Distributor Agreement

CONFIDENTIAL TREATMENT REQUESTED - EDITED COPY


- -------------------------------------------------------------------------------- *** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED AS [****]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. - --------------------------------------------------------------------------------


DISTRIBUTOR AGREEMENT


This Distributor Agreement (this "Agreement") made and entered into as of the 1st day of April, 2006 by and between Walco International, Inc., a Delaware corporation, d/b/a DVM Resources with its principal office at 7 Village Circle, Ste 200, Westlake, TX 76262 (hereinafter called "Distributor"); and ABAXIS, Inc., a California corporation with its principal office at 3240 Whipple Road, Union City, California 94587 (hereinafter called "ABAXIS").


WHEREAS, ABAXIS is a manufacturer of products for the in vitro analysis of various components in body fluids and whereas ABAXIS desires to further the sale of its products to veterinarians' offices, clinics, hospitals, and other End Users (as hereinafter defined);


WHEREAS, DISTRIBUTOR conducts a business which sells medical products to such veterinarian sites as those mentioned above and is interested in becoming a distributor of ABAXIS products;


NOW, THEREFORE, the parties hereto agree as follows:


1. Definitions
-----------


As used in this Agreement, the terms defined below shall have the following meanings:


A. "Distribute", "Distributed" or "Distribution" shall mean to
sell, distribute, market, promote, and stimulate interest in
the Products (as hereinafter defined) in connection with those
activities.


B. "Distributor Price" shall mean the price listed in the ABAXIS
Standard Distributor price list or Premier Distributor price
list attached hereto as Exhibit A.


C. "End User" shall mean any provider of veterinarian medical
care which actually uses the Products.


D. "Order" shall mean a written purchase order which describes
Products being purchased by Distributor.


E. "Order Terms" shall mean, notwithstanding any conflicting
terms set forth on an Order, the terms and conditions
contained in this Agreement, and in any modifications thereto
as may be agreed by the parties hereto in writing.


F. "Professional Use" shall mean use of Products in connection
with animal (non-human) care, conducted or supervised by
trained veterinarian personnel who have the authority under
applicable laws, regulations or statutes to use such Products.


G. "Products" shall mean the ABAXIS products listed in the ABAXIS
standard distributor price list attached hereto as Exhibit A
and such other ABAXIS products as ABAXIS shall from time to
time offer, in writing, to add.


H. "Instrument" shall mean the analyzer, which is an
electromechanical device.


I. "Reagent Rotor" shall mean the plastic disk containing
chemical reagents.


J. "Agreed to Annual Forecast" shall be as set forth in Appendix
A.


K. "Territory" shall mean the geographical area consisting of
those areas in the United States serviced by Distributor's
field sales representatives or called on by Distributor's
inside telesales representatives.


L. "Trademarks", "Trade names" and "Copyrights" shall mean the
trademarks, trade names and copyrights owned or controlled by
ABAXIS whether registered or arising by applicable law, and
used in connection with the Products.


M. "Warranty Period" shall have the meaning prescribed in Section
7 hereof.


2. Appointment
-----------


ABAXIS hereby grants to Distributor the non-exclusive right to
Distribute Products in the Territory to End-Users for Professional Use.
Distributor is not authorized to sell ABAXIS Products to resellers,
other than to a leasing company which leases the Product to End Users.


3. Obligations of Distributor
--------------------------


Distributor's obligations under this Agreement shall be:


A. Distributor shall use commercially reasonable efforts to
Distribute Products.


B. Distributor shall maintain adequate written procedures for
warehouse control and Distribution of Products. Distributor
shall maintain records of shipments to End-Users for at least
two (2) years after shipment. Such records shall be in such a
form as to enable ABAXIS to trace the location of all
Products. ABAXIS or Focus Technologies may ask from time to
time (but no more than one time each month), for point of
sales clinic level data and inventory on hand information,
which Distributor will report or make available in a timely
manner. ABAXIS shall request such data from Distributor's
corporate purchasing department.


C. Distributor shall maintain commercially reasonable procedures
in an effort to ensure that any Products which may be returned
directly to Distributor shall not be cleaned or otherwise
refurbished and re-sold or re-used by Distributor without
ABAXIS' prior written consent. Distributor further agrees to
contact ABAXIS Customer Service prior to any accepting any
return from any End User of any Instrument. In the event a
used Instrument is returned to Distributor, (i.e., packing
seal has been broken), ABAXIS will provide quotation for
refurbishing Instrument for Distributor to sell as a factory
refurbished Instrument. In the event an Instrument is returned
to Distributor and the packing seal has not been broken,
ABAXIS may inspect as it deems necessary. ABAXIS will adjust
Distributor and ABAXIS warranty base to reflect the return
within forty-eight (48) hours of original request in writing
to ABAXIS Customer Service.


D. Distributor shall submit all advertising and promotional
materials for Products to ABAXIS at least ten (10) days prior
to use or distribution of such materials. In the event that
ABAXIS provides comments or suggests changes within ten (10)
days of the receipt of such materials, Distributor will revise
the materials accordingly. Otherwise, the materials may be
used as submitted.


E. Distributor shall comply with all relevant governmental rules
and regulations, including without limitation, that of
obtaining licenses and approvals necessary to Distribute
Products.


F. Distributor will make no representations or warranties with
respect to the Products other than those specifically
authorized in writing by ABAXIS.


G. Distributor agrees to on going training and sales meetings as
required by ABAXIS so as to be able to adequately describe,
demonstrate and sell Products. At a minimum, Distributor
agrees to semi-annual meetings held at mutually agreed upon
sights and on mutually agreed upon dates.


H. Distributor will stock and/or assist End Users in obtaining
proper blood transfer devices. A list of approved devices is
described in ABAXIS Product Operators' Manual. Other devices
may interfere with Product performance and should not be used
without the written consent of ABAXIS


I. Distributor will provide ABAXIS with a [****] forecast of
Orders, which forecasts shall be given to ABAXIS prior to the
first day of [****] of each year during the term of this
Agreement. This will serve to facilitate production planning
and assure continuity of supply for Distributor. Said
forecasts shall not constitute a binding obligation of
Distributor to purchase the quantities and types of Product as
forecasted.


J. Distributor agrees to maintain a minimum of [****] inventory
of (a) Reagent Rotors at Distributor's warehouse locations in
[****]; and (b) Instruments at Distributor's warehouse
location in [****].


K. Under no circumstances will Distributor in any way alter
original manufacturer's packaging, sell Product in quantities
other than as originally packaged (i.e., break boxes) or
deface, tamper with or change in any way Product labeling.


4. Obligations of ABAXIS
---------------------


ABAXIS shall have the following obligations under this Agreement.


A. ABAXIS shall provide commercially reasonable marketing
direction and guidance to Distributor.


B. ABAXIS shall purchase and maintain a policy of product
liability insurance with minimum coverage limits of [****] per
occurrence. Distributor shall be named as an additional
insured on the policy, and ABAXIS shall furnish evidence of
such coverage within thirty (30) days after the date this
Agreement is signed. Such policy shall require at least thirty
(30) days prior written notice to Distributor in the event of
cancellation or any material modification.


C. ABAXIS shall provide to Distributor such literature,
brochures, and other materials reasonably necessary to sell
the Products.


D. ABAXIS shall maintain warranty and post-warranty repair
services for the Products that are equal to or greater than
the applicable warranty policies for such Products as of the
date of this Agreement.


E. ABAXIS will supply Reagent Rotors with a minimum of [****] of
shelf life from the date of shipment from ABAXIS, provided
that the storage and transportation guidelines in Appendix C
are followed.


F. ABAXIS will ship Product to Distributor on the date requested
on a faxed, mailed or emailed Order from Distributor. If it is
not possible to ship on the requested date, the parties will
agree upon an alternate date for shipment, or the Order may be
cancelled in the Distributor's sole discretion.


5. Orders
------


A. Orders shall be placed with ABAXIS by mail, email or facsimile
at the following:


ABAXIS, Inc.
3240 Whipple Road
Union City, CA 94587
Fax: 510-675-6500
Email: customersupport@abaxis.com


B. Orders shall be subject to reasonable acceptance by ABAXIS.
ABAXIS shall notify Distributor of acceptance in writing
within forty-eight (48) hours of the Order being placed.


C. ABAXIS reserves the right to reject any Order or to cancel any
Order previously accepted in writing if, in ABAXIS' reasonable
discretion, ABAXIS determines that such Order will not be paid
for in accordance with the Order Terms or that the Products
will not be Distributed in accordance with the terms and
conditions set forth in this Agreement. Upon a determination
that ABAXIS intends to cancel a previously accepted Order,
ABAXIS shall give Distributor prompt written notice of such
cancellation and ABAXIS will be under no further obligation to
deliver Products under that Order, unless Distributor provides
adequate assurances to ABAXIS that Distributor will comply
fully with Distributor's obligations under this Agreement.


6. Price and Payment Terms
-----------------------


A. The price payable by Distributor to ABAXIS for any Product
shall be as set forth in Exhibit A hereto. ABAXIS may lower
prices at any time without prior notice. ABAXIS shall notify
Distributor in writing thirty (30) days prior to the effective
date of any price increase.


B. All Orders shall be paid within [****] of the date of invoice.
If payment is not received by ABAXIS within said [****], the
payment shall bear a late payment charge equal to [****] per
month (or partial month) that the payment is delayed.


C. All Products sold and all prices quoted by ABAXIS are F.O.B.
Union City, California or other ABAXIS distribution locations.
Distributor shall be responsible for selecting the carrier
responsible for transporting Products to Distributor's
warehouse in accordance with the guidelines laid out in
Appendix B. ABAXIS will work with Distributor to minim ...