Item 1.01. Entry into a Material Definitive Agreement.

On December 30, 2008, Heska Corporation (the "Company") amended its credit and security agreement with Wells Fargo Bank, National Association ("Wells Fargo"). The amended agreement adjusts and sets the Minimum Capital, Minimum Net Income and Minimum Capital Expenditures financial covenants, among others, increases the interest rate and Spread charged to the Company to the Prime Rate plus 2.5% retroactive to December 1, 2008, increases the Prepayment Factor to 1.0% and imposes a $50,000 waiver and amendment fee in exchange for Wells Fargo's waiver of a financial covenant default by the Company.

Item 2.05. Costs Associated with Exit or Disposal Activities.

On December 30, 2008, Heska Corporation finalized a plan to reduce its staffing levels at its Loveland, Colorado facility and Des Moines, Iowa facility by a certain number of employees and by identified positions. In the absence of any pre-existing agreements between the designated employees and the Company, severance benefits will be determined under The Heska Corporation Severance Plan (the "Plan"). Under the Plan, employees terminated will receive an amount equal to four weeks of base salary plus for each full or partial year of service with the Company, one week of base salary with a maximum severance amount capped at 13 weeks of base salary per employee. Terminated employees will also receive three months of the Company's portion of premium payments for group health and dental insurance for coverage in effect immediately prior to the termination date. While the Company has not yet determined the estimated costs of this action, the Company anticipates the costs will be less than $1 million.

This action is the result of certain economic factors within the Company's industry. Affected employees will be notified in January 2009 and all activities associated with this action are expected to be completed within 60 days.

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