<PAGE>
                                                                   EXHIBIT 10.35

                             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;
<PAGE>
            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
<PAGE>
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
<PAGE>
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 TO SELL TO DISTRIBUTOR SPARE PARTS FOR REPAIR
      OF THE PRODUCTS FOR A PERIOD OF FIVE (5) YEARS AFTER DISCONTINUING A
      PARTICULAR PRODUCT ORDERED UNDER THIS AGREEMENT. NOT LESS THAN SIX (6)
      MONTHS PRECEDING THE EXPIRATION OF THIS PERIOD, ABAXIS WILL PROVIDE
      DISTRIBUTOR WITH A DETAILED SPARES PROVISIONING DOCUMENT, INCLUDING
      PRICES, TO ENABLE DISTRIBUTOR TO ORDER SPARE PARTS IT MAY REQUIRE AFTER
      THE PERIOD OF AVAILABILITY. THE PRICES FOR SPARE PARTS WILL BE ABAXIS'
      CURRENT PRICES AT THE TIME OF DISTRIBUTOR'S ORDER THEREOF.

4.    OUT-OF-WARRANTY MAINTENANCE. FOR DISTRIBUTOR WITHOUT QUALIFIED PERSONNEL,
      ABAXIS WILL PROVIDE MAINTENANCE SERVICES TO DISTRIBUTOR FOR PRODUCTS WHICH
      ARE OUT OF WARRANTY AT ABAXIS' THEN CURRENT MAINTENANCE FEES AND SUBJECT
      TO ABAXIS' POLICIES WITH RESPECT TO SUCH MAINTENANCE; PROVIDED, HOWEVER,
      THAT ABAXIS WILL USE ITS BEST EFFORTS TO REPAIR SUCH PRODUCTS WITHIN TEN
      (10) WORKING DAYS AFTER RECEIPT OF THOSE PRODUCTS.

ITEM 39. Engineering Changes; Documentation; Cooperation.

1.    PRODUCT CHANGES. ABAXIS SHALL HAVE THE RIGHT TO MAKE CHANGES,
      SUBSTITUTIONS AND MODIFICATIONS IN THE PRODUCTS AND THE PACKAGE INSERTS.
      SUCH SUBSTITUTIONS OR MODIFICATIONS, OTHER THAN MANDATORY FIELD CHANGE
      ORDERS REQUIRED FOR EQUIPMENT SAFETY OR PROPER OPERATION, WILL NOT
      MATERIALLY AND ADVERSELY AFFECT THE FORM, FIT OR FUNCTION OF THE PRODUCTS
      AND WILL BE OPERATIONALLY COMPATIBLE WITH PRIOR VERSIONS OF THE PRODUCTS.

2.    RIGHT TO REPRODUCE DOCUMENTATION. SUBJECT TO SECTION 10.2 OF THIS
      AGREEMENT, DISTRIBUTOR SHALL HAVE THE RIGHT TO TRANSLATE, REPRODUCE AND
      DISTRIBUTE ANY TRAINING AND END-USER DOCUMENTATION PROVIDED BY ABAXIS
      PURSUANT TO THIS AGREEMENT.

ITEM 40. Proprietary Rights; Records.

1.    OWNERSHIP BY ABAXIS. DISTRIBUTOR ACKNOWLEDGES AND AGREES THAT DISTRIBUTOR
      HAS NO PROPRIETARY RIGHTS IN THE PRODUCTS OR ANY OTHER MATERIALS AND
      RECEIVED FROM ABAXIS, AND DOES NOT ACQUIRE ANY PROPRIETARY RIGHTS BY
      VIRTUE OF THIS AGREEMENT, EXCEPT THOSE CONTRACTUAL RIGHTS THAT ARE
      EXPRESSLY GRANTED HEREIN.

2.    TRADEMARKS AND TRADE NAMES. ABAXIS GRANTS TO DISTRIBUTOR A LIMITED LICENSE
      TO USE ABAXIS' TRADEMARKS. DISTRIBUTOR AGREES THAT THE NATURE AND QUALITY
      OF ANY PRODUCTS OR SERVICES IT SUPPLIES IN CONNECTION WITH THE TRADEMARKS
      SHALL CONFORM TO THE STANDARDS SET BY ABAXIS.

            i. Distributor must prominently display and use ABAXIS' trade name,
trademarks and product names in connection with Distributor's promotion and
distribution of the Products.

                                       78
<PAGE>
            ii. Format and style used by Distributor must be approved, in
writing in advance, by ABAXIS to protect ABAXIS' trademark rights. All products
must be sold in the original packaging and no additions or deletions to the
labeling can be made by Distributor unless approved by ABAXIS in writing.

            iii. Distributor agrees that all use of ABAXIS' trademarks shall
clearly indicate ABAXIS as the trademark owner, and Distributor shall not do or
cause anything to be done anything that would impair or reduce ABAXIS' rights,
title and interest in the trademark information.

ITEM 41. Indemnification.

1.    INDEMNIFICATION. ABAXIS AGREES TO DEFEND AND OTHERWISE HOLD DISTRIBUTOR
      HARMLESS FROM ALL CLAIMS BY THIRD PARTIES PERTAINING TO THE INFRINGEMENT
      OF UNITED STATES AND AUSTRALIAN PATENTS, COPYRIGHTS AND TRADE SECRETS BY
      ANY OF THE PRODUCTS, PROVIDED THAT DISTRIBUTOR GIVES ABAXIS REASONABLE
      WRITTEN NOTICE OF ANY SUCH CLAIM TO ABAXIS WITH FULL COOPERATION (AT
      ABAXIS' EXPENSE) FOR THE DEFENSE OF SETTLEMENT OF THE SAME.

2.    OPTIONS. IF ABAXIS RECEIVES NOTICE OF AN ALLEGED INFRINGEMENT OR IF
      DISTRIBUTOR'S USE OF THE PRODUCTS IS PREVENTED BY PERMANENT INJUNCTION,
      ABAXIS MAY, AT ITS SOLE OPTION AND EXPENSE, PROCURE FOR DISTRIBUTOR THE
      RIGHT TO CONTINUED USE OF THE PRODUCTS, OR PROVIDE DISTRIBUTOR WITH
      VERSIONS OF THE PRODUCTS THAT ARE NOT INFRINGING, OR REFUND TO DISTRIBUTOR
      ALL PAYMENTS RECEIVED BY ABAXIS UNDER THIS AGREEMENT RELATING TO THE
      PRODUCTS (REFLECTING ANY QUANTITY OR OTHER DISCOUNTS GRANTED TO
      DISTRIBUTOR, LESS ANY AMOUNT FOR DEPRECIATION CALCULATED IN A
      STRAIGHT-LINE BASIS OVER AN ASSUMED USEFUL LIFE OF THREE (3) YEARS).

3.    EXCLUSIONS. IN NO EVENT WILL ABAXIS HAVE ANY LIABILITY UNDER THIS SECTION
      11 FOR ANY CLAIM OF INFRINGEMENT WHICH IS BASED ON (A) COMBINATION OR USE
      OF THE PRODUCTS WITH EQUIPMENT WHERE THE INFRINGEMENT WOULD NOT BE CAUSED
      BY USE OF THE PRODUCTS ALONE, OR (B) MODIFICATION OF THE PRODUCTS BY OTHER
      THAN ABAXIS IF SUCH CLAIM WOULD HAVE BEEN AVOIDED BY THE USE OF UNMODIFIED
      VERSIONS OF THE PRODUCTS.

4.    LIMITATION. THE RIGHTS GRANTED TO DISTRIBUTION UNDER THIS SECTION 11 ARE
      DISTRIBUTOR'S SOLE AND EXCLUSIVE REMEDY FOR ANY ALLEGED INFRINGEMENT OF
      ANY PROPRIETARY RIGHTS OF ANY KIND.

5.    DISTRIBUTORS' INDEMNIFICATION. DISTRIBUTOR WILL INDEMNIFY ABAXIS AGAINST
      THIRD-PARTY CLAIMS BASED ON MISLEADING STATEMENTS, PROVIDED THAT ABAXIS
      GIVES DISTRIBUTOR REASONABLE WRITTEN NOTICE OF ANY SUCH CLAIM AND PROVIDES
      DISTRIBUTOR WITH FULL COOPERATION (AT DISTRIBUTOR'S EXPENSE) FOR THE
      DEFENSE OR SETTLEMENT.

ITEM 42. Limited of Liability.

1.    IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL
      DAMAGES, INCLUDING ANY LOST PROFITS, LOST SAVINGS OR OTHER INCIDENTAL OR
      CONSEQUENTIAL DAMAGES OF ANY KIND, HOWEVER CAUSED, WHETHER FOR BREACH OR
      REPUDIATION OF CONTRACT, TORT, BREACH OF WARRANTY, NEGLIGENCE, OR
      OTHERWISE, WHETHER OR NOT THE PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH
      LOSS OR DAMAGES.

2.    NO ACTION MAY BE BROUGHT OR ARBITRATION DEMANDED UNDER THIS AGREEMENT AT
      ANY TIME MORE THAN TWELVE (12) MONTHS AFTER THE CAUSE OF ACTION OR
      ARBITRATION AROSE.

3.    NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT, ABAXIS' TOTAL
      LIABILITY TO DISTRIBUTOR ARISING FROM OR IN RELATION TO THIS AGREEMENT OR
      THE PRODUCTS SHALL BE LIMITED TO THE TOTAL PAYMENTS TO ABAXIS UNDER

                                       79
<PAGE>
      THIS AGREEMENT FOR THE RELEVANT PRODUCTS. THIS LIMITATION WILL APPLY TO
      ALL CAUSES OF ACTION IN THE AGGREGATE. IN NO EVENT WILL ABAXIS BE LIABLE
      FOR THE COST OF PROCUREMENT OF SUBSTITUTE GOODS.

ITEM 43. Confidential Information.

1.    CONFIDENTIAL INFORMATION. EACH PARTY AGREES TO USE THE OTHER PARTY'S
      CONFIDENTIAL INFORMATION ONLY AS AUTHORIZED IN THIS AGREEMENT AND TO USE
      DILIGENT EFFORTS, AND AT LEAST THE SAME DEGREE OF CARE THAT IS USED TO
      PROTECT ITS OWN CONFIDENTIAL INFORMATION OF LIKE IMPORTANCE, TO PREVENT
      UNAUTHORIZED USE, DISSEMINATION AND DISCLOSURE OF THE OTHER'S CONFIDENTIAL
      INFORMATION DURING AND AFTER THE TERM OF THIS AGREEMENT. "CONFIDENTIAL
      INFORMATION" INCLUDES:

            i. In the case of ABAXIS, any software and hardware designs,
drawings, procedures and trade secrets, including any specifications, schematic,
mechanical and engineering drawings, and engineering documentation for the
Products;

            ii. Any and all methods, algorithms, techniques and processes
contained in or related to the Products;

            iii. Both parties' research and development, pricing and new product
and marketing plans, unless and until publicly disclosed;

            iv. Nonpublic financial and administrative information concerning
either party; and

            v. Any other information designated by either party in writing as
confidential or proprietary.

      Exceptions. Confidential Information will not include any information that
(a) becomes known to the general public without fault or breach on the part of
the receiving party; (b) the receiving party obtains from a third party without
breach of a non-disclosure obligation and without restriction on disclosure; or
(c) is already known to the receiving party prior to its disclosure by the other
party.

2.    PUBLICITY. NEITHER PARTY SHALL MAKE THE PUBLIC INFORMATION CONCERNING THIS
      AGREEMENT NOR THE SUPPLIES OR SERVICES PROVIDED THEREUNDER WITHOUT THE
      PRIOR WRITTEN CONSENT OF THE OTHER PARTY EXCEPT AS MAY BE REQUIRED BY LAW
      OR PURSUANT TO A LAWFUL REQUEST OF A GOVERNMENTAL AGENCY. SUCH DISCLOSURE
      REQUIRED BY LAW OR PURSUANT TO LAWFUL REQUEST UPON ONE PARTY SHALL BE
      COMMUNICATED, IN A TIMELY MANNER, TO THE OTHER PARTY. NOTWITHSTANDING THIS
      PROVISION, ABAXIS RESERVES THE RIGHT TO USE DISTRIBUTOR'S NAME AND SALES
      IN PRESS RELEASES ABOUT THE SALE OF ABAXIS PRODUCTS IN THE FOREIGN MARKET.

ITEM 44. Term and Termination.

1.    TERM. THE INITIAL TERM OF THIS AGREEMENT WILL COMMENCE ON THE EFFECTIVE
      DATE AND, UNLESS EARLIER TERMINATED AS PROVIDED BELOW, WILL CONTINUE FOR A
      PERIOD OF FIVE (5) YEARS AFTER THE EFFECTIVE DATE (THE "INITIAL TERM").

2.    TERMINATION FOR CAUSE. THIS AGREEMENT AND ALL LICENSES THEREUNDER WILL
      TERMINATE:

            i. On the thirtieth (30th) day after either party gives the other
notice of a material breach by the other of any term of condition of this
Agreement, unless the breach is cured or notice of intent to cure and accept of
such notice by other party before that day; provided that (i) any breach of
Section 13 ("Confidential Information") will be deemed a material breach of this
Agreement that cannot be cured, and (ii) if the material breach is either
party's failure to pay any amounts due in a timely manner, the notice of default
shall provide for a cure period of not less than five (5) working days; or


                                       80
<PAGE>
            ii. Immediately and without further liability after either party
gives written notice to the other party if either party declares bankruptcy or
bankruptcy proceedings are instituted involuntarily on its behalf and the
voluntary or involuntary proceedings are not dismissed without sixty (60)
calendar days.

3.    THE EFFECT OF TERMINATION. AFTER TERMINATION (NOT FOR CAUSE):

            i. Any Firm Orders received by ABAXIS prior to termination will
remain enforceable, regardless of when such Firm Orders will be shipped;

            ii. Distributor may continue to market the Products in its
possession in its customer manner in the ordinary course of business; and

            iii. Payment and indemnification obligations arising prior to
termination and the obligations of each party to keep the other's Confidential
Information confidential, will remain in force.

4.    LIABILITY AND OTHER REMEDIES. NEITHER PARTY WILL BE LIABLE FOR DAMAGES OF
      ANY LAND AS A RESULT OF EXERCISING ITS RIGHT TO TERMINATE THIS AGREEMENT
      ACCORDING TO ITS TERMS, AND TERMINATION WILL NOT AFFECT ANY OTHER RIGHT OR
      REMEDY OF EITHER PARTY.

ITEM 45. Arbitration. Except as set forth in this Section 15, any controversy,
      claim or dispute arising out of or related to this Agreement, or the
      breach of alleged breach hereof, will be submitted by the Distributor to
      arbitration by the American Arbitration Association in the City of
      Sunnyvale, State of California, United States, under the Laws of the State
      of California in accordance with the commercial arbitration rules. Any
      controversy, claim or dispute arising out of or related to this Agreement,
      or the breach or alleged breach hereof, will be submitted by the company
      to arbitration by the Landgericht Darmstadt in Germany under the Laws of
      Germany in accordance with the commercial arbitration rules.

      Both parties agree to file any related counter legal actions at the
location of the initial filing.

      The decision of the arbitrators shall be final and binding, and judgment
on the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The aware rendered by the arbitration board shall include
costs of arbitration, reasonable attorneys' fees and reasonable costs for expert
and other witnesses.

      Although all disputes must be settled under arbitration nothing in this
Agreement shall prevent either party from seeking injunction (or any other
provisional remedy) from any court having jurisdiction to protect their
respective Confidential Information. In any suit or arbitration to enforce this
Agreement, the prevailing party will have the right to recover its costs and
reasonable fees of attorneys and other professionals.

ITEM 46. Export Control. In exercising its rights under this Agreement,
      Distributor agrees to comply strictly and fully with all export controls
      imposed on the products by any country or organization or nations within
      whose jurisdiction Distributor operates or does business. Distributor
      agrees not to export or permit exportation of any part of the Products or
      any related technical data or any direct product of any related technical
      data, outside of the United States other than to its territory without
      ABAXIS first either (a) obtaining any required written permission to do so
      from the United States Office of Export Administration and other
      appropriate governmental agencies of the United States, or (b) complying
      fully and strictly with all requirements of any general license exempting
      the exportation form the requirement for such permission.

ITEM 47. General Provisions.

1.    ASSIGNMENT. ABAXIS MAY ASSIGN THIS AGREEMENT TO THE SURVIVING ENTITY IN A
      MERGER OR CONSOLIDATION IN WHICH IT PARTICIPATES OR TO A PURCHASER OF ALL
      OR SUBSTANTIALLY ALL OF ITS ASSETS; OR, ABAXIS MAY ASSIGN THIS AGREEMENT
      TO ANY PERSON TO WHOM IT TRANSFERS ALL OR SUBSTANTIALLY ALL OF ITS
      PROPRIETARY RIGHTS IN THE PRODUCTS. OTHERWISE, NEITHER PARTY MAY ASSIGN
      ANY RIGHTS OR DELEGATE ANY DUTIES UNDER

                                       81
<PAGE>
      THIS AGREEMENT WITHOUT THE OTHER PARTY'S PRIOR WRITTEN CONSENT, AND ANY
      ATTEMPT TO DO SO WITHOUT THAT CONSENT WILL BE VOID. THIS AGREEMENT WILL
      BIND AND INURE TO THE BENEFIT OF THE PARTIES AND THEIR RESPECTIVE
      SUCCESSORS AND PERMITTED RIGHTS.

2.    CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE
      LAWS OF THE STATE OF CALIFORNIA AND THE LAWS OF GERMANY. THE PARTIES
      EXCLUDE IN ITS ENTIRETY THE APPLICATION TO THIS AGREEMENT OF THE UNITED
      NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS.

3.    AMENDMENT. THIS AGREEMENT MAY BE AMENDED OR SUPPLEMENTED ONLY BY A WRITING
      THAT REFERS EXPLICITLY TO THIS AGREEMENT AND THAT IS SIGNED ON BEHALF OF
      BOTH PARTIES.

4.    WAIVER. NO WAIVER WILL BE IMPLIED FROM CONDUCT OR FAILURE TO ENFORCE
      RIGHTS. NO WAIVER WILL BE EFFECTIVE UNLESS IN WRITING, SIGNED ON BEHALF OF
      THE PARTY AGAINST WHOM THE WAIVER IS ASSERTED.

5.    CONTINGENCIES. NEITHER PARTY WILL HAVE THE RIGHT TO CLAIM DAMAGES OR TO
      TERMINATE THIS AGREEMENT AS A RESULT OF THE OTHER PARTY'S FAILURE OR DELAY
      IN PERFORMANCE DUE TO CIRCUMSTANCES BEYOND ITS REASONABLE CONTROL,
      INCLUDING, BUT NOT LIMITED TO, LABOR DISPUTES, STRIKES, LOCKOUTS,
      SHORTAGES OF OR INABILITY TO OBTAIN LABOR, ENERGY, COMPONENTS, RAW
      MATERIALS OR SUPPLIES, WAR, RIOT, INSURRECTION, EPIDEMIC, ACTS OF GOD, OR
      GOVERNMENTAL ACTION NOT THE FAULT OF THE NON-PERFORMING PARTY.

6.    SEVERABILITY. IF ANY PART OF THIS AGREEMENT IS FOUND INVALID OR
      UNENFORCEABLE THAT PART WILL BE ENFORCED TO THE MAXIMUM EXTENT PERMITTED
      BY LAW AND THE REMAINDER OF THIS AGREEMENT WILL REMAIN IN FULL FORCE.

7.    ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING ALL EXHIBITS TO THIS
      AGREEMENT, WHICH ARE HEREBY INCORPORATED BY REFERENCE, REPRESENTS THE
      ENTIRE AGREEMENT BETWEEN THE PARTIES RELATING TO ITS SUBJECT MATTER AND
      SUPERSEDES ALL PRIOR REPRESENTATIONS, DISCUSSIONS, NEGOTIATIONS AND
      AGREEMENTS, WHETHER WRITTEN OR ORAL. THE ORIGINAL OF THIS AGREEMENT HAS
      BEEN WRITTEN IN ENGLISH AND ENGLISH IS THE GOVERNING LANGUAGE OF THIS
      AGREEMENT.

8.    NOTICES. EVERY NOTICE OR OTHER COMMUNICATION REQUIRED OR CONTEMPLATED BY
      THIS AGREEMENT BY EITHER PARTY SHALL BE DELIVERED EITHER BY (A) PERSONAL
      DELIVERY, (B) CERTIFIED OR REGISTERED AIR MAIL (POSTAGE PREPARED, RETURN
      RECEIPT REQUESTED), OR (C) "TESTED" FAX (A FAX FOR WHICH THE PROPER
      ANSWERED BACK HAS BEEN RECEIVED) ADDRESSED TO THE PARTY FOR WHOM INTENDED
      AT THE FOLLOWING ADDRESS:

If to ABAXIS, at the following address:

      ABAXIS, Inc.
      3240 Whipple Road
      Union City, CA  94587
      Attn:  President
      Fax:  1-510-441-6151

If to Distributor, at the following address:

      Scil Animal Care Company GmbH
      Dina-Weissmann-Allee 6
      D 68519 Viernheim, Germany
      Attn:  President
      Fax:  +49 620478 90 200

      or at such other address as the intended recipient shall have designated
by written notice to the other parties. Notice by mail shall be effective on the
date it is officially recorded as delivered to the intended recipient by return
receipt or equivalent. All notices and other communication required or
contemplated by this Agreement delivered in person or sent "tested" fax shall be
deemed to have been delivered to and received by the addressee and shall be
effective on the date of personal delivery or on the date sent, respectively.
Notice not given in writing shall be effective only if acknowledged in writing
by a duly authorized representative of the party to whom it was given.

9.    RELATIONSHIP OF PARTIES. THE PARTIES TO THIS AGREEMENT ARE INDEPENDENT
      CONTRACTORS. THERE IS NO RELATIONSHIP OF AGENCY, PARTNERSHIP, JOINT
      VENTURE, EMPLOYMENT OR FRANCHISE BETWEEN THE PARTIES. NEITHER PARTY HAS
      THE AUTHORITY TO BIND THE OTHER OR TO INCUR ANY OBLIGATION ON ITS BEHALF.
      DISTRIBUTOR SHALL NOT HAVE, AND SHALL NOT REPRESENT THAT IT HAS, ANY
      POWER, RIGHT OR AUTHORITY TO BIND ABAXIS, OR TO ASSUME OR CREATE ANY
      OBLIGATION OR RESPONSIBILITY, EXPRESS OR IMPLIED TO APPEAR AS A BONA FIDE
      AGENT


                                       82
<PAGE>
      OR REPRESENTATIVE, ON BEHALF OF ABAXIS OR IN NAME, EXCEPT AS EXPRESSLY
      PERMITTED IN WRITING. ALL SUCH DUTIES SHALL EXTEND TO DISTRIBUTOR'S
      EMPLOYEES, SUBCONTRACTORS, AGENTS, HEIRS AND ASSIGNS.

10.   EFFECTIVE DATE. THIS AGREEMENT IS SUBJECT TO ALL NECESSARY APPROVALS
      AND/OR AUTHORIZATIONS OR OTHER REQUIRED PROCEDURES OF THE GOVERNMENTS OF
      GERMANY, AND THE UNITED STATES HAVING BEEN OBTAINING OR COMPLETED. IN THE
      EVENT THAT A RECOMMENDATION OR ORDER FOR MODIFICATION OR SUSPENSION OF THE
      TERMS AND CONDITIONS OF THIS AGREEMENT OR THE ACTS CONTEMPLATED HEREUNDER
      IS MADE BY EITHER OF THE ABOVE-MENTIONED GOVERNMENTS, THIS AGREEMENT SHALL
      ONLY BECOME OR CONTINUE TO BE EFFECTIVE IF AN AMENDMENT IS EXECUTED IN
      WRITING BY THE PARTIES. FAILURE BY THE PARTIES TO REACH AN AGREEMENT SHALL
      RESULT IN THIS AGREEMENT BEING DEEMED NULL AND VOID AB INITIO, AND ALL
      RIGHTS, DUTIES AND OBLIGATIONS OF EACH PARTY TO THE OTHER SHALL NO LONGER
      EXIST. IN THE EVENT OF SUCH TERMINATION, ANY EXPENSES WHICH EITHER PARTY
      MAY HAVE INCURRED IN RESPECT TO THIS AGREEMENT AND THE SUBJECT MANNER OF
      THIS AGREEMENT SHALL BE FOR THE ACCOUNT OF THE PARTY HAVING INCURRED THEM.

11.   AUTHORITY. EACH PARTY WARRANTS THAT IT HAS FULL POWER TO ENTER INTO AND
      PERFORM THIS LICENSE AGREEMENT, AND THE PERSON SIGNING THIS LICENSE
      AGREEMENT ON SUCH PARTY'S BEHALF HAS BEEN DULY AUTHORIZED AND EMPOWERED TO
      ENTER IN THIS LICENSE AGREEMENT, UNDERSTANDS IT AND AGREES TO BE BOUND BY
      IT.

      IN WITNESS WHEREOF, the parties hereto have executed this Distributor
Agreement as of the day and year first written above.

ABAXIS, Inc.

By: ____________________________________     Date:______________________________
Achim Henkel
Director


Scil animal care company GmbH

By: ____________________________________     Date:______________________________
Ulrich Frank
Geschaeftsfuehrer


                                       83
<PAGE>
                                    EXHIBITS

Exhibit A                      -      Products Description

Exhibit B                      -      Territory

Exhibit C                      -      Price List

Exhibit D                      -      Bank and Wire Information
<PAGE>
                                    EXHIBIT A

                              PRODUCTS DESCRIPTION

A.     INSTRUMENTS
       VetScan(R) Chemistry Analyzer

B.     REAGENT DISCS
       All VetScan(R) Chemistry products
<PAGE>
                                    EXHIBIT B

                                    TERRITORY

Belgium
Denmark
Finland
Germany
Norway
Sweden
The Netherlands
<PAGE>
                                    EXHIBIT C


See Attached Price List



Additional Agreement:

ABAXIS grants distributor 5% f.o.c. rotors of each individual rotor order.

Limited to the first order of 10 VetScan(R) blood analyzer ABAXIS accepts a
special purchase price of US $6000,00 per instrument.
<PAGE>
                          VetScan(R) Chemistry Analyzer

                      International Distributor Price List
                           Effective February 12, 2001
                        FOB Union City, California 94587

<TABLE>
<CAPTION>
CATALOG NO.             PRODUCTS                                                               DISTRIBUTOR PRICE
-----------             --------                                                               -----------------
<S>                     <C>                                                                    <C>
                        Instruments
200-0000                VetScan(R) Point-of-Care Analyzer                                          $6,500.00

                        Reagents Discs 9 Box of 10, unless otherwise noted)
500-0017                VetScan(R) Critical Care Profile                                              $90.00
                        ALN, GLU, BUN, CRE, NA+, K+, tCO2

500-0002                VetScan(R) Diagnostic Profile Plus                                           $115.00
                        ALB, ALP, ALT, AMYL, BUN, CA, CHOL, CREA, GLU, K+, TBIL,
                        TP

500-0052                VetScan(R) Diagnostic Profile Plus                                           $250.00
                        Package of 25 Discs

500-0003                VetScan(R) Liver Profile                                                      $85.00
                        ALB, ALP, ALT, AST, GGT, GLOB, TBIL, TP

500-0004                VetScan(R) Thyroxin (T4) Test                                                 $95.00
                        T4

500-0014                VetScan(R) Equine Profile                                                     $95.00
                        ALB, AST, BUN, CA, CREA, CK, GGT, GLU, TBIL, TP

500-0023                VetScan(R) Large Animal Profile                                              $100.00
                        ALB, ALP, AST, BUN, CA, CK, GGT, PHOS, MG, TP, GLOB

500-0026                VetScan(R) Prep Profile II                                                    $80.00
                          ALP, ALT, BUN, CREA, GLU, TP

500-0256                VetScan(R) Prep Profile II                                                   $185.50
                        Package of 25 Discs

500-0024                VetScan(R) Diagnostic Profile II                                             $115.00
                        ALB, ALP, ALT, AMYL, BUN, CA, PHOS, CREA, GLU, K+, TBIL,
                        TP, GLOB

500-0254                VetScan(R) Diagnostic Profile II                                             $250.00
                        Package of 25 Discs
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CATALOG NO.             PRODUCTS                                                               DISTRIBUTOR PRICE
-----------             --------                                                               -----------------
<S>                     <C>                                                                    <C>
100-901                 Instrument Case with Wheels                                                  $343.00

400-7000                Results Cards 15/Pkg.                                                          $3.00

100-801                 Plug, Lighter Adapter                                                         $25.00

500-9006                Mini Pipette, 100uL                                                           $15.00

500-9007                Tip, Disposable, Rack of 96                                                   $31.50

                        4-page Brochure, 50/pkg                                                      $100.00
                        VetScan(R)

                        2-page Datasheet, 100/pkg                                                    $100.00
                        VetScan(R)
</TABLE>


                                       89