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EXHIBIT 10.10
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SECOND AMENDED AND RESTATED
CONTRACT PURCHASE AGREEMENT
BETWEEN
PATTERSON DENTAL COMPANY,
PATTERSON DENTAL SUPPLY, INC.,
THE BANK OF TOKYO - MITSUBISHI, LTD., CHICAGO BRANCH,
M & I MARSHALL & ILSLEY BANK,
THE NORTHERN TRUST COMPANY
AND
U.S. BANK NATIONAL ASSOCIATION,
as a Buyer and as Agent
DATED AS OF APRIL 28, 2000
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SECOND AMENDED AND RESTATED
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CONTRACT PURCHASE AGREEMENT
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THIS SECOND AMENDED AND RESTATED CONTRACT PURCHASE AGREEMENT is made as of
April 28, 2000 (the "Agreement") between PATTERSON DENTAL COMPANY, a Minnesota
corporation ("PDC"), PATTERSON DENTAL SUPPLY, INC., a Minnesota corporation
("PDSI;" PDC and PDSI are each referred to as a "Seller" and are collectively
referred to as the "Sellers"), U.S. BANK NATIONAL ASSOCIATION, a national
banking association ("U.S. Bank"), individually and as agent (in such capacity,
the "Agent") for the "Buyers"(as defined below), THE BANK OF TOKYO - MITSUBISHI,
LTD., CHICAGO BRANCH ("Tokyo"), M & I MARSHALL & ILSLEY BANK ("M&I") and THE
NORTHERN TRUST COMPANY ("Northern;" U.S. Bank in its individual capacity, Tokyo,
M&I and Northern, together with any other Person that may become a party hereto
pursuant to Section 13.4 are collectively referred to herein as the "Buyers").
W I T N E S S E T H :
WHEREAS, each of the Sellers holds or expects to hold certain contracts
providing for the sale of dental equipment and supplies to dentists for a
purchase price payable over time and secured by a security interest in the
purchased equipment and supplies, which contracts were acquired or will be
acquired by the Seller in the regular course of its business; and
WHEREAS, the Sellers desire to sell, and the Buyers desire to purchase,
from time to time, certain of such contracts; and
WHEREAS, the Sellers and the Buyers are parties to that certain Amended and
Restated Contract Purchase Agreement dated as of June 20, 1997, as amended by
First Amendment to Amended and Restated Contract Purchase Agreement, dated as of
April 28, 1998, by Second Amendment to Amended and Restated Contract Purchase
Agreement, dated as of October 21, 1998, by Third Amendment to Amended and
Restated Contract Purchase Agreement, dated as of April 2, 1999, and by Fourth
Amendment to Amended and Restated Contract Purchase Agreement, dated as of
February 22, 2000 (as so amended, the "Existing Purchase Agreement"); and
WHEREAS, the Sellers and the Buyers wish to amend and restate the Existing
Purchase Agreement to increase the "Contract Purchase Commitment Amount"
thereunder and to make certain other changes;
NOW THEREFORE, in consideration of the mutual covenants and agreements of
the parties herein contained and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree that
the Existing Purchase Agreement is hereby amended and restated to read, and the
parties hereby agree, as follows:
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ARTICLE I
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DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. Defined Terms. As used in this Agreement the following terms
shall have the following respective meanings (and such meanings shall be equally
applicable to both the singular and plural form of the terms defined, as the
context may require):
Account: A Seller's or a Subsidiary's right to the payment of money from
the sale, lease or other disposition of goods or other assets by that Seller or
a Subsidiary, a rendering of services by that Seller or a Subsidiary, a loan by
that Seller or a Subsidiary, the overpayment of taxes or other liabilities of
that Seller, or otherwise, however such right to payment may be evidenced,
together with all other rights and interests (including all liens and security
interests) that such Seller or a Subsidiary may at any time have against any
account debtor or other party obligated thereon or against any of the property
of such account debtor or other party.
Accounting Period: Each fiscal month of the Sellers, at the end of which
the Sellers reconcile accounting information relating to the Contracts.
Adverse Event: The occurrence of any event that could have material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of PDC and its Subsidiaries as a consolidated enterprise or on the
ability of either Seller or any other party obligated thereunder to perform its
obligations under this Agreement and the Assignments.
Affiliate: When used with reference to any Person, (a) each Person that,
directly or indirectly, controls, is controlled by or is under common control
with, the Person referred to, (b) each Person which beneficially owns or holds,
directly or indirectly, twenty-five percent or more of any class of voting stock
of the Person referred to (or if the Person referred to is not a corporation,
twenty-five percent or more of the equity interest), (c) each Person,
twenty-five percent or more of the voting stock (or if such Person is not a
corporation, twenty-five percent or more of the equity interest) of which is
beneficially owned or held, directly or indirectly, by the Person referred to,
and (d) each of such Person's officers, directors, joint venturers and partners.
The term control (including the terms "controlled by" and "under common control
with") means the possession, directly, of the power to direct or cause the
direction of the management and policies of the Person in question.
Aggregate Repurchase Commitment Amount: The sum of the Individual
Repurchase Commitment Amounts for the Sellers.
Applicable Commitment Percentage: With respect to each fiscal quarter of
the Sellers, the Applicable Commitment Percentage set forth in the table below,
based on the BD/EBITDA Ratio computed as of the last day of the immediately
preceding fiscal quarter:
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BD/EBITDA Ratio Applicable Commitment Percentage
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Less than or equal to 1.0 0.125%
Greater than 1.0 0.20%
If at any time of determination the applicable BD/EBITDA Ratio cannot be
determined, the Applicable Commitment Percentage shall be 0.20%.
Applicable Margin: With respect to each Interest Period, the Applicable
Margin set forth in the table below, based on the BD/EBITDA Ratio computed as of
the last day of the most recent fiscal quarter to end on or prior to the third
day prior to the first day of such Interest Period:
BD/EBITDA Ratio Applicable Margin
--------------- -----------------
Less than or equal to 1.0 0.75%
Greater than 1.0 1.00%
If at any time of determination the applicable BD/EBITDA Ratio cannot be
determined, the Applicable Margin shall be 1.00%.
Assignment: As defined in Section 2.2(i).
BD/EBITDA Ratio: The ratio of (i) the consolidated indebtedness for
borrowed money of PDC and its Subsidiaries as of the last day of a fiscal
quarter, to (ii) EBITDA for the period of four fiscal quarters ending on such
date.
Board: The Board of Governors of the Federal Reserve System or any
successor thereto.
Business Day: Any day (other than a Saturday, Sunday or legal holiday in
the State of Minnesota) on which national banks are permitted to be open in
Minneapolis, Minnesota.
Buyers' Contracts: Collectively, as of any date of determination, all
Contracts that have been purchased by the Buyers pursuant to this Agreement and
that have not been repurchased by the Sellers.
Buyers' Interest Amount: For any Interest Period, the amount determined by
applying the Buyers' Rate as in effect during such Interest Period to the
outstanding principal balance of the Buyers' Contracts as of the first day of
such Interest Period.
Buyer's Percentage: With respect to any Buyer, the percentage equivalent of
a fraction, the numerator of which is the Individual Contract Purchase
Commitment Amount of such Buyer and the denominator of which is the Contract
Purchase Commitment Amount.
Buyers' Rate: Prior to the occurrence of a Termination Event, for any
Interest Period, and except as otherwise provided in Sections 12.2 and 12.3, a
rate per annum equal to the weighted
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average of the Eurodollar Rates (Reserve Adjusted) in effect during such
Interest Period plus the Applicable Margin, and from and after the occurrence
and during the continuance of a Termination Event, a floating rate per annum
equal to the Reference Rate plus two percent (2.0%) per annum.
Closing Date: The Business Day on which the conditions precedent to the
Obligations of the Buyers to purchase the initial Contracts, as set forth in
Article V, have been satisfied.
Code: The Internal Revenue Code of 1986, as amended, or any successor
statute, together with regulations thereunder.
Collection Account: As defined in Section 3.1.
Collection Period: Each period commencing on a Determination Date and
ending on the day immediately preceding the next Determination Date.
Commitment Fee: As defined in Section 2.4.
Contract: Collectively, a contract evidencing a sale of dental equipment
and supplies entered into by a Seller, as the seller of such equipment and
supplies, in the regular course of its business, or an Eagle Soft Contract, and
all written agreements (and each of them) purporting to modify the terms of any
such contract, and includes, without limitation, all related security interests
and any and all rights to receive payments which are due pursuant thereto.
Contract Default: With respect to any Buyers' Contract: (i) the failure of
the Obligor(s) to pay within one hundred twenty (120) days of the due date any
amount payable thereunder; (ii) the writing off of such Buyers' Contract in
accordance with the customary credit and collection policies of the Sellers; or
(iii) the occurrence of any default under the terms of the Buyers' Contract or
any Related Security Document (other than a payment default) which continues for
the shorter of any grace or cure period provided in the Buyers' Contract or
Related Security Document or ten days from the date that any notice of such
nonpayment default required by the Buyers' Contract or the Related Security
Document is given to the Obligor(s).
Contract Purchase Commitment: The obligation of the Buyers to purchase
Contracts from the Sellers, on the terms and subject to the conditions and
limitations set forth in this Agreement, on a Purchase Date in an aggregate
principal amount not to exceed the remainder of: (x) the Contract Purchase
Commitment Amount, minus (y) the sum of (i) the aggregate principal amount
outstanding on all Buyers' Contracts as of the relevant Purchase Date, plus (ii)
the aggregate principal portion of all payments by Obligors under Buyers'
Contracts that have not been remitted to the Agent for the benefit of the Buyers
as of the relevant Purchase Date pursuant to Section 4.1(a).
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Contract Purchase Commitment Amount: As of any date, the sum of the
Individual Contract Purchase Commitment Amounts of all Buyers.
Contract Purchase Commitment Period: The period commencing on the Closing
Date and ending on the Business Day preceding the Contract Purchase Termination
Date.
Contract Purchase Termination Date: The earliest of (a) April 27, 2001, as
the same may be extended from time to time in writing by the Buyers, in their
sole and absolute discretion, at the request of the Sellers, (b) the date on
which the Contract Purchase Commitment is terminated pursuant to Section 11.2,
(c) the date on which the Contract Purchase Commitment Amount is reduced to zero
pursuant to Section 2.3, or (d) the date on which the sum of the Repurchase
Prices of all Contracts repurchased by the Sellers pursuant to Section 7.1(b)
since April 28, 2000 equals or exceeds five percent (5%) of the average of the
aggregate Net Ending Principal Balance for the 12 preceding Settlement Dates.
Credit Agreement: That certain Amended and Restated Credit Agreement of
even date herewith between PDC, the Buyers, as "Banks" and U.S. Bank, as agent,
as the same may be amended, supplemented or otherwise modified from time to
time; provided, however that if the Credit Agreement is terminated or satisfied
in the course of a transaction in which a new credit agreement is executed in
place of the Credit Agreement and the Buyers are lenders under such new credit
agreement, then such new credit agreement shall be deemed thereafter to be the
Credit Agreement for purposes of this Agreement, and references to "Events of
Default" or other terms as defined in, or Sections of, the Credit Agreement
shall be deemed to be references to the corresponding definitions or sections in
the new credit agreement; and provided further that should the Credit Agreement
be terminated or satisfied other than as described in the preceding proviso,
then Articles VIII, IX and X of the Credit Agreement, and all definitions of
terms used in said Articles VIII, IX and X, as they existed as of the date the
Credit Agreement was terminated or satisfied, shall be deemed to be incorporated
in this Agreement by reference and any breach by PDC of any provision of such
Sections, or any other "Event of Default" thereunder, shall constitute a
Termination Event hereunder as fully as if such provisions were set forth
herein.
Determination Date: The last day of every Accounting Period.
Discounted Contract: A Contract identified in the relevant Purchase Request
as a Contract (i) with respect to which the principal amount exceeds the
remainder of (x) the aggregate purchase price for all equipment and supplies
subject to such Contract that would be charged by the Related Seller for a cash
sale, minus (y) any downpayment by the relevant Obligor, or (ii) substantially
in the form of Exhibit A-2 hereto and providing for a single grace period of not
more than 150 days during which no payments will be due and no interest will
accrue with respect to such Contract.
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Eagle Soft Contract: Collectively, a contract evidencing a sale of dental
software entered into by Eagle Soft, a division of PDSI as the seller of such
dental software equipment, in the regular course of its business, and all
written agreements (and each of them) purporting to modify the terms of any such
contract, and including, without limitation, all related security interests and
any and all rights to receive payments which are due pursuant thereto.
EBITDA: For any period of determination, the consolidated net income of PDC
and its Subsidiaries before deductions for interest expense, income taxes,
depreciation and amortization, all determined in accordance with GAAP.
Eligible Contract: A Contract:
(i) the Obligor of which is a United States resident, is not an
Affiliate of either Seller, and is not a government or a governmental
subdivision or agency;
(ii) the principal Obligor of which is a dentist or a professional
association, partnership or other Person that provides dental services to
consumers, or a dental laboratory or other person who provides dental
services to other Persons who in turn provide dental services to consumers,
and that on the Purchase Date with respect to such Contract has an ongoing
business relationship with the Related Seller;
(iii) with respect to which no payment of principal, interest or other
amounts is past due by more than sixty (60) days as of the date that such
Contract is proposed to be sold to the Buyers hereunder;
(iv) the Obligor of which is not the Obligor of any Contract in
respect of which any payment of principal, interest or other amounts is
past due by more than sixty (60) days as of the date that such Contract is
proposed to be sold to the Buyers hereunder and is not otherwise in
material default under any other contract or agreement with a Seller;
(v) which is denominated and payable only in United States dollars in
the United States;
(vi) which has been duly authorized (if the Obligor thereon is not a
natural person) and which is in full force and effect and constitutes the
legal, valid and binding obligation of the Obligor of such Contract
enforceable against such Obligor in accordance with its terms;
(vii) which does not contravene in any material respect any laws,
rules or regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which the
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Related Seller is not in violation of any such law, rule or regulation in
any material respect;
(viii) which has not been modified or extended except in compliance
with all applicable requirements of the Related Seller's normal credit
policies;
(ix) which has not been acquired by the Related Seller from another
Person;
(x) which constitutes chattel paper or an instrument as such terms are
used in the Uniform Commercial Code of the State of Minnesota;
(xi) which, pursuant to its terms, is required to be paid in full on
or before the Final Maturity Date;
(xii) which is secured by a valid and perfected, first priority
security interest in the assets sold to the principal Obligor by the
Related Seller pursuant to such Contract and, if the principal amount
thereof exceeds $10,000, with respect to which the Related Seller has
delivered to the Agent UCC financing statements filed in each jurisdiction
necessary to perfect such security interest;
(xiii) which (A) does not require the Obligor under such Contract to
consent to the transfer, sale or assignment of the rights of the Related
Seller in order for the Buyers or the Agent to receive payments under such
Contract or the right to enjoy the benefits of any Related Security
therefor, and (B) does not restrict the ability of the Buyers or the Agent
to exercise their rights under this Agreement;
(xiv) which is not owed by an Obligor that is a debtor in any
proceeding under the Bankruptcy Code or comparable provision of state or
foreign law or an assignor for the benefit of creditors;
(xv) which is not subject to any off-set, counterclaim or other
claimed defense;
(xvi) with respect to which the liability of the Obligor thereon is
not conditioned upon the approval of the Obligor of any goods sold or
financed in connection therewith, and no such goods are subject to any
repurchase obligations on the part of the Seller or any return privilege on
the part of such Obligor;
(xvii) under which the initial payment is or was due no more than one
month after the date the equipment sold thereunder was delivered, and that
is payable in monthly installments, consisting of either level principal
installments, together with accrued interest, or level payments of
principal and interest, except that: (1) Contracts having an aggregate
Purchase Price of up to five percent (5%) of the aggregate Purchase Price
for all Buyers' Contracts existing as of the date of determination may be
Eligible Contracts
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despite having final balloon principal payments that are less than or equal
to forty-five percent (45%) of the initial principal amount of such
Contracts, (2) Contracts having an aggregate Purchase Price of up to ten
percent (10%) of the aggregate Purchase Price for all Buyers' Contracts
existing as of the date of determination may be Eligible Contracts despite
providing for payments of interest only for a period of up to twelve months
after the date of the Contract, and (3) Contracts having an aggregate
Purchase Price of up to fifteen percent (15%) of the aggregate Purchase
Price for all Buyers' Contracts existing as of the date of determination
may be Eligible Contracts despite providing a single grace period of up to
one hundred twenty (120) days (or, with respect to Discounted Contracts, as
and to the extent provided in the definition thereof, one hundred fifty
(150) days) during which no payment is due;
(xviii) that is evidenced by an Installment Sale Contract - Security
Agreement in substantially the form of Exhibit A-1 or Exhibit A-2 attached
hereto, or a Master Sale and Security Agreement in substantially the form
of Exhibit A-3 attached hereto, or another form of contract approved by the
Majority Buyers in their sole and unlimited discretion;
(xix) that is owned by the Related Seller free and clear of any Lien
or any claim of any other Person;
(xx) under which at least seventy-five percent (75%) of the principal
amount outstanding represents the purchase price of equipment; and
(xxi) which has an interest rate at least equal to the Buyers' Rate
plus 1% per annum as of the relevant Purchase Date and under which the
principal amount outstanding does not exceed the remainder of (x) the
aggregate purchase price for all equipment and supplies subject to such
Contract that would be charged by the Related Seller for a cash sale, minus
(y) any downpayment by the relevant Obligor, except that Contracts having
an aggregate Purchase Price of up to fifteen percent (15%) of the aggregate
Purchase Price for all Buyers' Contracts existing as of the date of
determination may be Eligible Contracts despite being Discounted Contracts.
(xxii) which is an Eagle Soft Contract with a final maturity of no
more than 36 months after the date of such Eagle Soft Contract, provided
that the Purchase Price of all such Eagle Soft Contracts does not exceed
ten percent (10%) of the aggregate Purchase Price of all Buyer's Contracts
existing as of the date of determination.
ERISA: The Employee Retirement Income Security Act of 1974, as amended, and
any successor statute, together with regulations thereunder.
ERISA Affiliate: Any trade or business (whether or not incorporated) that
is a member of a group of which a Seller is a member and which is treated as a
single employer under Section 414 of the Code.
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Eurodollar Business Day: A Business Day which is also a day for trading by
and between banks in United States dollar deposits in the interbank Eurodollar
market and a day on which banks are open for business in New York City.
Eurodollar Interbank Rate: With respect to each Interest Period or, if
elected by the Sellers pursuant to Section 2.7, a fixed rate period, the average
offered rate for deposits in United States dollars (rounded upward, if
necessary, to the nearest 1/16 of 1%) for delivery of such deposits on the first
day of such Interest Period or Fixed Rate Period, for the number of days in such
Interest Period or Fixed Rate Period, which appears on the Telerate page 3750 as
of 11:00 a.m., London time (or such other time as of which such rate appears)
two Eurodollar Business Days prior to the first day of such Interest Period or
Fixed Rate Period, or the rate for such deposits determined by the Agent at such
time based on such other published service of general application as shall be
selected by the Agent for such purpose (including, without limitation, Reuters
Screen LIBO page); provided, that in lieu of determining the rate in the
foregoing manner, the Agent may determine the rate based on rates at which
United States dollar deposits are offered to the Agent in the interbank
Eurodollar market at such time for delivery in Immediately Available Funds on
the first day of such Interest Period or Fixed Rate Period in an amount
approximately equal to the purchase by the Agent to which such Interest Period
or Fixed Rate Period is to apply (rounded upward, if necessary, to the nearest
1/16 of 1%). "Telerate page 3750 " means the display designated as such on
Telerate System Incorporated (or such other page as may replace page 3750 or
that service for the purpose of displaying London interbank offered rates of
major banks for U.S. Dollar deposits). "Reuters Screen LIBO page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rate Screen (or
such other page as may replace the LIBO page on such service for the purpose of
displaying London interbank offered rates of major banks for United States
dollar deposits).
Eurodollar Rate (Reserve Adjusted): With respect to each Interest Period or
Fixed Rate Period, the rate (rounded upward, if necessary, to the next one
sixteenth of one percent) determined by dividing the Eurodollar Rate for such
Interest Period or Fixed Rate Period by 1.00 minus the Eurodollar Reserve
Percentage.
Eurodollar Reserve Rate: As of any day, that percentage (expressed as a
decimal) which is in effect on such day, as prescribed by the Board for
determining the maximum reserve requirement (including any basic, supplemental
or emergency reserves) for a member bank of the Federal Reserve System, with
deposits comparable in amount to those held by the Agent, in respect of
"Eurocurrency Liabilities" as such term is defined in Regulation D of such
Board. The rate of interest applicable to any outstanding purchase shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
Existing Buyer's Contracts: As defined in Section 2.1(b).
Existing Purchase Agreement: As defined in the third recital.
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Final Maturity Date: April 27, 2006, as the same may be extended from time
to time in writing by the Buyers, in their sole and absolute discretion, at the
request of the Sellers.
Financial Officer: With respect to each Seller, its Chief Executive
Officer, Chief Financial Officer, Treasurer or Controller.
Financing Statements: As defined in Section 2.6.
Fixed Rate Period: As defined in Section 2.7.
Fixed Rate Tranches: As defined in Section 2.7.
GAAP: Generally accepted accounting principles as applied in the
preparation of the audited financial statement of PDC referred to in Section
8.5.
Guaranties: Collectively, the PDC Guaranty and the PDSI Guaranty.
Holding Account: An interest-bearing deposit account belonging to the
Agent, for the benefit of the Banks, into which either Seller may be required to
make deposits pursuant to the provisions of this Agreement, such account to be
under the sole dominion and control of the Agent and not subject to withdrawal
by either Seller, with any amounts therein to be held for application toward
payment of the depositing Seller's repurchase obligations with respect to any
outstanding Buyers' Contracts.
Immediately Available Funds: Funds with good value on the day and in the
city in which payment is received.
Individual Contract Purchase Commitment Amount: With respect to any Buyer,
initially the amount set opposite such Buyer's name on the signature pages
hereof as its Individual Contract Purchase Commitment Amount, as the same may be
reduced or increased from time to time pursuant to Section 2.3 or Section 13.4.
Individual Repurchase Commitment Amount: On any date of determination
during the Contract Purchase Commitment Period with respect to each Seller, 25%
of the Net Ending Principal Balance for such Seller on the most recent
Settlement Date, and on any date of determination occurring after the Contract
Purchase Commitment Period, 25% of the Net Ending Principal Balance for such
Seller on the first Settlement Date occurring on or after the Termination Date
minus the sum of the Repurchase Prices paid by such Seller since such Settlement
Date.
Interest Period: Each period beginning on a Settlement Date and ending on
the day before the next Settlement Date. The final Interest Period shall end on
the Final Maturity Date.
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Inventory: All goods held by a Seller or any Subsidiary for sale or lease,
or leased by a Seller or any Subsidiary, or furnished or to be furnished by the
Seller or any Subsidiary under any contract of service, or held by a Seller or
any Subsidiary as raw materials, work in process or materials used or consumed
in a business, and all returned and repossessed goods.
Lien: With respect to any Person, any security interest, mortgage, pledge,
lien, charge, encumbrance, title retention agreement or analogous instrument or
device (including but not limited to the interest of each lessor under any
capitalized lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law.
Majority Buyers: At any time, Buyers whose Buyer's Percentages aggregate at
least 60%.
Multiemployer Plan: A multiemployer plan, as such term is defined in
Section 4001 (a) (3) of ERISA, which is maintained (on the Closing Date, within
the five years preceding the Closing Date, or at any time after the Closing
Date) for employees of either Seller or any ERISA Affiliate.
Net Ending Principal Balance: On any Settlement Date for any Seller, the
sum of the outstanding principal balances of all Buyers' Contracts purchased
from such Seller as of such Settlement Date.
Obligor: Any Person who or which is directly or indirectly obligated to pay
any Contract, including, without limitation, any guarantor and any accommodation
maker.
PBGC: The Pension Benefit Guaranty Corporation, established pursuant to
Subtitle A of Title IV of ERISA, and any successor thereto or to the functions
thereof.
PDC Documents: As defined in Section 5.1(a).
PDC Guaranty: The guaranty of PDC dated as of June 20, 1997, as reaffirmed
on the Closing Date, guaranteeing all obligations of PDSI to the Buyers under
this Agreement.
PDSI Documents: As defined in Section 5.1(a).
PDSI Guaranty: The guaranty of PDSI dated as of the Closing Date,
guaranteeing certain obligations of PDC to the Buyers under this Agreement and
the Credit Agreement.
Permitted Account Sales: Sales, with limited recourse, or no recourse, by
PDC or PDSI of Accounts, which Accounts were derived from sales on contract of
furnishings and equipment (but not, however, open-account sales of supplies and
not accounts derived from provision of services).
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Permitted Liens: Any of the following: (a) Liens for taxes, assessments or
governmental charges or levies not yet due and payable, except to the extent
required to be paid by Section 8.4 of the Credit Agreement; (b) Liens imposed by
law, such as landlords', materialmen's, mechanics', carriers', workmen's,
employees' and repairmen's liens to the extent incurred in the ordinary course
of business for sums not yet delinquent, except to the extent required to be
paid by Section 8.4 of the Credit Agreement; (c) pledges or deposits to secure
payment of workers' compensation, unemployment insurance, old age pensions or
other social security obligations, in the ordinary course of business of a
Seller or a Subsidiary; (d) any security interest pertaining to the Permitted
Account Sales; (e) the landlord's interest in any security deposit provided by a
Seller or a Subsidiary under any lease of real property used in its business;
and (f) any Lien securing either a loan whose proceeds were used by a Seller or
a Subsidiary to acquire assets or a capitalized lease, provided that such Lien
does not extend to any assets other than those acquired with such loan proceeds
or subject to such capitalized lease and that the aggregate amount payable under
all such loans and capitalized leases at any time does not exceed $5,000,000;
provided, however, that none of the Liens listed in clauses (a) through (c) or
(e) above shall constitute "Permitted Liens" on and after the commencement in
respect thereof of any enforcement, collection, execution, levy or foreclosure
or forfeiture proceeding, including any setoff, which remains unstayed or
unbonded for thirty (30) consecutive days.
Person: Any natural person, corporation, partnership, limited partnership,
limited liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.
Plan: Each employee benefit plan (whether in existence on the Closing Date
or thereafter instituted), as such term is defined in Section 3 of ERISA,
maintained for the benefit of employees, officers or directors of the Seller or
of any ERISA Affiliate, other than a Multiemployer Plan.
Positive Interest Differential: As defined in Section 4.1(b).
Purchase Date: The Closing Date and any subsequent Settlement Date selected
by a Seller pursuant to Section 2.1 hereof on which a purchase of Contracts is
made pursuant to this Agreement.
Purchase Price: With respect to each Contract other than a Discounted
Contract, the aggregate principal amount outstanding thereunder on the Purchase
Date with respect to that Contract; with respect to each Discounted Contract, an
amount equal to the present value of the amount remaining unpaid under such
Contract on the Purchase Date with respect to that Contract, discounted to its
present value as of such Purchase Date using as the discount rate the Related
Seller's "book basis yield" for that Contract, as reflected on the Related
Seller's
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books and disclosed to the Buyers in the relevant Purchase Request, which
discount rate shall not be less than the Buyers' Rate in effect on the Purchase
Date with respect to such Contract.
Purchase Request: As defined in Section 2.2.
Quarterly Payment Date: The last Business Day of each March, June,
September and December, and the Final Maturity Date.
Reference Rate: The rate of interest from time to time publicly announced
by the Agent as its "reference rate." The Agent may lend to its customers at
rates that are at, above or below the Reference Rate. For purposes of
determining any interest rate hereunder which is based on the Reference Rate,
such interest rate shall change as and when the Reference Rate shall change.
Related Security: With respect to any Contract, any property or interest in
property securing payment of that Contract, together with any related guaranty,
surety bond, insurance policy or other document or instrument given as assurance
for the repayment of that Contract.
Related Security Document: With respect to any Contract, any security
agreement, financing statement, mortgage, deed of trust or similar instrument,
guaranty, pledge agreement, letter of credit or other agreement, instrument or
document evidencing, setting forth or otherwise pertaining to the Related
Security for that Contract.
Related Seller: With respect to any Contract, the Seller that originated
such Contract and that delivers a Purchase Request with respect to such Contract
to the Buyers.
Reportable Event: A reportable event as defined in Section 4043 of ERISA
and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any waiver in accordance with
Section 412(d) of the Code.
Repurchase Price: With respect to any Contract(s) repurchased by a Seller
hereunder, the outstanding principal balance of such Contract(s) as of the
immediately preceding Settlement Date, plus interest thereon at the Buyers' Rate
to the date of repurchase, together with any other amount due under this
Agreement (including, without limitation, Section 4.1 hereof) with respect to
such Contract.
Servicer: PDC, in its capacity as agent and servicer for the Buyers
hereunder.
Servicing Fee: As defined in Section 4.2.
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Settlement Date: The third Friday of each Accounting Period, or if such
date is not a Business Day, then the next succeeding Business Day; provided,
however, that at the Servicer's option, the Settlement Date shall be postponed
by one Business Day for each holiday of the Servicer that occurs during the
relevant Accounting Period and prior to the date that would otherwise be the
Settlement Date (but no Settlement Date shall be postponed by more than three
Business Days).
Subsidiary: Any corporation or other entity of which more than fifty
percent (50%) of the securities or other ownership interests having ordinary
voting power for the election of the board of directors or other Persons
performing similar functions are owned by PDC either directly or through one or
more Subsidiaries.
Termination Event: Any event described in Section 11.1.
Unmatured Termination Event: Any event which, with the giving of notice
(whether such notice is required under Article XI, under some other provision of
this Agreement, or otherwise) or lapse of time, or both, would constitute a
Termination Event.
Unused Contract Purchase Commitment: As of any date of determination, the
amount (if any) by which the Contract Purchase Commitment Amount exceeds the sum
of (x) the outstanding Principal Balance of all "Loans" under the Credit
Agreement, plus (y) the principal amount outstanding under all Buyers'
Contracts, all as of the date of determination, plus (z) the aggregate principal
amount of all payments by Obligors under Buyers' Contracts that have not been
remitted to the Agent for the benefit of the Buyers pursuant to Section 4.1(a).
Section 1.2. Accounting Terms and Calculations. Except as may be expressly
provided to the contrary herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP, consistently applied. To the extent any change in GAAP
affects any computation or determination required to be made pursuant to this
Agreement, such computation or determination shall be made as if such change in
GAAP had not occurred unless the Sellers and the Buyers agree in writing on an
adjustment to such computation or determination to account for such change in
GAAP.
Section 1.3. Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding".
Section 1.4. Other Definitional Terms. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided. The
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words "include", "includes" and "including" shall be deemed to be followed by
the phrase "without limitation". Unless the context in which used herein
otherwise clearly requires, "or" has the inclusive meaning represented by the
phrase "and/or".
ARTICLE II
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TERMS OF THE CONTRACT PURCHASES
Section 2.1. Purchase and Sale of Contracts; Purchase Price.
2.1(a) General Purchase Commitment. Subject to the terms and
conditions of this Agreement, on such Purchase Date or Purchase Dates prior
to the Contract Purchase Termination Date with respect to which one or both
Sellers shall have given the Agent, on behalf of the Buyers, a timely
Purchase Request pursuant to Section 2.2, the Related Seller will sell to
the Buyers and the Buyers will severally purchase from the Related Seller
undivided percentage ownership interests in all Eligible Contracts tendered
by the Related Seller, together with all of the Related Seller's right,
title and interest in and to any Related Security, any Related Security
Documents and the proceeds of any of the foregoing; provided, however, that
the Buyers will not be required to purchase any Contract that would cause:
(a) the sum of (i) the aggregate principal amount outstanding
under all Buyers' Contracts as of the relevant Purchase Date, plus
(ii) the aggregate principal portion of all payments by Obligors under
Buyers' Contracts that have not been remitted to the Agent for the
benefit of the Buyers as of the relevant Purchase Date pursuant to
Section 4.1(a),
to exceed
(b) the remainder of the Contract Purchase Commitment Amount,
minus the aggregate unpaid principal amount of "Loans" then
outstanding under the Credit Agreement,
all determined as of the relevant Purchase Date; and
provided further that the Buyers shall not be required to purchase any
Contracts from a Seller unless the aggregate Purchase Price of the
Contracts to be purchased from that Seller on that Purchase Date is
$300,000 or more. Undivided percentage ownership interests in Eligible
Contracts tendered by a Seller hereunder shall be purchased by the Buyers
ratably in the proportion of their respective Individual Contract Purchase
Commitment Amounts. The price to be paid by the Buyers to each Seller on
each Purchase Date shall equal the
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aggregate Purchase Price of all Contracts tendered to the Buyers by that
Seller and accepted by the Buyers on such Purchase Date. The sales of
Contracts contemplated hereby shall be made pursuant to and in reliance
upon the representations, warranties and agreements of the Sellers
contained herein and in the documents delivered pursuant hereto, and shall
be without recourse against the Sellers except as provided herein.
2.1(b) New Buyers' Purchase of Interest in Existing Contracts. As of
the Closing Date, the aggregate principal amount outstanding under all
"Buyer's Contracts" (as defined in, and as previously purchased pursuant
to, the Existing Purchase Agreement) (collectively, the "Existing Buyers'
Contracts") is $74,275,858.21 and interest accrued under the Existing
Buyers' Contracts at the Buyer's Rate is $0.00. On the Closing Date, Tokyo
and Northern shall pay to the Agent, which shall in turn pay to each of the
other Buyers, in Immediately Available Funds, the amount by which such
other Buyer's share of such aggregate principal and interest amounts under
the Existing Purchase Agreement exceeds its respective Buyer's Percentage
of such aggregate principal and interest amounts. Effective upon receipt of
such payments by U.S. Bank and M&I, each Buyer hereby sells, assigns and
transfers, to the Agent for the benefit of the Buyers, its successors and
assigns, all right, title and interest of such Buyer in, to and under (i)
each Existing Buyers' Contract, (ii) all Related Security for such
Contracts, (iii) all Related Security Documents, (iv) all rights against
the Sellers with respect to any of the foregoing, and (v) all proceeds of
any of the foregoing. Each of the several Buyers shall thereafter own an
undivided percentage ownership interest in the Existing Buyers' Contracts
in the amount of that Buyer's respective Buyer's Percentage thereof. Except
as provided in the next sentence, THE FOREGOING ASSIGNMENT IS WITHOUT
REPRESENTATION OR WARRANTY BY, OR RECOURSE TO, ANY BUYER. Each Buyer does
represent and warrant that it has the requisite power and authority to make
the foregoing assignment, and that the Existing Buyers' Contracts are free
and clear of any Lien created by such Buyer. From and after the Closing
Date, the Existing Buyers' Contracts shall be treated in every respect as
though undivided percentage ownership interests therein had been purchased
by the several Buyers from the Sellers hereunder, and shall be deemed to be
Buyers' Contracts hereunder, and all representations and warranties made by
the Sellers with respect thereto shall be deemed to have been made to and
for the benefit of the Agent and the Buyers.
Section 2.2. Procedures For Contract Purchases. Not less than five Business
Days before the date a Seller desires to sell Contracts to the Buyers hereunder,
that Seller shall deliver to the Agent a written request to buy Contracts in the
form of Exhibit D attached hereto or another form acceptable to the Majority
Buyers (a "Purchase Request"), setting forth (a) the proposed Purchase Date, (b)
the Contracts that Seller proposes to sell on such date, identified by the name
of the Obligor under, the principal amounts outstanding under, and the number of
months remaining until the final maturity date with respect to, each Contract,
and specifying which Contracts, if any, are Discounted Contracts and the
Seller's "book basis yield" with respect to each such Discounted Contract, and
(c) the Purchase Price for such
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Contracts. The Agent shall promptly notify each other Buyer of the receipt of
such Purchase Request, the matters specified therein, and of such Buyer's
ratable share of the requested Purchase Price (which shall be that Buyer's
respective Buyer's Percentage thereof). The Agent and the Buyers shall have an
opportunity prior to each Purchase Date to inspect all documentation relating to
the Contracts tendered for sale and the Related Security as the Agent or the
Buyers shall request and shall in no event be obligated to purchase any Contract
that the Agent, in its reasonable discretion, determines is not an Eligible
Contract. On or before each Purchase Date:
(i) the Related Seller shall deliver to the Agent an assignment in the
form of Exhibit E hereto (including Schedule I thereto) (an "Assignment"),
which will be effective to transfer to the Agent, for the benefit of the
Buyers, as of such Purchase Date all of the Related Seller's right, title
and interest in, to and under all Contracts tendered for purchase by that
Related Seller and any Related Security and Related Security Documents (and
such additional forms of assignment or conveyance concerning the Related
Security and Related Security Documents as shall be necessary or
appropriate, in the Agent's sole determination, to transfer of record the
Related Seller's rights therein to the Buyer);
(ii) the Related Seller shall deliver to the Agent the original
executed Contracts tendered for purchase by that Related Seller; and
(iii) the Related Seller shall place all records maintained by that
Related Seller relating to such tendered Contracts in separate files with
appropriate markings to indicate the Buyers' ownership thereof.
On each Purchase Date, each Buyer shall provide its Buyer's Percentage of the
requested Purchase Price to the Agent in Immediately Available Funds not later
than 3:00 p.m., Minneapolis time. Unless (i) the Agent determines that any
applicable condition specified in Article V has not been satisfied, or (ii) one
or more of the Buyers does not provide its Buyer's Percentage of the requested
Purchase Price in a timely fashion, the Agent will pay to each Seller, in
Immediately Available Funds, the Purchase Price of the Contracts (if any)
tendered by that Seller and accepted by the Buyers, such payment to be made at
the Agent's principal office in Minneapolis, Minnesota in immediately available
funds not later than 4:00 p.m. (Minneapolis time) on the requested Purchase
Date.
Section 2.3. Optional Reduction of Contract Purchase Commitment Amount. The
Sellers may, at any time, upon not less than five Business Days prior written
notice to the Agent, executed by both Sellers, reduce the Contract Purchase
Commitment Amount, with any such reduction in a minimum amount of $1,000,000,
or, if more, in an integral multiple of $500,000; provided, however that the
Contract Purchase Commitment Amount may not be reduced to an amount less than
the principal amount outstanding under all Buyers' Contracts as of the date of
the reduction.
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Section 2.4. Commitment and Agent's Fee. If the Credit Agreement has been
terminated, or if the "Commitment" thereunder has been terminated or reduced,
the Sellers hereby jointly and severally agree to pay to the Buyers a commitment
fee (the "Commitment Fee") in an amount equal to the Applicable Commitment
Percentage per annum of the average daily Unused Contract Purchase Commitment
for the period from the date the Credit Agreement was terminated or the
"Commitment" thereunder was terminated or reduced to the Termination Date. Such
Commitment Fees are payable in arrears on each Quarterly Payment Date. The
Commitment Fees shall be computed on the basis of actual days elapsed and a year
of 360 days. If the Credit Agreement has been terminated, the Sellers hereby
jointly and severally agree to pay to the Agent on each anniversary of the
Closing Date, for the Agent's own account, a yearly agent's fee in the amount
provided in a fee letter of even date herewith from the Agent to PDC. No Buyer
(other than the Agent) shall be entitled to any portion of such fee.
Section 2.5. Payments. Payments and prepayments of principal and interest
on the Contracts and all fees, expenses and other obligations under this
Agreement shall be made without setoff or counterclaim in Immediately Available
Funds (a) if to the Agent for the benefit of the Buyers or for its own account,
not later than 12:00 noon (Minneapolis time) on the dates called for under this
Agreement at its main office in Minneapolis, Minnesota, and (b) if to a Seller,
by deposit of the same into that Seller's operating account with the Agent not
later than 12:00 noon (Minneapolis time) on such date. Funds received after such
time shall be deemed to have been received on the next Business Day. Whenever
any payment to be made hereunder shall be stated to be due on a day which is not
a Business Day, such payment shall be made on the next succeeding Business Day
and such extension of time, in the case of a payment of principal, shall be
included in the computation of any interest on such principal payment. In the
event either Seller for any reason fails to pay or remit any amount or charge
due hereunder, such overdue amount shall bear interest from the due date thereof
until paid at the Reference Rate plus two percent (2%) per annum.
Section 2.6. Security Interest. The Sellers and the Buyers intend that the
transactions contemplated hereby shall be treated as a purchase and sale of the
Contracts, Related Security, Related Security Documents and proceeds for all
purposes and not as a lending transaction. In the event the transactions
contemplated hereby are determined not to constitute purchases and sales despite
the intentions of the parties, (a) each Seller shall be deemed to have granted
to the Agent, for the benefit of the Buyers, and each Seller does hereby grant
to the Agent, for the benefit of the Buyers, a security interest in and to that
Seller's interest in each Contract identified in an Assignment or delivered to
the Agent, the Related Security, the Related Security Documents, any amounts in
the Holding Account, and all proceeds of all of the foregoing, to secure all of
that Seller's obligations under this Agreement, whether now existing or
hereafter created, the Servicer's obligations to remit proceeds of the Contracts
and make other payments to the Bank as provided in Article IV, that Seller's
obligations to repurchase the Contracts as provided in Article VII, and that
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Seller's obligations under its Guaranty, and (b) the Financing Statements shall
perfect such security interest.
Section 2.7 Continuation of Buyer's Rate. PDC may elect to fix the
Eurodollar Interbank Rate with respect to any portion of the outstanding
principal balance of the Buyers' Contracts (each such portion, a "Fixed Rate
Tranche") for a period of two, three, six or (if acceptable to all of the
Buyers, in their sole and absolute discretion) nine or twelve Interest Periods
(each a "Fixed Rate Period"), by giving the Agent notice, which may be by
telephone, given so as to be received by the Agent not later than 10:00 a.m.,
Minneapolis time, three Business Days prior to the first day of such Fixed Rate
Period (which must be a Settlement Date). No Fixed Rate Tranche may be elected
if, after giving effect thereto, the scheduled amortization of the Buyers'
Contracts would result in any portion of any Fixed Rate Tranche being repaid
before the end of the Fixed Rate Period applicable thereto. Fixed Rate Tranches
may only be elected in amounts of $500,000 or an integral multiple thereof. Each
such notice shall specify (i) the portion of the outstanding principal balance
of the Buyers' Contracts to be included in such Fixed Rate Tranche and (ii) the
number of Interest Periods to be included in such Fixed Rate Period. For all or
any portion of the outstanding principal balance of the Buyers' Contracts with
respect to which no election pursuant to this Section 2.7 is effective, the
Eurodollar Interbank Rate and the Eurodollar Rate (Reserve Adjusted) will be
determined for a single Interest Period. No election pursuant to this Section
2.7 may be made if a Termination Event or Unmatured Termination Event has
occurred and is continuing. No more than five Fixed Rate Tranches may be
outstanding at any one time.
Section 2.8 Funding Losses; Fixed Rate Tranches. PDC shall compensate each
Buyer, upon its written request, for all losses, expenses and liabilities
(including any interest paid by such Buyer to lenders of funds borrowed by it to
make or carry Fixed Rate Tranches to the extent not recovered by such Buyer in
connection with the re-employment of such funds and including loss of
anticipated profits) which such Buyer may sustain if, for whatever reason, any
principal amount of a Fixed Rate Tranche is paid, or the rate payable thereon is
converted pursuant to Section 12.3, on any day prior to the last day of the
Fixed Rate Period applicable thereto. A Buyer's request for compensation shall
set forth the basis for the amount requested and shall be final, conclusive and
binding, absent error.
ARTICLE III
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COLLECTIONS AND SERVICING
Section 3.1. Servicing Agency. Until such time, if any, as the Agent shall
notify Seller in writing pursuant to Section 3.4 hereof of the revocation of
such power and authority, PDC shall, as agent for the Buyers, at PDC's expense,
and for the consideration described in Section 4.4, collect or cause to be
collected, for and on behalf of the Buyers, from the Obligors under all Buyers'
Contracts (whether purchased from PDC or PDSI), Related Security and Related
Security Documents, all amounts as and when due and owing thereunder. The
Servicer shall convert all checks and other instruments received on account
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of such amounts into immediately available funds as soon as is commercially
reasonable. All such immediately available funds collected by the Servicer shall
be deposited as promptly as practicable (not later than the Business Day after
the date such amounts are received) into the "Collection Account" (as defined in
the next sentence). The Collection Account shall be an escrow account in the
name of the Agent, for the benefit of the Buyers, at U.S. Bank Trust National
Association under that certain Escrow Agreement dated as of June 20, 1997
between PDC, PDSI, the Agent and U.S. Bank Trust National Association. On each
Settlement Date, the Servicer shall withdraw such portion of the funds in the
Collection Account as is necessary to make any payments due to the Buyers on
such Settlement Date, under Sections 4.1, 4.2 or any other section hereof, and
to pay PDC or itself the amount of any Positive Interest Differentials and any
accrued, unpaid earnings on the Collection Account pursuant to Section 4.6. At
any time after the occurrence of a Termination Event, the Agent may withdraw any
amounts in the Collection Account to pay any amounts due under Sections 4.1, 4.2
or any other section hereof at any time, without instructions from the Servicer.
Any amounts withdrawn by the Agent shall be applied first to amounts payable to
the Buyers under Sections 4.1 and 4.2, next to any other obligations owed to the
Buyers under this Agreement, and any surplus shall be paid pursuant to Section
4.6.
Section 3.2. Standard of Care. The Servicer shall, as part of its
administrative and servicing obligations hereunder, be responsible for all
administration, servicing and collection of all Buyers' Contracts, Related
Security and Related Security Documents. In performing such functions, the
Servicer agrees to exercise the same degree of skill and care and apply the same
standards, policies and procedures that it applies to the performance of the
same functions with respect to Contracts, Related Security and Related Security
Documents and rights of recourse owned by it (or, if it no longer owns any
Contracts, in accordance with its practices when it did own Contracts).
Section 3.3. Sellers' Obligations to Obligors. Anything herein to the
contrary notwithstanding, (a) the Related Seller shall remain liable under the
Contracts and the Related Security Documents to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed and the Contracts had not been sold to the
Buyers, (b) the exercise by the Agent or any Buyer of any of the rights
hereunder shall not release the Related Seller from any of its duties or
obligations under the Contracts and the Related Security Documents, and (c) the
Agent and the Buyer shall have no obligation or liability under the Contracts
and the Related Security Documents by reason of this Agreement, nor shall the
Agent or the Buyer be obligated to perform any of the obligations or duties of
the Related Seller thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder. The Related Seller will at all times
observe and perform, or cause to be observed and performed, all contractual
undertakings of the Related Seller to the Obligor under each Contract and the
Related Security Documents.
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Section 3.4. Termination of Servicing Agency. Notwithstanding the other
provisions of this Article III, if the Agent reasonably determines at any time,
in its sole discretion, that (i) the Servicer has failed to perform its
servicing and collection functions hereunder and has not corrected such failure
within ten (10) days of Agent's notifying the Servicer of such failure, (ii) a
Termination Event has occurred and is continuing, or (iii) there has been a
material adverse change in PDC's financial condition, the Agent may terminate
PDC's agency hereunder by delivering written notice of the Agent's revocation of
PDC's power and authority to service the Buyers' Contracts. After delivering
written notice pursuant to the preceding sentence, the Agent may directly
service the Buyers' Contracts and Related Security (or engage a third party to
do so on the Buyers' behalf). In such event, the Agent shall have the right,
without limitation, and notwithstanding Section 4.4 hereof, to collect and
retain all payments (excluding Positive Interest Differentials) received from
Obligors and shall be entitled to reimbursement (not to exceed the amounts from
time to time collected constituting Positive Interest Differentials and earnings
on the Collection Account) from PDC on demand for all reasonable expenses
incurred by the Agent (including but not limited to any fees and expenses of any
successor servicer and fees, service charges and disbursements of legal counsel)
in connection with such servicing activities (and the Agent may deduct such
expenses from collected amounts constituting Positive Interest Differentials and
earnings on the Collection Account) as provided in Section 4.6. Nothing
contained in this paragraph shall be construed to limit or otherwise affect or
modify PDC's obligation to make up interest deficiencies as provided in Section
4.2 and, if the Agent assumes servicing and collection functions under this
Article III, the Agent may from time to time deduct the amount of such
deficiencies from amounts constituting Positive Interest Differentials.
Section 3.5. Notices of Assignment to Obligors. On or before the Purchase
Date with respect to each Contract sold to the Buyer by PDSI, PDSI shall notify
the Obligor that the Servicer is authorized to service such Contract on behalf
of PDSI. Each Seller shall join in giving to any Obligor such notice as the
Agent may reasonably request of the Buyers' purchase of Contracts under this
Agreement. The Agent may give such notice at any time, in its sole and unlimited
discretion.
Section 3.6. Books and Records. The Servicer will keep and maintain at its
own cost and expense, satisfactory and complete records of the Buyers'
Contracts, the Related Security Documents and the Related Security, including a
record of all payments received and credits granted with respect to all
Contracts.
Section 3.7. Insurance; Notice of Loss. The Servicer shall enforce the
provisions of the Buyers' Contracts requiring the Obligors to maintain insurance
as described in Section 8.27, in accordance with the standard of care required
by Section 3.2. Each Seller will promptly notify the Agent of any loss of or
material damage to any Contract, Related Security Document or Related Security
or of any substantial adverse change, known to that Seller, in any Contract or
material item of Related Security or the prospect of payment or performance
thereof.
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ARTICLE IV
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SETTLEMENTS
Section 4.1. Payments to Buyers. On each Settlement Date, the Servicer will
remit to the Agent, for the benefit of the Buyers:
(a) the full amount of all principal payments (including, without
limitation, scheduled principal payments, prepayments of principal, overdue
principal, and principal payable on acceleration) received by the Servicer
under the Buyers' Contracts during the preceding Collection Period;
(b) all payments of interest received by the Servicer under the
Buyers' Contracts during the preceding Collection Period, provided,
however, that if the total of such interest payments received is greater
than the Buyers' Interest Amount for the Interest Period ending on such
Settlement Date, then the amount of interest to be remitted may be reduced
by the amount of such excess (such reduction being herein called the
"Positive Interest Differential"); and
(c) all other amounts received by the Servicer in respect of the
Buyers' Contracts during the preceding Collection Period, including without
limitation, proceeds received from any life, disability or property
insurance and any other proceeds of or from Related Security, provided,
however that if PDC is not in default under Section 4.2, PDC may retain any
late charges received by PDC.
Section 4.2. Additional Payments to Buyer.
(a) If the Servicer shall have released any Related Security, the
Servicer shall make the payment required by Section 9.1 with respect
thereto on the Settlement Date next succeeding such release.
(b) Should the amount of all payments of interest received during a
Collection Period be less than the Buyers' Interest Amount for the Interest
Period ending on the first Settlement Date after such Collection Period,
PDC shall advance to the Agent, for the benefit of the Buyers, on the next
Settlement Date the difference between the total of all such payments of
interest and the Buyer's Interest Amount. The obligations of PDC under the
preceding sentence shall be absolute and irrevocable, and shall not be
affected by the Agent's termination of PDC's servicing agency pursuant to
Section 3.4 or by any other event.
Section 4.3. Defaulted Contracts. If a Contract Default shall have occurred
with respect to any Buyers' Contract and such Contract is not repurchased by the
Related Seller hereunder, the Servicer shall take all reasonable actions, which
may include filing lawsuits, to collect such Contract and to enforce the Agent's
and the Buyers' rights under any Related Security
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Document. The proceeds of any action to collect such a Contract or of a sale of
any Related Security for such Contract shall be applied first to the Servicer's
reasonable out-of-pocket costs and expenses (including the fees and
disbursements of its counsel) incurred in obtaining such proceeds, second, to
the Agent's and the Buyers' reasonable costs and expenses (including the fees
and disbursements of its counsel), third, at the Agent's option, to accrued,
unpaid interest on the Contract or to the outstanding principal balance of the
Contract, fourth, to accrued, unpaid interest on the Contract or the outstanding
principal balance of the Contract (whichever was not chosen by the Agent
pursuant to clause third above), and the remainder, if any, to any other Person
legally entitled thereto, including, without limitation, the Related Seller.
Section 4.4. Consideration to PDC. As full consideration for all of the
Servicer's servicing and collection functions hereunder and for the Servicer's
obligation to advance such additional amounts as may from time to time be
required hereunder, until the Servicer's servicing agency is terminated pursuant
to Section 3.4, the Servicer shall be entitled to receive for its individual
account, out of any Positive Interest Differentials and all earnings on the
Collection Account, subject to Section 4.6 below, a fee (the "Servicing Fee") in
an amount equal to 1% per annum of the outstanding principal balance of the
Buyer's Contracts. As full consideration for PDC's obligations under Section
4.2(b) and Article XII, PDC shall be entitled to receive for its individual
account the portion of the Positive Interest Differentials and all earnings on
the Collection Account described in Section 4.6(d) (the "Guaranty Fee"). The
Servicing Fee and the Guaranty Fee shall accrue and be calculated for each
Collection Period and payable on each Settlement Date. All collections will,
notwithstanding the terms of this Section 4.4, be deposited in the Collection
Account no later than the Business Day following PDC's receipt of immediately
available funds with respect thereto.
Section 4.5. Payments by the Agent. Any amounts paid or prepaid on account
of the Buyers' Contracts or the Sellers' obligations with respect thereto shall
be paid to the Agent for the account of each Buyer in proportion to its
undivided percentage ownership interest of outstanding Buyers' Contracts. The
Agent will promptly distribute in like funds to each Buyer its ratable share of
each payment of principal, interest or fees received by the Agent for the
account of the Buyer.
Section 4.6. Application of Positive Interest Differentials and Earnings on
Collection Account. On each Settlement Date, the Positive Interest Differential,
if any, and all earnings on the Collection Account shall be distributed as
follows:
(a) first, to the Agent and the Buyers, in an amount sufficient to pay
or reimburse all amounts owed to them hereunder;
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(b) second, to the Servicer, to reimburse the Servicer for all
advances made by it pursuant to Section 4.2, in an amount up to the
unreimbursed amount of all such advances made;
(c) third, to the Servicer, in an amount equal to all accrued, unpaid
Servicing Fees; and
(d) fourth, to PDC, as the Guaranty Fee.
Neither the Servicer nor PDS shall have any claim for reimbursement of
advances made pursuant to Section 4.2, the Servicing Fee or the Guaranty Fee
except as provided in this Section 4.6.
ARTICLE V
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CONDITIONS PRECEDENT TO PURCHASES
Section 5.1. Conditions to Initial Purchase. The Buyers' obligation to
purchase Contracts hereunder, M&I's and U.S. Bank's obligation to sell and
Tokyo's and Northern's obligation to buy interests in the Existing Buyers'
Contracts pursuant to Section 2.1(b) and the effectiveness of this Agreement, is
subject to the satisfaction of the following conditions (except that U.S. Bank's
obligations to buy interests in the Existing Buyers' Contracts is not dependent
on satisfaction of Section 5.1(f)):
(a). Documents. The Agent shall have received the following, in
sufficient counterparts for each Buyer:
(i) A copy of this Agreement, duly executed by each of the
Sellers and the Buyers.
(ii) A copy of the Credit Agreement, duly executed by PDC and the
Buyers, and evidence satisfactory to the Bank that all conditions
precedent specified in Section 6.1 thereof have been satisfied.
(iii) A copy of the Reaffirmation of the PDC Guaranty, duly
executed by PDC.
(iv) The PDSI Guaranty, duly executed by PDSI.
(v) A copy of the corporate resolutions of PDC authorizing the
execution, delivery and performance of the Credit Agreement, this
Agreement, the Assignments hereunder, the PDC Guaranty and any
Financing Statements executed by PDC (collectively, the "PDC
Documents"), certified as of the Closing Date by the Secretary or an
Assistant Secretary of PDC.
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(vi) An incumbency certificate showing the names and titles and
bearing the signatures of the officers of PDC authorized to execute
the PDC Documents, and to request purchases of Contracts hereunder,
certified as of the Closing Date by the Secretary or an Assistant
Secretary of PDC.
(vii) A copy of the Articles of Incorporation of PDC with all
amendments thereto, certified by the appropriate governmental official
of the jurisdiction of its incorporation as of a date not more than 15
days prior to the Closing Date.
(viii) A long-form certificate of good standing for PDC in the
jurisdiction of its incorporation, certified by the appropriate
governmental officials as of a date not more than 15 days prior to the
Closing Date.
(ix) A copy of the bylaws of PDC, certified as of the Closing
Date by the Secretary or an Assistant Secretary of PDC.
(x) A copy of the corporate resolutions of PDSI authorizing the
execution, delivery and performance of this Agreement, the Assignments
hereunder, the PDSI Guaranty and any Financing Statements executed by
PDSI (collectively, the "PDSI Documents"), certified as of the Closing
Date by the Secretary or an Assistant Secretary of PDSI.
(xi) An incumbency certificate showing the names and titles and
bearing the signatures of the officers of PDSI authorized to execute
the PDSI Documents, and to request purchases of Contracts hereunder,
certified as of the Closing Date by the Secretary or an Assistant
Secretary of PDSI.
(xii) A copy of the Articles of Incorporation of PDSI with all
amendments thereto, certified by the appropriate governmental official
of the jurisdiction of its incorporation as of a date not more than 15
days prior to the Closing Date.
(xiii) A long-form certificate of good standing for PDSI in the
jurisdiction of its incorporation, certified by the appropriate
governmental officials as of a date not more than 15 days prior to the
Closing Date.
(xiv) A copy of the bylaws of PDSI, certified as of the Closing
Date by the Secretary or an Assistant Secretary of PDSI.
(xv) Proper Financing Statements (Form UCC-1) or amendments
thereto duly executed and suitable for filing under the Uniform
Commercial Code for all jurisdictions as may be necessary or, in the
opinion of the Agent,
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desirable to perfect the interest of the Agent and the Buyers in the
Buyers' Contracts, Related Security, Related Security Documents and
proceeds thereof.
(xvi) Completed UCC, tax lien and judgment searches against each
Seller or other evidence satisfactory to the Agent that there are no
Liens superior to the interest of the Agent and the Buyers in the
Buyers' Contracts, the Related Security, the Related Security
Documents or the proceeds thereof.
(xvii) A certificate dated the Closing Date of a Financial
Officer of PDC and PDSI certifying as to the matters set forth in
Sections 5.2(b) and 5.2(c) below.
(b) Opinion. The Seller shall have requested Matthew Levitt, Esq., its
counsel, to prepare a written opinion, addressed to the Agent and the
Buyers and dated the Closing Date, covering the matters set forth in
Exhibit F hereto, and such opinion shall have been delivered to the Agent
in sufficient counterparts for each Buyer.
(c) Compliance. The Sellers shall have performed and complied with all
agreements, terms and conditions contained in this Agreement required to be
performed or complied with by the Sellers prior to or simultaneously with
the Closing Date.
(d) Credit and Collection Policies. Each Seller shall have provided
the Buyers with copies of its credit and collection policies as in effect
on the Closing Date, which shall be satisfactory in all respects to the
Buyers.
(e) Fees and Expenses. The Agent shall have received (i) for the
account of the Buyers, an extension fee in the amount of $50,000, and (ii)
all other fees and amounts due and payable by the Agent or the Buyers on or
prior to the Closing Date, including the reasonable fees and expenses of
counsel of the Agent.
(f) Payment for Existing Contracts. Each of M&I and U.S. Bank shall
have received payment in the amount required by Section 2.1(b).
Section 5.2. Conditions Precedent to All Purchases of Contracts. The
obligation of the Buyers to purchase any Contracts hereunder (including the
first Contracts to be purchased hereunder) shall be subject to the fulfillment
of the following conditions:
(a) all obligations in Section 2.2 hereof shall have been fulfilled to
the satisfaction of the Agent;
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(b) the representations and warranties of the Related Seller herein
shall be true and correct on the Purchase Date in all material respects
with the same force and effect as if originally made on such Purchase Date,
and the Related Seller shall have performed and complied with all
agreements and conditions required hereby to be performed or complied with
prior to or on such Purchase Date;
(c) no Unmatured Termination Event or Termination Event shall have
occurred and be continuing on any Purchase Date or will exist after giving
effect to the purchase and sale of Contracts to be made on such Purchase
Date; and
(d) there shall have been delivered to the Agent such additional
documents as shall be requested by the Agent pursuant to Section 9.6.
ARTICLE VI
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REPORTS AND INFORMATION; INSPECTION
Section 6.1. Settlement Date Statements. The Servicer shall deliver to each
Buyer on or before each Settlement Date a settlement statement certified by a
duly authorized officer or employee of the Servicer, in substantially the form
of Exhibit G:
(a) setting forth as to each Buyers' Contract that remains
outstanding:
(i) the amount of principal collected during the preceding
Collection Period and to be paid over to the Agent for the benefit of
the Buyers; the amount of interest collected during the preceding
Collection Period; the amount of interest to be paid over to the Agent
for the benefit of the Buyers; the amount of any other payment
collected by PDC with respect to such Contracts during the preceding
Collection Period and being paid over to the Agent for the benefit of
the Buyers; and the remaining principal balance with respect to such
Contracts as of the last occurring Determination Date; all determined
and reported on an aggregate basis for all Buyers' Contracts; and
(ii) the principal balance outstanding; the number of payments
remaining to be made; whether such Contract has been modified or
amended or contains provisions authorizing the Obligor to skip a
payment, interest only or balloon payments; and whether to the
Servicer's knowledge any Obligor is in any way in default under the
terms of the Contract or any Related Security Documents; all
determined and reported for each Buyers' Contract on an individual
basis;
(b) listing each Buyers' Contract that remains outstanding with
respect to which the Obligor has not paid any amount due thereunder within
sixty (60) days of its due date;
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(c) setting out the aggregate of all Repurchase Prices paid by each
Seller pursuant to Section 7.1(b) during the preceding Collection Period
and since the Closing Date, and including a computation of each Individual
Repurchase Commitment Amount as of the Settlement Date with respect to
which such certificate is prepared;
(d) listing each Contract to be purchased on that Settlement Date that
is an Eligible Contract pursuant to one or more of clauses (xvii)(1)
through (3) or (xxi) of the definition of Eligible Contract, identifying
which clauses are applicable to each such Contract and giving the Purchase
Price of each such Contract;
(e) giving the total Purchase Price of all Contracts purchased by the
Buyers on or prior to that Settlement Date that were Eligible Contracts
under each of clauses (xvii)(1) through (3) or (xxi) of the definition of
Eligible Contract, and including computations demonstrating that such
aggregate Purchase Price does not exceed the maximums specified in such
clauses (xvii)(1) through (3) and (xxi) of the definition of Eligible
Contract; and
(f) describing each modification of a Contract entered into by the
Servicer during the preceding Collection Period and containing calculations
demonstrating that the aggregate Purchase Price of all Contracts modified
by the Servicer does not exceed the maximum specified in Section 9.1.
Section 6.2. Financial Statements. The Sellers shall deliver to each Buyer:
6.2(a) As soon as available and in any event within 90 days after the
end of each fiscal year of PDC, the annual audit report of PDC and its
Subsidiaries prepared on a consolidated basis and in conformity with GAAP,
consisting of at least statements of income, cash flow, changes in
financial position and stockholders' equity, and a consolidated balance
sheet as at the end of such year, setting forth in each case in comparative
form corresponding figures from the previous annual audit, certified
without qualification by independent certified public accountants of
recognized standing selected by PDC and acceptable to the Agent and the
Buyers, together with any management letters, management reports or other
supplementary comments or reports to PDC or its board of directors
furnished by such accountants.
6.2(b) As soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year, a copy
of the unaudited financial statement of PDC and its Subsidiaries, prepared
on the basis of the same accounting principles applied in the preparation
of the annual audited financial statements referred to in Section 6.2(a)
(but omitting footnotes and year-end adjustments), signed by a Financial
Officer of PDC, consisting of at least consolidated statements of income
and cash flow for PDC and the Subsidiaries for such quarter and
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for the period from the beginning of such fiscal year to the end of such
quarter, and a consolidated balance sheet of PDC as at the end of such
quarter setting forth in each case in comparative form corresponding
figures from the previous year.
6.2(c) Together with the financial statements furnished by PDC under
Sections 6.2(a) and (b), a statement signed by a Financial Officer of PDC
demonstrating in reasonable detail compliance (or noncompliance, as the
case may be) with each of the financial ratios and restrictions contained
in Article X and stating that as at the date of each such financial
statement there did not exist any Unmatured Termination Event or
Termination Event or, if an Unmatured Termination Event or Termination
Event existed, specifying the nature and period of existence thereof and
what action the Sellers propose to take with respect thereto.
6.2(d) Immediately upon becoming aware of any Unmatured Termination
Event or Termination Event, a notice describing the nature thereof and what
action the Sellers propose to take with respect thereto.
6.2(e) Immediately upon becoming aware of the occurrence, with respect
to any Plan, of any Reportable Event (other than a Reportable Event for
which the reporting requirements have been waived by PBGC regulations) or
any "prohibited transaction" (as defined in Section 4975 of the Code), a
notice specifying the nature thereof and what action the Sellers propose to
take with respect thereto, and, when received, copies of any notice from
PBGC of intention to terminate or have a trustee appointed for any Plan.
6.2(f) Promptly upon the mailing or filing thereof, copies of all
financial statements, reports and proxy statements mailed to PDC's
shareholders, and copies of all registration statements, periodic reports
and other documents filed with the Securities and Exchange Commission (or
any successor thereto) or any national securities exchange.
6.2(g) Immediately upon becoming aware of the occurrence thereof,
notice of the institution of any litigation, arbitration or governmental
proceeding, or the rendering of a judgment or decision in such litigation
or proceeding, which could constitute an Adverse Event, and the steps being
taken by the Person(s) affected by such proceeding.
6.2(h) Immediately upon becoming aware of the occurrence thereof,
notice of any violation as to any environmental matter by either Seller or
any Subsidiary and of the commencement of any judicial or administrative
proceeding relating to health, safety or environmental matters (i) in which
an adverse determination or result could result in the revocation of or
have a material adverse effect on any operating permits, air emission
permits, water discharge permits, hazardous waste permits or other
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permits held by either Seller or any Subsidiary which are material to the
operations of either Seller or such Subsidiary, or (ii) which will or
threatens to impose a material liability on either Seller or such
Subsidiary to any Person or which will require a material expenditure by
either Seller or such Subsidiary to cure any alleged problem or violation.
6.2(i) From time to time, such other information regarding the
business, operation and financial condition of the Sellers and the
Subsidiaries as the Agent or any Buyer may reasonably request.
Section 6.3. Inspection. Each Seller shall permit any Person designated by
the Agent or any Buyer to visit and inspect any of that Seller's properties,
corporate books and financial records, to examine and to make copies of that
Seller's books of accounts and other financial records, and to discuss the
affairs, finances and accounts of that Seller and the Subsidiaries with, and to
be advised as to the same by, its officers at such reasonable times and
intervals as the Agent or any Buyer may designate. So long as no Termination
Event exists, such visits, inspections and examinations shall be at the expense
of the Agent or Buyer conducting such visit, inspection or examination, but any
such visits, inspections and examinations made while any Termination Event is
continuing shall be at the expense of the Sellers.
Section 6.4. Fiscal Periods. Each Seller will have the same fiscal year and
schedule of fiscal months, determined for each year on a basis consistent with
PDC's historical practices. The Sellers will deliver a schedule of fiscal months
and Settlement Dates for each fiscal year to the Agent on or before the end of
the preceding fiscal year.
ARTICLE VII
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SELLERS' OBLIGATION TO REPURCHASE CONTRACTS
Each Seller shall have an obligation to repurchase Contracts, as follows:
Section 7.1. Sellers' Obligations to Repurchase.
7.1(a) Repurchases Without Limit. Each Seller agrees to repurchase, on
the Agent's demand, any Contract previously purchased by the Buyers from
that Seller hereunder:
(i) If such Contract was not, on the applicable Purchase Date, an
Eligible Contract;
(ii) If any representation or warranty by that Seller with
respect to such Contract was not true and correct on the applicable
Purchase Date;
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(iii) Upon any failure by that Seller, or by the Servicer, to
comply with any of its covenants or other agreements hereunder with
respect to such Contract; and
(iv) If such Contract is or becomes subject to any Liens or other
adverse claims created by or arising through that Seller.
7.1(b) Limited Repurchases Following Contract Default. In addition to
any repurchases required by Section 7.1(a), each Seller agrees to
repurchase, on the Agent's demand, any Contract previously purchased by the
Buyers from that Seller hereunder upon the occurrence of a Contract Default
with respect to such Contract; provided, however that a Seller shall not be
obligated to repurchase any Contract pursuant to this Section 7.1(b) if the
principal amount outstanding under that Contract exceeds the remainder of
that Seller's Individual Repurchase Commitment Amount as of the date of
determination; and provided further that neither Seller shall be obligated
to repurchase a Contract pursuant to this Section 7.1(b) if such repurchase
would cause the portion of the aggregate Repurchase Price for all Contracts
repurchased after the Closing Date under this Section 7.1(b) that is
attributable to principal outstanding under such Contracts to exceed the
Aggregate Repurchase Commitment Amount.
Section 7.2. Seller's Option to Repurchase. If on any Settlement Date the
aggregate outstanding principal balance of the Buyers' Contracts is less than or
equal to $1,000,000, the Sellers may repurchase from the Buyers all but not less
than all of such Contracts for the Repurchase Price.
Section 7.3. Terms of Repurchase. Repurchases of Contract(s) by a Seller
under the provisions of this Article VII shall be made by payment of the
Repurchase Price for such Contract(s) to the Agent for the benefit of the
Buyers. Each repurchase by a Seller from the Buyers under this Article VII shall
be made in Immediately Available Funds and shall be without recourse,
representation or warranty except as to the absence of encumbrances created by
the Buyers. In the event a Seller is obligated to repurchase a Contract under
the provisions of this Article VII, the Agent shall, at that Seller's expense
and after payment of the full Repurchase Price therefor, take such action as
that Seller may reasonably request in order to reassign to that Seller the
Contract, all Related Security Documents and all Related Security for such
Contract. Notwithstanding any other provision hereof, following the repurchase
of a Contract by a Seller and payment of the full Repurchase Price therefor, the
Agent and the Buyers shall have no further rights therein and all collections on
such repurchased Contract shall be the sole property of that Seller.
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ARTICLE VIII
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SELLERS' REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Buyers to execute this Agreement and
to purchase Contracts hereunder, the Sellers make the following representations
and warranties to the Agent and the Buyers, each of which shall survive the
execution and delivery of this Agreement and shall be deemed given as of the
date hereof and as of each Purchase Date:
Section 8.1 Organization; Standing, Etc. PDC and each of its corporate
Subsidiaries, including PDSI, are corporations duly incorporated and validly
existing and in good standing under the laws of the jurisdiction of their
respective incorporation and have all requisite corporate power and authority to
carry on their respective businesses as now conducted and to (in the instance of
the Sellers) enter into this Agreement, the Guaranties and the Assignments and
to perform their obligations under this Agreement, the Guaranties and the
Assignments. PDC and each of its Subsidiaries, including PDSI, are duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character of the properties owned, leased or operated by it or the
business conducted by it makes such qualification necessary and where failure to
so qualify or to maintain such good standing would constitute an Adverse Event.
Section 8.2. Authorization and Validity. The execution, delivery and
performance by the Sellers of this Agreement, the Guaranties and the Assignments
have been duly authorized by all necessary corporate action by the Sellers, and
this Agreement, the Guaranties and the Assignments constitute the legal, valid
and binding obligations of the Sellers, enforceable against the Sellers in
accordance with their respective terms, subject to limitations as to
enforceability which might result from bankruptcy, insolvency, moratorium and
other similar laws affecting creditors' rights generally and subject to
limitations on the availability of equitable remedies.
Section 8.3. No Conflict; No Default. The execution, delivery and
performance by the Sellers of this Agreement, the Guaranties and the Assignments
will not (a) violate any provision of any law, statute, rule or regulation or
any order, writ, judgement, injunction, decree, determination or award of any
court, governmental agency or arbitrator presently in effect having
applicability to either Seller, (b) violate or contravene any provisions of the
Articles (or Certificate) of Incorporation or by-laws of either Seller, or (c)
result in a breach of or constitute a default under any indenture, loan or
credit agreement or any other agreement, lease or instrument to which either
Seller is a party or by which it or any of its properties may be bound or result
in the creation of any Lien on any asset of either Seller or any Subsidiary.
Neither a Seller nor any Subsidiary is in default under or in violation of any
such law, statute, rule or regulation, order, writ, judgment, injunction,
decree, determination or award or any such indenture, loan or credit agreement
or other agreement, lease or instrument in any case in which the consequences of
such default or violation could constitute an Adverse Event.
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Section 8.4. Government Consent. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority is required on the
part of either Seller to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, this Agreement, the Guaranties and the Assignments.
Section 8.5. Financial Statements and Condition. PDC's audited consolidated
financial statements as at April 24, 1999 and its unaudited consolidated
financial statements as at January 21, 2000, as heretofore furnished to the
Agent, have been prepared in accordance with GAAP on a consistent basis and
fairly present the financial condition of PDC and its Subsidiaries as at such
dates and the results of their operations and changes in financial position for
the respective periods then ended. As of the dates of such financial statements,
neither a Seller nor any Subsidiary had any material obligation, contingent
liability, liability for taxes or long-term lease obligation which is not
reflected in such financial statements or in the notes thereto. Since April 24,
1999, no Adverse Event has occurred.
Section 8.6. Litigation and Contingent Liabilities. Except as previously
disclosed to the Buyers in writing, there are no actions, suits or proceedings
pending or, to the knowledge of either Seller, threatened against or affecting
either Seller or any Subsidiary or any of their properties before any court or
arbitrator, or any governmental department, board, agency or other
instrumentality which, if determined adversely to either Seller or such
Subsidiary, could constitute an Adverse Event.
Section 8.7. Compliance. PDC and its Subsidiaries, including PDSI, are in
material compliance with all statutes and governmental rules and regulations
applicable to them.
Section 8.8. Environmental, Health and Safety Laws. There does not exist
any violation by either Seller or any Subsidiary of any applicable federal,
state or local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to environmental,
pollution, health or safety matters which will or threatens to impose a material
liability on either Seller or a Subsidiary or which would require a material
expenditure by either Seller or such Subsidiary to cure. Neither a Seller nor
any Subsidiary has received any notice to the effect that any part of its
operations or properties is not in material compliance with any such law, rule,
regulation or order or notice that it or its property is the subject of any
governmental investigation evaluating whether any remedial action is needed to
respond to any release of any toxic or hazardous waste or substance into the
environment, the consequences of which non-compliance or remedial action could
constitute an Adverse Event.
Section 8.9. ERISA. Each Plan complies with all material applicable
requirements of ERISA and the Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No Reportable Event,
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other than a Reportable Event for which the reporting requirements have been
waived by regulations of the PBGC, has occurred and is continuing with respect
to any Plan. All of the minimum funding standards applicable to such Plans have
been satisfied and there exists no event or condition which would permit the
institution of proceedings to terminate any Plan under Section 4042 of ERISA.
The current value of the Plans' benefits guaranteed under Title IV of ERISA does
not exceed the current value of the Plans' assets allocable to such benefits.
Section 8.10. Regulation U. Neither Seller is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve System)
and no part of the proceeds of any purchase of Contracts by the Buyers hereunder
will be used to purchase or carry margin stock or for any other purpose which
would violate any of the margin requirements of the Board of Governors of the
Federal Reserve System.
Section 8.11. Liens. None of the Accounts or Inventory of either Seller or
any Subsidiaries is subject to a Lien, except for Permitted Liens.
Section 8.12. Taxes. Each of the Sellers and the Subsidiaries has filed all
federal, state and local tax returns required to be filed and has paid or made
provision for the payment of all taxes due and payable pursuant to such returns
and pursuant to any assessments made against it or any of its property and all
other taxes, fees and other charges imposed on it or any of its property by any
governmental authority (other than taxes, fees or charges the amount or validity
of which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in accordance with GAAP have been provided on
the books of PDC). No tax Liens have been filed and no material claims are being
asserted with respect to any such taxes, fees or charges. The charges, accruals
and reserves on the books of the Sellers in respect of taxes and other
governmental charges are adequate.
Section 8.13. Investment Company Act. Neither a Seller nor any Subsidiary
is an "investment company" or a company "controlled" by an investment company
within the meaning of the Investment Company Act of 1940, as amended.
Section 8.14. Public Utility Holding Company Act. Neither a Seller nor any
Subsidiary is a "holding company" or a "subsidiary company" of a holding company
or an "affiliate" of a holding company or of a subsidiary company of a holding
company within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
Section 8.15. Subsidiaries. Exhibit H sets forth as of the date of this
Agreement a list of all Subsidiaries and the number and percentage of the shares
of each class of capital stock owned beneficially or of record by the Seller or
any Subsidiary therein, and the jurisdiction of incorporation of each
Subsidiary. PDSI is a wholly owned Subsidiary of PDC.
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Section 8.16. Partnerships and Joint Ventures. Neither a Seller nor any
Subsidiary is currently a partner (limited or general) or joint venturer in any
partnership or joint venture.
Section 8.17. Enforceability of Agreements and Assignments. This Agreement
has been duly executed and delivered by each Seller and is a valid and binding
agreement of each Seller enforceable in accordance with its terms. Each
Assignment, upon delivery to the Agent, will have been duly executed and
delivered by the Related Seller with respect to the Contracts subject to that
Assignment and will constitute a valid and binding assignment by the Related
Seller enforceable against the Related Seller in accordance with its terms. Each
Seller has full right, power and authority to sell the Contracts, the Related
Security, the Related Security Documents and proceeds hereunder and has the
ability to fulfill completely its obligations to the Obligors with respect to
the Contracts.
Section 8.18. Sale of Contracts. On each Purchase Date the Related Seller
will be the owner of all right, title and interest in and to the Contracts to be
sold to the Buyers on such Purchase Date, all Related Security Agreements and
the Related Seller's interest in the Related Security and upon the delivery of
the Assignment to the Buyer on such Purchase Date, such ownership interest will
be vested in the Buyer. Each Contract offered to and/or purchased by the Buyers
hereunder, all Related Security Agreements and the Related Seller's interest in
the Related Security will be, when offered and/or purchased, owned by the
Related Seller free and clear of all Liens and rights of others excepting the
rights in favor of the Agent and the Buyers created or to be created pursuant to
this Agreement. Except in connection with the sale of Contracts hereunder,
neither Seller has sold, pledged, transferred, assigned or granted any Lien in
any Contracts sold or to be sold to the Buyers hereunder, any Related Security
or the Related Security Documents. No financing statement describing or
referring to any Contract (other than any financing statement naming the Agent
as secured party) is on file in any public office, except for financing
statements in favor of U.S. Bank and BA Credit Corporation. There is only one
original executed copy of each Contract, and such original executed copy of each
Contract purchased by the Buyers will be delivered to the Agent on the relevant
Purchase Date.
Section 8.19. Related Security. Immediately prior to the purchase of any
Contract on a Purchase Date, the Related Seller will have a perfected first
priority Lien on all Related Security for such Contract. Following the
assignment of each Contract to the Agent for the benefit of the Buyers, the
Buyers will have a valid and perfected and enforceable first priority security
interest in each Contract and the Related Security. With respect to each
Contract, the dental equipment included in the Related Security is located in a
state in which the filing of a financing statement under the UCC is required to
perfect a security interest in goods of the type including such dental
equipment; such filings have been duly made and show the Related Seller as
secured party; and the Agent has the same rights as the secured party of record
would have (if such secured party were still the owner of the Contract) against
all Persons (including the Related Seller and any trustee in bankruptcy of the
Related Seller) claiming an interest in such dental equipment included in the
Related Security.
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Section 8.20. Eligibility and Enforceability of Contracts; Accuracy of
Information; Compliance. As of the relevant Purchase Date, each Contract sold to
the Buyers by a Seller hereunder is an Eligible Contract. Each Contract sold to
the Buyers by a Seller hereunder, and all Related Security Documents, will
constitute the legal, valid and binding obligation of the Obligor(s) thereof,
enforceable in accordance with their respective terms. Each such Contract will
accurately reflect the name(s) and residence or business address of the
Obligor(s), the signature(s) of the Obligor(s) on each Contract are genuine and
all parties to each Contract had full legal capacity to execute that Contract.
At the date of origination of each Contract, and on the Purchase Date with
respect thereto, all requirements of any federal and state laws, rules and
regulations applicable to the Contract, including, without limitation, usury,
truth in lending and equal credit opportunity laws, have been complied with, and
the Related Seller shall for at least the period of this Agreement, maintain in
its possession, available for the Agent's and the Buyers' inspection, and shall
deliver to the Agent upon demand, evidence of compliance with all such
requirements. Such compliance is not affected by the Buyers' ownership of the
Contracts.
Section 8.21. Contract Defaults. As of the relevant Purchase Date: (i) each
Contract sold to the Buyers by a Seller hereunder will be current, or no more
than 60 days past due; (ii) there will be no default, breach, violation or event
permitting acceleration existing under the Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Contract
(except payment delinquencies permitted by clause (i) above); (iii) neither the
Related Seller nor the Servicer will have waived any such default, breach,
violation or event permitting acceleration except payment delinquencies
permitted by clause (i) above; (iv) the Related Security will be free of damage
and in good repair; (v) each Contract will not have had its terms of payment
extended or modified in a manner inconsistent with the Related Seller's normal
credit policies; (vi) each Contract has not been satisfied or subordinated in
whole or in part or rescinded, and the Related Security securing each Contract
has not been released from the lien of the Contract in whole or in part. Neither
Seller has changed its credit and collection policies in any material respect or
taken any action which would materially impair the collectability of any
Contract.
Section 8.22. Goods Sold. Immediately prior to the date on which title to
any goods sold to an Obligor by a Seller and financed by indebtedness evidenced
by a Contract or Contracts passes to the Obligor thereof, the Related Seller
shall have been the owner of such goods free and clear of all mortgages, deeds
of trust, pledges, liens, security interests and other charges or encumbrances.
As of the Purchase Date with respect to each Contract, there will be no liens or
claims filed for work, labor or materials affecting the Related Security
securing the Contract which are or may be liens prior to, or equal or coordinate
with, the lien of the Contract.
Section 8.23. Financing Statements. Appropriate Uniform Commercial Code
financing statements relating to the sale of Contracts hereunder have been filed
in all offices
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where such filing is necessary to give the Agent on behalf of the Buyers a prior
perfected security interest in the Buyers' Contracts, the Related Security
Documents and any Related Security superior to any other interest therein. The
Buyers' Contracts, the Related Security Documents and any Related Security are
or will be sufficiently described in the Assignments and such financing
statements in order to perfect and protect Buyers' interest in the Buyers'
Contracts, the Related Security Documents and any Related Security against all
other Persons. All filing fees and taxes, if any, necessary to make the
foregoing filing effective have been paid in full.
Section 8.24. Records. Both Sellers' chief executive office and the place
where they maintain the books and records relating to the Contracts and any
Related Security is located at 1031 Mendota Heights Road, St. Paul, Minnesota
55120.
Section 8.25. Licenses. All import and exchange licenses, if required under
applicable law or regulations for the exportation, importation and payment of
the purchase price and related costs of goods underlying the Contracts or the
shipment thereof, have been obtained.
Section 8.26. No Defenses or Waivers. As of the Purchase Date with respect
to each Contract: (i) the Contract is not subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury; (ii) the
operation of any of the terms of the Contract or the exercise of any right
thereunder will not render the Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury; (iii) no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto; and (iv) the terms of the
Contract have not been waived, altered or modified in any respect, except by
instruments or documents identified in the exhibits to the relevant Assignment.
Section 8.27.Insurance Coverage. The Obligor under each Contract is
contractually obligated to maintain all risk physical damage insurance upon the
equipment securing such Contract in an amount at least equal to the lesser of
the principal amount of such Contract or the replacement cost of such equipment,
which insurance policy must name the Related Seller as loss payee and additional
insured and require at least 10 days' prior written notice to the Related Seller
before cancellation. In the case of any Contract as to which the unpaid
principal balance as of the Purchase Date with respect to such Contract exceeds
$100,000, the Related Seller has obtained written proof of such insurance.
Section 8.28. Origination. Each Contract was originated by the Related
Seller in the ordinary course of its business. No Contract was originated in or
is subject to the laws of any jurisdiction whose laws would make the transfer of
the Contract pursuant to this Agreement, or the ownership of the Contract by the
Buyers, unlawful or render the Contract unenforceable as a result thereof.
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Section 8.29. Retirement Benefits. Except as required under Section 4980B
of the Code, Section 601 of ERISA or applicable state law, neither a Seller nor
any Subsidiary is obligated to provide post-retirement medical or insurance
benefits with respect to employees or former employees.
Section 8.30. Full Disclosure. Subject to the following sentence, neither
the financial statements referred to in Sections 6.2 or 8.5 nor any other
certificate, written statement, exhibit or report furnished by or on behalf of
either Seller in connection with or pursuant to this Agreement contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained therein not misleading.
Certificates or statements furnished by or on behalf of either Seller to the
Agent or the Buyers consisting of projections or forecasts of future results or
events have been prepared in good faith and based on good faith estimates and
assumptions of the management of that Seller, and the Sellers have no reason to
believe that such projections or forecasts are not reasonable.
ARTICLE IX
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SELLERS' AGREEMENTS WITH RESPECT
TO CONTRACTS AND RELATED SECURITY
In order to induce the Agent and the Buyers to execute this Agreement and
to purchase Contracts hereunder, the Sellers jointly and severally agree that,
with respect to each Buyers' Contract, for as long as such Contract or any
amount thereunder remains outstanding, and whether or not the Agent has
terminated PDC as Servicer of such Contract under Section 3.4:
Section 9.1. Modification of Contracts. Except as provided in the remainder
of this Section 9.1, neither Seller nor the Servicer will, as agent of the Agent
and the Buyers or otherwise, extend or otherwise compromise or modify the terms
of any Buyers' Contract or the terms of any Related Security Documents without
the prior written approval of the Agent, release any Related Security or alter
or amend in any material respect its credit policies with respect to Contracts,
Related Security Documents and Related Security as in effect on the date hereof.
The foregoing shall not prohibit the Servicer, as long as the Agent has not
terminated PDC's power to act as Servicer pursuant to Section 3.4, from
modifying the terms of any Buyers' Contract in a manner consistent with the the
Servicer's credit polices as they exist as of the date of this Agreement,
provided that (a) notice of such modification is included in each settlement
statement delivered to the Agent pursuant to Section 6.1 with respect to the
Collection Period during which such modification occurred, (b) the Servicer does
not permit more than one such modification to the amortization schedule with
respect to any Contract, (c) no modification extends the date for final payment
under a Contract beyond the Final Maturity Date, (d) if any modification
releases any Related Security, the Servicer pays to the Agent for the benefit of
the Buyers on the next Settlement Date an amount equal to the portion of the
principal amount outstanding under the modified Contract that is attributable to
the released Related Security, (e) no modification may reduce the interest rate
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payable on a Contract (other than a Discounted Contract) below the Buyers' Rate
in effect as of the date of the modification, (f) no modification may reduce the
principal amount outstanding under a Contract without the Buyers' prior consent,
and (g) no Contract may be modified pursuant to this Section 9.1 that would
cause the aggregate Purchase Price of all Contracts that have been modified by
the Servicer under this Section 9.1 to be ten percent (10%) or more of the
aggregate Purchase Price of all Buyers' Contracts.
Section 9.2. Assignments. Each Assignment executed and delivered in
connection with any purchase and sale of Contracts will vest in the Agent on
behalf of the Buyers all of the Related Seller's right, title and interest in
and to such Contracts, any Related Security, any Related Security Documents and
the proceeds thereof.
Section 9.3. Adverse Interests. Neither Seller will, as agent for the
Agent, the Buyers or otherwise, pledge, hypothecate, convey or otherwise
transfer, or grant any security or other interest in, any Buyers' Contract or
any Related Security or Related Security Document.
Section 9.4. Continuation of Related Security. The Servicer shall maintain
in full force and effect, in the name of the Related Seller (unless assigned to
the Agent for the benefit of the Buyers by the Seller's execution and delivery
to the Agent of a UCC assignment), all Liens constituting Related Security for
Buyers' Contracts sold by that Seller, with the priority such Liens had on the
applicable Purchase Date, until all amounts owing under the related Contract
have been paid in full.
Section 9.5. Taxes and Claims. Each Seller will promptly pay all taxes and
other governmental charges levied or assessed upon or against any of the Buyers'
Contracts sold by that Seller and the Related Security or upon or against the
creation, perfection or continuance of the Buyers' interest therein, as well as
all other claims of any kind (including claims for labor, material and supplies)
against or with respect to any such Contract or Related Security, except to the
extent (a) such taxes, charges or claims are being contested in good faith by
appropriate proceedings, (b) such proceedings do not involve any material danger
of the sale, forfeiture or loss of any of the Buyers' Contracts or Related
Security or any interest therein and (c) such taxes, charges or claims are
adequately reserved against on the Seller's books in accordance with generally
accepted accounting principles.
Section 9.6. Further Assurances.
9.6(a) Each Seller and the Servicer agrees that from time to time, at
its expense, it will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or that
the Agent or a Buyer may reasonably request, in order to perfect and
protect the sale of the Buyers' Contracts, the Related Security, the
Related Security Documents and proceeds hereunder or to enable the Agent or
a Buyer to exercise and enforce its rights and remedies hereunder with
respect to any of such Contracts, Related Security, Related Security
Documents
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and proceeds (but any failure to request or assure that a Seller execute
and deliver such instrument or documents or to take such action shall not
affect or impair the validity, sufficiency or enforceability of this
Agreement and the sale of the Contracts hereunder, regardless of whether
any such item was or was not executed and delivered or action taken in a
similar context or on a prior occasion). Without limiting the generality of
the foregoing, each Seller will, promptly and from time to time at the
request of the Agent, execute and file such financing statements or
continuation statements in respect thereof, or amendments thereto, and such
other instruments or notices, as the Agent may reasonably request, in order
to perfect, preserve, and enhance the sale of the Buyers' Contracts sold by
that Seller, the Related Security, the Related Security Documents and
proceeds hereunder and attempt to obtain waivers, in form satisfactory to
the Agent, of any claim to any such Contracts, Related Security or Related
Security Documents from any other party claiming or in a position to claim
an interest therein.
9.6(b) Each Seller hereby authorizes the Agent to file one or more
financing statements or continuation statements in respect thereof, and
amendments thereto, relating to all or any part of the Buyers' Contracts
sold by that Seller, the Related Security, the Related Security Documents
and proceeds without the signature of the Seller where permitted by law. A
photocopy or other reproduction of this Agreement or any financing
statement covering the Contracts, Related Security, Related Security
Documents and proceeds or any part thereof shall be sufficient as a
financing statement where permitted by law.
9.6(c) The Servicer will furnish to the Agent from time to time
statements and schedules further identifying and describing the Buyers'
Contracts or Related Security and such other reports in connection with the
Buyers' Contracts or Related Security as the Agent may reasonably request,
all in reasonable detail and in form and substance reasonably satisfactory
to the Agent.
9.6(d) Each Seller shall, at the request of the Agent, deliver or
cause the Servicer to deliver the originals of all Related Security
Documents to the Agent, and allow the Agent to verify that the Sellers or
the Servicer marked all of its relevant records to show the Buyers'
ownership of the Buyers' Contracts, Related Security and Related Security
Documents by labeling the same "Property of U.S. Bank National Association,
as agent for the benefit of the 'Buyers' as defined in that certain Second
Amended and Restated Contract Purchase Agreement dated as of April 28, 2000
by and between Patterson Dental Company, Patterson Dental Supply, Inc.,
U.S. Bank National Association, individually and as agent, The Bank of
Tokyo - Mitsubishi, Ltd., M&I Marshall & Ilsley Bank and The Northern Trust
Company."
Section 9.7. Secured Party Subsidiaries. If any Subsidiary of PDC at any
time becomes a secured party or creditor with respect to any Obligor, PDC shall
cause such
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Subsidiary to conduct its business with such Obligor in a manner such that no
defense to such Obligor's obligations under any Buyers' Contract arise from the
Obligor's relationship with such Subsidiary.
ARTICLE X
---------
GENERAL COVENANTS
In order to induce the Agent and the Buyers to execute this Agreement and
to purchase Contracts hereunder, the Sellers jointly and severally agree that,
until the Contract Purchase Commitment shall have expired or been terminated and
all Buyers' Contracts have been paid in full, unless the Majority Banks shall
otherwise consent in writing:
Section 10.1. Corporate Existence. Subject to Section 10.9 in the instance
of a Subsidiary, each of the Sellers and each Subsidiary will maintain its
corporate existence in good standing under the laws of its jurisdiction of
incorporation and its qualification to transact business in each jurisdiction in
which the character of the properties owned, leased or operated by it or the
business conducted by it makes such qualification necessary and where the
failure so to qualify or to maintain such good standing would constitute an
Adverse Event.
Section 10.2. Insurance. Each of the Sellers and each Subsidiary will
maintain with financially sound and reputable insurance companies such insurance
as may be required by law and such other insurance in such amounts and against
such hazards as is customary in the case of reputable corporations engaged in
the same or similar business and similarly situated.
Section 10.3. Payment of Taxes and Claims. Each of the Sellers and each
Subsidiary will file all tax returns and reports which are required by law to be
filed by it and pay before they become delinquent all taxes, assessments and
governmental charges and levies imposed upon it or its property and all claims
or demands of any kind (including, without limitation, those of suppliers,
mechanics, carriers, warehouses, landlords and other like Persons) which, if
unpaid, might result in the creation of a Lien upon its property; provided that
the foregoing items need not be paid if they are being contested in good faith
by appropriate proceedings, and as long as the Seller's or such Subsidiary's
title to its property is not materially adversely affected, its use of such
property in the ordinary course of its business is not materially interfered
with and adequate reserves with respect thereto have been set aside on the
Seller's or such Subsidiary's books in accordance with GAAP.
Section 10.4. Maintenance of Properties. Each of the Sellers and each
Subsidiary will maintain its properties used or useful in the conduct of its
business in good condition, repair and working order, and supplied with all
necessary equipment, and make all necessary repairs, renewals, replacements,
betterments and improvements thereto, all as may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
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Section 10.5. Books and Records. Each of the Sellers and each Subsidiary
will keep adequate and proper records and books of account in which full and
correct entries will be made of its dealings, business and affairs.
Section 10.6. Compliance. Each of the Sellers and each Subsidiary will
comply in all material respects with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject.
Section 10.7. ERISA. Each of the Sellers and each Subsidiary will maintain
each Plan in compliance with all material applicable requirements of ERISA and
of the Code and with all material applicable rulings and regulations issued
under the provisions of ERISA and of the Code.
Section 10.8. Environmental Matters. Each of the Sellers and each
Subsidiary will observe and comply with all laws, rules, regulations and orders
of any government or government agency relating to health, safety, pollution,
hazardous materials or other environmental matters to the extent non-compliance
could result in a material liability or otherwise constitute an Adverse Event.
Section 10.9. Merger. Neither a Seller nor any Subsidiary will merge or
consolidate or enter into any analogous reorganization or transaction with any
Person, unless PDC shall be the surviving corporation and no Default or Event of
Default shall exist before and after giving effect to such merger,
consolidation, reorganization, or transaction; provided, however, any
wholly-owned Subsidiary may be merged with or liquidated into a Seller (if the
Seller is the surviving corporation) or any other wholly-owned Subsidiary.
Section 10.10. Sale of Assets. Neither a Seller nor any Subsidiary will
sell, transfer, lease or otherwise convey all or any substantial part of its
assets except for sales and leases of inventory in the ordinary course of
business and except for sales or other transfers by a wholly-owned Subsidiary to
the Seller or another wholly-owned Subsidiary; provided, however, that the
foregoing shall not prohibit the Permitted Account Sales or the capitalization
of PDSI by a contribution of the distribution centers, warehouses, sales offices
and related assets owned by PDC if and only if PDSI is a wholly-owned Subsidiary
of PDC (and any such capitalization and contribution shall not be deemed to be a
change in the nature of PDC's or PDSI's business in violation of Section 10.12).
Section 10.11. Plans. Neither a Seller nor any Subsidiary will permit any
condition to exist in connection with any Plan which might constitute grounds
for the PBGC to institute proceedings to have such Plan terminated or a trustee
appointed to administer such Plan, permit any Plan to terminate under any
circumstances which would cause the lien provided for in Section 4068 of ERISA
to attach to any property, revenue or asset of a Seller or any Subsidiary or
permit the underfunded amount of Plan benefits guaranteed under Title IV of
ERISA to exceed $500,000.
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Section 10.12. Change in Nature of Business. Neither a Seller nor any
Subsidiary will make any material change in the nature of the business of the
Seller or such Subsidiary, as carried on at the date hereof.
Section 10.13. Liens. Neither a Seller nor any Subsidiary will create,
incur, assume or suffer to exist any Lien on any Account or Inventory, except
for Permitted Liens.
Section 10.14. Use of Proceeds. Neither a Seller nor any Subsidiary will
permit any proceeds of the sales of the Contracts to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
"purchasing or carrying any margin stock" within the meaning of Regulation U of
the Federal Reserve Board, as amended from time to time, and each Seller will
furnish to the Buyer, upon its request, a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U.
Section 10.15. Current Ratio. PDC will not permit the ratio of its
consolidated current assets to its consolidated current liabilities plus,
without duplication, the amount of all "Loans" (as defined in the Credit
Agreement) outstanding (whether or not current liabilities) to be less than
1.50:1.00 at any time.
Section 10.16. Tangible Net Worth. PDC will not permit its Consolidated
Tangible Net Worth at any time to be less than the sum of (a) $75,000,000, plus
(b) 75% of the cumulative net income for all periods following the fiscal
quarter of PDC ending July 27, 1996 (without taking into account any net loss in
any such period), plus (c) 90% of the net proceeds of any issuance after July
27, 1996 of common or preferred stock, convertible debentures, or any other
equity interests in PDC.
Section 10.17. Leverage Ratio. PDC will not permit the ratio of its
consolidated total liabilities plus "Deferred Credits" (as defined in the Credit
Agreement) to Consolidated Tangible Net Worth to be more than 1.50:1.00 at any
time.
Section 10.18. Accounting Changes. The Sellers will not, and will not
permit any Subsidiary to, make any change in accounting treatment or reporting
practices, except as required by GAAP, that would have a significant effect on
any determination made or required to be made hereunder, or change their fiscal
year or the fiscal year of any Subsidiary.
Section 10.19. Changes in Name or Location. Neither Seller will at any time
change its name, identity, address of its chief executive office or corporate
structure in any manner which would, could or might make any financing or
continuation statement filed hereunder seriously misleading within the meaning
of ss. 9-402(7) (or similar section) of any applicable enactment of the Uniform
Commercial Code or transact any business with respect to Contracts under a name
other than its present corporate title unless in either case it shall have given
the Agent at least sixty (60) days prior written notice thereof and shall have
made and cause to be filed such amendments to the financing statements filed
hereunder or such
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financing statements as are necessary to maintain the perfection and priority of
the Buyers' security interest or as may be requested by the Agent.
Section 10.20. Indemnity. The Sellers hereby agree, jointly and severally,
to indemnify and defend the Agent and the Buyers against all losses, damages,
costs, expenses, claims and liabilities (including, without limitation, the
Agent's and the Buyers' reasonable out-of-pocket expenses and reasonable fees
and expenses of counsel):
10.20(a) arising out of or resulting from (i) the use, ownership,
operation, sale or consumption by any Obligor, or any agent, employee or
customer of any Obligor, of any product distributed by a Seller or which at
any time was or shall have been related to any financing transaction from
which a Buyers' Contract arises, or (ii) any breach of warranty or alleged
breach of warranty by a Seller or any other Person, or (iii) any failure of
any Buyers' Contract or Related Security Document at any time to comply
with any legal requirement;
10.20(b) arising from the assertion by an Obligor of any right to
set-off against amounts owing under any Contract or Related Security any
claim of whatsoever nature against a Seller or its employees or agents;
10.20(c) relating to license and registration fees, duties or other
similar charges (including without limitation, any charges related to doing
business in a particular jurisdiction), or taxes, imposed or assessed
(including without limitation, any penalties, fees, additions to tax or
interest thereon, but excluding taxes imposed on the overall net income of
a Buyer by the United States or the jurisdiction in which the Buyer has its
principal office) by any government or taxing authority upon or with
respect to amounts received as collections on the Contracts solely as a
result of the Buyers' ownership of any Contract;
10.20(d) actually incurred by the Agent or a Buyer by reason of the
existence of any lien or encumbrance (other than those in favor of or
created by the Agent or a Buyer) on any Buyers' Contract, Related Security
Document or Related Security;
10.20(e) arising by reason of, relating to or in connection with the
execution, delivery, performance or enforcement of this Agreement, any
Assignment or any transaction contemplated hereby or thereby; and
10.20(f) arising by reason of, relating to or in connection with the
purchase of any Contracts, Related Security, Related Security Documents and
proceeds hereunder, or any act done or omitted by any Person with respect
thereto or the exercise of any rights or remedies thereunder (other than
nonpayment by an Obligor, or any other Contract Default, not attributable
to or caused by the failure of the Contract to
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constitute an Eligible Contract or the actions or failure to act of the
Sellers or the Servicer).
provided, however, that the Sellers shall not be liable to the Agent or a Buyer
for any portion of such losses, damages, costs, expenses, claims and liabilities
resulting from: (i) such Person's gross negligence or willful misconduct, or
(ii) the acts or omissions of any Person appointed by the Agent (after the
removal of PDC as Servicer) as the successor servicer for the Buyers' Contracts.
In the event this indemnity is unenforceable as a matter of law as to a
particular matter or consequence referred to herein, it shall be enforceable to
the full extent permitted by law. The foregoing indemnifications shall survive
full payment, any repurchase by or assignment to a Seller of any Contract and
the termination of this Agreement as provided in Section 13.14 hereof. The
Sellers will jointly and severally indemnify the Agent and the Buyers and save
them harmless from and against any claims, actions, damages, losses or expenses
(including reasonable attorneys' fees and court costs) awarded against or
incurred by the Agent or a Buyer as a result of any breach of this covenant.
Section 10.21. Filing Fees. Each Seller shall pay all filing fees and other
expenses incurred by the Agent to validate, perfect, continue or otherwise
protect the Buyers' interest in the Contracts sold by that Seller, any Related
Security and any Related Security Documents, including appropriate filings under
the Uniform Commercial Code.
Section 10.22. Guaranties. When so requested by the Agent from time to
time, each Guarantor will execute and deliver to the Agent reaffirmations of
their respective Guaranties in such form as the Agent may require.
Section 10.23 Year 2000 Compliance. The Sellers have reviewed and assessed
their business operations and computer systems and applications to address the
"year 2000 problem" (that is, that computer applications and equipment used by
the Sellers, directly or indirectly through third-parties may have been or may
be unable to properly perform date-sensitive functions before, during and after
January 1, 2000). The Sellers represent and warrant that the year 2000 problem
has not resulted in and will not result in a material adverse change in the
Sellers' business condition (financial or otherwise), operations, properties or
prospects, or ability to pay the Buyers. The Sellers agree that this
representation shall be true and correct on and shall be deemed made by the
Sellers on each date the Sellers request any purchase under this Agreement or
deliver any information to the Buyers. The Sellers will promptly deliver to the
Buyers such information relating to this representation and warranty as the
Buyers request from time to time.
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ARTICLE XI
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TERMINATION EVENTS AND REMEDIES
Section 11.1. Termination Events. The occurrence of any one or more of the
following events shall constitute a Termination Event:
11.1(a) Either Seller or the Servicer shall fail to pay when due any
amounts required to be paid to the Agent or the Buyers pursuant hereto.
11.1(b) The occurrence of any "Event of Default" (as defined in the
Credit Agreement).
11.1(c) Any representation or warranty made or deemed to have been
made by or on behalf of a Seller or any Subsidiary in this Agreement or the
Assignments or on behalf of a Seller or any Subsidiary in any certificate,
statement, report or other writing furnished by or on behalf of a Seller to
the Agent or a Buyer pursuant to this Agreement or the Assignments or any
other instrument, document or agreement shall prove to have been false or
misleading in any material respect on the date as of which the facts set
forth are stated or certified or deemed to have been stated or certified;
11.1(d) Either Seller shall fail to comply with any agreement,
covenant, condition, provision or term contained in this Agreement or the
Assignments (and such failure shall not constitute a Termination Event
under any of the other provisions of this Section 11.1) and such failure to
comply shall continue for 30 calendar days after notice thereof to that
Seller by the Agent;
11.1(e) A Seller or any Subsidiary shall become insolvent or shall
generally not pay its debts as they mature or shall apply for, shall
consent to, or shall acquiesce in the appointment of a custodian, trustee
or receiver of the Seller or Subsidiary or for a substantial part of the
property thereof or, in the absence of such application, consent or
acquiescence, a custodian, trustee or receiver shall be appointed for a
Seller or a Subsidiary or for a substantial part of the property thereof
and shall not be discharged within 30 days;
11.1(f) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by
or against a Seller or a Subsidiary, and, if instituted against a Seller or
a Subsidiary, shall have been consented to or acquiesced in by the Seller
or Subsidiary, or shall remain undismissed for 30 days, or an order for
relief shall have been entered against a Seller or a Subsidiary, or a
Seller or any Subsidiary shall take any corporate action to approve
institution of, or acquiescence in, such a proceeding;
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11.1(g) Any dissolution or liquidation proceeding shall be instituted
by or against a Seller or a Subsidiary and, if instituted against a Seller
or Subsidiary, shall be consented to or acquiesced in by the Seller or
Subsidiary or shall remain for 30 days undismissed, or a Seller or any
Subsidiary shall take any corporate action to approve institution of, or
acquiescence in, such a proceeding;
11.1(h) A judgment or judgments for the payment of money in excess of
the sum of $2,000,000 in the aggregate shall be rendered against a Seller
or a Subsidiary and the Seller or Subsidiary shall not discharge the same
or provide for its discharge in accordance with its terms, or procure a
stay of execution thereof, prior to any execution on such judgments by such
judgment creditor, within 30 days from the date of entry thereof, and
within said period of 30 days, or such longer period during which execution
of such judgment shall be stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal;
11.1(i) The institution by a Seller or any ERISA Affiliate of steps to
terminate any Plan if in order to effectuate such termination, the Seller
or any ERISA Affiliate would be required to make a contribution to such
Plan, or would incur a liability or obligation to such Plan, in excess of
$2,000,000, or the institution by the PBGC of steps to terminate any Plan;
11.1(j) The maturity of any indebtedness of a Seller or a Subsidiary
in an aggregate amount of $2,000,000 or more shall be accelerated, or a
Seller or a Subsidiary shall fail to pay any such indebtedness in such
amount when due or, in the case of such indebtedness payable on demand,
when demanded, or any event shall occur or condition shall exist and shall
continue for more than the period of grace, if any, applicable thereto and
shall have the effect of causing, or permitting (any required notice having
been given and grace period having expired) the holder of any such
indebtedness or any trustee or other Person acting on behalf of such holder
to cause, such indebtedness in such amount to become due prior to its
stated maturity or to realize upon any collateral given as security
therefor;
11.1(k) Any Person, or group of Persons acting in concert, that owned
less than 5% of the shares of any voting class of stock of PDC shall have
acquired more than 50% of the shares of such voting stock;
11.1(l) This Agreement or either Guaranty shall, at any time after the
execution and delivery hereof, cease to be in full force and effect or
shall be declared to be null and void, or the validity or enforceability
thereof shall be contested by a Seller, or a Seller shall deny that it has
any or further liability or obligation under this Agreement or that
Seller's Guaranty;
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11.1(m) Any execution or attachment shall be issued whereby any
substantial part of the property of a Seller or any Subsidiary shall be
taken or attempted to be taken and the same shall not have been vacated or
stayed within 30 days after the issuance thereof; or
11.1(n) PDSI shall cease to be a wholly-owned Subsidiary of PDC; or
11.1(o) That certain Escrow Agreement dated June 20, 1997 between PDC,
PDSI, the Agent and U.S. Bank Trust National Association shall be
terminated, amended or otherwise modified without the Majority Buyers'
prior written consent, or U.S. Bank Trust National Association shall resign
or be removed as escrow agent thereunder and not be replaced with a
substitute escrow agent satisfactory to the Majority Buyers.
Section 11.2. Remedies.
11.2(a) If (i) any Termination Event described in Sections 11.1(e),
(f) or (g) shall occur with respect to a Seller, the Contract Purchase
Commitment shall automatically terminate and each Seller shall without
demand pay into the Holding Account an amount equal to its Individual
Repurchase Commitment Amount as of such date; or (ii) any other Termination
Event shall occur and be continuing, then the Agent may, and at the request
of the Majority Buyers shall, (A) declare the Contract Purchase Commitment
terminated, whereupon the Contract Purchase Commitment shall terminate, and
(B) demand that each Seller pay into the Holding Account an amount equal to
its Individual Repurchase Commitment Amount as of such date. If a Seller
makes any deposit in the Holding Account, then, upon any reduction in the
aggregate unpaid principal amount of all outstanding Buyers' Contracts
purchased from that Seller resulting from (y) the Buyers' receipt of
principal payments thereon or (z) that Seller's repurchase thereof, the
Buyer shall withdraw from the Holding Account the amount (if any) by which
the amount on deposit in the Holding Account exceeds such aggregate unpaid
principal amount plus accrued, unpaid interest thereon at the Buyer's Rate,
and pay such amount to that Seller.
11.2(b) Upon the occurrence of any Termination Event:
(i) the Agent may exercise and enforce any and all rights and
remedies available upon default to a secured party under the Uniform
Commercial Code;
(ii) the Agent may deliver notice of the Buyers' purchase of the
Buyers' Contracts to one or more Obligors and may, in the Agent's
name, in the Buyers' name or in the Related Seller's name, demand, sue
for, collect or receive any money or property at any time payable or
receivable on account of,
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or securing, any of the Buyers' Contracts or the Related Security or
grant any extension to, make any compromise or settlement with or
otherwise agree to waive, modify, amend or change the obligation of
any Obligor. If any payments on any of the Buyers' Contracts or the
Related Security are received by a Seller after a Termination Event
has occurred, such payments shall be held in trust by that Seller as
the property of the Buyers and shall not be commingled with any funds
or property of that Seller and shall be forthwith remitted to the
Agent for the benefit of the Buyers;
(iii) the Agent may require each Seller to, and each Seller
hereby agrees that it will, at its expense and upon request of the
Agent forthwith, assemble all of the Contracts, Related Security
Documents and records related thereto (to the extent not already in
the Agent's possession) as directed by the Agent and make them
available to the Agent at a place or places to be designated by the
Agent; and
(iv) the Agent may exercise or enforce any and all other rights
or remedies available by law or agreement against the Buyers'
Contracts and the Related Security, against a Seller (including under
the Guaranties), or against any other Person or property.
If notice to a Seller of any intended disposition of the Contracts and the
Related Security or any other intended action is required by law in a
particular instance, such notice shall be deemed commercially reasonable if
given in the manner specified for the giving of notice in Section 13.3 at
least ten calendar days prior to the date of intended disposition or other
action. In addition to the other remedies set forth in this Section 11.2,
upon the occurrence of any Termination Event and thereafter while the same
be continuing, each Seller hereby irrevocably authorizes each Buyer to set
off any obligations of that Seller hereunder to such Buyer, or to make
deposits into the Holding Account, against all deposits and credits of that
Seller with, and any and all claims of that Seller against, such Buyer.
Such right shall exist whether or not such Buyer shall have made any demand
hereunder, whether or not the deposits and credits held for the account of
that Seller is or are matured or unmatured, and regardless of the existence
or adequacy of any security, right or remedy available to such Buyer. Each
Buyer agrees that, as promptly as is reasonably possible after the exercise
of any such setoff right, it shall notify the affected Seller of its
exercise of such setoff right; provided, however, that the failure of a
Buyer to provide such notice shall not affect the validity of the exercise
of such setoff rights.
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ARTICLE XII
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CHANGE IN CIRCUMSTANCES
Section 12.1. Increased Costs. If, as a result of any law, rule,
regulation, treaty or directive, or any change therein or in the interpretation
or administration thereof, or compliance by a Buyer with any request or
directive (whether or not having the force of law) from any court, central bank,
governmental authority, agency or instrumentality, or comparable agency:
(a) any tax, duty or other charge with respect to the Buyers'
Contracts or the Buyers' obligation to purchase Contracts is imposed,
modified or deemed applicable, or the basis of taxation of payments to any
Buyer of interest or principal on the Contracts or any amounts due under
this Agreement (other than taxes imposed on the overall net income of a
Buyer by the United States and the jurisdiction in which the Buyer has its
principal office) is changed;
(b) any reserve, special deposit, special assessment or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any Buyer is imposed, modified or deemed applicable; or
(c) any other condition affecting this Agreement, the Buyers'
Contracts or the Buyers' obligation to purchase the Contracts is imposed on
any Buyer or the relevant funding markets;
and any Buyer determines that, by reason thereof, the cost to that Buyer of
purchasing or maintaining the Contracts or the Buyers' obligation to purchase
Contracts is increased, or the amount of any sum receivable by that Buyer
hereunder or under this Agreement or any Contract is reduced;
then, PDC shall pay to such Buyer upon demand by such Buyer (with a copy to the
Agent) such additional amount or amounts as will compensate such Buyer (or the
controlling Person in the instance of (c) above) for such additional costs or
reduction (provided that the Buyer has not been compensated for such additional
cost or reduction in the calculation of the Eurodollar Reserve Rate). Each Buyer
will promptly notify PDC of any event of which such Buyer has knowledge,
occurring after the date hereof, which will entitle such Buyer to compensation
pursuant to this Section. If a Buyer fails to give such notice within 45 days
after it obtains knowledge of such an event, such Buyer shall, with respect to
compensation payable pursuant to this Section, only be entitled to payment under
this Section for costs incurred from and after the date 45 days prior to the
date that such Buyer does give such notice. A certificate of a Buyer claiming
compensation under this Section, setting forth the additional amount or amounts
to be paid to it hereunder and stating in reasonable detail the basis for the
charge and the method of computation, shall be conclusive in the absence of
manifest error. In determining such amount, each Buyer may use any reasonable
averaging and attribution methods. Failure on the part of a Buyer to demand
compensation for any increased costs or reduction in amounts received or
receivable with respect to any Interest Period shall not constitute a waiver of
that Buyer's rights to demand compensation for any
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increased costs or reduction in amounts received or receivable in any subsequent
Interest Period (subject to the limitation contained in the third preceding
sentence).
Section 12.2. Deposits Unavailable or Interest Rate Unascertainable or
Inadequate; Impracticability. If any Buyer reasonably determines (which
determination shall be conclusive and binding on the parties hereto) that:
(a) deposits of the necessary amount for the relevant Interest Period
or Fixed Rate Period elected by PDC pursuant to Section 2.7 are not
available to that Buyer in the relevant markets or that, by reason of
circumstances affecting such market, adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate for such Interest Period or
Fixed Rate Period;
(b) the use of the Eurodollar Rate (Reserve Adjusted) as the basis for
the Buyers' Rate will not adequately and fairly reflect the cost to that
Buyer of purchasing or maintaining the Buyers' Contracts for a relevant
Interest Period or Fixed Rate Period; or
(c) the use of the Eurodollar Rate (Reserve Adjusted) as the basis for
the Buyers' Rate has become impracticable as a result of any event
occurring after the date of this Agreement which, in the opinion of that
Buyer, materially and adversely affects the Buyers' Contracts or the
Buyers' obligation to purchase Contracts or the relevant market;
such Buyer shall promptly give notice of such determination to PDC, with a copy
to the Agent, and the Buyers' Rate with respect to the Buyer's Percentage of
that Buyer of the principal amount outstanding under the Buyers' Contracts shall
be the Reference Rate for as long as such condition persists; provided, however,
that if at the time of any such determination the affected Buyer is using a
reserve-adjusted certificate of deposit rate or similar rate as a basis for
pricing, and if PDC so requests and enters into such amendments to this
Agreement as the Agent and the Buyers may reasonably request in order to
incorporate appropriate definitions and other terms typically included in the
affected Buyer's documentation with respect to such rates, then the Buyers' Rate
for the Buyer's Percentage of the affected Buyer of the Buyers' Contracts shall
be the sum of (i) such reserve-adjusted certificate of deposit or similar rate,
(ii) the Applicable Margin, and (iii) one eighth of one percent (0.125%).
Section 12.3. Illegality. If at any time due to the adoption of any law,
rule, regulation, treaty or directive, or any change therein or in the
interpretation or administration thereof by any court, central bank,
governmental authority, agency or instrumentality, or comparable agency charged
with the interpretation or administration thereof, or for any other reason
arising subsequent to the date of this Agreement, it shall become unlawful or
impossible for a Buyer to purchase Contracts at a rate based on the Eurodollar
Rate (Reserve
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Adjusted), the obligation of such Buyer to purchase Contracts shall, upon the
happening of such event, forthwith be suspended for the duration of such
illegality or impossibility. If any such event shall make it unlawful or
impossible for a Buyer to maintain any Buyers' Contracts previously purchased by
it hereunder, such Buyer shall, upon the happening of such event, notify PDC
thereof in writing, and the Buyers' Rate with respect to the Buyer's Percentage
of that Buyer of the principal amount outstanding under the Buyers' Contracts
shall thereafter be the Reference Rate.
Section 12.4. Capital Adequacy. In the event that any change in any law,
rule, regulation, treaty or directive, or any change therein or in the
interpretation or administration thereof by any court, central bank,
governmental authority, agency or instrumentality, or comparable agency (a
"Governmental Agency") charged with the interpretation or administration
thereof, or compliance by any Bank with any request or directive (whether or not
having the force of law) of any such Governmental Agency, reduces or shall have
the effect of reducing the rate of return on any Buyer's capital or the capital
of its parent corporation (by an amount such Buyer deems material) as a
consequence of its Individual Contract Purchase Commitment Amount and/or its
undivided percentage ownership interest in the Buyers' Contracts to a level
below that which such Buyer or its parent corporation could have achieved but
for such change (taking into account such Buyer's policies and the policies of
its parent corporation with respect to capital adequacy), then PDC shall, within
30 days after written notice and demand from such Buyer (with a copy to the
Agent), pay to such Buyer additional amounts sufficient to compensate such Buyer
or its parent corporation for such reduction. Any determination by such Buyer
under this Section and any certificate as to the amount of such reduction given
to PDC by such Buyer shall be final, conclusive and binding for all purposes,
absent error. Each Buyer will promptly notify PDC of any event of which such
Buyer has knowledge, occurring after the date hereof, which will entitle such
Buyer to compensation pursuant to this Section. If a Buyer fails to give such
notice within 45 days after it obtains knowledge of such an event, such Buyer
shall, with respect to compensation payable pursuant to this Section, only be
entitled to payment under this Section for costs incurred from and after the
date 45 days prior to the date that such Buyer does give such notice.
ARTICLE XIII
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MISCELLANEOUS
Section 13.1. Waiver and Amendment. No failure on the part of the Agent or
any Buyer to exercise and no delay in exercising any power or right hereunder or
under any Assignment shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right preclude any other or further exercise
thereof or the exercise of any other power or right. The remedies herein and in
any other instrument, document or agreement delivered or to be delivered to the
Agent or the Buyers hereunder or in connection herewith are cumulative and not
exclusive of any remedies provided by law. No notice to or demand on a Seller
not required hereunder or under an Assignment shall in any event entitle either
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Seller to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Agent or the Buyers to
any other or further action in any circumstances without notice or demand. No
amendment, modification or waiver of any provision of this Agreement or consent
to any departure by a Seller therefrom shall be effective unless the same shall
be in writing and signed by the Agent and the Majority Buyers, and then such
amendment, modifications, waiver or consent shall be effective only in the
specific instances and for the specific purpose for which given. Notwithstanding
the foregoing, no such amendment, modification, waiver or consent shall:
13.1(a) Reduce the rate or extend the time of payment of interest
thereon, or reduce the amount of the principal thereof, modify any of the
provisions of any Buyers' Contract with respect to the payment or repayment
thereof, release any Guaranty, modify any repurchase or other payment
obligation of the Sellers, or transfer title to (or release any security
interest that the Agent may be deemed to hold, pursuant to Section 2.6, in)
any Buyers' Contract, without the consent of each Buyer; or
13.1(b) Increase the amount or extend the time of any Individual
Contract Purchase Commitment Amount of any Buyer, without the consent of
such Buyer; or
13.1(c) Reduce the rate or extend the time of payment of any fee
payable to a Buyer, without the consent of the Buyer affected; or
13.1(d) Amend the definition of Majority Buyers or otherwise reduce
the percentage of the Buyers required to approve or effectuate any such
amendment, modification, waiver, or consent, without the consent of all the
Buyers; or
13.1(e) Amend any of the foregoing Sections 13.1 (a) through (d) or
this Section 13.1 (e) without the consent of all the Buyers; or
13.1(f) Amend any provision of this Agreement relating to the Agent in
its capacity as Agent without the consent of the Agent.
Section 13.2. Expenses. Whether or not any Contract is purchased hereunder,
the Sellers jointly and severally agree to reimburse the Agent upon demand for
all reasonable expenses paid or incurred by the Agent (including filing and
recording costs and fees and expenses of legal counsel, who may be employees of
the Agent) in connection with the preparation, negotiation, execution, delivery,
amendment, modification and interpretation of this Agreement, the Assignments
and the Guaranties. The Sellers also jointly and severally agree to reimburse
the Agent and each Buyer upon demand for all reasonable out-of-pocket expenses
(including expenses of legal counsel) paid or incurred by the Agent or any Buyer
in connection with the collection and enforcement of this Agreement, the
Assignments, the Guaranties, the Buyers' Contracts and the Related Security
Documents. The Sellers jointly
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and severally agree to indemnify and hold the Agent and the Buyers harmless from
any loss or expense which may arise or be created by the acceptance of
telephonic or other instructions for purchasing Contracts or disbursing the
proceeds thereof. The obligations of the Sellers under this Section 13.2 shall
survive any termination of this Agreement.
Section 13.3. Notices. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Agent or any Buyer under Article II hereof shall be deemed to
have been given only when received by the Agent or that Buyer.
Section 13.4. Successors and Assigns; Disposition of Interests in Buyers'
Contracts; Transferees.
13.4(a) This Agreement shall be binding upon and inure to the benefit
of the Sellers, the Buyers, the Agent, and their respective successors and
assigns, except that the Sellers may not assign or transfer any of their
rights or obligations under this Agreement without the prior written
consent of each Buyer.
13.4(b) Any Buyer may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or
other entities ("Participants") participating interests in such Buyer's
undivided percentage ownership interest in the Buyers' Contracts, and the
Individual Contract Purchase Commitment Amount of such Buyer, or any other
interest of such Buyer hereunder. In the event of any such sale by a Buyer
of participating interests to a Participant, (i) such Buyer's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, (ii) such Buyer shall remain solely responsible for the
performance thereof, (iii) such Buyer shall remain the owner of such
Buyer's undivided percentage ownership interest in the Buyers' Contracts
for all purposes under this Agreement, (iv) the Sellers and the Agent shall
continue to deal solely and directly with such Buyer in connection with
such Buyer's rights and obligations under this Agreement and (v) the
agreement pursuant to which such Participant acquires its participating
interest herein shall provide that such Buyer shall retain the sole right
and responsibility to enforce its rights hereunder and with respect to the
Buyers' Contracts, including, without limitation the right to consent or
agree to any amendment, modification, consent or waiver with respect to
this Agreement or any other Buyers' Contract, provided that such agreement
may provide that such Buyer
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will not consent or agree to any such amendment, modification, consent or
waiver with respect to the matters set forth in Sections 13.1(a) - (c)
without the prior consent of such Participant. The Sellers agree that if
amounts outstanding under this Agreement are due and unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of a
Termination Event, each Participant shall be deemed to have, to the extent
permitted by applicable law, the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly
to it as a Buyer under this Agreement; provided, that such right of setoff
shall be subject to the obligation of such Participant to share with the
Buyers, and the Buyers agree to share with such Participant, as provided in
subsection 14.11. The Sellers also agree that each Participant shall be
entitled to the benefits of subsections 10.20, 11.2(b)(v), 12.1, 12.2, 12.3
and 13.2 with respect to its participation in the Commitments and Loans;
provided, that no Participant shall be entitled to receive any greater
amount pursuant to such subsections than the transferor Buyer would have
been entitled to receive in respect of the amount of the participation
transferred by such transferor Buyer to such Participant had no such
transfer occurred.
13.4(c) Each Buyer may, from time to time, with the consent of the
Agent (which consent shall not be unreasonably withheld), assign to other
Persons ("Assignees") part of such Buyer's undivided percentage ownership
interest in the Buyers' Contracts, together with equivalent proportions of
its Individual Contract Purchase Commitment Amount and its Buyer's
Percentage, and of such Buyer's "Loans" and "Commitment" (as defined in the
Credit Agreement) pursuant to written agreements executed by such assigning
Buyer, such Assignee(s) and the Agent in substantially the form of Exhibit
I, which agreements shall specify in each instance the portion of the
Buyer's Percentage and its undivided percentage ownership interest in the
Buyers' Contracts which is to be assigned to each Assignee and the portion
of the Individual Contract Purchase Commitment Amount of such Buyer to be
assumed by each Assignee (each, an "Assignment Agreement"); provided,
however, that the assigning Buyer must pay to the Agent a processing and
recordation fee of $3,500 and that each Assignment must be for an aggregate
amount of $15,000,000 or more (or the entire amount of the assigning
Buyer's Individual Contract Purchase Commitment Amount, if lesser). Upon
the execution of each Assignment Agreement by the assigning Buyer, the
relevant Assignee, the Sellers and the Agent, payment to the assigning
Buyer by such Assignee of the purchase price for the portion of the
assigning Buyer's undivided percentage ownership interest in the Buyers'
Contracts being acquired by the Assignee and receipt by the Sellers of a
copy of the relevant Assignment Agreement, (x) such Assignee lender shall
thereupon become a "Buyer" for all purposes of this Agreement with an
Individual Contract Purchase Commitment Amount in the amount set forth in
such Assignment Agreement and with all the rights, powers and obligations
afforded a Buyer under this Agreement, (y) such assigning Buyer shall have
no further liability for funding the portion of its Individual
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Contract Purchase Commitment Amount assumed by such Assignee and (z) the
address for notices to such Assignee shall be as specified in the
Assignment Agreement executed by it.
13.4(d) The Sellers shall not be liable for any costs incurred by the
Buyers in effecting any participation or assignment.
13.4(e) Each Buyer may disclose to any Assignee or Participant and to
any prospective Assignee or Participant any and all financial information
in such Buyer's possession concerning the Sellers or any of their
Subsidiaries which has been delivered to such Buyer by or on behalf of the
Sellers or any of their Subsidiaries pursuant to this Agreement or which
has been delivered to such Buyer by or on behalf of the Sellers or any of
its Subsidiaries in connection with such Buyer's credit evaluation of the
Sellers or any of their Subsidiaries prior to entering into this Agreement,
provided that prior to disclosing such information, such Buyer shall first
obtain the agreement of such prospective Assignee or Participant to comply
with the provisions of Section 13.13.
Section 13.5. Severability. Any provision of this Agreement or any
Assignment which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 13.6. Subsidiary References. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Seller has
one or more Subsidiaries.
Section 13.7. Captions. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
Section 13.8. Entire Agreement. This Agreement, the Guaranties and the
Assignments embody the entire agreement and understanding between the Sellers,
the Agent and the Buyers with respect to the subject matter hereof and thereof.
This Agreement, the Guaranties and the Assignments supersede all prior
agreements and understandings relating to the subject matter hereof.
Section 13.9. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 13.10. Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY
OF THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED
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BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS.
Section 13.11. Consent to Jurisdiction. AT THE OPTION OF THE AGENT, THIS
AGREEMENT AND THE ASSIGNMENTS MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA
STATE COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE SELLERS
CONSENT TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVE ANY ARGUMENT
THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT A SELLER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE AGENT AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
Section 13.12. Waiver of Jury Trial. EACH OF THE SELLERS, THE AGENT AND THE
BUYERS IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (b) ARISING FROM ANY RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Section 13.13. Confidentiality of Information. The Agent and the Buyers
shall use reasonable efforts to assure that information about the Sellers and
their operations, affairs and financial condition, not generally disclosed to
the public or to trade and other creditors, which is furnished to the Agent or
the Buyers pursuant to the provisions hereof is used only for the purposes of
this Agreement and any other relationship between the Agent or a Buyer and the
Sellers and shall not be divulged to any Person other than the Agents, the
Buyers, their Affiliates and their respective officers, directors, employees and
agents, except: (a) to their attorneys and accountants, (b) in connection with
the enforcement of the rights of the Agent or the Buyer hereunder or otherwise
in connection with applicable litigation, (c) in connection with assignments and
participations and the solicitation of prospective assignees and participants
referred to in Section 13.4 and (d) as may otherwise be required or requested by
any regulatory authority having jurisdiction over the Agent or a Buyer or by any
applicable law, rule, regulation or judicial process, the opinion of the Agent's
or Buyer's counsel concerning the making of such disclosure to be binding on the
parties hereto. The Agent and
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the Buyers shall not incur any liability to the Sellers by reason of any
disclosure permitted by this Section 13.13.
Section 13.14. Survival of Agreement. All representations, warranties,
covenants and agreement made by the Sellers herein and in the certificates or
other instruments prepared or delivered in connection with or pursuant to this
Agreement shall be deemed to have been relied upon by the Agent and the Buyers,
regardless of any investigation made by or on behalf of the Agent or the Buyers,
and shall continue in full force and effect as long as any Contract is
outstanding and unpaid and so long as the Contract Purchase Commitment has not
been terminated; provided, however, that the obligations of the Sellers under
Sections 10.20 and 13.2 shall survive payment in full of the Contracts and the
termination of the Contract Purchase Commitment.
Section 13.15 Withholding Taxes.
(a) Buyers to Submit Forms. Each Buyer represents to the Sellers and
the Agent that, as of the date it becomes a Buyer and at all times
thereafter, it is either (i) a corporation organized under the laws of the
United States or any State thereof or (ii) entitled to complete exemption
from United States withholding tax imposed on or with respect to any
payments, including fees, to be made pursuant to this Agreement (x) under
an applicable provision of a tax convention to which the United States is a
party or (y) because it is acting through a branch, agency or office in the
United States and any payment to be received by it hereunder is effectively
connected with a trade or business in the United States. Each Buyer that is
not a United States person (as such term is defined in Section 7701(a)(30)
of the Code) shall submit to the Sellers and the Agent, on or before the
later of the date hereof or the day on which such Buyer becomes a Buyer,
duly completed and signed copies of either Form 1001 (relating to such
Buyer and entitling it to a complete exemption from withholding on all
payments to be received by such Buyer hereunder) or Form 4224 (relating to
all payments to be received by such Buyer hereunder) of the United States
Internal Revenue Service. Thereafter and from time to time, each such Buyer
shall submit to the Sellers and the Agent such additional duly completed
and signed copies of one or the other of such Forms (or such successor
Forms as shall be adopted from time to time by the relevant United States
taxing authorities) as may be (i) reasonably requested by the Sellers or
the Agent and (ii) required and permitted under then- current United States
law or regulations to avoid United States withholding taxes on payments in
respect of all payments to be received by such Buyer hereunder. Upon the
request of the Sellers or the Agent, each Buyer that is a United States
person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Sellers and the Agent a certificate in such form as is
reasonably satisfactory to the Sellers and the Agent to the effect that it
is such a United States person.
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(b) Inability of a Buyer. If any Buyer that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code)
determines that, as a result of any change in law or regulation or the
interpretation thereof, any Seller or Obligor, or the Agent, is required by
law or regulation to make any deduction, withholding or backup withholding
(in which case either Seller or the Agent is hereby authorized to make such
deduction, withholding or backup withholding) of any taxes, levies,
imposts, duties, fees, liabilities or similar charges of the United States
of America, any possession or territory of the United States of America
(including the Commonwealth of Puerto Rico) or any area subject to the
jurisdiction of the United States of America ("U.S. Taxes") from any
payments to a Buyer pursuant to this Agreement in respect of the
obligations payable to such Buyer then or thereafter outstanding under this
Agreement or any Buyers' Contract, the Sellers will pay to such Buyer an
amount which, after deduction from such increased amount of all U.S. Taxes
required to be withheld or deducted therefrom, will yield the amount
required under this Agreement or the Buyers' Contract to be paid with
respect thereto; provided, that the Sellers shall not be required to pay
any additional amount pursuant to this Section 13.15(b) to any Buyer (i)
that is not, either on the date this Agreement is executed by such Buyer or
on the date such Buyer becomes such under Section 13.4(c), either (x)
entitled to submit Form 1001 (relating to such Buyer and entitling it to a
complete exemption from withholding on all payments to be received by such
Buyer hereunder) or Form 4224 (relating to all payments to be received by
such Buyer hereunder) or (y) a United States person (as such term is
defined in Section 7701(a)(30) of the Code), or (ii) that has failed to
submit any form or certificate that it was required to file pursuant to
subsection (a) and entitled to file under applicable law or (iii) arising
from such Buyer's failure to comply with any certification, identification
or other similar requirement under United States income tax laws or
regulations (including backup withholding) to establish entitlement to
exemption from such U.S. Taxes; and provided, further, that if a Buyer, as
a result of any amount paid by the Sellers to such Buyer pursuant to this
Section 13.15, shall realize a tax credit or refund, which tax credit or
refund would not have been realized but for the Sellers' payment of such
amount, such Buyer shall pay to the Sellers an amount equal to such tax
credit or refund. Each Buyer may determine the portion, if any, of any tax
credit or refund attributable to the Sellers' payments using such
attribution and accounting methods as such Buyer reasonably selects, and
such Buyer's determination of the portion of any tax credit or refund
attributable to the Sellers' payments shall be conclusive in the absence of
manifest error. The obligation of the Sellers under this Section 13.15(b)
shall survive the payment in full of the Obligations and the termination of
the Commitments of such Buyer.
(c) Substitution of Buyer. In the event the Sellers are required
pursuant to this Section 13.15 to pay any additional amount to any Buyer,
such Buyer shall, if no Event of Default has occurred and is continuing,
upon the request of the Sellers to such Buyer and the Agent, assign,
pursuant to and in accordance with the provisions
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of Section 13.4, all of its rights and obligations under this Agreement and
with respect to the Buyers' Contracts to another Buyer or an assignee
selected by the Sellers and reasonably satisfactory to the Agent, in
consideration for (i) the payment by such assignee to the assigning Buyer
of the Buyer's Percentage of the assigning Buyer of the principal
outstanding under, and interest accrued at the Buyers' Rate on, the Buyers'
Contracts, (ii) the payment by the Sellers to the assigning Buyer of any
and all other amounts owing to such Buyer under any provision of this
Agreement accrued and unpaid to the date of such assignment and (iii) the
Sellers' release of the assigning Buyer from any further obligation or
liability under this Agreement. Notwithstanding anything to the contrary in
this Section 13.15(c), in no event shall the replacement of any Buyer
result in a decrease in the aggregate Contract Purchase Commitments without
the written consent of the Majority Buyers.
ARTICLE XIV
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THE AGENT
The following provisions shall govern the relationship of the Agent with
the Buyers.
Section 14.1 Appointment and Authorization. Each Buyer appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such respective powers under this Agreement and with respect to the Buyers'
Contracts as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto. Neither the Agent nor any of its
directors, officers or employees shall be liable for any action taken or omitted
to be taken by it under or in connection with this Agreement and with respect to
the Buyers' Contracts, except for its own gross negligence or willful
misconduct. The Agent shall act as an independent contractor in performing its
obligations as Agent hereunder and nothing herein contained shall be deemed to
create any fiduciary relationship among or between the Agent, the Sellers or the
Buyers.
Section 14.2 Buyers. The Agent may treat each Buyer as the owner of its
respective Buyer's Percentage until written notice of transfer shall have been
filed with it, signed by such Buyer and in the form of Exhibit I.
Section 14.3 Consultation With Counsel. The Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the advice of such counsel.
Section 14.4 Validity of Agreement and Buyers' Contracts. The Agent shall
not be under a duty to examine or pass upon the validity, effectiveness,
genuineness or value of any of this Agreement or the Buyers' Contracts or any
other instrument or document furnished pursuant thereto, and the Agent shall be
entitled to assume that the same are valid, effective and genuine and what they
purport to be.
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Section 14.5 U.S. Bank and Affiliates. With respect to its Individual
Contract Purchase Commitment Amount and the undivided percentage ownership
interest in the Buyers' Contracts purchased by it, U.S. Bank shall have the same
rights and powers under this Agreement and with respect to the Buyers' Contracts
as any other Buyer and may exercise the same as though it were not the Agent
consistent with the terms thereof, and U.S. Bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Sellers as if it were not the Agent.
Section 14.6 Action by Agent. Except as may otherwise be expressly stated
in this Agreement, the Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, this Agreement
and the Buyers' Contracts. The Agent shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Buyers, and such instructions shall be
binding upon all owners of undivided percentage ownership interests in the
Buyers' Contracts; provided, however, that the Agent shall not be required to
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement, the Buyers' Contracts or applicable law. The Agent
shall incur no liability under or in respect of any of this Agreement or the
Buyers' Contracts by acting upon any notice, consent, certificate, warranty or
other paper or instrument believed by it to be genuine or authentic or to be
signed by the proper party or parties and to be consistent with the terms of
this Agreement.
Section 14.7 Credit Analysis. Each Buyer has made, and shall continue to
make, its own independent investigation or evaluation of the operations,
business, property and condition, financial and otherwise, of the Sellers in
connection with entering into this Agreement and has made its own appraisal of
the creditworthiness of the Sellers. Except as explicitly provided herein, the
Agent has no duty or responsibility, either initially or on a continuing basis,
to provide any Buyer with any credit or other information with respect to such
operations, business, property, condition or creditworthiness, whether such
information comes into its possession on or before the first Termination Event
or at any time thereafter.
Section 14.8 Notices of Termination Event, Etc. In the event that the Agent
shall have acquired actual knowledge of any Termination Event or Unmatured
Termination Event, the Agent shall promptly give notice thereof to the Buyers.
Section 14.9 Indemnification. Each Buyer agrees to indemnify the Agent, as
Agent (to the extent not reimbursed by the Sellers), ratably according to such
Buyer's Individual Contract Purchase Commitment Amount, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on or incurred by the Agent in any way relating to or arising out
of this Agreement or the Buyers' Contracts or any action taken or omitted by the
Agent under this Agreement or with respect to the Buyers' Contracts, provided
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that no Buyer shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct.
No payment by any Buyer under this Section shall relieve the Sellers of any of
their obligations under this Agreement.
Section 14.10 Payments and Collections. All funds received by the Agent in
respect of any payments made by the Sellers under this Agreement shall be
distributed forthwith by the Agent among the Buyers, in like currency and funds
as received, ratably according to each Bank's Individual Contract Purchase
Commitment Amount. After any Event of Default has occurred, all funds received
by the Agent, whether as payments by the Sellers or as realization on any
collateral or on any guaranties, shall (except as may otherwise be required by
law) be distributed by the Agent in the following order: (a) first to the Agent
or any Buyer who has incurred unreimbursed costs of collection with respect to
any amount payable hereunder, ratably to the Agent and each Buyer in the
proportion that the costs incurred by the Agent or such Buyer bear to the total
of all such costs incurred by the Agent and all Buyers; (b) next to the Agent
for the account of the Buyers (in accordance with their respective Individual
Contract Purchase Commitment Amounts) for application on the amounts owing
hereunder; and (c) last to the Agent for application to any unpaid agent's fees.
Section 14.11 Sharing of Payments. If any Buyer shall receive and retain
any payment, voluntary or involuntary, whether by setoff, application of deposit
balance or security, or otherwise, in respect of Indebtedness under this
Agreement in excess of such Buyer's share thereof as determined under this
Agreement, then such Buyer shall purchase from the other Buyers for cash and at
face value and without recourse, such participation in the percentage ownership
interests in the Buyers' Contracts held by such other Buyers as shall be
necessary to cause such excess payment to be shared ratably as aforesaid with
such other Buyers; provided, that if such excess payment or part thereof is
thereafter recovered from such purchasing Buyer, the related purchases from the
other Buyers shall be rescinded ratably and the purchase price restored as to
the portion of such excess payment so recovered, but without interest. Subject
to the participation purchase obligation above, each Buyer agrees to exercise
any and all rights of setoff, counterclaim or banker's lien first fully against
any indebtedness of the Sellers to such Buyer arising under or pursuant to this
Agreement or the Credit Agreement and to any participations held by such Buyer
in indebtedness of the Sellers arising under or pursuant to this Agreement and
the Credit Agreement, and only then to any other indebtedness of the Sellers to
such Buyer.
Section 14.12 Advice to Buyers. The Agent shall forward to the Buyers
copies of all notices, financial reports and other communications received
hereunder from the Sellers by it as Agent, excluding, however, notices, reports
and communications which by the terms hereof are to be furnished by the Sellers
directly to each Buyer.
Section 14.13 Resignation. If at any time U.S. Bank shall deem it
advisable, in its sole discretion, it may submit to each of the Buyers and the
Sellers a written notification of
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its resignation as Agent under this Agreement, such resignation to be effective
upon the appointment of a successor Agent, but in no event later than 30 days
from the date of such notice. Upon submission of such notice, the Majority
Buyers may appoint a successor Agent.
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above.
PATTERSON DENTAL COMPANY
By:
--------------------------------------
R. Stephen Armstrong
Executive Vice President,
Treasurer and Chief Financial Officer
1031 Mendota Heights Road
St. Paul, MN 55120
Attention: Mr. Ronald E. Ezerski
Telecopier: (612) 686-8984
PATTERSON DENTAL SUPPLY, INC.
By:
--------------------------------------
R. Stephen Armstrong
Vice President and Treasurer
1031 Mendota Heights Road
St. Paul, MN 55120
Attention: Mr. Ronald E. Ezerski
Telecopier: (612) 686-8984
Individual Contract Purchase
----------------------------
Commitment Amounts
------------------
$45,000,000 U.S. BANK NATIONAL ASSOCIATION
By:
--------------------------------------
Mark R. Olmon
Senior Vice President
U.S. Bank Place
601 Avenue South
Minneapolis, MN 55402
Attention: Mr. Mark R. Olmon
Telecopier: (612) 973-0825
Signature Page to Amended and Restated Contract Purchase Agreement
S-1
<PAGE>
$20,000,000 THE BANK OF TOKYO - MITSUBISHI,
LTD., CHICAGO BRANCH
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
227 West Monroe Street
Suite 2300
Chicago, Illinois 60606
Attention: Ms. Janice Hennig
Telecopier: (312)696-4532
$15,000,000 M & I MARSHALL & ILSLEY BANK
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
4135 Multifoods Tower
33 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Jeffrey P. Norton
Telecopier: (612)332-6745
Signature Page to Amended and Restated Contract Purchase Agreement
S-2
<PAGE>
$20,000,000 THE NORTHERN TRUST COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
The Northern Trust Company
50 South LaSalle Street, Floor B2
Chicago, Illinois 60675
Attention: Jeffrey Clark
Telecopier: (312) 444-7028
Signature Page to Amended and Restated Contract Purchase Agreement
S-3
