Exhibit 10.1

RECEIVABLES SALE AGREEMENT

THIS RECEIVABLES SALE AGREEMENT, dated as of April 27 , 2007, is by and among
Patterson Dental Supply, Inc., a Minnesota corporation (“PDSI”), Webster
Veterinary Supply, Inc., a Minnesota corporation (“Webster” and, together with
PDSI, the “Originators” and each, an “Originator”) and PDC Funding Company II,
LLC, a Minnesota limited liability company (“Purchaser”).

WITNESSETH:

WHEREAS, each Originator holds or expects to hold certain contracts providing
for the sale of equipment and supplies 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 Originators in the
regular course of their respective business; and

WHEREAS, each Originator wishes to sell and assign to Purchaser, and Purchaser
wishes to purchase from such Originator, all of such Originator’s right, title
and interest in and to certain of such contracts, together with the Related
Security and Collections with respect thereto; and

WHEREAS, following each purchase of Contracts from the Originators, Purchaser
will sell interests therein and in the associated Related Security and
Collections pursuant to that certain Contract Purchase Agreement dated as of
April 27, 2007 (as the same may from time to time hereafter be amended,
supplemented, restated or otherwise modified, the “Purchase Agreement”) among
Purchaser, Patterson Companies, Inc. (“PCI”) as Servicer (as defined therein),
the Buyers (as defined therein) from time to time party thereto, and U.S. Bank
National Association, as agent for the Buyers (in such capacity, the “Agent”).

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 as
follows:

ARTICLE I

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). Capitalized terms not defined herein shall have the
meaning assigned thereto in the Purchase Agreement.

Accounting Period: Each fiscal month of Purchaser.

Agent: As defined in the Recitals of this Agreement.

Agreement: This Receivables Sale Agreement, as the same may be amended,
restated, supplemented or otherwise modified from time to time.

Buyers: As defined in the Recitals of this Agreement.

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Change of Control: PCI shall cease to own, directly or indirectly, 100% of the
outstanding capital stock of any Originator.

Collections: With respect to any Contract, all cash collections and other cash
proceeds in respect of such Contract, including, without limitation, all
scheduled payments, prepayments, yield, finance charges or other related amounts
accruing in respect thereof, and all cash proceeds of Related Security with
respect to such Contract.

Contract: A contract evidencing a sale of dental equipment and supplies, in the
case of PDSI, or veterinary equipment and supplies, in the case of Webster,
entered into by an Originator, 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.

Credit and Collection Policy: Each Originator’s credit and collection policies
and practices relating to Contracts existing on the date hereof and summarized
in Exhibit B, as modified from time to time in accordance with the Agreement.

Default Fee: A per annum rate of interest equal to the sum of (i) the Prime
Rate, plus (ii) 2% per annum.

Discount Factor: means a percentage calculated to provide Purchaser with a
reasonable return on its investment in the Contract of any Originator after
taking account of (i) the time value of money based upon the anticipated dates
of collection of the Contracts of such Originator and the cost to Purchaser of
financing its investment in such Contracts during such period and (ii) the risk
of nonpayment by the Obligors. The Originator of such Contracts and Purchaser
may agree from time to time to change the Discount Factor based on changes in
one or more of the items affecting the calculation thereof, provided that any
change to the Discount Factor, shall apply only prospectively and shall not
affect the Purchase Price payment made prior to the Settlement Date during which
such Originator and Purchaser agree to make such change.

Eligible Contract: A Contract:

(i) the Obligor of which is a United States resident, is not an Affiliate of
PCI, and is not a government or a governmental subdivision or agency;

(ii) the principal Obligor of which is a dentist, veterinarian or a professional
association, partnership or other Person that provides dental or veterinary
services to consumers, or a dental or veterinary laboratory or other person who
provides dental or veterinary services to other Persons who in turn provide
dental or veterinary services to consumers, and that either (a) on the Purchase
Date with respect to such Contract has an ongoing business relationship with an
Originator or (b) was acquired by an Originator under the Assignment Agreement;

(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 the Contract is
proposed to be sold to the Purchaser or is a Contract acquired by an Originator
under the Assignment Agreement;

 

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(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 the Contracts proposed to be sold to the
Purchaser under this Agreement and is not otherwise in material default under
any other contract or agreement with an Originator;

(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 applicable Originator and Seller are 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 Credit and Collection Policies;

(ix) which has not been acquired by the Originator from another Person or was
not a Contract acquired by an Originator pursuant to the Assignment Agreement;

(x) which constitutes an account, 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 Originator pursuant
to such Contract and, if the principal amount thereof exceeds $10,000, with
respect to which the Originator has delivered to the Purchaser 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 Originator in order for
the Purchaser 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 Purchaser to exercise its rights under this Agreement;

 

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(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 Seller or any return privilege on the part of such
Obligor (other than the return privilege for defective goods which will be
replaced with conforming good in accordance with the terms of the Contract);

(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 outstanding principal balance at
the time of determination of up to five percent (5%) of the aggregate
outstanding principal balance for all Contracts existing as of the date of
determination may be Eligible Contracts 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
outstanding principal balance at the time of determination of up to ten
percent (10%) of the aggregate outstanding principal balance for all 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
outstanding principal balance at the time of determination of up to fifteen
percent (15%) of the aggregate outstanding principal balance for all 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 (it being
understood that such Eligible Contracts are subject to such limits only during
such 150 day or other grace period);

(xviii) that is evidenced by an Installment Sale Contract—Security Agreement or
Software Agreement in substantially the form of one of the four forms of
Contract attached as Exhibit A to the Purchase Agreement, or another form of
contract approved by the Majority Buyers in their sole and unlimited discretion;

(xix) that is owned by 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 (unless the Contract is
an Eagle Soft Contract);

 

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(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 Originator for a cash sale, minus (y) any down payment by the relevant
Obligor, except that Contracts having an aggregate principal balance outstanding
of up to fifteen percent (15%) of the aggregate outstanding principal balance
for all Buyer Contracts as of the date of determination may be Eligible
Contracts despite being Discounted Contracts;

(xxii) which, if an Eagle Soft Contract, has a final maturity of no more than 36
months after the date of such Eagle Soft Contract and an aggregate outstanding
principal balance at the time of determination that when added to the
outstanding principal balance of all Buyer Contracts that are Eagle Soft
Contracts, does not exceed ten percent (10%) of the outstanding principal
balance of all Contracts as of the date of determination;

(xxiii) which excludes residual value and any maintenance component;

(xxiv) which provides for aggregate principal payments thereunder in an amount
not greater than $400,000;

(xxv) the outstanding principal balance, together with the outstanding principal
balance of all Contracts with the same Obligor as the Contract, does not exceed
$400,000; and

(xxvi) which, if originated by Webster, has an outstanding principal balance
that, when added to the outstanding principal balance of all other Contracts
originated by Webster, does not exceed 5% of the outstanding principal balance
of all Contracts as of the date of determination.

Final Maturity Date: The final maturity date under the Purchase Agreement.

Indemnified Amounts: As defined in Section 7.1 of this Agreement.

Indemnified Party: As defined in Section 7.1 of this Agreement.

Net Value: As of any date of determination, an amount equal to the sum of
(i) the aggregate outstanding principal balance of the Contracts at such time,
minus (ii) the sum of (A) the Buyer Investment outstanding at such time, plus
(B) the Credit Enhancement.

Net Worth: As of the last Business Day of each Accounting Period preceding any
date of determination, the excess, if any, of (a) the aggregate outstanding
principal balance of the Contracts at such time, over (b) the sum of (i) the
Buyers Investments and Obligations outstanding at such time, plus (ii) the
aggregate outstanding principal balance of the Subordinated Loans (including any
Subordinated Loan proposed to be made on the date of determination).

Originator: As set forth in the Recitals to this Agreement.

 

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PDSI: As set forth in the Recitals to this Agreement.

Purchase: A purchase of Contracts pursuant to Section 2.1 of this Agreement by
Purchaser from any Originator of such Contracts and the Related Security and
Collections related thereto, together with all related rights in connection
therewith.

Purchase Agreement: As set forth in the Recitals to this Agreement.

Purchase Date: The Closing Date and any subsequent Settlement Date selected by
an Originator pursuant to Section 2.2 hereof on which a purchase of Contracts is
made pursuant to this Agreement.

Purchase Price: With respect to any Purchase from any Originator hereunder, the
aggregate price to be paid by Purchaser to such Originator for such Purchase in
accordance with Section 2.3, for the Contracts of such Originator, Collections,
Related Security, and Related Security Documents being sold to Purchaser, which
price shall equal on any date (i) the product of (x) the outstanding principal
balance of such Contracts on such date, multiplied by (y) one minus the Discount
Factor in effect on such date, minus (ii) any Purchase Price Credits to be
credited against the Purchase Price otherwise payable to such Originator in
accordance with Section 2.4.

Purchase Request: A purchase request substantially in the form of Exhibit C.

Purchase Price Credit: As set forth in Section 2.4 of this Agreement.

Purchase Termination Date: The earliest of (a) the purchase termination date
under the Purchase Agreement and, (b) the date on which the Purchase Commitment
is terminated pursuant to Section 6.2 herein.

Purchaser: As set forth in the opening paragraph hereof.

Records: With respect to any Contract, all documents, books, records and other
information (including without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights) relating
to such Contract, any Related Security thereof and the related Obligor.

Related Security: With respect to any Contract, (i) any property or interest in
property securing payment of that Contract, (ii) any related guaranty, surety
bond, insurance policy or other document or instrument given as assurance for
the repayment of that Contract and (iii) any of Seller’s right, title and
interest in the Receivables Sale Agreement pursuant to which it acquired the
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.

Required Capital Amount: As of any date of determination, $2,500,000.

 

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Settlement Date: Each settlement date under the Purchase Agreement.

Subordinated Loan: As set forth in Section 2.3 of this Agreement.

Subordinated Note: A promissory note in substantially the form of Exhibit D
hereto as more fully described in Section 2.3, as the same may be amended,
restated, supplemented or otherwise modified from time to time.

Termination Event: As set forth in Section 6.1 of the Agreement.

Transaction Documents: Collectively, this Agreement, each Purchase Request, the
Subordinated Notes and all other instruments, documents and agreements executed
and delivered in connection herewith.

Unmatured Termination Event: Any event which, with the giving of notice (whether
such notice is required under Article VI, under some other provision of this
Agreement, or otherwise) or lapse of time, or both, would constitute a
Termination Event.

Webster: As set forth in the Recitals to this Agreement.

ARTICLE II

TERMS OF THE CONTRACT PURCHASES

Section 2.1 Agreement to Sell and Purchase.

(a) Upon the terms and subject to the conditions set forth herein, each
Originator may, at its option from time to time, sell, assign, transfer and
convey to Purchaser, without recourse (except to the extent expressly provided
herein), and Purchaser may, at its option, purchase from such Originator, all of
Originator’s right, title and interest in, to and under certain Contracts owned
by such Originator, together, in each case, with all Related Security, any
Related Security Documents, Collections with respect thereto and the proceeds of
the foregoing. In connection with the payment of the Purchase Price for any
Contracts, Purchaser may request that Originator selling such Contracts deliver,
and such Originator shall deliver, such approvals, opinions, information,
reports or documents as Purchaser may reasonably request.

(b) It is the intention of the parties hereto that each Purchase of Contracts
made hereunder shall constitute a sale, which sale is absolute and irrevocable
and provides Purchaser with the full benefits of ownership of the Contracts.
Except for the Purchase Price Credits owed pursuant to Section 2.4, each sale of
Contracts hereunder is made without recourse to any Originator; provided,
however, that (i) each Originator shall be liable to Purchaser for all
representations, warranties, covenants and indemnities made by such Originator
pursuant to the terms of this Agreement, and (ii) such sale does not constitute
and is not intended to result in an assumption by Purchaser or any assignee
thereof of any obligation of any Originator or any other Person arising in
connection with the Contracts, Related Security Documents and/or other Related
Security or any other obligations of any Originator. In view of the intention of
the parties hereto that the Purchases of Contracts made hereunder shall
constitute sales of such Contracts rather

 

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than loans secured thereby, each Originator agrees that it will, on or prior to
the date hereof and in accordance with Section 5.1(e), mark its master data
processing records relating to the Contracts with a legend acceptable to
Purchaser and to the Agent (as Purchaser’s assignee), evidencing the Contracts
have been sold and to note in its financial statements that its Contracts have
been sold to Purchaser. Upon the request of Purchaser or the Agent (as
Purchaser’s assignee), each Originator will execute and file such financing or
continuation statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or appropriate to perfect and
maintain the perfection of Purchaser’s ownership interest in the Contracts,
Related Security Documents, the Related Security and Collections with respect
thereto, or as Purchaser or the Agent (as Purchaser’s assignee) may reasonably
request.

Section 2.2 Procedures For Contract Purchases. Not less than five Business Days
prior to each date on which any Originator proposes to sell Contracts to
Purchaser, such Originator shall deliver to Purchaser a Purchase Request that
such Originator proposes to sell Contracts to Purchaser on the specified
Purchase Date.

Effective upon Purchaser’s payment in full of the Purchase Price to Seller on
account of a Purchase Request, such Originator does hereby sell to Purchaser
without recourse (except to the extent expressly provided herein), and Purchaser
does hereby purchase or acquire, from such Originator, all of Originator’s
right, title and interest in and to the Contracts identified in such Purchase
Request, together with the Related Security Documents, the Related Security, all
Collections thereon and the proceeds of the foregoing. Purchaser shall be
obligated to pay the Purchase Price for the Contracts purchased hereunder in
accordance with Section 2.3.

Section 2.3 Payment for the Purchase.

(a) The Purchase Price for any Purchase of Contracts hereunder shall be payable
in full by Purchaser to the Originator of such Contracts in accordance with
Section 2.3(b), and shall be paid to such Originator in the following manner:

(i) by delivery of immediately available funds, to the extent of funds made
available to Purchaser in connection with its subsequent sale of an interest in
such Contract to the Buyers under the Purchase Agreement or other cash on hand;
and

(ii) the balance, by delivery of the proceeds of a subordinated revolving loan
(the “Subordinated Loan”) from such Originator to Purchaser in an amount not to
exceed the least of (A) the remaining unpaid portion of such Purchase Price,
(B) the maximum Subordinated Loan that could be borrowed without rendering
Purchaser’s Net Worth less than the Required Capital Amount and (C) the maximum
Subordinated Loan that could be borrowed without rendering the Net Value less
than the aggregate outstanding principal balance of the Subordinated Loans
(including the Subordinated Loan proposed to be made on such date). Each
Originator is hereby authorized by Purchaser to endorse on the schedule attached
to its Subordinated Note an appropriate notation evidencing the date and amount
of each advance thereunder, as well as the date of each payment with respect
thereto, provided that the failure to make such notation shall not affect any
obligation of Purchaser thereunder.

 

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Subject to the limitations set forth in Section 2.3(a)(ii), each Originator
irrevocably agrees to advance each Subordinated Loan requested by Purchaser on
or prior to the Purchase Termination Date. The Subordinated Loans shall be
evidenced by, and shall be payable in accordance with the terms and provisions
of the Subordinated Notes and shall be payable solely from funds which Purchaser
is not required under the Purchase Agreement to set aside for the benefit of, or
otherwise pay over to, the Buyers.

(b) The Purchase Price for each Contract purchased hereunder shall be due and
payable in full by Purchaser to the Originator of such Contract on the Purchase
Date for such Contract. In addition, increases or decreases in the amount owing
under the Subordinated Notes made pursuant to Section 2.3(a)(ii) shall be deemed
to have occurred and shall be effective as of the next Settlement Date to occur
after such increase or decrease.

Section 2.4 Purchase Price Credit Adjustments. If on any day:

(a) the outstanding principal balance of a Contract is:

(i) reduced as a result of any defective or rejected or returned goods or
services, any discount or any adjustment or otherwise by the Originator of such
Contract (other than cash Collections on account of the Contract),

(ii) reduced or canceled as a result of a setoff in respect of any claim by any
Person (whether such claim arises out of the same or a related transaction or an
unrelated transaction), or

(b) any of the representations and warranties set forth in Article IV are not
true when made or deemed made with respect to any Contract, or

(c) the Related Security for any Contract is repossessed and sold for less than
the fair market value of such Related Security,

then, in such event, Purchaser shall be entitled to a Purchase Price Credit
against the Purchase Price otherwise payable hereunder to the Originator of such
Contract equal to (i) in the case of clause (a) above, the amount of such
reduction or cancellation, (ii) in the case of clause (b) above, the outstanding
principal balance of such Contract and in the case of clause (c) above, the
difference between the fair market value of the repossessed Related Security and
the gross proceeds received upon the sale of such repossessed Related Security.
If such Purchase Price Credit exceeds the Purchase Price on any day, then such
Originator shall pay the remaining amount of such Purchase Price Credit in cash
immediately, provided that if the Purchase Termination Date has not occurred,
such Originator shall be allowed to deduct the remaining amount of such Purchase
Price Credit from any indebtedness owed to it under such Originator’s
Subordinated Note.

 

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Section 2.5 Payments and Computations, Etc. All amounts to be paid or deposited
by Purchaser hereunder shall be paid or deposited in accordance with the terms
hereof on the day when due in immediately available funds to the account of the
applicable Originator as designated from time to time by such Originator or as
otherwise directed by such Originator. In the event that any payment owed by any
Person hereunder becomes due on a day that is not a Business Day, then such
payment shall be made on the next succeeding Business Day. If any Person fails
to pay any amount hereunder when due, such Person agrees to pay, on demand, the
Default Fee in respect thereof until paid in full; provided, however, that such
Default Fee shall not at any time exceed the maximum rate permitted by
applicable law. All computations of interest payable hereunder shall be made on
the basis of a year of 360 days for the actual number of days (including the
first but excluding the last day) elapsed.

Section 2.6 Transfer of Records.

(a) In connection with each Purchase of Contracts hereunder, each Originator
hereby sells, transfers, assigns and otherwise conveys to Purchaser all of such
Originator’s right and title to and interest in the Records relating to all
Contracts sold hereunder, without the need for any further documentation in
connection with the Purchase. In connection with such transfer, each Originator
hereby grants to each of Purchaser, the Agent and the Servicer an irrevocable,
non-exclusive license to use, without royalty or payment of any kind, all
software used by such Originator to account for its Contracts, to the extent
necessary to administer such Contracts, whether such software is owned by such
Originator or is owned by others and used by such Originator under license
agreements with respect thereto, provided that should the consent of any
licensor of such software be required for the grant of the license described
herein, to be effective, such Originator hereby agrees that upon the request of
Purchaser (or Purchaser’s assignee), such Originator will use its reasonable
efforts to obtain the consent of such third-party licensor. The license granted
hereby shall be irrevocable until the indefeasible payment in full of the
purchased Contract, and shall terminate on the date this Agreement terminates in
accordance with its terms.

(b) Each Originator (i) shall take such action requested by Purchaser and/or the
Agent (as Purchaser’s assignee), from time to time hereafter, that may be
necessary or appropriate to ensure that Purchaser and its assigns under the
Purchase Agreement have an enforceable ownership interest in the Records
relating to the Contracts purchased from such Originator hereunder, and
(ii) shall use its reasonable efforts to ensure that Purchaser, the Agent and
the Servicer each has an enforceable right (whether by license or sublicense or
otherwise) to use all of the computer software used to account for the Contracts
and/or to recreate such Records.

Section 2.7 Characterization. If, notwithstanding the intention of the parties
expressed in Section 2.1(b), any sale by any Originator to Purchaser of
Contracts identified in a Purchase Request hereunder shall be characterized as a
secured loan and not a sale or such sale shall for any reason be ineffective or
unenforceable, then this Agreement shall be deemed to constitute a security
agreement under the UCC and other applicable law. For this purpose and without
being in derogation of the parties’ intention that the sale of Contracts
identified in a Purchase Request hereunder shall constitute a true sale thereof,
each Originator hereby grants to Purchaser a duly

 

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perfected security interest in all of such Originator’s right, title and
interest in, to and under all Contracts identified in a Purchase Request now
existing and hereafter arising, all Collections, Related Security and Related
Security Documents with respect thereto, all other rights and payments relating
to such Originator’s Contracts and all proceeds of the foregoing to secure the
prompt and complete payment of a loan deemed to have been made in an amount
equal to the aggregate Purchase Price of the Contracts together with all other
obligations of such Originator hereunder, which security interest shall be prior
to all other Liens therein. Purchaser and its assigns shall have, in addition to
the rights and remedies which they may have under this Agreement, all other
rights and remedies provided to a secured creditor under the UCC and other
applicable law, which rights and remedies shall be cumulative.

ARTICLE III

CONDITIONS PRECEDENT

Section 3.1 Conditions Precedent to Purchase. The initial Purchase under this
Agreement is subject to the conditions precedent that (a) Purchaser shall have
received on or before the date of such Purchase those documents listed on
Schedule I and (b) all of the conditions precedent to the initial Purchase of
Buyer Interests under the Purchase Agreement shall have been satisfied or waived
in accordance with the terms thereof.

Section 3.2 Conditions Precedent to Subsequent Payments. Purchaser’s obligation
to pay for Contracts on any Purchase Date shall be subject to the further
conditions precedent that (a) the Purchase Termination Date shall not have
occurred; (b) Purchaser (or its assigns) shall have received the notice required
pursuant to Section 2.2, and such other approvals, opinions or documents as it
may reasonably request and (c) on the Purchase Date for such Contracts, the
following statements shall be true (and acceptance of the proceeds by any
Originator of any payment for such Contract shall be deemed a representation and
warranty by such Originator that such statements are then true):

(a) the representations and warranties of such Originator set forth in
Article IV are true and correct on and as of such Purchase Date (and after
giving effect to the Purchase consummated thereon) as though made on and as of
such date; and

(b) no event has occurred and is continuing that will constitute a Termination
Event or a Unmatured Termination Event.

Notwithstanding the foregoing conditions precedent, upon payment of the Purchase
Price for any Contract (whether by payment of cash, through an increase in the
amounts outstanding under the Subordinated Notes and/or by offset of amounts
owed to Purchaser), title to such Contract, the Related Security, the Related
Security Documents and Collections with respect thereto shall vest in Purchaser,
whether or not the conditions precedent to Purchaser’s obligation to pay for
such Contract were in fact satisfied. The failure of any Originator to satisfy
any of the foregoing conditions precedent, however, shall give rise to a right
of Purchaser to rescind the related purchase and direct such Originator to pay
to Purchaser an amount equal to the Purchase Price that shall have been paid
with respect to any Contracts related thereto.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.1 Representations and Warranties of Originators. Each Originator
hereby represents and warrants to Purchaser on the date hereof and on the date
of each Purchase that:

(a) Organization; Standing, Etc. It is duly formed and validly existing and in
good standing under the laws of the jurisdiction of its formation and has all
requisite power and authority to carry on its business as now conducted and to
enter into this Agreement and to perform its obligations under this Agreement.
It is duly qualified and in good standing as a foreign entity 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.

(b) Authorization and Validity. Its execution, delivery and performance of this
Agreement has been duly authorized by all necessary action, and this Agreement
constitutes a legal, valid and binding obligation enforceable against it in
accordance with its 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.

(c) No Conflict. Its execution, delivery and performance of this Agreement will
not (a) violate any provision of any law, statute, rule or regulation or any
order, writ, judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability to
it, (b) violate or contravene any provisions of its constituent documents, 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 it 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 of its assets. It is not 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.

(d) Governmental Authorization. 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 to
authorize, or is required in connection with its execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
this Agreement against it.

(e) Actions, Suits. Except as previously disclosed to Purchaser in writing,
there are no actions, suits or proceedings pending or, to its knowledge,
threatened against or affecting it or any of its properties before any court or
arbitrator, or any governmental department, board, agency or other
instrumentality which, if determined adversely, could constitute an Adverse
Event.

 

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(f) Accuracy of Information. All information heretofore furnished by such
Originator or any of its Affiliates to Purchaser (or its assigns) for purposes
of or in connection with this Agreement or any transaction contemplated hereby
is, and all such information hereafter furnished by such Originator or any of
its Affiliates to Purchaser (or its assigns) will be, true and accurate in every
material respect on the date such information is stated or certified and does
not and will not contain any material misstatement of fact or omit to state a
material fact or any fact necessary to make the statements contained therein not
materially misleading.

(g) Compliance. It is in material compliance with all statutes and governmental
rules and regulations applicable to it.

(h) Environmental, Health and Safety. For such Originator, there does not exist
any violation by 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 such
Originator or which would require a material expenditure by such Originator to
cure. Such Originator has not 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.

(i) Regulation U. It is not 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 Purchaser 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.

(j) Taxes. It 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 such Originator or PCI).
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 such Originator or PCI in respect of taxes and other
governmental charges are adequate.

(k) Investment Company Act. It is not an “investment company” or a company
“controlled” by an investment company within the meaning of the Investment
Company Act of 1940, as amended.

 

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(l) Enforceability of Agreements It has the full right, power and authority to
sell the Contracts and proceeds owned by it hereunder and has the ability to
fulfill completely its obligations to the Obligors with respect to the
Contracts.

(m) Sale of Buyer Interests. On each Purchase Date, it will be the owner of all
right, title and interest in and to the Contracts and all Related Security
Documents transferred by it to Purchaser. Upon the execution of each transfer of
such Contracts, such Originator’s interest in the Contracts and the Related
Security Documents will be vested in the Purchaser. Each Contract transferred by
such Originator will be free and clear of all Liens and rights of others
excepting the rights in favor of the Purchaser created or to be created pursuant
to this Agreement. Except in connection with the sale of the Contracts under
this Agreement, such Originator has neither sold, pledged, transferred, assigned
or granted any Lien in any Contracts, any Related Security or the Related
Security Documents. No financing statement describing or referring to any
Contract is on file in any public office, except for financing statements in
favor of U.S. Bank. There is only one original executed copy of each Contract,
and on the relevant Purchase Date such original executed copy of each Contract
will be delivered to the Servicer to be held for the benefit of the Purchaser
(and Agent as Purchaser’s assignee).

(n) Related Security. Immediately prior to the sale by such Originator of any
Contract on a Purchase Date, such Originator will have a perfected first
priority Lien on all Related Security for each related Contract; provided,
however, for those Contracts where the Related Security has a value of $10,000
or less, no UCC financing statement may be on file and therefore Purchaser will
not have a perfected first priority Lien on such Related Security. Following the
assignment of any Contract by such Originator to Purchaser, the Purchaser will
have a valid and perfected and enforceable first priority security interest in
such Contract and the Related Security (other than with respect to those
Contracts secured by Related Security having a value of $10,000 or less). With
respect to each Contract transferred by such Originator, the dental equipment
and other goods included in the Related Security are 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 such Originator as secured party; and the
Purchaser 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 such Originator and any trustee in bankruptcy of such
Originator) claiming an interest in such dental equipment and other goods
included in the Related Security; provided, however no filing may be made for
those Contracts where the Related Security has a value of $10,000 or less.

(o) Eligibility and Enforceability of Contracts. As of the relevant Purchase
Date, or in the case of a sale on the Closing Date, as of March 24, 2007, each
Contract transferred by such Originator is an Eligible Contract. Each Contract
will constitute the legal, valid and binding obligation of the Obligor(s)
thereof, enforceable in accordance with their respective terms. Each 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

 

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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
such Originator shall for at least the period of this Agreement, maintain in its
possession, available for the Agent’s and the Buyers’ inspection (as assignee of
Purchaser), and shall deliver to the Agent upon demand, evidence of compliance
with all such requirements.

(p) Contract Defaults. As of the relevant Purchase Date, or in the case of a
sale on the Closing Date, as of March 24, 2007: (i) each Contract transferred by
such Originator 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 such 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) such Originator will not 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 transferred by such
Originator will not have had its terms of payment extended or modified in a
manner inconsistent with the Credit and Collection Policies; (vi) each Contract
transferred by such Originator 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. The Originator
has not changed the Credit and Collection Policies in any material respect or
taken any action which would materially impair the collectability of any
Contract.

(q) Goods Sold. Immediately prior to the date on which title to any goods sold
to an Obligor by an Originator and financed by indebtedness evidenced by a
Contract or Contracts passes to the Obligor thereof, such Originator 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.

(r) Financing Statements. Appropriate Uniform Commercial Code financing
statements relating to the sale of Contracts hereunder have been filed in all
offices where such filing is necessary to give the Purchaser (prior to its
transfer of any interest to the Agent on behalf of the Buyers) a prior perfected
security interest in the Contracts. All filing fees and taxes, if any, necessary
to make the foregoing filing effective have been paid in full.

(s) Records. Its chief executive offices and the place where the books and
records relating to the Contracts and any Related Security are maintained is
located at 1031 Mendota Heights Road, St. Paul, Minnesota 55120.

(t) 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.

 

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(u) No Defenses or Waivers. As of the Purchase Date with respect to each
Contract transferred by such Originator: (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 to the Purchaser.

(v) 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 applicable Originator as loss payee and
additional insured and require at least 10 days’ prior written notice to the
applicable Originator before cancellation. In the case of any Contract as to
which the outstanding principal balance as of the Purchase Date with respect to
such Contract exceeds $200,000, the applicable Originator has obtained written
proof of such insurance and such evidence shall be included in the contract file
delivered to the Servicer

(w) Origination. Each Contract was originated by the applicable Originator 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 an
interest in the Contract pursuant to this Agreement unlawful or render the
Contract unenforceable as a result thereof.

(x) Full Disclosure. No certificate, written statement, exhibit or report
furnished by or on behalf of such Originator 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
such Originator 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 such Originator, and such Originator has no
reason to believe that such projections or forecasts are not reasonable.

(y) Ownership of Originator. PCI owns directly or indirectly 100% of the issued
and outstanding shares in such Originator, free and clear of any Liens. Such
shares are validly issued, fully paid and nonassessable, and there are no
options, warrants or other rights to acquire securities of such Originator.

(z) Payments to Originator. With respect to each Contract transferred to the
Purchaser by such Originator hereunder, the Purchase Price received by such
Originator

 

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constitutes reasonably equivalent value in consideration therefor and such
transfer was not made for or on account of an antecedent debt. No transfer by
such Originator of any Contract hereunder is or may be voidable under any
section of the Federal Bankruptcy Code.

(aa) No Adverse Selection. To the extent that such Originator has retained
Contracts that could have been transferred to Purchaser hereunder, such
Originator has not selected those originated Contracts to be transferred
hereunder in any manner that materially adversely affects Purchaser.

ARTICLE V

COVENANTS

Until the date on which this Agreement terminates in accordance with its terms,
each Originator hereby covenants as set forth below:

Section 5.1 Financial and other Reporting. Such Originator will maintain, for
itself and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish to Purchaser (and its
assigns):

(a) As soon as available and in any event within 90 days after the end of each
fiscal year of PCI, the annual audit report of PCI 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 PCI and acceptable to the Agent
and the Buyers, together with any management letters, management reports or
other supplementary comments or reports to PCI or its board of directors
furnished by such accountants.

(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 PCI 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 5.1(a) (but omitting footnotes and
year-end adjustments), signed by a Financial Officer of PCI, consisting of at
least consolidated statements of income and cash flow for PCI and the
Subsidiaries for such quarter and for the period from the beginning of such
fiscal year to the end of such quarter, and a consolidated balance sheet of PCI
as at the end of such quarter setting forth in each case in comparative form
corresponding figures from the previous year.

(c) Together with the financial statements furnished by PCI under
Sections 5.1(a) and (b), a statement signed by a Financial Officer of PCI
demonstrating in reasonable detail compliance (or noncompliance, as the case may
be) with each of the restrictions contained in Article V and stating that as at
the date of each such financial statement there did not exist any Unmatured
Termination Event or Termination Event or,

 

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if an Unmatured Termination Event or Termination Event existed, specifying the
nature and period of existence thereof and what action the Originator proposes
to take with respect thereto.

(d) Immediately upon becoming aware of any Unmatured Termination Event or
Termination Event, a notice describing the nature thereof and what action such
Originator proposes to take with respect thereto.

(e) Promptly upon the mailing or filing thereof, copies of all financial
statements, reports and proxy statements mailed to PCI’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.

(f) 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.

(g) Immediately upon becoming aware of the occurrence thereof, notice of any
violation as to any environmental matter by PCI, 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 permits held by PCI or any Subsidiary which are material
to the operations of PCI or such Subsidiary, or (ii) which will or threatens to
impose a material liability on PCI or such Subsidiary to any Person or which
will require a material expenditure by PCI or such Subsidiary to cure any
alleged problem or violation.

(h) From time to time, such other information regarding the business, operation
and financial condition of PCI and the Subsidiaries as the Purchaser may
reasonably request.

Section 5.2 Corporate Existence. It will maintain its existence in good standing
under the laws of the jurisdiction of its formation 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 5.3 Insurance. It 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 5.4 Payment of Taxes and Claims. It 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,

 

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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 such Originator’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 such Originator’s or PCI’s books in accordance with GAAP.

Section 5.5 Maintenance of Properties. It 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.

Section 5.6 Books and Records. It 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 5.7 Compliance. It 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 5.8 Environmental Matters. It 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 5.9 Merger. It will not merge or consolidate or enter into any analogous
reorganization or transaction with any Person, unless it shall be the surviving
corporation and no Termination Event or Unmatured Termination Event shall exist
before and after giving effect to such merger, consolidation, reorganization, or
transaction

Section 5.10 Change in Nature of Business. It will not make any material change
in the nature of its business as carried on at the date hereof.

Section 5.11 Use of Proceeds. It will not 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

Section 5.12 Accounting Changes. It will not 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 its fiscal year.

Section 5.13 Changes in Name or Location. It will not at any time change its
name, identity, address of its chief executive office or corporate structure
(including without limitation changing its jurisdiction of organization) in any
manner which would, could or might make any financing or continuation statement
filed hereunder seriously misleading within the meaning of § 9-503, § 9-506 or
§ 9-507 (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 Purchaser (and Agent as

 

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assignee of Purchaser) 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 financing statements as are necessary to
maintain the perfection and priority of the Purchaser’s security interest or as
may be requested by the Agent.

Section 5.14 Filing Fees. It shall pay all filing fees and other expenses
incurred by the Purchaser to validate, perfect, continue or otherwise protect
the Contracts, any Related Security and any Related Security Documents,
including appropriate filings under the Uniform Commercial Code.

Section 5.15 Audits. Such Originator will furnish to Purchaser (or its assigns)
from time to time such information with respect to it and the Contracts as
Purchaser (or its assigns) may reasonably request. Such Originator will, from
time to time during regular business hours as requested by Purchaser (or its
assigns), upon reasonable notice and at the sole cost of such Originator, permit
Purchaser (or its assigns) or their respective agents or representatives, (i) to
examine and make copies of and abstracts from all records in the possession or
under the control of such Originator relating to the Contracts of such
Originator and the Related Security, including, without limitation, the related
agreements, and (ii) to visit the offices and properties of such Originator for
the purpose of examining such materials described in clause (i) above, and to
discuss matters relating to such Originator’s financial condition or the
Contracts of such Originator and the Related Security or such Originator’s
performance under this Agreement or such Originator’s performance under the
Contracts and, in each case, with any of the officers or employees of such
Originator having knowledge of such matters.

Section 5.16 Accounting for Purchase. Such Originator will not, and will not
permit any Affiliate to, account for or treat (whether in financial statements
or otherwise) the transactions contemplated hereby in any manner other than the
sale of the Contracts of such Originator and the Related Security by such
Originator to Purchaser or in any other respect account for or treat the
transactions contemplated hereby in any manner other than as a sale of the
Contracts of such Originator and the Related Security by such Originator to
Purchaser except to the extent that such transactions are not recognized on
account of consolidated financial reporting in accordance with GAAP.

Section 5.17 Segregation of Collections. Such Originator will direct that all
items in respect of Contracts sold to Purchaser hereunder received into a joint
account be processed and deposited into the Collection Account within 1 Business
Day after receipt. In the event any payments relating to Contracts are remitted
directly to an Originator or any Affiliate of such Originator, such Originator
will remit such payments (or will cause all such payments to be remitted)
directly to the Servicer for deposit into the Collection Account within one
(1) Business Day following receipt thereof and, at all times prior to such
remittance, such Originator will itself hold such payments or, if applicable,
will cause such payments to be held, in trust for the exclusive benefit of Buyer
and its assigns.

 

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ARTICLE VI

TERMINATION EVENTS

Section 6.1 Termination Events. The occurrence of any one or more of the
following events shall constitute a “Termination Event”:

(a) Originator shall fail (i) to make any payment or deposit required hereunder
when due, or (ii) to perform or observe any term, covenant or agreement
hereunder (other than as referred to in clause (i) of this paragraph (a)) and
such failure shall continue for seven (7) consecutive Business Days;

(b) Any representation, warranty, certification or statement made by any
Originator in this Agreement or in any other document delivered pursuant hereto
or thereto shall prove to have been incorrect in any material respect when made
or deemed made;

(c) An Originator 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 an Originator 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
an Originator or for a substantial part of the property thereof and shall not be
discharged within 30 days;

(d) Any bankruptcy, reorganization, debt arrangement or other proceedings under
any bankruptcy or insolvency law shall be instituted by or against an
Originator, and, if instituted against an Originator, shall have been consented
to or acquiesced in by such Originator, or shall remain undismissed for 30 days,
or an order for relief shall have been entered against an Originator, or an
Originator shall take any corporate action to approve institution of, or
acquiescence in, such a proceeding;

(e) Any dissolution or liquidation proceeding shall be instituted by or against
an Originator and, if instituted against an Originator, shall be consented to or
acquiesced in by such Originator or shall remain for 30 days undismissed, or an
Originator shall take any corporate action to approve institution of, or
acquiescence in, such a proceeding;

(f) 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 an Originator and such
Originator 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;

(g) The maturity of any indebtedness of an Originator in an aggregate amount of
$2,000,000 or more shall be accelerated, or an Originator 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

 

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continue for more than the period of grace, if any, applicable thereto and shall
have the effect of causing, or permitting 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 therefore;

(h) Any execution or attachment shall be issued whereby any substantial part of
the property of an Originator 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;

(i) A Change of Control shall occur; or

(j) The occurrence of a Termination Event under the Purchase Agreement.

Section 6.2 Remedies. Upon the occurrence of any Termination Event:

(a) if any Termination Event described in Section 6.1(c), (d) or (e) shall
occur, then Purchase Termination Date shall automatically occur;

(b) if any Termination Event other than those described in Section 6.1(c),
(d) or (e) shall occur and be continuing, then the Purchaser may declare that
the Purchase Termination Date has occurred;

(c) the Purchaser may exercise and enforce any and all rights and remedies
available upon default to a secured party under the Uniform Commercial Code;

(d) the Purchaser may deliver notice of its purchase of the Contracts to one or
more Obligors and may, in its name, demand, sue for, collect or receive any
money or property at any time payable or receivable on account of, or securing,
any of the 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 Contracts or
the Related Security are received by an Originator after a Termination Event has
occurred, such payments shall be held in trust by such Originator as the
property of the Purchase or its assignees and shall not be commingled with any
funds or property of such Originator and shall be forthwith remitted to the
Purchaser (or its assignee);

(e) the Purchaser may require the Originators to, and the Originators hereby
agree that they will, at their expense and upon request of the Purchaser
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 Purchaser and make them available to the Purchaser (or its
assignee) at a place or places to be designated by the Purchaser (or its
assignee); and

(f) the Purchaser (or its assignee) may exercise or enforce any and all other
rights or remedies available by law or agreement against the Contracts and the
Related Security, against the Originators, or against any other Person or
property.

 

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If notice to an Originator 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 8.2 at least ten calendar
days prior to the date of intended disposition or other action.

ARTICLE VII

INDEMNIFICATION

Section 7.1 Indemnities by the Originators. Without limiting any other rights
that Purchaser may have hereunder or under applicable law, each Originator
hereby agrees to indemnify (and pay upon demand to) Purchaser and its assigns
(and their respective Affiliates), officers, directors, agents and employees
(each an “Indemnified Party”) from and against any and all damages, losses,
claims, taxes, liabilities, costs, expenses and for all other amounts payable,
including reasonable attorneys’ fees (which attorneys may be employees of
Purchaser or any such assign) and disbursements (all of the foregoing being
collectively referred to as “Indemnified Amounts”) awarded against or incurred
by any of them arising out of or as a result of this Agreement or the
acquisition, either directly or indirectly, by Purchaser of an interest in the
Contracts of such Originator, excluding, however:

(a) Indemnified Amounts to the extent a final judgment of a court of competent
jurisdiction holds that such Indemnified Amounts resulted from gross negligence
or willful misconduct on the part of the Indemnified Party seeking
indemnification;

(b) Indemnified Amounts to the extent the same includes losses in respect of
Contracts that are uncollectible on account of the insolvency, bankruptcy or
lack of creditworthiness of the related Obligor; or

(c) taxes imposed by the jurisdiction in which such Indemnified Party’s
principal executive office is located, on or measured by the overall net income
of such Indemnified Party to the extent that the computation of such taxes is
consistent with the characterization for income tax purposes of the acquisition
by the Buyers of Buyer Interests under the Purchase Agreement as a loan or loans
by the Buyers to Purchaser secured by, among other things, the Contracts, the
Related Security and the Collections;

provided, however, that nothing contained in this sentence shall limit the
liability of any Originator or limit the recourse of Purchaser to any Originator
for amounts otherwise specifically provided to be paid by such Originator under
the terms of this Agreement. Without limiting the generality of the foregoing
indemnification, each Originator shall indemnify Purchaser for Indemnified
Amounts (including, without limitation, losses in respect of uncollectible
receivables, regardless of whether reimbursement therefor would constitute
recourse to Originator) relating to or resulting from:

(i) any representation or warranty made by such Originator (or any officers of
such Originator) under or in connection with this Agreement or any other
information or report delivered by such Originator pursuant hereto or thereto
that shall have been false or incorrect when made or deemed made;

 

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(ii) the failure by such Originator, to comply with any applicable law, rule or
regulation with respect to any Contract or agreement related thereto, or the
nonconformity of any Contract or agreement included therein with any such
applicable law, rule or regulation or any failure of such Originator to keep or
perform any of its obligations, express or implied, with respect to any
Contract;

(iii) any failure of such Originator to perform its duties, covenants or other
obligations in accordance with the provisions of this Agreement or any other
Transaction Document;

(iv) any products liability, personal injury or damage, suit or other similar
claim arising out of or in connection with merchandise, insurance or services
that are the subject of any Contract;

(v) any dispute, claim, offset or defense (other than discharge in bankruptcy of
the Obligor) of the Obligor to the payment of any Contract of such Originator
(including, without limitation, a defense based on such Contract or the related
agreement not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or service related to such Contract
or the furnishing or failure to furnish such merchandise or services;

(vi) the commingling of Collections of Contracts of such Originator at any time
with other funds;

(vii) any investigation, litigation or proceeding related to or arising from
this Agreement, the transactions contemplated hereby, the use of the proceeds of
any Purchase, the ownership of the Contracts of such Originator or any other
investigation, litigation or proceeding relating to such Originator in which any
Indemnified Party becomes involved as a result of any of the transactions
contemplated hereby;

(viii) any inability to litigate any claim against any Obligor in respect of any
Contract of such Originator as a result of such Obligor being immune from civil
and commercial law and suit on the grounds of sovereignty or otherwise from any
legal action, suit or proceeding;

(ix) any failure to vest and maintain vested in Purchaser, or to transfer to
Purchaser, legal and equitable title to, and ownership of, the Contracts of such
Originator and the Collections, and all of such Originator’s right, title and
interest in the Related Security associated with the Contracts of such
Originator, in each case, free and clear of any Liens;

(x) the failure to have filed, or any delay in filing, financing statements or
other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Contract of such
Originator and the Related Security and Collections with respect thereto, and
the proceeds of any thereof, whether at the time of the Purchase or at any
subsequent time;

 

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(xi) any action or omission by such Originator which reduces or impairs the
rights of Purchaser with respect to any Contract of such Originator or the value
of any such Contract;

(xii) any attempt by any Person to void the Purchase hereunder under statutory
provisions or common law or equitable action; and

Section 7.2 Other Costs and Expenses. Each Originator shall be jointly and
severally liable for, and shall reimburse Purchaser on demand for, all costs and
out-of-pocket expenses in connection with the preparation, negotiation,
arrangement, execution, delivery and administration of this Agreement, the
transactions contemplated hereby and the other documents to be delivered
hereunder. Each Originator shall reimburse Purchaser on demand for any and all
costs and expenses of Purchaser, if any, including reasonable counsel fees and
expenses, in connection with the enforcement of this Agreement and the other
documents delivered hereunder and in connection with any restructuring or
workout of this Agreement or such documents, or the administration of this
Agreement following a Termination Event.

ARTICLE VIII

MISCELLANEOUS

Section 8.1 Waivers and Amendments.

(a) No failure or delay on the part of Purchaser (or its assigns) in exercising
any power, right or remedy under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
remedy preclude any other further exercise thereof or the exercise of any other
power, right or remedy. The rights and remedies herein provided shall be
cumulative and nonexclusive of any rights or remedies provided by law. Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.

(b) No provision of this Agreement may be amended, supplemented, modified or
waived except in writing signed by each Originator and Purchaser and, to the
extent required under the Purchase Agreement, the Agent and the Buyers or the
Majority Buyers.

Section 8.2 Notices. All communications and notices provided for hereunder shall
be in writing (including bank wire, telecopy or electronic facsimile
transmission or similar writing) and shall be given to the other parties hereto
at their respective addresses or telecopy numbers set forth on the signature
pages hereof or at such other address or telecopy number as such Person may
hereafter specify for the purpose of notice to each of the other parties hereto.
Each such notice or other communication shall be effective (i) if given by
telecopy, upon the receipt thereof, (ii) if given by mail, four (4) Business
Days after the time such communication is deposited in the mail with first class
postage prepaid or (iii) if given by any other means, when received at the
address specified on the signature page hereof.

 

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Section 8.3 Protection of Ownership Interests of Purchaser.

(a) Each Originator agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that Purchaser (or its assigns)
may request, to perfect, protect or more fully evidence the interest of
Purchaser hereunder and the Purchaser Interests, or to enable Purchaser (or its
assigns) to exercise and enforce their rights and remedies hereunder. Without
limiting the foregoing, each Originator will, upon the request of Purchaser (or
its assigns), file such financing or continuation statements, or amendments
thereto or assignments thereof, and execute and file such other instruments and
documents, that may be necessary or desirable, or that Purchaser (or its
assigns) may reasonably request, to perfect, protect or evidence such interest
of Purchaser (or such Purchaser Interests). At any time, Purchaser may, at the
applicable Originator’s sole cost and expense, direct such Originator to notify
the Obligors of Contracts of such Originator of the ownership interests of
Purchaser under this Agreement and may also direct that payments of all amounts
due or that become due under any or all Contracts be made directly to Purchaser
or its designee.

(b) If any Originator fails to perform any of its obligations hereunder,
Purchaser (or its assigns) may (but shall not be required to) perform, or cause
performance of, such obligations, and Purchaser’s (or such assigns’) costs and
expenses incurred in connection therewith shall be payable by the Originators as
provided in Section 7.2. Each Originator irrevocably authorizes Purchaser (and
its assigns) at any time and from time to time in the sole and absolute
discretion of Purchaser (or its assigns), and appoints Purchaser (and its
assigns) as its attorney(ies)-in-fact, to act on behalf of such Originator
(i) to authorize and/or execute on behalf of such Originator as debtor and to
file financing or continuation statements (and amendments thereto and
assignments thereof) necessary or desirable in Purchaser’s (or its assigns’)
sole and absolute discretion to perfect and to maintain the perfection and
priority of the interest of Purchaser in the Contracts and (ii) to file a
carbon, photographic or other reproduction of this Agreement or any financing
statement with respect to the Contracts as a financing statement in such offices
as Purchaser (or its assigns) in their sole and absolute discretion deem
necessary or desirable to perfect and to maintain the perfection and priority of
Purchaser’s interests in the Contracts. This appointment is coupled with an
interest and is irrevocable. The authorization by each Originator set forth in
the second sentence of this Section 8.3(b) is intended to meet all requirements
for authorization by a debtor under Article 9 of any applicable enactment of the
UCC, including without limitation, Section 9-509 thereof.

Section 8.4 Confidentiality.

(a) Each Originator shall maintain and shall cause each of its employees and
officers to maintain the confidentiality of this Agreement and the other
confidential or proprietary information with respect to the Agent and each
Purchaser and their respective businesses obtained by it or them in connection
with the structuring, negotiating and execution of the transactions contemplated
herein, except that such Originator and its officers and employees may disclose
such information to such Originator’s external accountants and attorneys and as
required by any applicable law or order of any judicial or administrative
proceeding.

 

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(b) Anything herein to the contrary notwithstanding, each Originator hereby
consents to the disclosure of any nonpublic information with respect to it
(i) to Purchaser, the Agent or the Buyers by each other, or (ii) by Purchaser,
the Agent or the Buyers to any prospective or actual assignee or participant of
any of them, and to any officers, directors, employees, outside accountants and
attorneys of any of the foregoing, provided each such Person is informed of, and
agrees to maintain the confidential nature of, such information. In addition,
the Buyers and the Agent may disclose any such nonpublic information pursuant to
any law, rule, regulation, direction, request or order of any judicial,
administrative or regulatory authority or proceedings (whether or not having the
force or effect of law).

Section 8.5 Bankruptcy Petition. Each Originator covenants and agrees that,
prior to the date that is one year and one day after the payment in full of all
outstanding obligations of Purchaser under the Purchase Agreement, it will not
institute against, or join any other Person in instituting against, Purchaser
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.

Section 8.6 Limitation of Liability. Except with respect to any claim arising
out of the willful misconduct or gross negligence of the Agent or any Purchaser,
no claim may be made by any Originator or any other Person against the Agent or
any Buyer or their respective Affiliates, directors, officers, employees,
attorneys or agents for any special, indirect, consequential or punitive damages
in respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement, or
any act, omission or event occurring in connection therewith; and each
Originator hereby waives, releases, and agrees not to sue upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor.

Section 8.7 CHOICE OF LAW. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS
AGREEMENT SHALL BE GOVERNED 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 8.8 CONSENT TO JURISDICTION. EACH ORIGINATOR HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR MINNESOTA STATE COURT
SITTING IN ST. PAUL OR MINNEAPOLIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH ORIGINATOR PURSUANT
TO THIS AGREEMENT AND EACH ORIGINATOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT

 

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SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
PURCHASER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST ANY ORIGINATOR IN THE
COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY ORIGINATOR
AGAINST PURCHASER (OR ITS ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH ORIGINATOR PURSUANT TO THIS
AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN MINNEAPOLIS OR ST. PAUL,
MINNESOTA.

Section 8.9 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY
ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER
OR THEREUNDER.

Section 8.10 Integration: Binding Effect: Survival of Terms.

(a) This Agreement contains the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof superseding all prior oral or written understandings.

(b) This Agreement shall be binding upon and inure to the benefit of each
Originator and Purchaser, and their respective successors and permitted assigns
(including any trustee in bankruptcy). No Originator may assign any of its
rights and obligations hereunder or any interest herein without the prior
written consent of Purchaser. Purchaser may assign at any time its rights and
obligations hereunder and interests herein to any other Person without the
consent of any Originator. Without limiting the foregoing, each Originator
acknowledges that Purchaser, pursuant to the Purchase Agreement, may assign to
the Agent, for the benefit of the Buyers, its rights, remedies, powers and
privileges hereunder and that the Agent may further assign such rights,
remedies, powers and privileges to the extent permitted in the Purchase
Agreement. Each Originator agrees that the Agent, as the assignee of Purchaser,
shall, subject to the terms of the Purchase Agreement, have the right to enforce
this Agreement and to exercise directly all of Purchaser’s rights and remedies
under this Agreement (including, without limitation, the right to give or
withhold any consents or approvals of Purchaser to be given or withheld
hereunder) and each Originator agrees to cooperate fully with the Agent in the
exercise of such rights and remedies. This Agreement shall create and constitute
the continuing obligations of the parties hereto in accordance with its terms
and shall remain in full force and effect until terminated in accordance with
its terms; provided, however, that the rights and remedies with respect to
(i) any breach of any representation and warranty made by the Originators
pursuant to Article IV; (ii) the indemnification and payment provisions of
Article VII; and (iii) Section 8.5 shall be continuing and shall survive any
termination of this Agreement.

 

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Section 8.11 Counterparts: Severability; Section References. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are 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, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to “Article,” “Section,” “Schedule” or “Exhibit” shall mean articles and
sections of, and schedules and exhibits to, this Agreement.

Section 8.12 Subordination. Each Originator shall have the right to receive, and
Purchaser shall make, any and all payments relating to any indebtedness,
obligation or claim such Originator may from time to time hold or otherwise have
against Purchaser or any assets or properties of Purchaser, whether arising
hereunder or otherwise existing, provided that, after giving effect to any such
payment, the aggregate outstanding balance of the Contracts owned by Purchaser
at such time exceeds the sum of (a) the Buyer Investments and Obligations under
the Purchase Agreement, plus (b) the aggregate outstanding principal balance of
the Subordinated Loans. Each Originator hereby agrees that at any time during
which the condition set forth in the proviso of the immediately preceding
sentence shall not be satisfied, such Originator shall be subordinate in right
of payment to the prior payment of any indebtedness or obligation of Purchaser
owing to the Agent or any Purchaser under the Purchase Agreement.

Section 8.13 Contract Purchase Facility. This Agreement and the Purchase
Agreement together amend and restate the Third Amended and Restated Contract
Purchase Agreement, dated as of June 19, 2002, as amended prior to the date
hereof, among PCI, the Originators, U.S. Bank National Association, individually
and as agent, and certain buyers identified therein.

(Signature Page Follows)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date hereof.

 

PATTERSON DENTAL SUPPLY, INC.  

By:

 

/s/ R. Stephen Armstrong

 

Name:

  R. Stephen Armstrong  

Title:

  Vice President and Treasurer  

 

Address:

  

1031 Mendota Heights Road

St. Paul, MN 55120

   Attn: R. Stephen Armstrong    Facsimile: (651) 686-8984

 

WEBSTER VETERINARY SUPPLY, INC.

 

By:

 

/s/ R. Stephen Armstrong

 

Name:

  R. Stephen Armstrong  

Title:

  Vice President and Treasurer  

 

Address:

  

1031 Mendota Heights Road

St. Paul, MN 55120

   Attn: R. Stephen Armstrong    Facsimile: (651) 686-8984

 

PDC FUNDING COMPANY II, LLC  

By:

 

/s/ R. Stephen Armstrong

 

Name:

  R. Stephen Armstrong  

Title:

  Chief Manager and President  

 

Address:

  

1031 Mendota Heights Road

St. Paul, MN 55120

   Attn: R. Stephen Armstrong    Facsimile: (651) 686-8984

[Signature Page to Receivables Sale Agreement]

 

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