECUTIVE WILL BE PAID ALL ACCRUED BUT UNPAID
VACATION, EXPENSE REIMBURSEMENTS AND OTHER BENEFITS DUE TO EXECUTIVE THROUGH HIS
TERMINATION DATE UNDER ANY COMPANY-PROVIDED OR PAID PLANS, POLICIES, AND
ARRANGEMENTS.

 

(D)           REFORMATION OF AGREEMENT. IT IS THE PARTIES’ INTENT THAT NO
PAYMENT MADE OR TO BE MADE HEREUNDER SHALL BE SUBJECT TO THE PROVISIONS OF
SECTION 409A(A)(1)(B) OF THE INTERNAL REVENUE CODE. ACCORDINGLY, NOTWITHSTANDING
ANY PAYMENT DATE OR SCHEDULE SPECIFIED ABOVE, THE PARTIES AGREE TO WORK
EXPEDITIOUSLY TO AMEND THIS AGREEMENT TO CONFORM TO THEIR INTENT AS SET FORTH IN
THIS SECTION 7(D). NOTWITHSTANDING ANYTHING IN THIS SECTION 7 TO THE CONTRARY,
TO THE EXTENT THAT HESKA IN GOOD FAITH DETERMINES THAT ANY PAYMENT PROVIDED FOR
IN THIS SECTION 7 CONSTITUTES A “DEFERRAL OF COMPENSATION” UNDER CODE SECTION
409A, NO AMOUNTS SHALL BE PAYABLE TO EXECUTIVE PRIOR TO THE EARLIEST OF (A)
EXECUTIVE’S DEATH OR “DISABILITY” (WITHIN THE MEANING OF CODE SECTION
409A(A)(2)(C)) FOLLOWING THE TERMINATION DATE, (B) THE DATE THAT IS SIX MONTHS
FOLLOWING THE DATE OF EXECUTIVE’S “SEPARATION FROM SERVICE” WITH THE COMPANY
(WITHIN THE MEANING OF CODE SECTION 409A), OR (C) THE EFFECTIVE DATE OF A CHANGE
IN THE OWNERSHIP OR EFFECTIVE CONTROL OF THE COMPANY, OR IN THE OWNERSHIP OF A
SUBSTANTIAL PORTION OF THE ASSETS OF THE COMPANY (IN EACH CASE WITHIN THE
MEANING OF CODE SECTION 409A).

 

(E)           EXCISE TAX. IN THE EVENT THAT ANY BENEFITS PAYABLE TO EXECUTIVE
PURSUANT TO THIS AGREEMENT (“TERMINATION BENEFITS”) (I) CONSTITUTE “PARACHUTE
PAYMENTS” WITHIN THE MEANING OF SECTION 280G OF THE INTERNAL REVENUE CODE, OR
ANY COMPARABLE SUCCESSOR PROVISIONS,

 

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AND (II) BUT FOR THIS SECTION 7(E) 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 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
THE COMPANY AND EXECUTIVE OTHERWISE AGREE IN WRITING, ANY DETERMINATION REQUIRED
UNDER THIS SECTION 7(E) SHALL BE MADE IN WRITING IN GOOD FAITH BY THE COMPANY’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 THE COMPANY OF WHICH BENEFITS HE
CHOOSES TO REDUCE WITHIN TEN (10) DAYS AFTER WRITTEN NOTICE OF THE ACCOUNTANTS’
DETERMINATION, AND EXECUTIVE HAS NOT DISPUTED THE ACCOUNTANTS’ DETERMINATION,
THEN THE COMPANY SHALL SELECT THE BENEFITS TO BE REDUCED. FOR PURPOSES OF MAKING
THE CALCULATIONS REQUIRED BY THIS SECTION 7(E), 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. THE COMPANY 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 7(E). THE
COMPANY SHALL BEAR ALL COSTS THE ACCOUNTANTS MAY REASONABLY INCUR IN CONNECTION
WITH ANY CALCULATIONS CONTEMPLATED BY THIS SECTION 7(E).

 

8.             CONDITIONS TO RECEIPT OF SEVERANCE; NO DUTY TO MITIGATE.

 

(A)           SEPARATION AGREEMENT AND RELEASE OF CLAIMS. THE RECEIPT OF ANY
SEVERANCE PURSUANT TO SECTION 7 WILL BE SUBJECT TO EXECUTIVE SIGNING AND NOT
REVOKING A SEPARATION AGREEMENT AND RELEASE OF CLAIMS IN A FORM REASONABLY
ACCEPTABLE TO HESKA. SUCH AGREEMENT WILL PROVIDE (AMONG OTHER THINGS) THAT THE
PARTIES WILL NOT DISPARAGE EACH OTHER OR THE COMPANY, ITS DIRECTORS, OR ITS
EXECUTIVE OFFICERS. NO SEVERANCE WILL BE PAID OR PROVIDED UNTIL THE SEPARATION
AGREEMENT AND RELEASE AGREEMENT BECOMES EFFECTIVE WHICH SHALL BE PREPARED AND
EXECUTED BEFORE THE TERMINATION DATE.

 

(B)           NON-COMPETITION. IN THE EVENT OF A TERMINATION OF EXECUTIVE’S
EMPLOYMENT THAT OTHERWISE WOULD ENTITLE EXECUTIVE TO THE RECEIPT OF SEVERANCE
PURSUANT TO SECTION 7(B), EXECUTIVE AGREES NOT TO ENGAGE IN COMPETITION (AS
DEFINED BELOW) FOR 12 MONTHS FOLLOWING THE TERMINATION DATE. IF EXECUTIVE
ENGAGES IN COMPETITION WITHIN SUCH PERIOD ALL CONTINUING PAYMENTS AND BENEFITS
TO WHICH EXECUTIVE OTHERWISE MAY BE ENTITLED PURSUANT TO SECTION 7(B) WILL CEASE
IMMEDIATELY. IN ADDITION TO THE REMEDY SPECIFIED IN THE PRECEDING SENTENCE, THE
COMPANY WILL HAVE AGAINST EXECUTIVE IN THE EVENT OF HIS BREACH OF THIS SECTION
8(B) ANY AND ALL REMEDIES AVAILABLE TO IT IN LAW OR IN EQUITY, INCLUDING WITHOUT
LIMITATION THE RIGHT TO SEEK RECOVERY OF ANY AMOUNTS PAID UNDER SECTION 7 OF
THIS AGREEMENT.

 

(C)           NONSOLICITATION. IN THE EVENT OF A TERMINATION OF EXECUTIVE’S
EMPLOYMENT THAT OTHERWISE WOULD ENTITLE EXECUTIVE TO THE RECEIPT OF SEVERANCE
PURSUANT TO SECTION 7, EXECUTIVE AGREES THAT, FOR 24 MONTHS FOLLOWING THE
TERMINATION DATE, EXECUTIVE, DIRECTLY OR INDIRECTLY, WHETHER AS EMPLOYEE, OWNER,
SOLE PROPRIETOR, PARTNER, DIRECTOR, MEMBER, CONSULTANT,

 

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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 THE COMPANY (THE “NO-INDUCEMENT”), AND (II) NOT INTENTIONALLY DIVERT
BUSINESS AWAY FROM THE COMPANY BY SOLICITING BUSINESS FROM ANY OF THE COMPANY’S
SUBSTANTIAL CUSTOMERS AND USERS WHO WOULD OTHERWISE HAVE PLACED THE SOLICITED
ORDER WITH THE COMPANY (THE “NO SOLICIT”). IF EXECUTIVE BREACHES THE
NO-INDUCEMENT OR NO SOLICIT, ALL CONTINUING PAYMENTS AND BENEFITS TO WHICH
EXECUTIVE OTHERWISE MAY BE ENTITLED PURSUANT TO SECTION 7 WILL CEASE
IMMEDIATELY. IN ADDITION TO THE REMEDY SPECIFIED IN THE PRECEDING SENTENCE, THE
COMPANY WILL HAVE AGAINST EXECUTIVE IN THE EVENT OF HIS BREACH OF THIS SECTION
8(C) ANY AND ALL REMEDIES AVAILABLE TO IT IN LAW OR IN EQUITY, INCLUDING WITHOUT
LIMITATION THE RIGHT TO SEEK RECOVERY OF ANY AMOUNTS PAID UNDER SECTION 7 OF
THIS AGREEMENT.

 

(D)           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.

 

9.             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 BY WAY OF LIMITATION, 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. SUBJECT TO THE IMMEDIATELY PRECEDING SENTENCE, HESKA, OR ITS
SUCCESSOR, MAY, AT ITS OPTION, SATISFY ANY REQUIREMENT THAT HESKA PROVIDE
COVERAGE UNDER ANY BENEFIT PLAN BY INSTEAD PROVIDING COVERAGE UNDER A SEPARATE
PLAN OR PLANS PROVIDING COVERAGE THAT IS NO LESS FAVORABLE OR BY PAYING
EXECUTIVE A LUMP-SUM PAYMENT WHICH IS, ON AN AFTER-TAX BASIS, SUFFICIENT TO
PROVIDE EXECUTIVE AND EXECUTIVE’S ELIGIBLE DEPENDENTS WITH EQUIVALENT COVERAGE
UNDER A THIRD PARTY PLAN THAT IS REASONABLY AVAILABLE TO EXECUTIVE AND
EXECUTIVE’S ELIGIBLE DEPENDENTS.

 

(B)           CAUSE. FOR PURPOSES OF THIS AGREEMENT, “CAUSE” SHALL MEAN THE
OCCURRENCE OF ONE OR MORE OF THE FOLLOWING: (I) CONVICTION OF, OR A ENTRY OF A
PLEA OF NOLO CONTENDERE TO, ANY CRIME (INCLUDING ONE INVOLVING MORAL TURPITUDE),
WHETHER A FELONY OR MISDEMEANOR, 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

 

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HESKA WHICH RESULTS IN MATERIAL DAMAGE TO HESKA OR ITS BUSINESS; PROVIDED THAT
IF ANY OF THE FOREGOING EVENTS IS CAPABLE OF BEING CURED, HESKA WILL PROVIDE
NOTICE TO EXECUTIVE DESCRIBING THE NATURE OF SUCH EVENT AND EXECUTIVE WILL
THEREAFTER HAVE 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 HIS EMPLOYMENT
FOR CAUSE.

 

(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 HE, WITHOUT THE CONSENT OF THE BOARD
OR AN AUTHORIZED OFFICER OF ANY SUCCESSOR COMPANY TO HESKA, FOLLOWING A CHANGE
OF CONTROL AND FOLLOWING A TERMINATION OF HIS EMPLOYMENT DESCRIBED IN SECTION
7(B), DIRECTLY OR INDIRECTLY PROVIDES SERVICES RELATING TO THE COMPANION ANIMAL
HEALTH INDUSTRY (WHETHER AS AN EMPLOYEE, CONSULTANT, AGENT, CORPORATE OFFICER,
DIRECTOR, OR OTHERWISE) TO, OR PARTICIPATES IN THE FINANCING, OPERATION,
MANAGEMENT, OR CONTROL OF A “RESTRICTED COMPANY OR A “RESTRICTED DIVISION” AS
IDENTIFIED IN WRITING BY HESKA AND EXECUTIVE. NOTWITHSTANDING THE FOREGOING,
NOTHING CONTAINED IN THIS SECTION 9(D) OR IN SECTION 8(B) ABOVE SHALL PROHIBIT
EXECUTIVE FROM BEING EMPLOYED OR ENGAGED IN A CORPORATE FUNCTION OR SENIOR
MANAGEMENT POSITION (AND HOLDING COMMENSURATE EQUITY INTERESTS) WITH A
RESTRICTED COMPANY THAT IS ENGAGED IN MULTIPLE LINES OF BUSINESS, ONE OF WHICH
INCLUDES A RESTRICTED DIVISION, SO LONG AS EXECUTIVE DOES NOT PROVIDE TO THE
RESTRICTED DIVISION SERVICES OF A SORT THAT DIFFER SIGNIFICANTLY FROM THE
SERVICES HE PROVIDES TO THE OTHER DIVISIONS, UNITS OR AFFILIATES FOR WHICH HE
HAS RESPONSIBILITY WITHIN THE OVERALL ORGANIZATION.

 

(E)           DISABILITY. FOR PURPOSES OF THIS AGREEMENT, DISABILITY SHALL HAVE
THE SAME DEFINED MEANING AS IN HESKA’S LONG-TERM DISABILITY PLAN APPLICABLE TO
SENIOR EXECUTIVE OFFICERS.

 

(F)            GOOD REASON FOR PURPOSES OF THIS AGREEMENT, “GOOD REASON” MEANS
THE OCCURRENCE OF ANY OF THE FOLLOWING WITHOUT EXECUTIVE’S EXPRESS WRITTEN
CONSENT:

 

(I)            EXECUTIVE’S POSITION WITH HESKA IS, OR HIS DUTIES AND
RESPONSIBILITIES AS CEO ARE, MATERIALLY DIMINISHED RELATIVE TO HIS POSITION,
DUTIES AND

 

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RESPONSIBILITIES AS IN EFFECT IMMEDIATELY PRIOR TO SUCH CHANGE, OTHER THAN THE
REMOVAL FROM THE POSITION OF CHAIRMAN IF THE BOARD DECIDES TO SEPARATE THE ROLES
OF CEO AND CHAIRMAN;

 

(II)           A REDUCTION IN EXECUTIVE’S BASE SALARY AS IN EFFECT IMMEDIATELY
PRIOR TO SUCH REDUCTION; 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 REDUCTION;

 

(III)          A RELOCATION OF EXECUTIVE’S PRINCIPAL PLACE OF EMPLOYMENT SUCH
THAT THE NEW LOCATION RESULTS IN A COMMUTE FOR EXECUTIVE THAT IS BOTH (A) LONGER
THAN HIS COMMUTE PRIOR TO THE RELOCATION AND (B) GREATER THAN FIFTY (50) ROAD
MILES EACH WAY FROM HIS HOME IN THE SEVERANCE, COLORADO AREA;

 

(IV)          ANY MATERIAL BREACH BY HESKA OF ANY PROVISION OF THIS AGREEMENT,
AFTER WRITTEN NOTICE DELIVERED TO HESKA OF SUCH BREACH AND HESKA’S FAILURE TO
CURE SUCH BREACH, IF CURABLE, WITHIN THIRTY (30) DAYS FOLLOWING DELIVERY OF SUCH
NOTICE; AND

 

(V)           ANY ACQUIRING COMPANY FAILS TO ASSUME OR BE BOUND BY THE TERMS OF
THIS AGREEMENT IN CONNECTION WITH A CHANGE OF CONTROL.

 

(G)           IN CONNECTION WITH A CHANGE OF CONTROL. FOR PURPOSES OF THIS
AGREEMENT, A TERMINATION OF EXECUTIVE’S EMPLOYMENT WITH THE COMPANY 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 MONTHS PRIOR
TO A CHANGE OF CONTROL AND ENDING EIGHTEEN MONTHS FOLLOWING A CHANGE OF CONTROL.

 

10.           INDEMNIFICATION AND INSURANCE. EXECUTIVE WILL BE COVERED UNDER
HESKA’S INSURANCE POLICIES AND, SUBJECT TO APPLICABLE LAW, WILL BE PROVIDED
INDEMNIFICATION TO THE MAXIMUM EXTENT PERMITTED BY HESKA’S BYLAWS AND
CERTIFICATE OF INCORPORATION. THE COMPANY WILL PROVIDE EXECUTIVE WITH DIRECTOR
AND OFFICER ERROR AND OMISSIONS INSURANCE AND ERISA FIDUCIARY INSURANCE IN
ACCORDANCE WITH THE HESKA’S INSURANCE PRACTICES FOR EXECUTIVE OFFICERS DURING
THE TERM OF AGREEMENT, AND SHALL ALSO PURCHASE AND MAINTAIN “TAIL COVERAGE” FOR
AT LEAST TWO YEARS POST TERMINATION FOR ANY ACTIONS TAKEN BY EXECUTIVE IN GOOD
FAITH DURING THE TERM OF AGREEMENT.

 

11.           CONFIDENTIAL INFORMATION. EXECUTIVE ACKNOWLEDGES THAT HE HAS
EXECUTED HESKA’S STANDARD EMPLOYEE CONFIDENTIAL INFORMATION AND INVENTION
AGREEMENT (THE “CONFIDENTIALITY AGREEMENT”). DURING THE TERM OF AGREEMENT, AND
FOR TWO YEARS AFTER TERMINATION IF REQUESTED BY HESKA, EXECUTIVE AGREES TO
EXECUTE ANY UPDATED VERSIONS OF THE COMPANY’S FORM OF EMPLOYEE CONFIDENTIAL
INFORMATION AGREEMENT AS MAY BE REQUIRED OF SUBSTANTIALLY ALL OF THE COMPANY’S
EXECUTIVE OFFICERS.

 

12.           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 DAY AFTER BEING DELIVERED TO A
NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE OR (C) FIVE (5) BUSINESS DAYS
AFTER THE DATE OF MAILING IF SENT CERTIFIED OR REGISTERED MAIL. NOTICE

 

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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 EXECUTIVES LAST KNOWN ADDRESS PROVIDED TO HESKA.

 

13.           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 OF HESKA WILL BE DEEMED SUBSTITUTED FOR HESKA UNDER THE TERMS OF THIS
AGREEMENT FOR ALL PURPOSES. FOR THIS PURPOSE, “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.

 

14.           INTEGRATION. THIS AGREEMENT, TOGETHER WITH THE CONFIDENTIAL
AGREEMENT, HESKA’S STOCK PLANS, EXECUTIVE’S STOCK OPTION AND 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.

 

15.           INTERPRETATION. ARTICLE TITLES AND SECTION 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.

 

16.           EXPENSES. THE COMPANY WILL REIMBURSE EXECUTIVE, UP TO $7,500, FOR
REASONABLY LEGAL AND TAX ADVICE EXPENSES INCURRED BY HIM IN CONNECTION WITH THE
NEGOTIATION AND EXECUTION OF THIS AGREEMENT.

 

17.           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.

 

18.           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

 

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SUCH INVALID, ILLEGAL OR UNENFORCEABLE PROVISION OR PROVISIONS OR ANY OTHER
PROVISIONS HEREOF, UNLESS SUCH A CONSTRUCTION WOULD BE UNREASONABLE.

 

19.           TAX MATTERS.

 

(A)           EXCEPT AS PROVIDED IN PARAGRAPH 7(E) ABOVE, EXECUTIVE AGREES THAT
HE 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 HIS 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. EXECUTIVE AND HESKA AGREE TO
COOPERATE TO MAKE SUCH AMENDMENTS TO THE TERMS OF THIS AGREEMENT AS MAY BE
NECESSARY TO AVOID THE IMPOSITION OF PENALTIES AND ADDITIONAL TAXES UNDER
SECTION 409A OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED; PROVIDED HOWEVER,
THAT NO SUCH AMENDMENT SHALL MATERIALLY INCREASE THE COST TO, OR IMPOSE ANY
LIABILITY ON, HESKA WITH RESPECT TO ANY BENEFITS CONTEMPLATED OR PROVIDED
HEREUNDER.

 

(B)           EXECUTIVE ACKNOWLEDGES THAT NO REPRESENTATIVE OR AGENT OF HESKA
HAS PROVIDED HIM WITH ANY TAX ADVICE OF ANY NATURE, AND EXECUTIVE HAS CONSULTED
WITH HIS OWN LEGAL, TAX AND FINANCIAL ADVISOR(S) AS TO TAX AND RELATED MATTERS
CONCERNING THE COMPENSATION TO BE RECEIVED UNDER THIS AGREEMENT.

 

20.           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.

 

21.           ARBITRATION; ATTORNEYS’ FEES. IF ANY DISPUTE ARISES UNDER THIS
AGREEMENT OR BY REASON OF ANY ASSERTED BREACH OF IT, OR FROM THE PARTIES’
EMPLOYMENT 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.

 

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22.           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

 

IN WITNESS WHEREOF, HESKA HAS CAUSED THIS EMPLOYMENT AGREEMENT TO BE DULY
EXECUTED BY AN OFFICER THEREUNTO DULY AUTHORIZED, AND EXECUTIVE HAS HEREUNTO SET
HIS HAND, ALL AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.

 

 

HESKA CORPORATION

 

 

 

 

 

/s/ PETER EIO

 

 

Peter Eio, Chair of the Compensation Committee Acting
with Authority of the Board in its Entirety

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

/s/ ROBERT B. GRIEVE

 

 

Robert B. Grieve, Ph.D.

 

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