HESKA CORP, S-8, 1997-08-21

HESKA CORP
S-8, 1997-08-21
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)

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<PAGE> 1

As filed with the Securities and Exchange Commission on August 21, 1997
Registration No. 333-______

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

HESKA CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 77-0192527
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)

1825 Sharp Point Drive
Fort Collins, Colorado 80525
(Address, including zip code, of principal executive offices)

1988 STOCK PLAN
1994 KEY EXECUTIVE STOCK PLAN
1997 STOCK INCENTIVE PLAN
(Full Titles of the Plans)

Copy to:
FRED M. SCHWARZER KAREN A. DEMPSEY
Heska Corporation Pillsbury Madison & Sutro LLP
1825 Sharp Point Drive P.O. Box 7880
Fort Collins, Colorado 80525 San Francisco, CA 94120-7880
(970) 493-7272 (415) 983-1000
- ---------------------------- -----------------------------
(Name, address and telephone number,
including area code, of agent for service)

CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Securities Amount To Offering Price Aggregate Offering Amount of
To Be Registered Be Registered per Share Price Registration Fee
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 1,785,869 $0.79(1) $1,410,837(3) $428(5)
per share, to be issued upon
exercise of options granted
under the 1988 Stock Plan
</TABLE>

<PAGE> 2

<TABLE>
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 125,000 $1.03(1) $128,750(3) $39(5)
per share, to be issued upon
exercise of options granted
under the 1994 Key Executive
Stock Plan

Common Stock, $0.001 par value 1,612,461 $7.44(2) $11,996,710(4) $3,636(5)
per share, to be issued upon
exercise of options granted
under the 1997 Stock Incentive
Plan
</TABLE>
================================================================================

(1) The Proposed Maximum Offering Price Per Share was estimated pursuant to
Rule 457(h) under the Securities Act of 1933, as Amended (the
"Securities Act") under which rule the per share price of outstanding
options to purchase stock under an employee stock option plan may be
estimated by reference to the exercise price of such options. The
weighted average exercise price of the 1,785,869 shares subject to
outstanding options under the 1988 Stock Plan is $0.79. The weighted
average exercise price of the 125,000 shares subject to outstanding
options under the 1994 Key Executive Stock Plan is $1.03. No shares are
available for future grant under either of the 1988 Stock Plan or the
1994 Key Executive Stock Plan.

(2) The Proposed Maximum Offering Price Per Share was estimated in part
pursuant to Rule 457(h) under the Securities Act and, in party, pursuant
to Rule 457(c) under the Securities Act. With respect to the 540,780
shares which are subject to outstanding options to purchase Common Stock
under the 1997 Stock Incentive Plan, the Proposed Maximum Offering Price
Per Share was estimated pursuant to Rule 457(h). The weighted average
exercise price of the 540,780 shares subject to outstanding options
under the 1997 Stock Incentive Plan is $4.96. With respect to the
1,071,681 shares of Common Stock available for future grant under the
1997 Stock Incentive Plan, the estimated Proposed Maximum Offering Price
Per Share was estimated pursuant to Rule 457(c) whereby the per share
price was determined by reference to the average of the high and low
price of the Registrant's common stock as reported on the Nasdaq
National Market on August 19, 1997, which average was $8.688. The
number referenced above in the table entitled "Proposed Maximum Offering
Price Per Share" represents a weighted average of the foregoing
estimates calculated in accordance with Rules 457(h) and 457(c).

(3) The Proposed Maximum Aggregate Offering Price was estimated pursuant to
Rule 457(h) under the Securities Act based on the aggregate exercise
price of options as described in Note 1.

(4) The Proposed Maximum Aggregate Offering Price was estimated pursuant to
Rule 457(h) under the Securities Act based on the aggregate exercise
price of options as described in Note 2.

(5) Total filing fee for the filing of this Registration Statement is
$4,103.00

-----------------

The Registration Statement shall become effective upon filing in accordance
with Rule 462 under the Securities Act of 1933.

- --------------------------------------------------------------------------------
<PAGE> 3
PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

Item 1. Plan Information.*

Item 2. Registrant Information and Employee Plan Annual Information.*

* Information required by Part I to be contained in the
Section 10(a) prospectus is omitted from this Registration Statement in
accordance with Rule 428 under the Securities Act of 1933, as amended,
and the Note to Part I of Form S-8.

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Certain Documents by Reference.

The following documents filed by Registrant with the Securities
and Exchange Commission are incorporated by reference in this registration
statement:

(1) Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997 filed pursuant to Section 13 of the Securities Exchange Act
of 1934, as amended.

(2) Registrant's prospectus dated June 30, 1997 filed pursuant
to Rule 424(b) under the Securities Act of 1933 (in connection with
Registrant's Registration Statement on Form S-1, File No. 333-25767 (the "Form
S-1 Registration Statement")), which contains the balance sheets of the
Registrant as of December 31, 1995 and 1996 and March 31, 1997 (unaudited) and
the related statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1994, 1995 and 1996
and the three months ended March 31, 1997 (unaudited), together with the report
thereon of Arthur Andersen LLP, independent public accountants, and the
statements of income and cash flows of Diamond Animal Health, Inc., for the
years ended March 31, 1995 and 1996, together with the reports thereon of Ernst
& Young LLP and McGladrey & Pullen, LLP, independent public accountants.

(3) The description of Registrant's Common Stock contained in
Registrant's registration statement on Form 8-A, filed April 24, 1997.

In addition, all documents subsequently filed by Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by
<PAGE> 4
reference in this registration statement and to be a part hereof from the date
of filing of such documents.

Item 4. Description of Securities.

Not applicable.

Item 5. Interests of Named Experts and Counsel.

The financial statements of Heska Corporation incorporated by
reference in this registration statement have been audited by Arthur Andersen
LLP, independent public accountants, and the financial statements of Diamond
Animal Health, Inc. incorporated by reference in this registration statement
have been audited by McGladrey & Pullen, LLP and Ernst & Young LLP, independent
public accountants, to the extent indicated in each of their reports thereon
also incorporated by reference. Such financial statements have been
incorporated herein by reference in reliance upon each of such reports given
upon the authority of said firms as experts in auditing and accounting.

Item 6. Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law provides for
the indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the "Act"). Article XI of the Registrant's
Restated Certificate of Incorporation (Exhibit 3.1(c) to the Form S-1
Registration Statement) provides for indemnification of the Registrant's
directors, officers, employees and other agents to the extent and under the
circumstances permitted by the Delaware General Corporation Law.

The Underwriting Agreement (Exhibit 1.1 to the Form S-1
Registration Statement) provides for indemnification by the Underwriters of the
Registrant, its directors and officers, and by the Registrant of the
Underwriters, for certain liabilities, including liabilities arising under the
Act, and affords certain rights of contribution with respect thereto.

The Company has entered into separate indemnification agreements
(a form of which has been filed as Exhibit 10.18 to the Form S-1 Registration
Statement) with each of its directors and certain of its executive officers
that will require the Company, among other things, to indemnify them against
certain liabilities that may arise by reason of their status or service as a
director or executive officer, as the case may be, to the fullest extent not
prohibited by law.

-2-
<PAGE> 5
Item 7. Exemption from Registration Claimed.

Not applicable.

Item 8. Exhibits.

See Index to Exhibits.

Item 9. Undertakings.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement:

(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or
events arising after the effective date of the post-registration
statement (or the most recent effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;

(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
Registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.

(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

-3-
<PAGE> 6
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which remain
unsold at the termination of the offering.

(b) The undersigned Registrant hereby further undertakes that,
for purposes of determining any liability under the Securities Act of 1933,
each filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

-4-
<PAGE> 7
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8, and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Collins, State of Colorado, on August 21,
1997.

HESKA CORPORATION

By /s/ FRED M. SCHWARZER
---------------------------------------
Fred M. Schwarzer
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Fred M. Schwarzer, Robert B. Grieve,
William G. Skolout and Deborah E. Robbins, and each of them his or her true and
lawful attorneys-in-fact and agents, each with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments, including post-effective
amendments, to this registration statement, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, full
power and authority to do and perform each and every act and thing requisite
and necessary to be done, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his or her substitute or substitutes, may do
or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated:

Name Title Date
---- ----- ----
<S> <C> <C>
/s/ FRED M. SCHWARZER President and Chief Executive Officer August 21, 1997
- ---------------------------------- (Principal Executive Officer) and
Fred M. Schwarzer Director

/s/ WILLIAM G. SKOLOUT Chief Financial Officer
- ---------------------------------- (Principal Financial Officer and Accounting August 21, 1997
William G. Skolout Officer)

</TABLE>

<PAGE> 8

Name Title Date
---- ----- ----
<S> <C> <C>
/s/ A. BARR DOLAN Chairman of the Board August 21, 1997
- ----------------------------------
A. Barr Dolan

/s/ ROBERT B. GRIEVE, PH.D. Chief Scientific Officer and Vice August 21, 1997
- ---------------------------------- Chairman
Robert B. Grieve, Ph.D.

/s/ LYLE A. HOHNKE, PH.D. Director August 21, 1997
- ----------------------------------
Lyle A. Hohnke, Ph.D.

/s/ DENIS H. POMROY Director August 21, 1997
- ----------------------------------
Denis H. Pomroy

/s/ LYNNOR B. STEVENSON, PH.D. Director August 21, 1997
- ----------------------------------
Lynnor B. Stevenson, Ph.D.

/s/ GUY TEBBIT, PH.D. Director August 21, 1997
- ----------------------------------
Guy Tebbit, Ph.D.

</TABLE>

<PAGE> 9
INDEX TO EXHIBITS

Exhibit
Number Exhibit
- ------ -------
<S> <C>
4.1 Specimen Common Stock Certificate(1)

5.1 Opinion regarding legality of securities to be offered.

10.1 1988 Stock Plan of Registrant.

10.2 Form of Option Agreement for 1998 Stock Plan.

10.3 1994 Key Executive Stock Plan of Registrant.

10.4 Form of Option Agreement for 1994 Key Executive Stock Plan.

10.5 1997 Stock Incentive Plan of Registrant.(2)

23.1 Consent of Arthur Andersen LLP.

23.2 Consent of McGladrey & Pullen, LLP.

23.3 Consent of Ernst & Young LLP.

23.4 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1).

24.1 Power of Attorney (included on page 5).
</TABLE>

- ----------------------------------
(1) Incorporated by reference to Exhibit 4.1 to Registrant's
Registration Statement on Form S-1, File No. 333-25767.

(2) Incorporated by reference to Exhibit 10.19 to
Registrant's Registration Statement on Form S-1, File No. 333-25767.

<PAGE> 1
Exhibit 5.1

[PILLSBURY MADISON & SUTRO LLP LETTERHEAD]

August 21, 1997

Heska Corporation
1825 Sharp Point Drive
Fort Collins, Colorado 80525

Re: Registration Statement on Form S-8

Gentlemen:

With reference to the Registration Statement on Form S-8 to be filed by Heska
Corporation, a Delaware corporation (the "Company"), with the Securities and
Exchange Commission under the Securities Act of 1933, relating to (i) 1,785,869
shares of the Company's Common Stock issuable pursuant to the Company's 1988
Stock Plan (the "1988 Plan"), (ii) 125,000 shares of the Company's Common Stock
issuable pursuant to the Company's 1994 Key Executive Stock Plan (the "1994
Plan") and (iii) 1,612,461 shares of the Company's Common Stock issuable
pursuant to the Company's 1997 Stock Incentive Plan (the "1997 Plan"), it is
our opinion that such shares of the Common Stock of the Company, when issued
and sold in accordance with the 1988 Plan, the 1994 Plan and the 1997 Plan,
respectively, will be legally issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5.1 to the Registration Statement.

Very truly yours,

PILLSBURY MADISON & SUTRO LLP

<PAGE> 1
EXHIBIT 10.1

1988 HESKA CORPORATION STOCK PLAN
AS AMENDED AND RESTATED AS OF NOVEMBER 1994

1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject
to the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder. Stock purchase rights may also be granted
under the Plan.

2. DEFINITIONS. As used herein, the following definitions shall
apply:

(a) "ADMINISTRATOR" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.

(b) "BOARD" means the Board of Directors of the Company.

(d) "COMMITTEE" means the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan.

(e) "COMMON STOCK" means the Common Stock of the Company.

(f) "COMPANY" means Heska Corporation, a California
corporation.

(g) "CONSULTANT" means any person, including an advisor, who
is engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange
Act, the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the
Company.

(h) "CONTINUOUS STATUS AS AN EMPLOYEE" means the absence of
any interruption or termination of the employment relationship by the Company
or any Subsidiary. Continuous Status as an Employee shall not be considered
interrupted in the case of: (i) sick leave, military leave or any other leave
of absence approved by the Board, provided that such leave is for a period of
not more than ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (ii) in the case of
transfers between locations of the Company or between the Company, its
Subsidiaries or its successor.

(i) "EMPLOYEE" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.

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

<PAGE> 2
(k) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the
National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market
Value shall be the closing sales price for such stock (or the closing
bid, if no sales were reported, as quoted on such system or exchange
for the last market trading day prior to the time of determination) as
reported in the Wall Street Journal or such other source as the
Administrator deems reliable;

(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly
quoted by a recognized securities dealer but selling prices are not
reported, its Fair Market Value shall be the mean between the high and
low asked prices for the Common Stock; or

(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in
good faith by the Board.

(l) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

(m) "NONSTATUTORY STOCK OPTION" means an Option not intended
to qualify as an Incentive Stock Option.

(n) "OPTION" means a stock option granted pursuant to the
Plan.

(o) "OPTIONED STOCK" means the Common Stock subject to an
Option.

(p) "OPTIONEE" means an Employee or Consultant who receives an
Option.

(q) "PARENT" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.

(r) "PLAN" means this 1988 Stock Plan, as amended and restated
as of November 1994.

(s) "PURCHASER" means an Employee or Consultant who exercises
a Stock Purchase Right.

(t) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.

(u) "STOCK PURCHASE RIGHT" means the right to purchase
Restricted Stock granted pursuant to Section 11 of the Plan.

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<PAGE> 3
(v) "SUBSIDIARY" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
13 of the Plan, the maximum aggregate number of shares which may be optioned
and sold under the Plan is 2,683,060 shares of Common Stock. The shares may be
authorized, but unissued, or reacquired Common Stock.

If an Option or Stock Purchase Right should expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan shall have
been terminated, become available for future grant under the Plan.

4. ADMINISTRATION OF THE PLAN.

(a) PROCEDURE.

(i) ADMINISTRATION WITH RESPECT TO DIRECTORS AND
OFFICERS. With respect to grants of Options or Stock Purchase Rights
to Employees who are also officers or directors of the Company, the
Plan shall be administered by (A) the Board if the Board may
administer the Plan in compliance with Rule 16b-3 promulgated under
the Exchange Act or any successor thereto ("Rule 16b-3") with respect
to a plan intended to qualify thereunder as a discretionary plan, or
(B) a Committee designated by the Board to administer the Plan, which
Committee shall be constituted in such a manner as to permit the Plan
to comply with Rule 16b-3 with respect to a plan intended to qualify
thereunder as a discretionary plan. Once appointed, such Committee
shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove
members (with or without cause) and appoint new members in
substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by Rule 16b-3 with respect to
a plan intended to qualify thereunder as a discretionary plan.

(ii) MULTIPLE ADMINISTRATIVE BODIES. If permitted by
Rule 16b-3, the Plan may be administered by different bodies with
respect to directors, non-director officers and Employees who are
neither directors nor officers.

(iii) ADMINISTRATION WITH RESPECT TO CONSULTANTS AND
OTHER EMPLOYEES. With respect to grants of Options or Stock Purchase
Rights to Employees or Consultants who are neither directors nor
officers of the Company, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board, which Committee
shall be constituted in such a manner as to satisfy the legal
requirements relating to the administration of incentive stock option
plans, if any, of state corporate and state and federal securities
laws and of the Code (the "Applicable Laws"). Once appointed, such
Committee shall continue to serve in its designated capacity until
otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies, however caused, and
remove all members of the Committee and

-3-
<PAGE> 4
thereafter directly administer the Plan, all to the extent permitted
by the Applicable Laws.

(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions
of the Plan and in the case of a Committee, the specific duties delegated by
the Board to such Committee, the Administrator shall have the authority, in its
discretion:

(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(k) of the Plan;

(ii) to select the officers, Consultants and Employees to
whom Options and Stock Purchase Rights may from time to time be
granted hereunder;

(iii) to determine whether and to what extent Options and
Stock Purchase Rights or any combination thereof, are granted
hereunder;

(iv) to determine the number of shares of Common Stock to
be covered by each such award granted hereunder;

(v) to approve forms of agreement for use under the Plan;

(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted
hereunder (including, but not limited to the share price and any
restriction or limitation, based in each case on such factors as the
Administrator shall determine, in its sole discretion);

(vii) to determine the terms and restrictions applicable
to Stock Purchase Rights and the Restricted Stock purchased by
exercising such Stock Purchase Rights; and

(viii) to make any other such determinations with respect
to awards under the Plan as it shall deem appropriate.

(c) EFFECT OF COMMITTEE'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and Purchasers and any other holders of any Options or
Rights.

5. ELIGIBILITY FOR OPTIONS.

(a) Nonstatutory Stock Options may be granted to Employees
and Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.

(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or

-4-
<PAGE> 5
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.

(c) For purposes of Section 5(b), Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.

(d) The Plan shall not confer upon any Optionee any right
with respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's
right to terminate his employment or consulting relationship at any time, with
or without cause.

6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 19 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 15 of the Plan.

7. TERM OF OPTION. The term of each Option shall be the term stated
in the Option Agreement; provided, however, that in the case of an Incentive
Stock Option, the term shall be no more than ten (10) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Incentive Stock Option granted to an Optionee who,
at the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Option shall be five (5) years from the
date of grant thereof or such shorter term as may be provided in the Option
Agreement.

8. OPTION EXERCISE PRICE AND CONSIDERATION.

(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time of the grant
of such Incentive Stock Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per
Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

(B) granted to any Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share
on the date of grant.

(ii) In the case of a Nonstatutory Stock Option granted
to any person, the per Share exercise price shall be no less than 85%
of the Fair Market Value per Share on the date of grant.

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<PAGE> 6
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant) and may consist entirely of (i) cash,
(ii) check, (iii) other Shares which (x) in the case of Shares acquired upon
exercise of an Option either have been owned by the Optionee for more than six
months on the date of surrender or were not acquired, directly or indirectly,
from the Company, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised, (iv) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that number of
Shares having a Fair Market Value on the date of exercise equal to the exercise
price for the total number of Shares as to which the Option is exercised, (v)
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds required to pay the exercise price, (vi) any combination of
the foregoing methods of payment, (vii) or such other consideration and method
of payment for the issuance of Shares to the extent permitted under Applicable
Laws. In making its determination as to the type of consideration to accept,
the Board shall consider if acceptance of such consideration may be reasonably
expected to benefit the Company under applicable corporate laws.

9. EXERCISE OF OPTION.

(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of the Plan.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such stock certificate promptly upon exercise of the
Option. No adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 13 of the Plan.

Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

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<PAGE> 7
set forth in the Option Agreement), exercise the Option to the extent that
Optionee was entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of
such termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.

(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions
of Section 9(b) above, in the event of termination of an Optionee's Consulting
relationship or Continuous Status as an Employee as a result of his total and
permanent disability (as defined in Section 22(e)(3) of the Code), Optionee
may, but only within twelve (12) months from the date of such termination (but
in no event later than the expiration date of the term of such Option as set
forth in the Option Agreement), exercise the Option to the extent otherwise
entitled to exercise it at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate.

(d) DEATH OF OPTIONEE. In the event of the death of an
Optionee, the Option may be exercised, at any time within twelve (12) months
following the date of death (but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent the Optionee was entitled to
exercise the Option at the date of death. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.

(e) RULE 16B-3. Options granted to persons subject to
Section 16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain
such additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.

10. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.

11. STOCK PURCHASE RIGHTS.

(a) RIGHTS TO PURCHASE RESTRICTED STOCK. Stock Purchase
Rights may be issued either alone, in addition to, or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan.
After the Administrator determines that it will offer Stock Purchase Rights
under the Plan, it shall advise the offeree in writing of the terms, conditions
and restrictions related to the offer, including the number of Shares that such
person shall be entitled to purchase, the price to be paid (if any), and the
time within which such person must accept such offer, which shall in no event
exceed one-hundred twenty (120) days from the date of grant of the Stock
Purchase Right. The offer shall be accepted by execution of a Restricted Stock
agreement in the form determined by the Administrator. Shares purchased
pursuant to the grant of a Stock Purchase Right shall be referred to herein as
"Restricted Stock."

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<PAGE> 8
(b) REPURCHASE OPTION. Unless the Administrator determines
otherwise, the Restricted Stock agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
Purchaser's employment with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock agreement shall be the original price paid by the Purchaser
and may be paid by cancellation of any indebtedness of the purchaser to the
Company. The repurchase option with respect to the Restricted Stock shall
lapse at such rate as the Committee may determine.

(c) OTHER PROVISIONS. The Restricted Stock agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock agreements need not be the same
with respect to each purchaser.

(d) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right
is exercised, the Purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Stock Purchase Right is exercised, except as provided
in Section 13 of the Plan.

12. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At the
discretion of the Administrator, Optionees or Purchasers may satisfy
withholding obligations as provided in this paragraph. When an Optionee or
Purchaser incurs tax liability in connection with an Option or Stock Purchase
Right, which tax liability is subject to tax withholding under applicable tax
laws, and the Optionee or Purchaser is obligated to pay the Company an amount
required to be withheld under applicable tax laws, the Optionee or Purchaser
may satisfy the withholding tax obligation by electing to have the Company
withhold from the Shares to be issued upon exercise of the Option, or the
Shares to be issued in connection with the Stock Purchase Right, if any, that
number of Shares having a Fair Market Value equal to the amount required to be
withheld. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined (the "Tax Date").

All elections by an Optionee or Purchaser to have Shares withheld for
this purpose shall be made in writing in a form acceptable to the Administrator
and shall be subject to the following restrictions:

(a) the election must be made on or prior to the applicable
Tax Date;

(b) once made, the election shall be irrevocable as to the
particular Shares of the Option or Stock Purchase Right as to which the
election is made;

(d) if the Optionee is subject to Rule 16b-3, the election
must comply with the applicable provisions of Rule 16b-3 and shall be subject
to such additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.

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<PAGE> 9
In the event the election to have Shares withheld is made by
an Optionee or Purchaser and the Tax Date is deferred under Section 83 of the
Code because no election is filed under Section 83(b) of the Code, the Optionee
or Purchaser shall receive the full number of Shares with respect to which the
Option or Stock Purchase Right is exercised but such Optionee or Purchaser
shall be unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.

13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to
any required action by the shareholders of the Company, the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided in an
Option Agreement or Restricted Stock Agreement, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option
or Stock Purchase Right.

In the event of the proposed dissolution or liquidation of the
Company, or of a merger in which the successor corporation does not agree to
assume the Option or Stock Purchase Right or substitute an equivalent Option or
Stock Purchase Right, the Board shall terminate the Plan and, prior to such
termination, vesting shall accelerate in full with respect all outstanding
Options or Stock Purchase Rights. The Board shall notify Optionees and
Purchasers at least five (5) days prior to such proposed action and give such
Optionees and Purchasers the opportunity to exercise their rights. To the
extent it has not been previously exercised, any Option or Stock Purchase Right
will terminate immediately prior to the consummation of such proposed action.

14. TIME OF GRANTING OPTIONS. The date of grant of an Option shall,
for all purposes, be the date on which the Administrator makes the
determination granting such Option, or such other date as is determined by the
Board. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.

15. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT AND TERMINATION. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of
any Optionee or Purchaser under any grant theretofore made, without his or her
consent. In addition, to the extent necessary and desirable to comply with
Rule 16b-3 under the Exchange Act or with Section 422 of the Code (or any other
applicable law or regulation, including the requirements of the

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<PAGE> 10
NASD or an established stock exchange), the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.

(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment
or termination of the Plan shall not affect Options and Stock Purchase Rights
already granted and such Options and Stock Purchase Rights shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee or Purchaser and the Board,
which agreement must be in writing and signed by the Optionee or Purchaser and
the Company.

16. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

As a condition to the exercise of an Option or Stock Purchase Right,
the Company may require the person exercising such Option or Stock Purchase
Right to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.

17. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.

The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

18. AGREEMENTS. Options and Stock Purchase Rights shall be evidenced
by written agreements in such form as the Board shall approve from time to
time.

19. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject
to approval by the shareholders of the Company within twelve (12) months before
or after the date the Plan is adopted. Such shareholder approval shall be
obtained in the degree and manner required under applicable state and federal
law.

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<PAGE> 1
EXHIBIT 10.2

HESKA CORPORATION
1988 STOCK PLAN

EXHIBIT A TO NOTICE OF GRANT

STOCK OPTION AGREEMENT

1. GRANT OF OPTION. HESKA CORPORATION, a California
corporation (the "Company"), hereby grants to the Optionee (the "Optionee")
named in the Notice of Grant, an option (the "Option") to purchase a number of
Shares, as set forth in the Notice of Grant, at the exercise price per share
set forth in the Notice of Grant (the "Exercise Price"), subject to the terms,
conditions and definitions of the 1988 Stock Plan (the "Plan") adopted by the
Company, which is incorporated herein by reference. In the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of
this Option Agreement, which conflict is due to terms and conditions in this
Option that are broader (but not narrower) than the terms and conditions set
out in the Plan, the terms and conditions set out in the Plan shall govern.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option Agreement.

If designated in the Notice of Grant as an Incentive Stock
Option, this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code.

2. EXERCISE OF OPTION.

(a) RIGHT TO EXERCISE. This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement. In the event
of Optionee's death, Disability or other termination of Optionee's employment
or consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.

(b) METHOD OF EXERCISE. This Option is exercisable by
delivery of an exercise notice, in the form provided by the Company (the
"Exercise Notice"), which shall state the election to exercise the Option, the
number of Shares in respect of which the Option is being exercised (the
"Exercised Shares"), and such other representations and agreements as to the
holder's investment intent with respect to the Exercised Shares as may be
required by the Company pursuant to the provisions of the Plan. The Exercise
Notice shall be signed by the Optionee and, if the Optionee is married, by the
Optionee's spouse, and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares. This Option shall
be deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.

No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with all relevant provisions
of law and the requirements of any

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<PAGE> 2
stock exchange upon which the Shares are then listed. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.

3. METHOD OF PAYMENT. Payment of the aggregate Exercise
Price shall be by any of the following, or a combination thereof, at the
election of the Optionee:

(a) cash; or

(b) check; or

4. OPTIONEE'S REPRESENTATIONS. In the event the Shares
purchasable pursuant to the exercise of this Option have not been registered
under the Securities Act of 1933, as amended, at the time this Option is
exercised, Optionee shall, if required by the Company, concurrently with the
exercise of all or any portion of this Option, deliver to the Company an
Investment Representation Statement in the form attached hereto as Exhibit B.

5. RESTRICTIONS ON EXERCISE. This Option may not be
exercised until such time as the Plan has been approved by the shareholders of
the Company, or if the issuance of such Shares upon such exercise or the method
of payment of consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulation, including
any rule under Part 207 of Title 12 of the Code of Federal Regulations
("Regulation G") as promulgated by the Federal Reserve Board. As a condition
to the exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be required by any applicable
law or regulation.

6. TERMINATION OF RELATIONSHIP. In the event of termination
of Optionee's consulting relationship or Continuous Status as an Employee,
Optionee may, to the extent otherwise so entitled at the date of such
termination (the "Termination Date"), exercise this Option during the
Termination Period set out in the Notice of Grant. To the extent that Optionee
was not entitled to exercise this Option at the date of such termination, or if
Optionee does not exercise this Option within the time specified herein, the
Option shall terminate.

7. DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 6 above, in the event of termination of Optionee's Continuous Status as
an Employee as a result of total and permanent disability (as defined in
Section 22(e)(3) of the Code), Optionee may, but only within twelve (12) months
from the date of termination of the consulting or employment relationship (but
in no event later than the date of expiration of the term of this Option as set
forth in Section 10 below), exercise the Option to the extent otherwise so
entitled at the date of such termination. To the extent that Optionee was not
entitled to

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<PAGE> 3
exercise the Option at the date of termination, or if Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.

8. DEATH OF OPTIONEE. In the event of the death of Optionee,
the Option may be exercised at any time within twelve (12) months following the
date of death (but in no event later than the date of expiration of the term of
this Option as set forth in Section 10 below), by Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent the Optionee could exercise the Option at the date of
death.

9. NON-TRANSFERABILITY OF OPTION. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

10. TERM OF OPTION. This Option may be exercised only within
the term set out in the Notice of Grant, and may be exercised during such term
only in accordance with the Plan and the terms of this Option. If Optionee is
more than a ten percent (10%) shareholder, the limitations set out in Section 7
of the Plan regarding Option terms and Options granted to more than ten percent
(10%) shareholders shall apply to this Option.

11. TAX CONSEQUENCES. Some of the federal and state tax
consequences relating to this Option, as of the date of this Option, are set
forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(a) EXERCISING THE OPTION.

(i) NONQUALIFIED STOCK OPTION ("NSO"). If this Option does
not qualify as an ISO, the Optionee may incur regular federal income tax and
state income tax liability upon exercise. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the fair market value of the Exercised Shares
on the date of exercise over their aggregate Exercise Price. If the Optionee
is an employee, the Company will be required to withhold from his or her
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.

(ii) INCENTIVE STOCK OPTION ("ISO"). If this Option
qualifies as an ISO, the Optionee will have no regular federal income tax or
state income tax liability upon its exercise, although the excess, if any, of
the fair market value of the Exercised Shares on the

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<PAGE> 4
date of exercise over their aggregate Exercise Price will be treated as an
adjustment to the alternative minimum tax for federal tax purposes and may
subject the Optionee to alternative minimum tax in the year of exercise.

(b) DISPOSITION OF SHARES.

(i) NSO. If the Optionee holds NSO Shares for at least one
year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.

(ii) ISO. If the Optionee holds ISO Shares for at least one
year after exercise AND two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the LESSER OF (A) the difference
between the FAIR MARKET VALUE OF THE SHARES ACQUIRED ON THE DATE OF EXERCISE
and the aggregate Exercise Price, or (B) the difference between the SALE PRICE
of such Shares and the aggregate Exercise Price.

(c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If
the Optionee sells or otherwise disposes of any of the Shares acquired pursuant
to an ISO on or before the later of (i) the date two years after the grant
date, or (ii) the date one year after the exercise date, the Optionee shall
immediately notify the Company in writing of such disposition. The Optionee
agrees that he or she may be subject to income tax withholding by the Company
on the compensation income recognized from such early disposition of ISO Shares
by payment in cash or out of the current earnings paid to the Optionee.

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<PAGE> 1
EXHIBIT 10.3

HESKA CORPORATION
1994 KEY EXECUTIVE STOCK PLAN

1. PURPOSES OF THE PLAN. The purposes of this Key Executive
Stock Plan are to attract and retain the best available personnel for positions
of substantial responsibility, to provide additional incentive to Employees and
Consultants of the Company and its Subsidiaries, or their designees, and to
promote the success of the Company's business. Options granted under the Plan
shall be "non-statutory stock options" and "incentive stock options" within the
meaning of Section 422 of the Code, as designated by the Board at the time of
grant. Stock purchase rights may also be granted under the Plan. Options and
stock purchase rights under this Plan are intended to be granted only to key
executives (either employees or consultants, including directors, and their
designees).

2. DEFINITIONS. As used herein, the following definitions shall
apply:

(a) "ADMINISTRATOR" means the Committee appointed
pursuant to Section 4 of the Plan or, if the Committee is not so acting, the
Board.

(b) "BOARD" means the Board of Directors of the Company.

(d) "COMMON STOCK" means the Common Stock of the Company.

(e) "COMPANY" means Heska Corporation, a California
corporation.

(f) "CONSULTANT" means any person, including an advisor,
who is engaged by the Company or any Parent or Subsidiary to render services
and is compensated for such services, other than an employee. A director may
be a Consultant if not also an Employee, provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange
Act, the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the
Company.

(g) "CONTINUOUS STATUS AS AN EMPLOYEE" means the absence
of any interruption or termination of the employment relationship by the
Company or any Subsidiary. Continuous Status as an Employee shall not be
considered interrupted in the case of: (i) sick leave, military leave or any
other leave of absence approved by the Board, provided that such leave is for a
period of not more than ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; or
(ii) in the case of transfers between locations of the Company or between the
Company, its Subsidiaries or its successor.

(h) "EMPLOYEE" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a

<PAGE> 2
director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.

(i) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.

(j) "FAIR MARKET VALUE" means, as of any date, the value
of Common Stock determined as follows:

(i) If the Common Stock is listed on any
established stock exchange or a national market system
including without limitation the National Market System of the
National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be
the closing sales price for such stock (or the closing bid, if
no sales were reported, as quoted on such system or exchange
for the last market trading day prior to the time of
determination) as reported in the Wall Street Journal or such
other source as the Board deems reliable;

(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or
regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the
mean between the high and low asked prices for the Common
Stock; or

(iii) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be
determined in good faith by the Board.

(k) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

(l) "NONSTATUTORY STOCK OPTION" means an Option not
intended to qualify as an Incentive Stock Option.

(m) "OPTION" means a stock option granted pursuant to the
Plan.

(n) "OPTIONED STOCK" means the Common Stock subject to an
Option.

(o) "OPTIONEE" means an Employee or Consultant, or the
designee of an Employee or Consultant, who receives an Option.

(p) "PARENT" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.

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<PAGE> 3
(q) "PLAN" means this 1994 Key Executive Stock Plan, as
amended from time to time.

(r) "PURCHASER" means an Employee or Consultant, or the
designee of an Employee or Consultant, who exercises a Stock Purchase Right.

(s) "SHARE" means a share of the Common Stock, as
adjusted in accordance with Section 13 of the Plan.

(t) "STOCK PURCHASE RIGHT" means the right to purchase
Restricted Stock granted pursuant to Section 11 of the Plan.

(u) "SUBSIDIARY" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 13 of the Plan, the maximum aggregate number of shares which may be
optioned and/or sold under the Plan is 500,000 shares of Common Stock. The
shares may be authorized, but unissued, or reacquired Common Stock.

4. ADMINISTRATION OF THE PLAN.

(a) PROCEDURE. With respect to grants of Options or
Stock Purchase Rights to Employees or Consultants who are also officers or
directors of the Company, the Plan shall be administered by (A) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3
promulgated under the Exchange Act or any successor thereto ("Rule 16b-3") with
respect to a plan intended to qualify thereunder as a discretionary plan or (B)
the Board if the Board may administer the Plan in compliance with Rule 16b-3
with respect to a plan intended to qualify thereunder as a discretionary plan.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board
may increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder
as a discretionary plan.

(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted
by Rule 16b-3, the Plan may be administered by different
bodies with respect to directors, non-

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<PAGE> 4
director officers and Employees or Consultants who are neither
directors nor officers.

(b) POWERS OF THE ADMINISTRATOR. Subject to the
provisions of the Plan and the specific duties delegated to it by the Board,
the Administrator shall have the authority, in its discretion:

(i) to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(j) of the Plan;

(ii) to select the Consultants and Employees and
their designees to whom Options and Stock Purchase Rights may
from time to time be granted hereunder;

(iii) to determine whether and to what extent
Options and Stock Purchase Rights or any combination thereof,
are granted hereunder;

(iv) to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;

(v) to approve forms of agreement for use under
the Plan;

(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted
hereunder (including, but not limited to the share price and
any restriction or vesting limitation, based in each case on
such factors as the Administrator shall determine, in its sole
discretion);

(vii) to determine the terms and restrictions
applicable to Stock Purchase Rights and the Restricted Stock
purchased by exercising such Stock Purchase Rights; and

(viii) to make any other such determinations with
respect to awards under the Plan as it shall deem appropriate.

(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and Purchasers and any other holders of any Options or
Rights.

5. ELIGIBILITY FOR OPTIONS.

(a) Nonstatutory Stock Options may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. An Employee or

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<PAGE> 5
Consultant who has been granted an Option may, if he is otherwise eligible, be
granted an additional Option or Options.

6. TERM OF PLAN. The Plan shall become effective upon the
earlier of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 18 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 15 of the Plan.

7. TERM OF OPTION. The term of each Option shall be the term
stated in the Option Agreement; provided, however, that in the case of an
Incentive Stock Option, the term shall be no more than ten (10) years from the
date of grant thereof or such shorter term as may be provided in the Option
Agreement. However, in the case of an Incentive Stock Option granted to an
Optionee who, at the time the Option is granted, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant thereof or such shorter term as may be provided in
the Option Agreement.

8. OPTION EXERCISE PRICE AND CONSIDERATION.

(a) The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined
by the Board, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time of
the grant of such Incentive Stock Option, owns stock
representing more than ten percent (10%) of the voting power
of all classes of stock of the Company

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<PAGE> 6
or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the Fair Market Value per Share
on the date of grant.

(B) granted to any Employee, the per Share
exercise price shall be no less than 100% of the Fair Market
Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option
granted to any person, the per Share exercise price shall be
no less than 85% of the Fair Market Value per Share on the
date of grant.

(b) The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant) and may consist entirely of (i) cash,
(ii) check, (iii) other Shares which (x) in the case of Shares acquired upon
exercise of an Option either have been owned by the Optionee for more than six
months on the date of surrender or were not acquired, directly or indirectly,
from the Company, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised, (iv) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that number of
Shares having a Fair Market Value on the date of exercise equal to the exercise
price for the total number of Shares as to which the Option is exercised, (v)
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds required to pay the exercise price, (vi) any combination of
the foregoing methods of payment, (vii) or such other consideration and method
of payment for the issuance of Shares to the extent permitted under Applicable
Laws. In making its determination as to the type of consideration to accept,
the Board shall consider if acceptance of such consideration may be reasonably
expected to benefit the Company under applicable corporate laws.

9. EXERCISE OF OPTION.

(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator and set forth in the Option
Agreement, including performance criteria with respect to the Company and/or
the Optionee.

An Option may not be exercised for a fraction of a Share.

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<PAGE> 7
duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 13 of the Plan.

(b) TERMINATION OF EMPLOYMENT. In the event of
termination of an Optionee's consulting relationship or Continuous Status as an
Employee with the Company (as the case may be), such Optionee may, but only
within ninety (90) days after the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise the Option to the extent that Optionee was entitled
to exercise it at the date of such termination. To the extent that Optionee
was not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate.

(c) DISABILITY OF OPTIONEE. Notwithstanding the
provisions of Section 9(b) above, in the event of termination of an Optionee's
Consulting relationship or Continuous Status as an Employee as a result of his
total and permanent disability (as defined in Section 22(e)(3) of the Code),
Optionee may, but only within twelve (12) months from the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise the Option to the extent
otherwise entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.

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<PAGE> 8
10. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.

11. STOCK PURCHASE RIGHTS.

(a) RIGHTS TO PURCHASE RESTRICTED STOCK. Stock Purchase
Rights may be issued either alone, in addition to, or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan.
After the Administrator determines that it will offer Stock Purchase Rights
under the Plan, it shall advise the offeree in writing of the terms, conditions
and restrictions related to the offer, including the number of Shares that such
person shall be entitled to purchase, the price to be paid (if any), and the
time within which such person must accept such offer, which shall in no event
exceed one-hundred twenty (120) days from the date of grant of the Stock
Purchase Right. The offer shall be accepted by execution of a Restricted Stock
Agreement in the form determined by the Administrator. Shares purchased
pursuant to the grant of a Stock Purchase Right shall be referred to herein as
"Restricted Stock."

(b) REPURCHASE OPTION. Unless the Administrator
determines otherwise, the Restricted Stock Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the Purchaser's employment with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Agreement shall be the original price paid by the Purchaser
and may be paid by cancellation of any indebtedness of the purchaser to the
Company. The repurchase option with respect to the Restricted Stock shall
lapse at such rate as the Administrator may determine.

(c) OTHER PROVISIONS. The Restricted Stock Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Agreements need not be the same
with respect to each purchaser.

(d) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase
Right is exercised and the Restricted Stock has been issued in the name of the
Purchaser, the Purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Stock Purchase Right is exercised, except as provided
in Section 13 of the Plan..

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<PAGE> 9
obligation by electing to have the Company withhold from the Shares to be
issued upon exercise of the Option, or the Shares to be issued in connection
with the Stock Purchase Right, if any, that number of Shares having a Fair
Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined (the "Tax Date").

(a) the election must be made on or prior to the
applicable Tax Date;

(b) once made, the election shall be irrevocable as to
the particular Shares of the Option or Stock Purchase Right as to which the
election is made;

(d) if the Optionee is subject to Rule 16b-3, the
election must comply with the applicable provisions of Rule 16b-3 and shall be
subject to such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.

In the event the election to have Shares withheld is made by an
Optionee or Purchaser and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the Optionee or
Purchaser shall receive the full number of Shares with respect to which the
Option or Stock Purchase Right is exercised but such Optionee or Purchaser
shall be unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.

13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject
to any required action by the shareholders of the Company, the number of shares
of Common Stock which have been authorized for issuance under the Plan but as
to which no Options or Stock Purchase Rights have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an Option or
Stock Purchase Right, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided in an Option Agreement or Restricted Stock Agreement, no issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no

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<PAGE> 10
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option or Stock Purchase Right.

14. TIME OF GRANTING OPTIONS. The date of grant of an Option
shall, for all purposes, be the date on which the Administrator makes the
determination granting such Option, or such other date as is determined by the
Board. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.

15. AMENDMENT AND TERMINATION OF THE PLAN.

(b) EFFECT OF AMENDMENT OR TERMINATION. Any such
amendment or termination of the Plan shall not affect Options and Stock
Purchase Rights already granted and such Options and Stock Purchase Rights
shall remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee or Purchaser
and the Board, which agreement must be in writing and signed by the Optionee or
Purchaser and the Company.

16. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be
issued pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, state securities laws, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares
may then be listed, and shall be further subject to the approval of counsel for
the Company with respect to such compliance.

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<PAGE> 11
As a condition to the exercise of an Option or Stock Purchase Right,
the Company may require the person exercising such Option or Stock Purchase
Right to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.

18. AGREEMENTS. Options and Stock Purchase Rights shall be
evidenced by written agreements in such form as the Administrator shall approve
from time to time.

19. SHAREHOLDER APPROVAL. Continuance of the Plan shall be
subject to approval by the shareholders of the Company within twelve (12)
months before or after the date the Plan is adopted. Such shareholder approval
shall be obtained in the degree and manner required under applicable state and
federal law.

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<PAGE> 1
EXHIBIT 10.4

HESKA CORPORATION
1994 KEY EXECUTIVE STOCK PLAN

EXHIBIT A TO NOTICE OF GRANT

STOCK OPTION AGREEMENT

1. Grant of Option. HESKA CORPORATION, a California corporation (the
"Company"), hereby grants to the Optionee (the "Optionee") named in the Notice
of Grant, an option (the "Option") to purchase a number of Shares, as set forth
in the Notice of Grant, at the exercise price per share set forth in the Notice
of Grant (the "Exercise Price"), subject to the terms, conditions and
definitions of the 1994 Key Executive Stock Plan (the "Plan") adopted by the
Company, which is incorporated herein by reference. In the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of
this Option Agreement, which conflict is due to terms and conditions in this
Option that are broader (but not narrower) than the terms and conditions set
out in the Plan, the terms and conditions set out in the Plan shall govern.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option Agreement.

If designated in the Notice of Grant as an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option under Section 422 of
the Code.

2. Exercise of Option.

(a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.

(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form provided by the Company (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as to the holder's investment intent
with respect to the Exercised Shares as may be required by the Company pursuant
to the provisions of the Plan. The Exercise Notice shall be signed by the
Optionee and, if the Optionee is married, by the Optionee's spouse, and shall
be delivered in person or by certified mail to the Secretary of the Company.
The Exercise Notice shall be accompanied by payment of the aggregate Exercise
Price as to all Exercised Shares. This Option shall be deemed to be exercised
upon receipt by the Company of such fully executed Exercise Notice accompanied
by such aggregate Exercise Price.

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<PAGE> 2
No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with all relevant provisions of law and the
requirements of any stock exchange upon which the Shares are then listed.
Assuming such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.

3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:

(a) cash; or

(b) check; or

4. Optionee's Representations. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his Investment
Representation Statement in the form attached hereto as Exhibit B.

5. Restrictions on Exercise. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule
under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G")
as promulgated by the Federal Reserve Board. As a condition to the exercise of
this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.

6. Termination of Relationship. In the event of termination of
Optionee's consulting relationship or Continuous Status as an Employee,
Optionee may, to the extent otherwise so entitled at the date of such
termination (the "Termination Date"), exercise this Option during the
Termination Period set out in the Notice of Grant. To the extent that Optionee
was not entitled to exercise this Option at the date of such termination, or if
Optionee does not exercise this Option within the time specified herein, the
Option shall terminate.

7. Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event of termination of Optionee's Continuous Status as an
Employee as a result of total and permanent disability (as defined in Section
22(e)(3) of the Code), Optionee may, but only within twelve (12) months from
the date of termination of the consulting or employment relationship (but in no
event later than the date of expiration of the term of this Option as set forth
in Section 10 below), exercise the Option to the extent otherwise so entitled
at the date

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<PAGE> 3
of such termination. To the extent that Optionee was not entitled to exercise
the Option at the date of termination, or if Optionee does not exercise such
Option (to the extent otherwise so entitled) within the time specified herein,
the Option shall terminate.

8. Death of Optionee. In the event of the death of Optionee, the
Option may be exercised at any time within twelve (12) months following the
date of death (but in no event later than the date of expiration of the term of
this Option as set forth in Section 10 below), by Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent the Optionee could exercise the Option at the date of
death.

9. Non-Transferability of Option. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by him. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.

10. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. If Optionee is more
than a ten percent (10%) shareholder, the limitations set out in Section 7 of
the Plan regarding Option terms and Options granted to more than ten percent
(10%) shareholders shall apply to this Option.

11. Tax Consequences. Some of the federal and state tax consequences
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.

(a) Exercising the Option.

(i) Nonqualified Stock Option ("NSO"). If this Option does not qualify
as an ISO, the Optionee may incur regular federal income tax and state income
tax liability upon exercise. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the fair market value of the Exercised Shares on the date of
exercise over their aggregate Exercise Price. If the Optionee is an employee,
the Company will be required to withhold from his or her compensation or
collect from Optionee and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise.

(ii) Incentive Stock Option ("ISO"). If this Option qualifies as an
ISO, the Optionee will have no regular federal income tax or state income tax
liability upon its exercise, although the excess, if any, of the fair market
value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to the

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<PAGE> 4
alternative minimum tax for federal tax purposes and may subject the Optionee
to alternative minimum tax in the year of exercise.

(b) Disposition of Shares.

(i) NSO. If the Optionee holds NSO Shares for at least one year, any
gain realized on disposition of the Shares will be treated as long-term capital
gain for federal income tax purposes.

(ii) ISO. If the Optionee holds ISO Shares for at least one year after
exercise AND two years after the grant date, any gain realized on disposition
of the Shares will be treated as long-term capital gain for federal income tax
purposes. If the Optionee disposes of ISO Shares within one year after
exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the LESSER OF (A) the difference
between the FAIR MARKET VALUE OF THE SHARES ACQUIRED ON THE DATE OF EXERCISE
and the aggregate Exercise Price, or (B) the difference between the SALE PRICE
of such Shares and the aggregate Exercise Price.

(c) Notice of Disqualifying Disposition of ISO Shares. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on
or before the later of (i) the date two years after the grant date, or (ii) the
date one year after the exercise date, the Optionee shall immediately notify
the Company in writing of such disposition. The Optionee agrees that he or she
may be subject to income tax withholding by the Company on the compensation
income recognized from such early disposition of ISO Shares by payment in cash
or out of the current earnings paid to the Optionee.

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<PAGE> 1

Exhibit 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8 for the 1988 Stock Plan,
the 1994 Key Executive Stock Plan and the 1997 Stock Incentive Plan of Heska
Corporation of our report dated February 28, 1997, included in Heska
Corporation's Registration Statement (No. 333-25767) filed with the Securities
and Exchange Commission.

ARTHUR ANDERSEN LLP

Denver, Colorado
August 21, 1997

<PAGE> 1

Exhibit 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8 pertaining to the 1988
Stock Plan, the 1994 Key Executive Stock Plan and the 1997 Stock Incentive Plan
of Heska Corporation of our report dated May 14, 1996, relating to the
financial statements of Diamond Animal Health, Inc. included in the
Registration Statement (Form S-1, No. 333-25767) filed with the Securities and
Exchange Commission.

McGLADREY & PULLEN, LLP

Des Moines, Iowa
August 21, 1997

<PAGE> 1

Exhibit 23.3

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the 1988 Stock Plan, the 1994 Key Executive Plan and the
1997 Stock Incentive Plan of Heska Corporation of our report dated May 30,
1995, with respect to the statements of income and cash flows of Diamond Animal
Health, Inc. for the year ended March 31, 1995 included in the Registration
Statement (Form S-1 No. 333-25767) of Heska Corporation filed with the
Securities and Exchange Commission.

ERNST & YOUNG LLP

Des Moines, Iowa
August 21, 1997