Exhibit 10.1

 

* * – CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

 

2009 LIVESTOCK PRODUCTS DISTRIBUTION AGREEMENT

 

This Livestock Products Agreement (“Agreement”) effective as of January 1, 2009
(“Effective Date”) is made by and between Pfizer Inc., 812 Springdale Drive,
Exton, PA 19341 (“Pfizer”) and, MWI Veterinary Supply, 651 South Stratford
Drive, Suite 100, Meridian, Idaho 83642 (“MWI”).

 

WHEREAS, MWI is in the business of buying and selling animal health products and
servicing customers for those products, and

 

WHEREAS, MWI and Pfizer wish to set forth the terms of their relationship
related to the purchase and supply of such products,

 

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

 

Definitions:

 

“PARTICIPATING CUSTOMERS” shall mean customers from the list of customers
approved by Pfizer who have entered into a Leaders Edge Agreement with Pfizer.

 

“Products” shall mean the Pfizer cattle and swine products sold to MWI by Pfizer
pursuant to this Agreement (and referenced in Schedule A to this Agreement).

 

“Sales Out” shall mean the reported sales by MWI to Covansys and accepted by
Pfizer.

 

“Strategic Accounts” shall mean all those PARTICIPATING CUSTOMERS listed in
Schedule B hereto.

 

1.             (a)           Pfizer shall continue to promote its Products to
certain select customers in the livestock field. The parties agree that each
time a PARTICIPATING CUSTOMER selects MWI as their supplier and to service that
customer’s account, Pfizer shall send to MWI a Pfizer Suggested Resale Price
List which shall specify the Pfizer Products and the Pfizer suggested resale
prices quoted to such PARTICIPATING CUSTOMER (hereafter “SUGGESTED RESALE PRICE
LIST). Each such SUGGESTED RESALE PRICE LIST shall be incorporated into and
become part of this Agreement. Please find the current SUGGESTED RESALE PRICE
LIST listed on Schedule C hereto. Also included on Schedule C is the current
Pfizer Livestock Distributor Pricing. The Products and suggested resale prices
are subject to change at any time in Pfizer’s sole discretion upon thirty (30)
days prior written notice.

 

(b)           Pfizer reserves the right to add or delete PARTICIPATING CUSTOMERS
or Strategic Accounts at any time at Pfizer’s sole discretion. Pfizer will
provide written notice to MWI of any changes. Pfizer will notify MWI of any
(i) additions to the Strategic Accounts list within twenty-four (24) hours of
Pfizer’s receipt of the customer contract and (ii) removals from the Strategic
Accounts list within four (4) business days prior to the removal effective date.

 

2.             (a)           MWI represents and warrants that for the purposes
of this Agreement, it is in the business of purchasing Products from Pfizer for
the sole purpose of resale and distribution, is registered within the
state(s) with which it does business, is compliant with all pharmacy and
distribution licensing requirements within the state(s) with which it does
business, and is compliant with and capable of participating in Electronic Data
Interchange (EDI).

 

(b)           MWI agrees to purchase from Pfizer, at credit terms agreed to
between the parties and as may be further set forth on Pfizer’s invoices,
Products sufficient to fulfill demand from all customers to whom MWI will sell
Products in the quantities desired by the customers.

 

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(c)           MWI agrees to maintain an inventory of Products equal to /**/
Demand, but excluding all Products indicated on Schedule A as ineligible for RSA
payments. For purposes of this Agreement “Demand” shall mean /**/.

 

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All Products shall count towards the amount held in inventory by MWI. MWI and
Pfizer agree to act in good faith to resolve any material differences in the on
hand inventory calculations.

 

(d)           Pfizer reserves the right to allocate purchases such that MWI may
not purchase more than two (2) months MWI’s average of the most current Moving
Annual Total sales purchases. Exceptions must be approved by Pfizer’s New York
headquarters.

 

(e)           MWI agrees that all sales of Pfizer Products from MWI to a
PARTICIPATING CUSTOMER shall reflect the specific prices for each Product
provided for in that PARTICIPATING CUSTOMER’S most recent SUGGESTED RESALE PRICE
LIST. In the event that the price listed on a PARTICIPATING CUSTOMER’S most
recent SUGGESTED RESALE PRICE LIST for any particular Product is lower (at the
time of consummation of a sale of such particular Products between MWI and that
PARTICIPATING CUSTOMER) than the price paid by MWI to Pfizer for such Product,
Pfizer agrees to credit MWI’s account for the amount of such difference.

 

3.             Nothing herein contained shall create or be deemed to create any
relationship between the parties other than as specifically provided for herein.
No employment, partnership, specific or general agency relationship shall exist
unless specifically provided for in writing between the parties. MWI shall not
represent, directly or indirectly, expressly or by implication, that any such
relationships exist and/or that MWI has any authority except as set forth in
this Agreement.

 

4.             MWI shall use commercially reasonable efforts to provide
appropriate service to the customers to whom MWI will sell hereunder. For
customers serviced pursuant to this Agreement, MWI shall:

 

(a)           Store its inventory of Pfizer Products under conditions (including
refrigeration where appropriate) in accordance with package labeling or other
written instructions from Pfizer to ensure that such Products retain their
potency, purity, quality, and identity;

 

(b)           Provide to Covansys by the close of business on Friday of each
week an inventory report covering all Product inventory purchased from Pfizer
and setting forth in dollars at MWI’s acquisition cost from Pfizer the amount of
inventory by species. MWI agrees that Pfizer shall have the right, upon
reasonable advance notice and during business hours to audit inventory in the
possession of MWI to confirm compliance with this paragraph 4(b) and to confirm
the accuracy of the data contained in the report;

 

(c)           Provide to Covansys its Health Industry Number, Customer Health
Industry Number, Pfizer Product number, transaction date, ship to zip code,
number of units and price with respect to each sale of Product, and unit
inventories on each Pfizer Product sku that MWI sells;

 

(d)           Provide Sales Out data, which shall include Leaders Edge and
Non-Leaders Edge sales, to Covansys within ten (10) working days of the date of
each invoice. MWI will use its best efforts to ensure Sales Out data integrity
and timeliness;

 

(e)           Submit all orders to Pfizer via EDI. EDI report 867 is the
acceptable format;

 

(f)            Establish any service fee or other charge or discount to any
customer including PARTICIPATING CUSTOMERS for Pfizer Products independently and
at its sole discretion;

 

(g)           Provide regularly scheduled delivery service to its customers and
use commercially reasonable efforts to anticipate its customers’ requirements
for Pfizer Products. In the event Pfizer delivers any product order to
PARTICIPATING CUSTOMERS (drop ship), no consideration shall be payable to MWI
for that order under paragraph 5 below, provided that Pfizer will pay MWI for
any drop ship if such shipment is made necessary by the unavailability of Pfizer
Products;

 

(h)           MWI agrees that credit limits established by Pfizer shall be
subject to change upon written notice by Pfizer in its sole discretion and that
no Product shipments will be made to MWI in excess of the established credit
limits;

 

(i)            Invoice customers in an accurate and timely manner;

 

(j)            Refer to that PARTICIPATING CUSTOMERS SUGGESTED RESALE PRICE LIST
on each invoice for Pfizer Products;

 

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(k)           Take no action, whether or not identified above, that would harm
the Goodwill or name of Pfizer, or damage the interests of Pfizer or the
Products, other than where supported by sound factual evidence, including, but
not limited to, the diversion of Products and statements of false information.
For purposes of this Agreement “Goodwill” shall mean the marketplace advantage
of customer patronage and loyalty developed with continuous business under the
same name over a period of time; and

 

(l)            Make payment to Pfizer for all Products purchased from Pfizer
/**/. In the event MWI fails to maintain the inventory levels specified in
paragraph 2(c) above Pfizer shall have the right, upon /**/ written notice to
MWI, to receive payment from MWI /**/.

 

5.             In consideration of MWI undertaking the obligations set forth
herein Pfizer shall make payments to MWI in accordance with Schedule D hereto.

 

6.             All sales of Products to PARTICIPATING CUSTOMER or Strategic
Accounts for whom a SUGGESTED RESALE PRICE LIST has been incorporated into this
Agreement are covered by this Agreement with regard to compensation payable to
MWI hereunder. Any transaction involving Products with any customer including a
PARTICIPATING CUSTOMER for which MWI has not been selected by that PARTICIPATING
CUSTOMER as the distributor are not covered by this Agreement with regard to
compensation payable hereunder.

 

7.             (a)           MWI shall not be provided with any rebate, discount
or other compensation for Products handled under this Agreement unless
specifically set forth herein. MWI will NOT be eligible to collect an RSA on any
lateral sales to an unauthorized Pfizer distributor. (It is MWI’s obligation to
confirm with Pfizer, prior to making a sale, as to whether a distributor is an
authorized distributor.) All sales by Pfizer to MWI shall be at the then current
Pfizer list price but subject to appropriate credits in accordance with
paragraph 2(e). Pfizer shall have the right to raise or change the price of any
or all Products to MWI on /**/ prior written notice. Pfizer shall be free to
limit sales of any or all Products to MWI in advance of any price increase.

 

(b)           The parties agree that Pfizer shall not be obligated to issue
credits for any returns that exceed the current average of returns of
distributors as specified below unless such returns are the subject of a recall
or made at the request of Pfizer. The current average of returns of distributors
for the calendar year of the contract timeline January 1, 2009 to December 31,
2009 shall be: /**/

 

8.             The payments described in Schedule D hereto constitute full and
complete compensation for MWI.

 

9.             All returns shall be approved by Pfizer and subject to Pfizers
Returned Goods Policy, attached hereto as Schedule F. MWI may not offset payment
to Pfizer of invoice amounts as credit for any compensation payable hereunder.
Pfizer shall make bi-monthly payments of appropriate fees to MWI.

 

10.           MWI and Pfizer agree that, under the specific circumstances
delineated in this Section 10, Pfizer, at Pfizers sole discretion, may recoup
the sums outstanding to it from MWI against those sums which may become due from
Pfizer to MWI, in that the obligations arise from mutual transactions. The
specific circumstances which will enable Pfizer to initiate recoupment are:

 

(a) MWI becomes insolvent, which shall be defined as:

 

(i)            the sum of MWI’s debts is greater than all of MWI’s property
(“Balance Sheet Test”); or

 

(ii)           MWI is generally not paying its debts as they come due; or

 

(iii)          MWI has failed to act in good faith for a period in excess of six
(6) months to resolve any outstanding invoice or purchase order issues or
reconciliations.

 

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(b)           MWI commences a liquidation of its operations by means of a sale
of its assets in their entirety or piecemeal; or

 

(c)           MWI ceases its business operations whether or not such cessation
is voluntary or involuntary; or;

 

(d)           MWI files a proceeding pursuant to the U.S. Bankruptcy Code or any
state court proceeding, including an Assignment for the Benefit of Creditors.

 

11.           Nothing in this Agreement shall be deemed to preclude MWI from
negotiating a service fee or any other consideration from, or providing any
discount or rebate to, any customer, including PARTICIPATING CUSTOMERS for any
services provided by MWI.

 

12.           MWI shall distribute Pfizer Products only under the labeling
provided by Pfizer or as otherwise approved in writing by Pfizer; prescribe,
recommend, suggest, and advertise each Product for use only under the conditions
stated in the labeling provided by Pfizer; and observe all federal, state, and
local laws governing the distribution of the Products.

 

13.           Nothing in this Agreement shall be deemed to limit Pfizer’s
ability to sell any Product at any time to any customer including PARTICIPATING
CUSTOMERS or any other party. Transactions consummated directly between Pfizer
and any such customer or other party shall not qualify for any of the
compensation payable to MWI hereunder. Nothing in this Agreement shall be deemed
to limit MWI’s ability to sell non-Pfizer products at any time to any customer
including PARTICIPATING CUSTOMERS or any other party. MWI’s active promotion or
sale of products not made by Pfizer will not be considered harmful to the
Goodwill or name of Pfizer, or the Products, provided that the Pfizer Products
are not maligned in any way as prohibited under Section 4(k) of this Agreement.

 

14.           EXCEPT AS SET FORTH IN THIS AGREEMENT, IN THE LABELING OF THE
PRODUCTS SOLD HEREUNDER, OR AS OTHERWISE SPECIFIED IN WRITING BY PFIZER, PFIZER
MAKES NO EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO THE PRODUCTS.

 

(a)           Pfizer shall defend, indemnify, and hold MWI harmless from all
liabilities, claims, demands, damages, costs and expenses, or money judgments
incurred by MWI or rendered against it resulting from (a) any breach by Pfizer
of this Agreement, (b) third party claims or actions for personal injury or
property damage which arise out of the distribution or sale of Pfizer products
or the failure to warn, except to the extent that such personal injury or
property damage arises out of the negligence or willful misconduct of MWI, and
(c) any claim that the Products, as sold by Pfizer, were defective. In the event
Pfizer is found by any court of competent jurisdiction to be liable for any
claim based in products liability, then Pfizer shall reimburse MWI’s reasonable
legal fees incurred in the course of cooperating with Pfizers defense. To be
covered by this defense and indemnity, MWI must: promptly notify Pfizer of any
such claim; allow Pfizer to fully control the defense and/or resolution of the
claim; and cooperate fully with Pfizer in the matter. This defense, indemnity
and payment for legal fees shall not apply to claims alleging: MWI alteration,
negligent handling or improper storage of the Products; sale of outdated
Products; sale or recommendation of the Products for uses or in a manner not set
forth in either the labeling supplied by Pfizer or as otherwise specified by
Pfizer in writing; or sale of the Products after receipt of written notice from
Pfizer that such sales should be halted.

 

(b)           In no event shall either party be liable to the other party for
special, collateral, incidental, punitive or consequential damages in connection
with or arising out of this Agreement. Except as provided under subparagraph
14(a), above, total damages recoverable against Pfizer by MWI shall be
exclusively limited to the purchase price of the Products with respect to which
damages are claimed.

 

15. MWI and Pfizer acknowledge that in the performance of their duties hereunder
each may obtain access to “Confidential Information” (as defined below) of the
other. MWI and Pfizer agree that during the term of this Agreement and for a
period of three (3) years after the termination of this Agreement, unless
specifically permitted in writing by the other party, which permission shall not
be unreasonably withheld, especially in connection with a sale of all or a
substantial portion of MWI’s business, to (a) retain in confidence and not
disclose to any third party and (b) use only for the purpose of carrying out
their duties hereunder, any such Confidential Information. As used herein the
term “Confidential Information” means any information, or data, whether of a
business or scientific nature and whether in written, oral or tangible form,

 

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relating to Pfizers and MWI’s business or potential business or its research and
development activities, not generally available to or known to the public, and
not otherwise known to the receiving party, that is disclosed to or learned by
the other party pursuant hereto. “Confidential information” does not mean or
include any information: (a) which is, at the time of disclosure, available to
the general public; or (b) which following disclosure becomes available to the
general public through no fault of the recipient; or (c) which recipient can
demonstrate was in its possession before receipt; or (d) which is disclosed to
recipient without restriction on disclosure. Upon written request from either
party after completion of the work provided for hereunder or other termination
of this Agreement each party will return to the other party any documents, or
copies thereof, or any product samples, containing or constituting Confidential
Information disclosed to or generated by either party in connection with this
Agreement.

 

16.           All notices or communications given hereunder by one party to the
other shall be sent by hand or by first class prepaid registered or recorded
delivery post or by facsimile addressed to such party as follows:

 

If to Pfizer:

Pfizer, Inc.

Attention: President, Animal Health 235 East 42nd Street

New York, NY 10017

 

If to MWI:

MWI Veterinary Supply

Attention: President, CEO

651 South Strafford Drive, Suite 100 Meridian, Idaho 83642

 

Either party may change its address by giving written notice to the other party.

 

17.           This Agreement shall be effective as of January 1, 2009 and shall
continue in force until December 31, 2009. This Agreement may be terminated by
either party upon thirty (30) days prior written notice. Such termination may be
without cause. This Agreement may be terminated immediately by either party upon
written notice in the event of a material breach by the other. In the event MWI
takes any action that harms or damages the interests of Pfizer or the Products,
other than where supported by sound factual evidence, including, but not limited
to, the diversion of Products and statements of false information, Pfizer may
terminate this Agreement immediately upon written notice.

 

18.           This Agreement shall governed by the laws of the State of New York
applicable to contracts made and performed therein. This Agreement is not
assignable without the express written consent of the other party, and may be
modified or amended only in writing signed by both parties.

 

19.           This Agreement and documents referred to herein embody the entire
understanding between the parties hereto, will supersede prior agreements
relating to the Products. No activities conducted pursuant to this Agreement or
related thereto, including but not limited to the future planning activities of
the parties, shall be deemed to give rise to any obligations on the part of
either party other than as expressly provided for herein.

 

IN WITNESS WHEREOF, intending to be legally bound, the parties have executed
this Agreement.

 

MWI

 

Pfizer Inc.

 

 

 

By

/s/ Mary Pat Thompson

 

By

/s/ Clinton A. Lewis, Jr.

 

 

Clinton A. Lewis, Jr.

 

 

President, U.S. Operations

 

 

Pfizer Animal Health

 

 

 

Date 12/8/08

 

Date 12/11/08

 

 

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