DISTRIBUTION AGREEMENT

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Exhibit 10.29

[***]—Certain information in this exhibit have been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

DISTRIBUTION AGREEMENT

        THIS AGREEMENT entered into as of this 16th day of February, 2001 ("Effective Date"), by and between ARKRAY Inc., a Japanese corporation, having its principal office at 57 Nishi Aketa-cho, Higashikujo, Minami-ku, Kyoto 601-8045, Japan (hereinafter referred to as "ARK"), and Heska Corporation, Delaware corporation having its principal office at 1613 Prospect Parkway, Fort Collins, Colorado 80525, U.S.A. (hereinafter referred to as "Heska").

WITNESSETH

        WHEREAS, ARK is a manufacturer and distributor of clinical diagnostic instruments and Heska is a manufacturer and/or distributor of hematology instruments, reagents and other products targeted to veterinary markets.

        WHEREAS, ARK desires to appoint Heska as a distributor and Heska wishes to obtain such distribution rights to market and sell Automated Clinical Chemistry Analyzer Model SP-4430 (hereinafter referred to as "Product") as defined herein, effective from the date of the execution of this Agreement.

        NOW, THEREFORE, in consideration of the foregoing premises and of the mutual covenants herein contained, the parties hereby agree as follows:

ARTICLE I

        ARK appoints Heska as a distributor to promote, market, service and sell Product effective from the date of execution of this Agreement, and Heska agrees to accept such appointment subject to and in accordance with the following terms and conditions.

1.1   Product

        Product means product to be comprised of Automated Clinical Chemistry Analyzer Model SP-4430 ("Analyzer") and those related spare parts, consumables and reagents manufactured by ARK to be used to analyze blood in patients as listed in Appendix A and as amended from time to time by mutual written agreement of the parties.

1.2   Branding

        ARK and Heska agree that the brand name and logotype of Product shall be a combination of "ARKRAY" and "HESKA" in a format to be mutually agreed upon by the parties.

1.3   Distribution Right

        Heska shall have an exclusive right to promote, market, sell and distribute Product, with the right to appoint sub-distributors, in North America ("Territory") and only in the veterinary market ("Field"). The exclusivity referred to in this Agreement applies between Heska and ARK or the ARK-appointed distributors.

        Heska agrees that, during the term of this Agreement, (a) Heska shall not develop or make commercially available or acquire a product(s) with features identical to Product, and (b) Heska shall not handle or otherwise provide any "off-brand" and/or "generic" form of spare part, consumables and reagents to be used with Product unless such consumables and reagents are not available from Arkray; provided, however, this section will not apply to common laboratory transfer pipettes, common QC serum materials and primary blood collection tubes that fit commercially available external centrifuges.

1.4   Sales Responsibility

        Heska assumes all sales responsibilities for Product to be sold in the Territory and Field under this Agreement. "Sales Responsibilities" as used herein includes all sales force training, maintenance and support activities, as well as pricing, advertising, promotion, and demonstration. ARK will provide Heska with specifications, test procedures and manuals written in English that may be reasonably necessary for Heska to fulfill its Sales Responsibilities.

1.5   Relationship of Parties

        Each party shall be considered an independent contractor of the other party. Nothing in this Agreement shall be construed as establishing a joint venture or partnership or principal/agent, or employee relationship. No party is authorized to make any statement, claim, representation or warranty or to act on behalf of any other party with respect to any of the provisions of this Agreement, except as provided for herein or as specifically authorized in writing by other party.

1.6   Term and Renewal

        This Agreement shall continue in full force and effective for a period of three (3) years from the date of execution of this Agreement and shall be automatically renewed for additional one year periods unless a party provides notice to the other party of its intent not to renew this Agreement at least one hundred eighty (180) days prior to the current expiration date of this Agreement, unless this Agreement is terminated earlier as set forth in Section 1.7.

1.7   Termination

        Either party may cancel this Agreement by a written notice at any time in the event that the other party shall have been in material breach of any of the provisions of this Agreement and such breach shall have been continued for sixty (60) days after such a written notice thereof was provided to the breaching party by the non-breaching party. Either of the parties may terminate this Agreement at any time without giving any notice to the other party if that party is declared insolvent or bankrupt by a court of competent jurisdiction. If Heska fails to meet the agreed upon minimum annual purchases for two (2) consecutive years, then Heska shall lose all rights to distribute Analyzer. However, ARK shall continue to supply Heska with Consumables as provided in Section 2.3.

        Upon any such termination of this Agreement, the terminating party may (but has no obligation to) cancel any and all unshipped sales orders concluded hereunder. Unless otherwise provided herein, each party waives any claims for compensation or damages in connection with such cancellation of undelivered Products from the other party.

        The provisions of Sections 2.3 (Spare Parts, Consumables and Reagents), 2.4 (Patents), 4.2 (Confidentiality), 4.3 (Indemnification), 4.6 (Publicity), and 4.10 (Law of Contract Jurisdiction) shall survive termination of this Agreement.

ARTICLE II

2.1   Warranty and Quality

        ARK warrants that Product to be delivered hereunder shall be free and clear of any and all liens, encumbrances or defects in title and shall be conveyed to Heska with lawful and marketable title. ARK warrants that Product shall satisfy the performance specifications set forth in Appendix B. ARK will not make any changes to Product without first notifying Heska in writing at least ninety (90) days in advance of such changes and providing Heska with evidence that such changes do not alter the performance specifications of Product and obtaining Heska's consent in writing. ARK shall input normal reference ranges for animals supplied by Heska in writing into the Analyzers without modification by ARK.

        In the event that Heska determines that any shipment of Product to be delivered to it hereunder fail/s to conform to the performance specifications set forth in Appendix B, Heska shall promptly notify ARK and reasonably specify the manner in which Product fail/s to conform. ARK shall have the rights to make its own inspection and evaluation of the allegedly non-conforming Product and shall notify Heska, within twenty one (21) days after receipt of such information, including samples of the allegedly non-conforming Product from Heska, whether it has confirmed and accepted Heska's claim that Product are/is non-conforming.

        If ARK determines and confirms that Product are/is non-conforming, ARK shall replace, at no cost to Heska, the non-conforming Product at the earliest date after confirmation of Product non- conformance. ARK shall also bear the freight charges, insurance, duties and tariffs for return of all non-conforming Product to ARK from Heska.

        If, after evaluating the allegedly non-conforming Product, ARK believes that Product in question are/is conforming, ARK shall supply Heska with its written findings and request Heska to submit additional samples of Product to an independent third party, acceptable to both parties, for testing in accordance with and against the performance specifications set forth in Appendix B. The decision of such third party shall be final with respect to the alleged non-conforming Product and binding on both parties to this Agreement.

        If the decision of the third party is that Product are/is non-conforming, ARK shall pay the return freight, insurance, duties and tariffs with respect to Product shipped to Heska as well as all costs and expenses relating to the testing of Product by the independent third party. In addition, ARK shall supply Heska with a Certificate of Destruction certifying that Product have/has been destroyed in an environmentally safe manner.

        If the decision of the third party is that Product conform/s to the applicable specifications, Heska shall accept Product and shall be responsible for the return freight, insurance, duties, tariffs and all costs and expenses relating to the testing of Product by the independent third party.

        Each Product is warranted by ARK to be free from defects in materials and workmanship for a period of sixteen (16) months from the date of shipment from ARK to Heska. During the warranty period, ARK will provide Heska with all necessary warranty replacement parts at no charge. ARK's warranty obligation under this Article is limited to the repair or replacement of Product.

2.2   Trademark

        ARK grants to Heska a limited license to use on a non-exclusive basis ARK's trademarks and brand names as set forth in Appendix C for the purposes specified in this Agreement. Except as specified in this Section and Section 1.2, no party to this Agreement will derive any legal rights to the other party's trademarks. No party shall adopt, use or register in any country, without the written consent of the other party, a trademark for any similar, related or competitive product which is likely to be confused with a trademark of the other party.

2.3   Spare Parts, Consumables and Reagents

        ARK agrees that spare parts, consumables and reagents used with Analyzer (collectively called "Consumables") will continue to be furnished to Heska at the prices fixed on the basis of the price negotiation every year for a period of five (5) years following the last shipment of Analyzer from ARK to Heska as long as Heska continues to have exclusive distribution rights to sell Analyzer. Should Heska lose ARK's exclusive distribution rights to sell Analyzer, ARK agrees to allow Heska to be a supplier of Consumables to Heska's customers for a period of twelve (12) months from the loss of exclusive distribution rights to sell Analyzer. Thereafter, ARK agrees to supply Consumables to Heska's customers during the time ARK sells Consumables in North America directly or through a distributor.

2.4   Patents

        ARK warrants and represents to Heska, and without admitting any infringement, to the best of its current actual knowledge neither Product of this Agreement nor its manufacture, use, importation or sale infringe upon any issued patent or proprietary rights held by a third party.

        ARK shall defend, indemnify and hold Heska and its subsidiary or affiliated companies, and customers thereof, harmless from any damages, including without limitation reasonable attorneys' fees, with respect to any and all claims that the manufacture, use, rental or sale of any of Product of this Agreement infringes upon any patent or proprietary rights of a third party.

ARTICLE III

3.1   Orders and Forecasts

        The forecast provided for below will include a firm purchase commitment covering the first five (5) months of the forecast. Therefore, Heska will issue periodic purchase orders within the terms specified below. Such purchase orders shall not bind ARK unless or until accepted by ARK. ARK shall notify Heska of its decision on acceptance within ten (10) days after receipt of a purchase order.

        Heska shall provide ARK, on a quarterly basis by the end of each Calendar quarter, a non-binding rolling one (1) year forecast of its anticipated purchases of Product. ARK shall keep Heska notified immediately of any events that may significantly impact ARK's ability to deliver, such as interruptions by suppliers, labor troubles, discovered defects, and the like. ARK agrees to ship to Heska (i) Consumab1es within ninety (90) days of ARK's acceptance of a purchase order for Consumab1es, and (ii) Analyzers within one hundred twenty (120) days of ARK's acceptance of a purchase order for Analyzers.

3.2   Minimum Purchase

        ARK and Heska shall separately discuss and agree on a minimum annual purchase of Product to be made by Heska from ARK for every calendar year three (3) months prior to the beginning of every calendar year during the effective period of this Agreement.

3.3   Pricing

        ARK will sell Product to Heska in accordance with the prices agreed upon, which shall be denominated in Japanese yen. Upon thirty (30) day prior written notice from one party to the other, the parties agree to discuss in good faith any adjustment to the prices of Product in an attempt to reach a mutually satisfactory agreement. If a mutually satisfactory agreement cannot be reached, the prices of Product then in effect shall remain applicable.

3.4   Shipping of Products, Reagents, Spare Parts and etc.

        ARK will immediately confirm the receipt of each purchase order from Heska in order that Heska has assurance that each purchase order is duly received by ARK. ARK shall try its best efforts to ship all of Product ordered by Heska as specified by Heska. In the event of its inability to make a complete shipment as specified by Heska, ARK shall notify Heska immediately of the possible shipping date. Both parties shall discuss and amicably agree to adjust the shipping date if ARK's shipping date caus