Document:

Exhibit 10.12

HESKA
CORPORATION

2003
EQUITY INCENTIVE PLAN

HESKA CORPORATION hereby establishes the Heska
Corporation 2003 Equity Incentive Plan, effective as of April 15, 2003.

SECTION 1

BACKGROUND AND PURPOSE

1.1           Background.  The Plan
permits the grant of certain awards, including but not limited to, Nonqualified
Stock Options, Incentive Stock Options, SARs, Restricted Stock, Performance
Units, and Performance Shares.

1.2           Purpose of the
Plan.  The Plan is intended to attract, motivate, and retain
(a) employees of the Company and its Affiliates, (b) consultants who
provide significant services to the Company and its Affiliates, and
(c) directors of the Company who are employees of neither the Company nor
any Affiliate.  The Plan also is designed
to encourage stock ownership by Participants, thereby aligning their interests
with those of the Company’s shareholders.

SECTION 2

DEFINITIONS

The
following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

2.1           “1934 Act” means the
Securities Exchange Act of 1934, as amended. 
Reference to a specific section of the 1934 Act or regulation thereunder
shall include such section or regulation, any valid regulation promulgated
under such section, and any comparable provision of any future legislation or
regulation amending, supplementing or superseding such section or regulation.

2.2           “Affiliate” means any
corporation or any other entity (including, but not limited to, partnerships
and joint ventures) controlling, controlled by, or under common control with
the Company.

2.3           “Affiliated SAR” means a SAR
that is granted in connection with a related Option, and which automatically
will be deemed to be exercised at the same time that the related Option is
exercised.

2.4           “Annual Revenue” means the
Company’s or a business unit’s net sales for the Fiscal Year, determined in
accordance with generally accepted accounting principles; provided, however,
that prior to the Fiscal Year, the Committee shall determine whether any
significant item(s) shall be

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excluded or included from the calculation of Annual
Revenue with respect to one or more Participants.

2.5           “Award” means, individually or
collectively, a grant under the Plan of Nonqualified Stock Options, Incentive
Stock Options, SARs, Restricted Stock, Performance Units, or Performance
Shares.

2.6           “Award Agreement” means the
written agreement setting forth the terms and provisions applicable to each
Award granted under the Plan.

2.7           “Board” or “Board of
Directors” means the Board of Directors of the Company.

2.8           “Cash
Position” means the Company’s level of cash and cash equivalents.

2.9           “Change
in Control” means the occurrence of any of the following events:

(a)           Any “person” (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes
the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the total voting power represented by the Company’s then outstanding
voting securities;

(b)           The consummation of
the sale or disposition by the Company of all or substantially all of the
Company’s assets;

(c)           A change in the
composition of the Board occurring within a two-year period, as a result of
which fewer than a majority of the directors are Incumbent Directors.  “Incumbent Directors” means directors who
either (A) are Directors as of the effective date of the Plan, or
(B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Directors at the time of such
election or nomination (but will not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to the Company); or

(d)           The consummation of
a merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity or its parent) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or
consolidation.

2.10         “Code”
means the Internal Revenue Code of 1986, as amended.  Reference to a specific section of the Code
or regulation thereunder shall include such section or regulation, any valid
regulation promulgated under such section, and any comparable provision of any
future legislation or regulation amending, supplementing or superseding such
section or regulation.

2.11         “Committee”
means the Board or a committee appointed by the Board (pursuant to
Section 3.1) to administer the Plan.

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2.12         “Company” means Heska
Corporation, a Delaware corporation, or any successor thereto.

2.13         “Consultant” means any
consultant, independent contractor, or other person who provides significant
services to the Company or its Affiliates, but who is neither an Employee nor a
Director.

2.14         “Director” means any individual
who is a member of the Board of Directors of the Company.

2.15         “Disability” means a permanent
and total disability within the meaning of Section 22(e)(3) of the Code,
provided that in the case of Awards other than Incentive Stock Options, the
Committee in its discretion may determine whether a permanent and total
disability exists in accordance with uniform and non-discriminatory standards
adopted by the Committee from time to time.

2.16         “Earnings Per Share” means as to
any Fiscal Year, the Company’s or a business unit’s Net Income, divided by a
weighted average number of common shares outstanding and dilutive common
equivalent shares deemed outstanding, determined in accordance with generally
accepted accounting principles.

2.17         “Employee” means any employee of
the Company or of an Affiliate, whether such employee is so employed at the
time the Plan is adopted or becomes so employed subsequent to the adoption of
the Plan.

2.18         “Exercise Price” means the price
at which a Share may be purchased by a Participant pursuant to the exercise of
an Option.

2.19         “Fair Market Value” means the
last quoted per share selling price for Shares on the relevant date, or if there
were no sales on such date, the closing bid on the relevant date.  If there are neither bids nor sales on the
relevant date, then the Fair Market Value shall mean the arithmetic mean of the
highest and lowest quoted selling prices on the nearest day before and the
nearest day after the relevant date, as determined by the Committee.  Notwithstanding the preceding, for federal,
state, and local income tax reporting purposes, fair market value shall be
determined by the Committee (or its delegate) in accordance with uniform and
nondiscriminatory standards adopted by it from time to time.

2.20         “Fiscal Year” means the fiscal
year of the Company.

2.21         “Freestanding SAR” means a SAR
that is granted independently of any Option.

2.22         “Grant Date” means, with respect
to an Award, the date that the Award was granted.

2.23         “Incentive Stock Option” means
an Option to purchase Shares that is designated as an Incentive Stock Option
and is intended to meet the requirements of Section 422 of the Code.

2.24         “Individual Objectives” means as
to a Participant, the objective and measurable goals set by a “management by
objectives” process and approved by the Committee (in its discretion).

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2.25         “Net Income” means as to any
Fiscal Year, the income after taxes of the Company for the Fiscal Year
determined in accordance with generally accepted accounting principles,
provided that prior to the Fiscal Year, the Committee shall determine whether
any significant item(s) shall be included or excluded from the calculation of
Net Income with respect to one or more Participants.

2.26         “Nonqualified Stock Option”
means an option to purchase Shares that is not intended to be an Incentive
Stock Option.

2.27         “Operating
Cash Flow” means the Company’s or a business unit’s sum of Net Income plus depreciation
and amortization less capital expenditures plus changes in working capital
comprised of accounts receivable, inventories, other current assets, trade
accounts payable, accrued expenses, product warranty, advance payments from
customers and long-term accrued expenses, determined in accordance with
generally acceptable accounting principles.

2.28         “Operating
Income” means the Company’s or a business unit’s income from operations but
excluding any unusual items, determined in accordance with generally accepted
accounting principles.

2.29         “Option” means an Incentive
Stock Option or a Nonqualified Stock Option.

2.30         “Participant” means an Employee,
Consultant, or Director who has an outstanding Award.

2.31         “Performance Goals” means the
goal(s) (or combined goal(s)) determined by the Committee (in its discretion)
to be applicable to a Participant with respect to an Award.  As determined by the Committee, the
Performance Goals applicable to an Award may provide for a targeted level or
levels of achievement using one or more of the following measures:
(a) Annual Revenue, (b) Cash Position, (c) Earnings Per Share,
(d) Individual Objectives, (e) Net Income, (f) Operating Cash
Flow, (g) Operating Income, (h) Return on Assets, (i) Return on
Equity, (j) Return on Sales, and (k) Total Shareholder Return.  The Performance Goals may differ from
Participant to Participant and from Award to Award.

2.32         “Performance Share” means an
Award granted to a Participant pursuant to Section 8.

2.33         “Performance Unit” means an Award
granted to a Participant pursuant to Section 8.

2.34         “Period of Restriction” means
the period during which the transfer of Shares of Restricted Stock are subject
to restrictions and therefore, the Shares are subject to a substantial risk of
forfeiture.  As provided in
Section 7, such restrictions may be based on the passage of time, the
achievement of target levels of performance, or the occurrence of other events
as determined by the Committee, in its discretion.

2.35         “Plan” means the Heska Corporation
2003 Equity Incentive Plan, as set forth in this instrument and as hereafter
amended from time to time.

2.36         “Restricted Stock”
means an Award granted to a Participant pursuant to Section 7.

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2.37         “Return
on Assets” means the percentage equal to the Company’s or a business unit’s
Operating Income before incentive compensation, divided by average net Company
or business unit, as applicable, assets, determined in accordance with
generally accepted accounting principles.

2.38         “Return
on Equity” means the percentage equal to the Company’s Net Income divided
by average stockholder’s equity, determined in accordance with generally
accepted accounting principles.

2.39         “Return
on Sales” means the percentage equal to the Company’s or a business unit’s
Operating Income before incentive compensation, divided by the Company’s or the
business unit’s, as applicable, revenue, determined in accordance with
generally accepted accounting principles.

2.40         “Rule 16b-3” means
Rule 16b-3 promulgated under the 1934 Act, and any future regulation
amending, supplementing or superseding such regulation.

2.41         “Section 16 Person” means a
person who, with respect to the Shares, is subject to Section 16 of the
1934 Act.

2.42         “Shares” means the shares of
common stock of the Company.

2.43         “Stock Appreciation Right” or “SAR”
means an Award, granted alone or in connection with a related Option, that
pursuant to Section 6 is designated as a SAR.

2.44         “Subsidiary” means any
corporation in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the unbroken chain
then owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

2.45         “Tandem SAR” means a SAR that is
granted in connection with a related Option, the exercise of which shall
require forfeiture of the right to purchase an equal number of Shares under the
related Option (and when a Share is purchased under the Option, the SAR shall
be canceled to the same extent).

4.46         “Termination of Service” means
(a) in the case of an Employee, a cessation of the employee-employer
relationship between the Employee and the Company or an Affiliate for any
reason, including, but not by way of limitation, a termination by resignation,
discharge, death, Disability or the disaffiliation of an Affiliate, but
excluding any such termination where there is a simultaneous reemployment by
the Company or an Affiliate; and (b) in the case of a Consultant, a
cessation of the service relationship between the Consultant and the Company or
an Affiliate for any reason, including, but not by way of limitation, a
termination by resignation, discharge, death, Disability, or the disaffiliation
of an Affiliate, but excluding any such termination where there is a
simultaneous re-engagement of the consultant by the Company or an Affiliate.

2.47         “Total
Shareholder Return” means the total return (change in share price plus
reinvestment of any dividends) of a Share.

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SECTION 3

ADMINISTRATION

3.1           The Committee.  The Plan
shall be administered by the Committee. 
If the Committee is not the Board then the Committee shall consist of
not less than two (2) Directors who shall be appointed from time to time by,
and shall serve at the pleasure of, the Board of Directors.  If the Committee is not the Board then the
Committee shall be comprised solely of Directors who both are (a) ”non-employee
directors” under Rule 16b-3, and (b) ”outside directors” under
Section 162(m) of the Code.

3.2           Authority of the Committee. 
It shall be the duty of the Committee to administer the Plan in accordance with
the Plan’s provisions.  The Committee
shall have all powers and discretion necessary or appropriate to administer the
Plan and to control its operation, including, but not limited to, the power to
(a) determine which Employees, Consultants and Directors shall be granted
Awards, (b) prescribe the terms and conditions of the Awards,
(c) interpret the Plan and the Awards, (d) adopt such procedures and
subplans as are necessary or appropriate to permit participation in the Plan by
Employees and Directors who are foreign nationals or employed outside of the
United States, (e) adopt rules for the administration, interpretation and
application of the Plan as are consistent therewith, and (f) interpret,
amend or revoke any such rules.

3.3           Delegation by the Committee. 
The Committee, in its sole discretion and on such terms and conditions as it
may provide, may delegate all or any part of its authority and powers under the
Plan to one or more Directors or officers of the Company; provided, however,
that the Committee may not delegate its authority and powers (a) with
respect to Section 16 Persons, or (b) in any way which would
jeopardize the Plan’s qualification under Section 162(m) of the Code or
Rule 16b-3.

3.4           Decisions Binding.  All
determinations and decisions made by the Committee, the Board, and any delegate
of the Committee pursuant to the provisions of the Plan shall be final,
conclusive, and binding on all persons, and shall be given the maximum
deference permitted by law.

SECTION 4

SHARES SUBJECT TO THE PLAN

4.1           Number of Shares. 
Subject to adjustment as provided in Section 4.3, the total number of
Shares available for grant under the Plan shall not exceed 2,390,500.  Shares granted under the Plan may be either
authorized but unissued Shares or treasury Shares.

4.2           Lapsed Awards.  If an
Award is settled in cash, or is cancelled, terminates, expires, or lapses for
any reason (with the exception of the termination of a Tandem SAR upon exercise
of the related Option, or the termination of a related Option upon exercise of
the corresponding Tandem SAR), any Shares subject to such Award again shall be
available to be the subject of an Award.

4.3           Adjustments in Awards and
Authorized Shares.  In the event
that any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the
Company, or other

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change in the corporate structure of the Company affecting the Shares
occurs such that an adjustment is determined by the Committee (in its sole
discretion) to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the
Plan, then the Committee shall, in such manner as it may deem equitable, adjust
the number and class of Shares which may be delivered under the Plan,
the number, class, and price of Shares subject to outstanding Awards, and the
numerical limits of Sections 5.1, 6.1, 7.1 and 8.1.  Notwithstanding the preceding, the number of
Shares subject to any Award always shall be a whole number.

SECTION 5

STOCK OPTIONS

5.1           Grant of Options. 
Subject to the terms and provisions of the Plan, Options may be granted to
Employees, Consultants and Directors at any time and from time to time as
determined by the Committee in its sole discretion.  The Committee, in its sole discretion, shall
determine the number of Shares subject to each Option, provided that during any
Fiscal Year, no Participant shall be granted Options covering more than 500,000
Shares.  Notwithstanding the foregoing
limitation, in connection with a Participant’s initial service as an Employee,
a Participant may be granted Options to purchase up to an additional 500,000  Shares. 
The Committee may grant Incentive Stock Options, Nonqualified Stock
Options, or a combination thereof.

5.2           Award Agreement.  Each
Option shall be evidenced by an Award Agreement that shall specify the Exercise
Price, the expiration date of the Option, the number of Shares to which the
Option pertains, any conditions to exercise the Option, and such other terms
and conditions as the Committee, in its discretion, shall determine.  The Award Agreement shall also specify
whether the Option is intended to be an Incentive Stock Option or a
Nonqualified Stock Option.

5.3           Exercise Price.  Subject
to the provisions of this Section 5.3, the Exercise Price for each Option
shall be determined by the Committee in its sole discretion.

5.3.1        Nonqualified
Stock Options.  In the case of a
Nonqualified Stock Option, the Exercise Price shall be not less than one
hundred percent (100%) of the Fair Market Value of a Share on the Grant Date.

5.3.2        Incentive
Stock Options.  In the case of an
Incentive Stock Option, the Exercise Price shall be not less than one hundred
percent (100%) of the Fair Market Value of a Share on the Grant Date; provided,
however, that if on the Grant Date, the Employee (together with persons whose
stock ownership is attributed to the Employee pursuant to Section 424(d)
of the Code) owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any of its Subsidiaries, the
Exercise Price shall be not less than one hundred and ten percent (110%) of the
Fair Market Value of a Share on the Grant Date.

5.3.3        Substitute
Options.  Notwithstanding the
provisions of Sections 5.3.1 and 5.3.2, in the event that the Company or
an Affiliate consummates a transaction described in Section 424(a) of the
Code (e.g., the acquisition of property or stock from an unrelated
corporation), persons who become Employees, Directors or Consultants on account
of such transaction may be granted Options in substitution for options granted
by their former employer.  If such
substitute

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Options are granted, the Committee, in its sole
discretion and consistent with Section 424(a) of the Code, may determine
that such substitute Options shall have an exercise price less than one hundred
percent (100%) of the Fair Market Value of the Shares on the Grant Date.

5.4           Expiration of Options.

5.4.1        Expiration
Dates.  Each Option shall terminate
no later than the first to occur of the following events:

(a)           The
date for termination of the Option set forth in the written Award Agreement, or

(b)           If
no date for the termination of the Option is set forth in the written Award
Agreement (other than reference to Section 5.4.1(c)), the expiration of
three (3) months from the date of the Participant’s Termination of Service for
any reason; or

(c)           The
expiration of ten (10) years from the Grant Date.

5.4.2        Committee
Discretion.  Subject to the limits of
Section 5.4.1, the Committee, in its sole discretion, (a) shall
provide in each Award Agreement when each Option expires and becomes
unexercisable, and (b) may, after an Option is granted, extend the maximum
term of the Option (subject to Section 5.8.4 regarding Incentive Stock
Options).

5.5           Exercisability of Options. 
Options granted under the Plan shall be exercisable at such times and be
subject to such restrictions and conditions as the Committee shall determine in
its sole discretion.  After an Option is
granted, the Committee, in its sole discretion, may accelerate the
exercisability of the Option.

5.6           Payment.  Options shall
be exercised by the Participant’s delivery of a written notice of exercise to
the Secretary of the Company (or its designee), setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by full
payment for the Shares.

Upon the exercise of any
Option, the Exercise Price shall be payable to the Company in full in cash or
its equivalent.  The Committee, in its
sole discretion, also may permit exercise (a) by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Exercise Price (such previously acquired Shares must have
been held for the requisite period necessary to avoid a charge to the Company’s
earnings for the financial reporting purposes, unless otherwise determined by
the Committee), or (b) by any other means which the Committee, in its sole
discretion, determines to both provide legal consideration for the Shares, and
to be consistent with the purposes of the Plan.

As soon as practicable
after receipt of a written notification of exercise and full payment for the
Shares purchased, the Company shall deliver to the Participant (or the
Participant’s designated broker), Share certificates (which may be in book
entry form) representing such Shares.

5.7           Restrictions on Share
Transferability.  The Committee may impose such restrictions on any
Shares acquired pursuant to the exercise of an Option as it may deem advisable,
including, but not limited to, restrictions related to applicable federal
securities laws, the requirements of any

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national securities exchange or system upon which
Shares are then listed or traded, or any blue sky or state securities laws.

5.8           Certain Additional Provisions for
Incentive Stock Options.

5.8.1        Exercisability.  The aggregate Fair Market Value (determined
on the Grant Date(s)) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by any Employee during any calendar
year (under all plans of the Company and its Subsidiaries) shall not exceed
$100,000.

5.8.2        Termination
of Service.  No Incentive Stock
Option may be exercised more than three (3) months after the Participant’s
Termination of Service for any reason other than Disability or death, unless
(a) the Participant dies during such three-month period, and/or
(b) the Award Agreement or the Committee permits later exercise.  No Incentive Stock Option may be exercised
more than one (1) year after the Participant’s Termination of Service on
account of death or Disability, unless the Award Agreement or the Committee
permit later exercise.

5.8.3        Company
and Subsidiaries Only.  Incentive
Stock Options may be granted only to persons who are employees of the Company
or a Subsidiary on the Grant Date.

5.8.4        Expiration.  No Incentive Stock Option may be exercised
after the expiration of ten (10) years from the Grant Date; provided, however,
that if the Option is granted to an Employee who, together with persons whose
stock ownership is attributed to the Employee pursuant to Section 424(d)
of the Code, owns stock possessing more than 10% of the total combined voting
power of all classes of the stock of the Company or any of its Subsidiaries,
the Option may not be exercised after the expiration of five (5) years from the
Grant Date.

SECTION 6

STOCK APPRECIATION RIGHTS

6.1           Grant of SARs.  Subject
to the terms and conditions of the Plan, a SAR may be granted to Employees,
Directors and Consultants at any time and from time to time as shall be
determined by the Committee, in its sole discretion.  The Committee may grant Affiliated SARs,
Freestanding SARs, Tandem SARs, or any combination thereof.

6.1.1        Number
of Shares.  The Committee shall have
complete discretion to determine the number of SARs granted to any Participant,
provided that during any Fiscal Year, no Participant shall be granted SARs
covering more than 500,000 Shares, except that such Participant may receive
SARS covering up to an additional 500,000 Shares in the fiscal year of the
Company in which his or her service as an Employee first commences.

6.1.2        Exercise
Price and Other Terms.  The
Committee, subject to the provisions of the Plan, shall have complete
discretion to determine the terms and conditions of SARs granted under the
Plan.  However, the exercise price of a
Freestanding SAR shall be not less than one hundred percent (100%) of the Fair
Market Value of a Share on the Grant Date. 
The exercise price of Tandem or Affiliated SARs shall equal the Exercise
Price of the related Option.

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6.2           Exercise of Tandem SARs. 
Tandem SARs may be exercised for all or part of the Shares subject to the
related Option upon the surrender of the right to exercise the equivalent portion
of the related Option.  A Tandem SAR may
be exercised only with respect to the Shares for which its related Option is
then exercisable.  With respect to a
Tandem SAR granted in connection with an Incentive Stock Option: (a) the
Tandem SAR shall expire no later than the expiration of the underlying
Incentive Stock Option; (b) the value of the payout with respect to the
Tandem SAR shall be for no more than one hundred percent (100%) of the
difference between the Exercise Price of the underlying Incentive Stock Option
and the Fair Market Value of the Shares subject to the underlying Incentive
Stock Option at the time the Tandem SAR is exercised; and (c) the Tandem
SAR shall be exercisable only when the Fair Market Value of the Shares subject
to the Incentive Stock Option exceeds the Exercise Price of the Incentive Stock
Option.

6.3           Exercise of Affiliated SARs. 
An Affiliated SAR shall be deemed to be exercised upon the exercise of the
related Option.  The deemed exercise of
an Affiliated SAR shall not necessitate a reduction in the number of Shares
subject to the related Option.

6.4           Exercise of Freestanding SARs. 
Freestanding SARs shall be exercisable on such terms and conditions as the
Committee, in its sole discretion, shall determine.

6.5           SAR Agreement.  Each SAR
grant shall be evidenced by an Award Agreement that shall specify the exercise
price, the term of the SAR, the conditions of exercise, and such other terms
and conditions as the Committee, in its sole discretion, shall determine.

6.6           Expiration of SARs.  A
SAR granted under the Plan shall expire upon the date determined by the
Committee, in its sole discretion, and set forth in the Award Agreement.  Notwithstanding the foregoing, the rules of
Section 5.4 also shall apply to SARs.

6.7           Payment of SAR Amount. 
Upon exercise of a SAR, a Participant shall be entitled to receive payment from
the Company in an amount determined by multiplying:

(a)           The difference between the Fair
Market Value of a Share on the date of exercise over the exercise price; times

(b)           The number of Shares with respect to
which the SAR is exercised.

At
the discretion of the Committee, the payment upon SAR exercise may be in cash,
in Shares of equivalent value, or in some combination thereof.

SECTION 7

RESTRICTED STOCK

7.1           Grant of Restricted Stock. 
Subject to the terms and provisions of the Plan, the Committee, at any time and
from time to time, may grant Shares of Restricted Stock to Employees, Directors
and Consultants in such amounts as the Committee, in its sole discretion, shall
determine.  The Committee, in its sole
discretion, shall determine the number of Shares to be granted to each
Participant, provided that during any Fiscal Year, no Participant shall receive
more than 100,000 Shares of Restricted Stock. 
In addition, no more than 500,000 Shares available for grant under the

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Plan may be issued pursuant to Shares of Restricted
Stock with a purchase price that is less than 100% of Fair Market Value.

7.2           Restricted Stock Agreement. 
Each Award of Restricted Stock shall be evidenced by an Award Agreement that
shall specify the Period of Restriction, the number of Shares granted, and such
other terms and conditions as the Committee, in its sole discretion, shall
determine.  Unless the Committee
determines otherwise, Shares of Restricted Stock shall be held by the Company
as escrow agent until the restrictions on such Shares have lapsed.

7.3           Transferability.  Except
as provided in this Section 7, Shares of Restricted Stock may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until
the end of the applicable Period of Restriction.

7.4           Other Restrictions.  The
Committee, in its sole discretion, may impose such other restrictions on Shares
of Restricted Stock as it may deem advisable or appropriate, in accordance with
this Section 7.4.

7.4.1        General
Restrictions.  The Committee may set
restrictions based upon the achievement of specific performance objectives
(Company-wide, divisional, or individual), applicable federal or state
securities laws, or any other basis determined by the Committee in its
discretion.

7.4.2        Section 162(m)
Performance Restrictions.  For
purposes of qualifying grants of Restricted Stock as “performance-based
compensation” under Section 162(m) of the Code, the Committee, in its discretion,
may set restrictions based upon the achievement of Performance Goals.  The Performance Goals shall be set by the
Committee on or before the latest date permissible to enable the Restricted
Stock to qualify as “performance-based compensation” under Section 162(m)
of the Code.  In granting Restricted
Stock which is intended to qualify under Section 162(m) of the Code, the
Committee shall follow any procedures determined by it from time to time to be necessary
or appropriate to ensure qualification of the Restricted Stock under
Section 162(m) of the Code (e.g., in determining the Performance Goals).

7.4.3        Legend
on Certificates.  The Committee, in
its discretion, may legend the certificates representing Restricted Stock to
give appropriate notice of such restrictions.

7.5           Removal of
Restrictions.  Except as otherwise provided in this Section 7,
Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan shall be released from escrow as soon as practicable after the last
day of the Period of Restriction.  The
Committee, in its discretion, may accelerate the time at which any restrictions
shall lapse or be removed.  After the
restrictions have lapsed, the Participant shall be entitled to have any legend
or legends under Section 7.4.3 removed from his or her Share certificate,
and the Shares shall be freely transferable by the Participant.

7.6           Voting Rights.  During
the Period of Restriction, Participants holding Shares of Restricted Stock
granted hereunder may exercise full voting rights with respect to those Shares,
unless the Committee determines otherwise.

 

 11

7.7           Dividends and Other Distributions. 
During the Period of Restriction, Participants holding Shares of Restricted
Stock shall be entitled to receive all dividends and other distributions paid
with respect to such Shares unless otherwise provided in the Award
Agreement.  If any such dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.

7.8           Return of Restricted Stock to
Company.  On the date set forth in the Award Agreement, the Restricted
Stock for which restrictions have not lapsed shall revert to the Company and
again shall become available for grant under the Plan.

SECTION 8

PERFORMANCE UNITS AND PERFORMANCE SHARES

8.1           Grant of Performance Units/Shares. 
Performance Units and Performance Shares may be granted to Employees, Directors
and Consultants at any time and from time to time, as shall be determined by
the Committee, in its sole discretion. 
The Committee shall have complete discretion in determining the number
of Performance Units and Performance Shares granted to each Participant
provided that during any Fiscal Year, (a) no Participant shall receive
Performance Units having an initial value greater than $1,000,000, except that
such Participant may receive Performance Units in the fiscal year of the
Company in which his or her service as an Employee first commences with an
initial value no greater than $2,000,000, and (b) no Participant shall
receive more than 500,000 Performance Shares, except that such Participant may
receive up to an additional 500,000 Performance Shares in the fiscal year of
the Company in which his or her service as an Employee first commences.

8.2           Value of Performance Units/Shares. 
Each Performance Unit shall have an initial value that is established by the
Committee on or before the Grant Date. 
Each Performance Share shall have an initial value equal to the Fair
Market Value of a Share on the Grant Date.

8.3           Performance Objectives and Other
Terms.  The Committee shall set performance objectives in its
discretion which, depending on the extent to which they are met, will determine
the number or value of Performance Units/Shares that will be paid out to the
Participants.  The time period during
which the performance objectives must be met shall be called the “Performance
Period.”  Each Award of Performance
Units/Shares shall be evidenced by an Award Agreement that shall specify the
Performance Period, and such other terms and conditions as the Committee, in
its sole discretion, shall determine.

8.3.1        General
Performance Objectives.  The
Committee may set performance objectives based upon the achievement of
Company-wide, divisional, or individual goals, applicable federal or state
securities laws, or any other basis determined by the Committee in its
discretion.

8.3.2        Section 162(m)
Performance Objectives.  For purposes
of qualifying grants of Performance Units/Shares as “performance-based
compensation” under Section 162(m) of the Code, the Committee, in its
discretion, may determine that the performance objectives applicable to
Performance Units/Shares shall be based on the achievement of Performance
Goals.  The Performance Goals shall be set
by the Committee on or before the latest date permissible to enable

 12
 

the Performance Units/Shares to qualify as “performance-based
compensation” under Section 162(m) of the Code.  In granting Performance Units/Shares which
are intended to qualify under Section 162(m) of the Code, the Committee
shall follow any procedures determined by it from time to time to be necessary
or appropriate to ensure qualification of the Performance Units/Shares under
Section 162(m) of the Code (e.g., in determining the Performance Goals).

8.4           Earning of Performance
Units/Shares.  After the applicable Performance Period has ended, the
holder of Performance Units/Shares shall be entitled to receive a payout of the
number of Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the
corresponding performance objectives have been achieved.  After the grant of a Performance Unit/Share,
the Committee, in its sole discretion, may reduce or waive any performance
objectives for such Performance Unit/Share.

8.5           Form and Timing of Payment of
Performance Units/Shares.  Payment of earned Performance Units/Shares
shall be made as soon as practicable after the expiration of the applicable
Performance Period.  The Committee, in
its sole discretion, may pay earned Performance Units/Shares in the form of
cash, in Shares (which have an aggregate Fair Market Value equal to the value
of the earned Performance Units/Shares at the close of the applicable
Performance Period) or in a combination thereof.

8.6           Cancellation of Performance
Units/Shares.  On the date set forth in the Award Agreement, all
unearned or unvested Performance Units/Shares shall be forfeited to the
Company, and again shall be available for grant under the Plan.

SECTION 9

MISCELLANEOUS

9.1           Change
in Control.

9.1.1        Options
and SARs.

(a)           In
the event of a Change in Control, each outstanding Option and SAR shall be
assumed or an equivalent option or right substituted by the successor
corporation or a parent or Subsidiary of the successor corporation.

(b)           In the event that the successor
corporation refuses to assume or substitute for the Option or SAR, then the
Options and SARs held by such Participant shall become one hundred percent
(100%) exercisable.  If an Option or SAR
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a Change in Control, the Company shall notify the Participant in
writing or electronically that the Option or SAR shall be fully vested and
exercisable (subject to the consummation of the Change in Control) for a period
of fifteen (15) days from the date of such notice, and the Option or SAR shall
terminate upon the expiration of such period.

(c)           For
the purposes of this Section 9.1.1, the Option or SAR shall be considered
assumed if, following the Change in Control, the option or right confers the
right to purchase or receive, for each Share subject to the Option or SAR
immediately prior to the Change in Control, the consideration (whether stock,
cash, or other securities or property) received in the 

 13
 

Change in Control by holders of Shares for each Share
held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the Change in Control is not solely common stock of
the successor corporation or its parent, the Committee or the Board may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or SAR, for each Share subject to the
Option or SAR, to be solely common stock of the successor corporation or its
parent equal in fair market value to the per share consideration received by
holders of Shares in the Change in Control, as determined on the date of the
Change in Control.

9.1.2        Restricted
Stock.  In the event of a Change in
Control, any Company repurchase or reacquisition right with respect to
outstanding Shares of Restricted Stock held by the Participant will be assigned
to the successor corporation.  In the
event that the successor corporation refuses to accept the assignment of any
such Company repurchase or reacquisition right, such Company repurchase or
reacquisition right will lapse and the Participant will become one hundred
percent (100%) vested in such Shares of Restricted Stock immediately prior to
the Change in Control.

9.1.3        Performance
Shares and Performance Units.  In the
event of a Change in Control, the Committee or the Board, in its discretion,
may provide for any one or more of the following with respect to the
Performance Shares and Units: (a) any outstanding Performance Shares and Units
shall be assumed by the successor corporation or a parent or Subsidiary of the
successor corporation, (b) any outstanding Performance Shares and Units
shall be terminated immediately prior to the Change in Control, or
(c) with respect to a Change in Control that occurs prior to a Participant’s
Termination of Service, one hundred percent (100%) of any outstanding
Performance Shares or Units shall be deemed to be earned and shall be
immediately payable to the Participant, or, in cases where a Participant has
received a target award of Performance Units or Shares, up to one hundred
percent (100%) of the target amount shall vest. 
In the event any outstanding Performance Shares and Units are assumed,
the successor corporation shall have the ability to reasonably and equitably
adjust the Performance Goals.

9.2           Deferrals.  The
Committee, in its sole discretion, may permit a Participant to defer receipt of
the payment of cash or the delivery of Shares that would otherwise be due to
such Participant under an Award.  Any
such deferral elections shall be subject to such rules and procedures as shall
be determined by the Committee in its sole discretion.

9.3           No Effect on Employment or Service. 
Nothing in the Plan shall interfere with or limit in any way the right of the
Company to terminate any Participant’s employment or service at any time, with
or without cause.  For purposes of the
Plan, transfer of employment of a Participant between the Company and any one
of its Affiliates (or between Affiliates) shall not be deemed a Termination of
Service.  Employment with the Company and
its Affiliates is on an at-will basis only.

9.4           Participation.  No
Employee or Consultant shall have the right to be selected to receive an Award
under this Plan, or, having been so selected, to be selected to receive a
future Award.

 14
 

9.5           Indemnification.  Each
person who is or shall have been a member of the Committee, or of the Board,
shall be indemnified and held harmless by the Company against and from
(a) any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action taken or failure to act
under the Plan or any Award Agreement, and (b) from any and all amounts paid
by him or her in settlement thereof, with the Company’s approval, or paid by
him or her in satisfaction of any judgment in any such claim, action, suit, or
proceeding against him or her, provided he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf.  The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s Certificate of Incorporation or Bylaws, by
contract, as a matter of law, or otherwise, or under any power that the Company
may have to indemnify them or hold them harmless.

9.6           Successors.  All
obligations of the Company under the Plan, with respect to Awards granted
hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
or assets of the Company.

9.7           Beneficiary Designations. 
If permitted by the Committee, a Participant under the Plan may name a
beneficiary or beneficiaries to whom any vested but unpaid Award shall be paid
in the event of the Participant’s death. 
Each such designation shall revoke all prior designations by the
Participant and shall be effective only if given in a form and manner
acceptable to the Committee.  In the
absence of any such designation, any vested benefits remaining unpaid at the
Participant’s death shall be paid to the Participant’s estate and, subject to
the terms of the Plan and of the applicable Award Agreement, any unexercised
vested Award may be exercised by the administrator or executor of the
Participant’s estate.

9.8           Limited Transferability of Awards. 
No Award granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will, by the laws of descent
and distribution, or to the limited extent provided in Section 9.6.  All rights with respect to an Award granted
to a Participant shall be available during his or her lifetime only to the
Participant.  Notwithstanding the
foregoing, the Participant may, in a manner specified by the Committee,
(a) transfer a Nonqualified Stock Option to a Participant’s spouse, former
spouse or dependent pursuant to a court-approved domestic relations order which
relates to the provision of child support, alimony payments or marital property
rights, and (b) transfer a Nonqualified Stock Option by bona fide gift and
not for any consideration, to (i) a member or members of the Participant’s
immediate family, (ii) a trust established for the exclusive benefit of
the Participant and/or member(s) of the Participant’s immediate family,
(iii) a partnership, limited liability company of other entity whose only
partners or members are the Participant and/or member(s) of the Participant’s
immediate family, or (iv) a foundation in which the Participant and/or
member(s) of the Participant’s immediate family control the management of the
foundation’s assets.

9.9           No Rights as Stockholder. 
Except to the limited extent provided in Sections 7.6 and 7.7, no
Participant (nor any beneficiary) shall have any of the rights or privileges of
a stockholder of the Company with respect to any Shares issuable pursuant to an
Award (or exercise thereof), unless

 15
 

and until certificates representing such Shares shall
have been issued, recorded on the records of the Company or its transfer agents
or registrars, and delivered to the Participant (or beneficiary).

SECTION 10

AMENDMENT, TERMINATION, AND DURATION

10.1         Amendment, Suspension, or
Termination.  The Board, in its sole discretion, may amend, suspend or
terminate the Plan, or any part thereof, at any time and for any reason.  The amendment, suspension, or termination of
the Plan shall not, without the consent of the Participant, alter or impair any
rights or obligations under any Award theretofore granted to such
Participant.  No Award may be granted
during any period of suspension or after termination of the Plan.  Notwithstanding the foregoing, the Board may
not, without stockholder approval, (a) reduce the exercise price of any
outstanding Award, (b) cancel and re-grant Options at a lower exercise
price (including entering into a 6-month-and-1-day cancellation and re-grant
program), (c) replace underwater Options with other Awards in an exchange,
buy-back or other scheme, or (d) replace Awards with an Award of the same
type having a lower exercise price or accelerated vesting schedule in an
exchange, buy-back or other scheme.

10.2         Duration of the Plan.  The
Plan shall be effective as of April 15, 2003, and subject to Section 10.1
(regarding the Board’s right to amend or terminate the Plan), shall remain in
effect thereafter.  However, without
further stockholder approval, no Incentive Stock Option may be granted under
the Plan after April 15, 2013.

SECTION 11

TAX WITHHOLDING

11.1         Withholding Requirements. 
Prior to the delivery of any Shares or cash pursuant to an Award (or exercise
thereof), the Company shall have the power and the right to deduct or withhold,
or require a Participant to remit to the Company, an amount sufficient to
satisfy federal, state, and local taxes (including the Participant’s FICA
obligation) required to be withheld with respect to such Award (or exercise
thereof).

11.2         Withholding Arrangements. 
The Committee, in its sole discretion and pursuant to such procedures as it may
specify from time to time, may permit a Participant to satisfy such tax
withholding obligation, in whole or in part by (a) electing to have the
Company withhold otherwise deliverable Shares, or (b) delivering to the
Company already-owned Shares having a Fair Market Value equal to the minimum
amount required to be withheld.  The
amount of the withholding requirement shall be deemed to include any amount
which the Committee agrees may be withheld at the time the election is made,
not to exceed the amount determined by using the maximum federal, state or
local marginal income tax rates applicable to the Participant with respect to
the Award on the date that the amount of tax to be withheld is to be
determined.  The Fair Market Value of the
Shares to be withheld or delivered shall be determined as of the date that the
taxes are required to be withheld.

 16
 

SECTION 12

LEGAL CONSTRUCTION

12.1         Gender and Number.  Except
where otherwise indicated by the context, any masculine term used herein also
shall include the feminine; the plural shall include the singular and the
singular shall include the plural.

12.2         Severability.  In the event
any provision of the Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision
had not been included.

12.3         Requirements of Law.  The
granting of Awards and the issuance of Shares under the Plan shall be subject
to all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

12.4         Securities Law Compliance. 
With respect to Section 16 Persons, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3.  To the extent any provision of the Plan, Award
Agreement or action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Committee.

12.5         Governing Law.  The Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of California.

12.6         Captions.  Captions are
provided herein for convenience only, and shall not serve as a basis for
interpretation or construction of the Plan.

 17
 

EXECUTION

IN WITNESS WHEREOF, the Company, by its duly
authorized officer, has executed this Plan on the date indicated below.

	
  

  	
  HESKA CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: April 15,
  2003

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive
  Officer

  

 

 18EXHIBIT 10.13

HESKA CORPORATION 2003 EQUITY
INCENTIVE PLAN

STOCK OPTION AGREEMENT

(EMPLOYEES AND CONSULTANTS)

 

	
  Tax Treatment

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Vesting/ Exercisability

  	
   

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

   

  No additional shares become vested after your
  Termination of Service and the option shall terminate as to any shares that
  are unvested as of the end of business on the date of your Termination of
  Service.

  
	
   

  	
   

  	
   

  
	
  Term

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Regular Termination

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Death

  	
   

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

  

 

 1
 

 

	
  Disability

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Leaves of Absence

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Change in Control

  	
   

  	
  This option shall vest and become exercisable in
  full if (i) the Company is subject to a Change in Control, (ii) this option
  is not continued by the Company and (iii) this option is not either assumed
  by the surviving corporation or its parent or substituted for by the surviving
  corporation’s or its parent’s issuing its own option in replacement of this
  option.

  
	
   

  	
   

  	
   

  
	
  Restrictions on Exercise

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Notice of Exercise

  	
   

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

   

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

  
	
   

  	
   

  	
   

  
	
  Form of Payment

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·  Cash, check or wire transfer. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·  Certificates for shares of Company stock
  that you own, along with any forms needed to affect a transfer of those
  shares to the Company. The value of the shares, determined as of the
  effective date of the option exercise, will be applied to the option exercise
  price. However, the Company may restrict your ability to surrender shares of
  Company stock (including your ability to surrender any particular shares of
  Company Stock held by you) in payment of the 

  

 

 2
 

 

	
  

  	
   

  	
  exercise price if your
  doing so would result in the Company’s recognizing additional compensation
  expense with respect to this option for financial reporting purposes. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Withholding Taxes and Stock Withholding

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Restrictions on Resale

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Transfer of Option

  	
   

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

   

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

  
	
   

  	
   

  	
   

  
	
  Retention Rights

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Stockholder Rights

  	
   

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

  

 

 3
 

 

	
  Applicable Law

  	
   

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

  
	
   

  	
   

  	
   

  
	
  The Plan and Other Agreements

  	
   

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

   

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

  

BY
SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED ABOVE AND IN THE 2003 EQUITY INCENTIVE PLAN.

 

 4

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