Exhibit 10.1

Heska Corporation
1997 Stock Incentive Plan
(As Amended March 6, 2007 and May 5, 2009,
Amended and Restated on February 22, 2012,
Further Amended on March 25, 2014
And Further Amended and Restated on May 6, 2014)

Table of Contents

ARTICLE 1. INTRODUCTION 1       ARTICLE 2. ADMINISTRATION 1 2.1 Committee
Composition  1 2.2 Committee Responsibilities  2       ARTICLE 3. SHARES
AVAILABLE FOR GRANTS 2 3.1 Basic Limitation  2 3.2 Annual Increase in Shares  2
3.3 Additional Shares  3 3.4 One Time Increase  3       ARTICLE 4. ELIGIBILITY
 3 4.1 Nonstatutory Stock Options and Restricted Shares  3 4.2 Incentive Stock
Options  3       ARTICLE 5. OPTIONS 3 5.1 Stock Option Agreement 3 5.2 Number of
Shares 3 5.3 Exercise Price 4 5.4 Exercisability and Term 4 5.5 Effect of Change
in Control 4 5.6 Modification or Assumption of Options 4 5.7 Buyout Provisions 4
      ARTICLE 6. PAYMENT FOR OPTION SHARES 5 6.1 General Rule 5 6.2 Surrender of
Stock 5 6.3 Exercise/Sale 5 6.4 Exercise/Pledge 5 6.5 Promissory Note 5 6.6
Other Forms of Payment 5       ARTICLE 7. [RESERVED] 6     ARTICLE 8. RESTRICTED
SHARES 6

8.1 

Time, Amount and Form of Awards 6 8.2 Payment for Awards 6 8.3 Vesting
Conditions 6 8.4 Voting and Dividend Rights 6

 

 

 

8.5 Section 162(m) Performance Restrictions 6       ARTICLE 9. PROTECTION
AGAINST DILUTION 9 9.1 Adjustments 9 9.2 Dissolution or Liquidation 9 9.3
Reorganizations 9       ARTICLE 10. AWARDS UNDER OTHER PLANS 10     ARTICLE 11.
LIMITATION ON RIGHTS 10 11.1 Retention Rights 10 11.2 Stockholders’ Rights 10
11.3 Regulatory Requirements 10       ARTICLE 12. WITHHOLDING TAXES 10 12.1
General 10 12.2 Share Withholding 10 12.3 Section 280G 11       ARTICLE 13.
FUTURE OF THE PLAN 11 13.1 Term of the Plan 11 13.2 Amendment or Termination 11
    ARTICLE 14. DEFINITIONS 11 14.1 Affiliate 11 14.2 Award 12 14.3 Board 12
14.4 Change in Control 12 14.5 Code 12 14.6

Committee 

12 14.7 Common Share 12 14.8 Company 13 14.9 Consultant 13 14.10 Employee 13

14.11

Exchange Act 13 14.12 Exercise Price 13 14.13 Fair Market Value 13 14.14 ISO 13
14.15 NQO 13 14.16 Option 13 14.17 Optionee 13 14.18 Outside Director 13 14.19
Parent 13 14.20 Participant 13 14.21 Plan 13 14.22 Predecessor Plans 14 14.23
Restricted Share 14 14.24 Reverse Stock Split 14 14.25 Stock Award Agreement 14

 

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14.26 Stock Option Agreement 14 14.27 Subsidiary 14       ARTICLE 15. EXECUTION
14            

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HESKA CORPORATION
1997 STOCK INCENTIVE PLAN

(As Amended March 6, 2007 and May 5, 2009
and Amended and Restated on February 22, 2012,

Further Amended on March 25, 2014
and Further Amended and Restated on May 6, 2014)

ARTICLE 1.
Introduction

The Plan was adopted by the Board effective March 15, 1997, and was subsequently
amended on each of March 6, 2007 and May 5, 2009. In connection with completion
of the Company’s 1-for-10 Reverse Stock Split on December 30, 2010, pursuant to
Article 9 the Compensation Committee of the Board approved adjustments to the
Plan to reduce by a factor of ten the number of Options and Restricted Shares,
and related underlying Common Shares, available for issuance under the Plan. On
February 22, 2012, the Board approved, subject to stockholder approval, further
amendments to the Plan to increase the aggregate number of Common Shares
available for issuance under the Plan. On March 25, 2014, the Board approved,
subject to stockholder approval, further amendments to the Plan to increase the
aggregate number of Common Shares available for issuance under the Plan, and
adding provisions permitting the Committee to make Awards under the Plan that
will meet the performance-based compensation exception to Code Section 162(m).

The purpose of the Plan is to promote the long-term success of the Company and
the creation of stockholder value by (a) encouraging Employees, Outside
Directors and Consultants to focus on critical long-range objectives, (b)
encouraging the attraction and retention of Employees, Outside Directors and
Consultants with exceptional qualifications and (c) linking Employees, Outside
Directors and Consultants directly to stockholder interests through increased
stock ownership. The Plan seeks to achieve this purpose by providing for Awards
in the form of Restricted Shares or Options (which may constitute incentive
stock options or nonstatutory stock options).

The Plan shall be governed by, and construed in accordance with, the laws of the
State of Colorado (except its choice-of-law provisions).

ARTICLE 2.
ADMINISTRATION.

2.1Committee Composition. The Plan shall be administered by the Committee. The
Committee shall consist exclusively of two or more directors of the Company, who
shall be appointed by the Board. In addition, the composition of the Committee
shall satisfy:

(a)Such requirements as the Securities and Exchange Commission may establish for
administrators acting under plans intended to qualify for exemption under Rule
16b-3 (or its successor) under the Exchange Act; and

(b)Such requirements as the Internal Revenue Service may establish for outside
directors acting under plans intended to qualify for exemption under section
162(m)(4)(C) of the Code.

The Board may also appoint one or more separate committees of the Board, each
composed of one or more directors of the Company who need not satisfy the
foregoing requirements,

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who may administer the Plan with respect to Employees and Consultants who are
not considered officers or directors of the Company under section 16 of the
Exchange Act, may grant Awards under the Plan to such Employees and Consultants
and may determine all terms of such Awards.

2.2Committee Responsibilities. The Committee shall (a) select the Employees,
Outside Directors and Consultants who are to receive Awards under the Plan, (b)
determine the type, number, vesting requirements and other features and
conditions of such Awards, (c) interpret the Plan and (d) make all other
decisions relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as it deems appropriate to implement the Plan. The
Committee’s determinations under the Plan shall be final and binding on all
persons.

ARTICLE 3.
SHARES AVAILABLE FOR GRANTS.

3.1Basic Limitation. Common Shares issued pursuant to the Plan may be authorized
but unissued shares or treasury shares. Prior to December 30, 2010, the
effective date of the Reverse Stock Split, the aggregate number of Options and
Restricted Shares awarded under the Plan were not to exceed: (a) 1,350,000; plus
(b) the aggregate number of Common Shares remaining available for grants under
the Predecessor Plans on March 15, 1997; plus (c) the additional Common Shares
described in Sections 3.2(a) and 3.3; less (d) 250,000. From and after the
effective date of the Reverse Stock Split, the aggregate number of Options and
Restricted Shares available for award under the Plan were reduced (pursuant to
Article 9) by a factor of ten as follows: (a) 135,000; plus (b) 10% of the
aggregate number of Common Shares that remained available for grants under the
Predecessor Plans on March 15, 1997; plus (c) the additional Common Shares
described in Sections 3.2(b) and 3.3 plus 10% of the additional Common Shares
described in Section 3.2(a); less (d) 25,000. Subject to stockholder approval,
from and after the effective date of this amended and restated Plan, the
aggregate number of Options and Restricted Shares that may be awarded under the
Plan shall be increased by 250,000. No additional grants have been or are
permitted to be made under the Predecessor Plans after March 15, 1997. The
limitation of this Section 3.1 shall be further subject to adjustment pursuant
to Article 9.

3.2Annual Increase in Shares.

(a)As of January 1 of each year, commencing with the year 1998 and continuing
through January 1, 2007, the aggregate number of Options and Restricted Shares
that may be awarded under the Plan shall be increased by a number of Common
Shares equal to the lesser of (i) 5% of the total number of Common Shares
outstanding as of the next preceding December 31 or (ii) 1,500,000. After the
annual increase on January 1, 2007, there shall be no further annual increases
under the Plan pursuant to this Section 3.2(a) unless and until stockholder
approval of such increase has been obtained.

(b)Subject to stockholder approval, as of the Company’s Annual meeting of
stockholders of each given year, commencing with the Company’s Annual meeting of
stockholders in 2012 and continuing through the Company’s Annual meeting of
stockholders in 2016, the aggregate number of Options and Restricted Shares that
may be awarded under the Plan shall be increased by a number of Common Shares

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equal to the lesser of (A) 45,000 and (B) the product of 5,000 multiplied by the
number of non-employee directors serving on the Board as of the Company’s Annual
meeting of stockholders in the particular year of determination. After the
annual increase as of the Company’s Annual meeting of stockholders in 2016,
there shall be no further annual increases under the Plan pursuant to this
Section 3.2(b) unless and until stockholder approval of such increase has been
obtained.

3.3Additional Shares. If Options granted under this Plan or under the
Predecessor Plans are forfeited or terminate for any other reason before being
exercised, then the corresponding Common Shares shall become available for the
grant of Options and Restricted Shares under this Plan. If Restricted Shares are
forfeited, then the corresponding Common Shares shall again become available for
the grant of NQOs and Restricted Shares under the Plan. The aggregate number of
Common Shares that may be issued under the Plan upon the exercise of ISOs shall
not be increased when Restricted Shares are forfeited.

3.4One Time Increase. As of May 6, 2014, the aggregate number of Options and
Restricted Shares that may be awarded under the Plan is increased by 130,000
Common Shares. Following their initial grant, such Common Shares will not again
be available for grant under this Plan to the extent they are forfeited under
the terms of the corresponding Options and/or Restricted Shares.

ARTICLE 4.
ELIGIBILITY.

4.1Nonstatutory Stock Options and Restricted Shares. Only Employees, Outside
Directors and Consultants shall be eligible for the grant of NQOs and Restricted
Shares.

4.2Incentive Stock Options. Only Employees who are common-law employees of the
Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In
addition, an Employee who owns more than 10% of the total combined voting power
of all classes of outstanding stock of the Company or any of its Parents or
Subsidiaries shall not be eligible for the grant of an ISO unless the
requirements set forth in section 422(c)(6) of the Code are satisfied.

ARTICLE 5.
OPTIONS.

5.1Stock Option Agreement. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms of the Plan and may be subject
to any other terms that are not inconsistent with the Plan. The Stock Option
Agreement shall specify whether the Option is an ISO or an NQO. The provisions
of the various Stock Option Agreements entered into under the Plan need not be
identical. Options may be granted in consideration of a cash payment or in
consideration of a reduction in the Optionee’s other compensation. A Stock
Option Agreement may provide that a new Option will be granted automatically to
the Optionee when he or she exercises a prior Option and pays the Exercise Price
in the form described in Section 6.2.

5.2Number of Shares. Each Stock Option Agreement shall specify the number of
Common Shares subject to the Option and shall provide for the adjustment of such
number in

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accordance with Article 9. Options granted to any Optionee in a single fiscal
year of the Company shall not cover more than 50,000 Common Shares, except that
Options granted to a new Employee in the fiscal year of the Company in which his
or her service as an Employee first commences shall not cover more than 100,000
Common Shares. The limitations set forth in the preceding sentence shall be
subject to adjustment in accordance with Article 9.

5.3Exercise Price. Each Stock Option Agreement shall specify the Exercise Price;
provided that the Exercise Price under an ISO shall in no event be less than
100% of the Fair Market Value of a Common Share on the date of grant and the
Exercise Price under an NQO shall in no event be less than 85% of the Fair
Market Value of a Common Share on the date of grant. In the case of an NQO, a
Stock Option Agreement may specify an Exercise Price that varies in accordance
with a predetermined formula while the NQO is outstanding.

5.4Exercisability and Term. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. The Stock
Option Agreement shall also specify the term of the Option; provided that the
term of an ISO shall in no event exceed 10 years from the date of grant. A Stock
Option Agreement may provide for accelerated exercisability in the event of the
Optionee’s death, disability or retirement or other events and may provide for
expiration prior to the end of its term in the event of the termination of the
Optionee’s service. NQOs may also be awarded in combination with Restricted
Shares, and such an Award may provide that the NQOs will not be exercisable
unless the related Restricted Shares are forfeited.

5.5Effect of Change in Control. The Committee may determine, at the time of
granting an Option or thereafter, that such Option shall become exercisable as
to all or part of the Common Shares subject to such Option in the event that a
Change in Control occurs with respect to the Company, subject to the following
limitations:

(a)In the case of an ISO, the acceleration of exercisability shall not occur
without the Optionee’s written consent.

(b)If the Company and the other party to the transaction constituting a Change
in Control agree that such transaction is to be treated as a “pooling of
interests” for financial reporting purposes, and if such transaction in fact is
so treated, then the acceleration of exercisability shall not occur to the
extent that the surviving entity’s independent public accountants determine in
good faith that such acceleration would preclude the use of “pooling of
interests” accounting.

5.6Modification or Assumption of Options. Within the limitations of the Plan,
the Committee may modify, extend or assume outstanding options or may accept the
cancellation of outstanding options (whether granted by the Company or by
another issuer) in return for the grant of new options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.

5.7Buyout Provisions. The Committee may at any time (a) offer to buy out for a
payment in cash or cash equivalents an Option previously granted or (b)
authorize an Optionee to elect to

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cash out an Option previously granted, in either case at such time and based
upon such terms and conditions as the Committee shall establish.

ARTICLE 6.
PAYMENT FOR OPTION SHARES.

6.1General Rule. The entire Exercise Price of Common Shares issued upon exercise
of Options shall be payable in cash or cash equivalents at the time when such
Common Shares are purchased, except as follows:

(a)In the case of an ISO granted under the Plan, payment shall be made only
pursuant to the express provisions of the applicable Stock Option Agreement. The
Stock Option Agreement may specify that payment may be made in any form(s)
described in this Article 6.

(b)In the case of an NQO, the Committee may at any time accept payment in any
form(s) described in this Article 6.

6.2Surrender of Stock. To the extent that this Section 6.2 is applicable, all or
any part of the Exercise Price may be paid by surrendering, Common Shares that
are already owned by the Optionee. Such Common Shares shall be valued at their
Fair Market Value on the date when the new Common Shares are purchased under the
Plan. The Optionee shall not surrender Common Shares in payment of the Exercise
Price if such action would cause the Company to recognize compensation expense
(or additional compensation expense) with respect to the Option for financial
reporting purposes.

6.3Exercise/Sale. To the extent that this Section 6.3 is applicable, all or any
part of the Exercise Price and any withholding taxes may be paid by delivering
(on a form prescribed by the Company) an irrevocable direction to a securities
broker approved by the Company to sell all or part of the Common Shares being
purchased under the Plan and to deliver all or part of the sales proceeds to the
Company.

6.4Exercise/Pledge. To the extent that this Section 6.4 is applicable, all or
any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to
pledge all or part of the Common Shares being purchased under the Plan to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company.

6.5Promissory Note. To the extent that this Section 6.5 is applicable, all or
any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) a full-recourse promissory
note; provided that the par value of the Common Shares being purchased under the
Plan shall be paid in cash or cash equivalents.

6.6Other Forms of Payment. To the extent that this Section 6.6 is applicable,
all or any part of the Exercise Price and any withholding taxes may be paid in
any other form that is consistent with applicable laws, regulations and rules.

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article 7.
[Reserved]

ARTICLE 8.
RESTRICTED SHARES.

8.1Time, Amount and Form of Awards. Awards under the Plan may be granted in the
form of Restricted Shares. Restricted Shares may also be awarded in combination
with NQOs, and such an Award may provide that the Restricted Shares will be
forfeited in the event that the related NQOs are exercised. The maximum
aggregate number of Common Shares that may be granted in the form of Restricted
Shares in any one calendar year to any one Participant is 45,000, except: (a)
with respect to the Restricted Shares granted in 2014 pursuant to Section 3.4,
for which the annual limit is 130,000, and (b) a new Employee may receive a
grant of up to 75,000 Restricted Shares in the fiscal year of the Company in
which his or her service with the Company begins.

8.2Payment for Awards. To the extent that an Award is granted in the form of
newly issued Restricted Shares, the Award recipient, as a condition to the grant
of such Award, shall be required to pay the Company in cash, cash equivalents or
any other form of legal consideration acceptable to the Company, including but
not limited to future services, an amount equal to the par value of such
Restricted Shares. To the extent that an Award is granted in the form of
Restricted Shares from the Company’s treasury, no cash consideration shall be
required of the Award recipients. Any amount not paid in cash may be paid with a
full recourse promissory note.

8.3Vesting Conditions. Each Award of Restricted Shares may or may not be subject
to vesting. Vesting shall occur, in full or in installments, upon satisfaction
of the conditions specified in the Stock Award Agreement. A Stock Award
Agreement may provide for accelerated vesting in the event of the Participant’s
death, disability or retirement or other events. The Committee may determine, at
the time of granting Restricted Shares or thereafter, that all or part of such
Restricted Shares shall become vested in the event that a Change in Control
occurs with respect to the Company, except as provided in the next following
sentence. If the Company and the other party to the transaction constituting a
Change in Control agree that such transaction is to be treated as a “pooling of
interests” for financial reporting purposes, and if such transaction in fact is
so treated, then the acceleration of vesting shall not occur to the extent that
the surviving entity’s independent public accountants determine in good faith
that such acceleration would preclude the use of “pooling of interests”
accounting.

8.4Voting and Dividend Rights. The holders of Restricted Shares awarded under
the Plan shall have the same voting, dividend and other rights as the Company’s
other stockholders. A Stock Award Agreement, however, may require that the
holders of Restricted Shares invest any cash dividends received in additional
Restricted Shares. Such additional Restricted Shares shall be subject to the
same conditions and restrictions as the Award with respect to which the
dividends were paid.

8.5Section 162(m) Performance Restrictions.

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(a)In General. For purposes of qualifying grants of Restricted Shares as
“performance-based compensation” under Code Section 162(m), the Committee, in
its discretion, may make Restricted Shares subject to vesting based on the
achievement of performance goals, in which case the Committee will specify in
writing, by resolution or otherwise, the Participants eligible to receive such
an Award (which may be expressed in terms of a class of individuals) and the
performance goals applicable to such Awards within 90 days after the
commencement of the period to which the performance goals relate, or such
earlier time as required to comply with Section 162(m) of the Code. No such
Award shall be payable unless the Committee certifies in writing, by resolution
or otherwise, that the performance goals applicable to the Award were satisfied.
In no case may the Committee increase the value of an Award granted under this
Section 8.5 above the maximum value determined under the performance formula by
the attainment of the applicable performance goals, but the Committee retains
the discretion to reduce the value below such maximum.

(b)Performance Goals. Unless and until the Committee proposes for stockholder
vote and the stockholders approve a change in the general performance measures
applicable to Awards, the performance goals upon which the payment or vesting of
an Award that is intended to qualify as performance based compensation are
limited to the following Performance Measures:

(1)operating income;

(2)net earnings or net income (before or after taxes);

(3)basic or diluted earnings per share (before or after taxes);

(4)revenue, revenues, net revenue, net revenues, net revenue growth or net
revenue growth;

(5)gross revenue or gross revenues;

(6)gross profit or gross profit growth;

(7)net operating profit (before or after taxes);

(8)return on assets, capital, invested capital, equity or sales;

(9)cash flow (including, but not limited to, operating cash flow, free cash
flow, and cash flow return on capital);

(10)earnings before or after taxes, interest, depreciation and/or amortization;

(11)gross or operating margins;

(12)improvements in capital structure;

(13)budget and expense management;

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(14)productivity targets;

(15)economic value added or other value added measurements;

(16)share price (including, but not limited to, growth measures and total
shareholder return);

(17)expense targets;

(18)margins;

(19)operating efficiency;

(20)working capital targets;

(21)enterprise value;

(22)safety record;

(23)completion of business acquisition, divestment or expansion;

(24)operating cash flow;

(25)book value;

(26)tangible book value;

(27)pretax income;

(28)net income plus deferred taxes;

(29)cash position;

(30)total shareholder return;

(31)contract or other development of relationship with identified suppliers,
distributors or other business partners; or

(32)new product development (including but not limited to third-party
collaborations or contracts, and with milestones that may include but are not
limited to contract execution, proof of concept, regulatory approval, product
launch and targets such as unit volume and revenue following product launch).

Any performance measures may be used to measure the performance of the Company
as a whole and/or any one or more regional operations and/or Affiliates of the
Company or any combination thereof, as the Committee may deem appropriate, and
any performance measures may be used in comparison to the performance of a group
of peer companies, or a published or special index that the Committee, in its
sole discretion, deems appropriate. The Committee also has the authority to
provide in an

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Award for accelerated vesting of an Award based on the achievement of
performance goals.

The Committee may provide in any Award that any evaluation of attainment of a
performance goal may include or exclude any of the following events that occurs
during the relevant period: (a) asset write downs; (b) litigation judgments or
settlements; (c) the effect of changes in tax laws, accounting principles, or
other laws or regulations affecting reported results; (d) any reorganization or
restructuring transactions; (e) extraordinary nonrecurring items as described in
Accounting Principles Board Opinion No. 30 and/or in management’s discussion and
analysis of financial condition and results of operations appearing in the
Company’s Annual Report on Form 10-K for the applicable year; and (f)
significant acquisitions or divestitures.

In the event that applicable tax and/or securities laws change to permit
discretion by the Committee to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards that do not qualify as performance based compensation, the
Committee may make such grants without satisfying the requirements of Section
162(m) of the Code

ARTICLE 9.
PROTECTION AGAINST DILUTION.

9.1Adjustments. In the event of a subdivision of the outstanding Common Shares,
a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares in an amount that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin-off or a similar occurrence,
the Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of (a) the number of Options and Restricted Shares
available for future Awards under Article 3, (b) the limitations set forth in
Section 5.2, (c) the number of Common Shares covered by each outstanding Option
or (d) the Exercise Price under each outstanding Option. Except as provided in
this Article 9, a Participant shall have no rights by reason of any issue by the
Company of stock of any class or securities convertible into stock of any class,
any subdivision or consolidation of shares of stock of any class, the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class.

9.2Dissolution or Liquidation. To the extent not previously exercised, Options
shall terminate immediately prior to the dissolution or liquidation of the
Company.

9.3Reorganizations. In the event that the Company is a party to a merger or
other reorganization, outstanding Options and Restricted Shares shall be subject
to the agreement of merger or reorganization. Such agreement may provide,
without limitation, for the continuation of outstanding Awards by the Company
(if the Company is a surviving corporation), for their assumption by the
surviving corporation or its parent or subsidiary, for the substitution by the
surviving corporation or its parent or subsidiary of its own awards for

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such Awards, for accelerated vesting and accelerated expiration, or for
settlement in cash or cash equivalents.

ARTICLE 10.
AWARDS UNDER OTHER PLANS.

The Company may grant awards under other plans or programs. Such awards may be
settled in the form of Common Shares issued under this Plan. Such Common Shares
shall be treated for all purposes under the Plan like Restricted Shares and
shall, when issued, reduce the number of Common Shares available under Article
3.

ARTICLE 11.
LIMITATION ON RIGHTS.

11.1Retention Rights. Neither the Plan nor any Award granted under the Plan
shall be deemed to give any individual a right to remain an Employee, Outside
Director or Consultant. The Company and its Parents, Subsidiaries and Affiliates
reserve the right to terminate the service of any Employee, Outside Director or
Consultant at any time, with or without cause, subject to applicable laws, the
Company’s certificate of incorporation and bylaws and a written employment
agreement (if any).

11.2Stockholders’ Rights. A Participant shall have no dividend rights, voting
rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the time when a stock certificate for such
Common Shares is issued or, in the case of an Option, the time when he or she
becomes entitled to receive such Common Shares by filing a notice of exercise
and paying the Exercise Price. No adjustment shall be made for cash dividends or
other rights for which the record date is prior to such time, except as
expressly provided in the Plan.

11.3Regulatory Requirements. Any other provision of the Plan notwithstanding,
the obligation of the Company to issue Common Shares under the Plan shall be
subject to all applicable laws, rules and regulations and such approval by any
regulatory body as may be required. The Company reserves the right to restrict,
in whole or in part, the delivery of Common Shares pursuant to any Award prior
to the satisfaction of all legal requirements relating to the issuance of such
Common Shares, to their registration, qualification or listing or to an
exemption from registration, qualification or listing.

ARTICLE 12.
WITHHOLDING TAXES.

12.1General. To the extent required by applicable federal, state, local or
foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.

12.2Share Withholding. The Committee may permit a Participant to satisfy all or
part of his or her withholding or income tax obligations by having the Company
withhold all or a portion of any Common Shares that otherwise would be issued to
him or her or by surrendering all or a portion of any Common Shares that he or
she previously acquired. Such

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Common Shares shall be valued at their Fair Market Value on the date when taxes
otherwise would be withheld in cash.

12.3Section 280G. To the extent that any of the payments and benefits provided
for under the Plan or any other agreement or arrangement between the Company or
its Affiliates and a Participant (collectively, the “Payments”) (i) constitute a
“parachute payment” within the meaning of Code Section 280G and (ii) but for
this paragraph would be subject to the excise tax imposed by Section 4999 of the
Code, then the Payments shall be payable either (i) in full or (ii) as to such
lesser amount which would result in no portion of such Payments being subject to
excise tax under Section 4999 of the Code (determined in accordance with the
reduction of payments and benefits paragraph set forth below); whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results in the
participant’s receipt on an after-tax basis, of the greatest amount of benefits
under this Plan, notwithstanding that all or some portion of such benefits may
be taxable under Section 4999 of the Code. Any determination required under this
provision will be made by accountants chosen by the Company, whose determination
shall be conclusive and binding upon the participant and the Company for all
purposes.

Except to the extent, if any, otherwise agreed in writing between a participant
and the Company, reduction of payments and benefits hereunder, if applicable,
will be made by reducing, first, payments or benefits to be paid in cash in the
order in which such payment or benefit would be paid or provided (beginning with
such payment or benefit that would be made last in time and continuing, to the
extent necessary, through to such payment or benefit that would be made first in
time) and, then, reducing any benefit to be provided in-kind hereunder in a
similar order; provided, however, that any reduction or elimination of
accelerated vesting of any equity award will first be accomplished by reducing
or eliminating the vesting of such awards that are valued in full for purposes
of Section 280G of the Code, then the reduction or elimination of vesting of
other equity awards.

ARTICLE 13.
FUTURE OF THE PLAN.

13.1Term of the Plan. The Plan, as set forth herein, shall become effective on
March 14, 1997. The Plan shall remain in effect until it is terminated under
Section 13.2, except that no ISOs shall be granted after May 8, 2022.

13.2Amendment or Termination. The Board may, at any time and for any reason,
amend or terminate the Plan. An amendment of the Plan shall be subject to the
approval of the Company’s stockholders only to the extent required by applicable
laws, regulations or rules. No Awards shall be granted under the Plan after the
termination thereof. The termination of the Plan, or any amendment thereof,
shall not affect any Award previously granted under the Plan.

ARTICLE 14.
DEFINITIONS.

14.1Affiliate means any entity other than a Subsidiary, if the Company and/or
one or more Subsidiaries own not less than 50% of such entity.

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14.2Award means any award of an Option or a Restricted Share under the Plan.

14.3Board means the Company’s Board of Directors, as constituted from time to
time.

14.4Change in Control shall mean:

(a)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;

(b)The sale, transfer or other disposition of all or substantially all of the
Company’s assets;

(c)A change in the composition of the Board, a result of which fewer than 50% of
the incumbent directors are directors who either (i) had been directors of the
Company on the date 24 months prior to the date of the event that may constitute
a Change in Control (the “original directors”) or (ii) were elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the aggregate of the original directors who were still in office at
the time of the election or nomination and the directors whose election or
nomination was previously so approved; or

(d)Any transaction as a result of which any person is the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing at least 30% of the total voting power
represented by the Company’s then outstanding voting securities. For purposes of
this Paragraph (d), the term “person” shall have the same meaning as when used
in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) any
person, or person affiliated with said person, who, on March 15, 1997,is the
beneficial owner of securities of the Company representing at least 20% of the
total voting power represented by the Company’s then outstanding voting
securities (11,607,764), (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or of a Parent or Subsidiary and
(iii) a corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of the common
stock 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.

14.5Code means the Internal Revenue Code of 1986, as amended.

14.6Committee means a committee of the Board, as described in Article 2.

14.7Common Share means, as may be applicable, one share of Common Stock, par
value $0.01 per share, of the Company to the extent any remains outstanding at
the time of determination,

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or one share of Public Common Stock, par value $0.01 per share, of the Company,
to the extent any remains outstanding at the time of determination.

14.8Company means either (a) Heska Corporation, a California corporation (prior
to the formation of Heska Corporation, a Delaware corporation), or (b) Heska
Corporation, a Delaware corporation (following its formation).

14.9Consultant means a consultant or adviser who provides bona fide services to
the Company, a Parent, a Subsidiary or an Affiliate as an independent
contractor. Service as a Consultant shall be considered employment for all
purposes of the Plan, except as provided in Section 4.2.

14.10Employee means a common-law employee of the Company, a Parent, a Subsidiary
or an Affiliate.

14.11Exchange Act means the Securities Exchange Act of 1934, as amended.

14.12Exercise Price means the amount for which one Common Share may be purchased
upon exercise of such Option, as specified in the applicable Stock Option
Agreement.

14.13Fair Market Value means the market price of Common Shares, 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 reported in The Wall Street Journal. Such determination shall be
conclusive and binding on all persons.

14.14ISO means an incentive stock option described in section 422(b) of the
Code.

14.15NQO means a stock option not described in sections 422 or 423 of the Code.

14.16Option means an ISO or NQO granted under the Plan and entitling the holder
to purchase Common Shares.

14.17Optionee means an individual or estate who holds an Option.

14.18Outside Director shall mean a member of the Board who is not an Employee.
Service as an Outside Director shall be considered employment for all purposes
of the Plan, except as provided in Section 4.2.

14.19Parent means any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company, if each of the corporations other than
the Company 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. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be considered a Parent commencing as of such date.

14.20Participant means an individual or estate who holds an Award.

14.21Plan means this Heska Corporation 1997 Stock Incentive Plan, as amended
from time to time.

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14.22Predecessor Plans means (a) the 1988 Heska Corporation Stock Plan and (b)
the Heska Corporation 1994 Key Executive Stock Plan.

14.23Restricted Share means a Common Share awarded under the Plan.

14.24Reverse Stock Split means the Company’s 1-for-10 reverse stock split of its
then outstanding Common Shares, which was approved by the Company’s stockholders
and consummated and made effective December 30, 2010.

14.25Stock Award Agreement means the agreement between the Company and the
recipient of a Restricted Share that contains the terms, conditions and
restrictions pertaining to such Restricted Share.

14.26Stock Option Agreement means the agreement between the Company and an
Optionee that contains the terms, conditions and restrictions pertaining to his
or her Option.

14.27Subsidiary 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. A corporation that attains the status of a
Subsidiary on a date after the adoption of the Plan shall be considered a
Subsidiary commencing as of such date.

ARTICLE 15.
EXECUTION.

To record the adoption of the Plan by the Board, the Company has caused its duly
authorized officer to execute this document in the name of the Company.

 

 

  HESKA CORPORATION               By:  /s/ Jason A. Napolitano     Executive
Vice President and
Chief Financial Officer

 

 

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