**Exhibit 10.1**

 

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

 

**2009 LIVESTOCK PRODUCTSDISTRIBUTION AGREEMENT**

 

This Livestock Products Agreement (“Agreement”)effective as of January 1, 2009 (“Effective Date”) is made by and between **Pfizer Inc.,** 812 Springdale Drive, Exton, PA 19341 (“Pfizer”)and, MWI Veterinary Supply, 651 South Stratford Drive, Suite 100,Meridian, Idaho 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 (and referenced inSchedule A to this Agreement).

 

“Sales Out” shall mean the reported sales by MWI to Covansysand accepted by Pfizer.

 

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

 

1.             (a)           Pfizer shall continue to promote its Products tocertain select customers in the livestock field. The parties agree that eachtime a PARTICIPATING CUSTOMER selects MWI as their supplier and to service thatcustomer’s account, Pfizer shall send to MWI a Pfizer Suggested Resale PriceList which shall specify the Pfizer Products and the Pfizer suggested resaleprices quoted to such PARTICIPATING CUSTOMER (hereafter “SUGGESTED RESALE PRICELIST). Each such SUGGESTED RESALE PRICE LIST shall be incorporated into andbecome part of this Agreement. Please find the current SUGGESTED RESALE PRICELIST listed on Schedule C hereto. Also included on Schedule C is the currentPfizer Livestock Distributor Pricing. The Products and suggested resale pricesare subject to change at any time in Pfizer’s sole discretion upon thirty (30)days prior written notice.

 

(b)           Pfizer reserves theright to add or delete PARTICIPATING CUSTOMERS or Strategic Accounts at anytime at Pfizer’s sole discretion. Pfizer will provide written notice to MWI ofany changes. Pfizer will notify MWI of any (i) additions to the StrategicAccounts list within twenty-four (24) hours of Pfizer’s receipt of the customercontract and (ii) removals from the Strategic Accounts list within four (4) businessdays prior to the removal effective date.

 

2.             (a)           MWI represents and warrants that for thepurposes of this Agreement, it is in the business of purchasing Products fromPfizer for the sole purpose of resale and distribution, is registered withinthe state(s) with which it does business, is compliant with all pharmacyand distribution licensing requirements within the state(s) with which itdoes business, and is compliant with and capable of participating in ElectronicData Interchange (EDI).

 

(b)           MWIagrees to purchase from Pfizer, at credit terms agreed to between the partiesand as may be further set forth on Pfizer’s invoices, Products sufficient tofulfill demand from all customers to whom MWI will sell Products in thequantities desired by the customers.

 

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(c)           MWIagrees to maintain an inventory of Products equal to /**/ Demand, but excluding all Products indicated onSchedule A as ineligible for RSA payments. For purposes of this Agreement “Demand” shall mean /**/.

 

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All Products shall count towards the amount heldin inventory by MWI. MWI and Pfizer agree to act in good faith to resolve anymaterial differences in the on hand inventory calculations.

 

(d)           Pfizer reserves theright to allocate purchases such that MWI may not purchase more than two (2) monthsMWI’s average of the most current Moving Annual Total sales purchases.Exceptions must be approved by Pfizer’s New York headquarters.

 

(e)           MWI agrees that allsales of Pfizer Products from MWI to a PARTICIPATING CUSTOMER shall reflect thespecific prices for each Product provided for in that PARTICIPATING CUSTOMER’S most recent SUGGESTED RESALEPRICE LIST. In the event that the price listed on a PARTICIPATING CUSTOMER’Smost recent SUGGESTED RESALE PRICE LIST for any particular Product is lower (atthe time of consummation of a sale of such particular Products between MWI andthat 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 herein contained shall create or be deemedto create any relationship between the parties other than as specificallyprovided for herein. No employment, partnership, specific or general agencyrelationship shall exist unless specifically provided for in writing betweenthe parties. MWI shall not represent, directly or indirectly, expressly or byimplication, that any such relationships exist and/or that MWI has anyauthority except as set forth in this Agreement.

 

4.             MWI shall use commercially reasonable efforts toprovide appropriate service to the customers to whom MWI will sell hereunder.For customers serviced pursuant to this Agreement, MWI shall:

 

(a)           Store its inventory ofPfizer Products under conditions (including refrigeration where appropriate) inaccordance with package labeling or other written instructions from Pfizer toensure that such Products retain their potency, purity, quality, and identity;

 

(b)           Provide to Covansys bythe close of business on Friday of each week an inventory report covering allProduct inventory purchased from Pfizer and setting forth in dollars at MWI’sacquisition cost from Pfizer the amount of inventory by species. MWI agreesthat Pfizer shall have the right, upon reasonable advance notice and duringbusiness hours to audit inventory in the possession of MWI to confirmcompliance with this paragraph 4(b) and to confirm the accuracy of thedata contained in the report;

 

(c)           Provide to Covansysits Health Industry Number, Customer Health Industry Number, Pfizer Productnumber, transaction date, ship to zip code, number of units and price withrespect to each sale of Product, and unit inventories on each Pfizer Productsku that MWI sells;

 

(d)           Provide Sales Outdata, which shall include Leaders Edge and Non-Leaders Edge sales, to Covansyswithin ten (10) working days of the date of each invoice. MWI will use itsbest efforts to ensure Sales Out data integrity and timeliness;

 

(e)           Submit all orders toPfizer via EDI. EDI report 867 is the acceptable format;

 

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

 

(g)           Provide regularlyscheduled delivery service to its customers and use commercially reasonableefforts to anticipate its customers’ requirements for Pfizer Products. In theevent Pfizer delivers any product order to PARTICIPATING CUSTOMERS (drop ship),no consideration shall be payable to MWI for that order under paragraph 5below, provided that Pfizer will pay MWI for any drop ship if such shipment ismade necessary by the unavailability of Pfizer Products;

 

(h)           MWI agrees that creditlimits established by Pfizer shall be subject to change upon written notice byPfizer in its sole discretion and that no Product shipments will be made to MWIin excess of the established credit limits;

 

(i)            Invoicecustomers in an accurate and timely manner;

 

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

 

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(k)           Take no action,whether or not identified above, that would harm the Goodwill or name ofPfizer, or damage the interests of Pfizer or the Products, other than wheresupported by sound factual evidence, including, but not limited to, thediversion of Products and statements of false information. For purposes of thisAgreement “Goodwill” shall mean the marketplace advantage of customer patronageand loyalty developed with continuous business under the same name over aperiod of time; and

 

(l)            Make payment to Pfizerfor all Products purchased from Pfizer /**/.In the event MWI fails to maintain the inventory levels specified in paragraph2(c) above Pfizer shall have the right, upon /**/ written notice to MWI, to receive payment fromMWI /**/.

 

5.             Inconsideration of MWI undertaking the obligations set forth herein Pfizer shallmake payments to MWI in accordance with Schedule D hereto.

 

6.             All sales of Products to PARTICIPATING CUSTOMERor Strategic Accounts for whom a SUGGESTED RESALE PRICE LIST has beenincorporated into this Agreement are covered by this Agreement with regard tocompensation payable to MWI hereunder. Any transaction involving Products withany customer including a PARTICIPATING CUSTOMER for which MWI has not beenselected by that PARTICIPATING CUSTOMER as the distributor are not covered bythis Agreement with regard to compensation payable hereunder.

 

7.             (a)           MWI shall not be provided with any rebate,discount or other compensation for Products handled under this Agreement unlessspecifically set forth herein. MWI will NOT be eligible to collect an RSA onany lateral sales to an unauthorized Pfizer distributor. (It is MWI’sobligation to confirm with Pfizer, prior to making a sale, as to whether adistributor is an authorized distributor.) All sales by Pfizer to MWI shall beat the then current Pfizer list price but subject to appropriate credits inaccordance with paragraph 2(e). Pfizer shall have the right to raise or changethe price of any or all Products to MWI on /**/prior written notice. Pfizer shall be free to limit sales of any or allProducts to MWI in advance of any price increase.

 

(b)           The parties agree that Pfizer shall not beobligated to issue credits for any returns that exceed the current average ofreturns of distributors as specified below unless such returns are the subjectof a recall or made at the request of Pfizer. The current average of returns ofdistributors for the calendar year of the contract timeline January 1,2009 to December 31, 2009 shall be: /**/

 

8.             The payments described in Schedule D heretoconstitute full and complete compensation for MWI.

 

9.             All returns shall be approved by Pfizer andsubject to Pfizers Returned Goods Policy, attachedhereto as Schedule F. MWI may not offset payment to Pfizer of invoice amountsas credit for any compensation payable hereunder. Pfizer shall make bi-monthlypayments of appropriate fees to MWI.

 

10.           MWI and Pfizer agree that, under the specificcircumstances delineated in this Section 10, Pfizer, at Pfizers solediscretion, may recoup the sums outstanding to it from MWI against those sumswhich 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 debtsis greater than all of MWI’s property (“Balance Sheet Test”); or

 

(ii)           MWI is generally notpaying its debts as they come due; or

 

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

 

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(b)           MWI commences a liquidation of its operations bymeans of a sale of its assets in their entirety or piecemeal; or

 

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

 

(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 this Agreement shall be deemed topreclude MWI from negotiating a service fee or any other consideration from, orproviding any discount or rebate to, any customer, including PARTICIPATINGCUSTOMERS for any services provided by MWI.

 

12.           MWI shall distribute Pfizer Products only underthe labeling provided by Pfizer or as otherwise approved in writing by Pfizer;prescribe, recommend, suggest, and advertise each Product for use only underthe conditions stated in the labeling provided by Pfizer; and observe allfederal, state, and local laws governing the distribution of the Products.

 

13.           Nothing in this Agreement shall be deemed tolimit Pfizer’s ability to sell any Product at any time to any customerincluding PARTICIPATING CUSTOMERS or any other party. Transactions consummateddirectly between Pfizer and any such customer or other party shall not qualifyfor any of the compensation payable to MWI hereunder. Nothing in this Agreementshall be deemed to limit MWI’s ability to sell non-Pfizer products at any timeto any customer including PARTICIPATING CUSTOMERS or any other party. MWI’sactive promotion or sale of products not made by Pfizer will not be consideredharmful to the Goodwill or name of Pfizer, or the Products, provided that thePfizer Products are not maligned in any way as prohibited under Section 4(k) ofthis Agreement.

 

14.           EXCEPT AS SET FORTH IN THIS AGREEMENT, IN THELABELING OF THE PRODUCTS SOLD HEREUNDER, OR AS OTHERWISE SPECIFIED IN WRITINGBY PFIZER, PFIZER MAKES NO EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO THEPRODUCTS.

 

(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 againstit resulting from (a) any breach by Pfizer of this Agreement, (b) thirdparty claims or actions for personal injury or property damage which arise outof the distribution or sale of Pfizer products or the failure to warn, exceptto the extent 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. In the event Pfizer is found byany court of competent jurisdiction to be liable for any claim based inproducts liability, then Pfizer shall reimburse MWI’s reasonable legal feesincurred in the course of cooperating with Pfizers defense. To be covered bythis 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; andcooperate fully with Pfizer in the matter. This defense, indemnity and paymentfor legal fees shall not apply to claims alleging: MWI alteration, negligenthandling or improper storage of the Products; sale of outdated Products; saleor recommendation of the Products for uses or in a manner not set forth ineither the labeling supplied by Pfizer or as otherwise specified by Pfizer inwriting; or sale of the Products after receipt of written notice from Pfizerthat such sales should be halted.

 

(b)           In no event shalleither party be liable to the other party for special, collateral, incidental,punitive or consequential damages in connection with or arising out of thisAgreement. Except as provided under subparagraph 14(a), above, total damagesrecoverable against Pfizer by MWI shall be exclusively limited to the purchaseprice of the Products with respect to which damages are claimed.

 

15. MWI and Pfizer acknowledge that in the performanceof their duties hereunder each may obtain access to “Confidential Information”(as defined below) of the other. MWI and Pfizer agree that during the term ofthis Agreement and for a period of three (3) years after the terminationof this Agreement, unless specifically permitted in writing by the other party,which permission shall not be unreasonably withheld, especially in connectionwith a sale of all or a substantial portion of MWI’s business, to (a) retainin confidence 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,

 

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relating to Pfizers and MWI’s business or potentialbusiness or its research and development activities,not generally available to or known to the public, and not otherwise known tothe receiving party, that is disclosed to or learned by the other partypursuant hereto. “Confidential information” does not mean or include anyinformation: (a) which is, at the time of disclosure, available to thegeneral public; or (b) which following disclosure becomes available to thegeneral public through no fault of the recipient; or (c) which recipientcan demonstrate was in its possession before receipt; or (d) which isdisclosed to recipient without restriction on disclosure. Upon written requestfrom either party after completion of the work provided for hereunder or othertermination of this Agreement each party will return to the other party anydocuments, or copies thereof, or any product samples, containing orconstituting Confidential Information disclosed to or generated by either partyin connection with this Agreement.

 

16.           All notices or communications given hereunder byone party to the other shall be sent by hand or by first class prepaidregistered or recorded delivery post or by facsimile addressed to such party asfollows:

 

If to Pfizer:

Pfizer, Inc.

Attention: President, Animal Health 235 East 42ndStreet

New York, NY 10017

 

If to MWI:

MWI Veterinary Supply

Attention: President, CEO

651 South Strafford Drive, Suite 100 Meridian,Idaho 83642

 

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

 

17.           This Agreement shall be effective as of January 1,2009 and shall continue in force until December 31, 2009. This Agreementmay be terminated by either party upon thirty (30) days prior written notice.Such termination may be without cause. This Agreement may be terminatedimmediately by either party upon written notice in the event of a materialbreach by the other. In the event MWI takes any action that harms or damagesthe interests of Pfizer or the Products, other than where supported by soundfactual evidence, including, but not limited to, the diversion of Products andstatements of false information, Pfizer may terminate this Agreementimmediately upon written notice.

 

18.           This Agreement shall governed by the laws of theState of New York applicable to contracts made and performed therein. ThisAgreement is not assignable without the express written consent of the otherparty, and may be modified or amended only in writing signed by both parties.

 

19.           This Agreement and documents referred to hereinembody the entire understanding between the parties hereto, will supersedeprior agreements relating to the Products. No activities conducted pursuant tothis Agreement or related thereto, including but not limited to the futureplanning 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, theparties have executed this Agreement.

 
| MWI          |                   | Pfizer Inc.                |
|--------------|------------------------|----------------------------|
|         |                   |                       |
| By           | /s/  Mary Pat Thompson |                       | By | /s/  Clinton A. Lewis, Jr. |
|         |                   | Clinton A. Lewis, Jr. |
|         |                   | President, U.S. Operations |
|         |                   | Pfizer Animal Health       |
|         |                   |                       |
| Date 12/8/08 |                   | Date 12/11/08              |
|              |                        |                            |  |  |

 

 

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