<PAGE>
HESKA CORPORATION
1613 Prospect Parkway
Fort Collins, Colorado 80525
(970) 493-7272
April 7, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Heska Corporation, which will be held at 9:00 a.m. on Tuesday, May 4, 1999, at
1613 Prospect Parkway, Fort Collins, Colorado.
The formal notice of the Annual Meeting and the Proxy Statement have been
made a part of this invitation. A copy of the Company's 1998 Annual Report to
Stockholders, which includes certified financial statements, is also enclosed.
After reading the Proxy Statement, please complete and return your proxy as
promptly as you can in order to ensure that your shares will be represented.
Your cooperation is greatly appreciated. YOUR SHARES CANNOT BE VOTED UNLESS YOU
SIGN, DATE AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
The Board of Directors and management look forward to seeing you at the
meeting.
Sincerely,
/s/ Robert B. Grieve, Ph.D.
Robert B. Grieve, Ph.D.
Vice Chairman and
Chief Executive Officer
<PAGE>
HESKA CORPORATION
____________
Notice of Annual Meeting of Stockholders
to be held May 4, 1999
____________
To the Stockholders of Heska Corporation:
The 1999 Annual Meeting of Stockholders (the "Annual Meeting") of Heska
Corporation, will be held at 9:00 a.m. Mountain Daylight Time on Tuesday, May 4,
1999, at 1613 Prospect Parkway, Fort Collins, Colorado, for the following
purposes:
1. To elect three directors to the Board of Directors to serve until the
2002 Annual Meeting of Stockholders or until their successors have been
duly elected and qualified; and
2. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement of the Annual Meeting.
Management is presently aware of no other business to come before the
Annual Meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Stockholders of record as of the close of business on March 24, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting and
any adjournment or postponement thereof. A complete list of stockholders
entitled to vote will be available for inspection by any stockholder at the
Secretary's office, 1612 Specht Point Drive, Fort Collins, Colorado, for 10 days
before the Annual Meeting and at the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS ANNUAL MEETING.
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, WE HOPE THAT YOU WILL PROMPTLY
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY. PROXIES WILL ALSO BE ACCEPTED BY
TRANSMISSION OF A TELEGRAM, CABLEGRAM OR FACSIMILE PROVIDED SUCH TRANSMISSION
CONTAINS SUFFICIENT INFORMATION FROM WHICH IT CAN BE DETERMINED THAT THE
TRANSMISSION WAS AUTHORIZED BY THE STOCKHOLDER. THE TRANSFER AGENT'S FACSIMILE
NUMBER IS 303-234-5340. THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND OR VOTE AT THE
MEETING.
By Order of the Board of Directors
/s/ Ronald L. Hendrick
Executive Vice President, Chief Financial
Officer and Secretary
Fort Collins, Colorado
April 7, 1999
<PAGE>
HESKA CORPORATION
____________
PROXY STATEMENT
____________
INFORMATION CONCERNING SOLICITATION AND VOTING
This Proxy Statement is furnished to the stockholders of Heska Corporation,
a Delaware corporation (the "Company"), in connection with the solicitation of
proxies in the accompanying form to be used in voting at the annual meeting of
stockholders of the Company to be held at 9:00 a.m. on Tuesday, May 4, 1999, at
the Company's principal executive offices at 1613 Prospect Parkway, Fort
Collins, Colorado 80525, or at such other time and place at or to which the
Annual Meeting may be adjourned or postponed (the "Annual Meeting"). THE
ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY.
The shares represented by the proxies received in response to this
solicitation and not revoked will be voted at the Annual Meeting. A proxy may
be revoked at any time before it is exercised by filing with the Secretary of
the Company a written revocation, by submitting a duly executed proxy bearing a
later date or by voting in person at the Annual Meeting. All proxies returned
prior to the Annual Meeting will be voted in accordance with the instructions
contained therein. If no choice is specified, the shares will be voted FOR the
election of the nominees for directors listed in this Proxy Statement, as
described in the Notice of Annual Meeting and in this Proxy Statement, and as to
any other matter that may be properly brought before the Annual Meeting, in
accordance with the judgment of the proxy holders. Management of the Company
currently knows of no other proposals to come before the Annual Meeting.
Stockholders of record at the close of business on March 24, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the close of business on such date, the Company had 26,676,247 shares of
common stock, $.001 par value per share (the "Common Stock"), outstanding and
entitled to vote. The presence in person or by proxy of the holders of a
majority of the Company's outstanding shares constitutes a quorum for the
transaction of business at the Annual Meeting. Each holder of Common Stock is
entitled to one vote for each share held as of the Record Date. An inspector of
elections appointed by the Board of Directors will determine the shares
represented at the Annual Meeting and the validity of proxies and will count all
votes. Determinations of whether a quorum exists and whether proposals are
approved will be announced at the Annual Meeting.
Directors are elected by a plurality vote. Accordingly, the three director
nominees who receive the most votes cast in their favor will be elected. The
other matters submitted for stockholder approval at the Annual Meeting, if any,
will be decided by the affirmative vote of a majority of shares present in
person or represented by valid proxy and entitled to vote on each such matter.
Abstentions with respect to any matter are treated as shares present or
represented and entitled to vote on that matter and thus have the same effect as
negative votes. If a broker who is the record holder of certain shares
indicates on a proxy that he or she does not have discretionary authority to
vote on a particular matter as to such shares, or if shares are not voted in
other circumstances in which proxy authority is defective or has been withheld
with respect to any matter, these non-voted shares will be counted for quorum
purposes but are not deemed to be present or represented for purposes of
determining whether stockholder approval of a particular matter has been
obtained.
The expense of soliciting proxies, including the expense of preparing,
printing and mailing proxy materials, will be borne by the Company. In addition
to the solicitation of proxies by mail, solicitation may be made by certain
directors, officers and other employees of the Company by personal interview,
telephone or facsimile. No additional compensation will be paid to such persons
for such solicitation. The Company will reimburse brokerage firms and others
for their reasonable expenses in forwarding solicitation materials to beneficial
owners of the Company's Common Stock.
The information included herein should be reviewed in conjunction with the
consolidated financial statements, the notes to consolidated financial
statements, independent auditor's report and other information included in the
Company's 1998 Annual Report to Stockholders that was mailed with this Proxy
Statement.
This Proxy Statement and the accompanying form of proxy are first being
mailed to stockholders on or about April 7, 1999.
<PAGE>
IMPORTANT
Please mark, sign and date the enclosed proxy and return it at your earliest
convenience in the enclosed postage-prepaid return envelope so that, whether
you intend to be present at the Annual Meeting or not, your shares can be
voted. Proxies will also be accepted by transmission of a telegram, cablegram
or facsimile provided such transmission contains sufficient information from
which it can be determined that the transmission was authorized by the
stockholder. The transfer agent's facsimile number is 303-234-5340. This
will not limit your rights to attend or vote at the Annual Meeting.
PROPOSAL 1 - ELECTION OF DIRECTORS
Directors and Nominees for Directors
The Company's Board of Directors is divided into three classes, with one
class of directors elected each year at the annual meeting of stockholders for a
three-year term of office. Dr. Grieve, Mr. Dolan and Mr. Sasen serve as Class II
directors, whose term expires in 1999; Mr. Pomroy, Dr. Stevenson and Dr. Hohnke
serve as Class III directors, whose term expires in 2000; and Mr. Schwarzer and
Dr. Tebbit serve as Class I directors, whose term expires in 2001. The
directors of each class hold their positions until the annual meeting of
stockholders at which their respective successors are elected and qualified or
until their earlier resignation, removal from office, death or incapacity.
The Board of Directors proposes the election at the Annual Meeting of Dr.
Grieve, Mr. Dolan and Mr. Sasen as Class II directors and, unless authority to
vote for the nominees is withheld, it is intended that the shares represented by
proxy will be voted for the election of such nominees. Each of the nominees has
indicated his willingness to serve as a member of the Board of Directors if
elected; however, if any nominee is unable or declines to serve as a director at
the time of the Annual Meeting, an event not now anticipated, proxies will be
voted for any nominee designated by the Board of Directors to fill the vacancy.
Nominations for the Board of Directors must be made following the procedures set
forth in the Bylaws not less than 60 days nor more than 90 days prior to the
scheduled date of the Annual Meeting. The deadline for a stockholder to deliver
notice of a nomination for the election of directors at the 1999 Annual Meeting
of Stockholders was November 23, 1998. No such nominations were received from
any stockholder for the Annual Meeting.
Certain biographical information of each of the nominees, and of the
members of the Board of Directors continuing in office after the Annual Meeting,
is set forth below.
Class II
Robert B. Grieve, Ph.D., age 47, a founder of the Company, currently serves
as Chief Executive Officer and Vice Chairman of the Board of Directors. Dr.
Grieve was named Chief Executive Officer effective January 1, 1999 and Vice
Chairman effective December 1994. Dr. Grieve also served as Chief Scientific
Officer from December 1994 to January 1999 and Vice President, Research and
Development from March 1992 to December 1994. He has been a member of the
Company's Board of Directors since 1990. Dr. Grieve was a Professor of
Parasitology at Colorado State University from 1987 until joining the Company in
January 1994. He holds a Ph.D. degree from the University of Florida and M.S.
and B.S. degrees from the University of Wyoming.
A. Barr Dolan, age 49, has been a director of the Company since March 1988.
Mr. Dolan has been the President of Charter Venture Capital, a venture capital
management firm, since 1982, a general partner of Charter Ventures since 1982
and a general partner of Charter Ventures II, L.P. since 1994. Mr. Dolan is
also a director of several private companies. He holds M.S. and B.A. degrees
from Cornell University, an M.A. degree from Harvard University and an M.B.A.
from Stanford University.
John F. Sasen, Sr., age 56, has been a director of the Company since
October 1998. Since April 1998 he has served as Executive Vice President and
Chief Marketing Officer of PSS/World Medical, Inc. ("PSS"), and from December
1993 he held various other senior executive positions at PSS. From July 1993 to
April 1998, Mr. Sasen served as a Director of PSS. Prior to joining PSS in
1993, Mr. Sasen was Vice PresidentSales, Marketing and Distributor Relations for
a division of Becton Dickinson & Company ("Becton Dickinson"), a manufacturer of
health care products. Mr. Sasen was with Becton Dickinson for over 20 years.
In addition, Mr. Sasen serves as a director of Humascan, Inc., a manufacturer of
a breast thermal detection device. Mr. Sasen is the immediate past Chairman of
the Health Industry Distributors Association, a non-profit organization that
addresses the needs of the healthcare industry.
2
<PAGE>
Class III
Lyle A. Hohnke, Ph.D., age 56, has been a director of the Company since
April 1996. Dr. Hohnke is a general partner of Javelin Capital Fund, L.P., a
venture capital firm, a position he has held since 1994. Dr. Hohnke was a co-
founder of Diamond Animal Health, Inc. ("Diamond") and served as Chairman and
CEO from 1994 until its acquisition by the Company in April 1996. From January
1991 to October 1993 he was a general partner of Heart Land Seed Capital Fund.
Dr. Hohnke is also a director of Cytrx, Inc. and several private companies. In
addition, he is a member of the compensation committee of Cytrx, Inc. He holds
Ph.D. and M.A. degrees from the University of Oregon, an M.B.A. from the
Hartford Graduate Institute and a B.A. degree from Western Michigan University.
Denis H. Pomroy, age 48, has been a director of the Company since March
1995. He is the president of Volendam Capital Advisors, Palo Alto, California,
a venture capital management company, which advises on and manages investments
for member companies of the Volendam investment group, including Volendam
Investeringen N.V. Prior to joining Volendam Capital Advisors, Mr. Pomroy
served as chief financial officer from 1989 through 1996 of Madge Networks N.V.,
a computer networking company and is currently a Supervisory Director of such
company. Mr. Pomroy serves as a director of Superscape VR PLC, a publicly
traded company in the United Kingdom and several other private companies, mainly
in the emerging growth technology area. He holds a bachelors degree from The
University of Birmingham, England and is a fellow of The Chartered Institute of
Management Accountants, England.
Lynnor B. Stevenson, Ph.D., age 56, is a founder of the Company and has
been a director of the Company since March 1988. Dr. Stevenson served as
President of the Company from March 1988 to March 1992. Dr. Stevenson is
currently the President and Chief Executive Officer of Cascade Oncogenics, Inc.
From July 1992 to April 1997, she was Director, Technology Transfer at the
University of Oregon. She holds a Ph.D. degree in biochemistry from Monash
University, Australia and B.Sc. and M.Ed. degrees from the University of
Melbourne, Australia.
Class I
Fred M. Schwarzer, age 47, has been a member of the Board of Directors of
the Company since June 1994 and Chairman of the Board since January 1999. Mr.
Schwarzer served as President and Chief Executive Officer of the Company from
November 1994 to December 31, 1998. Prior to that, Mr. Schwarzer served as the
Executive Vice President responsible for the Company's strategic planning and
corporate partnerships from June 1994. From June through October 1994, Mr.
Schwarzer was also an employee of Charter Venture Capital and continues to hold
a small limited partnership interest in Charter Ventures II, L.P. Mr. Schwarzer
was the founder and a partner in the Mountain View, California law firm of
General Counsel Associates from August 1988 to June 1994 and, prior to founding
General Counsel Associates, was a partner in the San Francisco law firm of
Pillsbury Madison & Sutro LLP. He holds a J.D. degree from the University of
California, Berkeley and a B.A. degree from the University of Michigan.
Guy Tebbit, Ph.D., age 49, has been a director of the Company since March
1997 when he became Novartis Tiergesundheit AG's ("Novartis") designee on the
Board of Directors of the Company. Since January 1997, Dr. Tebbit has served as
Vice President, Research and Development, Regulatory Affairs and Professional
Services at Novartis Animal Health US, Inc ("Novartis US"). From January 1995
to January 1997, he held the position of Director, Manufacturing and Regulatory
Affairs at Novartis US and from January 1992 to January 1995 he served as Senior
Product Development Manager at Novartis US. Dr. Tebbit holds a Ph.D. from
Oregon State University and a B.S. degree from Northern Illinois University.
The Board of Directors unanimously recommends a vote FOR the election of
------------------------------------------------------------------------
Dr. Grieve, Mr. Dolan and Mr. Sasen as directors of the Company.
- ---------------------------------------------------------------
3
<PAGE>
Board Meetings and Committees
The Board of Directors held seven meetings during the year ended December
31, 1998. All directors attended at least 75% of the aggregate number of
meetings of the Board of Directors and of the committees on which such directors
serve which were held during the period of their respective Board and committee
memberships.
The Board of Directors has appointed a Compensation Committee and an Audit
Committee. The Compensation Committee and Audit Committee are comprised
entirely of non-employee directors.
The members of the Compensation Committee during 1998 were Mr. Dolan, Dr.
Hohnke and Dr. Stevenson. The Compensation Committee held two meetings during
1998. The Compensation Committee's functions are to make recommendations to the
Board of Directors with respect to general and specific compensation policies
and practices of the Company and to administer its 1997 Stock Incentive Plan and
1997 Employee Stock Purchase Plan.
The members of the Audit Committee during 1998 were Mr. Dolan, Mr. Pomroy
and Dr. Tebbit. The Audit Committee held one meeting during 1998. The Audit
Committee's functions are to review the scope of the annual audit, monitor the
independent auditor's relationship with the Company, advise and assist the Board
of Directors in evaluating the auditor's examination, and provide oversight to
the Company's financial and accounting organization and financial reporting.
Directors' Compensation
Directors do not receive any fees for service on the Board of Directors,
but are reimbursed for their expenses for each meeting attended and are eligible
to participate in the Company's 1997 Stock Incentive Plan. In addition, each
new non-employee director elected to the Company's Board of Directors is
automatically granted as of the date of election an option to purchase 10,000
shares of Common Stock at an exercise price equal to the fair market value of
the Common Stock on the date of grant. The shares subject to these options vest
in four equal installments at annual intervals over the four-year period
commencing on the date of grant. Further, each non-employee director who
continues to serve in such capacity following any annual meeting of stockholders
is automatically granted an option as of the date of such meeting to purchase
2,000 shares of Common Stock at an exercise price equal to the fair market value
of the Common Stock on the date of grant. The shares subject to these options
vest on the first anniversary of grant. No director is eligible to receive the
10,000-share grant and a 2,000-share grant in the same year. Directors are
eligible to receive a greater number of options or shares than the automatic
grants described above.
See "Employment Agreements" for a description of the compensation
arrangement with Dr. Grieve, an officer and director of the Company and for a
description of certain separation and future consulting arrangements with Mr.
Schwarzer, a director and former officer of the Company.
Board Composition and Voting Agreement
Mr. Dolan was appointed to the Company's Board of Directors in connection
with equity investments in the Company by Charter Ventures and Charter Ventures
II, L.P. (collectively, "Charter"). Dr. Tebbit was appointed to the Board of
Directors in connection with an equity investment in the Company by Novartis.
Mr. Pomroy was appointed to the Board of Directors of the Company in connection
with an investment in the Company by Volendam Investeringen N.V. ("Volendam").
Dr. Hohnke was appointed to the Board of Directors of the Company in connection
with the Company's April 1996 acquisition of Diamond.
Novartis, Volendam and Charter (collectively, the "Investors") are parties
to a Voting Agreement dated as of April 12, 1996 (the "Voting Agreement"),
whereby each Investor agreed to vote or act with respect to all shares of the
Company's voting securities now owned or subsequently acquired by such Investor
such that one designee of each of Novartis, Volendam and Charter shall be
elected to the Board of Directors of the Company. The Investors further agreed
to vote their shares in such manner to elect as the remaining directors of the
Company individuals unaffiliated with any of the Investors but who are
reasonably acceptable to all of the Investors. By executing the Voting
Agreement, the Company agreed to use its best efforts to cause the nominee of
each of Novartis, Volendam and Charter to be elected to the Company's Board of
Directors. The Voting Agreement terminates on December 31, 2005, unless prior
to that date any of the Investors ceases to beneficially hold 2,000,000 shares
(as adjusted for stock splits, recapitalizations and similar events) of the
voting stock of the Company.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 15, 1999 as
to shares of the Company's Common Stock beneficially owned by: (i) each of the
Named Executive Officers listed in the Summary Compensation Table; (ii) each of
the Company's directors; (iii) all directors and executive officers of the
Company as a group; and (iv) each person who is known by the Company to own
beneficially more than 5% of the Company's Common Stock.
<TABLE>
<CAPTION>
Shares Percentage
Beneficially Beneficially
Owned(1) Owned(1)
--------------- ---------------
<S> <C> <C>
Entities associated with
Charter Ventures (2)............................. 4,406,924 16.5%
525 University Avenue, Suite 1500
Palo Alto, CA 94301
Novartis Tiergesundheit AG....................... 3,705,389 13.9%
Klybeckstrasse A4A
4002 Basel
Switzerland
Volendam Investeringen, N.V. (3)................. 2,576,923 9.7%
14 John B. Gorsiraweg, P.O. Box 3889
Curacao, Netherlands Antilles
Dresdner RCM Global Investors LLC
Dresdner RCM Global Investors Holdings LLC
Dresdner Bank AG (4)............................. 2,411,403 9.0%
Four Embarcadero Center
San Francisco, CA 94111
Ralston Purina Company (6)....................... 2,331,184 8.7%
Checkerboard Square
St. Louis, MO 63164
Zesiger Capital Group LLC (5).................... 1,504,000 5.6%
320 Park Avenue, 30th Floor
New York, NY 10022
A. Barr Dolan (7)................................ 4,406,924 16.5%
Robert B. Grieve, Ph.D. (8)(12).................. 444,033 1.6%
Lyle A. Hohnke, Ph.D. (12)....................... 102,331 *
Denis H. Pomroy (9)(12).......................... 2,605,923 9.8%
John F. Sasen, Sr................................ -- --
Fred M. Schwarzer (10)(12)....................... 336,375 1.3%
Lynnor B. Stevenson, Ph.D. (12).................. 177,000 *
Guy Tebbit, Ph.D. (11)........................... 3,705,389 13.9%
R. Lee Seward, D.V.M. (12)....................... 202,582 *
John A. Shadduck, D.V.M., Ph.D (12).............. 78,750 *
Giuseppe Miozzari, Ph.D. (12).................... 56,250 *
All directors and executive officers as a group
(15 persons)(12)(13)............................ 12,280,360 44.7%
</TABLE>
________________
* Amount represents less than 1% of the Company's Common Stock.
(1) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes to this table.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment power
with respect to securities. Shares of Common Stock issuable upon exercise
of stock options or warrants exercisable within 60 days of March 15, 1999
are deemed outstanding and to be beneficially owned by the person holding
such option for purposes of computing such person's percentage ownership,
but are not deemed outstanding for the purpose of computing the percentage
ownership of any other person.
(2) Includes 3,386,510 shares and options to purchase 1,000 shares of Common
Stock held by Charter Ventures and 1,018,414 shares and options to purchase
1,000 shares of Common Stock held by Charter Ventures II, L.P.
(3) Based upon information derived from a Schedule 13G, as amended, filed by
Volendam Investeringen N.V. pursuant to Section 13 of the Securities
Exchange Act of 1934 and the rules promulgated thereunder (the
5
<PAGE>
"Exchange Act") reporting its beneficial ownership of Common Stock as of
February 16, 1999. According to the Schedule 13G Volendam has sole power to
vote and dispose of the shares.
(4) Based upon information derived from a Schedule 13G, as amended, filed by
the Dresdener RCM Global Investors LLC, Dresdner RCM Global Investors US
Holdings LLC and Dresdner Bank AG (collectively, "Dresdner") pursuant to
the Exchange Act, reporting its beneficial ownership of Common Stock as of
February 16, 1999. According to the Schedule 13G, Dresdner has sole power
to vote 1,806,503 shares and the sole power to dispose of 2,421,603 shares.
(5) Based upon information derived from a Schedule 13G filed by Zesiger Capital
Group LLC ("Zesiger") pursuant to Section 13G of the Exchange Act reporting
its beneficial ownership of Common Stock as of January 13, 1999. According
to the Schedule 13G, Zesiger has the sole power to vote 1,105,000 shares
and the sole power to dispose of 1,504,000 shares.
(6) Based upon information derived from a Schedule 13G filed by Ralston Purina
Company ("Ralston Purina") pursuant to Section 13G of the Exchange Act,
reporting its beneficial ownership of shares as of August 4, 1998.
Includes 1,165,592 shares of Common Stock which may be acquired upon
exercise of warrants and do not have voting rights until issued upon
exercise. According to the Schedule 13G, Ralston Purina has sole power to
vote and dispose of these shares.
(7) Represents shares and options held by Charter Ventures and Charter Ventures
II, L.P., with respect to which Mr. Dolan disclaims beneficial ownership
except to the extent of his proportionate share therein. Mr. Dolan, a
director of the Company, is a general partner of each of Charter Ventures
and Charter Ventures II, L.P., and may be deemed a beneficial owner of the
shares held by such entities because of shared voting power with respect to
such shares.
(8) Does not include 15,649 shares of Common Stock held by Dr. Grieve's wife,
with respect to which Dr. Grieve disclaims beneficial ownership.
(9) Includes 2,576,923 shares held by Volendam Investeringen, N.V., with
respect to which Mr. Pomroy disclaims beneficial ownership except to the
extent of his proportionate interest therein, and 11,480 shares of Common
Stock subject to repurchase by the Company.
(10) Does not include 949 shares of Common Stock and options to purchase 5,313
shares of Common Stock held by Mr. Schwarzer's wife, with respect to which
Mr. Schwarzer disclaims beneficial ownership.
(11) Represents shares held by Novartis, with respect to which Dr. Tebbit
disclaims beneficial ownership.
(12) Includes an aggregate of 768,738 shares of Common Stock issuable upon
exercise of stock options currently exercisable within 60 days of March 15,
1999 as follows: Dr. Grieve, 369,333; Dr. Hohnke, 15,940; Mr. Pomroy,
4,000; Mr. Schwarzer, 159,375; Dr. Stevenson, 2,000; Dr. Seward, 71,282;
Mr. Van Daele, 14,316; Dr. Shadduck, 76,242; Dr. Miozzari, 56,250; Mr. Van
Daele, 14,316 and Mr. Hudnut 25,750.
(13) Includes shares held by entities referenced in footnotes 7, 9 and 11 which
are affiliated with certain directors.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation for services rendered in all
capacities to the Company for the three fiscal years ended December 31, 1998 of
(i) Fred M. Schwarzer, the Company's former Chief Executive Officer, who
resigned from such position effective December 31, 1998; and (ii) the Company's
four other most highly compensated executive officers as of December 31, 1998
(the "Named Executive Officers").
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation Awards
--------------------- -----------------
Securities
Fiscal Underlying All Other
Name and Principal Position Year Salary($)(1) Options(#) Compensation($)
- --------------------------- --------- --------------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Fred M. Schwarzer............................. 1998 $ 200,000 150,000 $206,000 (6)
Former President and Chief Executive Officer (2) 1997 200,000 --
1996 200,000 150,000
Robert B. Grieve.............................. 1998 $ 195,000 150,000
Vice Chairman and Chief Executive Officer (3) 1997 190,000 --
1996 190,000 150,000
R. Lee Seward................................. 1998 $ 185,000 60,000
Executive Vice President 1997 180,000 20,000
1996 180,000 --
John A. Shadduck.............................. 1998 $ 185,000 -- $185,000 (7)
Former Executive Vice President, Operations (4) 1997 160,000 100,000
1996 -- --
Giuseppe Miozzari............................. 1998 $ 197,000 --
Chief Executive Officer of Heska Holding AG 1997 144,000 (5) 100,000
</TABLE>
- ------------------------
(1) Salary includes amounts, if any, deferred pursuant to 401(k) arrangements.
(2) Mr. Schwarzer's employment with the Company terminated effective December
14, 1998, although he served as President and Chief Executive Officer
through December 31, 1998. Mr. Schwarzer continues to serve as a director
of the Company and, effective January 1, 1999, was appointed Chairman of
the Board of Directors.
(3) Effective January 1, 1999, Dr. Grieve was elected Chief Executive Officer
of the Company and resigned his position as Chief Scientific Officer.
(4) Dr. Shadduck's employment with the Company commenced February 1997 and was
terminated effective December 14, 1998 although he served as Executive Vice
President, Operations through December 31, 1998.
(5) Dr. Miozzari's employment with the Company commenced in March 1997 and his
1997 salary reflects a partial year of employment.
(6) Includes $200,000 in separation pay to be paid in twelve equal monthly
installments during 1999 and $6,000 for health insurance premiums for
health insurance coverage through December 31, 1999 or until Mr. Schwarzer
obtains health insurance coverage from another employer. Does not include
the value from the continuation of vesting on all stock options owned by
Mr. Schwarzer through December 31, 1999.
(7) Includes $185,000 in separation pay to be paid in twelve equal monthly
installments during 1999. Does not include the value from the continuation
of vesting on all stock options owned by Dr. Shadduck through December 31,
1999.
7
<PAGE>
STOCK OPTIONS
The following tables summarize option grants to, and exercises by, the Named
Executive Officers during fiscal 1998, and the value of the options held by each
such person at the end of fiscal 1998.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Potential
-------------------------------------------------------- Realizable Value at
Number of Percentage of Assumed Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to Exercise for Option Term (4)
Options Employees in Price Expiration --------------------------
Name Granted(#)(1) Fiscal Year ($/Sh)(2) Date (3) 5%($) 10%($)
- ---- ------------- ------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Fred M. Schwarzer (5).. 150,000 11.79% $11.88 01/21/08 $1,120,690 $2,840,049
Robert B. Grieve....... 150,000 11.79% $11.88 01/21/08 $1,120,690 $2,840,049
R. Lee Seward.......... 30,000 2.36% $11.88 01/21/08 $ 224,138 $ 568,004
30,000 2.36% $10.25 07/30/08 $ 193,385 $ 490,075
John A. Shadduck....... -- -- -- -- -- --
Giuseppe Miozzari...... -- -- -- -- -- --
</TABLE>
____________
(1) The right to exercise these stock options vests ratably on a monthly basis
over a four year period. Under the terms of the Company's stock plans, the
committee designated by the Board of Directors to administer such plans
retains the discretion, subject to certain limitations, to modify, extend
or renew outstanding options and to reprice outstanding options. Options
may be repriced by canceling outstanding options and reissuing new options
with an exercise price equal to the fair market value on the date of
reissue, which may be lower than the original exercise price of such
canceled options.
(2) The exercise price is equal to 100% of the fair market value on the date of
grant as determined by the Board of Directors.
(3) The options have a term of ten years, subject to earlier termination in
certain events related to termination of employment.
(4) The 5% and 10% assumed rates of appreciation are suggested by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price. There can be no
assurance that any of the values reflected in the table will be achieved.
(5) The amounts shown do not include options to purchase 17,000 shares of
Common Stock granted to Mr. Schwarzer's wife, an employee of the Company
during part of 1998. Mr. Schwarzer disclaims any beneficial ownership of
these options.
8
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Securities Underlying Value of
Unexercised Unexercised
Options at In-the-Money Options at
December 31, 1998(#) December 31, 1998($)(2)
Shares Acquired Value -------------------------- --------------------------
Name on Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ---------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fred M. Schwarzer (3).. - - 238,625 184,375 $ 757,786 $233.237
Robert B. Grieve (4)... 4,000 $15,500 327,250 178,750 1,136,185 210,242
R. Lee Seward.......... 802 9,995 57,948 71,250 172,823 57,057
John A. Shadduck....... - - 67,909 52,083 239,880 168,644
Giuseppe Miozzari...... - - 45,833 54,167 148,407 175,392
- ------------
</TABLE>
(1) These values were calculated on the basis of the fair market value of the
underlying securities at the exercise date minus the applicable per share
exercise price.
(2) These values were calculated on the basis of the fair market value per
share of the Common Stock at December 31, 1998 ($4.438), minus the
applicable per share exercise price.
(3) The amounts shown for Mr. Schwarzer do not include 16,211 exercisable and
24,664 unexercisable options at December 31, 1998 held by Mr. Schwarzer's
wife, an employee of the Company during part of 1998. Mr. Schwarzer
disclaims any beneficial ownership of these options.
(4) The amounts shown do not include 15,649 shares owned by Dr. Grieve's wife.
Dr. Grieve disclaims any beneficial ownership of these shares.
Pension and Long-Term Incentive Plans
The Company has no pension or long-term incentive plans.
Employment Agreements
During 1998, the Company was a party to employment agreements with each of the
Named Executive Officers. All of the agreements provide for severance payments
if the individual's employment is terminated without cause, including
terminations in connection with a change in control of the Company. In the case
of Dr. Grieve, the payments set forth in his employment agreement are equal to
one year's salary plus an additional year of vesting under any stock
arrangements if the termination takes place at any time on or before December
31, 1999, or six months' salary and an additional six months' vesting under any
stock arrangements if the termination takes place after that date. In the case
of Dr. Seward, the severance payment would be six months' salary if he is
terminated without cause. In the case of Dr. Miozzari, the payments (including
amounts mandated by Swiss law) would be 12 months' salary if he is terminated
without cause prior to July 1, 2000, or six months' salary if he is terminated
without cause after that date.
In December 1998, the Company and each of Mr. Schwarzer and Dr. Shadduck
agreed that the employment of those officers would be terminated effective
December 14, 1998, with Mr. Schwarzer being appointed to the position of
Chairman of the Board of Directors. In connection with the arrangement with Mr.
Schwarzer, the Company and Mr. Schwarzer entered into a Separation Agreement and
a Consultant Services and Confidentiality Agreement. Under the Separation
Agreement, Mr. Schwarzer will be paid his 1998 base salary of $200,000 through
December 31, 1999 and will continue to vest under all outstanding stock options
and stock purchase agreements for so long as he remains a director of the
Company or December 31, 1999, whichever is later. The Company will pay the
health insurance premiums of Mr. Schwarzer and his dependents through December
31, 1999 or until he becomes covered under the health insurance plan of another
employer, whichever is earlier. Under Mr. Schwarzer's Consultant Services and
Confidentiality Agreement, Mr. Schwarzer will provide ongoing, part time
consulting services to the Company until the earlier of April 30, 2000 or until
the Company's annual meeting of stockholders in 2000. Under this agreement, Mr.
Schwarzer also agrees that during this period he will not provide services to
any business which is competitive with the present or anticipated business of
the Company. In consideration for such services, the Company will pay to Mr.
Schwarzer $30,000, payable in two installments of $15,000 each on March 31, 1999
and June 30, 1999. In addition, the Company has agreed to forgive Mr.
Schwarzer's outstanding principal indebtedness to the Company under a promissory
note in the amount of $61,950 plus accrued interest, thereon. See "Certain
Transactions and Relationships" for a
9
<PAGE>
description of the debt forgiveness. The Company will also reimburse Mr.
Schwarzer his reasonable out-of-pocket expenses incurred in performing
consulting services for the Company.
Under Dr. Shadduck's Separation Agreement, the Company will pay to Dr.
Shadduck his 1998 base salary of $185,000 through December 31, 1999, and his
outstanding stock options will continue to vest through December 31, 1999. In
addition, pursuant to a Consultant Services and Confidentiality Agreement
between the Company and Dr. Shadduck, Dr. Shadduck will provide ongoing part
time consulting services to the Company and, in consideration for such services,
the Company will pay to Dr. Shadduck $500 per day, together with that number of
shares of Company Common Stock equal in value to $200 per full day that Dr.
Shadduck provides consulting services (pro rated for partial days), and will
reimburse Dr. Shadduck for his reasonable out-of-pocket expenses incurred in
providing consulting services to the Company.
Report of the Compensation Committee
of the Board of Directors on Executive Compensation
This report on executive compensation is provided by the Compensation
Committee of the Board of Directors (the "Committee") to assist stockholders in
understanding the objectives and procedures used in establishing the
compensation of the Company's executive officers. Three non-employee directors,
Mr. Dolan, Dr. Hohnke and Dr. Stevenson, served on the Committee during the last
fiscal year.
Responsibilities of the Committee
The Committee acts on behalf of the Board of Directors. Its responsibilities
include:
. Establishing the Company's compensation philosophy for all employees,
including the CEO and other executive officers;
. Reviewing the performance of the CEO;
. Determining salary levels and stock grants for the CEO and other executive
officers;
. Administering the Company's 1997 Stock Incentive Plan and Employee Stock
Purchase Plan, including determining the number and type of options to be
granted to employees of the Company and its subsidiaries and the terms of such
grants.
Compensation Philosophy and Objectives
The Committee believes that compensation of the Company's executive officers
should promote the success of the Company by attracting, retaining and
motivating all employees, including executive officers, while aligning their
interests with the Company's long-term and strategic interests and the interests
of stockholders. Competition for skilled employees, particularly management
level employees, in the Company's industry is intense and the Committee seeks to
provide total compensation packages that will attract and retain superior
caliber individuals, yet be consistent with the Company's financial situation
and stage of development.
Key Elements of Executive Compensation
Until the Company has achieved operational profitability, the Committee
believes that the use of traditional performance standards, such as profit
levels and return on equity, are not appropriate in the evaluation of executive
officer performance. Instead, the Committee evaluates the performance of
executive officers and sets their compensation based primarily on the Company's
achievement of its business objectives, such as developing and introducing
products, obtaining appropriate financing, developing its intellectual property
portfolio and entering into collaborations with other companies and academia.
The Company also evaluates each officer's individual contribution toward the
achievement of these objectives and of other individual objectives. Currently,
the Company's compensation structure for executive officers includes a
combination of base salary and stock options. The Committee expects that it
will adopt performance-based cash incentive plans for 1999.
Base Salary. Salary levels are largely determined through comparisons with
companies of similar headcount and market capitalizations or complexity in the
biotechnology industry. Actual salaries are based on individual performance
contributions within a competitive salary range for each position that is
established through evaluation of responsibilities and market comparisons. The
Committee, on the basis of its knowledge of executive compensation in the
industry, believes that the Company's salary levels for the executive officers
are at a level that the Committee, at the time such salary determinations were
made, considered to be reasonable and necessary given the Company's financial
resources and the stage of its development. The Committee reviews performance
and sets salaries for executive officers in January of each year. For the past
several years, the Committee, at the request of the CEO, has determined not to
increase base salaries of most of its executive officers. This lack of
increases does not imply dissatisfaction with performance, but instead reflects
senior management's sensitivity to the Company's cash position and the need to
progress toward achieving profitability. The Committee has elected to reward
outstanding performance through the grant of additional stock options. The
Committee will review these approaches to cash compensation in future years as
the Company's financial and market position matures.
10
<PAGE>
Stock Options. The Committee believes that stock options provide excellent
long-term incentives for executive officers to increase the Company's market
value for the benefit of all stockholders. The Committee is responsible for
determining the number and terms of options to be granted to executive officers,
taking into account such factors as individual and Company performance, policies
regarding cash compensation, and practices of comparable companies in the
Company's industry. Options granted to executive officers have exercise prices
equal to fair market value on the date of grant, vest over a four-year period,
and expire ten years from the date of grant. Vesting ceases and the vested
portion of options must be exercised should the executive leave the Company's
employ (subject to any rights to partial acceleration of vesting upon
termination without cause under employment agreements). The Committee believes
that these vesting provisions help both to retain qualified employees and to
motivate them to achieve long-term increases in stock value, providing
continuing benefits to the Company and its stockholders beyond those in the year
of grant.
Chief Executive Officer Compensation
The annual salary of Fred M. Schwarzer, the Company's former President and
CEO, was $200,000 in 1998, the same as in the two prior fiscal years. The lack
of increase in base salary in 1998 does not imply dissatisfaction with
performance, but instead reflects the CEO's request and senior management's
sensitivity to the Company's cash position and need to progress toward achieving
profitability. As with other senior management, the Committee has elected to
reward outstanding performance through the grant of additional stock options.
In recognition of Mr. Schwarzer's contributions, particularly in the areas of
financing, new product introductions and completion of strategic acquisitions,
the Committee awarded him a stock option in January 1998 to purchase an
additional 150,000 shares of Common Stock. These options have the terms
described above. Given the Company's stage of development, the use of
traditional performance standards, such as profit levels and return on equity,
were not considered to be appropriate in the evaluation of Mr. Schwarzer's
performance.
Qualifying Compensation
It is the Company's policy generally to qualify compensation paid to executive
officers for deductibility under section 162(m) of the Internal Revenue Code.
Section 162(m) generally prohibits the Company from deducting the compensation
of executive officers that exceeds $1,000,000 unless that compensation is based
on the satisfaction of objective performance goals. The Company's 1997 Stock
Incentive Plan is structured to qualify awards under such plans as performance-
based compensation and to maximize the tax deductibility of such awards.
However, the Company reserves the discretion to pay compensation to its
executive officers that may not be deductible.
The foregoing report has been furnished by the Compensation Committee of the
Board of Directors and shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates this report by
reference and shall not otherwise be deemed filed under such Acts.
Respectfully submitted,
A. Barr Dolan, Chairman
Lyle A. Hohnke, Ph.D.
Lynnor B. Stevenson, Ph.D.
11
<PAGE>
Stock Price Performance Graph
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of the
Company's Common Stock with the Center for Research in Securities Prices
("CRSP") Total Return Index for the Nasdaq Stock Market (US and Foreign) and the
CRSP Total Return Index for Nasdaq Pharmaceutical Stocks assuming an investment
of $100 in each on June 30, 1997, the date of the Company's initial public
offering. The comparisons in the graph are required by the Securities and
Exchange Commission and are not intended to forecast or be indicative of
possible future performance of the Company's Common Stock.
Comparison of Cumulative Total Return Among Heska Corporation, The Nasdaq Stock
Market Index (U.S. and Foreign ) and The Nasdaq Pharmaceutical Stock Index
[PERFORMANCE GRAPH APPEARS HERE]
Section 16(a) Beneficial Ownership Reporting Compliance
Compliance with Section 16(a) of the Exchange Act requires the Company's
directors, executive officers and persons who own more than 10% of a registered
class of the Company's equity securities ("10% Holders") to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Directors, officers and 10% Holders are required by SEC
regulations to furnish the Company with copies of all of the Section 16(a)
reports they file.
Based solely upon a review of the copies of the forms furnished to the
Company and the representations made by the reporting persons to the Company,
the Company believes that during fiscal 1998 its directors, officers and 10%
Holders complied with all filing requirements under Section 16(a) of the
Exchange Act, with the exceptions noted below. Mr. Paul S. Hudnut, who reported
certain holdings as of his appointment as an executive officer of the Company in
September 1998 on a Form 3 in a timely manner, but erroneously excluded certain
stock options granted to him at or around that same time. The additional stock
options were subsequently reported on a Form 5 on February 12, 1999. In
addition, a group identified as "Entities associated with Charter Ventures," a
10% Holder, reported in an untimely manner on a Form 4 the grant of a stock
option assigned to it by Mr. A. Barr Dolan, a director of the Company who is
also affiliated with such holder and is such holder's designee on the Company's
board of directors. Mr. Dolan, in his capacity as a director of the Company,
also reported the same option grant on a Form 4 in an untimely manner.
12
<PAGE>
Certain Transactions and Relationships
In July 1998, the Company entered into a Research and Licensing Agreement with
Ralston Purina. Pursuant to such agreement, Ralston Purina acquired exclusive
rights to license certain of the Company's discoveries, know-how and
technologies for innovative diets for dogs and cats, and the parties have agreed
to allocate certain resources to research, develop and commercialize pet food
products that are the subject of the collaboration. In the event any products
that are the subject of the collaboration are commercialized by Ralston Purina,
they would owe certain royalties to the Company. In addition, Ralston Purina
acquired 1.165 million shares of the Company's Common Stock for $14.75 million
in cash, and also acquired, for an additional cash payment of $250,000, warrants
to purchase an additional 1.165 million shares of Common Stock. The exercise
price of the warrants is $12.67 for the first year of the warrants, increasing
by 20% per year for each of the second and third years of the warrant. The
warrant was vested immediately as of July 30, 1998 and expires in three years
with respect to any unexercised shares.
Novartis, a principal stockholder of the Company, has ongoing marketing rights
to certain of the Company's products under development and is a party to a
Screening and Development Agreement and Right of First Refusal Agreement with
the Company. Novartis obtained such rights in connection with its purchase of
the Company's preferred stock in April 1996 (which converted into Common Stock
upon the closing of the Company's initial public offering), but did not make any
separate payments for these rights.
Effective as of August 18, 1998, the Company entered into an Exclusive
Distribution Agreement with Novartis Agro K.K., Tokyo ("Novartis Agro"), an
affiliate of Novartis. Under the terms of the agreement Novartis Agro will have
exclusive rights to market and distribute selected Heska-branded products in
Japan. Novartis Agro is responsible for the registration of these products in
Japan. The initial products to be marketed under the agreement are Solo Step(TM)
CH and Solo Step(TM) FH, Heska's in-clinic heartworm diagnostic tests for
canines and felines, Heska's PERIOceutic(TM) Gel, a periodontal disease
therapeutic, the HESKA(TM) Trivalent Intranasal/Intraocular Vaccine for felines
and the HESKA(TM) Bivalent Intranasal/Intraocular Vaccine for felines. In
consideration of these distribution rights, Novartis has entered into a Right of
First Refusal Agreement wherein Novartis granted the Company a right of first
refusal to evaluate for possible development and marketing worldwide certain new
product technologies for the veterinary market as they become available from
Novartis.
On August 15, 1998, the Company and Vaxcel, Inc. ("Vaxcel") entered into a
License Agreement. Under this agreement, the Company obtained a non-exclusive
worldwide license to Vaxcel's rights to use certain microcapsules for oral
delivery of antigens. The Company also acquired an option to obtain an
exclusive license with respect to such technologies. In consideration of such
license, the Company has made certain license payments and may be required to
make milestone payments. The Company has also agreed to make certain royalty
payments following the sale of any vaccines utilizing the technology. Dr. Lyle
Hohnke, a director of the Company is a director of Vaxcel.
On February 9, 1999, the Company and Cascade Oncogenics, Inc. ("Cascade")
entered into an Evaluation and Option Agreement, pursuant to which the Company
obtained the right to evaluate for veterinary diagnostic applications certain
technologies and biological materials to which Cascade has rights. In addition,
the Company acquired an option to enter into a license agreement with respect to
such technologies. In consideration of such rights, the Company paid or will
pay to Cascade a fee and, if the option to enter into the license agreement is
exercised, the Company would pay to Cascade certain royalties and milestone
payments following the sale of any diagnostic product developed and sold by the
Company pursuant to such license. Dr. Lynnor Stevenson, a director and founder
of the Company, is a director, the chief executive officer and a significant
stockholder of Cascade.
In December 1994, Mr. Schwarzer executed a promissory note for the benefit of
the Company in the principal amount of $61,950 as payment for 177,000 shares of
Common Stock. The note accrues interest at the rate of seven and one-half
percent per annum. As of December 31, 1998, the total amount due, principal and
accrued interest was $81,311. Mr. Schwarzer and the Company recently entered
into a Consultant Services and Confidentiality Agreement wherein, the Company
agreed to forgive all of the outstanding indebtedness for principal and interest
under the note on the earliest of (i) April 30, 2000, (ii) the annual meeting of
stockholders of the Company held in 2000, or (iii) the date on which the
agreement is terminated before its expiration by the Company for cause or by Mr.
Schwarzer without cause, in which case such indebtedness will not be forgiven.
(See "Employment Agreements").
13
<PAGE>
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Proposals of stockholders submitted pursuant to Rule 14a-8 under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") and
intended to be presented for consideration at the Company's 2000 Annual Meeting
of Stockholders must be received by the Company not later than November 22, 1999
in order to be considered for inclusion in the Company's proxy materials for
that meeting.
The Company's Bylaws also establish an advance notice procedure with respect
to certain stockholder proposals and director nominations. In the event a
stockholder wishes to nominate a candidate for election as a director, or wishes
to propose any other matter for consideration at the Annual Meeting, other than
proposals to be included in the Proxy Statement, written notice of such intent
to make such nomination or propose such action must be given to the Secretary of
the Company pursuant to certain procedures set forth in the Company's Bylaws, a
copy of which is available upon request from the Secretary of the Company.
These procedures provide, among other things, that such shareholder's written
notice of intent must be delivered to the Secretary of the Company not less than
60 days nor more than 90 days prior to the scheduled meeting date; unless less
than 70 days prior notice or public disclosure of the date of the meeting is
given or made by the Company, in which event such notice of intent must be
received not later than the earlier (i) of the 10th day following the date on
which notice of the meeting was mailed or such public disclosure made or (ii)
two (2) days prior to the date of the scheduled meeting. Any such notice must
contain certain specified information concerning the proposed matter and the
stockholder submitting the proposed matter, all as set forth in the Bylaws. The
chairman of the Annual Meeting may refuse to acknowledge the nomination of any
person or the request for such other action not made in compliance with the
foregoing procedures. If the foregoing procedures are not followed and such
nomination or other request for action is nonetheless permitted, the proxy
holders appointed by the Company herein shall have discretionary voting
authority with respect to such matters at the Annual Meeting.
OTHER MATTERS
The Company knows of no other business that will be presented at the Annual
Meeting. If any other business is properly brought before the Annual Meeting,
it is intended that proxies in the enclosed form will be voted in accordance
with the judgment of the persons voting the proxies.
Whether or not you intend to be present at the Annual Meeting, we urge you to
return your signed proxy promptly.
By Order of the Board of Directors.
/s/ Ronald L. Hendrick
Ronald L. Hendrick
Executive Vice President,
Chief Financial Officer and Secretary
Fort Collins, Colorado
April 7, 1999
14
<PAGE>
Proxy HESKA CORPORATION Proxy
1613 Prospect Parkway
Fort Collins, Colorado 80525
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints the Board of Directors of Heska
Corporation, or its designee, the undersigned's true and lawful agent and proxy
with full power of substitution, to represent the undersigned at the Annual
Meeting of Stockholders to be held at 1613 Prospect Parkway, Fort Collins,
Colorado on May 4, 1999, at 9:00 a.m., and at any adjournment thereof, to vote
as designated below:
Election of Directors - Nominees:
Robert B. Grieve FOR WITHHOLD
[ ] [ ]
A. Barr Dolan FOR WITHHOLD
[ ] [ ]
John F. Sasen, Sr. FOR WITHHOLD
[ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES TO THE BOARD OF
DIRECTORS AND AS THE BOARD OF DIRECTORS MAY DETERMINE WITH REGARD TO ANY OTHER
MATTER PROPERLY BROUGHT BEFORE THE MEETING.
________________________________________________________________________________
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement furnished herewith.
<TABLE>
<CAPTION>
Dated:______________________________________ , 1999
<S> <C>
___________________________________________________
Signature
___________________________________________________
Signature, if held jointly
</TABLE>
Please sign exactly as name(s) appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership please sign in partnership name by authorized person.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE
PREPAID ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IF YOU ATTEND THE MEETING OR TO SUBMIT A LATER DATED REVOCATION OR
AMENDMENT TO THIS PROXY. THIS PROXY MAY ALSO BE TELECOPIED, PROVIDED THE
TRANSMISSION CONTAINS SUFFICIENT INFORMATION FROM WHICH IT CAN BE DETERMINED
THAT THE TRANSMISSION WAS AUTHORIZED BY THE STOCKHOLDER NAMED HEREIN. THE
TRANSFER AGENT'S TELECOPY NUMBER IS: 303-234-5340.
