<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Heska Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
HESKA CORPORATION
1613 PROSPECT PARKWAY
FORT COLLINS, COLORADO 80525
(970) 493-7272
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------
TIME.................................. 9:00 a.m. on Wednesday, May 24, 2000
PLACE................................. Heska Corporation
1613 Prospect Parkway
Fort Collins, Colorado
ITEMS OF BUSINESS..................... 1. To elect three directors to the
Board of Directors to serve until
the 2003 Annual Meeting of
Stockholders or until their
successors have been duly elected
and qualified;
2. To amend the Company's
Certificate of Incorporation to
increase the number of
authorized shares of common
stock of the Company from 40
million to 75 million;
3. To amend the Company's
Certificate of Incorporation to
modify and delete certain of the
supermajority provisions
therein;
4. To approve an amendment to the
Company's 1997 Employee Stock
Purchase Plan to increase the
number of shares reserved for
issuance under the plan by
500,000 shares; and
5. 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.
RECORD DATE........................... You can vote if you are a
stockholder of record on March 27,
2000.
ANNUAL REPORT......................... Our 1999 Annual Report, which is not
a part of the proxy soliciting
material, is enclosed.
PROXY VOTING.......................... It is important that your shares be
represented and voted at the Meeting.
Please vote in one of these ways:
1. VISIT THE WEB SITE noted on your
proxy card to vote via the
Internet; or
2. MARK, SIGN, DATE AND PROMPTLY
RETURN the enclosed proxy card in
the postage-paid envelope
provided.
Any proxy may be revoked at any time
prior to its exercise at the Meeting.
/s/ RONALD L. HENDRICK
-------------------------------
Ronald L. Hendrick
Executive Vice President,
Chief Financial Officer
and Secretary
April 4, 2000
<PAGE> 3
HESKA CORPORATION
------------
PROXY STATEMENT
------------
These proxy materials are furnished to the stockholders of Heska Corporation, a
Delaware corporation, in connection with the solicitation of proxies to be used
in voting at the 2000 Annual Meeting of Stockholders of the Company and at any
adjournment or postponement thereof. THE ENCLOSED PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS OF THE COMPANY.
You are invited to attend our Annual Meeting of Stockholders to be held on
May 24 2000, beginning at 9:00 a.m. The meeting will be held at Heska
Corporation, 1613 Prospect Parkway, Fort Collins, Colorado.
This Proxy Statement, form of proxy and voting instructions are being
mailed starting April 4, 2000.
STOCKHOLDERS ENTITLED TO VOTE
Stockholders of record at the close of business on March 27, 2000 are
entitled to notice of and to vote at the Annual Meeting. As of that date, the
Company had 33,642,063 shares of common stock outstanding. 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.
PROXIES
Your vote is important. Stockholders of record may vote their proxies by
Internet or mail. The web site address is included on your proxy card. If you
choose to vote by mail, a postage-paid envelope is provided.
A proxy may be revoked at any time before it is exercised by (1) filing a
written revocation with the Secretary of the Company, (2) submitting a duly
executed proxy bearing a later date, or (3) voting by ballot at the Annual
Meeting.
Vote by Internet
You can vote your shares via the Internet. The web site for Internet voting
is on your proxy card. Internet voting is available 24 hours a day. You will be
given the opportunity to confirm that your instructions have been properly
recorded. If you vote via the Internet you do not need to return your proxy
card.
Vote by Mail
If you choose to vote by mail, simply mark your proxy, date and sign it,
and return it to American Securities Transfer and Trust, Inc. in the
postage-paid envelope provided.
Voting at the Annual Meeting
The method by which you vote now will in no way limit your right to vote at
the Annual Meeting if you decide to attend in person. If your shares are held in
the name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record to be able to vote at the
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 proposals listed in this Proxy Statement.
Voting of Other Matters
If any other matters are properly presented at the Annual Meeting for
consideration, the persons, named in the enclosed proxy card will have the
discretion to vote on those matters for you. At the date this proxy statement
went to press, we do not know of any other matter to be raised at the Annual
Meeting.
<PAGE> 4
LIST OF STOCKHOLDERS
A list of stockholders entitled to vote at the Annual Meeting will be
available at the Annual Meeting and for ten days prior to the meeting during
normal business hours at our offices at 1612 Specht Point Drive, Fort Collins,
Colorado, 80525, by contacting the Secretary of the Company.
REQUIRED 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. Abstentions and broker "non-votes" are counted
as present and entitled to vote for purposes of determining a quorum.
Directors are elected by a plurality vote. The other matters submitted for
stockholder approval at the Annual Meeting, 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 unless the vote of more than a majority is
indicated in this Proxy Statement. 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, bank or other nominee,
who is the record holder of certain shares indicates on a proxy that it 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 will not be counted in
determining whether stockholder approval of a particular matter has been
obtained.
COST OF SOLICITATION
WE WILL BEAR THE EXPENSE OF SOLICITING PROXIES, INCLUDING THE EXPENSE OF
PREPARING, PRINTING AND MAILING PROXY MATERIALS. IN ADDITION TO THE
SOLICITATION OF PROXIES BY MAIL, SOLICITATION MAY BE MADE BY CERTAIN OF OUR
DIRECTORS, OFFICERS AND OTHER EMPLOYEES BY PERSONAL INTERVIEW, TELEPHONE OR
FACSIMILE. NO ADDITIONAL COMPENSATION WILL BE PAID TO THESE PEOPLE FOR SUCH
SOLICITATION. IN ADDITION, WE MAY HIRE GEORGESON SHAREHOLDER COMMUNICATIONS,
INC. TO ASSIST US IN THE DISTRIBUTION AND SOLICITATION OF PROXIES. IF HIRED, WE
WILL PAY THEM A FEE OF APPROXIMATELY $7,000 PLUS EXPENSES FOR THESE SERVICES.
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. Mr. Pomroy, Dr. Stevenson and Dr. Hohnke serve as
Class III directors, whose terms expire in 2000; Mr. Schwarzer and Dr. Tebbit
serve as Class I directors, whose terms expire in 2001; and Dr. Grieve, Mr.
Dolan and Mr. Sasen serve as Class II directors, whose terms expire in 2002. 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.
Hohnke, Mr. Pomroy and Dr. Stevenson as Class III directors. The persons named
on the enclosed proxy card intend to vote the proxy for the election of these
nominees, unless you indicate on the proxy card that your vote should be
withheld from any or all of such nominees. If you are voting by Internet, you
will be instructed how to withhold your vote from some or all of such nominees.
Each of the nominees has indicated his or her 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. Stockholder 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 2000 Annual Meeting of Stockholders was March
25, 2000. No such nominations were received from any stockholder for the Annual
Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
DR. HOHNKE, MR. POMROY AND DR. STEVENSON AS DIRECTORS OF THE COMPANY.
2
<PAGE> 5
BIOGRAPHICAL INFORMATION
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 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 49, has been a director of the Company since March
1995. Mr. Pomroy was appointed a director in conjunction with Volendam
Investeringen N.V's. investment in the Company. He is presently Chief Financial
Officer of CopperCom, Inc. Mr. Pomroy also serves on the boards of two publicly
held technology companies: Madge Networks NV and Superscape Plc. Prior to his
employment with CopperCom, Mr. Pomroy was President of Volendam Capital Advisors
from 1996 to 1999. Mr. Pomroy also served as chief financial officer of Madge
Networks N.V. from 1989 through 1996. He holds a bachelors degree in engineering
from The University of Birmingham, England and is a fellow of The Chartered
Institute of Management Accountants of the U.K.
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 and Chief Executive Officer 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 B.Ed. degrees from
the University of Melbourne, Australia.
Class I
FRED M. SCHWARZER, age 48, has been a member of the Board of Directors of
the Company since June 1994 and Chairman of the Board since January 1999. Since
July 1999 Mr. Schwarzer has also served as a Senior Vice President of C.M.
Capital, a diversified asset management firm and the parent corporation of
Charter Venture Capital. 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. 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 48, 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.
Class II
ROBERT B. GRIEVE, PH.D., age 48, 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. He holds a Ph.D. degree from the
University of Florida and M.S. and B.S. degrees from the University of Wyoming.
3
<PAGE> 6
A. BARR DOLAN, age 50, 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, a
general partner of Charter Ventures II, L.P. since 1994 and managing director of
Charter Ventures III, L.P. since 1998. 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 57, 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 President Sales, 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. 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.
BOARD AND COMMITTEE MEMBERSHIP AND MEETINGS
During 1999, the Board of Directors had two ongoing committees. Those
committees consisted of an Audit Committee and a Compensation Committee. The
Compensation Committee and Audit Committee are comprised entirely of
non-employee directors. There is no family relationship among any of the
directors or nominees.
Except as noted below, all directors attended at least 75% of the aggregate
number of meetings of the Board of Directors and Board committees on which they
served.
The Board of Directors held seven meetings during the year ended December
31, 1999. Dr. Tebbit attended five of the seven meetings.
The members of the Compensation Committee during 1999 were Mr. Dolan, Dr.
Hohnke and Mr. Sasen. The Compensation Committee held two meetings during 1999.
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 1999 were Mr. Dolan, Mr. Pomroy
and Dr. Tebbit. The Audit Committee held three meetings during 1999. Dr. Tebbit
was unable to attend any meeting. 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
In August 1999, the Board of Directors approved a policy to compensate
"outside" or non-employee directors with options to purchase Heska common stock.
Non-employee directors receive an option to purchase 100 shares for attendance
at a meeting of the Board of Directors, or Board committee, which is less than
four hours and an option to purchase 500 shares for attendance at a meeting of
the Board of Directors, or Board committee, which is four hours or more, or for
consulting services of four hours or more. These options are immediately
exercisable and the exercise price is equal to the fair market value on the date
of grant.
Directors are reimbursed for their expenses for each meeting attended. 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" below for a description of the compensation
arrangement with Dr. Grieve, an officer and director of the Company.
4
<PAGE> 7
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
Tiergesundheit AG ("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 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"). Under
the Voting Agreement each Investor agreed to vote or act with respect to all
shares of the Company's voting stock now owned or subsequently acquired by such
Investor such that one designee of each of Novartis, Volendam and Charter is
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.
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 27, 2000 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)........................................................ 5,206,924 15.5%
525 University Avenue, Suite 1500
Palo Alto, CA 94301
Novartis Tiergesundheit AG.................................................. 3,705,389 11.0%
Klybeckstrasse A4A
4002 Basel
Switzerland
Volendam Investeringen, N.V. (3)............................................ 2,304,633 6.9%
14 John B. Gorsiraweg, P.O. Box 3889
Curacao, Netherlands Antilles
Capital Group International, Inc. (4)....................................... 2,179,000 6.5%
Capital Guardian Trust Company
11100 Santa Monica Blvd.
Los Angeles, CA 90025
Ralston Purina Company (5).................................................. 2,331,184 6.7%
Checkerboard Square
St. Louis, MO 63164
State of Wisconsin Investment Board (6)..................................... 5,223,000 15.5%
P.O. Box 7842
Madison, WI 53707
Zesiger Capital Group LLC (7)............................................... 2,860,000 8.5%
320 Park Avenue, 30th Floor
New York, NY 10022
A. Barr Dolan (8)(13)....................................................... 5,209,924 15.5%
Robert B. Grieve, Ph.D. (9)(13)............................................. 577,576 1.7%
Lyle A. Hohnke, Ph.D. (13).................................................. 110,125 *
Denis H. Pomroy (10)(13).................................................... 2,336,033 6.9%
John F. Sasen, Sr. (13)...................................................... 7,900 *
Fred M. Schwarzer (11)(13).................................................. 426,692 1.3%
Lynnor B. Stevenson, Ph.D. (13)............................................. 185,300 *
Guy Tebbit, Ph.D. (12)...................................................... 3,705,389 11.0%
James H. Fuller (13)........................................................ 125,667 *
Ronald L. Hendrick (13)..................................................... 47,495 *
R. Lee Seward, D.V.M. (13).................................................. 227,427 *
Giuseppe Miozzari, Ph.D. (13)............................................... 89,271 *
All directors and executive officers as a group
(14 persons)(13)(14)..................................................... 13,161,777 37.9%
</TABLE>
- ----------------
* Amount represents less than 1% of the Company's common stock.
6
<PAGE> 9
(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 27, 2000
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 1,818,414 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 "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
Capital Group International, Inc., and Capital Guardian Trust Company
(collectively, "Capital") pursuant to the Exchange Act, reporting its
beneficial ownership of common stock as of February 10, 2000. According to
the Schedule 13G, Capital has sole power to vote 1,894,000 shares and the
sole power to dispose of 2,179,000 shares.
(5) 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.
(6) Based upon information derived from a Schedule 13G filed by State of
Wisconsin Investment Board ("SWIB") pursuant to Section 13G of the Exchange
Act, reporting its beneficial ownership of shares as of January 10, 2000.
According to the Schedule 13G, SWIB has sole power to vote and dispose of
these shares.
(7) 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 28, 2000. According
to the Schedule 13G, Zesiger has the sole power to vote 2,105,000 shares
and the sole power to dispose of 2,860,000 shares.
(8) 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.
(9) Does not include 15,649 shares of common stock held by Dr. Grieve's wife,
with respect to which Dr. Grieve disclaims beneficial ownership.
(10) Includes 2,304,633 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 3,680 shares of common
stock subject to repurchase by the Company.
(11) Does not include 949 shares of common stock held by Mr. Schwarzer's wife,
with respect to which Mr. Schwarzer disclaims beneficial ownership.
(12) Represents shares held by Novartis, with respect to which Dr. Tebbit
disclaims beneficial ownership.
(13) Includes an aggregate of 1,082,792 shares of common stock issuable upon
exercise of stock options currently exercisable within 60 days of March 27,
2000 as follows: Mr. Dolan, 4,600, Dr. Grieve, 456,875; Dr. Hohnke, 23,734;
Mr. Pomroy, 6,400; Mr. Sasen, 7,500; Mr. Schwarzer, 249,692; Dr. Stevenson,
6,300; Dr. Seward, 46,458; Mr. Hendrick, 35,416; Mr. Fuller, 116,667; Dr.
Miozzari, 39,521; Mr. Hudnut, 39,066 and Dr. Stinchcomb, 50,563.
(14) Includes shares held by the entities referenced in footnotes 8, 10 and 12
which are affiliated with certain directors.
7
<PAGE> 10
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, 1999 of
(i) Robert B. Grieve, Vice Chairman and Chief Executive Officer and (ii) the
Company's four other most highly compensated executive officers as of December
31, 1999 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation Awards
---------------------------- ------------------------------
Other Securities
Fiscal Annual Underlying All Other
Name and Principal Position Year Salary($)(1) Compensation($) Options(#) Compensation($)
- --------------------------- ------- ------------ --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Robert B. Grieve 1999 $245,400 200,000 --
Vice Chairman and Chief Executive Officer 1998 195,000 150,000 --
1997 190,000 -- --
James H. Fuller 1999 $229,200(2) $68,730(3) 350,000 --
President and Chief Operating Officer
Ronald L. Hendrick 1999 $180,000 -- --
Executive Vice President, Chief Financial Officer and 1998 15,000(4) 100,000 --
Secretary
R. Lee Seward 1999 $185,000(5) -- $174,208(6)
Executive Vice President 1998 185,000 60,000 --
1997 180,000 20,000 --
Giuseppe Miozzari (7) 1999 $173,000 37,000 --
Chief Executive Officer of Heska Holding AG 1998 166,000 -- --
1997 140,000(8) 100,000 --
</TABLE>
(1) Salary includes amounts, if any, deferred pursuant to 401(k) arrangements.
(2) Mr. Fuller's employment with the Company commenced on January 19, 1999 and
his 1999 salary reflects a partial year of employment.
(3) Includes a starting bonus of $60,000 and a moving expense reimbursement of
$8,730.
(4) Mr. Hendrick's employment with the Company commenced in December 1998 and
his 1998 salary reflects a partial year of employment.
(5) Dr. Seward's employment terminated effective November 30, 1999. Amount
includes eleven months of salary and one month of separation pay. See note
6 below.
(6) Includes $169,584 in separation pay to be paid in eleven equal monthly
installments during 2000 and $4,624 for health insurance premiums for
health insurance coverage through November 30, 2000 or until Dr. Seward
obtains health insurance coverage from another employer. Does not include
the value from the continuation of vesting on all stock options owned by
Dr. Seward through November 30, 2000.
(7) Dr. Miozzari's salary for the years 1998 and 1997 has been adjusted to
reflect the current rate of exchange.
(8) Dr. Miozzari's employment with the Company commenced in March 1997 and his
1997 salary reflects a partial year of employment.
8
<PAGE> 11
STOCK OPTIONS
The following tables summarize option grants to, and exercises by, the
Named Executive Officers during 1999, and the value of the options held by each
such person as of December 31, 1999.
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term (4)
-------------------------------------------------------------------- ---------------------------------
Number of Percentage of
Securities Total Options
Underlying Granted to
Options Employees in Exercise Price Expiration
Name Granted(#)(1) Fiscal Year ($/Sh)(2) Date(3) 5%($) 10%($)
- ---- ------------- ------------- -------------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Robert B. Grieve 20,449 1.22% $5.19 02/08/09 $66,745 $ 169,144
179,551 10.73% $5.19 02/08/09 $586,048 $1,485,160
James H. Fuller 81,775 4.89% $5.37 02/03/09 $276,167 $ 699,862
268,225 16.03% $5.37 02/03/09 $905,839 $2,295,576
Ronald L. Hendrick -- -- -- -- -- --
R. Lee Seward -- -- -- -- -- --
Giuseppe Miozzari 25,000 1.49% $3.06 04/06/09 $48,110 $121,921
12,000 0.07% $2.00 11/17/09 $15,093 $ 38,249
</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.
9
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Securities Underlying Value of Unexercised
Unexercised Options at Options In-the-Money Options at
at December 31, 1999(#) December 31, 1999($)(2)
------------------------------ -----------------------
Shares
Acquired on Value
Name Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert B. Grieve 8,000 $ 19,252 442,792 255,208 $531,812 $19,687
James H. Fuller -- -- 80,208 269,792 -- --
Ronald L. Hendrick -- -- 25,000 75,000 -- --
R. Lee Seward 49,198 $115,233 38,750 41,250 -- --
Giuseppe Miozzari -- -- 75,250 61,750 $ 74,437 $33,562
</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, 1999 ($2.25), minus the
applicable per share exercise price.
PENSION AND LONG-TERM INCENTIVE PLANS
The Company has no pension or long-term incentive plans.
EMPLOYMENT AGREEMENTS
During 1999, 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. In the case of Mr. Fuller, the payments set forth in his
employment agreement are equal to one year's salary plus an additional one
year's vesting under any stock arrangements if the termination takes place any
time on or before January 18, 2002, 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 Mr. Hendrick, the payments set forth in his
employment agreement are equal to one year's salary if the termination takes
place any time on or before December 1, 2001, or six months' salary if the
termination takes place after that date. 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 November 1999, the Company and Dr. Seward agreed that his employment
would terminate effective November 30, 1999. In connection with the arrangement
with Dr. Seward, the Company and Dr. Seward entered into a Separation Agreement
and a Consultant Services and Confidentiality Agreement. Under the Separation
Agreement, Dr. Seward will be paid his 1999 base salary of $185,000 through
November 30, 2000 and will continue to vest under all outstanding stock options
and stock purchase agreements through November 30, 2000. The Company will pay
the health insurance premiums of Dr. Seward and his dependents through November
30, 2000 or until he becomes covered under the health insurance plan of another
employer, whichever is earlier. Under Dr. Seward's Consultant Services and
Confidentiality Agreement, Dr. Seward will provide ongoing, part time consulting
services to the Company through November 30, 2000. In consideration for such
services, the Company will pay to Dr. Seward $1,200 per full day that Dr. Seward
provides consulting services (pro rated for partial days) and will reimburse Dr.
Seward his reasonable out-of-pocket expenses incurred in providing consulting
services to the Company. The Company may pay Dr. Seward's consulting fee in a
combination of 50% cash and 50% in shares of Heska stock. If payment is made in
stock, the price for the stock issued will be the average closing price for the
shares during the month the services were rendered.
10
<PAGE> 13
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 Mr. Sasen, 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:
o Establishing the Company's compensation philosophy for all employees,
including the CEO and other executive officers;
o Reviewing the performance of the CEO;
o Determining salary levels and stock grants for the CEO and other executive
officers;
o 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 Committee 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, stock options and a performance based cash incentive
plan.
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 and based on practices of comparable companies in the Company's
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.
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.
11
<PAGE> 14
Cash Incentive Plan. The Committee believes that cash performance based
incentives can also serve an important role in executive compensation. The
Committee has adopted a cash bonus plan to provide incentives to the executives
of the Company to meet and exceed certain predetermined annual net income and
revenue goals. The Committee has established these financial goals for the 2000
calendar year, and any such bonuses with respect to the 2000 calendar year will
only be paid after the audited financial results for the year are available.
While the Committee believes that providing cash bonuses to the executives of
the Company is an essential part of creating a competitive executive
compensation package, the Committee has determined that paying the great
majority of such bonuses only if specific predetermined financial goals are
achieved provides a very strong incentive to the Company's management to achieve
financial performance that will be beneficial to the Company and its
stockholders.
CHIEF EXECUTIVE OFFICER COMPENSATION
The annual salary of Robert B. Grieve, the Company's Vice Chairman and CEO,
was increased to $250,000 in 1999, and the Committee awarded him a stock option
in February 1999 to purchase an additional 200,000 shares of common stock at the
time he was named Chief Executive Officer of the Company. 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 Dr. Grieve'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.
John F. Sasen, Sr.
12
<PAGE> 15
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
Nasdaq
Pharmaceutical Nasdaq US & Heska
Stocks Foreign Corporation
Jul-97 100.000 100.000 100.000
Sep-97 105.978 109.069 172.727
Dec-97 98.631 97.928 150.000
Mar-98 115.577 107.648 180.303
Jun-98 118.218 99.619 134.097
Sep-98 105.357 93.982 68.182
Dec-98 136.386 124.577 53.794
Mar-99 152.303 136.706 39.394
Jun-99 166.986 139.118 28.036
Sep-99 170.674 158.975 27.273
Dec-99 249.927 232.795 27.273
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 1999 its directors, officers and 10%
Holders complied with all filing requirements under Section 16(a) of the
Exchange Act, with the exceptions noted below. Dr. Stevenson failed to report
the exercise of certain stock options in February 1999. This exercise was
subsequently reported on a Form 4 in April 1999. Dr. Stinchcomb failed to report
the exercise of certain stock options and sale of the underlying shares in May
1999. The exercise and sale were subsequently reported on a Form 5 in February
2000. Mr. Fuller failed to report the open-market purchase of common stock in
December 1999. This purchase was subsequently reported on a Form 5 in February
2000.
13
<PAGE> 16
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 was $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, 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 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, 1999, the total amount due, principal and
accrued interest was $86,112.76. Mr. Schwarzer and the Company 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.
In December 1999, the Compensation Committee approved a personal loan to
Dr. Grieve in the amount of $100,000. This loan is evidenced by a promissory
note which is due and payable on December 23, 2002. Interest on the outstanding
principal balance accrues at the rate of five and seventy-four one-hundredths
percent per annum. Payment of any unpaid principal balance together with all
accrued and unpaid interest can be accelerated and become payable within ninety
days after Dr. Grieve's relationship with Heska is terminated for any reason
other than Dr. Grieve's death or permanent disability.
14
<PAGE> 17
PROPOSAL 2 - AMENDMENT TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has approved an amendment of Article IV of the
Company's Restated Certificate of Incorporation to increase the number of
authorized shares of common stock from 40,000,000 to 75,000,000. The Board of
Directors recommends that the Company's stockholders approve this amendment. The
rights of additional authorized shares will be identical to the shares now
authorized. Although the authorization would not, in itself, have any effect on
your rights as a stockholder, issuance of additional shares of common stock for
other than a stock split or dividend could have a dilutive effect on earnings
per share.
Of the 40,000,000 shares of common stock currently authorized for issuance
approximately 6,248,327 are unissued, however all but 409,643 are reserved for
issuance pursuant to the Company's stock option and employee stock purchase
plans and for issuance upon conversion of an outstanding warrant. The authorized
shares of common stock in excess of those issued will be available for issuance
at such times and for such corporate purposes as the Board of Directors may deem
advisable without further action by the stockholders, unless stockholder
approval is required by applicable laws or the rules of any stock exchange or
national securities association trading system.
We do not have any current plans to issue additional shares of common
stock, other than under previously authorized benefit and compensation plans;
however, this amendment will enhance the Board's flexibility in possible future
actions, such as stock splits, stock dividends, acquisitions, and other
corporate activities involving the common stock.
The Company's Restated Certificate of Incorporation, attached to this Proxy
Statement in Annex A, illustrates how Article IV of the Company's Certificate
would read if the amendment is adopted.
REQUIRED APPROVAL
The affirmative vote of the holders of a majority of the Company's
outstanding common stock is required to approve this proposal. Therefore,
failure to vote will have the same effect as a vote against the amendment. If
approved by the stockholders, the proposed amendment to Article IV will become
effective upon the filing of a Certificate of Amendment with the Secretary of
State of Delaware amending the Company's Restated Certificate of Incorporation,
which will occur as soon as reasonably practicable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND ARTICLE
IV OF THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.
15
<PAGE> 18
PROPOSAL 3 - REPEAL OF MOST SUPERMAJORITY PROVISIONS OF THE
COMPANY'S CERTIFICATE OF INCORPORATION
SUMMARY OF PROPOSAL
As a condition to purchasing common stock in the Company's public offering
in December 1999, the State of Wisconsin Investment Board, required the Company
to propose an amendment to its Certificate of Incorporation to the stockholders
of the Company. This proposal provides that provisions requiring a supermajority
(66 2/3%) vote to amend or repeal certain articles of the Certificate of
Incorporation, other than those relating to the Company's classified board of
directors, are to be modified to require a simple majority vote. The Company is
seeking the approval of its stockholders to repeal the provisions of the
Company's Certificate of Incorporation that are described below. The provisions,
in their current form, limit the ability of the holders of the Company's common
stock to amend or repeal provisions of the Company's bylaws and Certificate of
Incorporation by requiring a supermajority vote. By making these amendments, the
stockholders of the Company will have the ability to amend or repeal most
provisions of the Company's bylaws and Certificate of Incorporation with a
majority vote.
The Company seeks to amend the following provisions of the Certificate of
Incorporation to reduce the vote required to amend or repeal these provisions
and in the case of Article VIII to amend or repeal the bylaws of the Company
from a supermajority vote to a majority vote:
(a) Article VII: Special meetings of the stockholders of the Company may
be called only at the request of the Chairman of the Board of
Directors, the Chief Executive Officer or President of the Company or
by a resolution duly adopted by the affirmative vote of a majority of
the Board of Directors;
(b) Article VIII: Stockholders have the authority to amend or repeal the
bylaws of the Company; however, Article 3.1 of the bylaws, relating to
the classified board of directors, will continue to retain the
previous requirement of sixty-six and two thirds (66 2/3%) stockholder
vote to amend or repeal; and
(c) Article XI: Limitation of liability of directors and indemnification
and insurance for directors and officers.
The repeal of the supermajority vote to amend these provisions will provide
the stockholders of the Company with greater power to control the Company's
affairs. In some instances this may work to the disadvantage of some
stockholders. For instance, the Board believes that under some circumstances, in
an acquisition context, a lack of supermajority voting may cause stockholders to
receive less than they otherwise would for their shares. Nevertheless, the
Company believes that the supermajority voting requirement for the amendment of
Articles VII, VIII and XI of the Company's Restated Certificate of Incorporation
should be repealed, with the exception of the supermajority voting provision
contained in Article VIII, relating to the classified board, which should be
retained.
The Company's Restated Certificate of Incorporation, attached to this Proxy
Statement in Annex A, illustrates how provisions of the Company's Certificate
would read if the Supermajority Provisions were repealed. Also included in Annex
A is a marked version, indicating the changes that would be made to the existing
provisions of the Company's Certificate if the Supermajority Provisions were
repealed.
REQUIRED APPROVAL
The affirmative vote of the holders of at least sixty-six and two-thirds
percent (66 2/3%) of the Company's outstanding common stock is required to
approve this proposal. Therefore, failure to vote will have the same effect as a
vote against the amendment. If approved by the stockholders, the proposed
amendments to the Certificate of Incorporation will be filed with the Secretary
of State of the State of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND MOST OF
THE SUPERMAJORITY PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION.
16
<PAGE> 19
PROPOSAL 4 -AMENDMENT TO THE 1997 EMPLOYEE STOCK PURCHASE PLAN
SUMMARY OF 1997 EMPLOYEE STOCK PURCHASE PLAN
The 1997 Employee Stock Purchase Plan was approved by the Board of
Directors and stockholders in April 1997. The purpose of the Plan is to provide
eligible employees with an opportunity to increase their stake in the success of
the Company by buying common stock at a discount through periodic payroll
deductions.
Currently, all U.S. employees who work more than 20 hours per week for more
than five months per calendar year, and have been employed by Heska or a U.S.
subsidiary of Heska for more than 30 consecutive days are eligible to
participate in the Plan, unless the employee would own 5% or more of the total
combined voting of the Company at the end of an offering period. Participation
in the Plan is voluntary. We believe that this Plan is an important factor in
attracting and retaining skilled personnel.
Shares of stock are offered for purchase through a series of overlapping
24-month offering periods. New offering periods start on each January 1 and July
1. Each offering period is comprised of four successive six-month accumulation
periods. Employees may authorize payroll deductions in 1% multiples of cash
compensation for each accumulation period they complete within an offering
period, up to a maximum of 10%. The purchase price per share is 85% of the lower
of (a) the closing price of the stock on the last trading day of the
accumulation period or (b) the closing price per share on the last trading day
before the commencement of the applicable offering period.
PROPOSED AMENDMENT
Management recently reviewed the number of shares available for issuance
under the Plan. As of December 31, 1999 a total of 21,314 shares remained
available for purchase under the Plan. Based upon estimates of the number of
shares expected to be purchased during the coming years, management presented to
the Board of Directors a recommendation to increase the number of shares to the
pool reserved for issuance under the Plan from 250,000 to 750,000. The Plan was
amended, subject to stockholder approval, by the Board in February 2000.
The amendment, amends and restates Section 12 (a) of the Plan to read as
follows:
"(a) AUTHORIZED SHARES. The aggregate number of shares of Stock
available for purchase under the Plan shall be 750,000, subject to
adjustment pursuant to Section 12."
FEDERAL INCOME TAX CONSEQUENCES
The proposed amendment will have no effect upon the tax consequences to
participants or the Company.
REQUIRED APPROVAL
The affirmative vote of the holders of a majority of the Company's
outstanding common stock is required to approve this proposal. Therefore,
failure to vote will have the same effect as a vote against the amendment. If
approved by the stockholders, the proposed amendment to 1997 Employee Stock
Purchase Plan will become effective immediately.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE 1997
EMPLOYEE STOCK PURCHASE PLAN.
17
<PAGE> 20
STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Proposals of stockholders submitted pursuant to Rule 14a-8 under the
Securities and Exchange Act of 1934, as amended, and intended to be presented
for consideration at the Company's 2001 Annual Meeting of Stockholders must be
received by the Company not later than December 4, 2000 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 will be voted in accordance with the judgment of the
persons voting the proxies.
Whether or not you plan to attend the meeting, please vote by Internet or
mark, sign, date and promptly return the enclosed proxy in the enclosed
envelope. No postage is required for mailing in the United States.
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 4, 2000
18
<PAGE> 21
ANNEX A
RESTATED CERTIFICATE OF INCORPORATION
OF
HESKA CORPORATION
HESKA CORPORATION, a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:
FIRST: The name of this corporation is Heska Corporation.
SECOND: The original Certificate of Incorporation of the
corporation was filed with the Secretary of State of the State of
Delaware on March 27, 1997 and the original name of the corporation was
Heska Merger Corporation. A Restated Certificate of Incorporation of
the corporation was filed with the Secretary of State of the State of
Delaware on May 28, 1997. A Certificate of Merger whereby Heska
Corporation, a California corporation, was merged with and into this
corporation and this corporation's name was changed to Heska
Corporation was filed with the Secretary of State of the State of
Delaware on May 29, 1997. A Restated Certificate of Incorporation was
filed with the Secretary of State of the State of Delaware on July 7,
1997.
THIRD: The Restated Certificate of Incorporation of said
corporation shall be amended and restated to read in full as follows:
ARTICLE I
The name of this corporation is HESKA CORPORATION.
ARTICLE II
The registered office of the corporation within the State of Delaware
is located at 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
ARTICLE III
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
-1-
<PAGE> 22
ANNEX A
ARTICLE IV
A. Authorized Stock. This corporation is authorized to issue two
classes of shares, to be designated Common Stock and Preferred Stock,
respectively. This corporation is authorized to issue seventy-five million
(75,000,000) shares of Common Stock, $.001 par value per share, and twenty-five
million (25,000,000) shares of Preferred Stock, $.001 par value per share.
B. Preferred Stock. The Preferred Stock may be issued in any number of
series, as determined by the Board of Directors. The Board of Directors may by
resolution fix the designation and number of shares of any such series, and may
determine, alter, or revoke the rights, preferences, privileges and restrictions
granted to or imposed upon any wholly unissued series. The Board of Directors
may thereafter in the same manner, within the limits and restrictions stated in
any resolution or resolutions of the Board of Directors originally fixing the
number of shares constituting any series, increase or decrease the number of
shares of any such series (but not below the number of shares of that series
then outstanding). In case the number of shares of any series shall be
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution originally fixing the number of
shares of such series.
C. Common Stock.
1. Relative Rights of Preferred Stock and Common Stock. All
preferences, voting powers, relative, participating, optional or other
special rights and privileges, and qualifications, limitations or
restrictions of the Common Stock are expressly made subject and
subordinate to those that may be fixed with respect to any shares of
the Preferred Stock.
2. Voting Rights. Except as otherwise required by law or this
Restated Certificate of Incorporation, each holder of Common Stock
shall have one vote in respect of each share of stock held by such
holder of record on the books of the corporation for the election of
directors and on all matters submitted to a vote of stockholders of the
corporation.
3. Dividends. Subject to the preferential rights of the
Preferred Stock, if any, the holders of shares of Common Stock shall be
entitled to receive, when and if declared by the Board of Directors,
out of the assets of the corporation which are by law available
therefor, dividends payable either in cash, in property or in shares of
capital stock.
4. Liquidation, Dissolution or Winding Up. In the event of any
dissolution, liquidation or winding up of the affairs of the
corporation, after distribution in full of the preferential amounts, if
any, to be distributed to the holders of shares of the Preferred Stock,
holders of Common Stock shall be entitled, unless otherwise provided by
law or this
-2-
<PAGE> 23
ANNEX A
Restated Certificate of Incorporation, to receive all of the remaining
assets of the corporation of whatever kind available for distribution
to stockholders ratably in proportion to the number of shares of Common
Stock held by them respectively.
ARTICLE V
The corporation is to have perpetual existence.
ARTICLE VI
A. Classified Board. The Board of Directors shall be divided into three
classes, designated Class I, Class II and Class III, as nearly equal in number
as possible, and the term of office of directors of one class shall expire at
each annual meeting of stockholders, and in all cases as to each director when
such director's successor shall be elected and shall qualify or upon such
director's earlier resignation, removal from office, death or incapacity.
Additional directorships resulting from an increase in number of directors shall
be apportioned among the classes as equally as possible. The initial term of
office of directors of Class I shall expire at the annual meeting of
stockholders in 1998; that of Class II shall expire at the annual meeting in
1999; and that of Class III shall expire at the annual meeting in 2000; and in
all cases as to each director when such director's successor shall be elected
and shall qualify or upon such director's earlier resignation, removal from
office, death or incapacity. At each annual meeting of stockholders, beginning
with the annual meeting of stockholders in 1998, the number of directors equal
to the number of directors of the class whose term expires at the time of such
meeting (or, if less, the number of directors properly nominated and qualified
for election) shall be elected to hold office until the third succeeding annual
meeting of stockholders after their election.
B. Changes. The Board of Directors of this corporation, by amendment
to the corporation's bylaws, is expressly authorized to change the number of
directors in any or all of the classes of directors without the consent of the
stockholders.
C. Elections. Elections of directors need not be by written ballot
unless the Bylaws of the corporation shall so provide.
D. Vote Required to Amend or Repeal. The affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then outstanding shares of the stock of the corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to amend in any respect or repeal this Article
VI.
-3-
<PAGE> 24
ANNEX A
ARTICLE VII
A. Special Meetings of Stockholders. Special meetings of the
stockholders of the corporation may be called for any purpose or purposes,
unless otherwise prescribed by statute or by this Restated Certificate of
Incorporation, only at the request of the Chairman of the Board of Directors,
the Chief Executive Officer or President of the corporation or by a resolution
duly adopted by the affirmative vote of a majority of the Board of Directors.
ARTICLE VIII
A. Amend or Repeal Bylaws. The Board of Directors is expressly
empowered to adopt, amend or repeal the Bylaws of the corporation; provided,
however, that any adoption, amendment or repeal of the Bylaws of the corporation
by the Board of Directors shall require the approval of at least sixty-six and
two-thirds percent (66 2/3%) of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized directorships
at the time any resolution providing for adoption, amendment or repeal is
presented to the Board of Directors). The stockholders shall also have the power
to adopt, amend or repeal the Bylaws of the corporation, provided, however, that
in addition to any vote of the holders of any class or series of stock of the
corporation required by law, the affirmative vote of the holders of more than
fifty percent (50%) of the voting power of all of the then outstanding shares of
the stock of the corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required for such
adoption, amendment or repeal by the stockholders of any provisions of the
Bylaws of the corporation. Notwithstanding the foregoing sentence, the
affirmative vote of the holders of at least sixty-six and two-thirds percent (66
2/3%) of the voting power of all of the then outstanding shares of the stock of
the corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required for the amendment or repeal of
Article 3.1 of the Bylaws of the corporation.
ARTICLE IX
The books of the corporation may be kept at such place within or
without the State of Delaware as the bylaws of the corporation may provide or as
may be designated from time to time by the board of directors of the
corporation.
-4-
<PAGE> 25
ANNEX A
ARTICLE X
Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receivers appointed for the corporation under the provisions
of section 291 of Title 8 of the Delaware Code or on the application of trustees
in dissolution or of any receiver or receivers appointed for the corporation
under the provisions of section 279 of Title 8 of the Delaware Code order a
meeting of the creditors or class of creditors, and/or the stockholders or class
of stockholders of the corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority, in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall if sanctioned by the
court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.
ARTICLE XI
A. Limitation on Liability. A director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (1) for any
breach of the director's duty of loyalty to the corporation and its
stockholders; (2) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law; (3) under Section 174 of
the Delaware General Corporation Law; or (4) for any transaction from which the
director derived an improper personal benefit.
If the Delaware General Corporation Law hereafter is amended to further
eliminate or limit the liability of directors, then the liability of a director
of the corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended Delaware
General Corporation Law.
B. Indemnification. The corporation is authorized to indemnify the
directors and officers of this corporation to the fullest extent permissible
under Delaware law.
C. Insurance. The corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense,
-5-
<PAGE> 26
liability or loss, whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss under the Delaware
General Corporation Law.
D. Repeal and Modification. Any repeal or modification of the foregoing
provisions of this Article XI shall not adversely affect any right or protection
of any director, officer, employee or agent of the corporation existing at the
time of such repeal or modification.
ARTICLE XII
The corporation reserves the right to amend or repeal any provision
contained in this Restated Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon a stockholder
herein are granted subject to this reservation.
* * * * *
Four: This Restated Certificate of Incorporation was duly
adopted by the Board of Directors of this corporation.
Five: This Restated Certificate of Incorporation was duly
adopted by written consent of the stockholders of the corporation in
accordance with Sections 228, 242 and 245 of the General Corporation
Law of the State of Delaware and written notice of such action has been
given as provided in Section 228.
IN WITNESS WHEREOF, Heska Corporation has caused this certificate to be
signed by the undersigned officer, thereunto duly authorized, this ____day of
_____, 2000.
By:
-----------------------------
Name:
Title:
-6-
<PAGE> 27
ANNEX A
MARKED COPY
RESTATED CERTIFICATE OF INCORPORATION
OF
HESKA CORPORATION
HESKA CORPORATION, a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:
FIRST: The name of this corporation is Heska Corporation.
SECOND: The original Certificate of Incorporation of the
corporation was filed with the Secretary of State of the State of
Delaware on March 27, 1997 and the original name of the corporation was
Heska Merger Corporation. A Restated Certificate of Incorporation of
the corporation was filed with the Secretary of State of the State of
Delaware on May 28, 1997. A Certificate of Merger whereby Heska
Corporation, a California corporation, was merged with and into this
corporation and this corporation's name was changed to Heska
Corporation was filed with the Secretary of State of the State of
Delaware on May 29, 1997. A Restated Certificate of Incorporation was
filed with the Secretary of State of the State of Delaware on July 7,
1997.
THIRD: The Restated Certificate of Incorporation of said
corporation shall be amended and restated to read in full as follows:
ARTICLE I
The name of this corporation is HESKA CORPORATION.
ARTICLE II
The registered office of the corporation within the State of Delaware
is located at 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
ARTICLE III
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
-1-
<PAGE> 28
ANNEX A
MARKED COPY
ARTICLE IV
A. Authorized Stock. This corporation is authorized to issue two
classes of shares, to be designated Common Stock and Preferred Stock,
respectively. This corporation is authorized to issue seventy-five million
(75,000,000) shares of Common Stock, $.001 par value per share, and twenty-five
million (25,000,000) shares of Preferred Stock, $.001 par value per share.
B. Preferred Stock. The Preferred Stock may be issued in any number of
series, as determined by the Board of Directors. The Board of Directors may by
resolution fix the designation and number of shares of any such series, and may
determine, alter, or revoke the rights, preferences, privileges and restrictions
granted to or imposed upon any wholly unissued series. The Board of Directors
may thereafter in the same manner, within the limits and restrictions stated in
any resolution or resolutions of the Board of Directors originally fixing the
number of shares constituting any series, increase or decrease the number of
shares of any such series (but not below the number of shares of that series
then outstanding). In case the number of shares of any series shall be
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution originally fixing the number of
shares of such series.
C. Common Stock.
1. Relative Rights of Preferred Stock and Common Stock. All
preferences, voting powers, relative, participating, optional or other
special rights and privileges, and qualifications, limitations or
restrictions of the Common Stock are expressly made subject and
subordinate to those that may be fixed with respect to any shares of
the Preferred Stock.
2. Voting Rights. Except as otherwise required by law or this
Restated Certificate of Incorporation, each holder of Common Stock
shall have one vote in respect of each share of stock held by such
holder of record on the books of the corporation for the election of
directors and on all matters submitted to a vote of stockholders of the
corporation.
3. Dividends. Subject to the preferential rights of the
Preferred Stock, if any, the holders of shares of Common Stock shall be
entitled to receive, when and if declared by the Board of Directors,
out of the assets of the corporation which are by law available
therefor, dividends payable either in cash, in property or in shares of
capital stock.
4. Liquidation, Dissolution or Winding Up. In the event of any
dissolution, liquidation or winding up of the affairs of the
corporation, after distribution in full of the preferential amounts, if
any, to be distributed to the holders of shares of the Preferred Stock,
holders of Common Stock shall be entitled, unless otherwise provided by
law or this
-2-
<PAGE> 29
ANNEX A
MARKED COPY
Restated Certificate of Incorporation, to receive all of the remaining
assets of the corporation of whatever kind available for distribution
to stockholders ratably in proportion to the number of shares of Common
Stock held by them respectively.
ARTICLE V
The corporation is to have perpetual existence.
ARTICLE VI
A. Classified Board. The Board of Directors shall be divided into three
classes, designated Class I, Class II and Class III, as nearly equal in number
as possible, and the term of office of directors of one class shall expire at
each annual meeting of stockholders, and in all cases as to each director when
such director's successor shall be elected and shall qualify or upon such
director's earlier resignation, removal from office, death or incapacity.
Additional directorships resulting from an increase in number of directors shall
be apportioned among the classes as equally as possible. The initial term of
office of directors of Class I shall expire at the annual meeting of
stockholders in 1998; that of Class II shall expire at the annual meeting in
1999; and that of Class III shall expire at the annual meeting in 2000; and in
all cases as to each director when such director's successor shall be elected
and shall qualify or upon such director's earlier resignation, removal from
office, death or incapacity. At each annual meeting of stockholders, beginning
with the annual meeting of stockholders in 1998, the number of directors equal
to the number of directors of the class whose term expires at the time of such
meeting (or, if less, the number of directors properly nominated and qualified
for election) shall be elected to hold office until the third succeeding annual
meeting of stockholders after their election.
B. Changes. The Board of Directors of this corporation, by amendment
to the corporation's bylaws, is expressly authorized to change the number of
directors in any or all of the classes of directors without the consent of the
stockholders.
C. Elections. Elections of directors need not be by written ballot
unless the Bylaws of the corporation shall so provide.
D. Vote Required to Amend or Repeal. The affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then outstanding shares of the stock of the corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to amend in any respect or repeal this Article
VI.
-3-
<PAGE> 30
ANNEX A
MARKED COPY
ARTICLE VII
A. Special Meetings of Stockholders. Special meetings of the
stockholders of the corporation may be called for any purpose or purposes,
unless otherwise prescribed by statute or by this Restated Certificate of
Incorporation, only at the request of the Chairman of the Board of Directors,
the Chief Executive Officer or President of the corporation or by a resolution
duly adopted by the affirmative vote of a majority of the Board of Directors.
ARTICLE VIII
A. Amend or Repeal Bylaws. The Board of Directors is expressly
empowered to adopt, amend or repeal the Bylaws of the corporation; provided,
however, that any adoption, amendment or repeal of the Bylaws of the corporation
by the Board of Directors shall require the approval of at least sixty-six and
two-thirds percent (66 2/3%) of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized directorships
at the time any resolution providing for adoption, amendment or repeal is
presented to the Board of Directors). The stockholders shall also have the power
to adopt, amend or repeal the Bylaws of the corporation, provided, however, that
in addition to any vote of the holders of any class or series of stock of the
corporation required by law, the affirmative vote of the holders of more than
fifty percent (50%) of the voting power of all of the then outstanding shares of
the stock of the corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required for such
adoption, amendment or repeal by the stockholders of any provisions of the
Bylaws of the corporation. Notwithstanding the foregoing sentence, the
affirmative vote of the holders of at least sixty-six and two-thirds percent (66
2/3%) of the voting power of all of the then outstanding shares of the stock of
the corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required for the amendment or repeal of
Article 3.1 of the Bylaws of the corporation.
ARTICLE IX
The books of the corporation may be kept at such place within or
without the State of Delaware as the bylaws of the corporation may provide or as
may be designated from time to time by the board of directors of the
corporation.
-4-
<PAGE> 31
ANNEX A
MARKED COPY
ARTICLE X
Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receivers appointed for the corporation under the provisions
of section 291 of Title 8 of the Delaware Code or on the application of trustees
in dissolution or of any receiver or receivers appointed for the corporation
under the provisions of section 279 of Title 8 of the Delaware Code order a
meeting of the creditors or class of creditors, and/or the stockholders or class
of stockholders of the corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority, in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall if sanctioned by the
court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.
ARTICLE XI
A. Limitation on Liability. A director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (1) for any
breach of the director's duty of loyalty to the corporation and its
stockholders; (2) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law; (3) under Section 174 of
the Delaware General Corporation Law; or (4) for any transaction from which the
director derived an improper personal benefit.
If the Delaware General Corporation Law hereafter is amended to further
eliminate or limit the liability of directors, then the liability of a director
of the corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended Delaware
General Corporation Law.
B. Indemnification. The corporation is authorized to indemnify the
directors and officers of this corporation to the fullest extent permissible
under Delaware law.
C. Insurance. The corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense,
-5-
<PAGE> 32
liability or loss, whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss under the Delaware
General Corporation Law.
D. Repeal and Modification. Any repeal or modification of the foregoing
provisions of this Article XI shall not adversely affect any right or protection
of any director, officer, employee or agent of the corporation existing at the
time of such repeal or modification.
ARTICLE XII
The corporation reserves the right to amend or repeal any provision
contained in this Restated Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon a stockholder
herein are granted subject to this reservation.
* * * * *
Four: This Restated Certificate of Incorporation was duly
adopted by the Board of Directors of this corporation.
Five: This Restated Certificate of Incorporation was duly
adopted by written consent of the stockholders of the corporation in
accordance with Sections 228, 242 and 245 of the General Corporation
Law of the State of Delaware and written notice of such action has been
given as provided in Section 228.
IN WITNESS WHEREOF, Heska Corporation has caused this certificate to be
signed by the undersigned officer, thereunto duly authorized, this ____day of
_____, 2000.
By:
-----------------------------
Name:
Title:
-6-
<PAGE> 33
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 24, 2000 at 9:00 a.m., and at any adjournment thereof, to vote
as designated below:
-------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1 through 4.
-------------------------------------------------------------------
For all
For Withhold Except
1. To elect three directors, Lyle A. [ ] [ ] [ ]
Hohnke, Denis H. Pomroy, and Lynnor
B. Stevenson, to the Board of
Directors to serve until the 2003
Annual Meeting of Stockholders or
until their successors have been
duly elected and qualified;
----------------------------------------------------
Write exception(s) here
For Against Abstain
2. To amend the Company's Certificate [ ] [ ] [ ]
of Incorporation to increase the
number of authorized shares of
Common Stock of the Company from 40
million to 75 million;
3. To amend the Company's Certificate [ ] [ ] [ ]
of Incorporation to modify and
delete certain of the supermajority
provisions therein; and
4. To approve an amendment to the [ ] [ ] [ ]
Company's 1997 Employee Stock
Purchase Plan to increase the
number of shares reserved for
issuance under the Plan by 500,000.
Date , 2000
-----------------------------
---------------------------------------
Signature
Stockholder Name and address here
---------------------------------------
Signature if held jointly
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.
- ----------------------------- FOLD AND DETACH HERE -----------------------------
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VOTE BY INTERNET
QUICK *** EASY *** IMMEDIATE
----------------------------
YOUR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES IN THE SAME
MANNER AS IF YOU'VE MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
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IF YOU VOTE BY INTERNET, DO NOT MAIL IN THE PROXY CARD.
THANK YOU FOR VOTING!
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123 456 7890
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