Exhibit 10.5


 


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


 


2009 STRATEGIC BRANDS
DISTRIBUTION AGREEMENT


 


This Agreement 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’s Products, to purchase 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 the following:


 


(a)                                  PFIZER has
elected to work with a select group of distributors that are committed to
maximizing the sale of the Products and to working closely with PFIZER to identify
market opportunities for both companies. The intent of this Agreement is to
attain that goal;


 


(b)                                 PFIZER
intends to utilize this group of distributors to sell the Products to
veterinarians who have and maintain a veterinary/client/patient relationship
and who prescribe products for dogs or cats within that relationship, and that
PFIZER has, and may in the future, run promotions and other activities that
would be seriously prejudiced if MWI resells the Products to non-veterinarians,
other distributors, internet pharmacies, human pharmacies or non-employee
agents or through brokers.


 


3.                                       Accordingly,
MW shall:


 


(a)                                  use its
reasonable best efforts to sell the Products by focusing its efforts at
reselling to veterinarians only. During the term of this Agreement MWI will not
sell any other product or formulation containing carprofen,
amoxicillin/clavulanic acid, or cefpodoxime proxetil other than those Products
purchased by MWI from PFIZER including but not limited to any capsule, tablet,
chewable tablet, drops or injectible carprofen, amoxicillin/clavulanic acid, or
cefpodoxime proxetil product. In the event that this Agreement is terminated
for any reason by MWI prior to December 31, 2010, MWI agrees not to sell
any other product or formulation containing carprofen, amoxicillin/clavulanic
acid, or cefpodoxime proxetil until after December 31, 2010. In the event
that 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 from
selling any cefpodoxime proxetil product that MWI was selling on the effective
date of this Agreement;


 


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


 





















 


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


 


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


 


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


 


(f)                                    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. MWI will make payment to PFIZER for all Products
shipped /**/;


 


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


 


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


 


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


 


4.                                       PFIZER
shall:


 


(a)                                  sell the
Products to MWI at the prices in effect in the then current published PFIZER
Animal Health Ethical Distribution Price Memo (hereinafter, “Price List”).
PFIZER also shall permit MWI to participate in the distributor incentive
programs offered by PFIZER, in accordance with the terms of such programs.
PFIZER shall have the unrestricted right to revise the prices, terms and
conditions of the Price List, and to add or delete Products or package sizes,
without advance notice to MWI, and the revisions shall be effective on all
orders submitted after the effective date of the price revisions. In all cases
of orders received for other than immediate shipment, the price for the
Products shall be that in effect at the time of shipment;


 


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


 


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


 


(d)                                 allow MWI
credit on prepaid returns in accordance with PFIZER’s Outdated Products Policy
which is in effect at the time;


 


(e)                                  If MWI has
more than one location then MWI must combine purchases of all locations to
determine attainment level for incentives. In the event that MWI acquires or
combines with 


 


2





















 


another PFIZER agreement
holder, the purchase objectives will be adjusted accordingly for the purpose of
determining incentives earned;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(d)                                 EXCEPT AS
SET FORTH 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 shall
defend and indemnify MWI from all claims resulting from any breach by PFIZER of
the warranties set forth in this paragraph 7 and specifically 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 the
labeling supplied by PFIZER; or sale of the Products after receipt of notice from
PFIZER that such sales should be halted;


 


(f)                                    in no event
shall PFIZER be liable to MWI for special, collateral, incidental, or
consequential damages in connection with or arising out of the purchase,
resale, or use of the Products. Except as provided under subparagraph 7(e),
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;


 


3





















 


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


 


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


 


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


 


8.                                       MWI shall
not delegate its duty of performance or assign its obligations under this
Agreement without the prior written consent of PFIZER.


 


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


 


10.                                 This
Agreement shall be effective as of the date first written above and shall
continue in force until December 31, 2010 (hereinafter, “Contract Term”).
For the purpose of calculating the year end rebates set forth in Exhibit A
and the Custom Marketing Program funds set forth in Exhibit B, the
Contract Term will 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 agreement prior to the expiration date with or without cause,
upon thirty (30) days written notice to MWI. Either party may terminate this
Agreement immediately upon written notice, in the event of a material breach by
the other party. Upon any termination of this Agreement for any reason prior to
the expiration date PFIZER shall have the right to buy back from MWI all
inventory of the Products owned by MWI at the time of termination at a price
equal to MWI’s purchase price from PFIZER of such inventory.


 


11.                                 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 (6) 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.


 


4





















 


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.


 


12.                                 MWI and
PFIZER acknowledge that in the performance of their duties hereunder MWI and
PFIZER may obtain access to “Confidential Information” (as defined below) of
each 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.


 


13.                                 This
Agreement shall be governed by the laws of the State of New York applicable to
contracts to be fully performed therein.


 


14.                                 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

  	
   

  	
  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

  



 


5

















 


Exhibit A


 


PFIZER shall compensate
MWI as follows:


 


For Contract Year 2009
of the Contract Term: A year end rebate up to a maximum of /**/ on MWI’s
Rimadyl sales out units plus /**/ on MWI’s Clavamox sales out units calculated as follows:


 


For RIMADYL:


 


1)                                      /**/ on
sales out units of Rimadyl by MWI calculated at the then current published
PFIZER Animal Health Ethical Distribution Price Memo if PFIZER attains PFIZER’s
overall Rimadyl growth target in sales in to all PFIZER customers for the
calendar year ended December 31, 2009 (such target to be determined at the
end of Contract Year 2008).


 


2)                                      /**/ on
sales out units of Rimadyl by MWI calculated at the then current published
PFIZER Animal Health Ethical Distribution Price Memo for MWI providing data on
the percentage of market share that Rimadyl represents of MWI ‘s entire NSAID
business.


 


3)                                      /**/ on
sales out units of Rimadyl by MWI calculated at the then current published
PFIZER Animal Health Ethical Distribution Price Memo for a ranking of MWI’s
sales representatives’ performance based on MWI’s sales out of Rimadyl.


 


4)                                      /**/ on
sales out of units of Rimadyl by MWI calculated at the then current published
PFIZER Animal Health Ethical Distribution Price Memo for a ranking of MWI’s
sales representatives’ performance based on MWI’s sales out of MWI’s entire
NSAID business.


 


For CLAVAMOX


 


5)                                      /**/ on
sales out units of Clavamox by MWI calculated at the then current published
PFIZER Animal Health Ethical Distribution Price Memo if PFIZER attains PFIZER’S
overall Clavamox growth target in sales in to all PFIZER customers for the
calendar year ended December 31, 2009 (such target to be determined at the
end of Contract Year 2008).


 


A-1





















 


For Contract Year 2010
of the Contract Term: A year end rebate up to a maximum of /**/ on MWI’s
Rimadyl sales out units plus /**/ on MWI’s Clavamox sales out units, calculated as follows:


 


For RIMADYL:


 


6)                                      /**/ on
sales out units of Rimadyl by MWI calculated at the then current published
PFIZER Animal Health Ethical Distribution Price Memo if PFIZER attains PFIZER’s
overall Rimadyl growth target in sales in to all PFIZER customers for the
calendar year ended December 31, 2010 (such target to be determined at the
end of Contract Year 2009).


 


7)                                      /**/ on
sales out units of Rimadyl by MWI calculated at the then current published
PFIZER Animal Health Ethical Distribution Price Memo for MWI providing data on
the percentage of market share that Rimadyl represents of MWI ‘s entire NSAID
business.


 


8)                                      /**/ on
sales out units of Rimadyl by MWI calculated at the then current published
PFIZER Animal Health Ethical Distribution Price Memo for a ranking of MWI’s
sales representatives’ performance based on MWI’s sales out of Rimadyl.


 


9)                                      /**/ on
sales out of units of Rimadyl by MWI calculated at the then current published
PFIZER Animal Health Ethical Distribution Price Memo for a ranking of MWI’s
sales representatives’ performance based on MWI’s sales out of MWI’s entire
NSAID business.


 


For CLAVAMOX:


 


10)                                /**/ on
sales out units of Clavamox by MWI calculated at the then current published
PFIZER Animal Health Ethical Distribution Price Memo if PFIZER attains PFIZER’s
overall Clavamox growth target in sales in to all PFIZER customers for the
calendar year ended December 31, 2010 (such target to be determined at the
end of Contract Year 2009).


 


A-2

















 


Exhibit B


 


CUSTOM
MARKETING PROGRAM Funding


 


MWI may earn up to /**/
for each contract year (as defined in the body of this agreement) in Custom
Marketing Program (“CMP”) funds based on all purchases (Gross less returns) by
MWI of PFIZER Rimadyl, Clavamox, and Simplicef (Products”).


 


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


 


1.                                       To be
eligible for CMP funds, programs must include specific performance metrics and
specifics on total CMP funds to be spent in the program and how all CMP funds
would be spent. In no event will MWI be eligible to receive CMP funds in excess
of /**/ of purchases by MWI from PFIZER of Rimadyl, Clavamox, and Simplicef
based on their Contract Year 2009 and Contract Year 2010 purchases of Rimadyl,
Clavamox, and Simplicef from PFIZER.


 


2.                                       While MWI is
free to sell Product at such prices and on such terms as MWI agrees with its
customers, programs that result in a direct price decrease to the purchaser
will not be supported with CMP funds.


 


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


 


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


 


B-1