Exhibit 10.1


[*] = Portions of
this exhibit have been omitted pursuant to a confidential treatment request. An
unredacted version of this exhibit has been filed with the Commission.


LIVESTOCK PRODUCTS AGREEMENT


This
Agreement effective as of December 23, 2006 is made by and between Pfizer Inc., 812 Springdale Drive, Exton, PA 19341 (“Pfizer”) and MWI Veterinary Supply Co., 651 S. Stratford
Drive, Ste 100, Meridian, ID 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:


“Incentive Eligible Products”
shall mean those Pfizer Products listed in Schedule A hereto which count
towards the incentive payments provided for in paragraph 5(b).


“Products” shall mean the
Pfizer cattle and swine products sold to MWI by Pfizer pursuant to this
Agreement.


“RSA Eligible Products” shall
mean those Pfizer Products listed in Schedule B hereto for which an RSA payment
will be made to MWI in accordance with paragraph 5(a).


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


1.            (a) Pfizer will continue to promote its
Products to certain select customers in the livestock field. The parties agree
that each time a customer from the list of customers approved by Pfizer enters
into a Leaders Edge agreement with Pfizer (such customers referred to as “PARTICIPATING
CUSTOMERS”) and selects MWI as their supplier and to service that customers account,
Pfizer shall send to MWI a Pfizer Suggested Price List which shall specify the
Pfizer Products (listed on Schedule D hereto) and the Pfizer suggested resale
prices quoted to such PARTICIPATING CUSTOMERS (hereafter a “SUGGESTED PRICE
LIST”). Each such SUGGESTED PRICE LIST shall be incorporated into and become
part of this Agreement.


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


2.            (a)  
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. MWI agrees to make purchases from
Pfizer in accordance with the timing set forth in Schedule E hereto.


(b)       MWI agrees to maintain an inventory of Products equal to [*]days Demand.
[*] 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.


(c)        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 CUSTOMERS most recent SUGGESTED PRICE LIST. In the event
that the price listed on a PARTICIPATING CUSTOMERS most recent SUGGESTED 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 its best efforts to provide
appropriate service to the customers to whom MWI will sell hereunder. MWI
shall:


(a)     Store its inventory of Pfizer Products under conditions (including
refrigeration where appropriate) that will ensure that such Products retain
their potency, purity, quality, and identity;


(b)    Provide to Covansys by the close of business on the last business day of
each Pfizer Accounting Period (as set forth in Schedule F hereto) an inventory
report covering all 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 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. MWI will 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 sku that MWI sells. This
information should be sent to Covansys. Sales out data shall be provided to
Covansys within [*] of the date of each invoice. MWI will use its best efforts
to ensure sales out data integrity and timeliness. Annual sales forecasts shall
be updated on a quarterly basis. The MWI/Pfizer Account Team will review each
quarterly forecast update and determine relative actions required if any.


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


(d)    Provide regularly scheduled delivery service to its customers, use its
best efforts to anticipate its customers’ requirements for Pfizer Products. In
the event Pfizer delivers any product order to a PARTICIPATING CUSTOMERS (drop
ships) no consideration shall be payable to MWI for that order under paragraph
5 below;


(e)     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;


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


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


(h)  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 Pfizer products. 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.


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


(j)
 MWI and PFIZER agree that MWI shall not be
entitled to any payment or incentive payments under Schedule I for sales to
customers at the close of Periods 1, 2 and 3 as defined in Schedule I hereto or
at the end of any fiscal or calendar year that do not comply with Pfizer’s
Revenue Recognition Guidelines contained in Schedule G for reporting of sales
and income in appropriate fiscal periods. All determinations of the
appropriateness of sales by MWI shall be in Pfizer’s discretion.











In
addition to the obligations set forth above related to PARTICIPATING CUSTOMERS,
MWI agrees as to all customers to undertake with Pfizer those efforts set forth
in Schedule H hereto.


5.            In consideration of MWI undertaking the
obligations set forth herein related to PARTICIPATING CUSTOMERS, Pfizer agrees
to pay to MWI the service fees provided for in paragraphs 5(a) and (b) below on
sales to PARTICIPATING CUSTOMERS;


(a)     A Revenue Sharing Allowance (RSA) paid at a rate of (i) [*] on sales out
for RSA Eligible Products to identified PARTICIPATING CUSTOMERS who are
producers (but not including Strategic Accounts), (ii) a Revenue Sharing
Allowance (RSA) paid at a rate of [*] on sales out for RSA Eligible Products to
identified PARTICIPATING CUSTOMERS who are veterinarians, Animal Health
Accounts or Strategic Accounts. The RSA is calculated on a Product by Product
basis and based on the Product price contained in the SUGGESTED PRICE LIST. The
RSA is contingent on MWI fulfilling all conditions outlined in paragraph 4 of
this Agreement. The payments made pursuant to this paragraph 5(a) are not
payable for sales to anyone other than PARTICIPATING CUSTOMERS. The RSA is net
of any difference between MWI’s purchase price and the SUGGESTED PRICE LIST
price. MWI shall only receive the payments set out in this paragraph 5 for
sales to PARTICIPATING CUSTOMERS which are consummated after confirmation by
Pfizer to MWI that a customer is a PARTICIPATING CUSTOMER.


(b)    The incentive payments provided for on Schedule I, provided, however,
that sales to other distributors who are Livestock Products Agreement Holders
do not count towards the calculation of sales to determine appropriate
incentive level. Only sales of the Incentive Eligible Products listed in
Schedule A shall count towards achievement of the incentive payments in Schedule
I. In the event that one Livestock Products Agreement holder acquires or
combines with another Livestock Products Agreement holder, the purchase
objectives will be adjusted accordingly for the purpose of determining
incentives earned. Only data for invoices dated between December 23, 2006 and
December 21, 2007 and reported to Covansys by December 26, 2007 and accepted by
Pfizer by December 28, 2007 in accordance with paragraph 4(b) above will count
towards the calculation of sales to determine appropriate incentive level. In
addition, MWI can earn the CMP provided for in Schedule J.


(c)     Pfizer shall have the right to audit shipping records of MWI to confirm
delivery to products to veterinarians, dealers or producers in order to assure
proper RSA payments under paragraph 5(a) above.   Any material misrepresentations by MWI
related to paragraph 5(a) above and the party actually taking possession of the
products shall void any payments due under paragraph 5(a) and (b) above. In
addition, MWI recognizes that the Leaders Edge program is designed as an
effective go to market approach to selling for the benefit of veterinarians
and/or dealers who add value in the transaction to their customers as well as
value for those customers. Blatant abuse of the intended structure of the
Leaders Edge Program (including, but not limited to, falsification of EDI data
or establishing false business entities or inserting business entities that add
no commercial value to end users purely to obtain additional RSA payments) will
subject MWI to potential forfeiture of all RSA’s paid on those transactions and
potential forfeiture of all or a portion of the year end rebate provided for in
Schedule I at the sole discretion of Pfizer. Decisions made as a result of
Pfizer’s investigations of blatant abuse of the intended structure of Leaders
Edge are solely Pfizer’s to make and forfeitures of RSAs may happen
retroactively in the form of credits against future RSA payments.


(d)    The parties agree that MWI will provide to Pfizer on request and within
48 hours proof of delivery on any suspicious (as determined by Pfizer) EDI
transactions. MWI agrees that Pfizer shall be entitled to audit, either
directly or through external auditors hired by Pfizer and upon reasonable
notice by Pfizer, MWI’s books and records for the purpose of determining the
accuracy of EDI data for Pfizer Product sales only communicated to Pfizer
through Covansys.


(e)     The parties agree that Pfizer will no longer automatically credit MWI
for returns of Products not sold in the calendar year in which they are
returned. Prior to issuing any appropriate credit Pfizer shall be entitled to
conduct a detailed manual review of sales data.


(f)       The parties agree that Pfizer shall not be
obligated to issue credits for any returns that exceed the current average of
select distributors as specified below unless such returns are the subject of a
recall or made at the request of Pfizer. The current average of select
distributors for 2007 shall be:


·  Distributor
Average Returns (credits and exchanges) as a % of sales - [*]











·  Distributor
Average Returns (excluding exchanges) as a % of sales - [*]


(g)   Products which are not listed in Schedules A
or B do not qualify for RSA payments or Incentive payments. All such Products
shall be purchased by MWI on a buy sell basis.


6.            Sales
of Pfizer Products to any party other than a PARTICIPATING CUSTOMER or
Strategic Account for whom a SUGGESTED PRICE LIST has been incorporated into
this Agreement are not covered by this Agreement. 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.


7.            MWI
shall not be provided with any rebate, discount or other compensation for
Products handled under this Agreement unless specifically set forth herein. 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(c). Pfizer shall
have the right to raise or change the price of any or all Products to MWI on [*] notice. Pfizer shall be free to
limit sales of any or all Products to MWI in advance of any price increase.


8.            The
RSA payable hereunder on sales from the SUGGESTED PRICE LIST, to PARTICIPATING
CUSTOMERS and the incentive payments under paragraph 5(b) above shall be net of
returns and constitute full and complete compensation for MWI.


9.            Pfizer may terminate this Agreement at any
time on fifteen (15) days notice in the event MWI takes any action that harms
the good will of Pfizer. All returns shall be approved by Pfizer and subject to
Pfizer’s Returned Goods Policy. MWI may not offset payment to Pfizer of invoice
amounts as credit for any compensation payable hereunder.


10.          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 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.


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 the services (including
those services specified hereunder or any other services provided by MWI to any
customer) provided by MWI.


12.            MWI
shall distribute Pfizer Products only under the labeling provided 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 animal drugs.


13.            Nothing
in this Agreement shall be deemed to limit Pfizer’s ability to sell any Product
or 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.


14.            EXCEPT AS SET FORTH IN THIS AGREEMENT, IN THE
LABELING OF THE PRODUCTS SOLD HEREUNDER, OR AS OTHERWISE APPROVED 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 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 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, 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.


16.            This Agreement shall be effective as of the
date first written above and shall continue in force until December 31, 2007.
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.


17.            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 Pfizer, and may be modified or amended only in
writing signed by the party to be bound.


18.            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/ James F. Cleary, Jr.

  	
   

  	
  By

  	
  /s/ Robert
  DiMarzo

  
	
   

  	
   

  	
   

  	
  Robert DiMarzo 

  
	
  Title

  	
  President & CEO

  	
   

  	
   

  	
  President, U.S. Operations 

  
	
   

  	
   

  	
   

  	
  Pfizer Animal Health

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
  March 26, 2007

  	
   

  	
  Date

  	
  April 3, 2007