Distribution Agreement

DISTRIBUTION AGREEMENT


This DISTRIBUTION AGREEMENT (the "Agreement") is made effective as of September 1, 2001 ("Effective Date") by and between Scil Animal Care Company GmbH (hereinafter called "Distributor"), and ABAXIS, Inc. (hereinafter called "Company"), a California corporation ("ABAXIS").


RECITALS


A. ABAXIS is the manufacturer of blood analyzers described in Exhibit A, attached (the "Products").


B. Distributor wishes to acquire non-exclusive rights to distribute the products in the territory described in Exhibit B.


ITEM 31. Definitions.


1. "INSTRUMENTS" MEANS THE ELECTROMECHANICAL DEVICES WHICH ARE MORE FULLY
DESCRIBED IN EXHIBIT A TO THIS AGREEMENT.


2. "DISCS" MEANS THE REAGENT DISCS, OR ROTORS, WHICH ARE MORE FULLY DESCRIBED
IN EXHIBIT A TO THIS AGREEMENT.


3. "PRODUCTS" MEANS THE INSTRUMENT AND THE DISCS.


ITEM 32. Purchase and Distribution Rights.


1. PURCHASE RIGHTS. ABAXIS WILL SELL TO DISTRIBUTOR AND DISTRIBUTOR WILL
PURCHASE FROM ABAXIS THE PRODUCTS FOR DISTRIBUTION ACCORDING TO THE TERMS
AND CONDITIONS OF THIS AGREEMENT.


Distribution Rights. Subject to the terms of this Agreement, ABAXIS grants Distributor, and Distributor accepts, the non-transferable right to distribute the Products within the territory. Distributor may not transfer any of these rights to any sub-distributor either in the employ or in any other way associated with Distributor.


2. DISTRIBUTION OBLIGATIONS OF DISTRIBUTOR. DURING THE TERM OF THIS
AGREEMENT, DISTRIBUTOR WILL:


i. Obtain all reasonable governmental approvals and make all governmental registrations and filings necessary to import the Products into the territory and to distribute the Products in the territory, including obtaining approvals to import and distribute each lot of Discs that Distributor purchases under this Agreement, or will return the distribution rights for the individual country to the company;


ii. If any approval or registration of this Agreement will be required to make it enforceable in the territory, or to comply with exchange regulations or other requirements so as to allow remittance abroad of payment as required in this Agreement. Distributor shall immediately take all required action and pay all required charges to obtain such approvals and registrations or will return the distribution rights for the individual country to the company. Distributor shall keep ABAXIS informed of the status of all efforts relating to such approvals and registrations, and ABAXIS shall be under no obligation to ship Products to Distributor thereunder until Distributor has provided ABAXIS with satisfactory evidence that such approval or registration is not required or that it has been obtained;


iii. Use its adequate efforts to promote the sales of the Products to customers located in the territory;
iv. Provide and maintain an adequately staffed, equipped and trained sales organization, whose members will be able to explain in detail to customers the specification, features and benefits of the products and the differences between the Products and competitive products;


v. Provide sales and market data reports on a yearly basis, and at ABAXIS' request, including customer identities, sales volume, and other information relating to the actual and potential market for the Products in the territory;


vi. Keep ABAXIS informed concerning problems encountered and their resolutions, and communicate promptly to ABAXIS any and all modifications, design changes or improvements of the Products suggested by any customer of distributor or any employee or agent of Distributor (Distributor agrees that ABAXIS shall be and remain in the sole and exclusive owner of all such information).


ITEM 33. Price and Taxes.


1. PRICE. THE PRICE FORMULA FOR THE PRODUCTS IS SET FORTH IN EXHIBIT C
("PRICE LIST") TO THIS AGREEMENT.


2. PRICE CHANGES. AFTER ONE (1) YEAR, ABAXIS RESERVES THE RIGHT TO AMEND THE
PRICES SHOWN ON THE PRICE LIST UPON NINETY (90) DAYS PRIOR WRITTEN NOTICE
TO DISTRIBUTOR. NO INCREASE IN PRICES OR REDUCTION IN DISCOUNTS WILL APPLY
TO ITEMS FOR WHICH FIRM ORDERS (AS DEFINED IN SECTION 5.1 BELOW) ARE
ACCEPTED BY ABAXIS BEFORE THE EFFECTIVE DATE OF THE CHANGE. DISTRIBUTOR
WILL HAVE THE BENEFIT OF ANY REDUCTION IN PRICES OR INCREASE IN DISCOUNTS
FOR FIRM ORDERS ACCEPTED BUT NOT SHIPPED BEFORE THE EFFECTIVE DATE OF SUCH
CHANGE.


3. TAXES. DISTRIBUTOR WILL PAY FOR ALL SALES, USE, VALUE-ADDED, AND OTHER
TAXES, AND ALL CUSTOMS, DUTIES, AND TARIFFS NOW OR HEREAFTER CLAIMED OR
IMPOSED BY ANY GOVERNMENTAL AUTHORITY UPON THE SALE OF THE PRODUCTS TO
DISTRIBUTOR, OR UPON PAYMENTS TO ABAXIS UNDER THIS AGREEMENT.


ITEM 34. Payment. All payments under this Agreement to ABAXIS are due sixty (60)
days after invoice date and will be made in United States dollars, free of
any currency control or other restrictions, by wire transfer to the ABAXIS
bank account designated by ABAXIS' credit department (Exhibit D). Credit
terms may be extended to Distributor at the complete discretion of ABAXIS.
ABAXIS reserves the right, upon written notice to Distributor, to declare
all sums immediately due and payable in the event of a breach by
Distributor of any of its obligations to ABAXIS; including the failure of
Distributor to comply with credit terms. Furthermore, ABAXIS reserves the
right at all times either generally or with respect to any specific order,
to vary, change, or limit the amount or duration of credit to be allowed
to Distributor.


ITEM 35. Orders.


1. FORECAST; FORM OF ORDERS. DISTRIBUTOR WILL PROVIDE ABAXIS WITH A GOOD
FAITH ROLLING NON-BINDING TWELVE-MONTH FORECAST OF ITS REQUIREMENTS
UPDATED EVER THREE (3) MONTHS. DISTRIBUTOR WILL PURCHASE PRODUCTS FROM
ABAXIS BY THE ISSUANCE OF FIRM WRITTEN PURCHASE ORDERS ("FIRM ORDERS")
SPECIFYING THE QUANTITY OF EACH PRODUCT ORDERED AND THE SHIPPING DATE OR
DATES FOR SHIPMENT THEREOF.


ITEM 36. Shipment and Acceptance.


1. SHIPMENT. ABAXIS WILL USE DILIGENT EFFORTS TO SHIP THE PRODUCTS AT THE
TIME REQUESTED IN FIRM ORDERS ACCEPTED BY ABAXIS. IN THE EVENT OF SHORTAGE
OF LABOR, ENERGY, COMPONENTS, RAW MATERIALS OR SUPPLIES OR INTERRUPTION OF
ABAXIS' PRODUCTION OR SHIPMENT FOR REASONS BEYOND ABAXIS' REASONABLE
CONTROL, ABAXIS WILL GIVE DISTRIBUTOR REASONABLE PRIORITY IN TERMS OF
ALLOCATING ABAXIS' PRODUCTION AND SHIPMENT OF THE PRODUCTS.


Without liability to any person and without prejudice to any other remedy, ABAXIS may withhold or delay shipment of any order if Distributor is late in payment or is otherwise in default under this Agreement. ABAXIS shall promptly notify Distributor in the event that ABAXIS withholds or delays shipments under this Agreement.


76 2. PACKAGING AND SHIPMENT-RISK OF LOSS. ABAXIS WILL PACKAGE AND SHIP ALL
ITEMS SUBJECT TO FIRM ORDERS IN ABAXIS' CUSTOMARY MANNER. ALL SHIPMENTS
WILL BE F.O.B. ABAXIS' SHIPPING LOCATION. TITLE TO THE PRODUCTS AND THE
RISK OF LOSS OF OR DAMAGE TO THE PRODUCTS ORDERED BY DISTRIBUTOR WILL PASS
TO DISTRIBUTOR UPON ABAXIS' DELIVERY TO THE CARRIER FOR SHIPMENT.
SUBSEQUENT LOSS OR DAMAGE WILL NOT RELIEVE DISTRIBUTOR OF ANY OBLIGATION
UNDER THIS AGREEMENT.


3. SHIPMENT EXPENSE. DISTRIBUTOR WILL INSTRUCT ABAXIS IN WRITING AS TO WHICH
CARRIER ABAXIS WILL USE TO TRANSPORT THE PRODUCTS ORDERED BY DISTRIBUTOR.
IF DISTRIBUTOR HAS NOT SO INSTRUCTED ABAXIS AT THE TIME OF THE ORDER,
ABAXIS MAY SELECT THE CARRIER. DISTRIBUTOR WILL PAY ALL COSTS OF
TRANSPORTATION, ANY INSURANCE REQUESTED BY DISTRIBUTOR, EXPORT AND IMPORT
FEES, CUSTOMS BROKERAGE EXPENSES AND SIMILAR CHANGES. DISTRIBUTOR AT ITS
EXPENSE WILL MAKE AND NEGOTIATE ANY CLAIMS AGAINST ANY CARRIER, INSURER,
CUSTOMS BROKER, FREIGHT FORWARDER OR CUSTOMS COLLECTOR. ABAXIS WILL
COOPERATE WITH AND ASSIST DISTRIBUTOR IN MAKING SUCH CLAIMS.


4. ACCEPTANCE. DISTRIBUTOR WILL HAVE TEN (10) WORKING DAYS AFTER ITS RECEIPT
OF PRODUCTS TO ACCEPT OR REJECT THOSE PRODUCTS. DISTRIBUTOR MAY ONLY
REJECT PRODUCTS WHICH FAIL TO CONFORM TO THE WARRANTY FOR THE PRODUCTS
CONTAINED IN SECTION 7 BELOW.


ITEM 37. Warranty.


1. INSTRUMENT WARRANTY. ABAXIS WARRANTS THAT THE INSTRUMENTS CONFIRM IN ALL
MATERIAL RESPECTS TO THE PACKAGE INSERT FOR THE INSTRUMENTS AND WILL BE
FREE FROM DEFECTS IN MATERIALS AND WORKMANSHIP UNTIL THE DATE WHICH IS ONE
YEAR AFTER INSTALLATION AT THE END USER'S FACILITY (THE "WARRANTY
PERIOD"). THIS LIMITED WARRANTY DOES NOT COVER THE RESULTS OF ACCIDENTS
(INCLUDING UNUSUAL PHYSICAL OR ELECTRICAL STRESS), ABUSE, NEGLECT,
VANDALISM, USE CONTRARY TO HANDLING OR OPERATING INSTRUCTIONS SUPPLIED BY
ABAXIS, OR REPAIR OR MODIFICATION BY ANYONE OTHER THAN ABAXIS OR ABAXIS
TRAINED DISTRIBUTOR PERSONNEL.


2. DISC WARRANTY. ABAXIS WARRANTS THAT THE DISCS CONFORM IN ALL MATERIAL
RESPECTS TO THE PACKAGE INSERT FOR THE DISCS UNTIL THE EXPIRATION DATE
MARKED ON THE DISC AND/OR THE DISCS PACKAGING (THE "WARRANTY PERIOD").
THIS LIMITED WARRANTY DOES NOT COVER THE RESULTS OF ACCIDENTS (INCLUDING
UNUSUAL PHYSICAL STRESS), ABUSE, NEGLECT, VANDALISM, USE CONTRARY TO
HANDLING OR OPERATING INSTRUCTIONS SUPPLIED BY ABAXIS, OR MODIFICATION BY
ANYONE OTHER THAN ABAXIS.


3. WARRANTY CLAIMS. IF DISTRIBUTOR BELIEVES THAT PRODUCTS DO NOT CONFORM TO
THE WARRANTY SET FORTH IN SECTIONS 7.1 AND 7.2, DISTRIBUTOR SHALL NOTIFY
ABAXIS IN WRITING OF SUCH NON-CONFORMANCE WITHIN TEN (10) WORKING DAYS
AFTER DISCOVERING SUCH DEFECT DURING THE WARRANTY PERIOD, AND SHALL
PROVIDE SUCH DETAILS OF THE NON-CONFORMANCE AS ABAXIS REASONABLY REQUESTS;
INCLUDING, BUT LIMITED TO, SALES DOCUMENTS AND/OR OTHER SALES INFORMATION
DESIGNED TO PROVE THAT THE NON-CONFORMITY WAS DISCOVERED DURING THE
WARRANTY PERIOD. DISTRIBUTOR WILL, UPON THE REQUEST OF ABAXIS AND IN
ACCORDANCE WITH ABAXIS' STANDARD PROCEDURES, RETURN SUCH PRODUCTS TO
ABAXIS AT ABAXIS' EXPENSE AND RISK. IF ABAXIS DETERMINES THAT A RETURN
PRODUCT DOES CONFORM TO THIS WARRANTY, OR THE NON-CONFORMITY WAS FOUND
AFTER THE EXPIRATION OF THE WARRANTY PERIOD. ABAXIS WILL RETURN SUCH
PRODUCTS. IF PRODUCTS ARE DEEMED TO FAIL TO CONFORM TO THIS WARRANTY BY
ABAXIS, DISTRIBUTOR'S SOLE REMEDY SHALL BE, AT ABAXIS' OPTION AND EXPENSE,
THE REPAIR (APPLIES SOLELY TO INSTRUMENTS) OR REPLACEMENT AND RETURN OF
THE PRODUCTS WITHIN (10) WORKING DAYS AFTER ABAXIS RECEIVES THE PRODUCTS,
OR A CREDIT OF THE PRICE OR FEE PAID BY DISTRIBUTOR FOR THE PRODUCTS.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, THE FOREGOING
IS DISTRIBUTOR'S SOLE AND EXCLUSIVE REMEDY FOR BREACH OF WARRANTY BY
ABAXIS WITH RESPECT TO THE PRODUCTS.


4. DISCLAIMER OF WARRANTIES. EXCEPT FOR THE LIMITED WARRANTY FOR THE PRODUCTS
CONTAINED IN SECTIONS 7.1 AND 7.2, ABAXIS AND ITS SUPPLIERS DISCLAIM ALL
WARRANTIES WITH RESPECT TO NON-INFRINGEMENT OF THIRD PARTY RIGHTS,
MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OTHER THAN STATED IN
PRODUCT DESCRIPTION.


77 5. ROTOR FAILURES. ABAXIS WILL REPLACE ROTORS ON A LIMITED 2% RATIO
INDEPENDENT OF CAUSE, DISTRIBUTOR DOCUMENTS PRODUCT FAILURES BY CUSTOMER.
PRODUCT FAILURES DUE TO IMPROPER USE OF THE EQUIPMENT OR FAILURE TO FOLLOW
PROCEDURES WILL NOT BE COMPENSATED. ABAXIS MAY REQUEST THAT DISTRIBUTOR
RETURN THE FAILED ROTORS FOR INVESTIGATION.


ITEM 38. Training and Maintenance.


1. PRODUCT TRAINING. ABAXIS WILL OFFER, WITHOUT CHARGE AND AT A MUTUALLY
ACCEPTANCE TIME, ONE (1) TRAINING SESSION IN THE OPERATION AND MAINTENANCE
OF THE PRODUCTS AT ABAXIS' OFFICES FOR A REASONABLE NUMBER OF
DISTRIBUTORS' QUALIFIED PERSONNEL. IN ADDITION, DISTRIBUTOR PERSONNEL MAY
ATTEND ABAXIS' SCHEDULE TRAINING SESSIONS CONDUCTED AT ABAXIS' FACILITIES
FOR ABAXIS' THEN CURRENT TRAINING FEES.


2. ENGINEER TRAINING. ABAXIS WILL OFFER, WITHOUT CHARGE AND AT A MUTUALLY
ACCEPTABLE TIME, ONE (1) TRAINING SESSION TO RECEIVE FULL SERVICE AND
MAINTENANCE QUALIFICATION FOR THE PRODUCTS AT ABAXIS' OFFICES FOR A
REASONABLE NUMBER OF DISTRIBUTOR'S QUALIFIED PERSONNEL.


3. SPARE PARTS. ABAXIS AGREES T ...