**Exhibit 10.3**

 

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

 

**2009 STRATEGIC BRANDS DISTRIBUTION AGREEMENT**

 

ThisAgreement 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”:Rimadyl, Clavamox, and Simplicef

 

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

 

2.             MWI recognizesand agrees to the following:

(a)           PFIZER has elected to workwith a select group of distributors that are committed to maximizing the saleof the Products and to working closely with PFIZER to identify marketopportunities for both companies. The intent of this Agreement is to attainthat goal;

(b)           PFIZER intends to utilize thisgroup of distributors to sell the Products to veterinarians who have andmaintain a veterinary/dient/patient relationship and who prescribe products fordogs or cats within that relationship, and that PFIZER has, and may in thefuture, run promotions and other activities that would be seriously prejudicedif MWI resells the Products to non-veterinarians, other distributors, intemetpharmacies, human pharmacies or non-employee agents or through brokers.

 

3.             Accordingly, MWIshall:

(a)           use itsreasonable best efforts to sell the Products by focusing its efforts atreselling to veterinarians only. During the term of this Agreement MWI will notsell any other product or formulation containing carprofen,amoxicillin/clavulanic acid, or cefpodoxime proxetil other than those Productspurchased by MWI from PFIZER including but not limited to any capsule, tablet,chewable tablet, drops or injectible carprofen, amoxicillin/clavulanic acid, orcefpodoxime proxetil product. In the event that this Agreement is terminatedfor any reason by MWI prior to December 31, 2010, MWI agrees not to sellany other product or formulation containing carprofen, amoxicillin/clavulanicacid, or cefpodoxime proxetil until after December 31, 2010. In the eventthat this Agreement is terminated for any reason by PFIZER prior to December 31,2010, MWI may sell any other product or formulation containing carprofen,amoxicillin/clavulanic acid, or cefpodoxime proxetil after such termination.Notwithstanding the foregoing, nothing in this Agreement forecloses MWI fromselling any cefpodoxime proxetil product that 

 

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MWIwas selling on the effective date of this Agreement;

(b)           maintain afull-time outside and inside sales force that will personally and activelysolicit sales of the Products and to pay such sales representatives reasonablecommission;

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

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

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

(f)            MWI agrees that creditlimits established by PFIZER shall be subject to change by PFIZER in its solediscretion and that no shipments will be made to MWI in excess of theestablished credit limits. MWI will make payment to PFIZER for all Productsshipped /**/;

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

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

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

 

4.             PFIZER shall:

(a)           sell the Productsto MWI at the prices in effect in the then current published PFIZER AnimalHealth Ethical Distribution Price Memo (hereinafter, “Price List). PFIZER alsoshall permit MWI to participate in the distributor incentive programs offeredby PFIZER, in accordance with the terms of such programs. PFIZER shall have theunrestricted right to revise the prices, terms and conditions of the PriceList, and to add or delete Products or package sizes, without advance notice toMWI, and the revisions shall be effective on all orders submitted after theeffective date of the price revisions. In all cases of orders received forother than immediate shipment, the price for the Products shall be that ineffect at the time of shipment;

(b)           retain soleresponsibility for the advertising and promotion of the Products andcollaborate with MWI in the development of activities appropriate for ethicaldistribution regarding the Products;

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

 

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andB;

(d)           allow MWI crediton prepaid returns in accordance with PFIZER’s Outdated Products Policy whichis in effect at the time;

(e)           If MWI has morethan one location then MWI must combine purchases of all locations to determineattainment level for incentives. In the event that MWI acquires or combineswith another PFIZER agreement holder, the purchase objectives will be adjustedaccordingly for the purpose of determining incentives earned;

(f)            Direct purchasefrom PFIZER will be used to determine the level of purchases achieved. Anydiscrepancies must be documented by the Marketing Agreement holder using copiesof PFIZER invoices.

 

5.             Nothing in thisAgreement shall be deemed to limit PFIZER’s ability to sell Products to anyother party.

 

6.             All purchases byMWI pursuant to this Agreement shall be in accordance with the terms of PFIZER’sPricing 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’scentral warehouse point or to branch offices at MWI’s direction.

 

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

(a)           MWI shallcooperate fully with PFIZER in participating fully in the Animal HealthInstitute Electronic Data Interchange (hereinafter, “AHI EDI”) for thereporting of sales and inventory data on a daily basis. The data to be reportedshall be as described in the AHI EDI Transaction sets.

(b)           all orders aresubject to acceptance by PFIZER. Title to the goods shall pass to MWI once theyhave been properly delivered to the address designated by MWI.

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

(d)           EXCEPT AS SETFORTH 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 shalldefend and indemnify MWI from all claims resulting from any breach by PFIZER ofthe warranties set forth in this paragraph 7 and specifically any claim thatthe Products, as sold by PFIZER, were defective. In the event PFIZER is foundby any court of competent jurisdiction to be liable for any claim based inproducts liability, then PFIZER shall reimburse MWI’s

reasonablelegal fees incurred in the course of cooperating with PFIZER’s defense. To becovered by this defense and indemnity, MWI must: promptly notify PFIZER of anysuch claim; allow 

 

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PFIZERto fully control the defense and/or resolution of the claim; and cooperatefully with PFIZER in the matter. Thisdefense, indemnity and payment for legal feesshall not apply to claims alleging: MWI alteration, negligent handling orimproper storage of the Products; sale of outdated Products; sale orrecommendation of the Products for uses or in a manner not set forth in thelabeling supplied by PFIZER; or sale of the Products after receipt of noticefrom PFIZER that such sales should be halted;

(f)            in no event shallPFIZER be liable to MWI for special, collateral, incidental, or consequentialdamages in connection with or arising out of the purchase, resale, or use ofthe Products. Except as provided under subparagraph 7(e), above, total damagesrecoverable against PFIZER by MWI shall be exclusively limited to the purchaseprice of the Products with respect to which damages are claimed;

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

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

(i)            in no event shallMWI be liable to PFIZER for special, collateral, incidental, or consequentialdamages in connection with or arising out of the purchase, resale, or use ofthe Products.

 

8.             MWI shall notdelegate its duty of performance or assign its obligations under this Agreementwithout the prior written consent of PFIZER.

 

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

 

10.           This Agreementshall be effective as of the date first written above and shall continue inforce until December 31, 2010 (hereinafter, “Contract Term”). For thepurpose of calculating the year end rebates set forth in Exhibit A and theCustom Marketing Program funds set forth in Exhibit B, the Contract Termwill 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 agreementprior to the expiration date with or without cause, upon thirty (30) dayswritten notice to MWI. Either party may terminate this Agreement immediatelyupon written notice, in the event of a material breach by the other party. Uponany termination of this Agreement for any reason prior to the expiration datePFIZER shall have the right to buy back from MWI all inventory of the Productsowned by MWI at the time of termination at a price equal to MW’s purchase pricefrom PFIZER of such inventory.

 

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11.           MWI and PFIZER agreethat, under the specific circumstances delineated herein, PFIZER, at PFIZER’ssole discretion may recoup the sums outstanding to it from MWI against thosesums which may become due from PFIZER to MW, in that the obligations arise frommutual transactions.

 

A.            The specificcircumstances which will enable PFIZER to initiate recoupment are:

i.              MWI becomesinsolvent which shall be defined as:

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

(b)   MWI is generallynot paying its debts as they come due; or

(c)   MWI has failed toact in good faith for a period in excess of six (6) months to resolve anyoutstanding invoice or purchase order issuesor reconciliations.

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

iii.            MWI ceases its businessoperations whether or not such cessation isvoluntary or involuntary.

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

 

12.           MWI and PFIZERacknowledge that in the performance of their duties hereunder MWI and PFIZERmay obtain access to “Confidential Information” (as defined below) of eachother. MWI and PFIZER agree that during the term of this Agreement and for aperiod of three (3) years after the termination of this Agreement, unlessspecifically permitted in writing by the other party, to (a) retain inconfidence and not disclose to any third party and (b) use only for thepurpose of carrying out their duties hereunder, any such ConfidentialInformation. As used herein the term “Confidential Information” means anyinformation, or data, whether of a business or scientific nature and whether inwritten, oral or tangible form, relating to PFIZER’s and MW’s business orpotential business or its research and development activities, not generallyavailable to or known to the public, and not otherwise known to the receivingparty, that is disclosed to or learned by the other party pursuant hereto. Uponcompletion of the work provided for hereunder or other termination of thisAgreement each party will return to the other party any documents, or copiesthereof, or any product samples, containing or constituting Confidential Informationdisclosed to or generated by either party in connection with this Agreement.

 

13.           This Agreementshall be governed by the laws of the State of New York applicable to contractsto be fully performed therein.

 

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14.           This Agreementand documents referred to herein embody the entire understanding between theparties hereto, will supersede prior agreements relating to the Products, andmay be modified only in writing and signed by the parties to be bound. Noactivities conducted pursuant to this Agreement or related thereto, includingbut not limited to the future planning activities of the parties, shall bedeemed to give rise to any obligations on the part of either party other thanas expressly provided for herein.

 

INWITNESS WHEREOF, intending to be legally bound, the parties have executed thisAgreement.

 
| MWI  Veterinary Supply |               | 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. 26, 2009 |         | Date: | 2/5/09 |
|                        |                    |              |  |  |  |  |  |  |

 

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