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Exhibit 10.35    
    


 
 

HESKA CORPORATION    
    
    DIRECTOR COMPENSATION POLICY    
    


        Effective January 1, 2005, non-employee directors of Heska Corporation, a Delaware corporation (the "Company") shall receive the following
compensation for their service as a member of the Board of Directors (the "Board") of the Company: 



Initial Grant for New Directors  


        An automatic grant of an option to purchase 40,000 shares of common stock of the Company as of the date of first becoming a member of the Board at an exercise
price equal to the fair market value of the common stock on the last trading date immediately preceding the date of grant. Initial grants are subject to vesting over a period of four years in equal
annual installments commencing on the date of grant, subject to the non-employee director's continued service to the Company through the vesting dates. These options are immediately
exercisable, but if "early exercised," unvested shares shall remain subject to the Company's right of repurchase upon termination of service prior to the fourth anniversary of the date of grant. 


Annual Grant for Continuing Board Members  


        An automatic annual grant to continuing non-employee directors of an option to purchase 40,000 shares of common stock of the Company shall be granted
on the date of each Company annual meeting of stockholders at an exercise price equal to the fair market value of the common stock on the last trading date immediately preceding the date of grant.
Annual grants for continuing Board members vest in full on the first anniversary of the date of grant, subject to the
non-employee director's continued service to the Company through the vesting date. These options are immediately exercisable, but if "early exercised," remain subject to the Company's
right of repurchase upon termination of service prior to the first anniversary of the date of grant. 


        No
new non-employee director may receive an initial 40,000-share grant and the annual 40,000-share grant in the same calendar year. 



Annual Grant for Board Committee Chairpersons  


        An automatic annual grant to continuing non-employee directors who serve as Chairperson of the Company's Audit, Compensation or Corporate Governance
committees shall be made of an option to purchase 2,000 shares of common stock of the Company as of the date of the annual meeting of stockholders at an exercise price equal to the fair market value
of the common stock on the last trading date immediately preceding the date of grant. Annual grants for Board committee chairpersons vest in full on the first anniversary of the date of grant, subject
to the non-employee director's continued service to the Company through the vesting date. These options are immediately exercisable, but if "early exercised," remain subject to the
Company's right of repurchase upon termination of service prior to the first anniversary of the date of grant. 


Director Compensation for Attendance at Board and Board Committee Meetings  



 In Person Board and Committee Meetings  




        Non-employee directors shall be entitled to receive a fee of $2,000.00 per day for any in person meeting of the Board or any in person meeting of any
committee of the Board. The fee of $2,000.00 per day shall be payable irrespective of (i) the number of Board or committee meetings in a given day and (ii) of the length of any such
meetings. 


        Those
non-employee directors who elect to receive such meeting fees in equity, will be entitled to receive a fully vested grant of options to purchase a number of shares of
common stock of the

 
Company equal to $2,000.00 divided by two-thirds of the fair market value of the Company's common stock on the last trading date immediately preceding the date of grant, to be issued with
an exercise price equal to the fair market value of such common stock on the last trading date immediately preceding the date of grant. The date of grant will be the first Monday or first business day
of the week immediately following the conclusion of such in person Board meeting or, where in person Board meetings and Board committee meetings occur in succession, following conclusion of all such
meetings. 



 Telephonic Board and Board Committee Meetings  




        Non-Employee directors will be entitled to receive a fee of $500.00 for each telephonic Board or committee meeting they attend. Where there is more
than one Board or Board committee telephonic meeting in a single day, non-employee directors shall receive a $500.00 payment for each meeting attended, irrespective of the length of such
meeting or meetings. 


        Those
non-employee directors who elect to receive such meeting fees in equity, will be entitled to receive a fully vested grant of options to purchase a number of shares of
common stock of the Company equal to $500.00 divided by two-thirds of the fair market value of the Company's common stock on the last trading date immediately preceding the date of grant,
to be issued with an exercise price equal to the fair market value of such common stock on the last trading date immediately preceding the date of grant. The date of grant will be the first Monday or
first business day of the week immediately following the conclusion of such telephonic Board or committee meeting. 



 Cash vs. Equity Election for Meeting Fees  




        Non-employee directors may elect to receive fees for meeting attendance in the form of a cash payment or in the form of a fully vested stock option as
described above. Such election shall be made on an annual basis and shall be irrevocable for the year in question. Such irrevocable election must be made in the fiscal year prior to the applicable
year in question for incumbent directors and following appointment to the Board for new directors. Cash payments for meeting attendance will be made following the fiscal quarter in which the meetings
are held. 


Provisions Applicable to All Non-Employee Director Equity Compensation Grants  


        Any unvested shares underlying non-employee director option grants shall become fully vested in the event of: (1) the termination of the
non-employee director's services because of death, total and permanent disability or retirement at or after age 65; or (2) a Change in Control (as defined in the 1997
Incentive Stock Plan) with respect to the Company. 


        All
grants shall be subject to the terms and conditions of the Company's 1997 Incentive Stock Plan, as amended, and the terms of the Stock Option Agreement issued thereunder. 


Amended January 31, 2003

Further Amended November 6-7, 2003,

Further Amended December 2, 2004,

Effective January 1, 2005  




 






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Exhibit 10.35


HESKA CORPORATION DIRECTOR COMPENSATION POLICY