Exhibit 10.6

 

* * — 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.

 

COMPANION ANIMAL SELECT BRANDS DISTRIBUTION AGREEMENT

 

This Agreement dated and effective as of January 1, 2009 is made by and between
Pfizer Inc, 235 East 42nd Street, New York, NY 10017 (hereinafter, “PFIZER”) and
MWI Veterinary Supply, 651 South Stratford Drive, Suite 100, Meridian, Idaho
83642 (hereinafter, “MWI”).

 

Definitions:

 

“Products”: Zeniquin, Temaril-P, Antirobe, Doxirobe, Medrol, Dexdomitor, and
Antisedan

 

1.                                       PFIZER hereby appoints MWI, and MWI
hereby accepts appointment, as a contract distributor for PFIZER’s Products, to
purchase from PFIZER and to resell for MWI’s own account as a distributor,
subject to the following terms and conditions.

 

2.                                       MWI recognizes and agrees to the
following:

 

(a)                                  PFIZER has elected to work with a select
group of distributors that are committed to maximizing the sale of the Products
and to working closely with PFIZER to identify market opportunities for both
companies. The intent of this Agreement is to attain that goal;

 

(b)                                 PFIZER intends to utilize this group of
distributors to sell the Products to veterinarians who have and maintain a
veterinary/client/patient relationship and who prescribe products for dogs or
cats within that relationship, and that PFIZER has, and may in the future, run
promotions and other activities that would be seriously prejudiced if MWI
resells the Products to non-veterinarians, other distributors, internet
pharmacies, human pharmacies or non-employee agents or through brokers.

 

3.                                       Accordingly, MWI shall:

 

(a)                                  use its reasonable best efforts to sell the
Products by focusing its efforts at reselling to veterinarians only with a
client patient relationship.

 

(b)                                 maintain a full-time outside and inside
sales force that will personally and actively solicit sales of the Products and
to pay such sales representatives reasonable commission;

 

(c)                                  store and handle its inventory of Products
under conditions that will ensure that the Product retains its potency, purity,
quality, and identity;

 

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(d)                                 cooperate fully with PFIZER by actively
participating in such strategy sessions as PFIZER reasonably may require, for
the purpose of developing programs to increase use of the Products; and to
cooperate fully with PFIZER in implementing all promotions and sales campaigns
for the Products;

 

(e)                                  allow PFIZER’s representatives to attend
and actively participate in meetings of MWI’s sales representatives;

 

(f)                                    MWI agrees that credit limits established
by PFIZER shall be subject to change by PFIZER in its sole discretion and that
no shipments will be made to MWI in excess of the established credit limits. MWI
will make payment to PFIZER for all Products shipped /**/;

 

(g)                                 take no action, whether or not identified
above, that would harm the goodwill of the Products;

 

(h)                                 MWI shall immediately notify PFIZER in the
event MWI obtains information indicating that the Products may have to be
recalled either by virtue of applicable law or regulation or good business
judgment. PFIZER shall control all efforts necessary to conduct any such recall.
MWI shall cooperate with PFIZER and MWI agrees to maintain adequate records to
conduct such recall, including the name, address and Product purchases of all
purchasers of PFIZER Products;

 

(i)                                     MWI shall not, under any circumstances,
be liable for special, collateral, incidental or consequential damages, and
PFIZER’s sole remedy for any such damages shall be in accordance with
Paragraph 7(e).

 

4.                                       PFIZER shall:

 

(a)                                  sell the Products to MWI at the prices in
effect in the then current published PFIZER Animal Health Ethical Distribution
Price Memo (hereinafter, “Price List”). PFIZER also shall permit MWI to
participate in the distributor incentive programs offered by PFIZER, in
accordance with the terms of such programs. PFIZER shall have the unrestricted
right to revise the prices, terms and conditions of the Price List, and to add
or delete Products or package sizes, without advance notice to MWI, and the
revisions shall be effective on all orders submitted after the effective date of
the price revisions. In all cases of orders received for other than immediate
shipment, the price for the Products shall be that in effect at the time of
shipment;

 

(b)                                 retain sole responsibility for the
advertising and promotion of the Products and collaborate with MWI in the
development of activities appropriate for ethical distribution regarding the
Products;

 

(c)                                  compensate MWI in accordance with
Exhibits A and B attached hereto. PFIZER shall have the right to audit MWI sales
data to confirm appropriate payment in accordance with Exhibits A and B;

 

(d)                                 Allow MWI credit on prepaid returns in
accordance with PFIZER’s Outdated Products Policy which is in effect at the
time;

 

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(e)                                  If MWI has more than one location then MWI
must combine purchases of all locations to determine attainment level for
incentives. In the event that MWI acquires or combines with another PFIZER
agreement holder, the purchase objectives will be adjusted accordingly for the
purpose of determining incentives earned;

 

(f)                                    Direct purchase from PFIZER will be used
to determine the level of purchases achieved. Any discrepancies must be
documented by the Marketing Agreement holder using copies of PFIZER invoices.

 

5.                                       Nothing in this Agreement shall be
deemed to limit PFIZER’s ability to sell Products to any other party.

 

6.                                       All purchases by MWI pursuant to this
Agreement shall be in accordance with the terms of PFIZER’s Pricing and Shipping
Policies, as may be amended by PFIZER from time to time. Unless the parties
agree otherwise, shipments shall be made to either MWI’s central warehouse point
or to branch offices at MWI’s direction.

 

7.                                       The following standard conditions shall
apply to all sales under this Agreement:

 

(a)                                  MWI shall cooperate fully with PFIZER in
participating fully in the Animal Health Institute Electronic Data Interchange
(hereinafter, “AHI EDI”) for the reporting of sales and inventory data on a
daily basis. The data to be reported shall be as described in the AHI EDI
Transaction sets.

 

(b)                                 all orders are subject to acceptance by
PFIZER. Title to the goods shall pass to MWI once they have been properly
delivered to the address designated by MWI.

 

(c)                                  any tax or other charge upon the sale
and/or shipment of the goods now or hereafter imposed by federal, state or
municipal authorities shall be paid by MWI. In the event that the price of any
article includes transportation charges, any increase or decrease in
transportation charges shall be for MWI’s account;

 

(d)                                 EXCEPT AS SET FORTH IN THIS AGREEMENT, OR IN
THE LABELING OF THE PRODUCTS SOLD HEREUNDER, PFIZER MAKES NO EXPRESS OR IMPLIED
WARRANTIES WITH RESPECT TO THE PRODUCTS;

 

(e)                                  PFIZER shall defend and indemnify MWI from
all claims resulting from any breach by PFIZER of the warranties set forth in
this paragraph 7 and specifically 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 PFIZER’s 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

 

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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 the labeling supplied by PFIZER; or sale of
the Products after receipt of notice from PFIZER that such sales should be
halted;

 

(f)                                    in no event shall PFIZER be liable to MWI
for special, collateral, incidental, or consequential damages in connection with
or arising out of the purchase, resale, or use of the Products. Except as
provided under subparagraph 7(e), 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;

 

(g)                                 failure of PFIZER to make or of MWI to take,
when due, any delivery (or portion thereof) pursuant to an order hereunder, if
occasioned by any circumstance or condition beyond the control of the party so
failing, shall not subject the failing party to any liability to the other and,
at the option of either party, that order or portion thereof not delivered may
be canceled;

 

(h)                                 acceptance of MWI’s order by PFIZER is
expressly made conditional upon MWI’s acceptance of the conditions of sale as
set forth herein, and the prices, terms and conditions of the Price List then in
effect, notwithstanding acknowledgment or receipt of MWI’s purchase order
containing additional or different provisions, or conflicting oral
representations by any agent of PFIZER;

 

(i)                                     in no event shall MWI be liable to
PFIZER for special, collateral, incidental, or consequential damages in
connection with or arising out of the purchase, resale, or use of the Products.

 

8.                                       MWI shall not delegate its duty of
performance or assign its obligations under this Agreement without the prior
written consent of PFIZER.

 

9.                                       This Agreement shall not be binding
upon PFIZER until it is approved by PFIZER at its New York, New York
headquarters.

 

10.                                 This Agreement shall be effective as of the
date first written above and shall continue in force until December 31, 2010
(hereinafter, “Contract Term”). For the purpose of calculating the sales out
rebates set forth in Exhibit A and the Custom Marketing Program funds set forth
in Exhibit B, the Contract Term will be divided into two one-year terms as
follows: January 1, 2009 to December 31, 2009 (hereinafter, “Contract Year
2009”) and January 1, 2010 to December 31, 2010 (hereinafter, “Contract Year
2010”). PFIZER may terminate this agreement prior to the expiration date with or
without cause, upon thirty (30) days written notice to MWI. Either party may
terminate this Agreement immediately upon written notice, in the event of a
material breach by the other party. Upon any termination of this Agreement for
any reason prior to the expiration date PFIZER shall have the right to buy back
from MWI

 

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all inventory of the Products owned by MWI at the time of termination at a price
equal to MWI’s purchase price from PFIZER of such inventory.

 

11.                                 MWI and PFIZER agree that, under the
specific circumstances delineated herein, PFIZER, at PFIZER’s 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.

 

(A)                              The specific circumstances which will enable
PFIZER to initiate recoupment are:

 

i.                                          MWI becomes insolvent which shall be
defined as:

 

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

 

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

 

(c)                                  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.

 

ii.                                       MWI commences a liquidation of its
operations by means of a sale of its assets in their entirety or piecemeal.

 

iii.                                    MWI ceases its business operations
whether or not such cessation is voluntary or involuntary.

 

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

 

12.                                 MWI and PFIZER acknowledge that in the
performance of their duties hereunder MWI and PFIZER may obtain access to
“Confidential Information” (as defined below) of each 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, 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, relating to
PFIZER’s 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. Upon 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.

 

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13.                                 This Agreement shall be governed by the laws
of the State of New York applicable to contracts to be fully performed therein.

 

14.                                 This Agreement and documents referred to
herein embody the entire understanding between the parties hereto, will
supersede prior agreements relating to the Products, and may be modified only in
writing and signed by the parties to be bound. 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 Veterinary Supply Co.

 

Pfizer Inc

 

 

 

BY:

/s/ Jim Cleary

 

BY:

/s/ Clinton Lewis

 

 

 

 

Clinton Lewis

Print Name:

Jim Cleary

 

 

President, U.S. Operations

 

 

 

 

Pfizer Animal Health

Title:

President

 

 

 

 

 

 

 

Date:

Jan. 23, 2009

 

Date:

2/5/09

 

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Exhibit A

 

For Non-Pfizer Established Accounts Sales fee:

 

For each contract year (Contract Year 2009 and Contract Year 2010), a sales out
rebate of /**/ of the reported sales out units by MWI, calculated at the
then-current published PFIZER Animal Health Ethical Distribution Price Memo,
will be paid on sales shipped to accounts that are NOT listed on the current or
existing Pfizer Account Sales List (to be provided upon signing of this
Agreement). Sales for which valid ship to HINs are not provided will not qualify
for this /**/ rebate.

 

Logistics Fee: For all Pfizer Account Sales of listed Products

 

For each contract year (Contract Year 2009 and Contract Year 2010), a logistics
fee of /**/ will be provided in the purchase price, in the form of an upfront
discount which is calculated from the then- current published PFIZER Animal
Health Direct Veterinary Price List.

 

A-1

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Exhibit B

 

CUSTOM MARKETING PROGRAM Funding

 

MWI may earn up to /**/ for each contract year (Contract Year 2009 and Contract
Year 2010) in Custom Marketing Program (“CMP”) funds based on all purchases
(Gross less returns) by MWI of PFIZER’s Zeniquin, Temaril-P, Antirobe, Doxirobe,
Medrol, Dexdomitor, and Antisedan (“Products”).

 

Programs that use these funds must be discussed in advance with MWI’s PFIZER
Account Executive, submitted in writing to PFIZER’s Senior Director of
Distribution and approved in writing by PFIZER’s Senior Director of Distribution
prior to the start of the program. PFIZER shall have no obligation to pay MWI
CMP funds if the parties are unable to agree on the programs to be funded.

 

1.                                       To be eligible for CMP funds, programs
must include specific performance metrics and specifics on total CMP funds to be
spent in the program and how all CMP funds would be spent. In no event will MWI
be eligible to receive CMP funds in excess of /**/ of purchases by MWI from
PFIZER of Zeniquin, Temaril-P, Antirobe, Doxirobe, Medrol, Dexdomitor, and
Antisedan based on their Contract Year 2009 and Contract Year 2010 purchases of
Zeniquin, Temaril-P, Antirobe, Doxirobe, Medrol, Dexdomitor, and Antisedan from
PFIZER.

 

2.                                       While MWI is free to sell Products at
such prices and on such terms as MWI agrees with its customers, programs that
result in a direct price decrease to the purchaser will not be supported with
CMP funds.

 

3.                                       ALL CMP’s REQUIRE PROOF OF PERFORMANCE
AND INVOICES AT PROGRAM CONCLUSION. No payment of CMP funds will be made by
PFIZER to MWI until all invoices and proof or performance wrap-ups are
submitted.

 

4.                                       All program wrap-ups and invoices are
to be submitted within 45 days of completion of the program. Wrap ups and
invoices for programs that run to year end 2009 should be submitted no later
than February 15, 2010 for payment. Any invoices submitted to PFIZER after
February 15, 2010 for 2009 programs will be paid out of 2010 CMP funds, at
PFIZER’s discretion. Wrap ups and invoices for programs that run to year end
2010 should be submitted no later than February 15, 2011 for payment. Programs
will be paid by check or credit memo.

 

A-2

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