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EXHIBIT 10.3
HESKA CORPORATION
1994 KEY EXECUTIVE STOCK PLAN
1. PURPOSES OF THE PLAN. The purposes of this Key Executive
Stock Plan are to attract and retain the best available personnel for positions
of substantial responsibility, to provide additional incentive to Employees and
Consultants of the Company and its Subsidiaries, or their designees, and to
promote the success of the Company's business. Options granted under the Plan
shall be "non-statutory stock options" and "incentive stock options" within the
meaning of Section 422 of the Code, as designated by the Board at the time of
grant. Stock purchase rights may also be granted under the Plan. Options and
stock purchase rights under this Plan are intended to be granted only to key
executives (either employees or consultants, including directors, and their
designees).
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "ADMINISTRATOR" means the Committee appointed
pursuant to Section 4 of the Plan or, if the Committee is not so acting, the
Board.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as
amended.
(d) "COMMON STOCK" means the Common Stock of the Company.
(e) "COMPANY" means Heska Corporation, a California
corporation.
(f) "CONSULTANT" means any person, including an advisor,
who is engaged by the Company or any Parent or Subsidiary to render services
and is compensated for such services, other than an employee. A director may
be a Consultant if not also an Employee, provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange
Act, the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the
Company.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE" means the absence
of any interruption or termination of the employment relationship by the
Company or any Subsidiary. Continuous Status as an Employee shall not be
considered interrupted in the case of: (i) sick leave, military leave or any
other leave of absence approved by the Board, provided that such leave is for a
period of not more than ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; or
(ii) in the case of transfers between locations of the Company or between the
Company, its Subsidiaries or its successor.
(h) "EMPLOYEE" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a
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director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(i) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(j) "FAIR MARKET VALUE" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system
including without limitation the National Market System of the
National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be
the closing sales price for such stock (or the closing bid, if
no sales were reported, as quoted on such system or exchange
for the last market trading day prior to the time of
determination) as reported in the Wall Street Journal or such
other source as the Board deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or
regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the
mean between the high and low asked prices for the Common
Stock; or
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be
determined in good faith by the Board.
(k) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(l) "NONSTATUTORY STOCK OPTION" means an Option not
intended to qualify as an Incentive Stock Option.
(m) "OPTION" means a stock option granted pursuant to the
Plan.
(n) "OPTIONED STOCK" means the Common Stock subject to an
Option.
(o) "OPTIONEE" means an Employee or Consultant, or the
designee of an Employee or Consultant, who receives an Option.
(p) "PARENT" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
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(q) "PLAN" means this 1994 Key Executive Stock Plan, as
amended from time to time.
(r) "PURCHASER" means an Employee or Consultant, or the
designee of an Employee or Consultant, who exercises a Stock Purchase Right.
(s) "SHARE" means a share of the Common Stock, as
adjusted in accordance with Section 13 of the Plan.
(t) "STOCK PURCHASE RIGHT" means the right to purchase
Restricted Stock granted pursuant to Section 11 of the Plan.
(u) "SUBSIDIARY" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 13 of the Plan, the maximum aggregate number of shares which may be
optioned and/or sold under the Plan is 500,000 shares of Common Stock. The
shares may be authorized, but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right should expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan shall have
been terminated, become available for future grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. With respect to grants of Options or
Stock Purchase Rights to Employees or Consultants who are also officers or
directors of the Company, the Plan shall be administered by (A) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3
promulgated under the Exchange Act or any successor thereto ("Rule 16b-3") with
respect to a plan intended to qualify thereunder as a discretionary plan or (B)
the Board if the Board may administer the Plan in compliance with Rule 16b-3
with respect to a plan intended to qualify thereunder as a discretionary plan.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board
may increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder
as a discretionary plan.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted
by Rule 16b-3, the Plan may be administered by different
bodies with respect to directors, non-
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director officers and Employees or Consultants who are neither
directors nor officers.
(b) POWERS OF THE ADMINISTRATOR. Subject to the
provisions of the Plan and the specific duties delegated to it by the Board,
the Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(j) of the Plan;
(ii) to select the Consultants and Employees and
their designees to whom Options and Stock Purchase Rights may
from time to time be granted hereunder;
(iii) to determine whether and to what extent
Options and Stock Purchase Rights or any combination thereof,
are granted hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;
(v) to approve forms of agreement for use under
the Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted
hereunder (including, but not limited to the share price and
any restriction or vesting limitation, based in each case on
such factors as the Administrator shall determine, in its sole
discretion);
(vii) to determine the terms and restrictions
applicable to Stock Purchase Rights and the Restricted Stock
purchased by exercising such Stock Purchase Rights; and
(viii) to make any other such determinations with
respect to awards under the Plan as it shall deem appropriate.
(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and Purchasers and any other holders of any Options or
Rights.
5. ELIGIBILITY FOR OPTIONS.
(a) Nonstatutory Stock Options may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. An Employee or
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Consultant who has been granted an Option may, if he is otherwise eligible, be
granted an additional Option or Options.
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right
with respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's
right to terminate his employment or consulting relationship at any time, with
or without cause.
6. TERM OF PLAN. The Plan shall become effective upon the
earlier of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 18 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 15 of the Plan.
7. TERM OF OPTION. The term of each Option shall be the term
stated in the Option Agreement; provided, however, that in the case of an
Incentive Stock Option, the term shall be no more than ten (10) years from the
date of grant thereof or such shorter term as may be provided in the Option
Agreement. However, in the case of an Incentive Stock Option granted to an
Optionee who, at the time the Option is granted, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant thereof or such shorter term as may be provided in
the Option Agreement.
8. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined
by the Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of
the grant of such Incentive Stock Option, owns stock
representing more than ten percent (10%) of the voting power
of all classes of stock of the Company
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or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the Fair Market Value per Share
on the date of grant.
(B) granted to any Employee, the per Share
exercise price shall be no less than 100% of the Fair Market
Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
granted to any person, the per Share exercise price shall be
no less than 85% of the Fair Market Value per Share on the
date of grant.
(b) The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant) and may consist entirely of (i) cash,
(ii) check, (iii) other Shares which (x) in the case of Shares acquired upon
exercise of an Option either have been owned by the Optionee for more than six
months on the date of surrender or were not acquired, directly or indirectly,
from the Company, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised, (iv) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that number of
Shares having a Fair Market Value on the date of exercise equal to the exercise
price for the total number of Shares as to which the Option is exercised, (v)
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds required to pay the exercise price, (vi) any combination of
the foregoing methods of payment, (vii) or such other consideration and method
of payment for the issuance of Shares to the extent permitted under Applicable
Laws. In making its determination as to the type of consideration to accept,
the Board shall consider if acceptance of such consideration may be reasonably
expected to benefit the Company under applicable corporate laws.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator and set forth in the Option
Agreement, including performance criteria with respect to the Company and/or
the Optionee.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a
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duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 13 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF EMPLOYMENT. In the event of
termination of an Optionee's consulting relationship or Continuous Status as an
Employee with the Company (as the case may be), such Optionee may, but only
within ninety (90) days after the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise the Option to the extent that Optionee was entitled
to exercise it at the date of such termination. To the extent that Optionee
was not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the
provisions of Section 9(b) above, in the event of termination of an Optionee's
Consulting relationship or Continuous Status as an Employee as a result of his
total and permanent disability (as defined in Section 22(e)(3) of the Code),
Optionee may, but only within twelve (12) months from the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise the Option to the extent
otherwise entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an
Optionee, the Option may be exercised, at any time within twelve (12) months
following the date of death (but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent the Optionee was entitled to
exercise the Option at the date of death. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.
(e) RULE 16B-3. Options granted to persons subject to
Section 16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain
such additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
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10. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.
11. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE RESTRICTED STOCK. Stock Purchase
Rights may be issued either alone, in addition to, or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan.
After the Administrator determines that it will offer Stock Purchase Rights
under the Plan, it shall advise the offeree in writing of the terms, conditions
and restrictions related to the offer, including the number of Shares that such
person shall be entitled to purchase, the price to be paid (if any), and the
time within which such person must accept such offer, which shall in no event
exceed one-hundred twenty (120) days from the date of grant of the Stock
Purchase Right. The offer shall be accepted by execution of a Restricted Stock
Agreement in the form determined by the Administrator. Shares purchased
pursuant to the grant of a Stock Purchase Right shall be referred to herein as
"Restricted Stock."
(b) REPURCHASE OPTION. Unless the Administrator
determines otherwise, the Restricted Stock Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the Purchaser's employment with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Agreement shall be the original price paid by the Purchaser
and may be paid by cancellation of any indebtedness of the purchaser to the
Company. The repurchase option with respect to the Restricted Stock shall
lapse at such rate as the Administrator may determine.
(c) OTHER PROVISIONS. The Restricted Stock Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Agreements need not be the same
with respect to each purchaser.
(d) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase
Right is exercised and the Restricted Stock has been issued in the name of the
Purchaser, the Purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Stock Purchase Right is exercised, except as provided
in Section 13 of the Plan..
12. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At
the discretion of the Administrator, Optionees or Purchasers may satisfy
withholding obligations as provided in this paragraph. When an Optionee or
Purchaser incurs tax liability in connection with an Option or Stock Purchase
Right, which tax liability is subject to tax withholding under applicable tax
laws, and the Optionee or Purchaser is obligated to pay the Company an amount
required to be withheld under applicable tax laws, the Optionee or Purchaser
may satisfy the withholding tax
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obligation by electing to have the Company withhold from the Shares to be
issued upon exercise of the Option, or the Shares to be issued in connection
with the Stock Purchase Right, if any, that number of Shares having a Fair
Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined (the "Tax Date").
All elections by an Optionee or Purchaser to have Shares withheld for
this purpose shall be made in writing in a form acceptable to the Administrator
and shall be subject to the following restrictions:
(a) the election must be made on or prior to the
applicable Tax Date;
(b) once made, the election shall be irrevocable as to
the particular Shares of the Option or Stock Purchase Right as to which the
election is made;
(c) all elections shall be subject to the consent or
disapproval of the Administrator;
(d) if the Optionee is subject to Rule 16b-3, the
election must comply with the applicable provisions of Rule 16b-3 and shall be
subject to such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
In the event the election to have Shares withheld is made by an
Optionee or Purchaser and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the Optionee or
Purchaser shall receive the full number of Shares with respect to which the
Option or Stock Purchase Right is exercised but such Optionee or Purchaser
shall be unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject
to any required action by the shareholders of the Company, the number of shares
of Common Stock which have been authorized for issuance under the Plan but as
to which no Options or Stock Purchase Rights have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an Option or
Stock Purchase Right, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided in an Option Agreement or Restricted Stock Agreement, no issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no
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adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option or Stock Purchase Right.
In the event of the proposed dissolution or liquidation of the
Company, or of a merger in which the successor corporation does not agree to
assume the Option or Stock Purchase Right or substitute an equivalent Option or
Stock Purchase Right, the Board shall terminate the Plan and, prior to such
termination, vesting shall accelerate in full with respect all outstanding
Options or Stock Purchase Rights. The Board shall notify Optionees and
Purchasers at least five (5) days prior to such proposed action and give such
Optionees and Purchasers the opportunity to exercise their rights. To the
extent it has not been previously exercised, any Option or Stock Purchase Right
will terminate immediately prior to the consummation of such proposed action.
14. TIME OF GRANTING OPTIONS. The date of grant of an Option
shall, for all purposes, be the date on which the Administrator makes the
determination granting such Option, or such other date as is determined by the
Board. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of
any Optionee or Purchaser under any grant theretofore made, without his or her
consent. In addition, to the extent necessary and desirable to comply with
Rule 16b-3 under the Exchange Act or with Section 422 of the Code (or any other
applicable law or regulation, including the requirements of the NASD or an
established stock exchange), the Company shall obtain shareholder approval of
any Plan amendment in such a manner and to such a degree as required.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such
amendment or termination of the Plan shall not affect Options and Stock
Purchase Rights already granted and such Options and Stock Purchase Rights
shall remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee or Purchaser
and the Board, which agreement must be in writing and signed by the Optionee or
Purchaser and the Company.
16. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be
issued pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, state securities laws, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares
may then be listed, and shall be further subject to the approval of counsel for
the Company with respect to such compliance.
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As a condition to the exercise of an Option or Stock Purchase Right,
the Company may require the person exercising such Option or Stock Purchase
Right to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
17. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
18. AGREEMENTS. Options and Stock Purchase Rights shall be
evidenced by written agreements in such form as the Administrator shall approve
from time to time.
19. SHAREHOLDER APPROVAL. Continuance of the Plan shall be
subject to approval by the shareholders of the Company within twelve (12)
months before or after the date the Plan is adopted. Such shareholder approval
shall be obtained in the degree and manner required under applicable state and
federal law.
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