**Exhibit 10.2**

 

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

 

**LIVESTOCK PRODUCTS AGREEMENT -2008**

 

This Livestock Products Agreement (“Agreement”)effective as of December 22, 2007 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 sellinganimal health products and servicing customers for those products, and

 

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

 

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

 

Definitions:

 

“PARTICIPATING CUSTOMERS” shall mean customers fromthe list of customers approved by Pfizer who have entered into a Leaders EdgeAgreement with Pfizer.

 

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

 

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

 

1.                                       (a) Pfizer shallcontinue to promote its Products to certain select customers in the livestockfield. The parties agree that each time a PARTICIPATING CUSTOMER selects MWI astheir supplier and to service that customers account, Pfizer shall send to MWIa Pfizer Suggested Price List which shall specify the Pfizer Products (listedon Schedule D hereto) and thePfizer suggested resale prices quoted to such PARTICIPATING CUSTOMER (hereaftera “SUGGESTED PRICE LIST”). Each such SUGGESTED PRICE LIST shall be incorporatedinto and become part of this Agreement.

 

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

 

2.                                       (a) MWI agrees topurchase from Pfizer, at credit terms agreed to between the parties and as maybe further set forth on Pfizer’s invoices, Products sufficient to fulfilldemand from all customers to whom MWI will sell Products in the quantitiesdesired by the customers. MWI agrees to make purchases from Pfizer in accordancewith the timing set forth in Schedule E hereto.

 

(b) MWI agrees to maintain an inventory pfProducts equal to /**/ Demand. For purposes of this Agreement “Demand” shallmean /**/. 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 differencesin the on hand inventory calculations.

 

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

 

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

 

4.                                       MWI shall use its bestefforts to provide appropriate service to the customers to whom MWI will sellhereunder. For customers serviced pursuant to this Agreement, MWI shall:

 

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(a) Store itsinventory of Pfizer Products under conditions (including refrigeration whereappropriate) in accordance with package labeling or other written instructionsfrom Pfizer to ensure that such Products retain their potency, purity, quality,and identity;

 

(b) Provide toCovansys by the close of business on Friday of each week an inventory reportcovering all Product inventory purchased from Pfizer and setting forth indollars at MWI’s acquisition cost from Pfizer the amount of inventory byspecies. MWI agrees that Pfizer shall have the right, upon reasonable advancenotice and during business hours to audit inventory in the possession of MWI toconfirm compliance with this paragraph 4(b) and to confirm the accuracy ofthe data contained in the report.

 

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

 

(d) Provide salesout data to Covansys within ten (10) working days of the date of eachinvoice. MWI will use its best efforts to ensure sales out data integrity andtimeliness. Annual sales forecasts shall be updated on a quarterly basis. TheMWI/Pfizer Account Team will review each quarterly forecast update anddetermine relative actions required if any.

 

(e) Establish anyservice fee or other charge or discount to any customer including PARTICIPATINGCUSTOMERS for Pfizer Products independently and at its sole discretion;

 

(f) Provideregularly scheduled delivery service to its customers, use its best efforts toanticipate its customers’ requirements for Pfizer Products. In the event Pfizerdelivers any product order to a PARTICIPATING CUSTOMERS (drop ships) noconsideration 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 madenecessary by the unavailability of Pfizer Products;

 

(g) MWI agreesthat credit limits established by Pfizer shall be subject to change uponwritten notice by Pfizer in its sole discretion and that no Product shipmentswill be made to MWI in excess of the established credit limits;

 

(h) Invoicecustomers in an accurate and timely manner;

 

(i) Refer to thatPARTICIPATING CUSTOMERS SUGGESTED PRICE LIST on each invoice for PfizerProducts;

 

(j) Take noaction, whether or not identified above, that would harm the Goodwill or nameof Pfizer, or damage the interests of Pfizer or the Products. For purposes ofthis Agreement “Goodwill” shall mean the marketplace advantage of customerpatronage and loyalty developed with continuous business under the same nameover a period of time.

 

(k) Make paymentto Pfizer for all Products purchased from Pfizer /**/. In the event MWI failsto maintain the inventory levels specified in paragraph 2(b) above Pfizershall have the right, upon /**/ written notice to MWI, to receive payment fromMWI /**/.

 

(l) MWI andPFIZER agree that MWI shall not be entitled to any payment or performancepayments under Schedule G for sales to customers at the close of Periods 1, 2and 3 as defined in Schedule G hereto or at the end of any fiscal or calendaryear that do not comply with Pfizer’s Guidelinesfor Backend Rebate Calculations contained in Schedule G for reporting of salesand income in appropriate fiscal periods. All determinations of theappropriateness of sales by MWI shall be in Pfizer’s reasonable discretion.

 

(m) MWI agrees toparticipate in and undertake the following activities with, and on behalf of,Pfizer:

 

Planning:

 

(i) Pfizer and MWI shall conduct at leasttwo full joint planning meetings per year. These sessions will includerepresentatives from sales, marketing, technical services and management fromboth Pfizer and MWI (hereafter referred to as the MWI/Pfizer Account Team).

 

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(ii) MWI and Pfizer shall prepare jointly,a written detailed sales plan which addresses key products, programs andcustomers to be focused on during the coming year. Plans shall include theidentification of specific support materials and training requirements,detailed communication plans including specific MWI sales representatives andmanagers and the customers to be contacted and the sequence, timing andcommunication vehicle to be used. Annual sales plans will be divided intoquarterly segments. Upon completion of a quarterly program, the Account Teamwill conduct a review outlining the strengths and weaknesses of the program.

 

(iii) MWI will provide Pfizer with anannual sales forecast as well as MWI’s interpretation and insight of the basisand meaning of such forecasts. The forecast shall include all Pfizer Productsku’s which MWI sells. Both parties agree that forecasts are not to beconsidered binding orders for delivery.

 

(iv) During the term of this Agreement MWIshall participate with Pfizer outside of the annual plans necessary forperformance under this Agreement. Active cooperation and participation by keymanagers of MWI in Pfizer’s strategic planning for the future is highlydesirable to Pfizer.

 

Product Support:

 

(i) MWI will staff all appropriate salesmeetings as planned in advance with Pfizer. Such sales meetings shall becharged to Pfizer and include but not be limited to; a) all appropriate salesrepresentatives, and managers as determined by MWI, b) key managementparticipation and support, c) MWI preparation on the material to be covered,and d) meeting summary and feedback mechanism.

 

(ii) MWI will participate in and assist inconducting product, program, production practices, sales training and customerknowledge training sessions.

 

(iii) MWI will guarantee to Pfizer thatPfizer products will be presented to customerson each and every appropriate sales call.

 

(iv) MWI will monitor customer meetings andprovide feedback to Pfizer.

 

(v) MWI will provide reasonable percentagesales commissions to its sales force employees.

 

(vi) MWI will provide Pfizer Territory Manageraccess to account’s management and representatives.

 

5.                                       In consideration ofMWI undertaking the obligations set forth herein Pfizer shall make payments toMWI in accordance with Schedule G hereto.

 

6.                                       Sales of Products toany party other than a PARTICIPATING CUSTOMER or Strategic Account for whom aSUGGESTED PRICE LIST has been incorporated into this Agreement are not coveredby this Agreement. Any transaction involving Products with any customerincluding a PARTICIPATING CUSTOMER for which MWIhas not been selected by that PARTICIPATING CUSTOMER as the distributor are notcovered by this Agreement.

 

7.                                       (a) MWI shall notbe provided with any rebate, discount or other compensation for Productshandled under this Agreement unless specifically set forth herein. All sales byPfizer to MWI shall be at the then current Pfizer list price but subject toappropriate credits in accordance with paragraph 2(c). Pfizer shall have theright to raise or change the price of any or all Products to MWI on /**/ priorwritten notice. Pfizer shall be free to limit sales of any or all Products toMWI in advance of any price increase.

 

(b) The parties agree that Pfizer will nolonger automatically credit MWI for returns of Products not sold in thecalendar year in which they are returned. Prior to issuing any appropriatecredit Pfizer shall be entitled to conduct a detailed manual review of salesdata.

 

(c) The parties agree that Pfizer shall notbe obligated to issue credits for any returns that exceed the current averageof select distributors as specified below unless such returns are the subjectof a recall or made at the request of Pfizer. The current average of selectdistributors for 2008 shall be:

 

-Distributor Average Returns (credits) as a % of sales- 1.63%

 

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8.                                       The payments describedin Schedule G hereto constitute full and complete compensation for MWI.

 

9.                                       Pfizer may terminatethis Agreement at any time on fifteen (15) days prior written notice in the event MWI takes any action that harms the Goodwillof Pfizer. All returns shall be approved by Pfizer and subject to Pfizer’sReturned Goods Policy. MWI may not offset payment to Pfizer of invoice amountsas credit for any compensation payable hereunder. Pfizer shall make monthlypayments of appropriate fees to MWI.

 

10.                                 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 MWI, in that the obligations arise frommutual transactions. The specific circumstances which will enable Pfizer toinitiate recoupment are:

 

(a) MWI becomes insolvent which shall be definedas:

 

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

 

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

 

(iii) 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.

 

(b) MWI commences a liquidation of its operationsby means of a sale of its assets in their entirety or piecemeal.

 

(c) MWI ceases its business operations whether ornot such cessation is voluntary or involuntary.

 

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

 

11.                                 Nothing in thisAgreement shall be deemed to preclude MWI from negotiating a service fee or anyother consideration from, or providing any discount or rebate to, any customer,including PARTICIPATING CUSTOMERS for the services (including those servicesspecified hereunder or any other services provided by MWI to any customer)provided by MWI.

 

12.                                 MWI shall distributePfizer Products only under the labeling provided by Pfizer or as otherwiseapproved in writing by Pfizer; prescribe, recommend, suggest, and advertiseeach Product for use only under the conditions stated in the labeling providedby Pfizer; and observe all federal, state, and local laws governing thedistribution of the Products.

 

13.                                 Nothing in thisAgreement shall be deemed to limit Pfizer’s ability to sell any Product at anytime to any customer including PARTICIPATING CUSTOMERS or any other party.Transactions consummated directly between Pfizer and any such customer or otherparty shall not qualify for any of the compensation payable to MWI hereunder.

 

14.                                 EXCEPT AS SET FORTH INTHIS AGREEMENT, IN THE LABELING OF THE PRODUCTS SOLD HEREUNDER, OR AS OTHERWISESPECIFIED IN WRITING BY PFIZER, PFIZER MAKES NO EXPRESS OR IMPLIED WARRANTIESWITH RESPECT TO THE PRODUCTS.

 

(a) Pfizer shall defend, indemnify, andhold MWI harmless from all liabilities, claims, demands, damages, costs andexpenses, or money judgments incurred by MWI or rendered against it resultingfrom (a) any breach by Pfizer of this Agreement, (b) third partyclaims or actions for personal injury or property damage which arise out of thedistribution or sale of Pfizer products or the failure to warn, except to theextent that such personal injury or property damage arises out of thenegligence or willful misconduct of MWI, and (c) any claim that theProducts, as sold by Pfizer, were defective, or (d) any claim that aProduct or its associated labeling or advertisinq prepared by Pfizer infringesany patent, trademark, trademark, copyright or other intellectual propertyright of any third party. Pfizer shall assume the defense of each such claimpromptly after written notice from MWI. In the event Pfizer is found by anycourt of competent jurisdiction to be liable for any claim based in productsliability, then Pfizer shall reimburse MWI’s reasonable legal fees incurred inthe course of cooperating with Pfizer’s defense. To be covered by this defenseand indemnity, MWI must: promptly notify Pfizer of any such claim; allow Pfizerto fully control the 

 

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defense and/or resolution of the claim; and cooperatefully with Pfizer in the matter. This defense, indemnity and payment for legalfees shall 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 eitherthe 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 suchsales should be halted.

 

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

 

15.                                 MWI and Pfizeracknowledge that in the performance of their duties hereunder each may obtainaccess to “Confidential Information” (as defined below) of the other. MWI andPfizer agree that during the term of this Agreement and for a period of three (3) yearsafter the termination of this Agreement, unless specifically permitted inwriting by the other party, to (a) retain in confidence and not discloseto any third party and (b) use only for the purpose of carrying out theirduties hereunder, 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 and developmentactivities, 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 written request from either party aftercompletion 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 ConfidentialInformation disclosed to or generated by either party in connection with thisAgreement.

 

16.                                 All notices orcommunications given hereunder by one party to the other shall be sent by handor by first class prepaid registered or recorded delivery post or by facsimileaddressed to such party as follows:

 
|   | If to Pfizer:                       | Pfizer, Inc.         |
|--------|-------------------------------------|---------------------------|
|   | 812 Springdale Drive                |
|   | Exton, PA 19341                     |
|   | Attention: President, Animal Health |
|   |                                |
|   | If to MWI:                          | MWI Veterinary Supply Co. |
|   | 651 S. Stratford Drive, Ste 100     |
|   | Meridian, ID 83642                  |
|   | Attn: Mary Pat Thompson, CFO        |

 
|   | With a copy to:                 |
|--------|---------------------------------|
|   |
|   | MWI Veterinary Supply Co.       |
|   | 651 S. Stratford Drive, Ste 100 |
|   | Meridian, ID 83642              |
|   | Attn: Jim Cleary, President     |
|        |                                 |  |

 

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

 

17.                                 This Agreement shallbe effective as of the date first written above and shall continue in forceuntil December 31, 2008. This Agreement may be terminated by either partyupon thirty (30) days prior written notice. Such termination may be withoutcause. This Agreement may be terminated immediately by either party upon writtennotice in the event of a material breach by the other.

 

18.                                 This Agreement shallgoverned by the laws of the State of New York applicable to contracts made andperformed therein. This Agreement is not assignable without the express writtenconsent of the other party, and may be modified or amended only in writingsigned by the party to be bound.

 

19.                                 This Agreement anddocuments 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 

 

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limited to the future planning activities of theparties, shall be deemed to give rise to any obligations on the part of eitherparty other than as expressly provided for herein.

 

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

 

 
| MWI Veterinary Supply Co. |           | Pfizer Inc. |
|---------------------------|----------------|-------------|
|                      |           |        |
| By                        | /s/ Jim Cleary |        | By | /s/ Clinton A. Lewis, Jr. |
|                      | Jim Cleary     |        |   | Clinton A. Lewis, Jr. |
|                      | President      |        |   | President, U.S. Operations |
|                      |           |        | Pfizer Animal Health |
|                      |           |        |
| Date                      | April 8, 2008  |        | Date | April 16, 2008 |
|                           |                |             |  |  |  |  |  |

 

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