**Exhibit10.6**

 

*** * — CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILEDSEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTEDPORTIONS.**

 

**COMPANIONANIMAL SELECT BRANDS DISTRIBUTION AGREEMENT**

** **

This Agreement dated andeffective as of January 1, 2009 is made by and between Pfizer Inc,235 East 42nd Street, New York, NY 10017 (hereinafter, “PFIZER”) andMWI 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 MWIhereby accepts appointment, as a contract distributor for PFIZER’s Products, topurchase 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 thefollowing:

 

(a)                                  PFIZER has elected to work with a selectgroup of distributors that are committed to maximizing the sale of the Productsand to working closely with PFIZER to identify market opportunities for bothcompanies. The intent of this Agreement is to attain that goal;

 

(b)                                 PFIZER intends to utilize this group ofdistributors to sell the Products to veterinarians who have and maintain aveterinary/client/patient relationship and who prescribe products for dogs orcats within that relationship, and that PFIZER has, and may in the future, runpromotions and other activities that would be seriously prejudiced if MWIresells the Products to non-veterinarians, other distributors, internetpharmacies, human pharmacies or non-employee agents or through brokers.

 

3.                                       Accordingly, MWI shall:

 

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

 

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

 

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

 

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

 

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

 

(f)                                    MWI agrees that credit limits establishedby PFIZER shall be subject to change by PFIZER in its sole discretion and thatno 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 identifiedabove, that would harm the goodwill of the Products;

 

(h)                                 MWI shall immediately notify PFIZER inthe event MWI obtains information indicating that the Products may have to berecalled either by virtue of applicable law or regulation or good businessjudgment. PFIZER shall control all efforts necessary to conduct any suchrecall. MWI shall cooperate with PFIZER and MWI agrees to maintain adequaterecords to conduct such recall, including the name, address and Productpurchases of all purchasers of PFIZER Products;

 

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

 

4.                                       PFIZER shall:

 

(a)                                  sell the Products to MWI at the prices ineffect in the then current published PFIZER Animal Health Ethical DistributionPrice Memo (hereinafter, “Price List”). PFIZER also shall permit MWI toparticipate in the distributor incentive programs offered by PFIZER, inaccordance with the terms of such programs. PFIZER shall have the unrestrictedright to revise the prices, terms and conditions of the Price List, and to addor delete Products or package sizes, without advance notice to MWI, and therevisions shall be effective on all orders submitted after the effective dateof the price revisions. In all cases of orders received for other thanimmediate shipment, the price for the Products shall be that in effect at thetime of shipment;

 

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

 

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

 

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

 

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

 

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

 

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

 

6.                                       All purchases by MWI pursuant to thisAgreement shall be in accordance with the terms of PFIZER’s Pricing andShipping Policies, as may be amended by PFIZER from time to time. Unless theparties agree otherwise, shipments shall be made to either MWI’s centralwarehouse point or to branch offices at MWI’s direction.

 

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

 

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

 

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

 

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

 

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

 

(e)                                  PFIZER shall defend and indemnify MWIfrom all claims resulting from any breach by PFIZER of the warranties set forthin this paragraph 7 and specifically any claim that the Products, as soldby PFIZER, were defective. In the event PFIZER is found by any court ofcompetent jurisdiction to be liable for any claim based in products liability,then PFIZER shall reimburse MWI’s reasonable legal fees incurred in the courseof cooperating with PFIZER’s defense. To be covered by this defense andindemnity, MWI must: promptly notify PFIZER of any such claim; allow PFIZER tofully control the defense and/or resolution of the claim; and cooperate fullywith PFIZER in the matter. This 

 

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defense, indemnity and payment for legal fees shallnot apply to claims alleging: MWI alteration, negligent handling or improperstorage of the Products; sale of outdated Products; sale or recommendation ofthe Products for uses or in a manner not set forth in the labeling supplied byPFIZER; or sale of the Products after receipt of notice from PFIZER that suchsales should be halted;

 

(f)                                    in no event shall PFIZER be liable to MWIfor special, collateral, incidental, or consequential damages in connectionwith or arising out of the purchase, resale, or use of the Products. Except asprovided under subparagraph 7(e), above, total damages recoverable againstPFIZER by MWI shall be exclusively limited to the purchase price of theProducts with respect to which damages are claimed;

 

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

 

(h)                                 acceptance of MWI’s order by PFIZER isexpressly made conditional upon MWI’s acceptance of the conditions of sale asset forth herein, and the prices, terms and conditions of the Price List thenin effect, notwithstanding acknowledgment or receipt of MWI’s purchase ordercontaining additional or different provisions, or conflicting oral representationsby any agent of PFIZER;

 

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

 

8.                                       MWI shall not delegate its duty ofperformance or assign its obligations under this Agreement without the priorwritten consent of PFIZER.

 

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

 

10.                                 This Agreement shall be effective as ofthe date first written above and shall continue in force until December 31,2010 (hereinafter, “Contract Term”). For the purpose of calculating the salesout rebates set forth in Exhibit A and the Custom Marketing Program fundsset forth in Exhibit B, the Contract Term will be divided into twoone-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 

 

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

 

11.                                 MWI and PFIZER agree that, under thespecific circumstances delineated herein, PFIZER, at PFIZER’s sole discretionmay recoup the sums outstanding to it from MWI against those sums which may becomedue from PFIZER to MWI, in that the obligations arise from mutual transactions.

 

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

 

i.                                          MWI becomes insolvent which shall bedefined as:

 

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

 

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

 

(c)                                  MWI has failed to act in good faith for aperiod in excess of six (6) months to resolve any outstanding invoice orpurchase order issues or reconciliations.

 

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

 

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

 

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

 

12.                                 MWI and PFIZER acknowledge that in theperformance of their duties hereunder MWI and PFIZER may obtain access to “ConfidentialInformation” (as defined below) of each other. MWI and PFIZER agree that duringthe term of this Agreement and for a period of three (3) years after thetermination of this Agreement, unless specifically permitted in writing by theother party, to (a) retain in confidence and not disclose to any thirdparty and (b) use only for the purpose of carrying out their dutieshereunder, any such Confidential Information. As used herein the term “ConfidentialInformation” means any information, or data, whether of a business orscientific nature and whether in written, oral or tangible form, relating toPFIZER’s and MWI’s business or potential business or its research anddevelopment activities, not generally available to or known to the public, and nototherwise known to the receiving party, that is disclosed to or learned by theother party pursuant hereto. Upon completion of the work provided for hereunderor other termination of this Agreement each party will return to the otherparty any documents, or copies thereof, or any product samples, containing orconstituting Confidential Information disclosed to or generated by either partyin connection with this Agreement.

 

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13.                                 This Agreement shall be governed by thelaws of the State of New York applicable to contracts to be fully performedtherein.

 

14.                                 This Agreement and documents referred toherein embody the entire understanding between the parties hereto, willsupersede prior agreements relating to the Products, and may be modified onlyin writing and signed by the parties to be bound. No activities conductedpursuant to this Agreement or related thereto, including but not limited to thefuture planning activities of the parties, shall be deemed to give rise to anyobligations on the part of either party other than as expressly provided forherein.

 

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 andContract Year 2010), a sales out rebate of /**/ of the reported sales out unitsby MWI, calculated at the then-current published PFIZER Animal Health EthicalDistribution Price Memo, will be paid on sales shipped to accounts that are NOTlisted on the current or existing Pfizer Account Sales List (to be providedupon signing of this Agreement). Sales for which valid ship to HINs are notprovided will not qualify for this /**/ rebate.

 

Logistics Fee: For all Pfizer Account Sales of listedProducts

 

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

 

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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) inCustom Marketing Program (“CMP”) funds based on all purchases (Gross lessreturns) by MWI of PFIZER’s **Zeniquin, Temaril-P,Antirobe, Doxirobe, Medrol, Dexdomitor, and Antisedan** (“Products”).

 

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

 

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

 

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

 

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

 

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

 

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