Sales Agent Agreement

Redacted portions have been marked with asterisks (***). Confidential treatment has been requested for the redacted portions. The confidential redacted portions have been filed separately with the Securities and Exchange Commission.


EXHIBIT 10.6


Sales Agent Agreement between
Professional Veterinary Products Limited and Merial


This Agreement, dated August 1, 1997, defines the business relationship between Merial Limited, a company limited by shares registered in England and Wales (registered number 3332751) with a registered office at 27 Knightsbridge, London SW1, England, and domesticated in Delaware, USA as Merial LLC ("Merial") and Professional Veterinary Products, 10100 "J" Street, Omaha, NE, 68127 and its Affiliates ("Professional Veterinary Products").


This Agreement is intended to establish a mutually profitable relationship in which Merial provides sales opportunities to Professional Veterinary Products for market-leading animal health products, and Professional Veterinary Products actively promotes Merial Products on a preferred or exclusive basis within those products' respective therapeutic classes. This Agreement represents a commitment on the part of Merial and Professional Veterinary Products to work together to develop markets and to expand the use of Merial Products for the benefit of animals, their owners, veterinarians, Professional Veterinary Products, and Merial.


1. The Territory will initially be Professional Veterinary Products'
Primary Territory as shown in Professional Veterinary Products' 1997
Merck AgVet Sales Agent Agreement and will remain unchanged through
December 31, 1997. Effective January 1, 1998, the Territory will be:


Shareholders in AR, FL GA, IA, IL IN, KS, KY, MD, Ml, MN, MO, NC, ND,
NE, NY, OH, PA, SD, TN, VA, WI, OK


"Products" will initially mean those products shown in Professional
Veterinary Products' 1997 Merck AgVet Sales Agent Agreement. Additional
products will be added upon notice in writing by Merial to Professional
Veterinary Products between the date of this Agreement and January 1,
1998, at which time Products will be as listed in Schedule A.


Professional Veterinary Products is authorized to obtain orders for the
Merial Products from Authorized Merial Accounts (AMAs) in the Territory.
Merial will pay commissions on those orders according to Schedule A.
Commissions on sales, if any, made by Professional Veterinary Products
to Special Services Organizations (SSOs) will be paid to Professional
Veterinary Products as show, in Schedule B.


Additionally, Professional Veterinary Products is authorized to obtain
orders for the Merial Products from AMAs in states or territories not
included in the Territory. Commissions will not be earned for such
orders obtained outside the Territory.


All sales of Merial Small Animal Products will be made only to
veterinarians who will


dispense the Products to clients with whom they have an established
veterinarian/ client/patient relationship.


Merial reserves the right to expand or reduce the Territory upon thirty
(30) days written notice to Professional Veterinary Products and to
authorize other Sales Agents to sell Merial Products, with or without
commission, in the Territory.


2. Merial agrees to:


a. Integrate all Merial Products approved in the U.S. into the Merial
Sales Agency system by January 1, 1998, providing Professional
Veterinary Products the opportunity to take orders from AMAs for
Products that are listed in Professional Veterinary Products' 1997
Merck AgVet Sales Agent Agreement and are listed in the attached
Schedule A (Merial Products).


b. Promptly fill accepted orders that are submitted by Professional
Veterinary Products.


c. Be responsible for all collection actions and expenses.
Professional Veterinary Products will assist in obtaining payment
from AMAs with overdue invoices when requested to do so by Merial.


d. Pay Professional Veterinary Products, as full compensation for all
services rendered under this Agreement, certain commissions.
Effective January 1, 1998, commissions will be paid as shown in the
attached Schedule A. On all sales of Merial Products invoiced after
the date of this Agreement but before January 1, 1998 (the "Interim
Period'), commissions for Merial Products included in the 1997
Merck AgVet Sales Agent Agreement will continue to be paid at the
rates reflected in that agreement. Commissions earned in the
Interim Period on sales of Merial Products added to the Merial
Sales Agency system after August 1, 1997, will be at the rate for
85%-100% of goal shown in the attached Schedule A. At all times,
commissions will be calculated on net invoiced sales. A monthly
report of sales and commissions earned will be provided to
Professional Veterinary Products.


e. Make available for the purposes of securing sales from AMAs all
national deals and sales promotion programs designed for AMAs and
applicable to Merial Products.


f. Work with Professional Veterinary Products to conduct in-depth
Business Planning to increase sales opportunities and results and
to maximize the use of available resources for Merial Products.


g. Support Professional Veterinary Products by increasing awareness
and usage of Merial Products in Professional Veterinary Products'
Territory in accordance with the Sales Agent's demonstrated
commitment to marketing Merial Products and by means that Merial
determines to be reasonable, which may include:


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i. Conducting national and regional consumer marketing and
promotional campaigns.


ii. Conducting sales promotions, disease and product awareness
campaigns, and client education programs for AMAs.


iii. Providing marketing assistance programs to develop
professional promotional and educational programs, workshops,
and seminars as mutually agreed between Merial and
Professional Veterinary Products.


iv. Providing product and skills training for Professional
Veterinary Products which may include the following:


- sales training for Professional Veterinary Products field
and telemarketing sales organizations


- sales Management training for Professional Veterinary
Products' managers


- technical training in the Merial Products and the
diseases which are controlled or prevented by them


- conducting meetings to inform Professional Veterinary
Products' sales force about sales promotions and the use
of campaign detail materials, sales tools, and
point-of-purchase merchandising aids


- participating in account presentations to AMAs


- handling customer complaints and inquiries and providing
consultations to promote and maintain customer
satisfaction


- maintaining communication between Merial and Professional
Veterinary Products to effectuate this Agreement.


h. Indemnify and hold Professional Veterinary Products harmless from
and against any and all claims, damages, losses, and liabilities
directly associated with the use of Merial Products, except to the
extent that said claim arises out of any statement, act, or
omission by Professional Veterinary Products.


3. Professional Veterinary Products agrees to:


a. Establish Merial Products shown on Schedule A as "Preferred
Products" within the formulary offered by Professional Veterinary
Products, by January 1, 1998. Professional Veterinary Products will
distinguish the "Preferred Products" from other products by:


- achieving sales goals agreed to by Professional Veterinary
Products and Merial management


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- conveying to Professional Veterinary Products' sales and
marketing organizations the strategic importance of Merial and
its Products


- offering sales representatives financial incentives to sell
Merial Products that are comparable or greater than the
incentives offered by Professional Veterinary Products to sell
any other supplier's products


- featuring Merial Products in daily detailing and sales
campaigns and mailings


- recommending Merial Preferred Products as the preferred
products offered within the respective product category


- permitting no negative selling against any Merial Products


- making no affirmative efforts to shift sales of Merial
Products to competing products


- recommending Merial Preferred Products as the preferred
products offered to veterinarians within the respective
product category


- utilizing Merial sales and technical support to increase and
maintain sales support


- providing Merial quarterly access to Professional Veterinary
Products sales force for product and sales training


- providing premium space allocation in publications for Merial
product advertisements


- providing to Merial preferred participation in regional and
national sales meetings.


For the term of this Agreement, Professional Veterinary Products
will not, on a preferred basis, sell, market or promote any
product(s) that compete directly with the Merial Products or any
combinations thereof.


b. That as of August 1,1997, the only products containing the
ivermectin molecule that Professional Veterinary Products will
represent, sell or distribute are those supplied, manufactured or
distributed by Merial.


In the event that Professional Veterinary Products elects to
represent, sell, or distribute ivermectin products not supplied or
manufactured by Merial, Merial reserves the right, to be exercised
within thirty (30) days of its discovery of such violation by
giving written notice to Professional Veterinary Products, to
terminate


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this Agreement or to modify its terms including, but not limited
to, the commissions paid for Merial Products.


c. Provide adequate sales representation to contact and service the
AMAs in the Territory according to the goals stated in the
Professional Veterinary Products business plan.


d. Use best efforts to solicit orders for the Merial Products from the
AMAs in the Territory, and submit the orders within two hours of
receipt from the AMA through a communications method (i.e.,
Electronic Data Interchange) designated and scheduled by Merial.


e. Ensure compliance with the Robinson-Patman Act and other applicable
laws. Professional Veterinary Products will not rebate any part of
the commission payment, either directly or indirectly, to any AMA.
Professional Veterinary Products agrees that Merial has the right
to apply commissions earned by Professional Veterinary Products
against any past due balance under any invoice(s) issued by Merial
to Professional Veterinary Products.


f. Meet with Merial management to develop an annual Business Plan
which describes Professional Veterinary Products' actions to
achieve marketing objectives and reasonable sales performance goals
that are developed on an annual basis by Merial and Professional
Veterinary Products management. The Business Plan will be developed
by March 1 of each year.


g. Generate sales for Merial Products equal to or greater than the
goals agreed to in the Business Plan. If Professional Veterinary
Products fails to meet 90% of the sales performance goals for two
(2) years in succession, or fails to reach 80% of the sales goal in
any year, Merial will have the right, upon thirty (30) days written
notice, to terminate this Agreement or to alter the Territory. If
Professional Veterinary Products' failure to meet these sales
performance goals is due to competitive market forces alone, and is
not due to any failure on the part of Professional Veterinary
Products to actively promote and expand sales of the Merial
Products in the Territory, Merial may waive its right to terminate
this Agreement with respect to that specific instance. Such waiver
will not affect Merial's rights to terminate this Agreement or
modify Professional Veterinary Products' Territory in the case of
other performance failures.


h. Arrange for Merial representatives to meet and make sales calls
with Professional Veterinary Products' representatives as specified
in the Business Plan or when needed to support Merial marketing and
sales promotions.


i. Provide training for Professional Veterinary Products' key
personnel, including inside and outside sales people, in the proper
procedure for placing AMA orders with Merial and administering the
Merial Returned Goods Policy.


j. Make no representations or warranties with respect to Merial
Products, other than such representations issued or approved in
writing by Merial.


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k. Assist Merial in providing AMAs in Professional Veterinary
Products' Territory full access to all Merial promotional
allowances, marketing programs, point-of-purchase materials, and
Product information literature.


l. Immediately notify Merial upon being made aware of any adverse
reaction, injury, damage, claim or lawsuit involving a Merial
Product, whether or not directly attributable to the Product.


m. Strictly comply with all applicable governmental requirements
relating to animal drugs, biologicals, and pesticides. Professional
Veterinary Products' failure to strictly comply with such
governmental requirements will result in the automatic termination
of this Agreement without the need for any prior notice by Merial.


n. Indemnify and hold Merial harmless from and against all claims,
damages, losses and liabilities arising out of any act or omission
by Professional Veterinary Products, except to the extent that said
claim arises out of any act or omission of Merial.


o. Provide Merial with timely, complete and accurate data on market
conditions in Professional Veterinary Products' Territory.


p. Utilize EDI as the primary means for transmitting AMA orders to
Merial and adhere to the provisions outlined in the attached EDI
Trading Partner Policy (Attachment 1) for all orders placed via EDI.


4. General


a. All orders will be obtained at prices and upon terms established by
Merial and will be submitted to Merial for acceptance. If Merial
accepts an order obtained by Professional Veterinary Products, it
will ship the Merial product(s) directly to the AMA.


b. Neither Professional Veterinary Products nor Merial will be liable
for failure to perform any part of this Agreement on account of any
cause beyond its reasonable control, including but not limited to
any act of God, fire, labor trouble, the government or any agency
thereof, inevitable accident, war or insurrection.


c. All information and materials relating to AMA customer databases,
AMA sales volume and Product formulation usage information and
general AMA account information is the sole property of Merial and
confidential and may not be disclosed by Professional Veterinary
Products to any third party without the prior written consent of
Merial.


d. Failure by Merial or Professional Veterinary Products at any time
to enforce any of the terms or conditions of this Agreement shall
not affect or impair such terms or conditions in any way, or the
right of Merial or Professional Veterinary


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Products at any time to avail itself of such remedies as it may
have for any breach of such terms or conditions under this
Agreement.


e. Professional Veterinary Products will not in any way jeopardize the
good will and reputation of Merial or Merial Products, and will
have no authority to bind Merial to any act or representation
unless specifically so authorized in writing. Professional
Veterinary Products will indemnify and hold Merial harmless from
and against all claims arising out of any breach of this subsection.


f. This Agreement describes a sales agency arrangement between Merial
and Professional Veterinary Products. This Agreement does not
constitute Professional Veterinary Products as a distributor or
franchisee or authorize Professional Veterinary Products to act as
an agent for Merial for any purposes other than those that are
expressly provided for herein.


g. (i) This Agreement will not be assignable or transferable by
either party without the written consent of the other, except
that Merial may assign it to an Affiliate. (For purposes of
this Agreement, an "Affiliate" is any corporation,
partnership, trust or other entity directly or indirectly
controlling or controlled by or under direct or indirect
common control with a party, control for the purpose of this
definition being taken to mean direct or indirect ownership of
at least 50% of the voting rights of the "controlled" entity.)
This Agreement cannot be modified or changed in any way except
in writing signed by both parties. Merial will have the right
to terminate this Agreement immediately or at any time
thereafter in the event that a majority of the stock, assets
or control of Professional Veterinary Products is acquired by
any other party(s) or the Professional Veterinary Products
becomes insolvent. This Agreement will become effective when
signed by both parties and shall continue in effect until
January 31, 2000 unless terminated sooner. This Agreement will
be renewable, by mutual consent expressed in writing, for
additional periods as determined by Merial.


(ii) Except as otherwise provided in this Agreement, either party
may terminate this Agreement upon thirty (30) days written
notice in the event of a breach of a material term of the
Agreement by the other party which is not cured by such other
party within the thirty (30) day period.


(iii) Termination will not extinguish obligations and liabilities
accrued prior to termination. However in the event of
termination neither party shall be liable for any claims of
lost future sales, profits, or commissions, or consequential
damages of any type.


h. All notices hereunder required to be in writing will be sufficient
if sent by certified mail, return receipt requested, postage
prepared, addressed as follows:


If to Merial: Merial Limited
2100 Ronson Road
Iselin, NJ 08830-3077


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Attention: Sales Operations


If to Professional Veterinary Products: Professional Veterinary
Products, Ltd.
10100 "J" Street
Omaha, Nebrask ...