Document:

ex10-1.htm

Exhibit 10.1

 

 

 

 

HESKA CORPORATION

1997 STOCK INCENTIVE PLAN

(AS AMENDED MARCH 6, 2007 AND MAY 5, 2009

AND AMENDED AND RESTATED ON FEBRUARY 22, 2012)

 

  

  

  

 

TABLE OF CONTENTS

	  	  	  	  
	
ARTICLE 1.

	  	
INTRODUCTION.

	
1

	
ARTICLE 2.

	  	
ADMINISTRATION.

	
1

	  	
2.1

	
Committee Composition

	
1

	  	
2.2

	
Committee Responsibilities

	
1

	
ARTICLE 3.

	  	
SHARES AVAILABLE FOR GRANTS.

	
1

	  	
3.1

	
Basic Limitation

	
1

	  	
3.2

	
Annual Increase in Shares

	
2

	  	
3.3

	
Additional Shares

	
2

	
ARTICLE 4.

	  	
ELIGIBILITY.

	
2

	  	
4.1

	
Nonstatutory Stock Options and Restricted Shares

	
2

	  	
4.2

	
Incentive Stock Options

	
2

	
ARTICLE 5.

	  	
OPTIONS.

	
2

	  	
5.1

	
Stock Option Agreement

	
2

	  	
5.2

	
Number of Shares

	
3

	  	
5.3

	
Exercise Price

	
3

	  	
5.4

	
Exercisability and Term

	
3

	  	
5.5

	
Effect of Change in Control

	
3

	  	
5.6

	
Modification or Assumption of Options

	
3

	  	
5.7

	
Buyout Provisions

	
3

	
ARTICLE 6.

	  	
PAYMENT FOR OPTION SHARES.

	
3

	  	
6.1

	
General Rule

	
3

	  	
6.2

	
Surrender of Stock

	
4

	  	
6.3

	
Exercise/Sale

	
4

	  	
6.4

	
Exercise/Pledge

	
4

	  	
6.5

	
Promissory Note

	
4

	  	
6.6

	
Other Forms of Payment

	
4

	
ARTICLE 7.

	  	
[Reserved]

	
4

	
ARTICLE 8.

	  	
RESTRICTED SHARES.

	
4

	  	
8.1

	
Time, Amount and Form of Awards

	
4

	  	
8.2

	
Payment for Awards

	
4

	  	
8.3

	
Vesting Conditions

	
4

	  	
8.4

	
Voting and Dividend Rights

	
4

	
ARTICLE 9.

	  	
PROTECTION AGAINST DILUTION.

	
5

	  	
9.1

	
Adjustments

	
5

	  	
9.2

	
Dissolution or Liquidation

	
5

	  	
9.3

	
Reorganizations

	
5

 

 

  

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ARTICLE 10.

	  	
AWARDS UNDER OTHER PLANS.

	
5

	
ARTICLE 11.

	  	
LIMITATION ON RIGHTS.

	
5

	  	
11.1

	
Retention Rights

	
5

	  	
11.2

	
Stockholders’ Rights

	
5

	  	
11.3

	
Regulatory Requirements

	
5

	
ARTICLE 12.

	  	
WITHHOLDING TAXES.

	
6

	  	
12.1

	
General

	
6

	  	
12.2

	
Share Withholding

	
6

	
ARTICLE 13.

	  	
FUTURE OF THE PLAN.

	
6

	  	
13.1

	
Term of the Plan

	
6

	  	
13.2

	
Amendment or Termination

	
6

	
ARTICLE 14.

	  	
DEFINITIONS.

	
6

	
ARTICLE 15.

	  	
EXECUTION.

	
9

 

  

ii

  

 

HESKA CORPORATION

 

1997 STOCK INCENTIVE PLAN

 

	
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.

 

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.

 

2.1           Committee 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, 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.

 

2.2           Committee 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.

 

3.1           Basic 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 

 

  

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(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.

 

3.2           Annual 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 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.

 

3.3           Additional 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.

 

	
ARTICLE 4.

	
ELIGIBILITY.

 

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

 

4.2           Incentive 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.

 

5.1           Stock 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 

  

2

  

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.

 

5.2           Number 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 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.

 

5.3           Exercise 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.

 

5.4           Exercisability 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.

 

5.5           Effect 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.

 

5.6           Modification 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.

 

5.7           Buyout 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 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.

 

6.1           General 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.

 

  

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

 

6.2           Surrender 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.

 

6.3           Exercise/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.

 

6.4           Exercise/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.

 

6.5           Promissory 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.

 

6.6           Other 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.

 

	
ARTICLE 7.

	
[Reserved]

 

	
ARTICLE 8.

	
RESTRICTED SHARES.

 

8.1           Time, 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.

 

8.2           Payment 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 or cash equivalents 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.

 

8.3           Vesting 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.

 

8.4 Voting 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

 

  

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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.

 

	
ARTICLE 9.

	
PROTECTION AGAINST DILUTION.

 

9.1           Adjustments. 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.

 

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

 

9.3           Reorganizations. 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 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.

 

11.1           Retention 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).

 

11.2           Stockholders’ 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.

 

11.3           Regulatory 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.

 

  

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ARTICLE 12.

	
WITHHOLDING TAXES.

 

12.1           General. 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.

 

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

 

	
ARTICLE 13.

	
FUTURE OF THE PLAN.

 

13.1           Term 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.

 

13.2           Amendment 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.

 

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

 

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

 

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

 

14.4           “Change 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 

  

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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.

 

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

 

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

 

14.7           “Common 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, 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.

 

14.8           “Company” 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).

 

14.9           “Consultant” 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.

 

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

 

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

 

14.12           “Exercise 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.

 

14.13           “Fair 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.

 

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

 

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

 

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

 

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

 

14.18           “Outside 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.

 

14.19           “Parent” 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.

 

  

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

 

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

 

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

 

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

 

14.24           “Reverse 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.

 

14.25           “Stock 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.

 

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

 

14.27           “Subsidiary” 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.

 

  

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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 

	  

 

  

9ex10-2.htm

Exhibit 10.2

HESKA CORPORATION

1997 EMPLOYEE STOCK PURCHASE PLAN

(AS AMENDED AND RESTATED, EFFECTIVE APRIL 30, 2013)

  

  

  

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TABLE OF CONTENTS

	
SECTION 1.

	  	
PURPOSE OF THE PLAN.

	
5

	
SECTION 2.

	  	
ADMINISTRATION OF THE PLAN.

	
5

	  	
(a)

	
Committee Composition

	
5

	  	
(b)

	
Committee Responsibilities

	
5

	
SECTION 3.

	  	
ENROLLMENT AND PARTICIPATION.

	
5

	  	
(a)

	
Offering Periods

	
5

	  	
(b)

	
Accumulation Periods

	
5

	  	
(c)

	
Enrollment

	
5

	  	
(d)

	
Duration of Participation

	
6

	  	
(e)

	
Applicable Offering Period

	
6

	
SECTION 4.

	  	
EMPLOYEE PAYROLL CONTRIBUTIONS.

	
7

	  	
(a)

	
Frequency of Payroll Deductions

	
7

	  	
(b)

	
Amount of Payroll Deductions

	
7

	  	
(c)

	
Changing Withholding Rate

	
7

	  	
(d)

	
Discontinuing Payroll Deductions

	
7

	  	
(e)

	
Limit on Number of Elections

	
7

	
SECTION 5.

	  	
WITHDRAWAL FROM THE PLAN.

	
7

	  	
(a)

	
Withdrawal

	
7

	  	
(b)

	
Failure to Participate

	
8

	  	
(c)

	
Re-Enrollment After Withdrawal

	
8

	
SECTION 6.

	  	
CHANGE IN EMPLOYMENT STATUS.

	
8

	  	
(a)

	
Termination of Employment

	
8

	  	
(b)

	
Leave of Absence

	
8

	  	
(c)

	
Death

	
8

	
SECTION 7.

	  	
PLAN ACCOUNTS AND PURCHASE OF SHARES.

	
8

	  	
(a)

	
Contribution Accounts and Purchase Accounts

	
8

	  	
(b)

	
Immediate Notification Share Purchase

	
8

	  	
(c)

	
Purchase Price at the Close of an Accumulation Period

	
9

	  	
(d)

	
Number of Shares Purchased at the Close of an Accumulation Period

	
9

	  	
(e)

	
Available Shares Insufficient

	
9

 

  

2

  

 

 

 

 

	  	
(f)

	
Issuance of Stock

	
10

	  	
(g)

	
Contribution Account Unused Cash Balances

	
10

	
SECTION 8.

	  	
LIMITATIONS ON STOCK OWNERSHIP.

	
10

	  	
(a)

	
Five Percent Limit

	
10

	  	
(b)

	
$25,000 Limit

	
10

	
SECTION 9.

	  	
RIGHTS NOT TRANSFERABLE.

	
11

	
SECTION 10.

	  	
NO RIGHTS AS AN EMPLOYEE.

	
11

	
SECTION 11.

	  	
NO RIGHTS AS A STOCKHOLDER.

	
11

	
SECTION 12.

	  	
STOCK OFFERED UNDER THE PLAN.

	
11

	  	
(a)

	
Authorized Shares

	
11

	  	
(b)

	
Anti-Dilution Adjustments

	
11

	  	
(c)

	
Reorganizations

	
11

	
SECTION 13.

	  	
AMENDMENT OR DISCONTINUANCE.

	
12

	
SECTION 14.

	  	
DEFINITIONS.

	
12

	  	
(a)

	
Accumulation Period

	
12

	  	
(b)

	
Board

	
12

	  	
(c)

	
Change in Control

	
12

	  	
(d)

	
Code

	
12

	  	
(e)

	
Committee

	
12

	  	
(f)

	
Company

	
12

	  	
(g)

	
Compensation

	
12

	  	
(h)

	
Contribution Account

	
13

	  	
(i)

	
Eligible Employee

	
13

	  	
(j)

	
Exchange Act

	
13

	  	
(k)

	
Fair Market Value

	
13

	  	
(l)

	
Immediate Price

	
13

	  	
(m)

	
Immediate Purchase Notification

	
13

	  	
(n)

	
Lookback Price

	
13

	  	
(o)

	
New Offering Date

	
14

	  	
(p)

	
Notification Offering Period

	
14

	  	
(q)

	
Notification Price

	
14

	  	
(r)

	
Offering Period

	
14

	  	
(s)

	
Participant

	
14

	  	
(t)

	
Participating Company

	
14

	  	
(u)

	
Plan

	
14

 

 

  

3

  

 

 

	  	
(v)

	
Purchase Account

	
14

	  	
(w)

	
Purchase Price

	
14

	  	
(x)

	
Remaining Shares

	
14

	  	
(y)

	
Stock

	
14

	  	
(z)

	
Subsidiary

	
14

	
SECTION 15.

	  	
EXECUTION.

	
15

 

  

4

  

HESKA CORPORATION

1997 EMPLOYEE STOCK PURCHASE PLAN

AS AMENDED AND RESTATED EFFECTIVE APRIL 30, 2013

 

SECTION 1.                         PURPOSE OF THE PLAN.

 

The Plan was adopted by the Board on April 23, 1997.  The purpose of the Plan is to provide Eligible Employees with an opportunity to increase their proprietary interest in the success of the Company by purchasing Stock from the Company on favorable terms.  The Plan is intended to qualify under section 423 of the Code.

The Plan was amended and restated on May 16, 2002, February 6, 2004, February 24, 2005, June 17, 2008 and May 4, 2010.  The Plan is now amended and restated, effective April 30, 2013.

 

SECTION 2.                         ADMINISTRATION OF THE PLAN.

 

(a)         Committee Composition.  The Plan shall be administered by the Committee.  The Committee shall consist exclusively of one or more directors of the Company, who shall be appointed by the Board.

 

(b)         Committee Responsibilities.  The Committee shall interpret the Plan and make all other policy decisions relating to the operation of the Plan.  The Committee may adopt such rules, guidelines and forms as it deems appropriate to implement the Plan.  The Committee’s determinations under the Plan shall be final and binding on all persons.

 

SECTION 3.                         ENROLLMENT AND PARTICIPATION.

 

(a)         Offering Periods.  Any and all then outstanding Offering Periods shall end on June 30, 2013.  While the Plan is in effect thereafter, four overlapping Offering Periods shall commence in each calendar year.  The Offering Periods shall consist of the 27-month periods commencing on each January 1, April 1, July 1 and October 1.

 

(b)         Accumulation Periods.  The then outstanding Accumulation Period shall end on June 30, 2013.  While the Plan is in effect thereafter, four Accumulation Periods shall commence in each calendar year.  The Accumulation Periods shall consist of the three-month periods commencing on each January 1, April 1, July 1 and October 1.

 

(c)         Enrollment.  Any individual who, at the end of the day immediately preceding the first day of an Offering Period, qualifies as an Eligible Employee may elect to become a Participant in the Plan for such Offering Period by executing the prescribed form, which shall be filed with the Company at the prescribed location prior to the commencement of such Offering Period; provided, however, that no Eligible Employee who does not comply with the five percent limit outlined in Section 8(a) at the commencement of such Offering Period shall become a Participant in the Plan under this Subsection (c) and, furthermore, that no Eligible Employee shall be enrolled in an Offering Period beginning prior to the New Offering Date applicable to such Eligible Employee.

 

  

5

  

(d)         Duration of Participation.  Once enrolled in the Plan, a Participant shall continue to participate in the Plan until he or she ceases to be an Eligible Employee, withdraws from the Plan under Section 5(a) or is withdrawn from the Plan under Section 5(b).  A Participant who withdrew from the Plan under Section 5(a) or was withdrawn from the Plan under Section 5(b) may again become a Participant, if he or she then is an Eligible Employee, by following the procedure described in Subsection (c) above.

 

(e)         Applicable Offering Period.  Only one Offering Period may apply to a Participant at one time.  The applicable Offering Period for a given Participant shall be determined as follows:

 

(i)       Once a Participant is enrolled in the Plan for an Offering Period, such Offering Period shall continue to apply to him or her until the earliest of (A) the end of such Offering Period, (B) the end of his or her participation under Subsection (d) above, (C) enrollment by the Participant in a subsequent Offering Period following a written request on the prescribed form to enroll in an immediately subsequent Offering Period filed with the Company at the prescribed location prior to the commencement of such subsequent Offering Period, which shall only be effective if (1) such Participant has designated on the prescribed form filed with the Company at the prescribed location prior to the commencement of such subsequent Offering Period that he or she elects to have withheld at least 1% of Compensation in the first month of such subsequent Offering Period, (2) such subsequent Offering Period begins on or after the New Offering Date applicable to such Participant and (3) such Participant complies with the five percent limit outlined in Section 8(a), or (D) automatic enrollment in a subsequent Offering Period under Paragraph (ii) below.

 

(ii)       In the event that the Fair Market Value of Stock at the commencement of the Offering Period in which the Participant is enrolled is higher than at the commencement of any subsequent Offering Period, the Participant shall automatically be enrolled in such subsequent Offering Period if (A) the Participant has designated on the prescribed form filed with the Company at the prescribed location prior to the commencement of such subsequent Offering Period that he or she elects to have withheld at least 1% of Compensation in the first month of such subsequent Offering Period, (B) such subsequent Offering Period begins on or after the New Offering Date applicable to such Participant and (C) such Participant complies with the five percent limit outlined in Section 8(a), unless the Participant has filed a written request on the prescribed form not to be enrolled in such subsequent Offering Period with the Company at the prescribed location prior to the commencement of such subsequent Offering Period.

 

(iii)       When a Participant reaches the end of an Offering Period but his or her participation is to continue as the Participant has not discontinued payroll deductions under Section 4(d) at the end of such Offering Period, then such Participant shall be enrolled automatically for the Offering Period that commences immediately thereafter unless such Participant does not comply with the five percent limit outlined in Section 8(a).

 

  

6

  

SECTION 4.                         EMPLOYEE PAYROLL CONTRIBUTIONS.

 

(a)         Frequency of Payroll Deductions.  A Participant may purchase shares of Stock under the Plan by means of payroll deductions.  Payroll deductions, as designated by the Participant pursuant to Subsection (b) below, shall occur on each payday during participation in the Plan.

 

(b)         Amount of Payroll Deductions.  An Eligible Employee shall designate on the prescribed form the portion of his or her Compensation that he or she elects to have withheld for the purchase of Stock.  Such portion shall be a whole percentage of the Eligible Employee’s Compensation, but not less than 1% nor more than 10%.  Any other provision of the Plan notwithstanding, no Participant shall have more than $25,000 from payroll deductions used to purchase Stock under the Plan in the same calendar year, which for the avoidance of doubt shall exclude any deposit made pursuant to Section 7(b).  If a Participant is precluded by this Subsection (b) from making additional purchases of Stock under the Plan in a given calendar year, then his or her payroll deductions shall be discontinued automatically and shall resume automatically at the beginning of the first Accumulation Period ending in the next calendar year or, if later, the first Accumulation Period during which the Participant is enrolled in an Offering Period other than a Notification Offering Period attributable to the Participant.

 

(c)         Changing Withholding Rate.  If a Participant wishes to change the rate of payroll withholding, he or she may do so by filing the prescribed form with the Company at the prescribed location at any time.  The new withholding rate shall be effective as soon as reasonably practicable after such form has been received by the Company.  The new withholding rate shall be a whole percentage of the Eligible Employee’s Compensation, but not less than 1% nor more than 10%.

 

(d)         Discontinuing Payroll Deductions.  If a Participant wishes to discontinue employee contributions entirely, he or she may do so by filing the prescribed form with the Company at the prescribed location at any time.  Payroll withholding shall cease as soon as reasonably practicable after such form has been received by the Company.  (In addition, employee contributions may be discontinued automatically pursuant to Section 4(b), 7(b) or 8(b).)  A Participant who has discontinued employee contributions may resume such contributions by filing the prescribed form with the Company at the prescribed location.  Payroll withholding shall resume as soon as reasonably practicable after such form has been received by the Company.

 

(e)         Limit on Number of Elections.  No Participant shall make more than two elections under Subsection (c) or (d) above, combined, during any Accumulation Period.

 

SECTION 5.                         WITHDRAWAL FROM THE PLAN.

 

(a)         Withdrawal.  A Participant may elect to withdraw from the Plan by filing the prescribed form with the Company at the prescribed location at any time before the last day of an Accumulation Period.  As soon as reasonably practicable thereafter, payroll deductions shall cease and the entire amount credited to the Participant’s Contribution Account and Purchase Account shall be refunded to him or her in cash, without interest.  No partial withdrawals shall be permitted.

 

  

7

  

(b)         Failure to Participate.  A participant who did not purchase Stock under the Plan during an Accumulation Period due to a decision to discontinue employee contributions under Section 4(d) shall be deemed as failing to participate in the Plan and shall be withdrawn from the Plan automatically.  As soon as reasonably practicable thereafter, the entire amount credited to the Participant’s Contribution Account shall be refunded to him or her in cash, without interest.

 

(c)         Re-Enrollment After Withdrawal.  A former Participant who has withdrawn or was withdrawn from the Plan shall not be a Participant until he or she re-enrolls in the Plan under Section 3(c).  Re-enrollment may be effective only at the commencement of an Offering Period.

 

SECTION 6.                         CHANGE IN EMPLOYMENT STATUS.

 

(a)         Termination of Employment.  Termination of employment as an Eligible Employee for any reason, including death, shall be treated as an automatic withdrawal from the Plan under Section 5(a).  (A transfer from one Participating Company to another shall not be treated as a termination of employment.)

 

(b)         Leave of Absence.  For purposes of the Plan, employment shall not be deemed to terminate when the Participant goes on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of service for such purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company).  Employment, however, shall be deemed to terminate 90 days after the Participant goes on a leave, unless a contract or statute protects his or her right to return to work.  Employment shall be deemed to terminate in any event when the approved leave ends, unless the Participant immediately returns to work.

 

(c)         Death.  In the event of the Participant’s death, unless otherwise prohibited by law, the entire amount credited to his or her Contribution Account and his or her Purchase Account shall be paid to a beneficiary designated by him or her for this purpose on the prescribed form or, if none, to the Participant’s estate.  Such form shall be valid only if it was filed with the Company at the prescribed location before the Participant’s death and is not otherwise prohibited by law.

 

SECTION 7.                         PLAN ACCOUNTS AND PURCHASE OF SHARES.

 

(a)         Contribution Accounts and Purchase Accounts.  The Company shall maintain a Contribution Account on its books in the name of each Participant.  Whenever an amount is deducted from the Participant’s Compensation under the Plan, such amount shall be credited to the Participant’s Contribution Account.  The Company shall also maintain a Purchase Account on its books in the name of each Participant.  Whenever any Participant makes a deposit pursuant to an Immediate Purchase Notification under Subsection (b) below, the amount of such deposit shall be credited to the Participant’s Purchase Account.  Amounts credited to Contribution Accounts and Purchase Accounts shall not be trust funds and may be commingled with the Company’s general assets and applied to general corporate purposes.  No interest shall be credited to Contribution Accounts and Purchase Accounts.

 

(b)         Immediate Notification Share Purchase.  A Participant may elect to purchase Stock at the commencement of an Offering Period, or effective at 5 p.m. on any day other than the last day of an Accumulation Period, by filing the prescribed form with the Company prior to such 

  

8

  

 

 

 

purchase - an Immediate Purchase Notification for such Participant. A Participant may make a deposit at the time of an Immediate Purchase Notification. The Offering Period in which an Immediate Purchase Notification is to be effective is a Notification Offering Period for such Participant. At the time the Immediate Purchase Notification is to be effective, the combined amount in the Participant’s Contribution Account and the Participant’s Purchase Account is divided by the Immediate Price at that time and the number of shares that results shall be purchased from the Company with the funds in the Participant’s Contribution Account and the Participant’s Purchase Account. The foregoing notwithstanding, no Participant shall purchase more than Remaining Shares nor more than the amounts of Stock set forth in Sections 8(b) and 12(a) at this time. Any remaining funds in the Participant’s Contribution Account shall then be deposited into the Participant’s Purchase Account. During the Notification Offering Period, at 5 p.m. on January 31 of each year following the year of the Immediate Purchase Notification, any amount in the Participant’s Purchase Account shall be divided by the Notification Price and the number of shares that results shall be purchased from the Company with the funds in the Participant’s Purchase Account. The foregoing notwithstanding, no Participant shall purchase more than Remaining Shares nor more than the amounts of Stock set forth in Sections 8(b) and 12(a) on any such January 31. Any fractional share, as calculated under this Subsection (b), shall be rounded down to the next lower whole share. As soon as reasonably practicable following an Immediate Purchase Notification, payroll deductions shall be discontinued automatically and shall automatically resume at the beginning of the next Offering Period in which the Participant is enrolled. Any amount remaining in the Participant’s Purchase Account at the end of the Notification Offering Period shall be refunded to the Participant in cash, without interest, at that time.

 

(c)         Purchase Price at the close of an Accumulation Period.  The Purchase Price for each share of Stock purchased at the close of an Accumulation Period shall be the greater of: (i) the Lookback Price or (ii) 65% of the Fair Market Value of a share of Stock at the close of such Accumulation Period.

 

(d)         Number of Shares Purchased at the close of an Accumulation Period.  As of the last day of each Accumulation Period, each Participant shall be deemed to have elected to purchase the number of shares of Stock calculated in accordance with this Subsection (d), unless the Participant has previously elected to withdraw from the Plan in accordance with Section 5(a).  The amount then in the Participant’s Contribution Account shall be divided by the Purchase Price, and the number of shares that results shall be purchased from the Company with the funds in the Participant’s Plan Account.  The foregoing notwithstanding, no Participant shall purchase more than 200 shares of Stock with respect to any Accumulation Period nor more than the amounts of Stock set forth in Sections 8(b) and 12(a).  Any fractional share, as calculated under this Subsection (c), shall be rounded down to the next lower whole share.

 

(e)         Available Shares Insufficient.  In the event that the aggregate number of shares that all Participants elect to purchase at any time, such as the close of an Accumulation Period, exceeds the maximum number of shares remaining available for issuance under Section 12(a), then the number of shares to which each Participant is entitled shall be determined by multiplying the number of shares available for issuance by a fraction, the numerator of which is the number of shares that such Participant has elected to purchase and the denominator of which is the number of shares that all Participants have elected to purchase.

 

  

9

  

(f)         Issuance of Stock.  The Committee may determine that shares of Stock purchased by a Participant under the Plan shall be held for each Participant’s benefit by a broker designated by the Committee, unless the Participant has elected that certificates be issued to him or her.  Such shares, whether to be held for a given Participant’s benefit by a broker or issued as certificates for a given Participant, shall be issued as soon as reasonably administratively practicable after shares of Stock are purchased.  Shares may be registered in the name of the Participant or jointly in the name of the Participant and his or her spouse as joint tenants with right of survivorship or as community property.

 

(g)         Contribution Account Unused Cash Balances.  An amount remaining in the Participant’s Contribution Account that represents the Purchase Price for any fractional share shall be carried over in the Participant’s Contribution Account to the next Accumulation Period.  Any amount remaining in the Participant’s Contribution Account that represents the Purchase Price for whole shares that could not be purchased by reason of Subsection (d) above shall be refunded to the Participant in cash, without interest.

 

SECTION 8.                         LIMITATIONS ON STOCK OWNERSHIP.

 

(a)         Five Percent Limit.  Any other provision of the Plan notwithstanding, no Participant shall be granted a right to purchase Stock under the Plan if such Participant, immediately after his or her election to purchase such Stock, would own stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or any parent or Subsidiary of the Company.  For purposes of this Subsection (a), the following rules shall apply:

 

(i)       Ownership of stock shall be determined after applying the attribution rules of section 424(d) of the Code;

 

(ii)       Each Participant shall be deemed to own any stock that he or she has a right or option to purchase under this or any other plan; and

 

(iii)       Each Participant shall be deemed to have the right to purchase 1,800 shares of Stock under this Plan with respect to each Offering Period.

 

(b)         $25,000 Limit.  Any other provision of the Plan notwithstanding, no Participant shall purchase Stock with a Fair Market Value (determined at the time such purchase right option is granted) in excess of $25,000 during any calendar year under this Plan and all other employee stock purchase plans of the Company or any parent or Subsidiary of the Company.  For purposes of this Subsection (b), employee stock purchase plans not described in section 423 of the Code shall be disregarded.  If a Participant is precluded by this Subsection (b) from purchasing additional Stock under the Plan, then his or her employee contributions shall automatically be discontinued and shall resume automatically at the beginning of the first Accumulation Period ending in the next calendar year or, if later, the first Accumulation Period during which the Participant is enrolled in an Offering Period other than a Notification Offering Period attributable to the Participant.  

 

  

10

  

 

SECTION 9.                                 RIGHTS NOT TRANSFERABLE.

The rights of any Participant under the Plan, or any Participant’s interest in any Stock or moneys to which he or she may be entitled under the Plan, shall not be transferable by voluntary or involuntary assignment or by operation of law, or in any other manner other than by beneficiary designation or the laws of descent and distribution.  If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interest under the Plan, other than by beneficiary designation or the laws of descent and distribution, then such act shall be treated as an election by the Participant to withdraw from the Plan under Section 5(a).

 

SECTION 10.                                NO RIGHTS AS AN EMPLOYEE.

Nothing in the Plan or in any right granted under the Plan shall confer upon the Participant any right to continue in the employ of a Participating Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Companies or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her employment at any time and for any reason, with or without cause.

 

SECTION 11.                                NO RIGHTS AS A STOCKHOLDER.

A Participant shall have no rights as a stockholder with respect to any shares of Stock that he or she may have a right to purchase under the Plan until such shares have been purchased under the Plan.

 

SECTION 12.                                STOCK OFFERED UNDER THE PLAN.

 

(a)         Authorized Shares.  The aggregate number of shares of Stock available for purchase under the Plan shall be 375,000, subject to adjustment pursuant to this Section 12.

 

(b)         Anti-Dilution Adjustments.  The aggregate number of shares of Stock offered under the Plan, the 200 share limit described in Section 7(d), the 1,800 share right to purchase calculation described in Section 8(a)(iii), the 1,800 share starting point and any pre-dilution purchases described in Section 14(x) and the price of shares that any Participant has elected to purchase shall be adjusted proportionately as directed by the Committee for any increase or decrease in the number of outstanding shares of Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend, any other increase or decrease in such shares effected without receipt or payment of consideration by the Company, the distribution of the shares of a Subsidiary to the Company’s stockholders or a similar event.

 

(c)         Reorganizations.  Any other provision of the Plan notwithstanding, immediately prior to the effective time of a Change in Control, the Offering Period and Accumulation Period then in progress shall terminate, shares shall be purchased pursuant to Section 7 and any remaining unused balance in a given Participant’s Contribution Account and Purchase Account shall be returned to such Participant.  In the event of a merger or consolidation to which the Company is a constituent corporation and which does not constitute a Change in Control, the Plan shall continue unless the plan of merger or consolidation provides otherwise.  The Plan shall in no 

 

  

11

  

event be construed to restrict in any way the Company’s right to undertake a dissolution, liquidation, merger, consolidation or other reorganization.

 

SECTION 13.                                AMENDMENT OR DISCONTINUANCE.

The Board shall have the right to amend, suspend or terminate the Plan at any time and without notice.  Except as provided in Section 12, any increase in the aggregate number of shares of Stock to be issued under the Plan shall be subject to approval by a vote of the stockholders of the Company.  In addition, any other amendment of the Plan shall be subject to approval by a vote of the stockholders of the Company to the extent required by an applicable law or regulation.

 

SECTION 14.                                DEFINITIONS.

 

(a)         "Accumulation Period" means a three-month period during which contributions may be made toward the purchase of Stock under the Plan, as determined pursuant to Section 3(b).

 

(b)         "Board" means the Board of Directors of the Company, as constituted from time to time.

 

(c)         "Change in Control" means:

 

(i)       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; or

 

(ii)       The sale, transfer or other disposition of all or substantially all of the Company’s assets or the complete liquidation or dissolution 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.

 

(d)         "Code" means the Internal Revenue Code of 1986, as amended.

 

(e)         "Committee" means a committee of the Board, as described in Section 2.

 

(f)         "Company" means Heska Corporation, a Delaware corporation.

 

(g)         "Compensation" means (i) the total compensation paid in cash to a Participant by a Participating Company, including salaries, wages, bonuses, incentive compensation, commissions and overtime pay, plus (ii) any pre-tax contributions made by the Participant under Section 401(k) or 125 of the Code.  Compensation shall exclude moving or relocation allowances, car allowances, imputed income attributable to cars or life insurance, fringe benefits, 

 

  

12

  

contributions to employee benefit plans and similar items.  The Committee shall determine whether a particular item is included in Compensation.

 

(h)         "Contribution Account" means the account established for each Participant pursuant to Section 7(a).

 

(i)         "Eligible Employee" means any employee of a Participating Company whose customary employment is for more than five months per calendar year and for more than 20 hours per week.  The foregoing notwithstanding, an individual shall not be considered an Eligible Employee if his or her participation in the Plan is prohibited by the law of any country which has jurisdiction over him or her or if he or she is subject to a collective bargaining agreement that does not provide for participation in the Plan.

 

(j)         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

 

(k)         "Fair Market Value" means the market price of Stock, determined by the Committee as follows:

 

(i)       If Stock is normally listed on the Nasdaq Stock Market, then the Fair Market Value shall be equal to the last transaction price reported by the Nasdaq Stock Market;

 

(ii)       If provision (i) above is not applicable and Stock is normally listed on a stock exchange, then the Fair Market Value shall be equal to the last transaction price reported by such stock exchange;

 

(iii)       If provisions (i) and (ii) above are not applicable and Stock was traded over-the-counter on the date in question, then the Fair Market Value shall be equal to the last transaction price reported by the principal automated inter-dealer quotation system on which Stock is quoted or, if the Stock is not quoted on any such system, by the "Pink Sheets" published by the National Quotation Bureau, Inc.; and

 

(iv)       If none of the foregoing provisions is applicable or may be implemented, then the Fair Market Value shall be 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 as reported directly to the Company by the Nasdaq Stock Market or a comparable exchange or as reported in The Wall Street Journal.  Such determination shall be conclusive and binding on all persons.

 

(l)         "Immediate Price" means 95% of the Fair Market Value of a share of Stock.

 

(m)         "Immediate Purchase Notification" means the election and related process set forth in Section 7(b).

 

(n)         "Lookback Price" means the lesser of:

 

(i)       85% of the Fair Market Value of a share of Stock; or

 

  

13

  

(ii)       95% of the Fair Market Value of a share of Stock at the commencement of the applicable Offering Period (as determined under Section 3(e)).

 

(o)         "New Offering Date" means, for a given individual, the later of (i) July 1, 2013 and (ii) the day following the last day of the most recent Notification Offering Period in which such individual filed an Immediate Purchase Notification, if applicable.  For example, if an individual is enrolled in an Offering Period beginning on January 1, 2016 and files an Immediate Purchase Notification on January 15, 2016, then this Offering Period is a Notification Offering Period for such individual, including if such individual withdraws from the Plan or terminates employment with the Company, and the related New Offering Date is April 1, 2018.

 

(p)         "Notification Offering Period" means, for a given individual, an Offering Period in which an Immediate Purchase Notification is to be effective.

 

(q)         "Notification Price" means the Immediate Price at the commencement of the applicable Offering Period if a given Participant gave an Immediate Purchase Notification to purchase Stock at the commencement of such Offering Period.  Otherwise, the Immediate Price at the time of purchase.

 

(r)         "Offering Period" means the 27-month period with respect to which the right to purchase Stock may be granted under the Plan and during which contributions may be made toward the purchase of Stock under the Plan, as determined pursuant to Section 3(a).

 

(s)         "Participant" means an Eligible Employee who elects to participate in the Plan, as provided in Section 3(c).

 

(t)         "Participating Company" means (i) the Company and (ii) each present or future Subsidiary designated by the Committee as a Participating Company.

 

(u)         "Plan" means this Heska Corporation 1997 Employee Stock Purchase Plan, as it may be amended from time to time.

 

(v)         "Purchase Account" means the account established for each Participant pursuant to Section 7(a).

 

(w)         "Purchase Price" means the price at which Participants may purchase Stock at the close of an Accumulation Period under the Plan, as determined pursuant to Section 7(c).

 

(x)         "Remaining Shares" means the number of shares of Stock equal to 1,800 less (i) cumulative shares of Stock purchased pursuant to Section 7(d) in a given Notification Offering Period prior to an Immediate Purchase Notification less (ii) cumulative shares of Stock purchased pursuant to Section 7(b) in a given Notification Offering Period following an Immediate Purchase Notification.

 

(y)         "Stock" means the Common Stock of the Company.

 

(z)         "Subsidiary" 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 

  

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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.

 

SECTION 15.                                EXECUTION.

 

To record the most recent amendment of the Plan by the Board or its Committee on April 30, 2013, the Company has caused its authorized officer to execute the same.

 

 

 

 

 

 

	 	
HESKA CORPORATION

 

 

	 
	
  

	
By: 

	/s/ Robert B. Grieve	 
	 	 	Robert B. Grieve	 
	 	 	
Chairman and Chief Executive Officer

	 
	 	 	 	 

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