EXHIBIT
          10.2

         

      

      Velcera,
        Inc.

      Stock
        Option Agreement

      (Non-Statutory)

      


      This
        Stock Option Agreement is made and entered into as of May 25, 2007 between
        Dennis F. Steadman (“Optionee”)
        and
        Velcera, Inc., a Delaware corporation (the “Company”).

      


      Background

      


      
        	 	
                A.

              	
                Optionee
                  is the chief executive officer of the Company. In consideration
                  of
                  Optionee’s service to the Company, the Company wishes to grant to Optionee
                  an option to purchase 280,000 shares of the Company’s common stock
                  according to the terms hereof.

              


      

      


      
        	 	
                B.

              	
                The
                  Company has adopted the 2007 Stock Option Plan (the “Plan”)
                  pursuant to which shares of the Company’s common stock are reserved for
                  issuance under the Plan.

              


      

      


      Now,
        Therefore,
        the
        parties hereto agree as follows:

      


      1. Incorporation
        by Reference.
        The
        terms and conditions of the Plan, a copy of which has been delivered to
        Optionee, are hereby incorporated herein and made a part hereof by reference
        as
        if set forth in full. In the event of any conflict or inconsistency between
        the
        provisions of this Agreement and those of the Plan, the provisions of the
        Plan
        will govern and control. 

      


      2. Grant
        of Option; Purchase Price.
        Subject
        to the terms and conditions herein set forth, the Company hereby irrevocably
        grants to Optionee from the Plan the right and option, hereinafter called
        the
“Option”,
        to
        purchase all or any part of an aggregate of the number of shares of common
        stock
        of the Company (the “Shares”)
        set
        forth at the end of this Agreement after “Number
        of Shares”
at
        the
        price per Share set forth at the end of this Agreement after “Exercise
        Price”.

      


      3. Exercise
        and Vesting of Option.
        The
        Option is exercisable only to the extent that all, or any portion thereof,
        has
        vested in the Optionee. Except as set forth in Sections 4 and 5 below, 155,000
        Shares will vest only
        upon
        Optionee’s
        attainment of certain performance standards set by the Company’s board of
        directors (the
        “Performance
        Shares”).
        The
        Performance Shares will be available for performance-based vesting, at the
        sole
        discretion of the Company’s board of directors, on the vesting dates set forth
        below
        (each
        such date is referred to herein as a “Vesting
        Date”).
        To the
        extent any Performance Shares available for vesting on a given Vesting Date
        are
        not deemed vested by the Company’s board of directors on such date, such
        Performance Shares will be available for performance-based vesting on future
        Vesting Dates. Any Performance Shares not deemed vested by the Company’s board
        of directors on or prior to December 31, 2009 will be forfeited as of such
        date.


       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
 

      
        	
                Performance
                  Shares 

                Available
                  for Vesting

              	 	
                Vesting
                  Date

              
	
                38,750

              	 	
                December
                  31, 2007

              
	
                58,125

              	 	
                December
                  31, 2008

              
	
                58,125

              	 	
                December
                  31, 2009

              


      

      


      


      Except
        as
        set forth in Sections 4 and 5 below,
        the
        remaining 125,000
        Shares
        will vest as set forth in the following  table,
        in each
        case so long as Optionee continues to be employed by the Company:

      


      
        	
                Shares
                  Subject 

                to
                  Vesting Date

              	 	
                Vesting
                  Date

              
	
                31,250

              	 	
                December
                  31, 2007

              
	
                46,875

              	 	
                December
                  31,
                  2008

              
	
                46,875

              	 	
                December
                  31,
                  2009

              
	
                 

              	 	
                 

              


      

       

      


      4. Termination
        of Employment.
        In the
        event that the Optionee ceases to be employed with the Company, any unvested
        portion of the Option as of the date thereof will vest. Notwithstanding the
        above, upon the Company terminating Optionee for “Cause” (as defined in the
        employment agreement between the Company and Optionee dated April 20, 2004
        (the
“Employment
        Agreement”))
        or
        Optionee terminating his employment without “Good Reason” (as defined in the
        Employment Agreement), any then unvested portion of the Option will be forfeited
        and cancelled and in the event Optionee is no longer employed by the Company
        due
        to Optionee’s death or Disability (as defined in the Employment Agreement), any
        portion of the Option other than that which is scheduled to,
        or will
        be available to (in the case of Performance Shares),
        vest on
        the next succeeding Vesting Date
        will be
        forfeited as of such date. 

      


      5. Change
        of Control.
        Upon a
“Change of Control” (as defined in the Employment Agreement) resulting in the
        Company or its stockholders receiving at least $50,000,000 in value, any
        then
        unvested portion of the Option will immediately vest as of the date of the
        “Change of Control”. Upon a “Change of Control” resulting in the Company or its
        stockholders receiving less than $50,000,000 in value, the portion of the
        Option
        that is scheduled to,
        or will
        be available to (in the case of Performance Shares),
        vest on
        the next succeeding Vesting Date  will
        be
        accelerated and deemed to have vested as of the date of the “Change of
        Control”.
        

       

      6. Term
        of Option.
        To the
        extent vested, and except as otherwise provided in this Agreement or the
        Employment Agreement, the Option is exercisable for 10 years from the date
        of
        this Agreement; provided,
        however,
        that in
        the event Optionee ceases to be an employee of the Company, for any reason
        other
        than for “Cause” (as defined in the Employment Agreement), Optionee or his/her
        legal representative will have 2 years from the date of such termination
        of his
        employment to exercise any part of the Option vested pursuant to Sections
        3, 4,
        or 5 of this Agreement. In the event Optionee is terminated by the Company
        for
“Cause” (as defined in the Employment Agreement), Optionee will have 90 days
        from the date of such termination to exercise any part of the Option vested
        pursuant to Sections 3, 4, or 5 of this Agreement. Upon the expiration of
        such 2
        year or 90 day period (as the case may be), or, if earlier, upon the expiration
        date of the Option as set forth above, the Option will terminate and become
        null
        and void.

      


      7. Rights
        of Option Holder.
        Optionee, as holder of the Option, shall not have any of the rights of a
        shareholder with respect to the Shares covered by the Option except to the
        extent that one or more certificates for such Shares shall be delivered to
        him
        or her upon the due exercise of all or any part of the Option.

      


      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      8. Transferability.
        The
        Option shall not be transferable except to the extent permitted by the
        Plan.

      


      9. Securities
        Law Matters.
        Optionee acknowledges that the Shares to be received by him or her upon exercise
        of the Option may have not been registered under the Securities Act of 1933
        or
        the Blue Sky laws of any state (collectively, the “Securities
        Acts”).
        If
        such Shares have not been so registered, Optionee acknowledges and understands
        that the Company is under no obligation to register, under the Securities
        Acts,
        the Shares received by him or her or to assist him or her in complying with
        any
        exemption from such registration if he or she should at a later date wish
        to
        dispose of the Shares. Optionee acknowledges that if not then registered
        under
        the Securities Acts, the Shares shall bear a legend restricting the
        transferability thereof, such legend to be substantially in the following
        form:

      


      “The
        shares represented by this certificate have not been registered or qualified
        under federal or state securities laws. The shares may not be offered for
        sale,
        sold, pledged or otherwise disposed of unless so registered or qualified,
        unless
        an exemption exists or unless such disposition is not subject to the federal
        or
        state securities laws, and the Company may require that the availability
        or any
        exemption or the inapplicability of such securities laws be established by
        an
        opinion of counsel, which opinion of counsel shall be reasonably satisfactory
        to
        the Company.”

      


      10. Optionee
        Representations.
        Optionee hereby represents and warrants that Optionee has reviewed with his
        or
        her own tax advisors the federal, state, and local tax consequences of the
        transactions contemplated by this Agreement. Optionee is relying solely on
        such
        advisors and not on any statements or representation of the Company or any
        of
        its agents. Optionee understands that he or she will be solely responsible
        for
        any tax liability that may result to him or her as a result of the transactions
        contemplated by this Agreement. The Option, if exercised, will be exercised
        for
        investment and not with a view to the sale or distribution of the Shares
        to be
        received upon exercise thereof.

      


      11. Notices.
        All
        notices and other communications provided in this Agreement will be in writing
        and will be deemed to have been duly given when received by the party to
        whom it
        is directed at the following addresses (or to such other address as a party
        provides in writing to the other party hereto):

       

      
        	 	
                If
                  to the Company:

                 

                Velcera,
                  Inc.

                201
                  Corporate Drive

                Langhorne,
                  PA 19047

                Attn:
                  Chief Executive Officer

              	 	
                If
                  to Optionee:

                 

                Dennis
                  F. Steadman

                10
                  Milton Drive

                Yardley,
                  PA 19067

              


      

      


      12. General.
        

      


      (a) The
        Option is granted pursuant to the Plan and is governed by the terms thereof.
        The
        Company shall at all times during the term of the Option reserve and keep
        available such number of Shares as will be sufficient to satisfy the
        requirements of this Agreement. 

      


      (b) Nothing
        herein expressed or implied is intended or shall be construed as conferring
        upon
        or giving to any person, firm, or corporation other than the parties hereto,
        any
        rights or benefits under or by reason of this Agreement.

      


      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      (c) Each
        party hereto agrees to execute such further documents as may be necessary
        or
        desirable to effect the purposes of this Agreement.

      


      (d) This
        Agreement may be executed in any number of counterparts, each of which shall
        be
        deemed an original, but all of which shall constitute one and the same
        agreement.

      


      (e) This
        Agreement, in its interpretation and effect, shall be governed by the laws
        of
        the Commonwealth of Pennsylvania applicable to contracts executed and to
        be
        performed therein.

      


      IN
        WITNESS WHEREOF, the undersigned have executed this Stock Option Agreement
        as of
        the date first written above.

      


      
        
          	
                  Number
                    of Shares:
                    280,000

                	 	 	OPTIONEE:
	
                  Exercise
                    Price:
                    $
                    1.87/share

                	 	 	 
	 	 	 	/s/
                  Dennis F.
                  Steadman
	
                	 	 	
                  

                  Name:
                    Dennis F. Steadman

                


        

         

        
          	 	 	 
	 	
                  VELCERA,
                    INC.

                
	 
 	 
 	 
 
	
                	By:  	/s/
                  Matthew C.
                  Hill
	 	
                  
Name:
                  Matthew C. Hill 
	 	
                  Its:
                    CFO

                


        

         

      

       

      
        
           

        

        
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