Document:

EXHIBIT 10.17

 

LIVESTOCK PRODUCTS AGREEMENT

 

This
Agreement effective as of January 1, 2005 is made by and between Pfizer Inc., 812 Springdale Drive, Exton,
PA 19341 (“Pfizer”) and MWI Veterinary Supply
Co., 2201 North 20th Street, Nampa, ID 83687 (“MWI”).

 

WHEREAS,
MWI is in the business of buying and selling animal health products and
servicing customers for those products, and

 

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

 

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

 

1.                                       Pfizer will continue to promote its products
to certain select customers in the cattle and swine fields. The parties agree
that each time a customer from the list of customers approved by Pfizer enters
into an annual volume agreement with Pfizer (such customers referred to as “PARTICIPATING
CUSTOMERS”) and selects MWI as their supplier and to service that customers
account, Pfizer shall send to MWI a Pfizer Suggested Price List which shall
specify the products and prices which are the subject of an agreement between
Pfizer and such PARTICIPATING CUSTOMERS (hereafter a “SUGGESTED PRICE LIST”).
Each such SUGGESTED PRICE LIST shall be incorporated into and become part of
this Agreement.

 

2.                                       (a)                                  MWI agrees to purchase from Pfizer, at credit
terms agreed to between the parties and as may be further set forth on Pfizer’s
invoices, products sufficient to fulfill demand from all PARTICIPATING CUSTOMERS
in the quantities desired by the PARTICIPATING CUSTOMERS. MWI agrees to make
purchases from Pfizer in accordance with the timing set forth in Schedule C
hereto.

 

(b)                                 MWI agrees to maintain inventory in
accordance with Schedule E attached hereto. After the end of each quarter
PFIZER and MWI will agree a new Schedule E showing actual amount of
inventory to be maintained by MWI. Such Schedule shall be consistent with
MWI’s anticipated demand on a monthly basis.

 

(c)                                  MWI agrees that all sales of Pfizer products
from MWI to a PARTICIPATING CUSTOMER shall reflect the specific prices for each
product provided for in that PARTICIPATING CUSTOMERS most recent SUGGESTED

 

 

 

PRICE
LIST. In the event that the price listed on a PARTICIPATING CUSTOMERS most
recent SUGGESTED PRICE LIST for any particular product is lower (at the time of
consummation of a sale of such particular products between MWI and that
PARTICIPATING CUSTOMER) than the price paid by MWI to Pfizer for such product,
Pfizer agrees to credit MWI’s account for the amount of such difference. MWI
agrees to pay Pfizer for its products on a timely basis.

 

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

 

4.                                       MWI shall use its best efforts to provide
appropriate service to PARTICIPATING CUSTOMERS. MWI shall:

 

(a)                                  Store its inventory of Pfizer products under
conditions (including refrigeration where appropriate) that will ensure that
such products retain their potency, purity, quality, and identity;

 

(b)                                 Provide to Pfizer your Health Industry
Number, Customer Health Industry Number, Pfizer product number, transaction
date, number of units and price with respect to each sale of product on a
monthly basis, in such amounts and format as Pfizer may require, by means of
EDT.

 

This
information should be sent to Pfizer at 812 Springdale Drive, Exton, PA 19341,
Attn. Ms. Jennifer Willis;

 

(c)                                  Establish any service fee or other charge or
discount to any customer including PARTICIPATING CUSTOMERS for Pfizer products
independently and at its sole discretion;

 

(d)                                 Provide regularly scheduled delivery service
to its customers, use its best efforts to anticipate its customers’
requirements for Pfizer products, and maintain adequate stocks of Pfizer
products to meet its customers’ demands. In the event Pfizer delivers any
product order to a PARTICIPATING CUSTOMERS (drop ships) no consideration shall
be payable to MWI for that order under paragraph 5 below;

 

(e)                                  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;

 

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(f)                                    Invoice PARTICIPATING CUSTOMERS in an
accurate and timely manner;

 

(g)                                 Refer to that PARTICIPATING CUSTOMERS
SUGGESTED PRICE LIST on each invoice;

 

(h)                                 Take no action, whether or not identified
above, that would harm the goodwill or name of Pfizer, or damage the interests
of Pfizer or the Pfizer products. This shall include selling the Pfizer
livestock products to any customer requesting such products;

 

(i)                                     Make payment to Pfizer for all product
purchased from Pfizer net 60 days.

 

(j)                                     Provide to Pfizer by the close of business on
the last business day of each Pfizer Accounting Period (as set forth in Schedule D
hereto) an inventory report covering all inventory purchased from Pfizer and
setting forth in dollars at MWI’s acquisition cost from Pfizer the amount of
inventory by species. MWI agrees that Pfizer shall have the right to audit
inventory in the possession of MWI to confirm compliance with this paragraph 4
(j) and to confirm the accuracy of the data contained in the report.

 

In addition to the
obligations set forth above related to PARTICIPATING CUSTOMERS, MWI agrees as
to all customers to undertake with Pfizer those efforts set forth in Schedule A
hereto.

 

5.                                       In consideration of MWI undertaking the obligations
set forth herein related to PARTICIPATING CUSTOMERS, Pfizer agrees to pay to
MWI the following service fees on sales to PARTICIPATING CUSTOMERS;

 

(a)                                  a Revenue Sharing Allowance (RSA) paid at a
rate of (i) 9% on sales out for products to identified PARTICIPATING
CUSTOMERS who are producers, (ii) a Revenue Sharing Allowance (RSA) paid
at a rate of 9% on sales out for products to identified PARTICIPATING CUSTOMERS
who are veterinarians or dealers and who take possession of the Products which
are the subject of the sale for which the RSA is to be paid, (iii) a
Revenue Sharing Allowance (RSA) paid at a rate of 5% on sales out for products
to identified PARTICIPATING CUSTOMERS who are veterinarians or dealers and who
DO NOT take possession of the Products which are the subject of the sale for
which the RSA is to be paid. The RSA is calculated on a product by product
basis and based on the product price contained in the SUGGESTED PRICE LIST. The
RSA is contingent on MWI fulfilling all conditions outlined in paragraph 4 of
this Agreement. The payments made pursuant to this paragraph 5 (a) are not
payable for sales to anyone other than PARTICIPATING CUSTOMERS. The RSA is net
of any difference between MWI’s purchase price and the SPL price. Pfizer shall
pay 4% RSA for sales to 2nd tier distributors.

 

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(b)                                 the rebates provide for on Schedule B.
In the event that one Agreement holder acquires or combines with another
Agreement holder, the purchase objectives will be adjusted accordingly for the
purpose of determining incentives earned.

 

Pfizer
shall have the right to audit shipping records of MWI to confirm delivery to
products to veterinarians, dealers or producers in order to assure proper RSA
payments under paragraph 5 (a) above. Any material misrepresentations by
MWI related to paragraph 5 (a) (ii) or (iii) above and the party
actually taking possession of the products shall void any payments due under
paragraph 5 (b) above.

 

6.                                       Sales of Pfizer products to any party other
than a PARTICIPATING CUSTOMER for whom a SUGGESTED PRICE LIST has been
incorporated into this Agreement and any transaction with any customer
including a PARTICIPATING CUSTOMER for which MWI has not been selected by that
PARTICIPATING CUSTOMER as the distributor are not covered by this Agreement.
All sales by MWI to any party who is not a PARTICIPATING CUSTOMER shall be made
at prices and on terms and commitments agreeable to MWI and such customer.

 

7.                                       MWI shall not be provided with any rebate, discount
or other compensation for products handled under this Agreement, including any
rebate, discount or compensation which would otherwise be due under Pfizer’s
spring, fall or other similar program.

 

8.                                       The RSA payable hereunder on sales from the
SUGGESTED PRICE LIST, to PARTICIPATING CUSTOMERS shall be net of returns and
constitute full and complete compensation for MWI providing the EDI data and
upholding the reputation of Pfizer in carrying out the service of PARTICIPATING
CUSTOMERS.

 

9.                                       Pfizer may terminate this Agreement at any
time on fifteen (15) days notice in the event MWI takes any action that harms
the good will of Pfizer. All returns shall be approved by Pfizer and subject to
Pfizer’s Returned Goods Policy. MWI may not offset payment to Pfizer of invoice
amounts as credit for the fee payable hereunder. Pfizer shall make monthly
payment of appropriate fees to MWI.

 

10.                                 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:

 

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(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 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.

 

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.

 

11.                                 Nothing in this Agreement shall be deemed to
preclude MWI from negotiating a service fee or any other consideration from any
customer including PARTICIPATING CUSTOMERS for the services (including those
services specified hereunder or any other services provided by MWI to any
customer) provided by MWI.

 

12.                                 MWI shall distribute Pfizer products only
under the labeling provided by Pfizer; prescribe, recommend, suggest, and
advertise each product for use only under the conditions stated in the labeling
provided by Pfizer; and observe all federal, state, and local laws governing
the distribution of animal drugs.

 

13.                                 Nothing in this Agreement shall be deemed to
limit Pfizer’s ability to sell any product at any time to any customer
including PARTICIPATING CUSTOMERS or any other party. Transactions consummated
directly between Pfizer and any such customer or other party shall not qualify
for the fee payable under paragraph 5 above.

 

14.                                 MWI and Pfizer acknowledge that in the
performance of their duties hereunder each may obtain access to “Confidential
Information” (as defined below) of the other. MWI and Pfizer agree that during
the term of this Agreement and for a period of two (2) 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

 

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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.

 

15.                                 This Agreement shall be effective as of the
date first written above and shall continue in force until December 31,
2005. This Agreement may be terminated by either party upon thirty (30) days
prior written notice. Such termination may be without cause. This Agreement may
be terminated immediately by either party upon written notice in the event of a
material breach by the other.

 

16.                                 This Agreement shall governed by the laws of
the State of New York applicable to contracts made and performed therein. This
Agreement is not assignable without the express written consent of Pfizer, and
may be modified or amended only in writing signed by the party to be bound.

 

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

 

	
  MWI Veterinary Supply Co.

  	
   

  	
  Pfizer Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James F. Cleary, Jr.

  	
   

  	
  By:

  	
  /s/ Robert Dimarzo

  
	
   

  	
  James F. Cleary, Jr.

  	
   

  	
   

  	
  Robert DiMarzo

  
	
   

  	
   

  	
   

  	
   

  	
  President, U.S. Operations

  
	
   

  	
   

  	
   

  	
   

  	
  Pfizer Animal Health

  
	
  Title:

  	
  President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  February 11, 2005

  	
   

  	
  Date:

  	
  February 15, 2005

  

 

6Exhibit 10.18

TERMINATION OF MANAGEMENT AND

CONSULTING SERVICES AGREEMENT

 

This Termination of Management and Consulting Services
Agreement (“Agreement”) is dated as of June 3, 2005 between MWI Veterinary
Supply Co., an Idaho corporation (the “Company), Bruckmann, Rosser, Sherrill
& Co., L.L.C., a Delaware limited liability company (the “Consultant”), and
Agri Beef Co., an Idaho corporation (“Agri Beef”).

Recitals

A.            The Company, the Consultant and Agri Beef are parties to a Management and Consulting
Services Agreement, dated as of June 18, 2002 (the “Management Agreement”),
pursuant to which the Consultant provides certain management, consulting and
financial planning services to the Company. 
In consideration for such services, the Consultant and Agri Beef receive
from the Company an annual management fee determined in accordance with the
terms of the Management Agreement. 
Capitalized terms used in this Agreement but not defined herein shall
have the meanings given to such terms in the Management Agreement.

B.            The parent of the Company, MWI Veterinary
Supply, Inc., a Delaware corporation (the “Parent”), has filed a registration
statement on Form S-1 (Registration No. 333-124264) (the “Registration
Statement”) to register with the Securities and Exchange Commission (the “SEC”)
shares of common stock in connection with an underwritten initial public
offering.

C.            In connection with the initial public
offering, the parties have determined that it is in the best interests of the
Parent and the Company to terminate the Management Agreement in exchange for the
fee set forth herein.

Agreement

1.             Termination; Release.  The
parties agree that as consideration for the payment referred to in Section 2
hereof, the Management Agreement will terminate effective immediately prior to
the time the Registration Statement is declared effective by the SEC (the “Termination
Date”).  Each of the parties also hereby
agrees to release the others from any obligations or claim, whether known or
unknown, under the Management Agreement effective upon the Termination Date; provided, however, that the obligation of the
Company to indemnify the Consultant against any Losses arising out of the
Management Agreement shall survive the termination of the Management Agreement.

2.             Consideration.  As
consideration for the termination of the obligation of the Company to pay the
Management Fee pursuant to the Management Agreement, the Company agrees to pay the
Consultant $1,600,000 and Agri Beef $400,000, (in the aggregate, the “Termination
Fee”).  The Termination Fee shall be payable
within 15 days of the Termination Date.

 

 

3.             Counterparts.
 This Agreement may be executed in
one or more counterparts, each of which shall be an original, with the same
effect as if the signatures thereto were upon one instrument.

 

[Signatures begin
on next page]

 

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IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written
above.

 

	
   

  	
   

  	
   

  
	
   

  	
  MWI
  Veterinary Supply Co.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James F. Cleary, Jr.

  
	
   

  	
   

  	
  James F. Cleary, Jr.

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Bruckmann,
  Rosser, Sherrill & Co., L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce C. Bruckmann

  
	
   

  	
   

  	
  Bruce C. Bruckmann

  
	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Agri Beef
  Co.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert N. Rebholtz,
  Jr.

  
	
   

  	
   

  	
  Robert N. Rebholtz, Jr.

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
				

 

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