UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Delaware
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77-0192527
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(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification Number) |
3760 Rocky Mountain Avenue
Loveland, Colorado |
80538
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number, including area code:
(970) 493-7272
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Securities registered pursuant to Section 12(b) of the Act:
Public Common Stock, $.01 par value
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act: None |
The Nasdaq Stock Market LLC
(Name of Each Exchange on Which Registered)
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
(Do not check if a small reporting company)
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Smaller Reporting Company
¨
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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Item 1.
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Business.
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•
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Blood Chemistry.
The Element DC
®
Veterinary Chemistry Analyzer (the "Element DC") is an easy-to-use, robust system that uses dry slide technology for blood chemistry and electrolyte analysis and has the ability to run 22 tests at a time with a single blood sample. Test slides are available as both pre-packaged panels as well as individual slides. The DRI-CHEM 7000 Veterinary Chemistry Analyzer (the "DRI-CHEM 7000") is a complementary chemistry offering, co-branded with FUJIFILM Corporation ("FUJIFILM"), with higher throughput, multiple patient staging and a "STAT" feature which provides emergency sample flexibility in critical cases. The Element DC and DRI-CHEM 7000 utilize the same test slides. We are supplied with the Element DC, the DRI-CHEM 7000 and affiliated test slides and supplies under a contractual agreement with FUJIFILM.
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•
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Hematology.
The Element HT5
®
Hematology Analyzer (the "HT5") is a true 5-part hematology analyzer which uses laser, impedance and colorimetric technologies to measure key parameters such as white blood cell count, red blood cell count, platelet count and hemoglobin levels in animals. The HT5, which we began shipping in January 2015, can generate results in less than a minute with 15 µL of sample. We are supplied with the HT5 and affiliated reagents and supplies under a contractual agreement with Shenzen Mindray Bio-Medical Electronics Co., Ltd. ("Mindray"). The HEMATRUE Veterinary Hematology Analyzer (the "HEMATRUE") is an easy-to-use and reliable 3-part hematology blood analyzer that we continue to offer to our customers. We are supplied HEMATRUE instruments and affiliated reagents and supplies for the HEMATRUE under a contractual agreement with Boule Medical AB ("Boule").
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•
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Blood Gases and Electrolytes.
The Element POC
®
Blood Gas & Electrolyte Analyzer ("EPOC") is a handheld, wireless analyzer which delivers rapid blood gas, electrolyte, metabolite, and basic blood chemistry testing. EPOC features test cards with room temperature storage which can offer results with less than 100 µL of sample as well as WiFi and Bluetooth connectivity. We began to ship EPOC units to customers in October 2013. EPOC and affiliated consumables and supplies
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•
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Immunodiagnostics
. The Element i Immunodiagnostic Analyzer ("Element i") utilizes
fluorescence immunoassay technology to ensure sensitivity for accurate in-clinic detection of Total T4, TSH and Cortisol. The Element i is a benchtop technology with a test time of 10 minutes or less per analyte. Along with confidence in results, this measurement principle allows for simplified reagents and testing protocols. Element i units, which we began shipping in December 2015, are supplied to us under a contractual agreement with FUJIFILM.
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•
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IV Pumps.
The VET/IV 2.2 infusion pump is a compact, affordable IV pump that allows veterinarians to easily provide regulated infusion of fluids for their patients.
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•
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Quidel for the development of SOLO STEP CH Cassettes, SOLO STEP CH Batch Test Strips and SOLO STEP FH Cassettes;
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•
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Mindray for the development of veterinary applications for the ELEMENT HT5 Veterinary Hematology Analyzer and associated reagents; and
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•
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FUJIFILM for the development of veterinary applications for the Element DC Veterinary Chemistry Analyzer and associated slides and supplies.
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•
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USDA
. Vaccines and certain single use, point-of-care diagnostics are considered veterinary biologics and are therefore regulated by the Center for Veterinary Biologics, or CVB, of the USDA. Industry data indicates that it takes approximately four years and in excess of $1.0 million to license a conventional vaccine for animals from basic research through licensing. In contrast to vaccines, single use, point-of-care diagnostics can typically be licensed by the USDA in about two years, at considerably less cost. However, vaccines or diagnostics that use innovative materials, such as those resulting from recombinant DNA technology, usually require additional time to license. The USDA licensing process involves the submission of several data packages. These packages include information on how the product will be manufactured, information on the efficacy and safety of the product in
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•
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FDA
. Pharmaceutical products, which typically include synthetic compounds, are approved and monitored by the Center for Veterinary Medicine of the FDA. Under the Federal Food, Drug and Cosmetic Act, the same statutory standard for FDA approval applies to both human and animal drugs: demonstrated safety, efficacy and compliance with FDA manufacturing standards. However, unlike human drugs, neither preclinical studies nor a sequential phase system of studies are required. Rather, for animal drugs, studies for safety and efficacy may be conducted immediately in the species for which the drug is intended. Thus, there is no required phased evaluation of drug performance, and the Center for Veterinary Medicine will review data at appropriate times in the drug development process. The process can be costly and time consuming, requiring up to $100 million and seven to ten years to sell an animal drug in the market. In addition, the time and cost for developing companion animal drugs may be significantly less than for drugs for livestock animals, which generally have enhanced standards designed to ensure safety in the food chain.
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•
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EPA
. Products that are applied topically to animals or to premises to control external parasites are regulated by the Environmental Protection Agency, or EPA.
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Products
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Country
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Regulated
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Agency
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Status
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ALLERCEPT Allergy Treatment Sets
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United States
Canada
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Yes
Yes
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USDA
CCVB
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Licensed
Licensed
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SOLO STEP CH
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United States
EU
Canada
Japan
Australia
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Yes
No-in most countries
Yes
Yes
Yes
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USDA
CCVB
MAFF
ADAFF
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Licensed
Licensed
Licensed
Licensed
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SOLO STEP CH Batch Test Strips
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United States
Canada
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Yes
Yes
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USDA
CCVB
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Licensed
Licensed
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SOLO STEP FH
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United States
Canada
Australia
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Yes
Yes
Yes
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USDA
CCVB
ADAFF
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Licensed
Licensed
Licensed
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TRI-HEART Plus Heartworm Preventive
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United States
Japan
South Korea
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Yes
Yes
Yes
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FDA
MAFF
NVRQS
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Licensed
Licensed
Licensed
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Name
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Age
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Position
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Kevin S. Wilson
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44
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Chief Executive Officer and President
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John McMahon
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51
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Vice President, Chief Financial Officer
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Jason A. Napolitano
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48
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Chief Operating Officer, Chief Strategist and Secretary
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Michael J. McGinley, Ph.D.
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56
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President, Biologicals & Pharmaceuticals
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Nancy Wisnewski, Ph.D.
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54
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Executive Vice President, Diagnostic Operations and Product Development
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Steven M. Eyl
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51
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Executive Vice President, Global Sales and Marketing
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Steven M. Asakowicz
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51
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Executive Vice President, Companion Animal Health Sales
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Rodney A. Lippincott
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43
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Executive Vice President, Companion Animal Health Sales
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Item 1A.
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Risk Factors
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•
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Inability to meet minimum obligations.
Current agreements, or agreements we may negotiate in the future, may commit us to certain minimum purchase or other spending obligations. It is possible we will not be able to create the market demand to meet such obligations, which could create a drain on our financial resources and liquidity. Some such agreements may require minimum purchases and/or sales to maintain product rights and we may be significantly harmed if we are unable to meet such requirements and lose product rights.
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•
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Loss of exclusivity.
In the case of our blood testing instruments, if we are entitled to non-exclusive access to consumable supplies for a defined period upon expiration of exclusive rights, we may face increased competition from a third party with similar non-exclusive access or our former supplier, which could cause us to lose customers and/or significantly decrease our margins and could significantly affect our financial results. In addition, current agreements, or agreements we may negotiate in the future, with suppliers may require us to meet minimum annual sales levels to maintain our position as the exclusive distributor of these products. We may not meet these minimum sales levels and maintain exclusivity over the distribution and sale of these products. If we are not the exclusive distributor of these products, competition may increase significantly, reducing our revenues and/or decreasing our margins.
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•
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Changes in economics.
An underlying change in the economics with a supplier, such as a large price increase or new requirement of large minimum purchase amounts, could have a significant, adverse effect on our business, particularly if we are unable to identify and implement an alternative source of supply in a timely manner.
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•
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The loss of product rights upon expiration or termination of an existing agreement.
Unless we are able to find an alternate supply of a similar product, we would not be able to continue to offer our customers the same breadth of products and our sales and operating results would likely suffer. In the case of an instrument supplier, we could also potentially suffer the loss of sales of consumable supplies, which would be significant in cases where we have built a significant installed base, further harming our sales prospects and opportunities. Even if we were able to find an alternate supply for a product to which we lost rights, we would likely face increased competition from the product whose rights we lost being marketed by a third party or the former supplier and it may take us additional time and expense to gain the necessary approvals and launch an alternative product.
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•
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High switching costs.
In our blood testing instrument products, we could face significant competition and lose all or some of the consumable revenues from the installed base of those instruments if we were to switch to a competitive instrument. If we need to change to other commercial manufacturing contractors for certain of our regulated products, additional regulatory licenses or approvals generally must be obtained for these contractors prior to our use. This would require new testing and compliance inspections prior to sale, thus resulting in potential delays. Any new manufacturer would have to be educated in, or develop, substantially equivalent processes necessary for the production of our products. We likely would have to train our sales
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•
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The involuntary or voluntary discontinuation of a product line.
Unless we are able to find an alternate supply of a similar product in this or similar circumstances with any product, we would not be able to continue to offer our customers the same breadth of products and our sales would likely suffer. Even if we are able to identify an alternate supply, it may take us additional time and expense to gain the necessary approvals and launch an alternative product, especially if the product is discontinued unexpectedly.
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•
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Inconsistent or inadequate quality control.
We may not be able to control or adequately monitor the quality of products we receive from our suppliers. Poor quality items could damage our reputation with our customers.
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•
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Limited capacity or ability to scale capacity.
If market demand for our products increases suddenly, our current suppliers might not be able to fulfill our commercial needs, which would require us to seek new manufacturing arrangements and may result in substantial delays in meeting market demand. If we consistently generate more demand for a product than a given supplier is capable of handling, it could lead to large backorders and potentially lost sales to competitive products that are readily available. This could require us to seek or fund new sources of supply, which may be difficult to find or may require terms that are less advantageous if available at all.
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•
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Regulatory risk.
Our manufacturing facility and those of some of our third-party suppliers are subject to ongoing periodic unannounced inspection by regulatory authorities, including the FDA, USDA and other federal, state and foreign agencies for compliance with strictly enforced Good Manufacturing Practices, regulations and similar foreign standards. We do not have control over our suppliers' compliance with these regulations and standards. Regulatory violations could potentially lead to interruptions in supply that could cause us to lose sales to readily available competitive products. If one of our suppliers is unable to provide a raw material or finished product due to regulatory issues, it could have a material adverse financial impact on our business and could expose us to legal action if we are unable to perform on contracts to our customers involving related products.
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•
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Developmental delays.
We may experience delays in the scale-up quantities needed for product development that could delay regulatory submissions and commercialization of our products in development, causing us to miss key opportunities.
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•
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Limited geographic rights.
We typically do not have global geographic rights to products supplied by third parties. If we were to determine a market opportunity in a geography where we did not have distribution rights and were unable to obtain such rights from the supplier, it might hamper our ability to succeed in such geography and our sales and profits would be lower than they otherwise would have been.
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•
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Limited intellectual property rights.
We typically do not have intellectual property rights, or may have to share intellectual property rights, to the products supplied by third parties and any improvements to the manufacturing processes or new manufacturing processes for these products.
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•
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stock sales by large stockholders or by insiders;
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•
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changes in the outlook for our business;
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•
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our quarterly operating results, including as compared to expected revenue or earnings and in comparison to historical results;
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•
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termination, cancellation or expiration of our third-party supplier relationships;
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•
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announcements of technological innovations or new products by our competitors or by us;
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•
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litigation;
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•
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regulatory developments, including delays in product introductions;
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•
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developments or disputes concerning patents or proprietary rights;
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•
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availability of our revolving line of credit and compliance with debt covenants;
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•
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releases of reports by securities analysts;
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•
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economic and other external factors; and
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•
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general market conditions.
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•
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supply of products from third-party suppliers or termination, cancellation or expiration of such relationships;
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•
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competition and pricing pressures from competitive products;
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•
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the introduction of new products or services by our competitors or by us;
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•
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large customers failing to purchase at historical levels;
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•
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fundamental shifts in market demand;
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•
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manufacturing delays;
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•
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shipment problems;
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•
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information technology problems, which may prevent us from conducting our business effectively, or at all, and may also raise our costs;
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•
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regulatory and other delays in product development;
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•
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product recalls or other issues which may raise our costs;
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•
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changes in our reputation and/or market acceptance of our current or new products; and
|
•
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changes in the mix of products sold.
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Item 1B.
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Unresolved Staff Comments.
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Item 2
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Properties.
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Item 3
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Legal Proceedings.
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Item 4
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Mine Safety Disclosures.
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Item 5
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
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High
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Low
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||||
2015
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|
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First Quarter
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$
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26.68
|
|
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$
|
15.58
|
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Second Quarter
|
$
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32.98
|
|
|
$
|
23.22
|
|
Third Quarter
|
$
|
35.72
|
|
|
$
|
26.73
|
|
Fourth Quarter
|
$
|
40.29
|
|
|
$
|
27.59
|
|
2016
|
|
|
|
|
|
||
First Quarter
|
$
|
38.29
|
|
|
$
|
27.00
|
|
Second Quarter
|
$
|
40.73
|
|
|
$
|
26.26
|
|
Third Quarter
|
$
|
57.41
|
|
|
$
|
37.49
|
|
Fourth Quarter
|
$
|
74.33
|
|
|
$
|
46.51
|
|
2017
|
|
|
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||||
First Quarter (through March 2, 2017)
|
$
|
95.98
|
|
|
$
|
70.84
|
|
|
Dec-11
|
|
Dec-12
|
|
Dec-13
|
|
Dec-14
|
|
Dec-15
|
|
Dec-16
|
||||||||||||
Heska Corporation
|
$
|
100
|
|
|
$
|
163
|
|
|
$
|
176
|
|
|
$
|
366
|
|
|
$
|
780
|
|
|
$
|
981
|
|
NASDAQ Medical Supplies Index
|
$
|
100
|
|
|
$
|
118
|
|
|
$
|
145
|
|
|
$
|
174
|
|
|
$
|
193
|
|
|
$
|
228
|
|
NASDAQ Composite Total Return Index
|
$
|
100
|
|
|
$
|
116
|
|
|
$
|
163
|
|
|
$
|
187
|
|
|
$
|
200
|
|
|
$
|
220
|
|
Item 6
|
Selected Financial Data.
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||
Consolidated Statements of Income Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
130,083
|
|
|
$
|
104,597
|
|
|
$
|
89,837
|
|
|
$
|
78,339
|
|
|
$
|
72,805
|
|
Operating income (loss)
|
16,533
|
|
|
8,557
|
|
|
2,911
|
|
|
(1,430
|
)
|
|
2,158
|
|
|||||
Income (loss) before income taxes
|
16,504
|
|
|
8,427
|
|
|
2,950
|
|
|
(1,393
|
)
|
|
2,023
|
|
|||||
Net income (loss) attributable to Heska Corporation
|
$
|
10,508
|
|
|
$
|
5,239
|
|
|
$
|
2,603
|
|
|
$
|
(1,196
|
)
|
|
$
|
1,203
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share attributable to Heska Corporation:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings (loss) per share attributable to Heska Corporation
|
$
|
1.55
|
|
|
$
|
0.80
|
|
|
$
|
0.44
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.23
|
|
Diluted earnings (loss) per share attributable to Heska Corporation
|
$
|
1.43
|
|
|
$
|
0.74
|
|
|
$
|
0.41
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.22
|
|
Basic weighted-average common shares outstanding
|
6,783
|
|
|
6,509
|
|
|
5,951
|
|
|
5,755
|
|
|
5,326
|
|
|||||
Diluted weighted-average common shares outstanding
|
7,361
|
|
|
7,074
|
|
|
6,409
|
|
|
5,755
|
|
|
5,489
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Balance Sheets Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
130,844
|
|
|
$
|
109,719
|
|
|
$
|
96,844
|
|
|
$
|
93,553
|
|
|
$
|
66,826
|
|
Item 7
|
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
Persuasive evidence of an arrangement exists;
|
•
|
Delivery has occurred or services rendered;
|
•
|
Price is fixed or determinable; and
|
•
|
Collectability is reasonably assured.
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue
|
$
|
130,083
|
|
|
$
|
104,597
|
|
|
$
|
89,837
|
|
Gross Profit
|
53,892
|
|
|
44,213
|
|
|
35,715
|
|
|||
Operating expenses
|
37,359
|
|
|
35,656
|
|
|
32,804
|
|
|||
Operating income
|
16,533
|
|
|
8,557
|
|
|
2,911
|
|
|||
Interest and other expense (income), net
|
29
|
|
|
130
|
|
|
(39
|
)
|
|||
Income before income taxes
|
16,504
|
|
|
8,427
|
|
|
2,950
|
|
|||
Provision for income taxes
|
4,339
|
|
|
2,908
|
|
|
1,351
|
|
|||
Net income
|
12,165
|
|
|
5,519
|
|
|
1,599
|
|
|||
Net income (loss) attributable to non-controlling interest
|
1,657
|
|
|
280
|
|
|
(1,004
|
)
|
|||
Net income attributable to Heska Corporation
|
$
|
10,508
|
|
|
$
|
5,239
|
|
|
$
|
2,603
|
|
|
Years Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Gross Profit
|
41.4
|
%
|
|
42.3
|
%
|
|
39.8
|
%
|
Operating expenses
|
28.7
|
%
|
|
34.1
|
%
|
|
36.5
|
%
|
Operating income
|
12.7
|
%
|
|
8.2
|
%
|
|
3.2
|
%
|
Interest and other expense (income), net
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
Income before income taxes
|
12.7
|
%
|
|
8.1
|
%
|
|
3.3
|
%
|
Provision for income taxes
|
3.3
|
%
|
|
2.8
|
%
|
|
1.5
|
%
|
Net income
|
9.4
|
%
|
|
5.3
|
%
|
|
1.8
|
%
|
Net income (loss) attributable to non-controlling interest
|
1.3
|
%
|
|
0.3
|
%
|
|
(1.1
|
)%
|
Net income attributable to Heska Corporation
|
8.1
|
%
|
|
5.0
|
%
|
|
2.9
|
%
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash provided by operating activities
|
$
|
5,855
|
|
|
$
|
2,125
|
|
|
$
|
5,554
|
|
Net cash used in investing activities
|
(3,302
|
)
|
|
(3,773
|
)
|
|
(2,331
|
)
|
|||
Net cash provided by (used in) financing activities
|
1,403
|
|
|
2,726
|
|
|
(3,271
|
)
|
|||
Effect of currency translation on cash
|
(52
|
)
|
|
(43
|
)
|
|
(113
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
3,904
|
|
|
1,035
|
|
|
(161
|
)
|
|||
Cash and cash equivalents, beginning of the period
|
6,890
|
|
|
5,855
|
|
|
6,016
|
|
|||
Cash and cash equivalents, end of the period
|
$
|
10,794
|
|
|
$
|
6,890
|
|
|
$
|
5,855
|
|
|
Total
|
|
Less Than 1 Year
|
|
1 - 3 Years
|
|
4 - 5 Years
|
|
After 5 Years
|
||||||||||
Operating leases
|
$
|
12,445
|
|
|
$
|
2,090
|
|
|
$
|
3,780
|
|
|
$
|
3,373
|
|
|
$
|
3,202
|
|
Obligation to purchase minority interest
|
6,245
|
|
|
6,245
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Unconditional purchase obligations
|
976
|
|
|
638
|
|
|
338
|
|
|
—
|
|
|
—
|
|
|||||
Long-term debt
|
78
|
|
|
78
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Line of credit
|
672
|
|
|
672
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest payments on debt
|
86
|
|
|
86
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
20,502
|
|
|
$
|
9,809
|
|
|
$
|
4,118
|
|
|
$
|
3,373
|
|
|
$
|
3,202
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
Item 8.
|
Financial Statements and Supplementary Data.
|
|
Page
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
ASSETS
|
||||||||
Current assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
10,794
|
|
|
$
|
6,890
|
|
Accounts receivable, net of allowance for doubtful accounts of
$237 and $189, respectively |
|
20,857
|
|
|
15,935
|
|
||
Due from – related parties
|
|
100
|
|
|
308
|
|
||
Inventories, net
|
|
20,395
|
|
|
16,101
|
|
||
Other current assets
|
|
3,127
|
|
|
2,028
|
|
||
Total current assets
|
|
55,273
|
|
|
41,262
|
|
||
Property and equipment, net
|
|
16,581
|
|
|
17,020
|
|
||
Note receivable – related party
|
|
—
|
|
|
1,516
|
|
||
Goodwill
|
|
26,647
|
|
|
20,910
|
|
||
Other intangible assets, net
|
|
2,346
|
|
|
56
|
|
||
Deferred tax asset, net
|
|
21,122
|
|
|
25,883
|
|
||
Other long-term assets
|
|
8,875
|
|
|
3,072
|
|
||
Total assets
|
|
$
|
130,844
|
|
|
$
|
109,719
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable
|
|
$
|
7,154
|
|
|
$
|
7,624
|
|
Accrued liabilities
|
|
6,469
|
|
|
5,416
|
|
||
Current portion of deferred revenue
|
|
3,439
|
|
|
5,461
|
|
||
Obligation to purchase minority interest
|
|
14,602
|
|
|
—
|
|
||
Line of credit
|
|
672
|
|
|
143
|
|
||
Other short-term borrowings, including current portion of
long-term note payable |
|
78
|
|
|
159
|
|
||
Total current liabilities
|
|
32,414
|
|
|
18,803
|
|
||
Long-term note payable, net of current portion
|
|
—
|
|
|
69
|
|
||
Deferred revenue, net of current portion, and other
|
|
11,455
|
|
|
11,572
|
|
||
Total liabilities
|
|
43,869
|
|
|
30,444
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
|
|
|
||
Non-Controlling Interest
|
|
—
|
|
|
15,747
|
|
||
Stockholders' equity:
|
|
|
|
|
|
|
||
Preferred stock, $.01 par value, 2,500,000 shares authorized,
none issued or outstanding |
|
—
|
|
|
—
|
|
||
Common stock, $.01 par value, 9,000,000 shares authorized,
none issued or outstanding |
|
—
|
|
|
—
|
|
||
Public common stock, $.01 par value, 9,000,000 shares authorized,
7,026,051 and 6,625,287 shares issued and outstanding, respectively |
|
70
|
|
|
66
|
|
||
Additional paid-in capital
|
|
238,635
|
|
|
227,267
|
|
||
Accumulated other comprehensive income
|
|
97
|
|
|
187
|
|
||
Accumulated deficit
|
|
(151,827
|
)
|
|
(163,992
|
)
|
||
Total stockholders' equity
|
|
86,975
|
|
|
63,528
|
|
||
Total liability and stockholders' equity
|
|
$
|
130,844
|
|
|
$
|
109,719
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|||
Core companion animal health
|
|
$
|
107,398
|
|
|
$
|
84,249
|
|
|
$
|
72,354
|
|
Other vaccines, pharmaceuticals and products
|
|
22,685
|
|
|
20,348
|
|
|
17,483
|
|
|||
Total revenue, net
|
|
130,083
|
|
|
104,597
|
|
|
89,837
|
|
|||
|
|
|
|
|
|
|
||||||
Cost of revenue
|
|
76,191
|
|
|
60,384
|
|
|
54,122
|
|
|||
|
|
|
|
|
|
|
||||||
Gross profit
|
|
53,892
|
|
|
44,213
|
|
|
35,715
|
|
|||
|
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|||
Selling and marketing
|
|
22,092
|
|
|
21,339
|
|
|
19,159
|
|
|||
Research and development
|
|
2,147
|
|
|
1,658
|
|
|
1,414
|
|
|||
General and administrative
|
|
13,120
|
|
|
12,659
|
|
|
12,231
|
|
|||
Total operating expenses
|
|
37,359
|
|
|
35,656
|
|
|
32,804
|
|
|||
Operating income
|
|
16,533
|
|
|
8,557
|
|
|
2,911
|
|
|||
Interest and other expense (income), net
|
|
29
|
|
|
130
|
|
|
(39
|
)
|
|||
Income before income taxes
|
|
16,504
|
|
|
8,427
|
|
|
2,950
|
|
|||
Income tax expense:
|
|
|
|
|
|
|
|
|
|
|||
Current income tax expense
|
|
407
|
|
|
1,581
|
|
|
47
|
|
|||
Deferred income tax expense
|
|
3,932
|
|
|
1,327
|
|
|
1,304
|
|
|||
Total income tax expense
|
|
4,339
|
|
|
2,908
|
|
|
1,351
|
|
|||
|
|
|
|
|
|
|
||||||
Net income
|
|
12,165
|
|
|
5,519
|
|
|
1,599
|
|
|||
Net income (loss) attributable to non-controlling interest
|
|
1,657
|
|
|
280
|
|
|
(1,004
|
)
|
|||
Net income attributable to Heska Corporation
|
|
$
|
10,508
|
|
|
$
|
5,239
|
|
|
$
|
2,603
|
|
|
|
|
|
|
|
|
||||||
Basic earnings per share attributable
to Heska Corporation
|
|
$
|
1.55
|
|
|
$
|
0.80
|
|
|
$
|
0.44
|
|
Diluted earnings per share attributable
to Heska Corporation
|
|
$
|
1.43
|
|
|
$
|
0.74
|
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
||||||
Weighted average outstanding shares used to compute basic earnings per share attributable to Heska Corporation
|
|
6,783
|
|
|
6,509
|
|
|
5,951
|
|
|||
Weighted average outstanding shares used to compute diluted earnings per share attributable to Heska Corporation
|
|
7,361
|
|
|
7,074
|
|
|
6,409
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
12,165
|
|
|
$
|
5,519
|
|
|
$
|
1,599
|
|
Other comprehensive income (expense):
|
|
|
|
|
|
|
|
|
|
|||
Minimum pension liability
|
|
75
|
|
|
(129
|
)
|
|
—
|
|
|||
Sale of equity investment
|
|
(90
|
)
|
|
44
|
|
|
3
|
|
|||
Foreign currency translation
|
|
(75
|
)
|
|
(11
|
)
|
|
(300
|
)
|
|||
Comprehensive income
|
|
12,075
|
|
|
5,423
|
|
|
1,302
|
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive income (loss) attributable to non-controlling interest
|
|
1,657
|
|
|
280
|
|
|
(1,004
|
)
|
|||
Comprehensive income attributable to Heska Corporation
|
|
$
|
10,418
|
|
|
$
|
5,143
|
|
|
$
|
2,306
|
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income
|
|
Accumulated
Deficit
|
|
Total Stockholders' Equity |
|||||||||||||
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balances January 1, 2014
|
|
5,846
|
|
|
$
|
58
|
|
|
$
|
217,588
|
|
|
$
|
580
|
|
|
$
|
(171,110
|
)
|
|
$
|
47,116
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,599
|
|
|
1,599
|
|
|||||
Issuance of common stock related to options, ESPP and other
|
|
496
|
|
|
5
|
|
|
1,443
|
|
|
— |
|
—
|
|
|
1,448
|
|
||||||
Recognition of stock based compensation
|
|
—
|
|
|
—
|
|
|
1,653
|
|
|
—
|
|
|
—
|
|
|
1,653
|
|
|||||
Excess tax benefit from stock-based compensation
|
|
—
|
|
|
—
|
|
|
228
|
|
|
—
|
|
|
—
|
|
|
228
|
|
|||||
Stock issued for Heska Imaging
|
|
—
|
|
|
—
|
|
|
3,405
|
|
|
—
|
|
|
—
|
|
|
3,405
|
|
|||||
Stock issued for Heska Imaging Mark to Market
|
|
—
|
|
|
—
|
|
|
(2,020
|
)
|
|
—
|
|
|
—
|
|
|
(2,020
|
)
|
|||||
Unrealized gain on available for sale investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300
|
)
|
|
—
|
|
|
(300
|
)
|
|||||
Balances, December 31, 2014
|
|
6,342
|
|
|
$
|
63
|
|
|
$
|
222,297
|
|
|
$
|
283
|
|
|
$
|
(169,511
|
)
|
|
$
|
53,132
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,519
|
|
|
5,519
|
|
|||||
Issuance of common stock related to options, ESPP and other
|
|
283
|
|
|
3
|
|
|
1,255
|
|
|
—
|
|
|
—
|
|
|
1,258
|
|
|||||
Recognition of stock based compensation
|
|
—
|
|
|
—
|
|
|
2,269
|
|
|
—
|
|
|
—
|
|
|
2,269
|
|
|||||
Excess tax benefit from stock-based compensation
|
|
—
|
|
|
—
|
|
|
1,514
|
|
|
—
|
|
|
—
|
|
|
1,514
|
|
|||||
Unrealized gain on available for sale investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|
44
|
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|||||
Balances, December 31, 2015
|
|
6,625
|
|
|
$
|
66
|
|
|
$
|
227,267
|
|
|
$
|
187
|
|
|
$
|
(163,992
|
)
|
|
$
|
63,528
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,165
|
|
|
12,165
|
|
|||||
Issuance of common stock related to the acquisition of Cuattro Veterinary International, LLC
|
|
175
|
|
|
2
|
|
|
6,347
|
|
|
—
|
|
|
—
|
|
|
6,349
|
|
|||||
Issuance of common stock related to options, ESPP and other
|
|
226
|
|
|
2
|
|
|
1,616
|
|
|
—
|
|
|
—
|
|
|
1,618
|
|
|||||
Recognition of stock based compensation
|
|
—
|
|
|
—
|
|
|
2,260
|
|
|
—
|
|
|
—
|
|
|
2,260
|
|
|||||
Accretion of non-controlling interest
|
|
—
|
|
|
—
|
|
|
1,145
|
|
|
—
|
|
|
—
|
|
|
1,145
|
|
|||||
Minimum pension liability adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
75
|
|
|||||
Sale of equity investment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
(90
|
)
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|
—
|
|
|
(75
|
)
|
|||||
Balances, December 31, 2016
|
|
7,026
|
|
|
$
|
70
|
|
|
$
|
238,635
|
|
|
$
|
97
|
|
|
$
|
(151,827
|
)
|
|
$
|
86,975
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
12,165
|
|
|
$
|
5,519
|
|
|
$
|
1,599
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
4,645
|
|
|
4,187
|
|
|
3,712
|
|
|||
Deferred tax expense
|
|
3,932
|
|
|
1,327
|
|
|
1,304
|
|
|||
Stock based compensation
|
|
2,260
|
|
|
2,269
|
|
|
1,653
|
|
|||
Unrealized (gain) loss on foreign currency translation
|
|
(3
|
)
|
|
36
|
|
|
(81
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|||
Accounts receivable
|
|
(4,700
|
)
|
|
(4,216
|
)
|
|
(510
|
)
|
|||
Inventories
|
|
(4,731
|
)
|
|
(7,240
|
)
|
|
(5,592
|
)
|
|||
Other current assets
|
|
88
|
|
|
(238
|
)
|
|
(73
|
)
|
|||
Accounts payable
|
|
(688
|
)
|
|
3,059
|
|
|
900
|
|
|||
Accrued liabilities and other
|
|
1,005
|
|
|
43
|
|
|
814
|
|
|||
Other non-current assets
|
|
(5,818
|
)
|
|
(2,430
|
)
|
|
(263
|
)
|
|||
Deferred revenue and other
|
|
(2,300
|
)
|
|
(191
|
)
|
|
2,091
|
|
|||
Net cash provided by operating activities
|
|
5,855
|
|
|
2,125
|
|
|
5,554
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
||||||
Proceeds from sale of equity investment
|
|
115
|
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment
|
|
(3,417
|
)
|
|
(3,773
|
)
|
|
(2,337
|
)
|
|||
Proceeds from disposition of property and equipment
|
|
—
|
|
|
—
|
|
|
6
|
|
|||
Net cash used in investing activities
|
|
(3,302
|
)
|
|
(3,773
|
)
|
|
(2,331
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock, net of distributions
|
|
1,620
|
|
|
1,258
|
|
|
1,430
|
|
|||
Proceeds from (repayments of) line of credit borrowings, net
|
|
530
|
|
|
95
|
|
|
(4,751
|
)
|
|||
Repayments of other debt
|
|
(747
|
)
|
|
(141
|
)
|
|
(178
|
)
|
|||
Excess tax benefit from stock-based compensation
|
|
—
|
|
|
1,514
|
|
|
228
|
|
|||
Net cash provided by (used in) financing activities
|
|
1,403
|
|
|
2,726
|
|
|
(3,271
|
)
|
|||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
(52
|
)
|
|
(43
|
)
|
|
(113
|
)
|
|||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
3,904
|
|
|
1,035
|
|
|
(161
|
)
|
|||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
|
6,890
|
|
|
5,855
|
|
|
6,016
|
|
|||
CASH AND CASH EQUIVALENTS, END OF YEAR
|
|
$
|
10,794
|
|
|
$
|
6,890
|
|
|
$
|
5,855
|
|
NON-CASH TRANSACTIONS:
|
|
|
|
|
|
|
||||||
Common stock issued as partial consideration of acquisition of Cuattro Veterinary International, LLC
|
|
$
|
6,349
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Balances at beginning of period
|
$
|
189
|
|
|
$
|
216
|
|
|
$
|
209
|
|
Additions - charged to expense
|
163
|
|
|
83
|
|
143
|
|||||
Deductions - write offs, net of recoveries
|
(115
|
)
|
|
(110)
|
|
(136)
|
|||||
Balances at end of period
|
$
|
237
|
|
|
$
|
189
|
|
|
$
|
216
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Raw materials
|
|
$
|
10,807
|
|
|
$
|
8,531
|
|
Work in process
|
|
3,820
|
|
|
2,839
|
|
||
Finished goods
|
|
7,087
|
|
|
6,122
|
|
||
Allowance for excess or obsolete inventory
|
|
(1,319
|
)
|
|
(1,391
|
)
|
||
|
|
$
|
20,395
|
|
|
$
|
16,101
|
|
Asset Classification
|
Estimated
Useful Life
|
Building
|
10 to 20 years
|
Machinery and equipment
|
3 to 15 years
|
Leasehold and building improvements
|
7 to 15 years
|
•
|
Persuasive evidence of an arrangement exists;
|
•
|
Delivery has occurred or services rendered;
|
•
|
Price is fixed or determinable; and
|
•
|
Collectability is reasonably assured.
|
Common stock issued - 175,000 shares
|
$
|
6,347
|
|
Debt assumed
|
1,535
|
|
|
Total fair value of consideration transferred
|
$
|
7,882
|
|
Accounts receivable
|
$
|
222
|
|
Inventories
|
39
|
|
|
Due from Cuattro, LLC
|
963
|
|
|
Property and equipment
|
80
|
|
|
Other tangible assets
|
164
|
|
|
Deferred tax asset
|
56
|
|
|
Intangible assets
|
2,521
|
|
|
Goodwill
|
5,783
|
|
|
Accounts payable
|
(112
|
)
|
|
Deferred tax liability
|
(905
|
)
|
|
Other assumed liabilities
|
(929
|
)
|
|
Total fair value of consideration transferred
|
$
|
7,882
|
|
|
Useful Life
|
|
Amortization Method
|
|
Fair Value
|
Customer relationships
|
6.67
|
|
Straight-line
|
|
$2,521
|
Balance December 31, 2015
|
$
|
15,747
|
|
Accretion of Put Value
|
(1,145
|
)
|
|
Balance reclassification to current liabilities
|
$
|
(14,602
|
)
|
Balance December 31, 2016
|
$
|
—
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Inventory
|
|
$
|
1,172
|
|
|
$
|
954
|
|
Accrued compensation
|
|
114
|
|
|
267
|
|
||
Stock Options
|
|
811
|
|
|
344
|
|
||
Research and development
|
|
438
|
|
|
440
|
|
||
Alternative minimum tax credit
|
|
543
|
|
|
367
|
|
||
Deferred revenue
|
|
2,934
|
|
|
3,638
|
|
||
Property and equipment
|
|
2,750
|
|
|
1,967
|
|
||
Net operating loss carryforwards – domestic
|
|
34,706
|
|
|
37,845
|
|
||
Capital Lease
|
|
(2,833
|
)
|
|
(384
|
)
|
||
Other
|
|
34
|
|
|
(8
|
)
|
||
|
|
40,669
|
|
|
45,430
|
|
||
Valuation allowance
|
|
(19,547
|
)
|
|
(19,547
|
)
|
||
Total net deferred tax assets
|
|
$
|
21,122
|
|
|
$
|
25,883
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current income tax expense:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
$
|
197
|
|
|
$
|
1,492
|
|
|
$
|
11
|
|
State
|
|
179
|
|
|
65
|
|
|
7
|
|
|||
Foreign
|
|
31
|
|
|
24
|
|
|
29
|
|
|||
Total current expense
|
|
$
|
407
|
|
|
$
|
1,581
|
|
|
$
|
47
|
|
Deferred income tax expense:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
$
|
3,545
|
|
|
$
|
1,043
|
|
|
$
|
1,181
|
|
State
|
|
387
|
|
|
284
|
|
|
123
|
|
|||
Foreign
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total deferred expense
|
|
3,932
|
|
|
1,327
|
|
|
1,304
|
|
|||
Total income tax expense
|
|
$
|
4,339
|
|
|
$
|
2,908
|
|
|
$
|
1,351
|
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Statutory federal tax rate
|
34
|
%
|
|
34
|
%
|
|
34
|
%
|
State income taxes, net of federal benefit
|
2
|
%
|
|
3
|
%
|
|
5
|
%
|
Non-controlling interest in Heska Imaging US, LLC
|
(3
|
)%
|
|
(1
|
)%
|
|
12
|
%
|
Other permanent differences
|
(7
|
)%
|
|
(1
|
)%
|
|
(3
|
)%
|
Change in tax rate
|
—
|
%
|
|
(1
|
)%
|
|
2
|
%
|
Change in valuation allowance
|
—
|
%
|
|
(14
|
)%
|
|
78
|
%
|
Other
|
—
|
%
|
|
15
|
%
|
|
(82
|
)%
|
Effective income tax rate
|
26
|
%
|
|
35
|
%
|
|
46
|
%
|
|
Years ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net income attributable to Heska Corporation
|
$
|
10,508
|
|
|
$
|
5,239
|
|
|
$
|
2,603
|
|
|
|
|
|
|
|
||||||
Basic weighted-average common shares outstanding
|
6,783
|
|
|
6,509
|
|
|
5,951
|
|
|||
Assumed exercise of dilutive stock options and restricted stock units
|
578
|
|
|
565
|
|
458
|
|
||||
Diluted weighted-average common shares outstanding
|
7,361
|
|
|
7,074
|
|
|
6,409
|
|
|||
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
1.55
|
|
|
$
|
0.80
|
|
|
$
|
0.44
|
|
Diluted earnings per share
|
$
|
1.43
|
|
|
$
|
0.74
|
|
|
$
|
0.41
|
|
|
Years ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Stock options
|
234
|
|
|
144
|
|
|
367
|
|
|
Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Carrying amount, December 31, 2015
|
$
|
20,910
|
|
|
$
|
20,903
|
|
Additions and adjustments
|
5,737
|
|
|
7
|
|
||
Carrying amount, December 31, 2016
|
$
|
26,647
|
|
|
$
|
20,910
|
|
|
Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Gross carrying amount
|
$
|
2,622
|
|
|
$
|
788
|
|
Accumulated amortization
|
(276
|
)
|
|
(732
|
)
|
||
Net carrying amount
|
$
|
2,346
|
|
|
$
|
56
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Amortization expense
|
$
|
230
|
|
|
$
|
246
|
|
|
$
|
260
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Land
|
$
|
377
|
|
|
$
|
377
|
|
Building
|
2,868
|
|
|
2,868
|
|
||
Machinery and equipment
|
36,588
|
|
|
35,284
|
|
||
Leasehold and building improvements
|
7,662
|
|
|
6,673
|
|
||
Construction in progress
|
1,655
|
|
|
1,496
|
|
||
|
49,150
|
|
|
46,698
|
|
||
Less accumulated depreciation
|
(32,569
|
)
|
|
(29,678
|
)
|
||
Total property and equipment, net
|
$
|
16,581
|
|
|
$
|
17,020
|
|
|
2016
|
|
2015
|
||||
Accrued payroll and employee benefits
|
$
|
2,166
|
|
|
$
|
1,626
|
|
Accrued property taxes
|
748
|
|
|
594
|
|
||
Other
|
3,555
|
|
|
3,196
|
|
||
Total accrued liabilities
|
$
|
6,469
|
|
|
$
|
5,416
|
|
|
2016
|
|
2015
|
|
2014
|
Risk-free interest rate
|
1.76%
|
|
1.41%
|
|
1.21%
|
Expected lives
|
4.5 years
|
|
3.4 years
|
|
3.4 years
|
Expected volatility
|
41%
|
|
41%
|
|
43%
|
Expected dividend yield
|
0%
|
|
0%
|
|
0%
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Options |
|
Weighted Average Exercise Price
|
|
Options |
|
Weighted Average Exercise Price
|
|
Options |
|
Weighted Average Exercise Price
|
|||||||||
Outstanding at beginning of period
|
940,610
|
|
|
$
|
14.163
|
|
|
1,074,251
|
|
|
$
|
10.110
|
|
|
1,321,232
|
|
|
$
|
10.386
|
|
Granted at Market
|
129,855
|
|
|
$
|
67.706
|
|
|
146,446
|
|
|
$
|
36.904
|
|
|
134,800
|
|
|
$
|
16.398
|
|
Canceled
|
(463
|
)
|
|
$
|
14.881
|
|
|
(28,440
|
)
|
|
$
|
10.080
|
|
|
(218,926
|
)
|
|
$
|
17.786
|
|
Exercised
|
(240,385
|
)
|
|
$
|
11.886
|
|
|
(251,647
|
)
|
|
$
|
10.559
|
|
|
(162,855
|
)
|
|
$
|
7.234
|
|
Outstanding at end of period
|
829,617
|
|
|
$
|
23.203
|
|
|
940,610
|
|
|
$
|
14.163
|
|
|
1,074,251
|
|
|
$
|
10.110
|
|
Exercisable at end of period
|
532,703
|
|
|
$
|
12.140
|
|
|
621,559
|
|
|
$
|
10.269
|
|
|
729,175
|
|
|
$
|
9.800
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Exercise Prices
|
|
Number of
Options Outstanding at December 31, 2016 |
|
Weighted
Average Remaining Contractual Life in Years |
|
Weighted
Average Exercise Price |
|
Number of
Options Exercisable at December 31, 2016 |
|
Weighted
Average Exercise Price |
||||||
$ 4.40 - $ 6.90
|
|
164,794
|
|
|
3.94
|
|
$
|
5.679
|
|
|
163,663
|
|
|
$
|
5.676
|
|
$ 6.91 - $ 7.36
|
|
157,323
|
|
|
6.89
|
|
$
|
7.360
|
|
|
114,670
|
|
|
$
|
7.360
|
|
$ 7.37 - $18.13
|
|
214,697
|
|
|
6.68
|
|
$
|
12.800
|
|
|
162,451
|
|
|
$
|
11.317
|
|
$18.14 - $39.76
|
|
182,303
|
|
|
7.93
|
|
$
|
34.954
|
|
|
91,878
|
|
|
$
|
31.057
|
|
$39.77 - $72.85
|
|
110,500
|
|
|
9.99
|
|
$
|
72.721
|
|
|
41
|
|
|
$
|
56.587
|
|
$ 4.40 - $72.85
|
|
829,617
|
|
|
6.89
|
|
$
|
23.203
|
|
|
532,703
|
|
|
$
|
12.140
|
|
|
2016
|
2015
|
|
2014
|
Risk-free interest rate
|
0.54%
|
0.27%
|
|
0.23%
|
Expected lives
|
1.2 years
|
1.2 years
|
|
1.3 years
|
Expected volatility
|
42%
|
36%
|
|
34%
|
Expected dividend yield
|
0%
|
0%
|
|
0%
|
|
Minimum pension liability
|
|
Foreign currency translation
|
|
Sale of equity investment
|
|
Total accumulated other comprehensive income
|
||||||||
Balances at December 31, 2015
|
$
|
(576
|
)
|
|
$
|
673
|
|
|
$
|
90
|
|
|
$
|
187
|
|
Current period other comprehensive income (loss)
|
75
|
|
|
(75
|
)
|
|
(90
|
)
|
|
(90
|
)
|
||||
Balances at December 31, 2016
|
$
|
(501
|
)
|
|
$
|
598
|
|
|
$
|
—
|
|
|
$
|
97
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Interest income
|
$
|
(124
|
)
|
|
$
|
(172
|
)
|
|
$
|
(190
|
)
|
Interest expense
|
160
|
|
|
200
|
|
|
206
|
|
|||
Other expense (income), net
|
(7
|
)
|
|
102
|
|
|
(55
|
)
|
|||
|
$
|
29
|
|
|
$
|
130
|
|
|
$
|
(39
|
)
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Term loan with a financial entity due in monthly installments beginning July 2012 with the balance to be paid in full in June 2017 and a stated interest rate of 6.0%.
|
$
|
78
|
|
|
$
|
228
|
|
Less current maturities
|
78
|
|
|
159
|
|
||
Long-term debt, net of current portion
|
$
|
—
|
|
|
$
|
69
|
|
Year Ended December 31, 2016
|
|
Core
Companion Animal Health |
|
Other Vaccines,
Pharmaceuticals and Products |
|
Total |
||||||
Total revenue
|
|
$
|
107,398
|
|
|
$
|
22,685
|
|
|
$
|
130,083
|
|
Operating Income
|
|
13,015
|
|
|
3,518
|
|
|
16,533
|
|
|||
Income before income taxes
|
|
12,938
|
|
|
3,566
|
|
|
16,504
|
|
|||
Total assets
|
|
110,995
|
|
|
19,849
|
|
|
130,844
|
|
|||
Net assets
|
|
68,072
|
|
|
18,903
|
|
|
86,975
|
|
|||
Capital expenditures
|
|
1,135
|
|
|
2,282
|
|
|
3,417
|
|
|||
Depreciation and amortization
|
|
3,800
|
|
|
845
|
|
|
4,645
|
|
Year Ended December 31, 2015
|
|
Core
Companion Animal Health |
|
Other Vaccines, Pharmaceuticals and Products
|
|
Total |
||||||
Total revenue
|
|
$
|
84,249
|
|
|
$
|
20,348
|
|
|
$
|
104,597
|
|
Operating Income
|
|
4,911
|
|
|
3,646
|
|
|
8,557
|
|
|||
Income before income taxes
|
|
4,836
|
|
|
3,591
|
|
|
8,427
|
|
|||
Total assets
|
|
92,567
|
|
|
17,152
|
|
|
109,719
|
|
|||
Net assets
|
|
48,175
|
|
|
15,353
|
|
|
63,528
|
|
|||
Capital expenditures
|
|
1,177
|
|
|
2,596
|
|
|
3,773
|
|
|||
Depreciation and amortization
|
|
3,478
|
|
|
709
|
|
|
4,187
|
|
Year Ended December 31, 2014
|
|
Core
Companion Animal Health |
|
Other Vaccines, Pharmaceuticals and Products
|
|
Total |
||||||
Total revenue
|
|
$
|
72,354
|
|
|
$
|
17,483
|
|
|
$
|
89,837
|
|
Operating Income
|
|
1,198
|
|
|
1,713
|
|
|
2,911
|
|
|||
Income before income taxes
|
|
1,290
|
|
|
1,660
|
|
|
2,950
|
|
|||
Total assets
|
|
85,361
|
|
|
11,483
|
|
|
96,844
|
|
|||
Net assets
|
|
41,286
|
|
|
11,846
|
|
|
53,132
|
|
|||
Capital expenditures
|
|
1,864
|
|
|
473
|
|
|
2,337
|
|
|||
Depreciation and amortization
|
|
2,954
|
|
|
758
|
|
|
3,712
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
$
|
120,082
|
|
|
$
|
97,164
|
|
|
$
|
83,584
|
|
Canada
|
2,378
|
|
|
1,833
|
|
|
1,123
|
|
|||
Europe
|
4,781
|
|
|
2,086
|
|
|
2,264
|
|
|||
Other International
|
2,842
|
|
|
3,514
|
|
|
2,866
|
|
|||
Total
|
$
|
130,083
|
|
|
$
|
104,597
|
|
|
$
|
89,837
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Total
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total revenue
|
$
|
27,146
|
|
|
$
|
29,965
|
|
|
$
|
33,430
|
|
|
$
|
39,542
|
|
|
$
|
130,083
|
|
Gross profit
|
11,442
|
|
|
12,682
|
|
|
13,718
|
|
|
16,050
|
|
|
53,892
|
|
|||||
Operating income
|
1,970
|
|
|
3,556
|
|
|
4,492
|
|
|
6,515
|
|
|
16,533
|
|
|||||
Net income
|
1,447
|
|
|
2,742
|
|
|
3,343
|
|
|
4,633
|
|
|
12,165
|
|
|||||
Net income attributable to Heska Corporation
|
1,186
|
|
|
2,522
|
|
|
3,347
|
|
|
3,453
|
|
|
10,508
|
|
|||||
Basic earnings per share attributable to Heska Corporation
|
0.18
|
|
|
0.38
|
|
|
0.49
|
|
|
0.50
|
|
|
1.55
|
|
|||||
Diluted earnings per share attributable to Heska Corporation
|
0.17
|
|
|
0.35
|
|
|
0.45
|
|
|
0.46
|
|
|
1.43
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total revenue
|
$
|
22,894
|
|
|
$
|
23,910
|
|
|
$
|
28,034
|
|
|
$
|
29,759
|
|
|
$
|
104,597
|
|
Gross profit
|
10,084
|
|
|
10,297
|
|
|
11,597
|
|
|
12,235
|
|
|
44,213
|
|
|||||
Operating income
|
1,021
|
|
|
1,829
|
|
|
2,142
|
|
|
3,565
|
|
|
8,557
|
|
|||||
Net income
|
583
|
|
|
1,178
|
|
|
1,383
|
|
|
2,375
|
|
|
5,519
|
|
|||||
Net income attributable to Heska Corporation
|
598
|
|
|
1,197
|
|
|
1,415
|
|
|
2,029
|
|
|
5,239
|
|
|||||
Basic earnings per share attributable to Heska Corporation
|
0.10
|
|
|
0.19
|
|
|
0.22
|
|
|
0.29
|
|
|
0.80
|
|
|||||
Diluted earnings per share attributable to Heska Corporation
|
0.09
|
|
|
0.17
|
|
|
0.20
|
|
|
0.28
|
|
|
0.74
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Plan Category
|
(a) Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights (1)
|
|
(b) Weighted-Average Exercise Price of Outstanding Options and Rights (1)
|
|
(c) Number of Securities
Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) |
Equity Compensation Plans Approved
by Stockholders
|
829,617
|
|
$23.20
|
|
449,950
|
Equity Compensation Plans Not Approved
by Stockholders |
None |
|
None |
|
None |
Total
|
829,617
|
|
$23.20
|
|
449,950
|
(1)
|
Excluding outstanding options to purchase an aggregate of 0.5 fractional shares resulting from our December 2010 reverse stock split.
|
Item 13.
|
Certain Relationships and Related Transactions and Director Independence.
|
Item 14.
|
Principal Accountant Fees and Services.
|
Item 15.
|
Exhibits and Financial Statement Schedules.
|
|
Exhibit Number
|
|
Notes
|
|
Description of Document
|
|
3(i)
|
|
(13)
|
|
Restated Certificate of Incorporation of the Registrant.
|
|
3(ii)
|
|
(13)
|
|
Certificate of Amendment to Restated Certificate of Incorporation of Registrant.
|
|
3(iii)
|
|
(13)
|
|
Certificate of Amendment to the Restated Certificate of Incorporation, as amended, of Registrant.
|
|
3(iv)
|
|
|
|
Certificate of Amendment to the Restated Certificate of Incorporation, as amended, of Registrant.
|
|
3(v)
|
|
(28)
|
|
Amended and Restated Bylaws of the Registrant, as amended.
|
|
3(vi)
|
|
(13)
|
|
Amended and Restated Operating Agreement of Heska Imaging US, LLC.
|
|
10.1*
|
|
|
|
1997 Stock Incentive Plan of Registrant, as amended and restated.
|
|
10.2*
|
|
|
|
1997 Stock Incentive Plan Restricted Stock Grant Agreement.
|
|
10.3*
|
|
|
|
1997 Stock Incentive Plan Restricted Stock Grant Agreement (Management Incentive Plan Award).
|
|
10.4*
|
|
|
|
1997 Stock Incentive Plan Restricted Stock Grant Agreement (Outside Director Award).
|
|
10.5*
|
|
|
|
1997 Stock Incentive Plan Employees and Consultants Option Agreement.
|
|
10.6*
|
|
|
|
1997 Stock Incentive Plan Outside Directors Option Agreement.
|
|
10.7*
|
|
(9)
|
|
2003 Equity Incentive Plan, as amended and restated.
|
|
10.8*
|
|
|
|
2003 Equity Incentive Plan Restricted Stock Grant Agreement.
|
|
10.9*
|
|
|
|
2003 Equity Incentive Plan Restricted Stock Grant Agreement (Management Incentive Plan Award).
|
|
10.10*
|
|
|
|
2003 Equity Incentive Plan Restricted Stock Grant Agreement (Outside Director Award).
|
|
10.11*
|
|
|
|
2003 Equity Incentive Plan Employees and Consultants Option Agreement.
|
|
10.12*
|
|
|
|
2003 Equity Incentive Plan Outside Directors Option Agreement.
|
|
10.13*
|
|
(21)
|
|
1997 Employee Stock Purchase Plan of Registrant, as amended and restated.
|
|
10.14*
|
|
(20)
|
|
Amended and Restated Management Incentive Plan Master Document.
|
|
10.15*
|
|
|
|
Director Compensation Policy.
|
|
10.16*
|
|
(7)
|
|
Form of Indemnification Agreement entered into between Registrant and its directors and certain officers.
|
|
10.17*
|
|
(17)
|
|
Employment Agreement between Registrant and Kevin S. Wilson, effective as of March 26, 2014.
|
|
10.18*
|
|
(17)
|
|
Restricted Stock Grant Agreement between Registrant and Kevin S. Wilson, effective as of March 26, 2014.
|
|
10.19*
|
|
(20)
|
|
Restricted Stock Grant Agreement between Heska Corporation and Kevin S. Wilson, effective as of May 6, 2014.
|
|
10.20*
|
|
(3)
|
|
Employment Agreement between Registrant and Jason A. Napolitano, effective as of May 6, 2002.
|
|
10.21*
|
|
(7)
|
|
Amendment to Employment Agreement between Registrant and Jason A. Napolitano, effective as of January 1, 2008.
|
|
10.22*
|
|
(6)
|
|
Employment Agreement between Diamond Animal Health, Inc. and Michael J. McGinley, effective as of May 1, 2000.
|
|
10.23*
|
|
(7)
|
|
Amendment to Employment Agreement between Diamond Animal Health, Inc. and Michael J. McGinley, effective as of January 1, 2008.
|
|
10.24*
|
|
(10)
|
|
Assignment and Second Amendment to Employment Agreement between Registrant and Michael J. McGinley, effective as of August 4, 2011.
|
|
10.25*
|
|
(6)
|
|
Employment Agreement between Registrant and Nancy Wisnewski, effective as of April 15, 2002.
|
|
10.26*
|
|
(7)
|
|
Amendment to Employment Agreement between Registrant and Nancy Wisnewski, effective as of January 1, 2008.
|
|
10.27*
|
|
(17)
|
|
Employment Agreement between Registrant and Steven M. Eyl, effective as of May 15, 2013.
|
|
10.28*
|
|
(13)
|
|
Employment Agreement between Registrant and Steven M. Asakowicz, effective as of February 22, 2013.
|
|
10.29*
|
|
(20)
|
|
Amendment to Employment Agreement between Registrant and Steven M. Asakowicz, effective as of March 1, 2015.
|
|
10.30*
|
|
(13)
|
|
Employment Agreement between Registrant and Rodney A. Lippincott, effective as of February 22, 2013.
|
|
10.31*
|
|
(20)
|
|
Amendment to Employment Agreement between Registrant and Rodney A. Lippincott, effective as of March 1, 2015.
|
|
10.32*
|
|
(25)
|
|
Employment Agreement between Registrant and John McMahon, effective as of October 14, 2015.
|
|
10.33
|
|
(4)
|
|
Net Lease Agreement between Registrant and CCMRED 40, LLC, effective as of May 24, 2004.
|
|
10.34
|
|
(5)
|
|
First Amendment to Net Lease Agreement and Development Agreement between Registrant and CCMRED 40, LLC, dated February 11, 2005.
|
|
10.35
|
|
(5)
|
|
Second Amendment to Net Lease Agreement between Registrant and CCMRED 40, LLC, dated July 14, 2005.
|
|
10.36
|
|
(12)
|
|
Third Amendment to Net Lease Agreement between Registrant and Millbrae Square Company, effective as of January 1, 2010.
|
|
10.37+
|
|
(6)
|
|
Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Business Credit, Inc., dated December 30, 2005.
|
|
10.38+
|
|
(7)
|
|
First Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated December 5, 2006.
|
|
10.39+
|
|
(7)
|
|
Second Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated July 20, 2007.
|
|
10.40
|
|
(7)
|
|
Third Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated December 21, 2007.
|
|
10.41+
|
|
(8)
|
|
Fourth and Fifth Amendments to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated October 16, 2008.
|
|
10.42+
|
|
(9)
|
|
Sixth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated December 30, 2008.
|
|
10.43+
|
|
(11)
|
|
Seventh Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated November 30, 2009.
|
|
10.44+
|
|
(11)
|
|
Eighth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated December 15, 2010.
|
|
10.45+
|
|
(12)
|
|
Ninth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated December 21, 2011.
|
|
10.46+
|
|
(12)
|
|
Tenth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated February 9, 2012.
|
|
10.47+
|
|
(13)
|
|
Eleventh Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated November 5, 2012.
|
|
10.48+
|
|
(16)
|
|
Twelfth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc., Heska Imaging US, LLC and Wells Fargo Bank, National Association, dated August 13, 2013.
|
|
10.49+
|
|
(19)
|
|
Letter Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc., Heska Imaging US, LLC and Wells Fargo Bank, National Association, dated September 17, 2014.
|
|
10.50+
|
|
(25)
|
|
Thirteenth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc., Heska Imaging US, LLC and Wells Fargo Bank, National Association, dated December 21, 2015.
|
|
10.51+
|
|
(28)
|
|
Fourteenth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc., Heska Imaging US, LLC and Wells Fargo Bank, National Association, dated August 31, 2016.
|
|
10.52+
|
|
(28)
|
|
Letter Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc., Heska Imaging US, LLC and Wells Fargo Bank, National Association, dated October 25, 2016.
|
|
10.53+
|
|
(1)
|
|
Product Supply Agreement between Registrant and Quidel Corporation, effective as of July 3, 1997.
|
|
10.54+
|
|
(2)
|
|
First Amendment to Product Supply Agreement between Registrant and Quidel Corporation, effective as of March 15, 1999.
|
|
10.55
|
|
(9)
|
|
Letter Amendment to Product Supply Agreement between Registrant and Quidel Corporation dated July 7, 2004.
|
|
10.56+
|
|
(6)
|
|
Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of June 17, 2003; Letter Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, dated June 1, 2004; and Letter Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, dated December 31, 2004.
|
|
10.57+
|
|
(8)
|
|
Letter Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, dated July 12, 2005; Letter Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, dated March 20, 2007; Letter Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, dated January 23, 2008; and Sixth Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of October 1, 2008.
|
|
10.58+
|
|
(10)
|
|
Seventh Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of June 1, 2011.
|
|
10.59+
|
|
(14)
|
|
Eighth Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of January 1, 2013.
|
|
10.60+
|
|
(18)
|
|
Ninth Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of January 1, 2014; and Tenth Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of July 11, 2014.
|
|
10.61+
|
|
(6)
|
|
Supply and License Agreement between Registrant and Schering-Plough Animal Health Corporation, effective as of August 1, 2003.
|
|
10.62+
|
|
(9)
|
|
Amendment No. 1 to Supply and License Agreement between Registrant and Schering-Plough Animal Health Corporation, effective as of August 31, 2005.
|
|
10.63+
|
|
(13)
|
|
Amendment No. 2 to Supply and License Agreement between Registrant and Intervet Inc., d/b/a Merck Animal Health, effective as of December 7, 2011.
|
|
10.64+
|
|
(16)
|
|
Amendment No. 3 to Supply and License Agreement between Registrant and Intervet Inc., d/b/a Merck Animal Health, effective as of July 30, 2013.
|
|
10.65+
|
|
(17)
|
|
Amendment No. 4 to Supply and License Agreement between Registrant and Intervet Inc., d/b/a Merck Animal Health, effective as of December 9, 2013.
|
|
10.66+
|
|
(26)
|
|
Amendment No. 5 to Supply and License Agreement between Registrant and Intervet Inc., d.b.a. Merck Animal Health, effective as of October 30, 2015.
|
|
10.67+
|
|
(18)
|
|
Clinical Chemistry Analyzer Agreement between Registrant and FUJIFILM Corporation, effective as of January 30, 2007; and First Amendment to Clinical Chemistry Analyzer Agreement, effective as of April 1, 2014.
|
|
10.68
|
|
(21)
|
|
Second Amendment to Clinical Chemistry Analyzer Agreement, effective as of April 1, 2015.
|
|
10.73+
|
|
(13)
|
|
Amended and Restated Master License Agreement between Heska Imaging US, LLC and Cuattro, LLC, effective as of February 22, 2013.
|
|
10.74
|
|
(27)
|
|
Assignment and Assumption Agreement (License Agreement) between Heska Imaging US, LLC, Heska Imaging Global, LLC, Cuattro, LLC, and Heska Imaging International, LLC, dated as of March 14, 2016.
|
|
10.75+
|
|
(13)
|
|
Supply Agreement between Cuattro, LLC and Heska Imaging US, LLC effective as of February 24, 2013.
|
|
10.76
|
|
(23)
|
|
First Amendment to Supply Agreement between Heska Imaging US, LLC and Cuattro, LLC, effective as of August 10, 2015.
|
|
10.77
|
|
(27)
|
|
Assignment and Assumption Agreement (Supply Agreement) between Heska Imaging US, LLC, Heska Imaging Global, LLC, Cuattro, LLC, and Heska Imaging International, LLC, dated as of March 14, 2016.
|
|
10.78+
|
|
(15)
|
|
Asset Purchase and License Agreement between Diamond Animal Health, Inc., and Elanco Animal Health, a division of Eli Lilly and Company effective as of June 17, 2013.
|
|
10.79+
|
|
(22)
|
|
Master Supply Agreement between Diamond Animal Health, Inc. and Eli Lilly and Company and its Affiliates, operating through its Elanco Animal Health division, effective as of October 1, 2014.
|
|
10.80+
|
|
(22)
|
|
Supplemental Agreement between Diamond Animal Health, Inc. and Eli Lilly and Company and its Affiliates, operating through its Elanco Animal Health division, effective as of October 1, 2014.
|
|
10.81+
|
|
(25)
|
|
Agreement and Plan of Merger among Heska Corporation, Cuattro Veterinary, LLC, Kevin S. Wilson, Cuattro LLC, Lane Naffziger, Clint Roth, DVM and Doug G. Wilson, III, dated as of March 14, 2016.
|
|
10.82
|
|
(24)
|
|
Letter Agreement between Heska Imaging US, LLC and Cuattro Veterinary, LLC, dated as of March 14, 2016.
|
|
21.1
|
|
|
|
Subsidiaries of the Company.
|
|
23.1
|
|
|
|
Consent of EKS&H LLLP, Independent Registered Public Accounting Firm.
|
|
24.1
|
|
|
|
Power of Attorney (See Signature Page of this Form 10-K).
|
|
31.1
|
|
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
31.2
|
|
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
32.1**
|
|
|
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
|
|
|
XBRL Instance Document.
|
|
101.SCH
|
|
|
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF
|
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.PRE
|
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
101.LAB
|
|
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
Notes
|
|
*
|
Indicates management contract or compensatory plan or arrangement.
|
+
|
Portions of the exhibit have been omitted pursuant to a request for confidential treatment.
|
**
|
Furnished herewith but not filed.
|
(1)
|
Filed with the Registrant's Form 10-Q for the quarter ended September 30, 1997.
|
(2)
|
Filed with the Registrant's Form 10-K for the year ended December 31, 2001.
|
(3)
|
Filed with the Registrant's Form 10-K for the year ended December 31, 2002.
|
(4)
|
Filed with the Registrant's Form 10-K for the year ended December 31, 2004.
|
(5)
|
Filed with the Registrant's Form 10-Q for the quarter ended June 30, 2005.
|
(6)
|
Filed with the Registrant's Form 10-K for the year ended December 31, 2006.
|
(7)
|
Filed with the Registrant's Form 10-K for the year ended December 31, 2007.
|
(8)
|
Filed with the Registrant's Form 10-Q for the quarter ended September 30, 2008.
|
(9)
|
Filed with the Registrant's Form 10-K for the year ended December 31, 2008.
|
(10)
|
Filed with the Registrant's Form 10-Q for the quarter ended June 30, 2011.
|
(11)
|
Filed with the Registrant's Form 10-Q for the quarter ended September 30, 2011.
|
(12)
|
Filed with the Registrant's Form 10-K for the year ended December 31, 2011.
|
(13)
|
Filed with the Registrant's Form 10-K for the year ended December 31, 2012.
|
(14)
|
Filed with the Registrant's Form 10-Q for the quarter ended June 30, 2013.
|
(15)
|
Filed with the Registrant's Form 8-K/A on August 29, 2013.
|
(16)
|
Filed with the Registrant's Form 10-Q for the quarter ended September 30, 2013.
|
(17)
|
Filed with the Registrant's Form 10-K for the year ended December 31, 2013.
|
(18)
|
Filed with the Registrants' Form 10-Q for the quarter ended June 30, 2014.
|
(19)
|
Filed with the Registrants' Form 10-Q for the quarter ended September 30, 2014.
|
(20)
|
Filed with the Registrants' Form 10-K for the year ended December 31, 2014.
|
(21)
|
Filed with the Registrants' Form 10-Q for the quarter ended March 31, 2015.
|
(22)
|
Filed with the Registrants' Form 10-Q for the quarter ended June 30, 2015.
|
(23)
|
Filed with the Registrants' Form 10-Q for the quarter ended September 30, 2015.
|
(24)
|
Filed with the Registrants' Form 8-K on March 15, 2016.
|
(25)
|
Filed with the Registrants' Form 10-K for the year ended December 31, 2015.
|
(26)
|
Filed with the Registrant's Form 10-Q for the quarter ended March 31, 2016.
|
(27)
|
Filed with the Registrants' Form 10-Q for the quarter ended June 30, 2016.
|
(28)
|
Filed with the Registrants' Form 10-Q for the quarter ended September 30, 2016.
|
Item 16.
|
Form 10-K Summary
|
|
HESKA CORPORATION
|
|
|
|
By:
/s/ KEVIN S. WILSON
Kevin S. Wilson
Chief Executive Officer and President
|
Signature
|
Title
|
Date
|
/s/ KEVIN S. WILSON
Kevin S. Wilson
|
Chief Executive Officer, President and Director (Principal Executive Officer)
|
March 3, 2017
|
/s/ JOHN MCMAHON
John McMahon
|
Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)
|
March 3, 2017
|
/s/ SHARON L. LARSON
Sharon L. Larson
|
Chair
|
March 3, 2017
|
/s/ G. IRWIN GORDON
G. Irwin Gordon
|
Director
|
March 3, 2017
|
/s/ BONNIE J. TROWBRIDGE
Bonnie J. Trowbridge
|
Director
|
March 3, 2017
|
/s/ DAVID E. SVEEN
David E. Sveen, Ph.D.
|
Director
|
March 3, 2017
|
/s/ CAROL A. WRENN
Carol A. Wrenn
|
Director
|
March 3, 2017
|
|
Exhibit Number
|
|
Notes
|
|
Description of Document
|
|
3(i)
|
|
(13)
|
|
Restated Certificate of Incorporation of the Registrant.
|
|
3(ii)
|
|
(13)
|
|
Certificate of Amendment to Restated Certificate of Incorporation of Registrant.
|
|
3(iii)
|
|
(13)
|
|
Certificate of Amendment to the Restated Certificate of Incorporation, as amended, of Registrant.
|
|
3(iv)
|
|
|
|
Certificate of Amendment to the Restated Certificate of Incorporation, as amended, of Registrant.
|
|
3(v)
|
|
(28)
|
|
Amended and Restated Bylaws of the Registrant, as amended.
|
|
3(vi)
|
|
(13)
|
|
Amended and Restated Operating Agreement of Heska Imaging US, LLC.
|
|
10.1*
|
|
|
|
1997 Stock Incentive Plan of Registrant, as amended and restated.
|
|
10.2*
|
|
|
|
1997 Stock Incentive Plan Restricted Stock Grant Agreement.
|
|
10.3*
|
|
|
|
1997 Stock Incentive Plan Restricted Stock Grant Agreement (Management Incentive Plan Award).
|
|
10.4*
|
|
|
|
1997 Stock Incentive Plan Restricted Stock Grant Agreement (Outside Director Award).
|
|
10.5*
|
|
|
|
1997 Stock Incentive Plan Employees and Consultants Option Agreement.
|
|
10.6*
|
|
|
|
1997 Stock Incentive Plan Outside Directors Option Agreement.
|
|
10.7*
|
|
(9)
|
|
2003 Equity Incentive Plan, as amended and restated.
|
|
10.8*
|
|
|
|
2003 Equity Incentive Plan Restricted Stock Grant Agreement.
|
|
10.9*
|
|
|
|
2003 Equity Incentive Plan Restricted Stock Grant Agreement (Management Incentive Plan Award).
|
|
10.10*
|
|
|
|
2003 Equity Incentive Plan Restricted Stock Grant Agreement (Outside Director Award).
|
|
10.11*
|
|
|
|
2003 Equity Incentive Plan Employees and Consultants Option Agreement.
|
|
10.12*
|
|
|
|
2003 Equity Incentive Plan Outside Directors Option Agreement.
|
|
10.13*
|
|
(21)
|
|
1997 Employee Stock Purchase Plan of Registrant, as amended and restated.
|
|
10.14*
|
|
(20)
|
|
Amended and Restated Management Incentive Plan Master Document.
|
|
10.15*
|
|
|
|
Director Compensation Policy.
|
|
10.16*
|
|
(7)
|
|
Form of Indemnification Agreement entered into between Registrant and its directors and certain officers.
|
|
10.17*
|
|
(17)
|
|
Employment Agreement between Registrant and Kevin S. Wilson, effective as of March 26, 2014.
|
|
10.18*
|
|
(17)
|
|
Restricted Stock Grant Agreement between Registrant and Kevin S. Wilson, effective as of March 26, 2014.
|
|
10.19*
|
|
(20)
|
|
Restricted Stock Grant Agreement between Heska Corporation and Kevin S. Wilson, effective as of May 6, 2014.
|
|
10.20*
|
|
(3)
|
|
Employment Agreement between Registrant and Jason A. Napolitano, effective as of May 6, 2002.
|
|
10.21*
|
|
(7)
|
|
Amendment to Employment Agreement between Registrant and Jason A. Napolitano, effective as of January 1, 2008.
|
|
10.22*
|
|
(6)
|
|
Employment Agreement between Diamond Animal Health, Inc. and Michael J. McGinley, effective as of May 1, 2000.
|
|
10.23*
|
|
(7)
|
|
Amendment to Employment Agreement between Diamond Animal Health, Inc. and Michael J. McGinley, effective as of January 1, 2008.
|
|
10.24*
|
|
(10)
|
|
Assignment and Second Amendment to Employment Agreement between Registrant and Michael J. McGinley, effective as of August 4, 2011.
|
|
10.25*
|
|
(6)
|
|
Employment Agreement between Registrant and Nancy Wisnewski, effective as of April 15, 2002.
|
|
10.26*
|
|
(7)
|
|
Amendment to Employment Agreement between Registrant and Nancy Wisnewski, effective as of January 1, 2008.
|
|
10.27*
|
|
(17)
|
|
Employment Agreement between Registrant and Steven M. Eyl, effective as of May 15, 2013.
|
|
10.28*
|
|
(13)
|
|
Employment Agreement between Registrant and Steven M. Asakowicz, effective as of February 22, 2013.
|
|
10.29*
|
|
(20)
|
|
Amendment to Employment Agreement between Registrant and Steven M. Asakowicz, effective as of March 1, 2015.
|
|
10.30*
|
|
(13)
|
|
Employment Agreement between Registrant and Rodney A. Lippincott, effective as of February 22, 2013.
|
|
10.31*
|
|
(20)
|
|
Amendment to Employment Agreement between Registrant and Rodney A. Lippincott, effective as of March 1, 2015.
|
|
10.32*
|
|
(25)
|
|
Employment Agreement between Registrant and John McMahon, effective as of October 14, 2015.
|
|
10.33
|
|
(4)
|
|
Net Lease Agreement between Registrant and CCMRED 40, LLC, effective as of May 24, 2004.
|
|
10.34
|
|
(5)
|
|
First Amendment to Net Lease Agreement and Development Agreement between Registrant and CCMRED 40, LLC, dated February 11, 2005.
|
|
10.35
|
|
(5)
|
|
Second Amendment to Net Lease Agreement between Registrant and CCMRED 40, LLC, dated July 14, 2005.
|
|
10.36
|
|
(12)
|
|
Third Amendment to Net Lease Agreement between Registrant and Millbrae Square Company, effective as of January 1, 2010.
|
|
10.37+
|
|
(6)
|
|
Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Business Credit, Inc., dated December 30, 2005.
|
|
10.38+
|
|
(7)
|
|
First Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated December 5, 2006.
|
|
10.39+
|
|
(7)
|
|
Second Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated July 20, 2007.
|
|
10.40
|
|
(7)
|
|
Third Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated December 21, 2007.
|
|
10.41+
|
|
(8)
|
|
Fourth and Fifth Amendments to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated October 16, 2008.
|
|
10.42+
|
|
(9)
|
|
Sixth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated December 30, 2008.
|
|
10.43+
|
|
(11)
|
|
Seventh Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated November 30, 2009.
|
|
10.44+
|
|
(11)
|
|
Eighth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated December 15, 2010.
|
|
10.45+
|
|
(12)
|
|
Ninth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated December 21, 2011.
|
|
10.46+
|
|
(12)
|
|
Tenth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated February 9, 2012.
|
|
10.47+
|
|
(13)
|
|
Eleventh Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc. and Wells Fargo Bank, National Association, dated November 5, 2012.
|
|
10.48+
|
|
(16)
|
|
Twelfth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc., Heska Imaging US, LLC and Wells Fargo Bank, National Association, dated August 13, 2013.
|
|
10.49+
|
|
(19)
|
|
Letter Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc., Heska Imaging US, LLC and Wells Fargo Bank, National Association, dated September 17, 2014.
|
|
10.50+
|
|
(25)
|
|
Thirteenth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc., Heska Imaging US, LLC and Wells Fargo Bank, National Association, dated December 21, 2015.
|
|
10.51+
|
|
(28)
|
|
Fourteenth Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc, Heska Imaging US, LLC and Wells Fargo Bank, National Association, dated August 31, 2016.
|
|
10.52+
|
|
(28)
|
|
Letter Amendment to Third Amended and Restated Credit and Security Agreement between Registrant, Diamond Animal Health, Inc., Heska Imaging US, LLC and Wells Fargo Bank, National Association, dated October 25, 2016.
|
|
10.53+
|
|
(1)
|
|
Product Supply Agreement between Registrant and Quidel Corporation, effective as of July 3, 1997.
|
|
10.54+
|
|
(2)
|
|
First Amendment to Product Supply Agreement between Registrant and Quidel Corporation, effective as of March 15, 1999.
|
|
10.55
|
|
(9)
|
|
Letter Amendment to Product Supply Agreement between Registrant and Quidel Corporation dated July 7, 2004.
|
|
10.56+
|
|
(6)
|
|
Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of June 17, 2003; Letter Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, dated June 1, 2004; and Letter Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, dated December 31, 2004.
|
|
10.57+
|
|
(8)
|
|
Letter Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, dated July 12, 2005; Letter Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, dated March 20, 2007; Letter Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, dated January 23, 2008; and Sixth Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of October 1, 2008.
|
|
10.58+
|
|
(10)
|
|
Seventh Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of June 1, 2011.
|
|
10.59+
|
|
(14)
|
|
Eighth Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of January 1, 2013.
|
|
10.60+
|
|
(18)
|
|
Ninth Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of January 1, 2014; and Tenth Amendment to Supply and Distribution Agreement between Registrant and Boule Medical AB, effective as of July 11, 2014.
|
|
10.61+
|
|
(6)
|
|
Supply and License Agreement between Registrant and Schering-Plough Animal Health Corporation, effective as of August 1, 2003.
|
|
10.62+
|
|
(9)
|
|
Amendment No. 1 to Supply and License Agreement between Registrant and Schering-Plough Animal Health Corporation, effective as of August 31, 2005.
|
|
10.63+
|
|
(13)
|
|
Amendment No. 2 to Supply and License Agreement between Registrant and Intervet Inc., d/b/a Merck Animal Health, effective as of December 7, 2011.
|
|
10.64+
|
|
(16)
|
|
Amendment No. 3 to Supply and License Agreement between Registrant and Intervet Inc., d/b/a Merck Animal Health, effective as of July 30, 2013.
|
|
10.65+
|
|
(17)
|
|
Amendment No. 4 to Supply and License Agreement between Registrant and Intervet Inc., d/b/a Merck Animal Health, effective as of December 9, 2013.
|
|
10.66+
|
|
(26)
|
|
Amendment No. 5 to Supply and License Agreement between Registrant and Intervet Inc., d.b.a. Merck Animal Health, effective as of October 30, 2015.
|
|
10.67+
|
|
(18)
|
|
Clinical Chemistry Analyzer Agreement between Registrant and FUJIFILM Corporation, effective as of January 30, 2007; and First Amendment to Clinical Chemistry Analyzer Agreement, effective as of April 1, 2014.
|
|
10.68
|
|
(21)
|
|
Second Amendment to Clinical Chemistry Analyzer Agreement, effective as of April 1, 2015.
|
|
10.73+
|
|
(13)
|
|
Amended and Restated Master License Agreement between Heska Imaging US, LLC and Cuattro, LLC, effective as of February 22, 2013.
|
|
10.74
|
|
(27)
|
|
Assignment and Assumption Agreement (License Agreement) between Heska Imaging US, LLC, Heska Imaging Global, LLC, Cuattro, LLC, and Heska Imaging International, LLC, dated as of March 14, 2016.
|
|
10.75+
|
|
(13)
|
|
Supply Agreement between Cuattro, LLC and Heska Imaging US, LLC effective as of February 24, 2013.
|
|
10.76
|
|
(23)
|
|
First Amendment to Supply Agreement between Heska Imaging US, LLC and Cuattro, LLC, effective as of August 10, 2015.
|
|
10.77
|
|
(27)
|
|
Assignment and Assumption Agreement (Supply Agreement) between Heska Imaging US, LLC, Heska Imaging Global, LLC, Cuattro, LLC, and Heska Imaging International, LLC, dated as of March 14, 2016.
|
|
10.78+
|
|
(15)
|
|
Asset Purchase and License Agreement between Diamond Animal Health, Inc., and Elanco Animal Health, a division of Eli Lilly and Company effective as of June 17, 2013.
|
|
10.79+
|
|
(22)
|
|
Master Supply Agreement between Diamond Animal Health, Inc. and Eli Lilly and Company and its Affiliates, operating through its Elanco Animal Health division, effective as of October 1, 2014.
|
|
10.80+
|
|
(22)
|
|
Supplemental Agreement between Diamond Animal Health, Inc. and Eli Lilly and Company and its Affiliates, operating through its Elanco Animal Health division, effective as of October 1, 2014.
|
|
10.81+
|
|
(25)
|
|
Agreement and Plan of Merger among Heska Corporation, Cuattro Veterinary, LLC, Kevin S. Wilson, Cuattro LLC, Lane Naffziger, Clint Roth, DVM and Doug G. Wilson, III, dated as of March 14, 2016.
|
|
10.82
|
|
(24)
|
|
Letter Agreement between Heska Imaging US, LLC and Cuattro Veterinary, LLC, dated as of March 14, 2016.
|
|
21.1
|
|
|
|
Subsidiaries of the Company.
|
|
23.1
|
|
|
|
Consent of EKS&H LLLP, Independent Registered Public Accounting Firm.
|
|
24.1
|
|
|
|
Power of Attorney (See Signature Page of this Form 10-K).
|
|
31.1
|
|
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
31.2
|
|
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
32.1**
|
|
|
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
|
|
|
XBRL Instance Document.
|
|
101.SCH
|
|
|
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document.
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document.
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document.
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Notes
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*
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Indicates management contract or compensatory plan or arrangement.
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+
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Portions of the exhibit have been omitted pursuant to a request for confidential treatment.
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**
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Furnished herewith but not filed.
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(1)
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Filed with the Registrant's Form 10-Q for the quarter ended September 30, 1997.
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(2)
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Filed with the Registrant's Form 10-K for the year ended December 31, 2001.
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(3)
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Filed with the Registrant's Form 10-K for the year ended December 31, 2002.
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(4)
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Filed with the Registrant's Form 10-K for the year ended December 31, 2004.
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(5)
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Filed with the Registrant's Form 10-Q for the quarter ended June 30, 2005.
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(6)
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Filed with the Registrant's Form 10-K for the year ended December 31, 2006.
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(7)
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Filed with the Registrant's Form 10-K for the year ended December 31, 2007.
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(8)
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Filed with the Registrant's Form 10-Q for the quarter ended September 30, 2008.
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(9)
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Filed with the Registrant's Form 10-K for the year ended December 31, 2008.
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(10)
|
Filed with the Registrant's Form 10-Q for the quarter ended June 30, 2011.
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(11)
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Filed with the Registrant's Form 10-Q for the quarter ended September 30, 2011.
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(12)
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Filed with the Registrant's Form 10-K for the year ended December 31, 2011.
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(13)
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Filed with the Registrant's Form 10-K for the year ended December 31, 2012.
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(14)
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Filed with the Registrant's Form 10-Q for the quarter ended June 30, 2013.
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(15)
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Filed with the Registrant's Form 8-K/A on August 29, 2013.
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(16)
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Filed with the Registrant's Form 10-Q for the quarter ended September 30, 2013.
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(17)
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Filed with the Registrant's Form 10-K for the year ended December 31, 2013.
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(18)
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Filed with the Registrants' Form 10-Q for the quarter ended June 30, 2014.
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(19)
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Filed with the Registrants' Form 10-Q for the quarter ended September 30, 2014.
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(20)
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Filed with the Registrants' Form 10-K for the year ended December 31, 2014.
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(21)
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Filed with the Registrants' Form 10-Q for the quarter ended March 31, 2015.
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(22)
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Filed with the Registrants' Form 10-Q for the quarter ended June 30, 2015.
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(23)
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Filed with the Registrants' Form 10-Q for the quarter ended September 30, 2015.
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(24)
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Filed with the Registrants' Form 8-K on March 15, 2016.
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(25)
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Filed with the Registrants' Form 10-K for the year ended December 31, 2015.
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(26)
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Filed with the Registrant's Form 10-Q for the quarter ended March 31, 2016.
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(27)
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Filed with the Registrants' Form 10-Q for the quarter ended June 30, 2016.
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(28)
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Filed with the Registrants' Form 10-Q for the quarter ended September 30, 2016.
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1.
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This Certificate of Amendment to the Corporation’s Restated Certificate of Incorporation, as amended (the "
Certificate
"), has been duly adopted in accordance with the provisions of Section 242 of the DGCL.
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2.
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This Certificate of Amendment to the Certificate amends Article IV of the Certificate by deleting the existing Paragraph A of Article IV in its entirety and substituting therefore a new Paragraph A of Article IV, to read in its entirety as follows:
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A.
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Authorized Stock. The total authorized stock of the Corporation, which shall be an aggregate of 20,500,000 shares, shall consist of three classes: (i) a first class consisting of 9,000,000 shares of Traditional Common Stock having a par value of $0.01 per share (the "
Original Common Stock
"); (ii) a second class consisting of 9,000,000 shares of Public Common Stock having a par value of $0.01 per share (the "
Common Stock
" or "
NOL Restricted Common Stock
" and, together with the Original Common Stock, the "
Common Stock Securities
"); and (iii) a third class consisting of 2,500,000 shares of Preferred Stock having a par value of $0.01 per share (the "
Preferred Stock
").
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3.
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This Certificate of Amendment shall become effective at the time this Certificate of Amendment to the Restated Certificate of Incorporation, as amended, is filed with the Secretary of State of the State of Delaware.
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Heska Corporation
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By:
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/s/ Jason A. Napolitano
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Name:
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Jason A. Napolitano
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Title:
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Chief Operating Officer, Chief Financial Officer, Executive Vice President and Secretary
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ARTICLE 1. INTRODUCTION
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4
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ARTICLE 2. ADMINISTRATION
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4
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2.1
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Committee Composition
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4
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2.2
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Committee Responsibilities
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5
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ARTICLE 3. SHARES AVAILABLE FOR GRANTS
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5
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3.1
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Basic Limitation
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5
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3.2
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Additional Shares
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5
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ARTICLE 4. ELIGIBILITY
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5
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4.1
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Nonstatutory Stock Options and Restricted Shares
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5
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4.2
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Incentive Stock Options
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6
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ARTICLE 5. OPTIONS
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6
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5.1
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Stock Option Agreement
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6
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5.2
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Number of Shares
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6
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5.3
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Exercise Price
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6
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5.4
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Exercisability and Term
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6
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5.5
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Effect of Change in Control
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6
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5.6
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Modification or Assumption of Options
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7
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5.7
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Buyout Provisions
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7
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ARTICLE 6. PAYMENT FOR OPTION SHARES
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7
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6.1
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General Rule
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7
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6.2
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Surrender of Stock
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7
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6.3
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Exercise/Sale
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7
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6.4
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[Reserved]
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7
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6.5
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[Reserved]
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7
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6.6
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Other Forms of Payment
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8
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ARTICLE 7. CLAWBACK
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8
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ARTICLE 8. RESTRICTED SHARES
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8
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8.1
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Time, Amount and Form of Awards
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8
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8.2
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Payment for Awards
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8
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8.3
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Vesting Conditions
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8
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8.4
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Voting and Dividend Rights
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9
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8.5
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Section 162(m) Performance Restrictions
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9
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8.6
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Minimum Vesting Requirement
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11
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ARTICLE 9. PROTECTION AGAINST DILUTION
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11
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9.1
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Adjustments
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11
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9.2
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Dissolution or Liquidation
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12
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9.3
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Reorganizations
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12
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ARTICLE 10. AWARDS UNTER OTHER PLANS
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12
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ARTICLE 11. LIMITATION ON RIGHTS
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12
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11.1
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Retention Rights
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12
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11.2
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Stockholders' Rights
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12
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11.3
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Regulatory Requirements
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13
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ARTICLE 12. WITHHOLDING TAXES; PARACHUTE PAYMENTS
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13
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12.1
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General
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13
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12.2
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Section 280G
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13
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ARTICLE 13. FUTURE OF THE PLAN
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14
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13.1
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Term of the Plan
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14
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13.2
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Performance Awards
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14
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ARTICLE 14. DEFINITIONS
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14
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ARTICLE 15. EXECUTION
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16
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2.1
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COMMITTEE COMPOSITION
. The Plan shall be administered by the Committee. The Committee shall consist exclusively of two or more directors of the Company, who shall be appointed by the Board. In addition, the composition of the Committee shall satisfy:
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(a)
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Such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and
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(b)
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Such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under section 162(m)(4)(C) of the Code.
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2.2
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COMMITTEE RESPONSIBILITIES.
The Committee shall (a) select the Employees, Outside Directors and Consultants who are to receive Awards under the Plan, (b) determine the type, number, vesting requirements and other features and conditions of such Awards, (c) interpret the Plan and (d) make all other decisions relating to the operation of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee may amend or modify any outstanding Awards in any manner to the extent the Committee would have had the authority under the Plan initially to make such Awards as so amended or modified. The Committee's determinations under the Plan shall be final and binding on all persons.
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3.1
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BASIC LIMITATION
. Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares, or shares reacquired by the Company in any manner. The number of shares stated in this Section 3.1 as available for the grant of Awards is subject to adjustment in accordance with Article 9. As of March 27, 2016, the aggregate number of Common Shares cumulatively authorized by the Company's stockholders for issuance as Options and Restricted Shares under the Plan was 2,135,130. Of that total, as of March 27, 2016, Previously Issued Awards have been issued covering 2,103,899 Common Shares, leaving 31,231 Common Shares for the issuance of Options and Restricted Shares. Common Shares underlying Previously Issued Awards as of March 27, 2016 consisted of 316,666 Restricted Shares which were not subject to further vesting conditions, 370,625 Common Shares issued pursuant to the exercise of ISOs, 480,517 Common Shares issued pursuant to the exercise of NQOs, 117,677 Restricted Shares subject to further vesting conditions, 572,234 Common Shares underlying outstanding ISOs and 246,180 Common Shares underlying outstanding NQOs. With this amendment and restatement of the Plan, the Company's Board and stockholders have approved an increase of 500,000 in the aggregate number of Common Shares available for Awards under the Plan, to a new total of 2,635,130. Assuming no Unexercised/Unvested Awards outstanding as of March 27, 2016 are exercised, if applicable, or vest, the total number of Common Shares that may be granted underlying ISOs is 1,467,322. Assuming all Unexercised/Unvested Awards outstanding as of March 27, 2016 vest and are exercised, if applicable, the total number Common Shares that may be granted underlying ISOs is 531,231.
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3.2
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ADDITIONAL SHARES.
Any shares of Common Stock subject to an Award that is canceled, forfeited or expires prior to exercise or realization, either in full or in part, shall again become available for issuance under the Plan as ISOs or any type of Award. Notwithstanding anything to the contrary contained herein: shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such shares are (a) shares tendered in payment of an Option, or (b) shares delivered or withheld by the Company to satisfy any tax withholding obligation.
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4.1
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NONSTATUTORY STOCK OPTIONS AND RESTRICTED SHARES
. Only Employees, Outside Directors and Consultants shall be eligible for the grant of NQOs and Restricted Shares.
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4.2
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INCENTIVE STOCK OPTIONS
. Only Employees who are common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In addition, an Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company or any of its Parents or Subsidiaries shall not be eligible for the grant of an ISO unless the requirements set forth in section 422(c)(6) of the Code are satisfied.
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5.1
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STOCK OPTION AGREEMENT
. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The Stock Option Agreement shall specify whether the Option is an ISO or an NQO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. Options may be granted in consideration of a cash payment or in consideration of a reduction in the Optionee's other compensation.
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5.2
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NUMBER OF SHARES
. Each Stock Option Agreement shall specify the number of Common Shares subject to the Option and shall provide for the adjustment of such number in accordance with Article 9. Options granted to any Optionee in a single fiscal year of the Company shall not cover more than 50,000 Common Shares, except that Options granted to a new Employee in the fiscal year of the Company in which his or her service as an Employee first commences shall not cover more than 100,000 Common Shares. The limitations set forth in the preceding sentence shall be subject to adjustment in accordance with Article 9.
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5.3
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EXERCISE PRICE
. Each Stock Option Agreement shall specify the Exercise Price; provided that the Exercise Price under an ISO shall in no event be less than 100% of the Fair Market Value of a Common Share on the date of grant and the Exercise Price under an NQO shall in no event be less than 85% of the Fair Market Value of a Common Share on the date of grant. In the case of an NQO, a Stock Option Agreement may specify an Exercise Price that varies in accordance with a predetermined formula while the NQO is outstanding.
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5.4
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EXERCISABILITY AND TERM
. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant. A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee's death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee's service. NQOs may also be awarded in combination with Restricted Shares, and such an Award may provide that the NQOs will not be exercisable unless the related Restricted Shares are forfeited.
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5.5
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EFFECT OF CHANGE IN CONTROL
. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Common Shares subject to such Option in the event that a Change in Control occurs with respect to the Company, provided, however, that in the case of an ISO, the acceleration of exercisability shall not occur without the Optionee's written consent.
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5.6
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MODIFICATION OR ASSUMPTION OF OPTIONS.
. The Committee may modify, extend or assume outstanding options or may accept the cancellation of outstanding options (whether granted by the Company or by another issuer) in return for the grant of new options for the same or a different number of shares and at the same or a different exercise price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, alter or impair his or her rights or obligations under such Option (except that the Committee has the authority to amend any outstanding Option without the Optionee's consent if the Committee deems it necessary or advisable to comply with Code Section 409A). In addition, to the extent the Committee's modification of the purchase price or the exercise price of any outstanding Award effects a repricing, shareholder approval shall be required before the repricing is effective.
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5.7
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BUYOUT PROVISIONS
. The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.
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6.1
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GENERAL RULE
. The entire Exercise Price of Common Shares issued upon exercise of Options shall be payable in cash or cash equivalents at the time when such Common Shares are purchased, except as follows:
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(a)
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In the case of an ISO granted under the Plan, payment shall be made only pursuant to the express provisions of the applicable Stock Option Agreement. The Stock Option Agreement may specify that payment may be made in any form(s) described in this Article 6.
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(b)
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In the case of an NQO, the Committee may at any time accept payment in any form(s) described in this Article 6.
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6.2
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SURRENDER OF STOCK
. To the extent that this Section 6.2 is applicable, all or any part of the Exercise Price may be paid by surrendering Common Shares that are already owned by the Optionee. Such Common Shares shall be valued at their Fair Market Value on the date when the new Common Shares are purchased under the Plan. The Optionee shall not surrender Common Shares in payment of the Exercise Price if such action could cause the Company to recognize additional compensation expense with respect to the Option for financial reporting purposes under GAAP accounting at the time of such proposed surrender.
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6.3
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EXERCISE/SALE
. To the extent that this Section 6.3 is applicable, all or any part of the Exercise Price may be paid by delivering (on a form prescribed by the Company) an irrevocable direction to a securities broker approved by the Company to sell all or part of the Common Shares being purchased under the Plan and to deliver all or part of the sales proceeds to the Company.
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6.6
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OTHER FORMS OF PAYMENT
. To the extent that this Section 6.6 is applicable, all or any part of the Exercise Price may be paid in any other form that is consistent with applicable laws, regulations and rules.
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8.1
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TIME, AMOUNT AND FORM OF AWARDS
. Awards under the Plan may be granted in the form of Restricted Shares. Restricted Shares may also be awarded in combination with NQOs, and such an Award may provide that the Restricted Shares will be forfeited in the event that the related NQOs are exercised. The maximum aggregate number of Common Shares that may be granted in the form of Restricted Shares in any one calendar year to any one Participant is 45,000, except a new Employee may receive a grant of up to 75,000 Restricted Shares in the fiscal year of the Company in which his or her service with the Company begins.
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8.2
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PAYMENT OF AWARDS
. To the extent that an Award is granted in the form of newly issued Restricted Shares, the Award recipient, as a condition to the grant of such Award, shall be required to pay the Company in cash, cash equivalents or any other form of legal consideration acceptable to the Company, including but not limited to future services, an amount equal to the par value of such Restricted Shares. To the extent that an Award is granted in the form of Restricted Shares from the Company's treasury, no cash consideration shall be required of the Award recipients.
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8.3
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VESTING CONDITIONS
. Each Award of Restricted Shares shall be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Award Agreement. A Stock Award Agreement may provide for accelerated vesting in the event of the Participant's death, disability or retirement or other events. Notwithstanding any other provision of the Plan to the contrary, the Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company.
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8.4
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VOTING AND DIVIDEND RIGHTS
. Unless otherwise provided in the Stock Award Agreement, the holder of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company's other stockholders. Without limitation, a Stock Award Agreement may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares (in which case such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid), or may defer payment of any dividends until vesting of the Award.
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8.5
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SECTION 162(M) PERFORMANCE RESTRICTIONS
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(a)
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In General
. For purposes of qualifying grants of Restricted Shares as "performance-based compensation" under Code Section 162(m), the Committee, in its discretion, may make Restricted Shares subject to vesting based on the achievement of performance goals, in which case the Committee will specify in writing, by resolution or otherwise, the Participants eligible to receive such an Award (which may be expressed in terms of a class of individuals) and the performance goals applicable to such Awards within 90 days after the commencement of the period to which the performance goals relate, or such earlier time as required to comply with Section 162(m) of the Code. No such Award shall be payable unless the Committee certifies in writing, by resolution or otherwise, that the performance goals applicable to the Award were satisfied. In no case may the Committee increase the value of an Award granted under this Section 8.5 above the maximum value determined under the performance formula by the attainment of the applicable performance goals, but the Committee retains the discretion to reduce the value below such maximum.
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(b)
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Performance Goals
. Unless and until the Committee proposes for stockholder vote and the stockholders approve a change in the general performance measures applicable to Awards, the performance goals upon which the payment or vesting of an Award that is intended to qualify as performance based compensation are limited to the following Performance Measures:
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(1)
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operating income or operating profit (including but not limited to operating income and any affiliated growth measure);
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(2)
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net earnings or net income (before or after taxes, including but not limited to deferred taxes, and any affiliated growth measure);
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(3)
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basic or diluted earnings per share (before or after taxes, including but not limited to deferred taxes, and any affiliated growth measure);
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(4)
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revenues (including but not limited to revenue, gross revenue, net revenue, and any affiliated growth measure);
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(5)
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gross profit or gross profit growth;
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(6)
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return on assets, capital, invested capital, equity or sales;
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(7)
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cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital);
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(8)
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earnings before or after taxes, interest, depreciation and/or amortization (including but not limited to changes in this measure);
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(9)
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improvements or changes in capital structure (including but not limited to debt balances or debt issuance);
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(10)
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budget management;
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(11)
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productivity targets;
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(12)
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economic value added or other value added measurements;
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(13)
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share price (including, but not limited to, growth measures and total shareholder return);
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(14)
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expense targets;
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(15)
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margins (including but not limited to gross or operating margins);
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(16)
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efficiency measurements (including but not limited to availability measurements, call wait times, call, meeting, shipping or other volume measurements, turnaround times and error rates);
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(17)
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working capital targets (including but not limited to items reported on the Company's balance sheet and time-based or similar measures such as days inventory, days receivable and days payable);
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(18)
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equity or market value measures;
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(19)
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enterprise or adjusted market value measures;
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(20)
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safety record;
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(21)
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completion of business acquisition, divestment or expansion;
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(22)
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book value or changes in book value (including but not limited to tangible book value and net asset measures);
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(23)
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assets or changes in assets;
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(24)
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cash position or changes in cash position;
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(25)
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employee retention or recruiting measures;
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(26)
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milestones related to filings with government entities or related approvals (including but not limited to filings with the Securities and Exchange Commission which may require stockholder approval);
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(27)
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changes in location or the opening or closing of facilities;
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(28)
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contract or other development of relationship with identified suppliers, distributors or other business partners; and
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(29)
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new product development (including but not limited to third-party collaborations or contracts, and with milestones that may include but are not limited to contract execution, proof of concept, regulatory approval, product launch and targets such as unit volume and revenue following product launch).
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8.6
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MINIMUM VESTING REQUIREMENT
. The minimum period for Restricted Shares granted under the Plan to vest shall be one year.
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9.1
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ADJUSTMENTS
. In the event of a subdivision of the outstanding Common Shares, a declaration of a dividend payable in Common Shares, a declaration of a dividend payable in a form other than Common Shares in an amount that has a material effect on the price of Common Shares, a combination or consolidation of the outstanding Common Shares (by reclassification or otherwise) into a lesser number of Common Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of (a) the number of Options and Restricted Shares available for future Awards under Article 3, (b) the limitations set forth in Section 5.2 and Section 8.1, (c) the number of Common Shares covered by each outstanding Option or (d) the Exercise Price under each outstanding Option. Except as provided in this Article 9, a Participant shall have no rights by reason of any issue by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class.
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9.2
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DISSOLUTION OR LIQUIDATION
. To the extent not previously exercised, Options shall terminate immediately prior to the dissolution or liquidation of the Company.
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9.3
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REORGANIZATIONS
. In the event that the Company is a party to a merger or other reorganization, outstanding Options and Restricted Shares shall be subject to the agreement of merger or reorganization. Such agreement may provide, without limitation, for the continuation of outstanding Awards by the Company (if the Company is a surviving corporation), for their assumption by the surviving corporation or its parent or subsidiary, for the substitution by the surviving corporation or its parent or subsidiary of its own awards for such Awards, for accelerated vesting and accelerated expiration, or for settlement in cash or cash equivalents.
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11.1
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RETENTION RIGHTS
. Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an Employee, Outside Director or Consultant. The Company and its Parents, Subsidiaries and Affiliates reserve the right to terminate the service of any Employee, Outside Director or Consultant at any time, with or without cause, subject to applicable laws, the Company's certificate of incorporation and bylaws and a written employment agreement (if any).
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11.2
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STOCKHOLDERS' RIGHTS
. A Participant shall have no dividend rights, voting rights or other rights as a stockholder with respect to any Common Shares covered by his or her Award prior to the time when a stock certificate for such Common Shares is issued or, in the case of an Option, the time when he or she becomes entitled to receive such Common Shares by filing a notice of exercise and paying the Exercise Price. No adjustment shall be made for cash dividends or other rights for which the record date is prior to such time, except as expressly provided in the Plan.
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11.3
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REGULATORY REQUIREMENTS
. Any other provision of the Plan notwithstanding, the obligation of the Company to issue Common Shares under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Common Shares pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Common Shares, to their registration, qualification or listing or to an exemption from registration, qualification or listing.
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12.1
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GENERAL
. To the extent provided by the terms of an Award Agreement and subject to the discretion of the Committee, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under an Award by any of the following means (in addition to the Company's right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (c) delivering to the Company previously owned and unencumbered shares of Common Stock of the Company. The Company shall not be required to issue any Common Shares or make any cash payment under the Plan until such obligations are satisfied.
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12.2
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SECTION 280G
. To the extent that any of the payments and benefits provided for under the Plan or any other agreement or arrangement between the Company or its Affiliates and a Participant (collectively, the "Payments") (i) constitute a "parachute payment" within the meaning of Code Section 280G and (ii) but for this paragraph would be subject to the excise tax imposed by Section 4999 of the Code, then the Payments shall be payable either (i) in full or (ii) as to such lesser amount which would result in no portion of such Payments being subject to excise tax under Section 4999 of the Code (determined in accordance with the reduction of payments and benefits paragraph set forth below); whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the participant's receipt on an after-tax basis, of the greatest amount of benefits under this Plan, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. Any determination required under this provision will be made by accountants chosen by the Company, whose determination shall be conclusive and binding upon the participant and the Company for all purposes.
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13.1
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TERM OF THE PLAN
. The Plan was initially effective on March 14, 1997. The Board may, at any time and for any reason, amend, suspend or terminate the Plan (subject to the approval of the Company's stockholders only to the extent required by applicable law, regulations or rules). The Committee may issue ISOs under the Plan until the tenth anniversary of the date of its most recent amendment or restatement. The Committee may issue any Award other than ISOs at any time prior to the date, if any, that the Board suspends or terminates the Plan. No Award may be granted pursuant to the Plan after such date, but Awards granted before such date may extend beyond that date.
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13.2
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PERFORMANCE AWARDS
. Unless the Company determines to submit the Plan to the Company's stockholders at the first stockholder meeting that occurs in the fifth year following the year in which the Plan was last approved by stockholders (or any earlier meeting designated by the Board), in accordance with the requirements of Code Section 162(m), and unless such stockholder approval is obtained, then no further Awards made under Section 8.5 will qualify as performance-based compensation for purposes of Code Section 162(m).
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14.1
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Affiliate
means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.
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14.2
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Award
means any award of an Option or a Restricted Share under the Plan.
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14.3
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Board
means the Company's Board of Directors, as constituted from time to time.
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14.4
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Change in Control
shall mean:
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14.5
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Code
means the Internal Revenue Code of 1986, as amended.
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14.6
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Committee
means a committee of the Board, as described in Article 2.
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14.7
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Common Share
means, as may be applicable, one share of Traditional Common Stock, par value $0.01 per share, of the Company to the extent any remains outstanding at the time of determination, or one share of Public Common Stock, par value $0.01 per share, of the Company, to the extent any remains outstanding at the time of determination.
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14.8
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Company
means Heska Corporation, a Delaware corporation.
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14.9
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Consultant
means a consultant or adviser who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor. Service as a Consultant shall be considered employment for all purposes of the Plan, except as provided in Section 4.2.
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14.10
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Employee
means a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.
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14.11
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Exchange Act
means the Securities Exchange Act of 1934, as amended.
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14.12
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Exercise Price
means the amount for which one Common Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement.
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14.13
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Fair Market Value
means, for so long as the Common Stock is listed on any established stock exchange or a national market system, the value of the Common Stock as determined by reference to the most recent reported sale price of a share of Common Stock (or if no sales were reported, the most recent closing price) as quoted on such exchange or system at the time of determination. In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Committee and such determination shall be conclusive and binding on all persons.
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14.14
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ISO
means an incentive stock option described in section 422(b) of the Code.
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14.15
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NQO
means a stock option not described in sections 422 or 423 of the Code.
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14.16
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Option
means an ISO or NQO granted under the Plan and entitling the holder to purchase Common Shares.
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14.17
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Optionee
means an individual or estate who holds an Option.
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14.18
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Outside Director
shall mean a member of the Board who is not an Employee. Service as an Outside Director shall be considered employment for all purposes of the Plan, except as provided in Section 4.2.
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14.19
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Parent
means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.
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14.20
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Participant
means an individual or estate who holds an Award.
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14.21
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Plan
means this Heska Corporation 1997 Stock Incentive Plan, as amended from time to time.
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14.22
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Previously Issued Awards
means Restricted Shares which were not subject to further vesting conditions, Common Shares issued pursuant to the exercise of ISOs, Common Shares issued pursuant to the exercise of NQOs, Restricted Shares subject to further vesting conditions, outstanding ISOs and outstanding NQOs.
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14.23
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Restricted Share
means a Common Share awarded under the Plan.
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14.24
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Stock Award Agreement
means the agreement between the Company and the recipient of a Restricted Share that contains the terms, conditions and restrictions pertaining to such Restricted Share.
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14.25
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Stock Option Agreement
means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her Option.
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14.26
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Subsidiary
means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.
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14.27
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Subject Participant
means a Participant who is designated by the Board as an "executive officer" under the Exchange Act.
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14.28
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Unexercised/Unvested Awards
means Restricted Shares subject to further vesting conditions, as well as outstanding ISOs and outstanding NQOs.
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HESKA CORPORATION
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By:
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/s/ Jason A. Napolitano
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Chief Operating Officer, Chief
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Financial Officer, Executive Vice
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President and Secretary
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EXECUTIVE
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HESKA CORPORATION
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a Delaware corporation
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By:
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Address
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Signature:
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Instruction
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EXECUTIVE
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HESKA CORPORATION
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a Delaware corporation
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By:
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Title:
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Address
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Signature:
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Instruction
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DIRECTOR
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HESKA CORPORATION
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a Delaware corporation
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By:
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Title:
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Address
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Signature:
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Instruction
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Tax Treatment
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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.
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Vesting/
Exercisability
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This option vests and becomes exercisable in installments, as shown in the Notice of Stock Option Grant. In addition, this option shall vest and become exercisable in full if one of the following events occurs:
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Your service as an Employee, Consultant or Outside Director of the Company or a Subsidiary terminates because of death or total and permanent disability, or
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The Company is a party to a merger or other reorganization while you are an Employee, Consultant or Outside Director of the Company or a Subsidiary, 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
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The Company is subject to a “Change in Control” while you are an Employee, Consultant or Outside Director of the Company or a Subsidiary and, your service is terminated either (i) without Cause as part of an agreement which contemplated such Change in Control or (ii) without your consent and without Cause, as defined below. 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.
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“Cause” shall mean (i) your failure to perform your assigned duties or responsibilities as an Employee, Consultant or Outside Director of the Company or a Subsidiary (other than a failure resulting from total and permanent disability, as discussed below) after notice thereof from the Company describing your failure to perform such duties or responsibilities; (ii) your material breach of any confidentiality agreement or invention assignment agreement between you and the Company or a Subsidiary; (iii) your engaging in any act of dishonesty, fraud, misrepresentation, moral turpitude or misappropriation of material property that was or is materially injurious to the Company or its affiliates; (iv) your violation of any federal or state law or regulation applicable to the Company’s business; or (v) your being convicted of, or entering a plea of nolo contendere to, any crime.
No additional shares become vested after your service as an Employee, Consultant or Outside Director of the Company or a Subsidiary has terminated for any reason other than those outlined herein.
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Term
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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.)
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Regular Termination
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If your service as an Employee, Consultant or Outside Director of the Company or a Subsidiary 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.
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Death
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If your service as an Employee, Consultant or Outside Director of the Company or a Subsidiary terminates because of your death, then this option will expire at the close of business at Company headquarters on the date 12 months after the date of death.
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Disability
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If your service as an Employee, Consultant or Outside Director of the Company or a Subsidiary 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.
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Leaves of Absence
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Vesting of this option shall be suspended during any unpaid leave of absence unless continued vesting is required by the terms of the leave or by applicable law.
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 Company approved your leave in writing and if continued crediting of service is required by the terms of the leave or by applicable law.
For purposes of incentive stock options, no such leave may exceed 90 days, unless reemployment upon expiration of such leave is guaranteed by the terms of the leave or by applicable law. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three months following the 91
st
day of such leave, an incentive stock option shall cease to be treated as an incentive stock option and shall be treated for tax purposes as a nonstatutory option.
Unless you immediately return to active work when the approved leave ends, your service will terminate.
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Restrictions on Exercise
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The Company will not permit you to exercise this option if the issuance of shares at that time would violate any law or regulation.
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Notice of Exercise
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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.
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Form of Payment
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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:
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Your personal check, a cashier's check or a money order.
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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, you may not surrender 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.
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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.
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Withholding Taxes and Stock Withholding
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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.
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Restrictions on Resale
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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.
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Tax Treatment
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This option is intended to be a nonstatutory option.
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Vesting/
Exercisability
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This option is immediately exercisable, but subject to vesting as indicated in the Notice of Stock Option Grant. In the event of termination of your service as an Employee, Consultant or Outside Director of the Company or a Subsidiary, any unvested shares issued upon exercise are subject to repurchase by the Company at the same price as the original Exercise Price Per Share. The Company's right to repurchase such shares shall lapse as the shares become vested as indicated in the Notice of Stock Option Grant.
In addition, this option becomes vested in full if one of the following events occurs:
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Your service as an Employee, Consultant or Outside Director of the Company or a Subsidiary terminates because of death, total and permanent disability, or retirement at or after age 65, or
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The Company is a party to a merger or other reorganization while you are an Employee, Consultant or Outside Director of the Company or a Subsidiary, 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
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The Company is subject to a “Change in Control” while you are an Employee, Consultant or Outside Director of the Company or a Subsidiary and, your service is terminated either (i) without Cause as part of an agreement which contemplated such Change in Control or (ii) without your consent and without Cause, as defined below. 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.
“Cause” shall mean (i) your failure to perform your assigned duties or responsibilities as an Employee, Consultant or Outside Director of the Company or a Subsidiary (other than a failure resulting from total and permanent disability, as discussed below) after notice thereof from the Company describing your failure to perform such duties or responsibilities; (ii) your material breach of any confidentiality agreement or invention assignment agreement between you and the Company or a Subsidiary; (iii) your engaging in any act of dishonesty, fraud, misrepresentation, moral turpitude or misappropriation of material
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property that was or is materially injurious to the Company or its affiliates; (iv) your violation of any federal or state law or regulation applicable to the Company’s business; or (v) your being convicted of, or entering a plea of nolo contendere to, any crime.No additional shares become vested after your service as an Employee, Consultant or Outside Director of the Company or a Subsidiary has terminated for any reason other than those outlined herein.
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Term
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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.)
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Regular Termination
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If your service as an Employee, Consultant or Outside Director of the Company or a Subsidiary 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.
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Death
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If your service as an Employee, Consultant or Outside Director of the Company or a Subsidiary terminates because of your death, then this option will expire at the close of business at Company headquarters on the date 12 months after the date of death.
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Disability
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If your service as an Employee, Consultant or Outside Director of the Company or a Subsidiary 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.
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Restrictions on Exercise
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The Company will not permit you to exercise this option if the issuance of shares at that time would violate any law or regulation.
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Notice of Exercise
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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.
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Exercise of Unvested Shares
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Exercise of unvested shares is allowed under the Plan. If you would like to exercise your option before it is vested, you must complete a Stock Repurchase Agreement, which provides for the repurchase of that portion of the shares that remain unvested at the time of your termination.
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Form of Payment
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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:
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Your personal check, a cashier's check or a money order.
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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, you may not surrender 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.
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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.
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EXECUTIVE
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HESKA CORPORATION
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a Delaware corporation
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By:
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Title:
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Address
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Signature:
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Instruction
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Please do not fill in any blanks other than the signature line.
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EXECUTIVE
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HESKA CORPORATION
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a Delaware corporation
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By:
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Title:
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Address
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Signature:
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Instruction
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Please do not fill in any blanks other than the signature line.
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DIRECTOR
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HESKA CORPORATION
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a Delaware corporation
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By:
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Title:
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Address
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Signature:
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Instruction
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Please do not fill in any blanks other than the signature line.
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Tax Treatment
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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 and it does not qualify as an incentive stock option under applicable laws, it will be treated as a nonstatutory option.
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Vesting/
Exercisability
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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 or Disability, your option shall become fully vested and exercisable as to the total number of shares subject thereto immediately upon the date of your death or your Termination of Service, as applicable.
Except as otherwise provided below following a Change in Control, 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.
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Term
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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.)
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Regular Termination
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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.
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Death
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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.
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Disability
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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.
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Leaves of Absence
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Vesting of this option shall be suspended during any unpaid leave of absence unless continued vesting is required by the terms of the leave or by applicable law.
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Tax Treatment
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This option is intended to be a Non-qualified Stock Option and not an Incentive Stock Option under section 422 of the Internal Revenue Code.
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Vesting/
Exercisability
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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, or Disability, this option shall become fully vested and exercisable as to the total number of shares subject thereto immediately upon the date of your death or your Termination of Service, as applicable.
Except as otherwise provided below following a Change in Control, 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.
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Term
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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 or as provided in this Agreement or the Amended and Restated 2003 Equity Incentive Plan (the “Plan”).
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Regular Termination
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In the event of your Termination of Service for any reason other than 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.
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Death
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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.
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Disability
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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.
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Leaves of Absence
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Vesting of this option shall be suspended during any unpaid leave of absence unless continued vesting is required by the terms of the leave or by applicable law.
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Change in Control
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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. This option shall vest and become exercisable in full if (i) the Company is subject to a Change in Control and (ii) a Termination of Service for you is triggered either (i) without Cause as part of an agreement which contemplated such Change in Control or (ii) without your consent and without Cause. If the surviving corporation or its parent 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 shall be treated as triggering a Termination of Service under this Agreement. For the avoidance of doubt, a refusal by the surviving corporation or its parent to extend a consulting engagement beyond its current term shall not be deemed to trigger any option to vest and become immediately exercisable under this Agreement.
“Cause” shall mean (i) your failure to perform your assigned duties or responsibilities as an Employee, Director or Consultant (other than a failure resulting from death or Disability) after notice thereof from the surviving corporation or its parent describing your failure to perform such duties or responsibilities; (ii) your material breach of any confidentiality agreement or invention assignment agreement between you and the Company or a Subsidiary; (iii) your engaging in any act of dishonesty, fraud, misrepresentation, moral turpitude, or misappropriation of material property that was or is materially injurious to the Company or its Affiliates; (iv) your violation of any federal or state regulation applicable to the Company's business; of (v) your being convicted of, or entering a plea of nolo contendere to, any crime.
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Restrictions on Exercise
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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. No shares shall be issued pursuant to this option unless and until any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. This option may not be exercised for a fraction of a share.
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Notice of Exercise
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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 of Exercise 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.
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Form of Payment
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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:
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Cash, check or wire transfer.
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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 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.
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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.
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Withholding Taxes and Stock
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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
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Acceptance
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You hereby acknowledge receipt of a copy of the Plan and this Agreement. You have read and understand the terms and provisions thereof, and accept this option subject to all the terms and conditions of the Plan and this Agreement. You acknowledge that there may be adverse tax consequences upon exercise of this option or disposition of the underlying shares and that you should consult a tax advisor prior to such exercise or disposition.
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Role
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Service Retainer
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Chair of the Board
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$12,000
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Lead Director
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$10,000
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Audit Chair
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$20,000
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Compensation Chair
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$12,000
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Corporate Governance Chair
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$7,500
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Audit Member
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$10,000
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Compensation Member
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$6,000
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Corporate Governance Member
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$3,000
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1.
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I have reviewed this annual report on Form 10-K of Heska Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Dated: March 3, 2017
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/s/ Kevin S. Wilson
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KEVIN S. WILSON
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Chief Executive Officer and President
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(Principal Executive Officer)
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1.
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I have reviewed this annual report on Form 10-K of Heska Corporation;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Dated:
March 3, 2017
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/s/ John McMahon
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|
JOHN MCMAHON
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|
Vice President, Chief Financial Officer
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(Principal Financial Officer)
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Dated: March 3, 2017
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By:
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/s/ Kevin S. Wilson
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|
Name:
|
KEVIN S. WILSON
|
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Title:
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Chief Executive Officer and President
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Dated: March 3, 2017
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By:
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/s/ John McMahon
|
|
Name:
|
JOHN MCMAHON
|
|
Title:
|
Vice President, Chief Financial Officer
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