PROFESSIONAL VETERINARY PRODUCTS LTD /NE/ - Proxy Statement (definitive) (DEF 14A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Plan provides benefits upon a participant’s retirement, early retirement, disability before retirement, and in some cases, survivor benefits to a participant’s beneficiary. Benefits will also be paid to a participant if the participant’s employment is terminated within three years following a change in control as defined in the Plan document. Under the terms of this Plan, the Company is responsible for the premiums of the additional disability coverage purchased but the respective executive or employee owns the insurance policy. The Plan is unfunded and is not subject to ERISA requirements.

Benefits payable under the Plan are paid exclusively from the Company’s general assets. Because these assets remain subject to the claims of the Company’s general creditors, no security is offered against the Company’s financial inability to pay due to insolvency or bankruptcy. While the Plan is an unfunded non-contributory plan, the Company is informally funding the plan through life insurance contracts on the participants. The life insurance contracts had cash surrender values of $658,524 at July 31, 2004. The amount of the annual benefit is based upon the final three-year average of compensation paid to such executives. Benefits under this Plan can be illustrated as follows:


Average Final Three Years of
Compensation	Plan Benefit
$150,000	$	120,000
$200,000	$	160,000
$300,000	$	240,000
$400,000	$	320,000

The benefits shown in the above table are subject to offsets for Social Security and Company paid 401(k) contributions at the time of payment. For additional information, see “Certain Relationships and Related Transactions.”

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Company’s Articles and Bylaws specifically provide that each shareholder is entitled to own only one share of stock. Thus, there is no shareholder that currently owns or will own more than one share in the future and no shareholder owns less than or a fractional portion of the single share. No single shareholder owns more than 5% of the outstanding Common Stock. The percentages shown prior to this offering are based on 1,946 shares of Common Stock outstanding on October 31, 2004. Except as indicated and subject to community property laws where applicable, the persons named in the table have sole voting and investment power for each share beneficially owned by them.


	Shares
	Beneficially		Nature of Beneficial	Percentage
Name of Beneficial Owner ⁽¹⁾	Owned		Ownership	of Class
Dr. Buddy D. Ray		1	By Mayfield Veterinary Clinic	*
Dr. Steven E. Wright		1	By Millard Veterinary Clinic	*
Dr. Chester L. Rawson		1	By Veterinary Associates	*
Dr. G.W. Buckaloo, Jr.		1	By Crysler Animal Hospital	*
Dr. Tom Latta		1	By Hansford County Veterinary Hospital	*
Dr. Michael B. Davis ⁽²⁾		1	By Carroll Veterinary Clinic	*
Dr. Amy Lynne Hinton		1	By Companion Animal Veterinary Services	*
Dr. William Swartz		1	Bill Swartz, D.V.M. d/b/a Clocktower Animal Hospital	*
Dr. Scott A. Shuey ⁽²⁾		1	By Adams County Veterinary Services, Inc. ⁽³⁾	*
Dr. Lionel Reilly		-		—
Neal Soderquist		-		—

All executive officers and directors as a group (11 persons)		9		*

*		Less than one percent

(1)		Unless otherwise indicated, the business address for the persons named in the above table is 10077 South 134th Street, Omaha, Nebraska 68138.

(2)		Dr. Davis has elected not to stand for re-election as a board member after the 2004 Annual Meeting. Dr. Shuey has been nominated to be elected as a board member for District 2 at the 2004 Annual Meeting.

(3)		Voting power shared with owners of veterinary practice.

Certain Relationships and Related Transactions

We have not made loans to, loan guarantees on behalf of, or engaged in material transactions with the Company officers, directors or shareholders except as set forth herein. In 2002, the Sarbanes-Oxley Act made it unlawful for any publicly traded company to extend or maintain credit, to arrange for the extension of credit, or to renew an extension of credit in the form of a personal loan to or for the benefit of executive officers and directors. The Sarbanes-Oxley Act also provides that an extension of credit maintained by such company on the date of enactment of the Sarbanes-Oxley Act will be “grandfathered” and therefore not subject to the Act as long as there is no material modification to any term of any such extension of credit or renewal of any such extension of credit on or after the enactment date. The Company does not believe that making additional payments under the pre-existing insurance arrangements should constitute banned personal loans, and to the extent certain policies may be considered loans, the Company’s current arrangements are grandfathered under the Sarbanes-Oxley Act and are not prohibited. Until further guidance is issued, the Company intends to continue paying such premiums for the benefit of Dr. Reilly.

From time to time, we have engaged in transactions with affiliated parties. The directors and/or their related practices, acting in their capacity as shareholders, have purchased items related to the practice of veterinary medicine from the Company on the same terms and conditions as every other shareholder. As a matter of policy, all future material transactions between the Company and any of its officers, directors, or shareholders or other affiliates (including SERVCO) will be approved by our audit committee or a majority of the independent and disinterested members of the Board of Directors, will be on terms no less favorable to the Company than could be obtained from unaffiliated third parties and will be in connection with bona fide business purposes of the Company. The Company owns a 20% interest in SERVCO d/b/a MARKETLink. Dr. Reilly, the Company’s Chief Executive Officer and President serves on the board of SERVCO. In 2004, sales to non-shareholders through ProConn, LLC and through Market Link totaled $63 million.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and holders of in excess of ten percent of any such class are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. We believe that our officers, directors, and greater than ten percent beneficial owners complied with all Section 16 (a) filing requirements applicable to them during our preceding fiscal year.

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

The principal independent public accounting firm utilized by the Company during fiscal 2004 was Quick & McFarlin, P.C., and the Company has selected such firm to continue as its independent public accountants for the fiscal year ending July 31, 2005. A representative of Quick & McFarlin, P.C. is expected to attend the Annual Meeting, will have an opportunity to make a statement if he or she desires to do so, and is expected to respond to appropriate questions from shareholders.