Document:

exv10w2

Exhibit 10.2

PINNACLE FINANCIAL PARTNERS, INC.

RESTRICTED STOCK AGREEMENT

     THIS RESTRICTED STOCK AGREEMENT (the “Agreement”) is by and between Pinnacle Financial
Partners, Inc., a Tennessee corporation (the “Company”),
and                      (the “Grantee”).
Capitalized terms used but not defined in this Agreement shall have the meaning ascribed to such
terms in the Pinnacle Financial Partners, Inc. 2004 Equity Incentive Plan (the “Plan”).

     Section 1. Restricted Stock Award. The Grantee is hereby granted the right to
receive
                     shares (the “Restricted Stock”) of the Company’s common stock, $1.00 par value
per share (the “Common Stock”), subject to the terms and conditions of this Agreement and the Plan.

     Section 2. Lapse of Restrictions. Subject to Sections 5 and 9
hereof, the restrictions associated with the shares of Restricted Stock granted pursuant to
Section 1 hereof shall lapse at such times (each, a “Vesting Date”) and in the amounts set
forth below so long as the Company reports net income greater than $0 in the fiscal year preceding
each Date of Vesting noted below:

	 	 	 	 	 
	Cumulative	 	 	 	Cumulative
	Percentage Vested	 	Date of Vesting	 	Shares Vested
	20%
	 	_______________, _______
	 	__________
	30%
	 	_______________, _______
	 	__________
	40%
	 	_______________, _______
	 	__________
	50%
	 	_______________, _______
	 	__________
	60%
	 	_______________, _______
	 	__________
	70%
	 	_______________, _______
	 	__________
	80%
	 	_______________, _______
	 	__________
	90%
	 	_______________, _______
	 	__________
	100%
	 	_______________, _______
	 	__________

     Should the Grantee become 65 years of age before the last Date of Vesting as noted above then
all restrictions with respect to the shares of Restricted Stock granted hereunder which would have
otherwise vested subsequent to the Grantee becoming 65 years of age shall lapse in equal increments
on each Date of Vesting noted above during the period from the effective date of this Agreement
thru the Date of Vesting as noted above which occurs immediately prior to the date the Grantee
becomes age 65.

Section 3. Distribution of Restricted Stock. Certificates representing the shares of
Restricted Stock that have vested under Section 2 will be distributed to the Grantee as
soon as practicable after each Vesting Date; provided, however, that no certificates shall be
distributed to the Grantee prior to the lapsing of any restrictions on the transferability of any
shares represented by such certificates, including those restrictions on transferability set for in
Section 6 hereof resulting from the company’s participation in the Capital Purchase Program (the
“CPP”) under

 

 

the United States Treasury Department’s (the “Treasury”) Troubled Asset Relief Program (the
“TARP”).

     Section 4. Voting Rights and Dividends. Prior to the distribution of the Restricted
Stock, certificates representing shares of Restricted Stock will be held by the Company (the
“Custodian”) in the name of the Grantee. The Custodian will take such action as is necessary and
appropriate to enable the Grantee to vote the Restricted Stock. All cash dividends received by the
Custodian, if any, with respect to the Restricted Stock will be remitted to the Grantee. Stock
dividends issued with respect to the Restricted Stock shall be treated as additional shares of
Restricted Stock that are subject to the same restrictions and other terms and conditions that
apply to the shares of Restricted Stock. Notwithstanding the foregoing, no voting rights or
dividend rights shall inure to the Grantee following the forfeiture of the Restricted Stock
pursuant to Section 5.

     Section 5. Termination/Change of Status. In the event that the Grantee’s employment
by the Company (or any Subsidiary or Affiliate of the Company) terminates for any reason, other
than death or Disability, all shares of Restricted Stock for which the forfeiture restrictions have
not lapsed prior to the date of termination shall be immediately forfeited and Grantee shall have
no further rights with respect to such shares of Restricted Stock. In the event that the Grantee’s
employment terminates by reason of death or Disability all Restricted Stock shall be deemed vested
and the restrictions under the Plan and this Agreement with respect to the Restricted Stock,
including the restriction on transfer set forth in Section 6 hereof, shall automatically
expire and shall be of no further force or effect, except that the restrictions on transferability
set forth in Section 6 hereof resulting from the Company’s participation in the CPP shall continue
until such time as such restrictions lapse in accordance with the Treasury’s Interim Final Rule on
TARP Standards for Compensation and Corporate Governance, dated June 15, 2009, as amended from time
to time (the “Treasury Regulations”).

     Section 6. No Transfer or Pledge of Restricted Stock. No shares of Restricted Stock
may be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of
prior to the later of (i) the date the forfeiture restrictions with respect to such shares have
lapsed, if at all, on any Vesting Date, and (ii) the date that the transfer restrictions set forth
in the Treasury Regulations shall lapse with respect to such shares of Restricted Stock.

     Section 7. Withholding of Taxes. If the Grantee makes an election under section
83(b) of the Code with respect to the Award, the Award made pursuant to this Agreement shall be
conditioned upon the Grantee making prompt payment to the Company of any applicable withholding
obligations or withholding taxes by the Grantee (“Withholding Taxes”). Failure by the Grantee to
pay such Withholding Taxes will render this Agreement and the Award granted hereunder null and void
ab initio and the Restricted Shares granted hereunder will be immediately cancelled. If the
Grantee does not make an election under section 83(b) of the Code with respect to the Award, upon a
Vesting Date with respect to any portion of the Restricted Shares (or property distributed with
respect thereto), the Company shall cancel such Restricted Shares (or withhold property) having an
aggregate Fair Value, on the date next preceding the Vesting Date, in an amount required to satisfy
the required Withholding Taxes as set forth by Internal Revenue Service guidelines for the
employer’s minimum statutory withholding with

2

 

respect to Grantee. The Company shall deduct from any distribution of cash (whether or not related
to the Award including, without limitation, salary payments) to the Grantee an amount required to
satisfy the required Withholding Taxes as set forth by Internal Revenue Service guidelines for the
employer’s minimum statutory withholding with respect to Grantee pertaining to cash payments under
the Award (including any cash dividends made in respect of the Shares subject to the Award). For
purposes of this Agreement, “Fair Value” means the closing sales price of the Shares on the Nasdaq
Global Select Market on such date, or in the absence of reported sales on such date, the closing
sales price of the Shares on the immediately preceding date for which sales were reported.

     Section 8. Change of Control. Upon the occurrence of a Change in Control as defined
in the Plan, all Restricted Stock shall be deemed vested and the restrictions under the Plan and
the Agreement with respect to the Restricted Stock, including the restriction on transfer set forth
in Section 6 hereof, shall automatically expire and shall be of no further force or effect.

     Section 9. Stock Subject to Award. In the event that the shares of Common Stock of
the Company should, as a result of a stock split or stock dividend or combination of shares or any
other change, redesignation, merger, consolidation, recapitalization or otherwise, be increased or
decreased or changed into or exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation, the number of shares of Restricted Stock that
have been awarded to Grantee shall be adjusted in an equitable and proportionate manner to reflect
such action. If any such adjustment shall result in a fractional share, such fraction shall be
disregarded.

     Section 10. Impact of Law or Regulations. This agreement and other incentive
agreements and arrangements of the Company are subject to Federal law or regulations (including the
Treasury Regulations) which may limit or prohibit the Company’s performance of certain provisions,
or require repayment to the Company of the value of awards or payments under or require rescission
or clawback of vesting, payments or awards under, this Agreement or other incentive agreements or
awards with or to the Grantee. By acceptance of the benefits of this Agreement, Grantee agrees and
consents to any such requirements or limitations (when applicable) and to the Company’s compliance
with such laws or regulations, with respect to this and other incentive agreements or awards.

     Section 11. Stock Power. Concurrently with the execution of this Agreement, the
Grantee shall deliver to the Company a stock power, endorsed in blank, relating to the shares of
Restricted Stock. Such stock power shall be in the form attached hereto as Exhibit A.

     Section 12. Legend. Each certificate representing Restricted Stock shall bear a
legend in substantially the following form:

THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS
AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN
THE PINNACLE FINANCIAL PARTNERS, INC. 2004 EQUITY INCENTIVE PLAN (THE “PLAN”) AND
THE RESTRICTED STOCK

3

 

AGREEMENT (THE “AGREEMENT”) BETWEEN THE OWNER OF THE RESTRICTED STOCK REPRESENTED
HEREBY AND PINNACLE FINANCIAL PARTNERS, INC. (THE “COMPANY”). THE RELEASE OF SUCH
STOCK FROM SUCH TERMS AND CONDITIONS SHALL BE MADE ONLY IN ACCORDANCE WITH THE
PROVISIONS OF THE PLAN AND THE AGREEMENT, COPIES OF WHICH ARE ON FILE AT THE
COMPANY.

     Section 13. No Right to Continued Employment. This Agreement shall not be construed
as giving the Grantee the right to be retained in the employ of the Company (or any Subsidiary or
Affiliate of the Company), and the Company (or any Subsidiary or Affiliate of the Company) may at
any time dismiss the Grantee from employment, free from any liability or any claim under the Plan.

     Section 14. Governing Provisions. This Agreement is made under and subject to the
provisions of the Plan, and all of the provisions of the Plan are also provisions of this
Agreement. If there is a difference or conflict between the provisions of this Agreement and the
provisions of the Plan, the provisions of the Plan will govern. By signing this Agreement, the
Grantee confirms that he or she has received a copy of the Plan.

     Section 15. Miscellaneous.

          15.1 Entire Agreement. This Agreement and the Plan contain the entire understanding
and agreement between the Company and the Grantee concerning the Restricted Stock granted hereby,
and supersede any prior or contemporaneous negotiations and understandings. The Company and the
Grantee have made no promises, agreements, conditions or understandings relating to the Restricted
Stock, either orally or in writing, that are not included in this Agreement or the Plan.

          15.2 Captions. The captions and section numbers appearing in this Agreement are
inserted only as a matter of convenience. They do not define, limit, construe or describe the
scope or intent of the provisions of this Agreement.

          15.3 Counterparts. This Agreement may be executed in counterparts, each of which
when signed by the Company and the Grantee will be deemed an original and all of which together
will be deemed the same Agreement.

          145.4 Notice. Any notice or communication having to do with this Agreement must be
given by personal delivery or by certified mail, return receipt requested, addressed, if to the
Company, to the principal office of the Company, and, if to the Grantee, to the Grantee’s last
known address provided by the Grantee to the Company.

          15.5 Amendment. This Agreement may be amended by the Company, provided that unless
the Grantee consents in writing, the Company cannot amend this Agreement if the amendment will
materially change or impair the Grantee’s rights under this Agreement and such change is not to the
Grantee’s benefit.

4

 

          15.6 Successors and Assignment. Each and all of the provisions of this Agreement are
binding upon and inure to the benefit of the Company and the Grantee and their heirs, successors,
and assigns. However, neither the Restricted Stock nor this Agreement may be assigned or
transferred except as otherwise set forth in this Agreement or the Plan.

          15.7 Governing Law. This Agreement shall be governed and construed exclusively in
accordance with the laws of the State of Tennessee applicable to agreements to be performed in the
State of Tennessee.

[Signature page to follow.]

5

 

     IN WITNESS WHEREOF, the Company and the Grantee have executed this Agreement to be effective
as of                     .

	 	 	 	 	 	 	 

	 	 	PINNACLE FINANCIAL PARTNERS, INC.:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Hugh M. Queener
	 	 
	 

	 	Title:
	 	Chief Administrative Officer and
Corporate Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	GRANTEE:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 

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     EXHIBIT A-STOCK POWER

     FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer to Pinnacle
Financial Partners, Inc. (the “Company”),
                     shares of the Company’s common stock
represented by Certificate No.                     . The undersigned authorizes the Secretary of the Company to
transfer the stock on the books of the Company in the event of the forfeiture of any shares issued
under the Restricted Stock Agreement dated                      between the Company and the undersigned.

Dated:                     

	 	 	 	 	 	 	 

	 	 	Signed:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 

7Exhibit 10.32

Exhibit 10.32

[***] — Certain information in this exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Confidential treatment has been requested with respect to the
omitted portions.

EIGHTH AMENDMENT TO THIRD AMENDED AND RESTATED

CREDIT AND SECURITY AGREEMENT

This Amendment, dated as of December 15, 2010, is made by and between Heska Corporation, a
Delaware corporation (“Heska”), Diamond Animal Health, Inc., an Iowa corporation (“Diamond”) (each
of Heska and Diamond may be referred to herein individually as a “Borrower” and collectively as the
“Borrowers”), and Wells Fargo Bank, National Association, operating through its Wells Fargo Capital
Finance operating division (the “Lender”).

Recitals

The Borrowers and the Lender are parties to a Third Amended and Restated Credit and Security
Agreement dated as of December 30, 2005 (as amended to date and as the same may be hereafter
amended from time to time, the “Credit Agreement”).

The Borrowers have requested that certain amendments be made to the Credit Agreement, which
the Lender is willing to make pursuant to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements
herein contained, it is agreed as follows:

1. Defined Terms. Capitalized terms used in this Amendment which are defined in the
Credit Agreement shall have the same meanings as defined therein, unless otherwise defined herein.
In addition, Section 1.1 of the Credit Agreement is amended by adding or amending, as the case may
be, the following definitions:

“Maturity Date” means December 31, 2013.

“Rental Inventory” of a Borrower means diagnostic and monitoring instruments purchased by
such Borrower for the purpose of demonstrating, loaning, leasing or renting to customers,
and/or exchanging for otherwise similar customer instruments requiring service, whether
accounted for as equipment or inventory.

“Revolving Floating Rate” means Daily Three Month LIBOR plus the Spread, which annual rate
shall change when and as Daily Three Month LIBOR changes.

 

 

 

2. Spread. Section 2.7 of the Credit Agreement is hereby amended to read it its
entirety as follows:

“Section 2.7 Spread. The spread (the “Spread”) means, from December 1,
2010 through the first adjustment as described below, 5.75%, and thereafter, the
percentage set forth in the table below opposite the applicable prior-fiscal-year Net
Income of the Borrowers, which percentage shall change annually effective as of the
first day of the month following the month in which the Borrowers deliver to the
Lender their audited financial statements for the prior fiscal year; provided, however,
that in no case shall any decrease in the Spread occur during a Default Period:

	 	 	 	 	 
	Prior Fiscal Year Net Income	 	Spread	 
	 
	 	 	 	 
	Less than $0
	 	 	5.75	%
	 
	 	 	 	 
	Greater than or equal to $0
but less than $2,500,000
	 	 	4.75	%
	 
	 	 	 	 
	Greater than or equal to $2,500,000
but less than $5,000,000
	 	 	3.75	%
	 
	 	 	 	 
	Greater than or equal to $5,000,000
	 	 	2.75	%

3. Financial Covenants. Sections 6.12 and 6.13 of the Credit Agreement are hereby
amended to read in their entireties as follows:

“Section 6.12 Minimum Capital. Heska will maintain, on a consolidated
basis, as of each date listed below, its Capital at an amount not less than the amount
set forth opposite such date:

	 	 	 	 	 
	Date	 	Minimum Capital	 
	November 30, 2010
	 	$	13,900,000	 
	December 31, 2010
	 	$	14,000,000	 
	January 31, 2011
	 	$	10,600,000	 
	February 28, 2011
	 	$	10,725,000	 
	March 31, 2011
	 	$	11,725,000	 
	April 30, 2011
	 	$	11,775,000	 
	May 31, 2011
	 	$	11,825,000	 
	June 30, 2011
	 	$	12,325,000	 
	July 31, 2011
	 	$	12,175,000	 
	August 31, 2011
	 	$	12,525,000	 
	September 30, 2011
	 	$	13,475,000	 
	October 31, 2011
	 	$	13,375,000	 
	November 30, 2011
	 	$	13,825,000	 
	December 31, 2011
	 	$	14,525,000	 

The covenant levels for January 31, 2011 through and including December 31, 2011
shall be adjusted upwards or downwards, respectively on a dollar-for-dollar basis, by an
amount equal to the amount by which Heska’s Capital, as evidenced by Heska’s audited
balance sheet as of December 31, 2010, is greater than or less than $14,898,000;
provided, however, that any such downward adjustment shall not exceed $500,000.

 

2

 

Section 6.13 Minimum Net Income. Heska will achieve, on a consolidated
basis, during each period described below, Net Income in an amount not less than the
amount set forth opposite such period (amounts in parentheses denote negative
numbers):

	 	 	 	 	 
	 	 	Minimum Net	 
	Period	 	Income	 
	Twelve months ending December 31, 2010
	 	$	(1,550,000	)
	Three months ending March 31, 2011
	 	$	(2,600,000	)
	Six months ending June 30, 2011
	 	$	(2,000,000	)
	Nine months ending September 30, 2011
	 	$	(850,000	)
	Twelve months ending December 31, 2011
	 	$	200,000”	 

4. Capital Expenditures. Section 7.10 of the Credit Agreement is hereby amended to
read in its entirety as follows:

“Section 7.10 Capital Expenditures. The Borrowers, together with any
Affiliates, will not incur or contract to incur, in the aggregate, Capital Expenditures
in the aggregate during the fiscal year-to-date period ending on any date described
below in excess of the amount set forth opposite such date:

	 	 	 	 	 
	 	 	Maximum Capital	 
	Period	 	Expenditures	 
	November 30, 2010
	 	$	1,000,000	 
	December 31, 2010
	 	$	1,000,000	 
	January 31, 2011
	 	$	975,000	 
	February 28, 2011
	 	$	1,000,000	 
	March 31, 2011
	 	$	1,175,000	 
	April 30, 2011
	 	$	1,750,000	 
	May 31, 2011
	 	$	1,875,000	 
	June 30, 2011
	 	$	2,025,000	 
	July 31, 2011
	 	$	2,125,000	 
	August 31, 2011
	 	$	2,250,000	 
	September 30, 2011
	 	$	2,725,000	 
	October 31, 2011
	 	$	2,750,000	 
	November 30, 2011
	 	$	2,950,000	 
	December 31, 2011
	 	$	2,975,000	 

In addition to the foregoing, the amounts set forth above shall be adjusted upward on a
dollar-for-dollar basis by the amount allocated for such purpose in accordance with
Section 2.22, from the date of such increase through the end of the fiscal year in which
such increase occurs.”

5. Compliance Certificate. Exhibit B to the Credit Agreement is replaced in its
entirety by Exhibit B to this Amendment.

6. No Other Changes. Except as explicitly amended by this Amendment, all of the terms
and conditions of the Credit Agreement shall remain in full force and effect and shall apply to any
advance or letter of credit thereunder.

 

3

 

7. Consent to Reverse Stock Split. Notwithstanding Section 7.5 of the Credit
Agreement, the Lender hereby consents to Heska’s 10-to-1 reverse stock split proposed to be
effected in December 2010, provided that cash payments to shareholders shall be made only in
respect of odd amounts of shares held in Heska stockholder accounts (accounts containing a number
of shares prior to Heska’s 10-to-1 reverse split not divisible by 10) and such cash payments in the
aggregate shall not exceed $50,000.

8. Restructuring Fee. The Borrower shall pay to the Lender, as of the date of this
Agreement, a fully earned, non-refundable fee of $25,000 in consideration of the Lender’s execution
of this Amendment.

9. Conditions Precedent. This Amendment shall be effective when the Lender shall have
received an executed original hereof, together with the following, each in form and substance
acceptable to the Lender in its sole discretion:

(a) Payment of the fee described in paragraph 8.

(b) Such other matters as the Lender may require.

10. Representations and Warranties. The Borrowers hereby represent and warrant to the
Lender as follows:

(a) The Borrowers have all requisite power and authority to execute this Amendment and to
perform all of its obligations hereunder, and this Amendment has been duly executed and delivered
by the Borrowers and constitute the legal, valid and binding obligation of the Borrowers,
enforceable in accordance with their terms.

(b) The execution, delivery and performance by the Borrowers of this Amendment have been duly
authorized by all necessary corporate action and do not (i) require any authorization, consent or
approval by any governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) violate any provision of any law, rule or regulation or of any order,
writ, injunction or decree presently in effect, having applicability to the Borrowers, or the
articles of incorporation or by-laws of the Borrowers, or (iii) result in a breach of or constitute
a default under any indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Borrower is a party or by which it or its properties may be bound or
affected.

(c) All of the representations and warranties contained in Article V of the Credit Agreement
are correct on and as of the date hereof as though made on and as of such date, except to the
extent that such representations and warranties relate solely to an earlier date.

11. No Waiver. The execution of this Amendment and acceptance of any documents
related hereto shall not he deemed to be a waiver of any Default or Event of Default under the
Credit Agreement or breach, default or event of default under any Security Document or other
document held by the Lender, whether or not known to the Lender and whether or not existing on the
date of this Amendment.

 

4

 

12. Release. The Borrowers hereby absolutely and unconditionally release and forever
discharge the Lender, and any and all participants, parent corporations, subsidiary corporations,
affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all
of the present and former directors, officers, agents and employees of any of the foregoing, from
any and all claims, demands or causes of action of any kind, nature or description, whether arising
in law or equity or upon contract or tort or under any state or federal law or otherwise, which any
Borrower has had, now has or has made claim to have against any such person for or by reason of any
act, omission, matter, cause or thing whatsoever arising from the beginning of time to and
including the date of this Amendment, whether such claims, demands and causes of action are matured
or unmatured or known or unknown.

13. Costs and Expenses. The Borrowers hereby reaffirm their agreement under the
Credit Agreement to pay or reimburse the Lender on demand for all costs and expenses incurred by
the Lender in connection with the Loan Documents, including without limitation all reasonable fees
and disbursements of legal counsel. Without limiting the generality of the foregoing, the
Borrowers specifically agree to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this Amendment and the
documents and instruments incidental hereto. The Borrowers hereby agree that the Lender may, at
any time or from time to time in its sole discretion and without further authorization by the
Borrowers, make a loan to the Borrowers under the Credit Agreement, or apply the proceeds of any
loan, for the purpose of paying any such fees, disbursements, costs and expenses.

14. Miscellaneous. This Amendment may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original and all of which counterparts,
taken together, shall constitute one and the same instrument.

 

5

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of
the date first written above.

	 	 	 	 	 	 	 	 	 	 	 
	HESKA CORPORATION	 	 	 	DIAMOND ANIMAL HEALTH, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	/s/ Jason Napolitano
	 	 	 	By
	 	/s/ Jason Napolitano	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Its Chief Financial Officer
	 	 	 	 	 	Its Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	WELLS FARGO BANK, NATIONAL ASSOCIATION
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	[***]	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	[***], Authorized Signatory	 	 	 	 	 	 	 	 

 

6

 

Exhibit B to Eighth Amendment

Compliance Certificate

	 	 	 	 	 
	To:

	 	                                                            	 	 
	 

	 	Wells Fargo Capital Finance	 	 
	 
	 	 	 	 
	Date:

	 	                                        , 20     
	 	 
	 
	 	 	 	 
	Subject:

	 	Heska Corporation	 	 
	 

	 	Financial Statements	 	 

In accordance with our Third Amended and Restated Credit and Security Agreement dated as of
December 30, 2005 (the “Credit Agreement”), attached are the financial statements of Heska
Corporation (“Heska”) as of and for                     , 20      (the “Reporting Date”) and the year-to-date
period then ended (the “Current Financials”). All terms used in this certificate have the meanings
given in the Credit Agreement.

I certify that, to the best of my knowledge, the Current Financials have been prepared in
accordance with GAAP, subject to year-end audit adjustments, and fairly present the Borrowers’
financial condition and the results of its operations as of the date thereof.

Events of Default. (Check one):

	o	 	The undersigned does not have knowledge of the occurrence of a Default
or Event of Default under the Credit Agreement.

	 
	o	 	The undersigned has knowledge of the occurrence of a Default or Event
of Default under the Credit Agreement and attached hereto is a
statement of the facts with respect to thereto.

	 
	 	 	
I hereby certify to the Lender as follows:

	 
	o	 	The Reporting Date does not mark the end of one of the Borrowers’
fiscal quarters, hence I am completing all paragraphs below except
paragraph 4.

	 
	o	 	The Reporting Date marks the end of one of the Borrowers’ fiscal
quarters, hence I am completing all paragraphs below.

Financial Covenants. I further hereby certify as follows:

1. Accounts Payable. Pursuant to Section 6.5 of the Credit Agreement, as of the
Reporting Date, Past Due Payables on a consolidated basis was $                    , which
o satisfies o does not satisfy the requirement that the Borrowers have no Past Due Payables.

 

B-1

 

2. Minimum Capital. Pursuant to Section 6.12 of the Credit Agreement., as of the
Reporting Date, Heska’s Capital was, on a consolidated basis, $                    , which o satisfies
o does not satisfy the requirement that such amount be not less than $                     on the
Reporting Date, as set forth in the table below and adjusted, if applicable, in accordance with
Section 6.12:

	 	 	 	 	 
	Date	 	Minimum Capital	 
	November 30, 2010
	 	$	13,900,000	 
	December 31, 2010
	 	$	14,000,000	 
	January 31, 2011
	 	$	10,600,000	 
	February 28, 2011
	 	$	10,725,000	 
	March 31, 2011
	 	$	11,725,000	 
	April 30, 2011
	 	$	11,775,000	 
	May 31, 2011
	 	$	11,825,000	 
	June 30, 2011
	 	$	12,325,000	 
	July 31, 2011
	 	$	12,175,000	 
	August 31, 2011
	 	$	12,525,000	 
	September 30, 2011
	 	$	13,475,000	 
	October 31, 2011
	 	$	13,375,000	 
	November 30, 2011
	 	$	13,825,000	 
	December 31, 2011
	 	$	14,525,000	 

The covenant levels for January 31, 2011 through and including December 31, 2011 shall be
adjusted upwards or downwards, respectively on a dollar-for-dollar basis, by an amount equal to the
amount by which Heska’s Capital, as evidenced by Heska’s audited balance sheet as of December 31,
2010, is greater than or less than $14,898,000; provided, however, that any such downward
adjustment shall not exceed $500,000.

3. Minimum Net Income. Pursuant to Section 6.13 of the Credit Agreement, as of the
Reporting Date, Heska’s Net Income was, on a consolidated basis, $                    , which o
satisfies o does not satisfy the requirement that such amount be no less than $                     on
the Reporting Date, as set forth in the table below:

	 	 	 	 	 
	 	 	Minimum Net	 
	Period	 	Income	 
	Twelve months ending December 31, 2010
	 	$	(1,550,000	)
	Three months ending March 31, 2011
	 	$	(2,600,000	)
	Six months ending June 30, 2011
	 	$	(2,000,000	)
	Nine months ending September 30, 2011
	 	$	(850,000	)
	Twelve months ending December 31, 2011
	 	$	200,000”	 

4. Minimum Liquidity. Pursuant to Section 6.14 of the Credit Agreement, as of the
Reporting Date, Heska’s Liquidity was, on a consolidated basis, $                    , which o satisfies
o does not satisfy the requirement that such amount be no less than $1,500,000 on the Reporting
Date.

 

B-2

 

5. Minimum Individual Book Net Worth. Pursuant to Section 6.15 of the Credit
Agreement, as of the Reporting Date, Heska’s Book Net Worth was $                     and Diamond’s Book
Net Worth was $                    , which o satisfies o does not satisfy the requirement that such
amounts be no less than zero on the Reporting Date.

6. Maximum Contributions. Pursuant to Section 7.4(a)(v) of the Credit Agreement, as
of the Reporting Date, Heska’s fiscal year-to-date aggregate contributions to non-Borrower
Subsidiaries was $                    , which o satisfies o does not satisfy the requirement that such
amounts be no more than $700,000 during any fiscal year.

7. Capital Expenditures. Pursuant to Section 7.10 of the Credit Agreement, for the
fiscal year-to-date period ending on the Reporting Date, Heska’s Capital Expenditures were, in the
aggregate and on a consolidated basis, $                    , which o satisfies o does not satisfy the
requirement that such amount be not more than $                     during the period ending on the
Reporting Date, as set forth in the table below and adjusted, if applicable, in accordance with
Section 7.10:

	 	 	 	 	 
	 	 	Maximum Capital	 
	Period	 	Expenditures	 
	November 30, 2010
	 	$	1,000,000	 
	December 31, 2010
	 	$	1,000,000	 
	January 31, 2011
	 	$	975,000	 
	February 28, 2011
	 	$	1,000,000	 
	March 31, 2011
	 	$	1,175,000	 
	April 30, 2011
	 	$	1,750,000	 
	May 31, 2011
	 	$	1,875,000	 
	June 30, 2011
	 	$	2,025,000	 
	July 31, 2011
	 	$	2,125,000	 
	August 31, 2011
	 	$	2,250,000	 
	September 30, 2011
	 	$	2,725,000	 
	October 31, 2011
	 	$	2,750,000	 
	November 30, 2011
	 	$	2,950,000	 
	December 31, 2011
	 	$	2,975,000	 

 

B-3

 

Attached hereto are all relevant facts in reasonable detail to evidence the computations of the
financial covenants referred to above. These computations were made in accordance with GAAP.

	 	 	 	 	 
	 	HESKA CORPORATION

 	 
	 	By:  	 	 
	 	 	Its 	 	 

 

B-4

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