Exhibit 10.5


 


HESKA
CORPORATION 2003 EQUITY INCENTIVE PLAN


 


STOCK OPTION AGREEMENT


(EMPLOYEES AND CONSULTANTS)


 


	
  Tax Treatment

  	
   

  	
  This option is intended to be an incentive stock option under section
  422 of the Internal Revenue Code or a nonstatutory option, as provided in the
  Notice of Stock Option Grant. To the extent this option is designated an
  incentive stock option and it does not qualify as an incentive stock option
  under applicable laws, it will be treated as a nonstatutory option.

  
	
   

  	
   

  	
   

  
	
  Vesting/Exercisability

  	
   

  	
  This option vests and becomes exercisable in installments, as shown
  in the Notice of Stock Option Grant. In addition, in the event your service
  as an Employee, Director or Consultant terminates because of your death, your
  option shall become fully vested and exercisable as to the total number of
  shares subject thereto immediately upon the date of your death.

   

  Except as otherwise provided below following a Change in Control, no
  additional shares become vested after your Termination of Service and the
  option shall terminate as to any shares that are unvested as of the end of
  business on the date of your Termination of Service.

  
	
   

  	
   

  	
   

  
	
  Term

  	
   

  	
  This option expires in any event at the close of business at Company
  headquarters on the day before the 10th anniversary of the Date of Grant, as
  shown in the Notice of Stock Option Grant. (It will expire earlier if your
  service terminates, as described below.)

  
	
   

  	
   

  	
   

  
	
  Regular Termination

  	
   

  	
  In the event of your Termination of Service for any reason except
  death or Disability, then this option will expire as to unexercised vested
  option shares at the close of business at Company headquarters on the date
  three months after your termination date. The Company determines when your
  service terminates for this purpose.

  
	
   

  	
   

  	
   

  
	
  Death

  	
   

  	
  In the event of your Termination of Service because of your death or
  your death within three months after your Termination of Service, then this
  option will expire as to unexercised vested option shares at the close of
  business at Company headquarters on the date one year after your date of
  death.

  
	
   

  	
   

  	
   

  
	
  Disability

  	
   

  	
  In the event of your Termination of Service because of your
  Disability, then this option will expire as to unexercised vested option
  shares at the close of business at Company headquarters on the date one year
  after your termination date.

  



 


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  Leave of Absence

  	
   

  	
  Vesting of this option shall be suspended during any unpaid leave of
  absence unless continued vesting is required by the terms of the leave or by
  applicable law.

  
	
   

  	
   

  	
   

  
	
  Change in Control

  	
   

  	
  This option shall vest and become exercisable in full if (i) the
  Company is subject to a Change in Control, (ii) this option is not
  continued by the Company and (iii) this option is not either assumed by
  the surviving corporation or its parent or substituted for by the surviving
  corporation’s or its parent’s issuing its own option in replacement of this
  option. This option shall vest and become exercisable in full if (i) the
  Company is subject to a Change in Control and (ii) within twelve months
  thereafter the surviving corporation or its parent triggers a Termination of
  Service for you without your consent and without Cause. If the surviving
  corporation or its parent demotes you to a lower position, materially reduces
  your authority or responsibilities, materially reduces your total
  compensation or announces its intention to relocate your principal place of
  work by more than 20 miles, then that action shall be treated as triggering a
  Termination of Service under this Agreement. For the avoidance of doubt, a
  refusal by the surviving corporation or its parent to extend a consulting
  engagement beyond its current term shall not be deemed to trigger any option
  to vest and become immediately exercisable under this Agreement. 

   

  “Cause” shall mean (i)  your failure to perform your assigned
  duties or responsibilities as an Employee, Director or Consultant (other than
  a failure resulting from death or Disability) after notice thereof from the
  surviving corporation or its parent describing your failure to perform such
  duties or responsibilities; (ii) your material breach of any
  confidentiality agreement or invention assignment agreement between you and
  the Company or a Subsidiary; (iii) your engaging in any act of dishonesty,
  fraud, misrepresentation, moral turpitude, or misappropriation of material
  property that was or is materially injurious to the Company or its
  Affiliates; (iv) your violation of any federal or state regulation
  applicable to the Company’s business; or (v) your being convicted of, or
  entering a plea of nolo contendere to, any crime.

  
	
   

  	
   

  	
   

  
	
  Restrictions on Exercise

  	
   

  	
  The Company will not permit you to exercise this option if the
  issuance of shares at that time would violate any law or regulation, and the
  Company will have no liability for failure to issue or deliver any shares
  upon exercise of this option if the issuance or delivery would violate any
  law or regulation as determined by the Company in consultation with its legal
  counsel. This option may not be exercised for a fraction of a share.

  
	
   

  	
   

  	
   

  
	
  Notice of Exercise

  	
   

  	
  When you wish to exercise this option, you must notify the Company by
  filing the proper “Notice of Exercise” form at the address given on the form.
  Your notice must specify how many shares you wish to purchase. The exercise
  will be effective when the Company receives the Notice of Exercise with the
  option exercise payment described herein. 

  



 


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  If someone else wants to exercise this option after your death, that
  person must prove to the Company’s satisfaction that he or she is entitled to
  do so.

  
	
   

  	
   

  	
   

  
	
  Form of Payment

  	
   

  	
  When you submit your notice of exercise, you must include payment of
  the option exercise price for the shares you are purchasing. Payment may be
  made in one (or a combination of two or more) of the following forms:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·      Cash, check or wire
  transfer.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·      Certificates
  for shares of Company stock that you own, along with any forms needed to
  affect a transfer of those shares to the Company. The value of the shares,
  determined as of the effective date of the option exercise, will be applied
  to the option exercise price. However, the Company may restrict your ability
  to surrender shares of Company stock (including your ability to surrender any
  particular shares of Company Stock held by you) in payment of the exercise price
  if your doing so would result in the Company’s recognizing additional
  compensation expense with respect to this option for financial reporting
  purposes. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·      Irrevocable directions to
  a securities broker approved by the Company to sell all or part of your
  option shares and to deliver to the Company proceeds from the sale in an
  amount sufficient to pay the option exercise price and any withholding taxes.
  (The balance of the sale proceeds, if any, will be delivered to you.) The
  directions must be given by signing a special “Notice of Exercise” form
  provided by the Company.

  
	
   

  	
   

  	
   

  
	
  Withholding Taxes and Stock Withholding

  	
   

  	
  You will not be allowed to exercise this option unless you make
  arrangements acceptable to the Company to pay any withholding taxes that may
  be due as a result of the option exercise. These arrangements may include
  (with the Company’s approval) withholding shares of Company stock that
  otherwise would be issued to you when you exercise this option. The value of
  these shares, determined as of the effective date of the option exercise,
  will be applied to the withholding taxes.

  
	
   

  	
   

  	
   

  
	
  Restrictions on Resale

  	
   

  	
  By signing this Agreement, you agree not to sell any option shares at
  a time when applicable laws, Company policies or an agreement between the
  Company and its underwriters prohibit a sale. This restriction will apply as
  long as you are an Employee, Consultant or Director of the Company or a
  Subsidiary.

  
	
   

  	
   

  	
   

  
	
  Transfer of Option

  	
   

  	
  Prior to your death, only you may exercise this option. You cannot
  sell, transfer, pledge or assign this option. For instance, you may not sell
  this option or use it as security for a loan. You may, however, dispose of
  this option in your will, by the laws of descent and distribution or through
  a beneficiary designation. 

  



 


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  Regardless of any marital property settlement agreement, the Company
  is not obligated to honor a notice of exercise from your former spouse, nor
  is the Company obligated to recognize your former spouse’s interest in your
  option in any other way.

  
	
   

  	
   

  	
   

  
	
  Retention Rights

  	
   

  	
  Neither your option nor this Agreement give you the right to be
  employed or otherwise retained by the Company in any capacity. The Company
  reserves the right to terminate your service at any time, with or without
  cause.

  
	
   

  	
   

  	
   

  
	
  Stockholder Rights

  	
   

  	
  You, or your estate or heirs, have no rights as a stockholder of the
  Company until you have exercised this option by giving the required notice to
  the Company and paying the exercise price.

  
	
   

  	
   

  	
   

  
	
  Applicable Law

  	
   

  	
  This Agreement will be interpreted and enforced under the laws of the
  State of Delaware (without giving effect to its conflict of laws provisions).

  
	
   

  	
   

  	
   

  
	
  The Plan and Other Agreements

  	
   

  	
  The Amended and Restated 2003 Equity Incentive Plan is incorporated
  in this Agreement by reference. Unless otherwise defined herein, all
  capitalized terms herein have the same defined meanings as in the Amended and
  Restated 2003 Equity Incentive Plan. In the event of any conflict
  between the terms and provisions of the Plan and this Agreement, the Plan
  terms and provisions shall govern.  

   

  This Agreement and the Plan constitute the entire understanding
  between you and the Company regarding this option. Any prior agreements,
  commitments or negotiations concerning this option are superseded. This
  Agreement may be amended only by another written agreement, signed by both
  parties.

  



 


BY SIGNING THE COVER SHEET OF THIS AGREEMENT,
YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.


 


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