1
EXHIBIT 10.20
HESKA CORPORATION 1997 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
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.
VESTING This option becomes exercisable in installments, as
shown in the Notice of Stock Option Grant. In
addition, this option becomes exercisable in full if
one of the following events occurs:
o Your service as an employee, consultant or
director of the Company or a subsidiary of the
Company terminates because of death, total and
permanent disability, or retirement at or after
age 65, or
o The Company is a party to a merger or other
reorganization while you are an employee,
consultant or director of the Company or a
subsidiary of the Company, this option is not
continued by the Company and is not assumed by the
surviving corporation or its parent, and the
surviving corporation or its parent does not
substitute its own option for this option, or
o The Company is subject to a "Change in
Control" (as defined in the Plan) while
you are an employee, consultant or
director of the Company or a
subsidiary of the Company and, within
12 months after the Change in
Control, the surviving entity
terminates your service without your
consent. If the surviving entity
demotes you to a lower position,
materially reduces your authority or
responsibilities, materially reduces
your total compensation or announces
its intention to relocate your
principal place of work by more than
20 miles, then that action will be
treated as a termination of your
service.
In the event of a merger or other
reorganization or a Change in Control, the
following rules apply:
o If this option is designated as an
incentive stock option in the Notice of
Stock Option Grant, the acceleration
of exercisability will not occur
without your written consent.
o If the Company and the other party to
the transaction agreed that the
transaction is to be treated as a
"pooling of interests" for financial
reporting purposes, and if the
transaction in fact was so treated,
then the acceleration of
exercisability will not occur to the
extent that the surviving entity's
independent
2
public accountants determine in good faith
that the acceleration would include the use
of "pooling of interests" accounting.
No additional shares become exercisable after
your service as an employee, consultant or
director of the Company or a subsidiary
of the Company has terminated for any reason.
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 If your service as an employee, consultant
or director of the Company or a subsidiary of
the Company terminates for any reason except
death or total and permanent disability, then
this option will expire 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 If you die as an employee, consultant or
director of the Company or a subsidiary of the
Company, then this option will expire at the
close of business at Company headquarters on the
date 12 months after the date of death.
DISABILITY If your service as an employee, consultant or
director of the Company or a subsidiary of
the Company terminates because of your
total and permanent disability, then this
option will expire at the close of business
at Company headquarters on the date 12 months
after your termination date. For all purposes
under this Agreement, "total and permanent
disability" means that you are unable to engage
in any substantial gainful activity by reason
of any medically determinable physical or mental
impairment which can be expected to result in
death or which has lasted, or can be expected to
last, for a continuous period of not less than
one year.
LEAVES OF ABSENCE For purposes of this option, your service does
not terminate when you go 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 is required by the terms of the
leave or by applicable law. But your service
terminates when the approved leave ends, unless
you immediately return to active work.
RESTRICTIONS ON The Company will not permit you to exercise this
EXERCISE option if the issuance of shares at that time
would violate any law or regulation.
NOTICE OF EXERCISE When you wish to exercise this option, you must
notify the Company by
-2-
3
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. Your notice must also specify how
your shares should be registered (in your name
only or in your and your spouse's names as
community property or as joint tenants with
right of survivorship). The notice will be
effective when it is received by the Company.
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:
o Your personal check, a cashier's check or a
money order.
o Certificates for shares of Company stock
that you own, along with any forms needed to
effect 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. Instead of surrendering shares
of Company stock, you may attest to the
ownership of those shares on a form provided
by the Company and have the same number of
shares subtracted from the option shares
issued to you. However, you may not
surrender, or attest to the ownership of,
shares of Company stock in payment of the
exercise price if your action would cause
the Company to recognize compensation expense
(or additional compensation expense) with
respect to this option for financial reporting
purposes.
o 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 from the sale proceeds 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 You will not be allowed to exercise this
STOCK WITHHOLDING 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 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.
-3-
4
RESTRICTIONS ON By signing this Agreement, you agree not to sell
RESALE any option shares at a time when applicable
laws, Company policies or an agreement between
the Company and its underwriters prohibit a
sale. This restriction will apply as long as
you are an employee, consultant or director of
the Company or a subsidiary of the Company.
TRANSFER OF Prior to your death, only you may exercise this
OPTION option. You cannot transfer or assign this
option. For instance, you may not sell this
option or use it as security for a loan. If
you attempt to do any of these things, this
option will immediately become invalid. You
may, however, dispose of this option in your
will or 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 Your option or this Agreement do not give you
the right to be retained by the Company or a
subsidiary of the Company in any capacity.
The Company and its subsidiaries reserve 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. No adjustments are made for dividends
or other rights if the applicable record date
occurs before you exercise this option, except
as described in the Plan.
ADJUSTMENTS In the event of a stock split, a stock dividend
or a similar change in Company stock, the
number of shares covered by this option and
the exercise price per share may be adjusted
pursuant to the Plan.
APPLICABLE LAW This Agreement will be interpreted and enforced
under the laws of the State of Colorado.
THE PLAN AND The text of the Plan is incorporated in this
OTHER AGREEMENTS Agreement by reference.
This Agreement and the Plan constitute the
entire understanding between you and the
Company regarding this option. Any prior
agreements, commitments or negotiations
concerning this option are superseded. This
Agreement may be amended only by another written
agreement, signed by both parties.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
-4-
5
HESKA CORPORATION 1997 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
(OUTSIDE DIRECTORS)
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.
VESTING This option becomes exercisable in installments, as
shown in the Notice of Stock Option Grant. In
addition, this option becomes exercisable in full if
one of the following events occurs:
o Your service as an employee, consultant or
director of the Company or a subsidiary of the
Company terminates because of death, total and
permanent disability, or retirement at or after
age 65, or
o The Company is a party to a merger or other
reorganization while you are an employee,
consultant or director of the Company or a
subsidiary of the Company, this option is not
continued by the Company and is not assumed by
the surviving corporation or its parent, and
the surviving corporation or its parent does
not substitute its own option for this option, or
o The Company is subject to a "Change in Control"
(as defined in the Plan) while you are an
employee, consultant or director of the Company or
a subsidiary of the Company and, within 12 months
after the Change in Control, the surviving entity
terminates your service without your consent. If
the surviving entity demotes you to a lower
position, materially reduces your authority or
responsibilities, materially reduces your total
compensation or announces its intention to
relocate your principal place of work by more than
20 miles, then that action will be treated as a
termination of your service.
In the event of a merger or other reorganization or
a Change in Control, the following rules apply:
o If this option is designated as an
incentive stock option in the Notice of
Stock Option Grant, the acceleration of
exercisability will not occur without your
written consent.
o If the Company and the other party to the
transaction agreed that the transaction is
to be treated as a "pooling of interests"
for financial reporting purposes, and if
the transaction in fact was so treated, then
the acceleration of exercisability will
not
6
occur to the extent that that the surviving
entity's independent public accountants
determine in good faith that the
acceleration would preclude the use of
"pooling of interests" accounting.
No additional shares become exercisable after
your service as an employee, consultant or
director of the Company or a subsidiary of the
Company has terminated for any reason.
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 If your service as an employee, consultant or
director of the Company or a subsidiary of the
Company terminates for any reason except death or
total and permanent disability, then this option
will expire 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 If you die as an employee, consultant or director of
the Company or a subsidiary of the Company, then
this option will expire at the close of business at
Company headquarters on the date 12 months after the
date of death.
DISABILITY If your service as an employee, consultant or
director of the Company or a subsidiary of the
Company terminates because of your total and
permanent disability, then this option will expire
at the close of business at Company headquarters on
the date 12 months after your termination date. For
all purposes under this Agreement, "total and
permanent disability" means that you are unable to
engage in any substantial gainful activity by reason
of any medically determinable physical or mental
impairment which can be expected to result in death or
which has lasted, or can be expected to last, for a
continuous period of not less than one year.
LEAVES OF ABSENCE For purposes of this option, your service does not
terminate when you go 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 is required by the
terms of the leave or by applicable law. But
your service terminates when the approved leave ends,
unless you immediately return to active work.
-2-
7
RESTRICTIONS ON The Company will not permit you to exercise this
EXERCISE option if the issuance of shares violate any law or
regulation.
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. Your notice must also specify how your
shares should be registered (in your name only or
in your and your spouse's names as community
property or as joint tenants with right of
survivorship). The notice will be effective when it
is received by the Company. 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.
EXERCISE OF UNVESTED Exercise of unvested shares is allowed under the
SHRES Plan. If you would like to exercise your
option before it is vested, you must complete a Stock
Repurchase Agreement. This agreement provides for the
repurchase of that portion of the shares which remain
unvested at the time of your termination, death or
disability.
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:
o Your personal check, a cashier's check or a money
order.
o Certificates for shares of Company stock that you
own, along with any forms needed to effect 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. Instead
of surrendering shares of Company stock, you may
attest to the ownership of those shares on a
form provided by the Company and have the same
number of shares subtracted from the option shares
issued to you. However, you may not surrender,
or attest to the ownership of, shares of
Company stock in payment of the exercise price
if your action would cause the Company to
recognize compensation expense (or additional
compensation expense) with respect to this option
for financial reporting purposes.
o 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 from the sale proceeds 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.
-3-
8
WITHHOLDING You will not be allowed to exercise this option unless
TAXES AND STOCK you make arrangements acceptable to the Company to pay
WITHHOLDING any withholding taxes that may be due as a result of
the option exercise. These arrangements may include
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 By signing this Agreement, you agree not to sell any
RESALE option shares at a time when applicable laws, Company
policies or an agreement between the Company and
its underwriters prohibit a sale. This restriction
will apply as long as you are an employee, consultant
or director of the Company or a subsidiary of the
Company.
TRANSFER OF Prior to your death, only you may exercise this
OPTION option. You cannot transfer or assign this option.
For instance, you may not sell this option or use
it as security for a loan. If you attempt to do any
of these things, this option will immediately become
invalid. You may, however, dispose of this option
in your will or 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 Your option or this Agreement do not give you the
right to be retained by the Company or a subsidiary
of the Company in any capacity. The Company and
its subsidiaries reserve the right to terminate
your service at any time, with or without cause.
STOCKHOLDER You, or your estate or heirs, have no rights as a
RIGHTS stockholder of the Company until you have exercised
this option by giving the required notice to the
Company and paying the exercise price. No
adjustments are made for dividends or other rights
if the applicable record date occurs before you
exercise this option, except as described in the
Plan.
ADJUSTMENTS In the event of a stock split, a stock dividend or
a similar change in Company stock, the number of
shares covered by this option and the exercise
price per share may be adjusted pursuant to the Plan.
-4-
9
APPLICABLE LAW This Agreement will be interpreted and enforced
under the laws of the State of Colorado.
THE PLAN AND The text of the Plan is incorporated in this Agreement
OTHER AGREEMENTS by reference.
This Agreement and the Plan constitute the
entire understanding between you and the Company
regarding this option. Any prior agreements,
commitments or negotiations concerning this option
are superseded. This Agreement may be amended only by
another written agreement, signed by both parties.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
-5-
