Exhibit 10.13

THIRD AMENDED AND RESTATED
CONTRACT PURCHASE AGREEMENT

THIS THIRD AMENDED AND RESTATED CONTRACT PURCHASE AGREEMENT is made as of June 19, 2002 (the "Agreement") between PATTERSON DENTAL COMPANY, a Minnesota corporation ("PDC"), PATTERSON DENTAL SUPPLY, INC., a Minnesota corporation ("PDSI"), WEBSTER VETERINARY SUPPLY, INC., a Minnesota corporation ("Webster;" Webster 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), and THE NORTHERN TRUST COMPANY ("Northern;" U.S. Bank in its individual capacity, 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 Seller 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 Sellers in the regular course of their respective business; and

WHEREAS, the Sellers desire to sell, and the Buyers desire to purchase, from time to time, certain of such contracts; and

WHEREAS, PDC, PDSI and the Buyers are parties to that certain Second Amended and Restated Contract Purchase Agreement dated as of April 28, 2000, as amended by First Amendment to Amended and Restated Contract Purchase Agreement, dated as of April 30, 2001 (the "Existing Purchase Agreement"); and

WHEREAS, the Sellers and the Buyers wish to amend and restate the Existing Purchase Agreement to decrease 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:

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):

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 PDC, as Servicer, and the Sellers reconcile accounting information relating to the Contracts.

"Acquisition" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which PDC or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company or other business entity.

Adverse Event: The occurrence of any event that could have a 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, PDC 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:

BD/EBITDA Ratio Applicable Commitment Percentage

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:": Subject to the last sentence of this definition, with respect to the period beginning five days after the financial statements and compliance certificate required by Sections 6.2(b) and (c) are delivered with respect to any fiscal quarter and ending on the day five days after the date such financial statements and compliance certificate for the next fiscal quarter are actually delivered, the percentage specified, based on the BD/EBITDA Ratio calculated as of the end of the fiscal quarter for which such financial statements were delivered:

BD/EBITDA Ratio                    Applicable Margin

Less than or equal to 1.0                0.75%
Greater than 1.0                         1.00%

During the period beginning on the date five days after the financial statements and compliance certificate for a fiscal quarter are required to be delivered pursuant to Sections 6.2(b) and (c) but are not delivered and ending five days after the date such financial statements are delivered, the Applicable Margin shall be as specified for a BD/EBITDA Ratio greater than 1.0 to 1.0. The Applicable Margin shall change on the date of adjustment notwithstanding any Fixed Interest Period.

Assignment: As defined in Section 2.2(i).

Bank One Securitization: The sale of Contracts to PDC Funding by the Sellers and the subsequent sale by PDC Funding to Bank One, NA (Main Office Chicago), as agent.

Bank One Securitization Documents: The Receivables Sale Agreement dated as of May 10, 2002 among PDSI, Webster and PDC Funding (including any Sale Assignment (as defined therein) executed pursuant thereto) and the Receivables Purchase Agreement dated as of May 10, 2002 among PDC, PDC Funding, Bank One, NA (Main Office Chicago), as agent, and the financial institutions from time to time party thereto, in each case as the same may be amended, restated, supplemented or otherwise modified from time to time.

BD/EBITDA Ratio: The ratio of (i) the Consolidated Total Debt minus the obligations arising from the purchase price of Permitted Account Sales and other forms of off-balance sheet financing 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 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 Prime 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.

"Consolidated Adjusted EBITDA": As to any Person for any period, the sum of Consolidated EBIT for such period (i) plus consolidated depreciation and amortization for such period, (ii) plus extraordinary losses incurred other than in the ordinary course of business, (iii) minus extraordinary gains realized other than in the ordinary course of business. For Persons acquired by PDC during the relevant measurement period, their EBITDA results will be included in the calculation of Consolidated Adjusted EBITDA as if those Persons were owned by PDC for the entire reporting period. Consolidated Adjusted EBITDA will be calculated on a rolling four-quarter basis.

"Consolidated EBIT": As to any Person and with reference to any period, Consolidated Net Income plus, to the extent deducted from revenues in determining Consolidated Net Income, (i) Consolidated Interest Expense, (ii) expense for federal, state, local and foreign income and franchise taxes paid or accrued and (iii) extraordinary losses incurred other than in the ordinary course of business, minus, to the extent included in Consolidated Net Income, extraordinary gains realized other than in the ordinary course of business, all calculated for such Person and its Subsidiaries on a consolidated basis.

"Consolidated Interest Expense": As to any Person and with reference to any period, the interest expense of such Person and its Subsidiaries calculated on a consolidated basis for such period including, without limitation, such interest expense as may be attributable to capitalized leases, receivables transaction financing costs, the discount or implied interest component of off-balance sheet liabilities, all commissions, discounts and other fees and charges owed with respect to letters of credit and net mark-to-market exposure.

"Consolidated Net Income": As to any Person and with reference to any period, the net income (or loss) of such Person and its Subsidiaries calculated on a consolidated basis for such period, excluding any non-cash charges or gains which are unusual, non-recurring or extraordinary.

"Consolidated Tangible Net Worth": As of any date of determination, the consolidated total stockholders' equity (including capital stock, additional paid in capital and retained earnings) of PDC and its Subsidiaries determined in accordance with GAAP, less goodwill and other intangible assets.

"Consolidated Total Debt": (a) all indebtedness of PDC and its Subsidiaries, on a consolidated basis, reflected on a balance sheet prepared in accordance with GAAP, plus, without duplication (b) the face amount of all outstanding letters of credit in respect of which PDC or any Subsidiary has any reimbursement obligation and the principal amount of all contingent obligations of PDC and its Subsidiaries, plus obligations associated with capitalized leases, plus obligations arising from Permitted Account Sales (including the Bank One Securitization) and other forms of off-balance sheet financing, including receivables transaction attributed indebtedness.

Contract: Collectively, 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 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).

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 26, 2003, 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 26, 2002 equals or exceeds five percent (5%) of the average of the aggregate Net Ending Principal Balance for the 12 preceding Settlement Dates.

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) 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.

Eagle Soft Contract: Collectively, a contract evidencing a sale of dental software entered into by PDSI as the seller or licensor of such dental software 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, 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 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 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 outstanding balance at the time of determination of up to five percent (5%) of the aggregate outstanding balance for all Buyers' 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 balance at the time of determination of up to ten percent (10%) of the aggregate outstanding balance 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 outstanding balance at the time of determination of up to fifteen percent (15%) of the aggregate outstanding balance 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 or Software Agreement in substantially the form of one of the four forms of Contract attached hereto as Exhibit A, 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 (unless the Contract is an Eagle Soft Contract); 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 outstanding balance for all Buyers' 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 balance at the time of determination that when added to the outstanding balance of all Buyers' Contracts that are Eagle Soft Contracts, does not exceed ten percent (10%) of the outstanding balance of all Buyers' Contracts as of the date of determination.

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

(xxiv) which provides for aggregate payments thereunder in an amount not greater than $250,000.

(xxv) the Purchase Price of which, together with the outstanding balance of all Contracts with the same Obligor as the Contract, does not exceed $250,000.

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

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.

Final Maturity Date: April 26, 2008, 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.

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.

Intercreditor Agreement: The Intercreditor Agreement dated as of June 19, 2002 among Bank One, NA (Main Office Chicago), the Agent, the Sellers, PDC and PDC Funding.

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.

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, if there are two or fewer Buyers, Buyers whose Buyer's Percentages aggregate 100%; if there are more than two Buyers, 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 amended and restated guaranty of PDC dated as of June 19, 2002, guaranteeing the obligations of PDSI and Webster to the Buyers under this Agreement.

PDC Funding: PDC Funding Company, LLC, a Minnesota limited liability company.

PDSI Documents: As defined in Section 5.1(a).

Permitted Account Sales: Sales (including licenses), with limited recourse, or no recourse, (i) by PDSI or Webster of Accounts 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) or (ii) by PDSI, Webster or PDC Funding under the Bank One Securitization Documents.

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 that such Liens materially adversely affect a Seller's or PDC's property or their respective use of such property in the ordinary course of their respective business, and adequate reserves with respect thereto have been set aside on a Seller's or PDC's books in accordance with GAAP; (b) Liens imposed by law, such as landlords', materialmen's, mechanics', carriers', workmen's, employees' and repairmen's liens except to the extent that such Liens materially and adversely affects a Seller's or PDC's title to its property or their respective use of such property in the ordinary course of their respective business, and adequate reserves with respect thereto which have been set aside on a Seller's or PDC's books in accordance with GAAP; (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).

Prime Rate: The rate of interest from time to time publicly announced by the Agent as its "prime rate." The Agent may lend to its customers at rates that are at, above or below the Prime Rate. For purposes of determining any interest rate hereunder which is based on the Prime Rate, such interest rate shall change as and when the Prime Rate shall change.

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 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.

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.

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); provided further, however, that June 19, 2002 shall also be a Settlement Date.

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.

Transaction Documents: The PDC Documents, the PDSI Documents and the Webster Documents.

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 principal amount outstanding under all Buyers' Contracts, all as of the date of determination, plus (y) 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).

Webster Documents: As defined in Section 5.1(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 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
TERMS OF THE CONTRACT PURCHASES

Section 2.1 Purchase and Sale of Contracts; Purchase Price. 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:

(i) 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

(ii) the Contract Purchase Commitment Amount,

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 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.

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 C 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 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 D 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 conspicuously stamp the first page of each Contract tendered for purchase with the following notice: "This Contract has been assigned to U.S. Bank National Association, as Agent. Any purchase of this Contract would violate the rights of U.S. Bank National Association";

(iii) the Related Seller shall deliver to the Servicer the original executed Contracts tendered for purchase by that Related Seller to be held by the Servicer in accordance with
Section 3.8 hereof; and

(iv) 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.

Section 2.4 Commitment and Agent's Fee. 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. 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. 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 dated April 28, 2000 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 Prime 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 (except, to the extent permitted by law, for tax 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 with respect to such Contract, the Related Security Documents with respect to such Contract, 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, and that Seller's obligations to repurchase the

Contracts as provided in Article VII, 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
COLLECTIONS AND SERVICING

Section 3.1 Servicing Agency; Holding of Buyers' Contracts.

(a) Contract Collections. 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 PDSI or Webster), 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 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 National Association under that certain Escrow Agreement dated as of June 20, 1997, as amended by a First Amendment to Escrow Agreement dated as of June 19, 2002, between PDC, PDSI, the Agent and U.S. Bank 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 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.

(b) Manner of Holding Buyers' Contracts. The Servicer shall hold in trust, for the benefit of the Agent and the Buyers, the Buyers' Contracts, until its status as Servicer is terminated as set forth herein. The Servicer shall not release, deliver, sell, pledge or grant a security interest in or authorize the release, delivery, sale, pledge or the granting of a security interest in, any Buyers' Contract to any other entity or person, or take any other action with respect to any Buyers' Contract which could cause the sale to the Buyers to become unperfected or which could otherwise jeopardize the perfected sale of any Buyers' Contract. The Servicer shall physically segregate all Buyers' Contracts from all other contracts or documents of PDC or any Seller, and shall adequately designate such area as an area containing only Buyers' Contracts. The Servicer shall review Buyers' Contracts for compliance with the legending requirements set forth in Section 2.2(ii) hereof. Upon receipt of written notice from the Agent, the Servicer shall deliver the Buyers' Contracts immediately to the Agent. The Servicer shall not honor any requests or instructions from any Person other than the Agent relating to any Buyers' Contract.

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.

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 Buyers, PDSI or Webster, as the case may be, shall notify the Obligor that the Servicer is authorized to service such Contract on behalf of PDSI or Webster, as the case may be. 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.

ARTICLE IV
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 the Servicer is not in default under Section 4.2, the Servicer may retain any late charges received by the Servicer.

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 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 Buyers' 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 the Servicer'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;

(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
CONDITIONS PRECEDENT TO PURCHASES

Section 5.1 Conditions to Initial Purchase. The Buyers' obligation to purchase Contracts hereunder and the effectiveness of this Agreement, is subject to the satisfaction of the following conditions:

(a) Documents. The Agent shall have received the following, in sufficient counterparts for each Buyer:

(i) A copy of this Agreement, duly executed by PDC, each of the Sellers and the Buyers.

(ii) A copy of the PDC Guaranty, duly executed by PDC.

(iii) A copy of the corporate resolutions of PDC authorizing the execution, delivery and performance of this Agreement and the PDC Guaranty (collectively, the "PDC Documents"), certified as of the Closing Date by the Secretary or an Assistant Secretary of PDC.

(iv) An incumbency certificate showing the names and titles and bearing the signatures of the officers of PDC authorized to execute the PDC Documents, certified as of the Closing Date by the Secretary or an Assistant Secretary of PDC.

(v) 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.

(vi) 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.

(vii) A copy of the bylaws of PDC, certified as of the Closing Date by the Secretary or an Assistant Secretary of
PDC.

(viii) A copy of the corporate resolutions of PDSI authorizing the execution, delivery and performance of this Agreement, the Assignments hereunder 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.

(ix) 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.

(x) 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.

(xi) 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.

(xii) A copy of the bylaws of PDSI, certified as of the Closing Date by the Secretary or an Assistant Secretary of
PDSI.

(xiii) A copy of the corporate resolutions of Webster authorizing the execution, delivery and performance of this Agreement, the Assignments hereunder and any Financing Statements executed by Webster (collectively, the "Webster Documents"), certified as of the Closing Date by the Secretary or an Assistant Secretary of Webster.

(xiv) An incumbency certificate showing the names and titles and bearing the signatures of the officers of Webster authorized to execute the Webster Documents, and to request purchases of Contracts hereunder, certified as of the Closing Date by the Secretary or an Assistant Secretary of Webster.

(xv) A copy of the Articles of Incorporation of Webster 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.

(xvi) A long-form certificate of good standing for Webster 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.

(xvii) A copy of the bylaws of Webster, certified as of the Closing Date by the Secretary or an Assistant Secretary of Webster.

(xviii) 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, desirable to perfect the interest of the Agent and the Buyers in the Buyers' Contracts, Related Security, Related Security Documents and proceeds thereof.

(xix) 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.

(xx) A certificate dated the Closing Date of a Financial Officer of PDC, PDSI and Webster 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 E hereto, and such opinion shall have been delivered to the Agent in sufficient counterparts for each Buyer.

(c) Compliance. PDC and 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. PDC and 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 $25,000, 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.

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;

(b) the representations and warranties of PDC and 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 PDC 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
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 F:

(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;

(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. PDC and the Sellers shall deliver to each Buyer:

(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.

(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 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.

(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.

(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.

(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.

(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.

(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.

(h) Immediately upon becoming aware of the occurrence thereof, notice of any violation as to any environmental matter by PDC, 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 permits held by PDC, 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 PDC, either Seller or such Subsidiary to any Person or which will require a material expenditure by PDC, either Seller or such Subsidiary to cure any alleged problem or violation.

(i) From time to time, such other information regarding the business, operation and financial condition of PDC, the Sellers and the Subsidiaries as the Agent or any Buyer may reasonably request.

Section 6.3 Inspection. PDC and each Seller shall permit any Person designated by the Agent or any Buyer to visit and inspect any of such Person's properties, corporate books and financial records, to examine and to make copies of such Person's books of accounts and other financial records, and to discuss the affairs, finances and accounts of such Person's 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. PDC and 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. PDC and 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
SELLERS' OBLIGATION TO REPURCHASE CONTRACTS

Each Seller shall have an obligation to repurchase Contracts, as follows:

Section 7.1 Sellers' Obligations to Repurchase.

(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;

(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 PDC or that Seller.

(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.

ARTICLE VIII
PDC'S AND SELLERS' REPRESENTATIONS AND WARRANTIES

In order to induce the Agent and the Buyers to execute this Agreement and to purchase Contracts hereunder, PDC and 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 and Webster, 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 enter into the Transaction Documents executed by it and to perform its obligations under the Transaction Documents executed by it. PDC and each of its Subsidiaries, including PDSI and Webster, 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 PDC and the Sellers of the Transaction Documents executed by it have been duly authorized by all necessary corporate action by PDC and the Sellers, and the Transaction Documents executed by it constitute the respective legal, valid and binding obligations of PDC and the Sellers, enforceable against PDC and 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 PDC and the Sellers of the Transaction Documents executed by it 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 PDC or either Seller, (b) violate or contravene any provisions of the Articles (or Certificate) of Incorporation or by-laws of PDC or 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 PDC or 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 PDC or either Seller or any Subsidiary. Neither PDC or nor either 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.

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 PDC or 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, the Transaction Documents executed by it.

Section 8.5 Financial Statements and Condition. PDC's audited consolidated financial statements as at April 28, 2001 and its unaudited consolidated financial statements as at January 26, 2002, 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 28, 2001, 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 PDC or either Seller, threatened against or affecting either PDC or 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 PDC or either Seller or such Subsidiary, could constitute an Adverse Event.

Section 8.7 Compliance. PDC and its Subsidiaries, including PDSI and Webster, 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 PDC or 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 PDC or either Seller or a Subsidiary or which would require a material expenditure by PDC or either Seller or such Subsidiary to cure. Neither PDC nor either 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 8.10 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, 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. None of PDC or either 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 PDC or either Seller or any Subsidiaries is subject to a Lien, except for Permitted Liens.

Section 8.12 Taxes. Each of PDC, 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 PDC and the Sellers in respect of taxes and other governmental charges are adequate.

Section 8.13 Investment Company Act. None of PDC, either Seller or 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. None of PDC, either Seller or 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 G 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.

Section 8.16 Partnerships and Joint Ventures. None of PDC, nor either Seller or any Subsidiary is currently a partner (limited or general) or joint venturer in any partnership or joint venture, except for Webster Management, LP, 100% of the equity in which is owned by Webster and PDSI.

Section 8.17 Enforceability of Agreements and Assignments. This Agreement has been duly executed and delivered by PDC and each Seller and is a valid and binding agreement of each PDC and 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 Buyers' 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 Buyers' 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 Documents 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 Documents 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 financing statements evidencing Permitted Account Sales. There is only one original executed copy of each Contract, and on the relevant Purchase Date such original executed copy of each Contract purchased by the Buyers will be legended in accordance with Section 2.2(ii) and be delivered to the Servicer to be held for the benefit of the Buyers in accordance with Section 3 hereof.

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 any 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 such Buyers' Contract and the Related Security. With respect to each Buyers' 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.

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 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. PDC and 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.

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 PDC or 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 PDC or 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 PDC or that Seller, and PDC or the Sellers have no reason to believe that such projections or forecasts are not reasonable.

ARTICLE IX
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 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 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. None of PDC or either 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.

(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 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.

(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 Buyers' Contracts, Related Security, Related Security Documents and proceeds or any part thereof shall be sufficient as a financing statement where permitted by law.

(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.

(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 Third Amended and Restated Contract Purchase Agreement dated as of June 19, 2002 (as amended) between Patterson Dental Company, Patterson Dental Supply, Inc., Webster Veterinary Supply, Inc., U.S. Bank National Association, individually and as agent, and the Buyers named therein from time to time."

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 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, PDC and 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, PDC, 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. PDC, 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. PDC, 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 PDC and 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 PDC, the Seller's or such Subsidiary's books in accordance with GAAP.

Section 10.4 Maintenance of Properties. PDC, 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.

Section 10.5 Books and Records. PDC, 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. PDC, 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. PDC, 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. PDC, 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. None of PDC, either Seller or 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. None of PDC, either Seller or any Subsidiary will sell, transfer, lease or otherwise convey all or any substantial part of its assets except for (a) sales and leases of inventory in the ordinary course of business, (b) Permitted Account Sales and (c) sales by PDC or a Subsidiary of PDC to PDC or a Subsidiary of PDC.

Section 10.11 Plans. None of PDC, either Seller or 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 PDC, either Seller or any Subsidiary or permit the underfunded amount of Plan benefits guaranteed under Title IV of ERISA to exceed $500,000.

Section 10.12 Change in Nature of Business. None of PDC, either Seller or any Subsidiary will make any material change in the nature of the business of PDC or either Seller or such Subsidiary, as carried on at the date hereof.

Section 10.13 Liens. None of PDC, either Seller or 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. None of PDC, either Seller or 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 PDC or 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 Accounting Changes. PDC or 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 10.16 Changes in Name or Location. None of PDC nor either Seller will 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 ss. 9-503 or ss. 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 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 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 10.17 Indemnity. PDC and each Seller 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):

(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;

(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;

(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;

(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;

(e) arising by reason of, relating to or in connection with the execution, delivery, performance or enforcement of the Transaction Documents or any transaction contemplated hereby or thereby; and

(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 constitute an Eligible Contract or the actions or failure to act of the Sellers or the Servicer).

provided, however, that PDC and 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 10.18 Filing Fees. PDC and 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 10.19 Guaranties. When so requested by the Agent from time to time, PDC will execute and deliver to the Agent reaffirmations of the PDC Guaranty in such form as the Agent may require.

ARTICLE XI
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:

(a) PDC, 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.

(b) Any representation or warranty made or deemed to have been made by or on behalf of a Seller or any Subsidiary in the Transaction Documents 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;

(c) PDC or either Seller shall fail to comply with any agreement, covenant, condition, provision or term contained in the Transaction Documents (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;

(d) PDC, 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 PDC, a 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 PDC, a Seller or a Subsidiary or for a substantial part of the property thereof and shall not be discharged within 30 days;

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

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

(g) 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 PDC, a Seller or a Subsidiary and PDC, 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;

(h) The institution by PDC, a Seller or any ERISA Affiliate of steps to terminate any Plan if in order to effectuate such termination, PDC, 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;

(i) The maturity of any indebtedness of PDC (including its obligations under any Permitted Account Sales), a Seller or a Subsidiary in an aggregate amount of $2,000,000 or more shall be accelerated, or PDC, 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 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;

(j) 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;

(k) This Agreement or the PDC 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 PDC or any Seller, or PDC or any Seller shall deny that it has any or further liability or obligation under this Agreement or PDC's Guaranty;

(l) Any execution or attachment shall be issued whereby any substantial part of the property of PDC, 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

(m) PDSI or Webster shall cease to be a wholly-owned Subsidiary of PDC; or

(n) That certain Escrow Agreement among PDC, PDSI, the Agent and U.S. Bank National Association shall be terminated, amended or otherwise modified without the Majority Buyers' prior written consent, or U.S. Bank 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; or

(o) The Intercreditor Agreement shall, at any time after the execution and delivery thereof, be breached by any Seller or Bank One, NA, 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 any Seller or Bank One, NA, or any Seller or Bank One, NA, shall deny that it has any or further liability or obligation under the Intercreditor Agreement.

(p) PDC's Consolidated Tangible Net Worth at any time shall be less than the sum of (i) $300,000, plus (ii) 50% of the cumulative positive quarterly Consolidated Net Income for all fiscal quarters of PDC following the fiscal quarter of PDC ending April 27, 2002 (without taking into account any net loss in any such fiscal quarter), plus (iii) 100% of the amount, if any, by which stockholder's equity of PDC is, in accordance with GAAP, increased for all fiscal quarters of PDC following the fiscal quarter of PDC ending April 27, 2002 as a result of (A) the issuance of any capital stock of PDC or (B) any Acquisition.

(q) PDC's ratio of Consolidated Total Debt to Consolidated Adjusted EBITDA at any time to be greater than 2.0 to 1.0.

Section 11.2 Remedies.

(a) If (i) any Termination Event described in Sections 11.1(e),
(f) or (g) shall occur with respect to PDC, 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.

(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, 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 PDC and each Seller to, and PDC 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 PDC and a Seller (including under PDC Guaranty), 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.

ARTICLE XII
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 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 Prime 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 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 Prime 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
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 PDC or a Seller not required hereunder or under an Assignment shall in any event entitle PDC or either 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 PDC or 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:

(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

(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

(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

(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

(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

(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 the Transaction Documents. PDC and 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 the Transaction Documents, the Buyers' Contracts and the Related Security Documents. PDC and the Sellers jointly 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 PDC and 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.

(a) This Agreement shall be binding upon and inure to the benefit of PDC, the Sellers, the Buyers, the Agent, and their respective successors and assigns, except that PDC or the Sellers may not assign or transfer any of their rights or obligations under this Agreement without the prior written consent of each Buyer.

(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) PDC, 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 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. PDC and 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.

(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, pursuant to written agreements executed by such assigning Buyer, such Assignee(s) and the Agent in substantially the form of Exhibit H, 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, PDC, 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 PDC and 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 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.

(d) PDC and the Sellers shall not be liable for any costs incurred by the Buyers in effecting any participation or assignment.

(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 PDC or the Sellers or any of their Subsidiaries which has been delivered to such Buyer by or on behalf of PDC or the Sellers or any of their Subsidiaries pursuant to this Agreement or which has been delivered to such Buyer by or on behalf of PDC or the Sellers or any of its Subsidiaries in connection with such Buyer's credit evaluation of PDC or 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 PDC or a 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. The Transaction Documents embody the entire agreement and understanding between PDC, the Sellers, the Agent and the Buyers with respect to the subject matter hereof and thereof. The Transaction Documents 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 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 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 PDC OR 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. PDC, EACH OF THE SELLERS, THE AGENT AND
THE BUYERS IRREVOCABLY WAIVE 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 PDC and 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 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 PDC and 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.

(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 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
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 H.

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.

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 PDC or 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 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 PDC or 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 PDC or 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 PDC or the Sellers to such Buyer arising under or pursuant to this Agreement and to any participations held by such

Buyer in indebtedness of PDC or the Sellers arising under or pursuant to this, and only then to any other indebtedness of PDC or 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 PDC or the Sellers by it as Agent, excluding, however, notices, reports and communications which by the terms hereof are to be furnished by PDC or 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, the Sellers and PDC a written notification of 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]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above.

PATTERSON DENTAL COMPANY

By:  /s/ R. Stephen Armstrong
    ---------------------------------------
    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:  /s/ R. Stephen Armstrong
    ---------------------------------------
    R. Stephen Armstrong
    Vice President and Treasurer

1031 Mendota Heights Road St. Paul, MN 55120 Attention: Mr. Ronald E. Ezerski Telecopier: (612) 686-8984

WEBSTER VETERINARY SUPPLY, INC.

By:  /s/ R. Stephen Armstrong
    ---------------------------------------
    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
$30,00,000                          U.S. BANK NATIONAL ASSOCIATION


                                    By:  /s/ Mark R. Olmon
                                        ---------------------------------------
                                        Mark R. Olmon
                                        Senior Vice President

                                    U.S. Bank Place
                                    601 Second Avenue South
                                    Minneapolis, MN  55402
                                    Attention: Mr. Mark R. Olmon
                                    Telecopier: (612) 973-0825


$20,00,000                          THE NORTHERN TRUST COMPANY
                                    By:  /s/ Jeffrey B. Clark
                                        ---------------------------------------
                                        Name: Jeffrey B. Clark
                                             ----------------------------------
                                        Title: Vice President
                                              ---------------------------------

                                    The Northern Trust Company
                                    50 South LaSalle Street, Floor B2
                                    Chicago, Illinois 60675
                                    Attention: Jeffrey Clark
                                    Telecopier: (312) 444-7028

Exhibit 10.14

RECEIVABLES PURCHASE AGREEMENT

dated as of May 10, 2002

Among

PDC FUNDING COMPANY, LLC, as Seller,

PATTERSON DENTAL COMPANY, as Servicer,

PREFERRED RECEIVABLES FUNDING CORPORATION,

THE FINANCIAL INSTITUTIONS PARTY HERETO

and

BANK ONE, NA (MAIN OFFICE CHICAGO),
as Agent

RECEIVABLES PURCHASE AGREEMENT

This Receivables Purchase Agreement, dated as of May 10, 2002, is by and among PDC Funding Company, LLC, a Minnesota limited liability company ("Seller"), Patterson Dental Company, a Minnesota corporation (together with its successors and assigns "PDCo"), as initial Servicer (the Servicer together with Seller, the "Seller Parties" and each a "Seller Party"), the entities listed on Schedule A to this Agreement (together with any of their respective successors and assigns hereunder, the "Financial Institutions"), Preferred Receivables Funding Corporation ("Conduit") and Bank One, NA (Main Office Chicago), as agent for the Purchasers hereunder or any successor agent hereunder (together with its successors and assigns hereunder, the "Agent"). Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I.

PRELIMINARY STATEMENTS

Seller desires to transfer and assign Purchaser Interests to the Purchasers from time to time.

Conduit may, in its absolute and sole discretion, purchase Purchaser Interests from Seller from time to time.

In the event that Conduit declines to make any purchase, the Financial Institutions shall, at the request of Seller, purchase Purchaser Interests from time to time. In addition, the Financial Institutions have agreed to provide a liquidity facility to Conduit in accordance with the terms hereof.

Bank One, NA (Main Office Chicago) has been requested and is willing to act as Agent on behalf of Conduit and the Financial Institutions in accordance with the terms hereof.

ARTICLE I
PURCHASE ARRANGEMENTS

Section 1.1 Purchase Facility.

(a) Upon the terms and subject to the conditions hereof, Seller may, at its option, sell and assign Purchaser Interests to the Agent for the benefit of one or more of the Purchasers. In accordance with the terms and conditions set forth herein, Conduit may, at its option, instruct the Agent to purchase on behalf of Conduit, or if Conduit shall decline to purchase, the Agent shall purchase, on behalf of the Financial

PATTERSON RECEIVABLES PURCHASE AGREEMENT

Institutions, Purchaser Interests from time to time in an aggregate amount not to exceed at such time the lesser of (i) the Purchase Limit and (ii) the aggregate amount of the Commitments during the period from the date hereof to but not including the Facility Termination Date.

(b) Seller may, upon at least 10 Business Days' prior notice to the Agent, terminate in whole or reduce in part, ratably among the Financial Institutions, the unused portion of the Purchase Limit; provided that each partial reduction of the Purchase Limit shall be in an amount equal to $5,000,000 or an integral multiple thereof.

Section 1.2 Increases.

Seller shall provide the Agent with at least two Business Days' prior notice in a form set forth as Exhibit II hereto of each Incremental Purchase (a "Purchase Notice"). Each Purchase Notice shall be subject to Section 6.2 hereof and, except as set forth below, shall be irrevocable, shall specify the requested Purchase Price (which shall not be less than $10,000,000 and in additional increments of $100,000) and date of purchase (which, in the case of any Incremental Purchase (after the initial Incremental Purchase hereunder), shall only be on a Settlement Date) and, in the case of an Incremental Purchase to be funded by the Financial Institutions, the requested Discount Rate and Tranche Period and shall be accompanied by a current listing of all Receivables (including any Receivables to be purchased by Seller under the Receivables Sale Agreement on the date of purchase specified in such Purchase Notice). Following receipt of a Purchase Notice, the Agent will determine whether Conduit agrees to make the purchase. If Conduit declines to make a proposed purchase, Seller may cancel the Purchase Notice or, in the absence of such a cancellation, the Incremental Purchase of the Purchaser Interest will be made by the Financial Institutions. On the date of each Incremental Purchase, upon satisfaction of the applicable conditions precedent set forth in Article VI, Conduit or the Financial Institutions, as applicable, shall deposit to the Facility Account, in immediately available funds, no later than 12:00 noon (Chicago time), an amount equal to (i) in the case of Conduit, the aggregate Purchase Price of the Purchaser Interests Conduit is then purchasing or (ii) in the case of a Financial Institution, such Financial Institution's Pro Rata Share of the aggregate Purchase Price of the Purchaser Interests the Financial Institutions are purchasing.

Section 1.3 [Intentionally Omitted].

Section 1.4 Payment Requirements. All amounts to be paid or deposited by any Seller Party pursuant to any provision of this Agreement shall be paid or deposited in accordance with the terms hereof no later than 11:00 a.m. (Chicago time) on the day when due in immediately available funds, and if not received before 11:00 a.m. (Chicago time) shall be deemed to be received on the next succeeding Business Day. If such amounts are payable to a Purchaser they shall be paid to the Agent, for the account of

PATTERSON RECEIVABLES PURCHASE AGREEMENT

such Purchaser, at 1 Bank One Plaza, Chicago, Illinois 60670 until otherwise notified by the Agent. Upon notice to Seller, the Agent may debit the Facility Account for all amounts due and payable hereunder. All computations of Financial Institution Yield, per annum fees calculated as part of any CP Costs, per annum fees hereunder and per annum fees under the Fee Letter shall be made on the basis of a year of 360 days for the actual number of days elapsed. If any amount hereunder shall be payable on a day which is not a Business Day, such amount shall be payable on the next succeeding Business Day.

ARTICLE II
PAYMENTS AND COLLECTIONS

Section 2.1 Payments. Notwithstanding any limitation on recourse contained in this Agreement, Seller shall immediately pay to the Agent when due, for the account of the relevant Purchaser or Purchasers on a full recourse basis, (i) such fees as set forth in the Fee Letter (which fees shall be sufficient to pay all fees owing to the Financial Institutions), (ii) all amounts payable as CP Costs, (iii) all amounts payable as Financial Institution Yield, (iv) all amounts payable as Deemed Collections (which shall be immediately due and payable by Seller and applied to reduce outstanding Aggregate Capital hereunder in accordance with Sections 2.2 and 2.3 hereof), (v) all amounts required pursuant to Section 2.5 or 2.6, (vi) all amounts payable pursuant to Article X, if any, (vii) all Servicer costs and expenses, including the Servicing Fee, in connection with servicing, administering and collecting the Receivables, (viii) all Broken Funding Costs, (ix) all Hedging Obligations and (x) all Default Fees (collectively, the "Obligations"). If any Person fails to pay any of the Obligations when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid. Notwithstanding the foregoing, no provision of this Agreement or the Fee Letter shall require the payment or permit the collection of any amounts hereunder in excess of the maximum permitted by applicable law. If at any time Seller receives any Collections or is deemed to receive any Collections, Seller shall immediately pay such Collections or Deemed Collections to the Servicer for application in accordance with the terms and conditions hereof and, at all times prior to such payment, such Collections or Deemed Collections shall be held in trust by Seller for the exclusive benefit of the Purchasers and the Agent.

Section 2.2 Collections Prior to Amortization.

(a) Collections Generally. On any day prior to the Amortization Date that the Servicer receives any Collections and/or Deemed Collections, such Collections and/or Deemed Collections shall be set aside and held in trust by the Servicer in the Collection Accounts in the manner set forth in Sections 7.1(j) and 8.2. Prior to the Amortization Date, all such amounts shall be applied as set forth in this Section 2.2. The Servicer shall, on each Settlement Date, determine the portion of Collections set aside in

PATTERSON RECEIVABLES PURCHASE AGREEMENT

accordance with the first sentence of this Section 2.2 during the related Settlement Period which constitute Principal Collections and the portion of such Collections which constitute Finance Charge Collections. On each Settlement Date, the Servicer shall remit the Principal Collections set aside pursuant to this subsection (a) to an account designated by the Agent (the "Agent's Account") to be distributed in accordance with subsection (b) below and the Servicer shall remit the Finance Charge Collections set aside pursuant to this subsection (a) to the Agent's Account to be distributed in accordance with subsection (c) below.

(b) Application of Principal Collections. On each Settlement Date, the Agent will apply the Principal Collections deposited to the Agent's Account pursuant to Section 2.2(a) to make the following distributions in the following amounts and order of priority:

first, to each Terminating Financial Institution, an amount equal to such Terminating Financial Institution's Termination Percentage of such Principal Collections for the ratable reduction of the Capital of each such Terminating Financial Institution, and

second, if any Purchase Notice shall have been delivered in accordance with Section 1.2, to Seller to fund the Purchase Price of the Incremental Purchase to be made on such date; otherwise, to the Agent for the account of the Purchasers (other than any Terminating Financial Institution) as a further reduction of Aggregate Capital.

(c) Application of Finance Charge Collections. On each Settlement Date, the Agent will apply the Finance Charge Collections deposited to the Agent's Account pursuant to Section 2.2(a), together with the Hedge Floating Amount, if any, paid to the Servicer by the Hedge Provider pursuant to the Hedging Agreement and any net income from Permitted Investments deposited to the Agent's Account pursuant to Section 2.8, to make the following distributions in the following amounts and order of priority:

first, if the Hedging Agreement shall be in effect, to the Hedge Provider, the Hedge Fixed Amount, if any, due to the Hedge Provider pursuant to the Hedging Agreement as of such Settlement Date,

second, to the reimbursement of the Agent's costs of collection and enforcement of this Agreement,

third, to the Agent for the account of the Purchasers, all accrued and unpaid fees under the Fee Letter and all accrued and unpaid CP Costs and Financial Institution Yield, including any accrued CP Costs and Financial Institution Yield in

PATTERSON RECEIVABLES PURCHASE AGREEMENT

respect of Capital reduced pursuant to clause second of subsection (b) above, together with any Broken Funding Costs,

fourth, if the Servicer is not then Seller or an Affiliate of Seller, to the Servicer in payment of the Servicing Fee,

fifth, to the Agent as a reduction of Aggregate Capital an amount necessary to pay in full the Outstanding Balance of any Receivables that became Defaulted Receivables during the related Settlement Period and Receivables that became Defaulted Receivables during any prior Settlement Period that have not previously been the subject of payment hereunder,

sixth, if Seller or an Affiliate of Seller is then acting as Servicer, to the Servicer in payment of the Servicing Fee,

seventh, to the applicable Persons, for the ratable payment in full of all other unpaid Obligations, and

eighth, the balance, if any, (i) to the Agent for deposit to the Second-Tier Account if the conditions of Section 7.3 requiring that the Hedging Agreement be in effect have occurred, but the Hedging Agreement is not then in effect (such amount to be set aside and held in trust for application in accordance with this Section 2.2(c) on the next occurring Settlement Date) and (ii) otherwise, to the Seller.

(d) Each Terminating Financial Institution shall be allocated a ratable portion of Collections from the date of any assignment by Conduit pursuant to Section 13.6 (the "Termination Date") until such Terminating Financial Institution's Capital shall be paid in full. This ratable portion shall be calculated on the Termination Date of each Terminating Financial Institution as a percentage equal to (i) Capital of such Terminating Financial Institution outstanding on its Termination Date, divided by (ii) the Aggregate Capital outstanding on such Termination Date (the "Termination Percentage"). Each Terminating Financial Institution's Termination Percentage shall remain constant prior to the Amortization Date. On and after the Amortization Date, each Termination Percentage shall be disregarded, and each Terminating Financial Institution's Capital shall be reduced ratably with all Financial Institutions in accordance with Section 2.3.

Section 2.3 Collections Following Amortization. On the Amortization Date and on each day thereafter, the Servicer shall set aside and hold in trust for the Purchasers, in the Collection Accounts in the manner set forth in Sections 7.1(j) and 8.2, all Collections and/or Deemed Collections received on such day and any additional amount for the payment of any accrued and unpaid Obligations owed by Seller and not previously paid

PATTERSON RECEIVABLES PURCHASE AGREEMENT

by Seller in accordance with Section 2.1. On and after the Amortization Date, the Servicer shall, at any time upon the request from time to time by (or pursuant to standing instructions from) the Agent (i) remit to the Agent's Account the amounts set aside pursuant to the preceding sentence, and (ii) apply such amounts at the Agent's direction to reduce the Aggregate Capital and any other Aggregate Unpaids. If there shall be insufficient funds on deposit for the Servicer to distribute funds in payment in full of the aforementioned amounts, the Servicer shall distribute funds:

first, if the Hedging Agreement shall be in effect, the Hedge Fixed Amount, if any due to the Hedge Provider pursuant to the Hedging Agreement as of such Settlement Date,

second, to the reimbursement of the Agent's costs of collection and enforcement of this Agreement,

third, ratably to the payment of all accrued and unpaid fees under the Fee Letter and all accrued and unpaid CP Costs and Financial Institution Yield,

fourth, to the payment of the Servicer's reasonable out-of-pocket costs and expenses in connection with servicing, administering and collecting the Receivables, including the Servicing Fee, if Seller, or one of its Affiliates is not then acting as the Servicer,

fifth, for the ratable payment of all other unpaid Obligations, provided that to the extent such Obligations relate to the payment of Servicer costs and expenses, including the Servicing Fee, when Seller or one of its Affiliates is acting as the Servicer, such costs and expenses will not be paid until after the payment in full of all other Obligations,

sixth, to the ratable reduction of Aggregate Capital to zero,

seventh, to the ratable payment in full of all other Aggregate Unpaids, and

eighth, after the Aggregate Unpaids have been indefeasibly reduced to zero and this Agreement has terminated in accordance with its terms, any remaining Collections shall be remitted to Seller.

Section 2.4 Ratabe Payments. Collections applied to the payment of Aggregate Unpaids shall be distrbed in accordance with the aforementioned provisions, and giving effect to each of the priorities set forth in Sections 2.2 and 2.3 above, shall be shared ratably (within each priority) among the Agent and the Purchasers in accordance

PATTERSON RECEIVABLES PURCHASE AGREEMENT

with the amount of such Aggregate Unpaids owing to each of them in respect of each such priority.

Section 2.5 Payment Rescission. No payment of any of the Aggregate Unpaids shall be considered paid or applied hereunder to the extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must otherwise be returned or refunded for any reason. Seller shall remain obligated for the amount of any payment or application so rescinded, returned or refunded, and shall promptly pay to the Agent (for application to the Person or Persons who suffered such rescission, return or refund) the full amount thereof, plus the Default Fee from the date of any such rescission, return or refunding.

Section 2.6 Maximum Purchaser Interests. Seller shall ensure that the Purchaser Interests of the Purchasers shall at no time exceed in the aggregate 100%. If the aggregate of the Purchaser Interests of the Purchasers exceeds 100%, Seller shall pay to the Agent within one (1) Business Day an amount to be applied to reduce the Aggregate Capital (as allocated by the Agent), such that after giving effect to such payment the aggregate of the Purchaser Interests equals or is less than 100%.

Section 2.7 Clean Up Call. In addition to Seller's rights pursuant to
Section 1.3, Seller shall have the right (after providing written notice to the Agent in accordance with the Required Notice Period), at any time following the reduction of the Aggregate Capital to a level that is less than 10.0% of the original Purchase Limit, to repurchase from the Purchasers all, but not less than all, of the then outstanding Purchaser Interests. The purchase price in respect thereof shall be an amount equal to the Aggregate Unpaids through the date of such repurchase, payable in immediately available funds. Such repurchase shall be without representation, warranty or recourse of any kind by, on the part of, or against any Purchaser or the Agent.

Section 2.8 Investment of Collections in Second-Tier Account. All amounts from time to time held in, deposited in or credited to, the Second-Tier Account shall be invested by the Servicer (as agent for the Agent) in Permitted Investments selected in writing by the Servicer. All such investments shall at all times be held by or on behalf of the Agent for the benefit of the Purchasers and the Hedge Provider (if any), provided, that neither the Agent, any Purchaser nor the Hedge Provider shall be held liable in any way by reason of any loss arising from the investment of amounts on deposit in the Second-Tier Account in Permitted Investments. All income or other gain from investment of monies deposited in or credited to the Second-Tier Account shall be deposited in or credited to the Second-Tier Account immediately upon receipt, and any loss resulting from such investment shall be charged thereto. Any net income from such investments shall be transferred to the Agent's Account on a monthly basis on the Business Day preceding each Settlement Date to be applied in accordance with Section 2.2. Except as permitted in writing by the Agent,

PATTERSON RECEIVABLES PURCHASE AGREEMENT

funds on deposit in the Second-Tier Account shall be invested in Permitted Investments that will mature no later than the Business Day immediately preceding the next Settlement Date. No Permitted Investment shall be sold or otherwise disposed of prior to its scheduled maturity date unless a default occurs with respect to such Permitted Investment and the Agent directs the Servicer in writing to dispose of such Permitted Investment.

Section 2.9 PDCo Advances. If, on any Settlement Date occurring when the Hedging Agreement is required to be in effect pursuant to Section 7.3 but such Hedging Agreement is not in full force and effect, Finance Charge Collections are insufficient to pay the amounts set forth in clauses second and third of Section 2.2(c), PDCo shall advance, by payment to the Agent for the account of the Purchasers, an amount equal to the lesser of (a) such shortfall and (b) the product of (i) 5% minus Excess Spread (to the extent that Excess Spread is less than 5% but greater than zero) and (ii) the aggregate Outstanding Balance of all Receivables. The obligations of PDCo under the preceding sentence shall be absolute and irrevocable, and shall not be affected by any termination of PDCo as Servicer pursuant to Section 8.1 or by any other event.

ARTICLE III
CONDUIT FUNDING

Section 3.1 CP Costs. Seller shall pay CP Costs with respect to the Capital associated with each Purchaser Interest of Conduit for each day that any Capital in respect of such Purchaser Interest is outstanding.

Section 3.2 CP Costs Payments. On each Settlement Date, Seller shall pay to the Agent (for the benefit of Conduit) an aggregate amount equal to all accrued and unpaid CP Costs in respect of the Capital associated with all Purchaser Interests of Conduit for the related Settlement Period in accordance with Article II.

Section 3.3 Calculation of CP Costs. On the third Business Day immediately preceding each Settlement Date, Conduit shall calculate the aggregate amount of CP Costs for the related Settlement Period and shall notify Seller of such aggregate amount.

ARTICLE IV
FINANCIAL INSTITUTION FUNDING

Section 4.1 Financial Institution Funding. Each Purchaser Interest of the Financial Institutions shall accrue Financial Institution Yield for each day during its Tranche Period at either the LIBO Rate or the Prime Rate in accordance with the terms and conditions hereof. Until Seller gives notice to the Agent of another Discount Rate in

PATTERSON RECEIVABLES PURCHASE AGREEMENT

accordance with Section 4.4, the initial Discount Rate for any Purchaser Interest transferred to the Financial Institutions pursuant to the terms and conditions hereof shall be the Prime Rate. If the Financial Institutions acquire by assignment from Conduit any Purchaser Interest pursuant to Article XIII, each Purchaser Interest so assigned shall each be deemed to have a new Tranche Period commencing on the date of any such assignment.

Section 4.2 Financial Institution Yield Payments. On the Settlement Date for each Purchaser Interest of the Financial Institutions, Seller shall pay to the Agent (for the benefit of the Financial Institutions) an aggregate amount equal to the accrued and unpaid Financial Institution Yield for the entire Tranche Period of each such Purchaser Interest in accordance with Article II.

Section 4.3 Selection and Continuation of Tranche Periods.

(a) With consultation from (and approval by) the Agent, Seller shall from time to time request Tranche Periods for the Purchaser Interests of the Financial Institutions, provided that, if at any time the Financial Institutions shall have a Purchaser Interest, Seller shall always request Tranche Periods such that at least one Tranche Period shall end on the date specified in clause (A) of the definition of Settlement Date.

(b) Seller or the Agent, upon notice to and consent by the other received at least three (3) Business Days prior to the end of a Tranche Period (the "Terminating Tranche") for any Purchaser Interest, may, effective on the last day of the Terminating Tranche: (i) divide any such Purchaser Interest into multiple Purchaser Interests, (ii) combine any such Purchaser Interest with one or more other Purchaser Interests that have a Terminating Tranche ending on the same day as such Terminating Tranche or (iii) combine any such Purchaser Interest with a new Purchaser Interests to be purchased on the day such Terminating Tranche ends, provided, that in no event may a Purchaser Interest of Conduit be combined with a Purchaser Interest of the Financial Institutions.

Section 4.4 Financial Institution Discount Rates. Seller may select the LIBO Rate or the Prime Rate for each Purchaser Interest of the Financial Institutions. Seller shall by 11:00 a.m. (Chicago time): (i) at least three (3) Business Days prior to the expiration of any Terminating Tranche with respect to which the LIBO Rate is being requested as a new Discount Rate and (ii) at least one (1) Business Day prior to the expiration of any Terminating Tranche with respect to which the Prime Rate is being requested as a new Discount Rate, give the Agent irrevocable notice of the new Discount Rate for the Purchaser Interest associated with such Terminating Tranche. Until Seller gives notice to the Agent of another Discount Rate, the initial Discount Rate for any Purchaser Interest transferred to the Financial Institutions pursuant to the terms and conditions hereof shall be the Prime Rate.

PATTERSON RECEIVABLES PURCHASE AGREEMENT

Section 4.5 Suspension of the LIBO Rate. If any Financial Institution notifies the Agent that it has determined that funding its Pro Rata Share of the Purchaser Interests of the Financial Institutions at a LIBO Rate would violate any applicable law, rule, regulation, or directive of any governmental or regulatory authority, whether or not having the force of law, or that (i) deposits of a type and maturity appropriate to match fund its Purchaser Interests at such LIBO Rate are not available or (ii) such LIBO Rate does not accurately reflect the cost of acquiring or maintaining a Purchaser Interest at such LIBO Rate, then the Agent shall suspend the availability of such LIBO Rate and require Seller to select the Prime Rate for any Purchaser Interest accruing Financial Institution Yield at such LIBO Rate.

ARTICLE V
REPRESENTATIONS AND WARRANTIES

Section 5.1 Representations and Warranties of the Seller Parties. Each Seller Party hereby represents and warrants to the Agent and the Purchasers, as to itself, as of the date hereof and as of the date of each Incremental Purchase that:

(a) Existence and Power. Such Seller Party is a corporation or limited liability company, as applicable, duly organized, validly existing and in good standing under the laws of its state of organization. Such Seller Party is duly qualified to do business and is in good standing as a foreign entity, and has and holds all power, corporate or otherwise, and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted, except where the failure to be so qualified or to have and hold such governmental licenses, authorization, consents and approvals could not reasonably be expected to have a Material Adverse Effect.

(b) Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case of Seller, Seller's use of the proceeds of purchases made hereunder, are within its powers and authority, corporate or otherwise, and have been duly authorized by all necessary action, corporate or otherwise, on its part. This Agreement and each other Transaction Document to which such Seller Party is a party has been duly executed and delivered by such Seller Party.

(c) No Conflict. The execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or organization, by-laws or limited liability company agreement (or equivalent governing documents), (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party

PATTERSON RECEIVABLES PURCHASE AGREEMENT

or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Seller Party or its Subsidiaries (except as created hereunder); and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.

(d) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.

(e) Actions, Suits. There are no actions, suits or proceedings pending, or to the best of such Seller Party's knowledge, threatened, against or affecting such Seller Party, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a Material Adverse Effect. Such Seller Party is not in default with respect to any order of any court, arbitrator or governmental body.

(f) Binding Effect. This Agreement and each other Transaction Document to which such Seller Party is a party constitute the legal, valid and binding obligations of such Seller Party enforceable against such Seller Party in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(g) Accuracy of Information. All information heretofore furnished by such Seller Party or any of its Affiliates to the Agent or the Purchasers for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Seller Party or any of its Affiliates to the Agent or the Purchasers 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.

(h) Use of Proceeds. No proceeds of any purchase hereunder will be used (i) for a purpose that violates, or would be inconsistent with, Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time

PATTERSON RECEIVABLES PURCHASE AGREEMENT

or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.

(i) Good Title. Immediately prior to each purchase hereunder, Seller shall be the legal and beneficial owner of the Receivables and Related Security with respect thereto, free and clear of any Adverse Claim, except as o created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller's ownership interest in each Receivable, its Collections and the Related Security.

(j) Perfection. This Agreement, together with the filing of the financing statements contemplated hereby, is effective to, and shall, upon each purchase hereunder, transfer to the Agent for the benefit of the relevant Purchaser or Purchasers (and the Agent for the benefit of such Purchaser or Purchasers shall acquire from Seller) a valid and perfected first priority undivided percentage ownership or security interest in each Receivable existing or hereafter arising and in the Related Security and Collections with respect thereto, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Agent's (on behalf of the Purchasers) ownership or security interest in the Receivables, the Related Security and the Collections.

(k) Jurisdiction of Organization; Places of Business and Locations of Records. The principal places of business, jurisdiction of organization and chief executive office of such Seller Party and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit III or such other locations of which the Agent has been notified in accordance with Section 7.2(a) in jurisdictions where all action requ ired by
Section 7.1(h) and/or Section 14.4(a) has been taken and completed. Such Seller party's organizational number assigned to it by its jurisdiction of organization and such Seller Party's Federal Employer Identification Number are correctly set forth on Exhibit III. Such Seller Party has not, within a period of one year prior to the date hereof, (i) changed the location of its principal place of business or chief executive office or its organizational structure, (ii) changed its legal name, (iii) become a "new debtor" (as defined in Section 9-102(a)(56) of the UCC in effect in the State of Minnesota) or (iv) changed its jurisdiction of organization. Seller is a Minnesota limited liability company and is a "registered organization" (within the meaning of Section 9-102 of the UCC in effect in the State of Minnesota).

(l) Collections. The conditions and requirements set forth in
Section 7.1(j) and Section 8.2 have at all times been satisfied and duly performed. The

PATTERSON RECEIVABLES PURCHASE AGREEMENT

names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts at each Collection Bank and the post office box number of each Lock-Box or P.O. Box, are listed on Exhibit IV. Seller has not granted any Person, other than the Agent as contemplated by this Agreement, dominion and control or "control" (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of any Lock-Box, P.O. Box or Collection Account, or the right to take dominion and control or "control" (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of any such Lock-Box, P.O. Box or Collection Account at a future time or upon the occurrence of a future event. Each Seller Party has taken all steps necessary to ensure that the Agent has "control" (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) over all Collection Accounts. Such Seller Party has the ability to identify, within one Business Day of deposit, all amounts that are deposited to any First Tier Account as constituting Collections or non-Collections. No funds other than the proceeds of Receivables are deposited to the Second-Tier Account.

(m) Material Adverse Effect. (i) The initial Servicer represents and warrants that since January 26, 2002, no event has occurred that would have a material adverse effect on the financial condition or operations of the initial Servicer and its Subsidiaries or the ability of the initial Servicer to perform its obligations under this Agreement, and (ii) Seller represents and warrants that since the date of this Agreement, no event has occurred that would have a material adverse effect on (A) the financial condition or operations of Seller, (B) the ability of Seller to perform its obligations under the Transaction Documents, or (C) the collectibility of the Receivables generally or any material portion of the Receivables.

(n) Names. In the past five (5) years, Seller has not used any corporate or other names, trade names or assumed names other than the name in which it has executed this Agreement.

(o) Ownership of Seller. PDCo owns, directly or indirectly, 100% of the issued and outstanding membership units of Seller, free and clear of any Adverse Claim. Such membership units are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Seller.

(p) Not a Holding Company or an Investment Company. Such Seller Party is not a "holding company" or a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or any successor statute. Such Seller Party is not and, after giving effect to the transactions contemplated hereby, will not be required to be registered as, an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or any successor statute.

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(q) Compliance with Law. Such Seller Party has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Averse Effect. Each Receivable, together with the Contract related thereto, does not contravene 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 no part of such Contract is in violation of any such law, rule or regulation.

(r) Compliance with Credit and Collection Policy. Such Seller Party has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any material change to such Credit and Collection Policy, except such material change as to which the Agent has been notified in accordance with Section 7.1(a)(vii).

(s) Payments to Originators. With respect to each Receivable transferred to Seller under the Receivables Sale Agreement, Seller has given reasonably equivalent value to the applicable Originator in consideration therefor and such transfer was not made for or on account of an antecedent debt. No transfer by any Originator of any Receivable under the Receivables Sale Agreement is or may be voidable under any section of the Federal Bankruptcy Code.

(t) Enforceability of Contracts. Each Contract with respect to each Receivable is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(u) Eligible Receivables. Each Receivable included in the Net Receivables Balance as an Eligible Receivable was an Eligible Receivable on the date of its purchase under the Receivables Sale Agreement.

(v) Net Receivables Balance. Seller has determined that, immediately after giving effect to each purchase hereunder, the Net Receivables Balance is at least equal to the sum of (i) the Aggregate Capital, plus (ii) the Credit Enhancement.

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(w) Accounting. The manner in which such Seller Party accounts for the transactions contemplated by this Agreement and the Receivables Sale Agreement does not jeopardize the true sale analysis.

Section 5.2 Financial Institution Representations and Warranties. Each Financial Institution hereby represents and warrants to the Agent and Conduit that:

(a) Existence and Power. Such Financial Institution is a corporation or a banking association duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has all corporate power to perform its obligations hereunder.

(b) No Conflict. The execution and delivery by such Financial Institution of this Agreement and the performance of its obligations hereunder are within its corporate powers, have been duly authorized by all necessary corporate action, do not contravene or violate (i) its certificate or articles of incorporation or association or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on its assets. This Agreement has been duly authorized, executed and delivered by such Financial Institution.

(c) Governmental Authorization. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Financial Institution of this Agreement and the performance of its obligations hereunder.

(d) Binding Effect. This Agreement constitutes the legal, valid and binding obligation of such Financial Institution enforceable against such Financial Institution in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law).

ARTICLE VI
CONDITIONS OF PURCHASES

Section 6.1 Conditions Precedent to Initial Incremental Purchase. The initial Incremental Purchase of a Purchaser Interest under this Agreement is subject to the conditions precedent that (a) the Agent shall have received on or before the date of such

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purchase those documents listed on Schedule B, (b) the Agent shall have received all fees and expenses required to be paid on or prior to such date pursuant to the terms of this Agreement and the Fee Letter, (c) Seller shall have marked its books and records with a legend satisfactory to the Agent identifying the Agent's interest therein, (d) the Agent shall have completed to its satisfaction a due diligence review of each Originator's and Seller's billing, collection and reporting systems and other items related to the Receivables and (e) each of the Purchasers shall have received the approval of its credit committee of the transactions contemplated hereby.

Section 6.2 Conditions Precedent to All Purchases. Each purchase of a Purchaser Interest (other than pursuant to Section 13.1) shall be subject to the further conditions precedent that (a) in the case of each such purchase:
(i) the Servicer shall have delivered to the Agent on or prior to the date of such purchase, in form and substance satisfactory to the Agent, all Monthly Reports as and when due under Section 8.5 and (ii) upon the Agent's request, the Servicer shall have delivered to the Agent at least three (3) days prior to such purchase an interim Monthly Report showing the amount of Eligible Receivables;
(b) the Facility Termination Date shall not have occurred; (c) the Agent shall have received a duly executed Purchase Notice and such other approvals, opinions or documents as it may reasonably request, (d) if required to be in effect pursuant to Section 7.3, the Hedging Agreement shall be in full force and effect and (e) on the date of each such Incremental Purchase, the following statements shall be true (and acceptance of the proceeds of such Incremental Purchase shall be deemed a representation and warranty by Seller that such statements are then true):

(i) the representations and warranties set forth in
Section 5.1 are true and correct on and as of the date of such Incremental Purchase as though made on and as of such date;

(ii) no event has occurred and is continuing, or would result from such Incremental Purchase, that will constitute an Amortization Event, and no event has occurred and is continuing, or would result from such Incremental Purchase, that would constitute a Potential Amortization Event; and

(iii) the Aggregate Capital does not exceed the Purchase Limit and the aggregate Purchaser Interests do not exceed 100%.

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ARTICLE VII
COVENANTS

Section 7.1 Affirmative Covenants of The Seller Parties. Until the date on which the Aggregate Unpaids have been indefeasibly paid in full and this Agreement terminates in accordance with its terms, each Seller Party hereby covenants, as to itself, as set forth below:

(a) Financial Reporting. Such Seller Party will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish or cause to be furnished to the Agent:

(i) Annual Reporting. Within 90 days after the close of each of its respective fiscal years, (x) audited, unqualified consolidated financial statements (which shall include balance sheets, statements of income and retained earnings and a statement of cash flows) for PDCo and its consolidated Subsidiaries for such fiscal year certified in a manner acceptable to the Agent by independent public accountants acceptable to the Agent and (y) unaudited balance sheets of Seller as at the close of such fiscal year and statements of income and retained earnings and a statement of cash flows for Seller for such fiscal year, all certified by its chief financial officer. Delivery within the time period specified above of PDCo's annual report on Form 10-K for such fiscal year (together with PDCo's annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Securities Exchange Act of 1934, as amended) prepared in accordance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of clause (x) of this Section 7.1(a)(i), provided that the report of the independent public accountants contained therein is acceptable to the Agent.

(ii) Quarterly Reporting. Within 45 days after the close of the first three (3) quarterly periods of each of its respective fiscal years, unaudited balance sheets of PDCo as at the close of each such period and statements of income and retained earnings and a statement of cash flows for PDCo for the period from the beginning of such fiscal year to the end of such quarter, all certified by its chief financial officer. Delivery within the time period specified above of copies of PDCo's quarterly report Form 10-Q for such fiscal quarter prepared in accordance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the foregoing requirements of this Section 7.1(a)(ii).

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(iii) Compliance Certificate. Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit V signed by such Seller Party's Authorized Officer and dated the date of such annual financial statement or such quarterly financial statement, as the case may be.

(iv) Shareholders Statements and Reports. Promptly upon the furnishing thereof to the shareholders of such Seller Party copies of all financial statements, reports and proxy statements so furnished.

(v) S.E.C. Filings. Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which PDCo, any Originator or any of their respective Subsidiaries files with the Securities and Exchange Commission.

(vi) Copies of Notices. Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than the Agent or Conduit, copies of the same.

(vii) Change in Credit and Collection Policy. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such change or amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables, requesting the Agent's consent thereto.

(viii) Sale Assignments. Promptly upon its receipt of any Sale Assignment under and as defined in the Receivables Sale Agreement, copies of the same.

(ix) Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Seller Party as the Agent may from time to time reasonably request in

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order to protect the interests of the Agent and the Purchasers under or as contemplated by this Agreement.

(b) Notices. Such Seller Party will notify the Agent in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:

(i) Amortization Events or Potential Amortization Events. The occurrence of each Amortization Event and each Potential Amortization Event, by a statement of an Authorized Officer of such Seller Party.

(ii) Judgment and Proceedings. (A) (1) The entry of any judgment or decree against the Servicer or any of its respective Subsidiaries if the aggregate amount of all judgments and decrees then outstanding against the Servicer and its Subsidiaries exceeds $1,000,000 and (2) the institution of any litigation, arbitration proceeding or governmental proceeding against the Servicer that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and (B) the entry of any judgment or decree or the institution of any litigation, arbitration proceeding or governmental proceeding against Seller.

(iii) Material Adverse Effect. The occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect.

(iv) Termination Date. The occurrence of the "Termination Date" under and as defined in the Receivables Sale Agreement.

(v) Defaults Under Other Agreements. The occurrence of a default or an event of default under any other financing arrangement pursuant to which such Seller Party is a debtor or an obligor.

(vi) Downgrade of PDCo or any Originator. Any downgrade in the rating of any Indebtedness of PDCo or any Originator by Standard & Poor's Ratings Services or by Moody's Investors Service, Inc., setting forth the Indebtedness affected and the nature of such change.

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(c) Compliance with Laws and Preservation of Existence. Such Seller Party will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Such Seller Party will preserve and maintain its legal existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign entity in each jurisdiction where its business is conducted, except where the failure to so preserve and maintain any such rights, franchises or privileges or to so qualify could not reasonably be expected to have a Material Adverse Effect.

(d) Audits. Such Seller Party will furnish to the Agent from time to time such information with respect to it and the Receivables as the Agent may reasonably request. Such Seller Party will, from time to time during regular business hours as requested by the Agent upon reasonable notice and at the sole cost of such Seller Party, permit the Agent, or its agents or representatives, (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person relating to the Receivables and the Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person's financial condition or the Receivables and the Related Security or any Person's performance under any of the Transaction Documents or any Person's performance under the Contracts and, in each case, with any of the officers or employees of Seller or the Servicer having knowledge of such matters. Without limiting the foregoing, such Seller Party will, annually and prior to any Financial Institution renewing its Commitment hereunder, during regular business hours as requested by the Agent upon reasonable notice and at the sole cost of such Seller Party, permit the Agent, or its agents or representatives, to conduct a follow-up audit.

(e) Keeping and Marking of Records and Books.

(i) The Servicer will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable). The Servicer will give the Agent notice of any material change in the administrative and operating procedures referred to in the previous sentence.

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(ii) Such Seller Party will (A) on or prior to the date hereof, mark its master data processing records and other books and records relating to the Purchaser Interests with a legend, acceptable to the Agent, describing the Purchaser Interests and (B) upon the request of the Agent (x) mark each Contract with a legend describing the Purchaser Interests and (y) deliver to the Agent all Contracts (including, without limitation, all multiple originals of any such Contract) relating to the Receivables.

(f) Compliance with Contracts and Credit and Collection Policy. Such Seller Party will timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and (ii) comply in all respects with the Credit and Collection Policy in regard to each Receivable and the related Contract.

(g) Performance and Enforcement of Receivables Sale Agreement. Seller will, and will require each Originator to, perform each of their respective obligations and undertakings under and pursuant to the Receivables Sale Agreement, will purchase Receivables thereunder in strict compliance with the terms thereof and will vigorously enforce the rights and remedies accorded to Seller under the Receivables Sale Agreement. Seller will take all actions to perfect and enforce its rights and interests (and the rights and interests of the Agent and the Purchasers as assignees of Seller) under the Receivables Sale Agreement as the Agent may from time to time reasonably request, including, without limitation, making claims to which it may be entitled under any indemnity, reimbursement or similar provision contained in the Receivables Sale Agreement.

(h) Ownership. Seller will take all necessary action to (i) vest legal and equitable title to the Receivables, the Related Security and the Collections purchased under the Receivables Sale Agreement irrevocably in Seller, free and clear of any Adverse Claims other than Adverse Claims in favor of the Agent and the Purchasers (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller's interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Seller therein as the Agent may reasonably request), and (ii) establish and maintain, in favor of the Agent, for the benefit of the Purchasers, a valid and perfected first priority undivided percentage ownership interest (and/or a valid and perfected first priority security interest) in all Receivables, Related Security and Collections to the full extent contemplated herein, free and clear of any Adverse Claims other than Adverse Claims in favor of the

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Agent for the benefit of the Purchasers (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Agent's (for the benefit of the Purchasers) interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of the Agent for the benefit of the Purchasers as the Agent may reasonably request).

(i) Purchasers' Reliance. Seller acknowledges that the Purchasers are entering into the transactions contemplated by this Agreement in reliance upon Seller's identity as a legal entity that is separate from each Patterson Entity and their respective Affiliates. Therefore, from and after the date of execution and delivery of this Agreement, Seller will take all reasonable steps, including, without limitation, all steps that the Agent or any Purchaser may from time to time reasonably request, to maintain Seller's identity as a separate legal entity and to make it manifest to third parties that Seller is an entity with assets and liabilities distinct from those of each Patterson Entity and any Affiliates thereof and not just a division of any Patterson Entity. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, Seller will:

(A) conduct its own business in its own name and require that all full-time employees of Seller, if any, identify themselves as such and not as employees of any Patterson Entity (including, without limitation, by means of providing appropriate employees with business or identification cards identifying such employees as Seller's employees);

(B) compensate all employees, consultants and agents directly, from Seller's own funds, for services provided to Seller by such employees, consultants and agents and, to the extent any employee, consultant or agent of Seller is also an employee, consultant or agent of any Patterson Entity or any Affiliate thereof, allocate the compensation of such employee, consultant or agent between Seller and such Patterson Entity or such Affiliate, as applicable on a basis that reflects the services rendered to Seller and such Patterson Entity or such Affiliate, as applicable;

(C) clearly identify its offices (by signage or otherwise) as its offices and, if such office is located in the offices of any Patterson Entity or an Affiliate thereof, Seller will lease such office at a fair market rent;

(D) have a separate telephone number, which will be answered only in its name and separate stationery, invoices and checks in its own name;

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(E) conduct all transactions with each Patterson Entity and the Servicer and their respective Affiliates strictly on an arm's-length basis, allocate all overhead expenses (including, without limitation, telephone and other utility charges) for items shared between Seller and any Patterson Entity or any Affiliate thereof on the basis of actual use to the extent practicable and, to the extent such allocation is not practicable, on a basis reasonably related to actual use;

(F) at all times have a Board of Governors consisting of three members, at least one member of which is an Independent Governor;

(G) observe all limited liability company formalities as a distinct entity, and ensure that all limited liability company actions relating to (1) the selection, maintenance or replacement of the Independent Governor, (2) the dissolution or liquidation of Seller or (3) the initiation of, participation in, acquiescence in or consent to any bankruptcy, insolvency, reorganization or similar proceeding involving Seller, are duly authorized by unanimous vote of its Board of Governors (including the Independent Governor);

(H) maintain Seller's books and records separate from those of each Patterson Entity and any Affiliate thereof and otherwise readily identifiable as its own assets rather than assets of any Patterson Entity and any Affiliate thereof;

(I) prepare its financial statements separately from those of each Patterson Entity and insure that any consolidated financial statements of any Patterson Entity or any Affiliate thereof that include Seller, including any that are filed with the Securities and Exchange Commission or any other governmental agency have notes clearly stating that Seller is a separate legal entity and that its assets will be available first and foremost to satisfy the claims of the creditors of Seller;

(J) except as herein specifically otherwise provided, maintain the funds or other assets of Seller separate from, and not commingled with, those of any Patterson Entity or any Affiliate thereof and only maintain bank accounts or other depository accounts to which Seller alone (or the Servicer in the performance of its duties hereunder) is the account party and from which Seller alone (or the Servicer in the performance of its duties hereunder or the Agent hereunder) has the power to make withdrawals;

(K) pay all of Seller's operating expenses from Seller's own assets (except for certain payments by any Patterson Entity or other Persons

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pursuant to allocation arrangements that comply with the requirements of this
Section 7.1(i));

(L) operate its business and activities such that: it does not engage in any business or activity of any kind, or enter into any transaction or indenture, mortgage, instrument, agreement, contract, lease or other undertaking, other than the transactions contemplated and authorized by this Agreement and the Receivables Sale Agreement; and does not create, incur, guarantee, assume or suffer to exist any Indebtedness or other liabilities, whether direct or contingent, other than (1) as a result of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, (2) the incurrence of obligations under this Agreement, (3) the incurrence of obligations, as expressly contemplated in the Receivables Sale Agreement, to make payment to the Originators thereunder for the purchase of Receivables from the Originators under the Receivables Sale Agreement, and (4) the incurrence of operating expenses in the ordinary course of business of the type otherwise contemplated by this Agreement;

(M) maintain its articles of organization and bylaws in conformity with this Agreement, such that it does not amend, restate, supplement or otherwise modify its articles of organization or bylaws in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents, including, without limitation, Section 7.1(i) of this Agreement;

(N) maintain the effectiveness of, and continue to perform under the Receivables Sale Agreement, the Performance Undertaking and the other Transaction Documents, such that it does not amend, restate, supplement, cancel, terminate or otherwise modify the Receivables Sale Agreement, the Performance Undertaking or any other Transaction Document, or give any consent, waiver, directive or approval thereunder or waive any default, action, omission or breach under the Receivables Sale Agreement, the Performance Undertaking, or any other Transaction Document, or otherwise grant any indulgence thereunder, without (in each case) the prior written consent of the Agent;

(O) maintain its legal separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time create, have, acquire, maintain or hold any interest in any Subsidiary;

(P) maintain at all times the Required Capital Amount (as defined in the Receivables Sale Agreement) and refrain from making any

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dividend, distribution, redemption of membership units or payment of any subordinated Indebtedness or other liabilities which would cause the Required Capital Amount to cease to be so maintained; and

(Q) take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinion issued by Briggs and Morgan, Professional Association, as counsel for Seller, in connection with the closing or initial Incremental Purchase under this Agreement and relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in all material respects at all times.

(j) Collections. Such Seller Party will cause (1) all items from all P.O. Boxes to be processed and deposited into a Collection Account within 1 Business Day after receipt in a P.O. Box, all ACH Receipts to be deposited immediately to a Collection Account and all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account, (2) all Collections deposited to any First-Tier Account to be electronically swept or otherwise transferred to the Second-Tier Account within 1 Business Day of being deposited to such First-Tier Account, and (3) each Lock-Box, P.O. Box and Collection Account to be subject at all times to a Collection Account Agreement that is in full force and effect. In the event any payments relating to Receivables are remitted directly to any Seller Party or any Affiliate of any Seller Party, such Seller Party will remit (or will cause all such payments to be remitted) directly to a Collection Bank and deposited into a Collection Account within 1 Business Day following receipt thereof, and, at all times prior to such remittance, such Seller Party or Affiliate will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of the Agent and the Purchasers. Seller will maintain exclusive ownership, dominion and control (subject to the terms of this Agreement) of each Lock-Box, P.O. Box and Collection Account and shall not grant the right to take dominion and control or establish "control" (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of any Lock-Box, P.O. Box or Collection Account at a future time or upon the occurrence of a future event to any Person, except to the Agent as contemplated by this Agreement. With respect to each Collection Account, each Seller Party shall take all steps necessary to ensure that the Agent has "control" (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) over each such Collection Account.

(k) Taxes. Such Seller Party will file all tax returns and reports required by law to be filed by it and will promptly pay all taxes and governmental charges at any time owing. Seller will pay when due any taxes payable in connection with the Receivables, exclusive of taxes on or measured by income or gross receipts of Conduit, the Agent or any Financial Institution.

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(l) Insurance. Seller will maintain in effect, or cause to be maintained in effect, at Seller's own expense, such casualty and liability insurance as Seller shall deem appropriate in its good faith business judgment. The Agent, for the benefit of the Purchasers, shall be named as an additional insured with respect to all such liability insurance maintained by Seller. Seller will pay or cause to be paid, the premiums therefor and deliver to the Agent evidence satisfactory to the Agent of such insurance coverage. Copies of each policy shall be furnished to the Agent and any Purchaser in certificated form upon the Agent's or such Purchaser's request. The foregoing requirements shall not be construed to negate, reduce or modify, and are in addition to, Seller's obligations hereunder.

(m) Payments to Originators. With respect to any Receivable purchased by Seller from any Originator, such sale shall be effected under, and in strict compliance with the terms of, the Receivables Sale Agreement, including, without limitation, the terms relating to the amount and timing of payments to be made to such Originator in respect of the purchase price for such Receivable.

Section 7.2 Negative Covenants of The Seller Parties. Until the date on which the Aggregate Unpaids have been indefeasibly paid in full and this Agreement terminates in accordance with its terms, each Seller Party hereby covenants, as to itself, that:

(a) Name Change, Offices and Records. Such Seller Party will not change its name, jurisdiction of organization, identity or organizational structure (within the meaning of Sections 9-503 and/or 9-507 of the UCC of all applicable jurisdictions) or relocate its chief executive office, principal place of business or any office where Records are kept unless it shall have: (i) given the Agent at least forty-five (45) days' prior written notice thereof and
(ii) delivered to the Agent all financing statements, instruments and other documents requested by the Agent in connection with such change or relocation.

(b) Change in Payment Instructions to Obligors. Except as may be required by the Agent pursuant to Section 8.2(b), such Seller Party will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box, P.O. Box or Collection Account, unless the Agent shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account, P.O. Box or Lock-Box, an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box or P.O. Box; provided, however, that the Servicer may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account.

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(c) Modifications to Contracts and Credit and Collection Policy. Such Seller Party will not make any change to the Credit and Collection Policy that could adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables. Except as provided in Section 8.2(d), the Servicer will not extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy.

(d) Sales, Liens. Seller will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Receivable, Related Security or Collections, or upon or with respect to any Contract under which any Receivable arises, or any Lock-Box, P.O. Box or Collection Account, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in favor of the Agent and the Purchasers provided for herein), and Seller will defend the right, title and interest of the Agent and the Purchasers in, to and under any of the foregoing property, against all claims of third parties claiming through or under Seller or any Originator. Seller will not create or suffer to exist any mortgage, pledge, security interest, encumbrance, lien, charge or other similar arrangement on any of its inventory, the financing or lease of which gives rise to any Receivable.

(e) Net Receivables Balance. At no time prior to the Amortization Date shall Seller permit the Net Receivables Balance to be less than an amount equal to the sum of (i) the Aggregate Capital plus (ii) the Credit Enhancement.

(f) Termination Date Determination. Seller will not designate the Termination Date (as defined in the Receivables Sale Agreement), or send any written notice to any Originator in respect thereof, without the prior written consent of the Agent, except with respect to the occurrence of such Termination Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.

(g) Restricted Junior Payments. From and after the occurrence of any Amortization Event, Seller will not make any Restricted Junior Payment if, after giving effect thereto, Seller would fail to meet its obligations set forth in Section 7.2(e).

(h) Collections. No Seller Party will deposit or otherwise credit, or cause or permit to be so deposited or credited, to the Second-Tier Account cash or cash proceeds other than Collections. Except as may be required by the Agent pursuant to the last sentence of Section 8.2(b), no Seller Party will deposit or otherwise credit, or cause or permit to be so deposited or credited, any Collections or proceeds thereof to any lock-box account or to any other account not covered by a Collection Account Agreement.

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Section 7.3 Hedging Agreement. If at any time, Excess Spread shall be less than 5% and PDCo shall have an unsecured, unguaranteed, long-term debt rating of less than A- as rated and determined by Bank One in accordance with its internal credit standards, the Conduit shall enter into an interest rate hedge agreement with the Hedge Provider pursuant to which Conduit shall have the fixed rate obligation and the Hedge Provider shall have the floating rate obligation (such hedge agreement, together with the related confirmations and schedules thereunder, the "Hedging Agreement"). The obligations under the Hedging Agreement shall be based upon a schedule of notional amounts that shall initially equal the Aggregate Capital of all Purchaser Interests outstanding at the time such Hedging Agreement is entered into and shall decline over time. On the date of each Incremental Purchase occurring thereafter, such notional amounts shall be amended to reflect a future anticipated amount of Aggregate Capital, based upon scheduled payments and an anticipated level of defaults on the Receivables and, on the Settlement Date occurring after each such Incremental Purchase, the Hedge Fixed Rate shall be re-set to an interest rate agreed to by the Conduit and the Hedge Provider, and if Bank One is then acting as Hedge Provider, the Agent shall notify Seller of such interest rate. After the Hedging Agreement has been entered into in accordance with the terms of this
Section 7.3, on each Settlement Date, the Hedge Provider shall be obligated to pay the Hedge Floating Amount to the Agent, for the account of the Purchasers and distribution pursuant to Article II and the Hedge Provider shall be entitled to receive out of Finance Charge Collections, the Hedge Fixed Amount. If a Hedge Provider Downgrade shall occur, within 10 days thereof, the then current Hedge Provider shall transfer its obligations under this Agreement and the Hedging Agreement, at the Hedge Provider's cost and expense, to a bank or other financial institution acceptable to the Agent and consented to by Seller (such consent not to be unreasonably withheld) which possesses an unsecured, unguaranteed, long-term debt rating of A- or better by Standard & Poor's Ratings Service and A3 or better by Moody's Investors Service.

ARTICLE VIII
ADMINISTRATION AND COLLECTION

Section 8.1 Designation of Servicer. (a) The servicing, administration and collection of the Receivables shall be conducted by such Person (the "Servicer") so designated from time to time in accordance with this
Section 8.1. PDCo is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms of this Agreement. The Agent may at any time following the occurrence of an Amortization Event designate as Servicer any Person to succeed PDCo or any successor Servicer.

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(b) Without the prior written consent of the Agent and the Required Financial Institutions, PDCo shall not be permitted to delegate any of its duties or responsibilities as Servicer to any Person other than (i) an Originator (with respect to Receivables originated by such Originator), (ii) Seller and (iii) with respect to certain Charged-Off Receivables, outside collection agencies and lawyers in accordance with its customary practices. None of Seller or any Originator shall be permitted to further delegate to any other Person any of the duties or responsibilities of the Servicer delegated to it by PDCo. If at any time the Agent shall designate as Servicer any Person other than PDCo, all duties and responsibilities theretofore delegated by PDCo to Seller and any Originator may, at the discretion of the Agent, be terminated forthwith on notice given by the Agent to PDCo and to Seller.

(c) Notwithstanding the foregoing subsection (b), (i) PDCo shall be and remain primarily liable to the Agent and the Purchasers and the Hedge Provider (if any) for the full and prompt performance of all duties and responsibilities of the Servicer hereunder and (ii) the Agent and the Purchasers shall be entitled to deal exclusively with PDCo in matters relating to the discharge by the Servicer of its duties and responsibilities hereunder. The Agent and the Purchasers shall not be required to give notice, demand or other communication to any Person other than PDCo in order for communication to the Servicer and its sub-servicer or other delegate with respect thereto to be accomplished. PDCo, at all times that it is the Servicer, shall be responsible for providing any sub-servicer or other delegate of the Servicer with any notice given to the Servicer under this Agreement.

Section 8.2 Duties of Servicer. (a) The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Receivable from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy.

(b) The Servicer will instruct all Obligors to pay all Collections either (i) directly to a Collection Account by means of an automatic electronic funds transfer, wire transfer or otherwise or (ii) directly to a Lock-Box or P.O. Box. The Servicer shall cause any payments made by means of automatic electronic funds transfer to be deposited directly into a Collection Account from each Obligor's relevant account. The Servicer shall effect a Collection Account Agreement substantially in the form of Exhibit VI with each bank party to a Collection Account at any time. In the case of any remittances received in any Lock-Box, P.O. Box or Collection Account that shall have been identified, to the satisfaction of the Servicer, to not constitute Collections or other proceeds of the Receivables or the Related Security, the Servicer shall promptly remit such items to the Person identified to it as being the owner of such remittances. From and after the date the Agent delivers a Collection Notice to any Collection Bank or a Postal Notice to any post office pursuant to Section 8.3, the Agent may request that the Servicer, and the Servicer

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thereupon promptly shall instruct all Obligors with respect to the Receivables, to remit all payments thereon to a new lock-box, post office box or depositary account specified by the Agent and, at all times thereafter, Seller and the Servicer shall not deposit or otherwise credit, and shall not permit any other Person to deposit or otherwise credit to such new lock-box, post office box or depositary account any cash or payment item other than Collections.

(c) The Servicer shall administer the Collections in accordance with the procedures described herein and in Article II. The Servicer shall set aside and hold in trust for the account of Seller, the Purchasers and the Hedge Provider (if any) their respective shares of the Collections in accordance with Article II. The Servicer shall, upon the request of the Agent, segregate, in a manner acceptable to the Agent, all cash, checks and other instruments received by it from time to time constituting Collections from the general funds of the Servicer or Seller prior to the remittance thereof in accordance with Article II. If the Servicer shall be required to segregate Collections pursuant to the preceding sentence, the Servicer shall segregate and deposit with a bank designated by the Agent such allocable share of Collections of Receivables set aside for the Purchasers on the first Business Day following receipt by the Servicer of such Collections, duly endorsed or with duly executed instruments of transfer.

(d) The Servicer may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable or adjust the Outstanding Balance of any Receivable as the Servicer determines to be appropriate to maximize Collections thereof; provided, however, that such extension or adjustment shall not alter the status of such Receivable as a Delinquent Receivable, Defaulted Receivable or Charged-Off Receivable or limit the rights of the Agent or the Purchasers under this Agreement. Notwithstanding anything to the contrary contained herein, the Agent shall have the absolute and unlimited right to direct the Servicer to commence or settle any legal action with respect to any Receivable or to foreclose upon or repossess any Related Security.

(e) The Servicer shall hold in trust for Seller and the Purchasers all Records that (i) evidence or relate to the Receivables, the related Contracts and Related Security or (ii) are otherwise necessary or desirable to collect the Receivables and shall, as soon as practicable upon demand of the Agent, deliver or make available to the Agent all such Records, at a place selected by the Agent. The Servicer shall, as soon as practicable following receipt thereof turn over to Seller any cash collections or other cash proceeds received with respect to Indebtedness not constituting Receivables. The Servicer shall, from time to time at the request of any Purchaser, furnish to the Purchasers (promptly after any such request) a calculation of the amounts set aside for the Purchasers pursuant to Article II.

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(f) Any payment by an Obligor in respect of any Indebtedness or other liability owed by it to the applicable Originator or Seller shall, except as otherwise specified by such Obligor or otherwise required by contract or law and unless otherwise instructed by the Agent, be applied as a Collection of any Receivable of such Obligor (starting with the oldest such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other obligation of such Obligor.

Section 8.3 Collection Notices. The Agent is authorized at any time after the occurrence of an Amortization Event to date and to deliver to the Collection Banks the Collection Notices and to date and deliver the Postal Notices to the applicable post offices. Seller hereby transfers to the Agent for the benefit of the Purchasers, effective when the Agent delivers such notices, the dominion and control and "control" (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of each Lock-Box, P. O. Box, each Collection Account and the amounts on deposit therein. In case any authorized signatory of Seller whose signature appears on a Collection Account Agreement shall cease to have such authority before the delivery of such notice, such Collection Notice or Postal Notice shall nevertheless be valid as if such authority had remained in force. Seller hereby authorizes the Agent, and agrees that the Agent shall be entitled to (i) endorse Seller's name on checks and other instruments representing Collections, (ii) enforce the Receivables, the related Contracts and the Related Security and (iii) take such action as shall be necessary or desirable to cause all cash, checks and other instruments constituting Collections of Receivables to come into the possession of the Agent rather than Seller.

Section 8.4 Responsibilities of Seller. Anything herein to the contrary notwithstanding, the exercise by the Agent and the Purchasers of their rights hereunder shall not release the Servicer, any Originator or Seller from any of their duties or obligations with respect to any Receivables or under the related Contracts. The Purchasers shall have no obligation or liability with respect to any Receivables or related Contracts, nor shall any of them be obligated to perform the obligations of Seller.

Section 8.5 Reports. The Servicer shall prepare and forward to the Agent (i) three Business Days prior to each Settlement Date and at such times as the Agent shall request, a Monthly Report and (ii) at such times as the Agent shall request, a listing by Obligor of all Receivables together with an aging of such Receivables. Unless otherwise requested by the Agent, all computations in such Monthly Report shall be made as of the close of business on the last day of the Accrual Period preceding the date on which such Monthly Report is delivered.

Section 8.6 Servicing Fees. In consideration of PDCo's agreement to act as Servicer hereunder, the Purchasers hereby agree that, so long as PDCo shall continue to perform as Servicer hereunder, Seller shall pay over to PDCo a fee (the "Servicing Fee")

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on the 19/th/ calendar day of each month (or, if such day is not a Business Day, then the next Business Day thereafter), in arrears for the immediately preceding Fiscal Month, equal to 1% per annum of the average Net Receivables Balance during such period, as compensation for its servicing activities.

ARTICLE IX
AMORTIZATION EVENTS

Section 9.1 Amortization Events. The occurrence of any one or more of the following events shall constitute an "Amortization Event":

(a) Any Seller Party 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 Section 9.1(e)) or any other Transaction Document and such failure shall continue for seven (7) consecutive Business Days.

(b) Any representation, warranty, certification or statement made by any Seller Party in this Agreement, any other Transaction Document 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) Failure of Seller to pay any Indebtedness when due or the failure of any other Seller Party to pay Indebtedness when due in excess of $1,000,000; or the default by any Seller Party in the performance of any term, provision or condition contained in any agreement under which any such Indebtedness was created or is governed, the effect of which is to cause, or to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of any Seller Party shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof.

(d) (i) Any Seller Party, the Hedge Provider (if any), the Performance Provider or any of their respective Subsidiaries shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against any Seller Party, the Hedge Provider (if any), the Performance Provider or any of their respective Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or

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the appointment of a receiver, trustee or other similar official for it or any substantial part of its property, and solely in the case of the Servicer and the Performance Provider and a proceeding instituted against (and not by) such Person, such proceeding is not dismissed within 60 days or (iii) any Seller Party, the Hedge Provider (if any), the Performance Provider or any of their respective Subsidiaries shall take any corporate or other action to authorize any of the actions set forth in clauses (i) or (ii) above in this subsection (d).

(e) Seller shall fail to comply with the terms of Section 2.6 hereof.

(f) As at the end of any Fiscal Month:

(i) the average of the Delinquency Ratio for such Fiscal Month and each of the two immediately preceding Fiscal Months shall exceed 8.25%, or

(ii) the average of the Default Ratio for such Fiscal Month and each of the two immediately preceding Fiscal Months shall exceed 3.30%, or

(iii) Excess Spread is less than 4.0%.

(g) A Change of Control shall occur.

(h) A Hedge Provider Downgrade shall occur and a replacement Hedge Provider meeting the requirements of Section 7.3 fails to assume the then current Hedge Provider's obligations under this Agreement and the Hedging Agreement as provided in Section 7.3 after such occurrence.

(i) One or more final judgments for the payment of money shall be entered against Seller or (ii) one or more final judgments for the payment of money in an amount in excess of $1,000,000, individually or in the aggregate, shall be entered against the Servicer on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and such judgment shall continue unsatisfied and in effect for fifteen (15) consecutive days without a stay of execution.

(j) The "Termination Date" under and as defined in the Receivables Sale Agreement shall occur under the Receivables Sale Agreement or any Originator shall for any reason cease to transfer, or cease to have the legal capacity to transfer, or otherwise be incapable of transferring Receivables to Seller under the

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Receivables Sale Agreement; or Seller shall for any reason cease to purchase, or cease to have the legal capacity to purchase, or otherwise be incapable of accepting Receivables from any Originator under the Receivables Sale Agreement.

(k) This Agreement shall terminate in whole or in part (except in accordance with its terms), or shall cease to be effective or to be the legally valid, binding and enforceable obligation of Seller, or any Obligor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability, or the Agent for the benefit of the Purchasers shall cease to have a valid and perfected first priority security interest in the Receivables, the Related Security and the Collections with respect thereto and the Collection Accounts.

(l) If required to be in effect pursuant to Section 7.3, the Hedging Agreement shall for any reason not be in full force and effect.

(m) The Intercreditor Agreement shall terminate in whole or in part or shall cease to be in full force and effect or US Bank shall directly or indirectly contest in any manner the effectiveness or enforceability thereof.

(n) The Consolidated Tangible Net Worth of PDCo shall at any time be less than the sum of (i) $300,000,000, plus (ii) 50% of the cumulative positive quarterly Consolidated Net Income for all fiscal quarters of PDCo following the fiscal quarter of PDCo ending April 27, 2002 (without taking into account any net loss in any such fiscal quarter), plus (iii) 100% of the amount, if any, by which stockholder's equity of PDCo is, in accordance with GAAP, increased for all fiscal quarters of PDCo following the fiscal quarter of PDCo ending April 27, 2002 as a result of (A) the issuance of any capital stock of PDCo or (B) any Acquisition.

(o) The ratio of Consolidated Total Debt to Consolidated Adjusted EBITDA shall at any time be greater than 2.0 to 1.0.

(p) Performance Provider shall fail to perform or observe any term, covenant or agreement required to be performed by it under the Performance Undertaking, or the Performance Undertaking shall cease to be effective or to be the legally valid, binding and enforceable obligation of Performance Provider, or Performance Provider shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability.

Section 9.2 Remedies. Upon the occurrence and during the continuation of an Amortization Event, the Agent may, or upon the direction of the Required Financial Institutions shall, take any of the following actions: (i) replace the Person then acting as

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Servicer, (ii) declare the Amortization Date to have occurred, whereupon the Amortization Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Seller Party; provided, however, that upon the occurrence of an Amortization Event described in Section 9.1(d), or of an actual or deemed entry of an order for relief with respect to any Seller Party under the Federal Bankruptcy Code or under any other applicable bankruptcy, insolvency, arrangement, moratorium or similar laws of any other jurisdiction (foreign or domestic), the Amortization Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Seller Party, (iii) to the fullest extent permitted by applicable law, declare that the Default Fee shall accrue with respect to any of the Aggregate Unpaids outstanding at such time, (iv) deliver the Collection Notices to the Collection Banks and the Postal Notices to any post office where a P.O. Box is located, and (v) notify Obligors of the Purchasers' interest in the Receivables. The aforementioned rights and remedies shall be without limitation, and shall be in addition to all other rights and remedies of the Agent and the Purchasers otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative.

ARTICLE X
INDEMNIFICATION

Section 10.1 Indemnities by The Seller Parties. Without limiting any other rights that the Agent or any Purchaser may have hereunder or under applicable law, (A) Seller hereby agrees to indemnify (and pay upon demand to) the Agent, each Purchaser and the Hedge Provider (if any) and their respective assigns, 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 the Agent or such Purchaser) 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 Hedging Agreement or the acquisition, either directly or indirectly, by a Purchaser of an interest in the Receivables, and (B) the Servicer hereby agrees to indemnify (and pay upon demand to) each Indemnified Party for Indemnified Amounts awarded against or incurred by any of them arising out of the Servicer's activities as Servicer hereunder excluding, however, in all of the foregoing instances under the preceding clauses (A) and (B):

(x) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted

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from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification;

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

(z) 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 Purchasers of Purchaser Interests as a loan or loans by the Purchasers to Seller secured by the Receivables, the Related Security, the Collection Accounts and the Collections;

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

(i) any representation or warranty made by any Seller Party, any Originator or Performance Provider (or any officers of any such Person) under or in connection with this Agreement, any other Transaction Document or any other information or report delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made;

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

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

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(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 or any Receivable;

(v) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivable or the related Contract 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 Receivable or the furnishing or failure to furnish such merchandise or services;

(vi) the commingling of Collections of Receivables at any time with other funds;

(vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of an Incremental Purchase or a Reinvestment, the ownership of the Purchaser Interests or any other investigation, litigation or proceeding relating to Seller, the Servicer or any 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 Receivable 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 Amortization Event described in Section 9.1(d);

(x) any failure of Seller to acquire and maintain legal and equitable title to, and ownership of, any Receivable and the Related Security and Collections with respect thereto from any Originator, free and clear of any Adverse Claim (other than as created hereunder); or any failure of Seller to give reasonably equivalent value to any Originator under the Receivables Sale Agreement in consideration of

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the transfer by such Originator of any Receivable, or any attempt by any Person to void such transfer under statutory provisions or common law or equitable action;

(xi) any failure to vest and maintain vested in the Agent for the benefit of the Purchasers, or to transfer to the Agent for the benefit of the Purchasers, legal and equitable title to, and ownership of, a first priority perfected undivided percentage ownership interest (to the extent of the Purchaser Interests contemplated hereunder) or security interest in the Receivables, the Related Security and the Collections, free and clear of any Adverse Claim (except as created by the Transaction Documents);

(xii) 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 Receivable, the Related Security and Collections with respect thereto, and the proceeds of any thereof, whether at the time of any Incremental Purchase or Reinvestment or at any subsequent time;

(xiii) any action or omission by any Seller Party which reduces or impairs the rights of the Agent or the Purchasers with respect to any Receivable or the value of any such Receivable;

(xiv) any attempt by any Person to void any Incremental Purchase under statutory provisions or common law or equitable action; and

(xv) the failure of any Receivable included in the calculation of the Net Receivables Balance as an Eligible Receivable to be an Eligible Receivable at the time so included.

Section 10.2 Increased Cost and Reduced Return.

If after the date hereof, any Funding Source shall be charged any fee, expense or increased cost on account of the adoption of any applicable law, rule or regulation (including any applicable law, rule or regulation regarding capital adequacy) or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance with any request or directive (whether or not

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having the force of law) of any such authority, central bank or comparable agency: (i) that subjects any Funding Source to any charge or withholding on or with respect to any Funding Agreement or a Funding Source's obligations under a Funding Agreement, or on or with respect to the Receivables, or changes the basis of taxation of payments to any Funding Source of any amounts payable under any Funding Agreement (except for changes in the rate of tax on the overall net income of a Funding Source or taxes excluded by Section 10.1) or (ii) that imposes, modifies or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of a Funding Source, or credit extended by a Funding Source pursuant to a Funding Agreement or (iii) that imposes any other condition the result of which is to increase the cost to a Funding Source of performing its obligations under a Funding Agreement, or to reduce the rate of return on a Funding Source's capital as a consequence of its obligations under a Funding Agreement, or to reduce the amount of any sum received or receivable by a Funding Source under a Funding Agreement or to require any payment calculated by reference to the amount of interests or loans held or interest received by it, then, upon demand by the Agent, Seller shall pay to the Agent, for the benefit of the relevant Funding Source, such amounts charged to such Funding Source or such amounts to otherwise compensate such Funding Source for such increased cost or such reduction.

Section 10.3 Other Costs and Expenses. Seller shall reimburse the Agent and Conduit on demand for all costs and out-of-pocket expenses in connection with the preparation, negotiation, arrangement, execution, delivery, enforcement and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder, including without limitation, the cost of Conduit's auditors auditing the books, records and procedures of Seller, reasonable fees and out-of-pocket expenses of legal counsel for Conduit and the Agent (which such counsel may be employees of Conduit or the Agent) with respect thereto and with respect to advising Conduit and the Agent as to their respective rights and remedies under this Agreement. Seller shall reimburse the Agent on demand for any and all costs and expenses of the Agent and the Purchasers, 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 an Amortization Event. Seller shall reimburse Conduit on demand for all other costs and expenses incurred by Conduit ("Other Costs"), including, without limitation, the cost of auditing Conduit's books by certified public accountants, the cost of rating the Commercial Paper by independent financial rating agencies, and the reasonable fees and out-of-pocket expenses of counsel for Conduit or any counsel for any shareholder of Conduit with respect to advising Conduit or such shareholder as to matters relating to Conduit's operations.

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Section 10.4 Allocations. Conduit shall allocate the liability for Other Costs among Seller and other Persons with whom Conduit has entered into agreements to purchase interests in receivables ("Other Sellers"). If any Other Costs are attributable to Seller and not attributable to any Other Seller, Seller shall be solely liable for such Other Costs. However, if Other Costs are attributable to Other Sellers and not attributable to Seller, such Other Sellers shall be solely liable for such Other Costs. All allocations to be made pursuant to the foregoing provisions of this Article X shall be made by Conduit in its sole and absolute discretion and shall be binding on Seller and the Servicer.

ARTICLE XI
THE AGENT

Section 11.1 Authorization and Action. Each Purchaser hereby designates and appoints Bank One to act as its agent hereunder and under each other Transaction Document, and authorizes the Agent to take such actions as agent on its behalf and to exercise such powers as are delegated to the Agent by the terms of this Agreement and the other Transaction Documents together with such powers as are reasonably incidental thereto. The Agent shall not have any duties or responsibilities, except those expressly set forth herein or in any other Transaction Document, or any fiduciary relationship with any Purchaser, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Agent shall be read into this Agreement or any other Transaction Document or otherwise exist for the Agent. In performing its functions and duties hereunder and under the other Transaction Documents, the Agent shall act solely as agent for the Purchasers and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any Seller Party or any of such Seller Party's successors or assigns. The Agent shall not be required to take any action that exposes the Agent to personal liability or that is contrary to this Agreement, any other Transaction Document or applicable law. The appointment and authority of the Agent hereunder shall terminate upon the indefeasible payment in full of all Aggregate Unpaids. Each Purchaser hereby authorizes the Agent to authorize each of the Uniform Commercial Code financing or continuations statements (and amendments thereto and assignments or terminations thereof) on behalf of such Purchaser (the terms of which shall be binding on such Purchaser).

Section 11.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement and each other Transaction Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

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Section 11.3 Exculpatory Provisions. Neither the Agent nor any of its directors, officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Agreement or any other Transaction Document (except for its, their or such Person's own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Purchasers for any recitals, statements, representations or warranties made by any Seller Party contained in this Agreement, any other Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement, or any other Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or any other Transaction Document or any other document furnished in connection herewith or therewith, or for any failure of any Seller Party to perform its obligations hereunder or thereunder, or for the satisfaction of any condition specified in Article VI, or for the perfection, priority, condition, value or sufficiency of any collateral pledged in connection herewith. The Agent shall not be under any obligation to any Purchaser to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Seller Parties. The Agent shall not be deemed to have knowledge of any Amortization Event or Potential Amortization Event unless the Agent has received notice from Seller or a Purchaser.

Section 11.4 Reliance by Agent. The Agent shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to any Seller Party), independent accountants and other experts selected by the Agent. The Agent shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of Conduit or the Required Financial Institutions or all of the Purchasers, as applicable, as it deems appropriate and it shall first be indemnified to its satisfaction by the Purchasers, provided that unless and until the Agent shall have received such advice, the Agent may take or refrain from taking any action, as the Agent shall deem advisable and in the best interests of the Purchasers. The Agent shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a request of Conduit or the Required Financial Institutions or all of the Purchasers, as applicable, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Purchasers.

Section 11.5 Non-Reliance on Agent and Other Purchasers. Each Purchaser expressly acknowledges that neither the Agent, nor any of its officers, directors,

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employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Agent hereafter taken, including, without limitation, any review of the affairs of any Seller Party, shall be deemed to constitute any representation or warranty by the Agent. Each Purchaser represents and warrants to the Agent that it has and will, independently and without reliance upon the Agent or any other Purchaser and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of each Seller Party and made its own decision to enter into this Agreement, the other Transaction Documents and all other documents related hereto or thereto.

Section 11.6 Reimbursement and Indemnification. The Financial Institutions agree to reimburse and indemnify the Agent and its officers, directors, employees, representatives and agents ratably according to their Pro Rata Shares, to the extent not paid or reimbursed by the Seller Parties (i) for any amounts for which the Agent, acting in its capacity as Agent, is entitled to reimbursement by the Seller Parties hereunder and (ii) for any other expenses incurred by the Agent, in its capacity as Agent and acting on behalf of the Purchasers, in connection with the administration and enforcement of this Agreement and the other Transaction Documents.

Section 11.7 Agent in its Individual Capacity. The Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Seller Party or any Affiliate of any Seller Party as though the Agent were not the Agent hereunder. With respect to the acquisition of Purchaser Interests pursuant to this Agreement, the Agent shall have the same rights and powers under this Agreement in its individual capacity as any Purchaser and may exercise the same as though it were not the Agent, and the terms "Financial Institution," "Purchaser," "Financial Institutions" and "Purchasers" shall include the Agent in its individual capacity.

Section 11.8 Successor Agent. The Agent may, upon 10 Business Days' notice to Seller and the Purchasers, and the Agent will, upon the direction of all of the Purchasers (other than the Agent, in its individual capacity) resign as Agent. If the Agent shall resign, then the Required Financial Institutions during such five-day period shall appoint from among the Purchasers a successor agent. If for any reason no successor Agent is appointed by the Required Financial Institutions during such five-day period, then effective upon the termination of such five-day period, the Purchasers shall perform all of the duties of the Agent hereunder and under the other Transaction Documents and Seller and the Servicer (as applicable) shall make all payments in respect of the Aggregate Unpaids directly to the applicable Purchasers and for all purposes shall deal directly with the Purchasers. After the effectiveness of any retiring Agent's resignation hereunder as Agent, the retiring Agent shall be discharged from its duties and obligations hereunder and

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under the other Transaction Documents and the provisions of this Article XI and Article X shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while it was Agent under this Agreement and under the other Transaction Documents.

ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS

Section 12.1 Assignments. (a) Seller, the Servicer, the Agent and each Financial Institution hereby agree and consent to the complete or partial assignment by Conduit of all or any portion of its rights under, interest in, title to and obligations under this Agreement to the Financial Institutions pursuant to Section 13.1 or to any other Person, and upon such assignment, Conduit shall be released from its obligations so assigned. Further, Seller, the Servicer, the Agent and each Financial Institution hereby agree that any assignee of Conduit of this Agreement or of all or any of the Purchaser Interests of Conduit shall have all of the rights and benefits under this Agreement as if the term "Conduit" explicitly referred to such party (provided that the Purchaser Interests of any such assignee shall accrue Financial Institution Yield pursuant to Article IV as if such assignee were a Financial Institution hereunder), and no such assignment shall in any way impair the rights and benefits of Conduit hereunder. Neither Seller nor the Servicer shall have the right to assign its rights or obligations under this Agreement.

(b) Any Financial Institution may at any time and from time to time assign to one or more Persons ("Purchasing Financial Institutions") all or any part of its rights and obligations under this Agreement pursuant to an assignment agreement, substantially in the form set forth in Exhibit VII hereto (the "Assignment Agreement") executed by such Purchasing Financial Institution and such selling Financial Institution. The consent of Conduit shall be required prior to the effectiveness of any such assignment. Each assignee of a Financial Institution must (i) have a short-term debt rating of A-1 or better by Standard & Poor's Ratings Services and P-1 by Moody's Investors Service, Inc. and (ii) agree to deliver to the Agent, promptly following any request therefor by the Agent or Conduit, an enforceability opinion in form and substance satisfactory to the Agent and Conduit. Upon delivery of the executed Assignment Agreement to the Agent, such selling Financial Institution shall be released from its obligations hereunder to the extent of such assignment. Thereafter the Purchasing Financial Institution shall for all purposes be a Financial Institution party to this Agreement and shall have all the rights and obligations of a Financial Institution under this Agreement to the same extent as if it were an original party hereto and no further consent or action by Seller, the Purchasers or the Agent shall be required.

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(c) Each of the Financial Institutions agrees that in the event that it shall cease to have a short-term debt rating of A-1 or better by Standard & Poor's Ratings Services and P-1 by Moody's Investors Service, Inc. (an "Affected Financial Institution"), such Affected Financial Institution shall be obliged, at the request of Conduit or the Agent, to assign all of its rights and obligations hereunder to (x) another Financial Institution or (y) another funding entity nominated by the Agent and acceptable to Conduit, and willing to participate in this Agreement through the Liquidity Termination Date in the place of such Affected Financial Institution; provided that the Affected Financial Institution receives payment in full, pursuant to an Assignment Agreement, of an amount equal to such Financial Institution's Pro Rata Share of the Aggregate Capital and Financial Institution Yield owing to the Financial Institutions and all accrued but unpaid fees and other costs and expenses payable in respect of its Pro Rata Share of the Purchaser Interests of the Financial Institutions.

Section 12.2 Participations. Any Financial Institution may, in the ordinary course of its business at any time sell to one or more Persons (each a "Participant") participating interests in its Pro Rata Share of the Purchaser Interests of the Financial Institutions, its obligation to pay Conduit its Acquisition Amounts or any other interest of such Financial Institution hereunder. Notwithstanding any such sale by a Financial Institution of a participating interest to a Participant, such Financial Institution's rights and obligations under this Agreement shall remain unchanged, such Financial Institution shall remain solely responsible for the performance of its obligations hereunder, and Seller, Conduit and the Agent shall continue to deal solely and directly with such Financial Institution in connection with such Financial Institution's rights and obligations under this Agreement. Each Financial Institution agrees that any agreement between such Financial Institution and any such Participant in respect of such participating interest shall not restrict such Financial Institution's right to agree to any amendment, supplement, waiver or modification to this Agreement, except for any amendment, supplement, waiver or modification described in Section 14.1(b)(i).

ARTICLE XIII
LIQUIDITY FACILITY

Section 13.1 Transfer to Financial Institutions. Each Financial Institution hereby agrees, subject to Section 13.4, that immediately upon written notice from Conduit delivered on or prior to the Liquidity Termination Date, it shall acquire by assignment from Conduit, without recourse or warranty, its Pro Rata Share of one or more of the Purchaser Interests of Conduit as specified by Conduit. Each such assignment by Conduit shall be made pro rata among all of the Financial Institutions, except for pro rata assignments to one or more Terminating Financial Institutions pursuant to Section 13.6.

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Each such Financial Institution shall, no later than 1:00 p.m. (Chicago time) on the date of such assignment, pay in immediately available funds (unless another form of payment is otherwise agreed between Conduit and any Financial Institution) to the Agent at an account designated by the Agent, for the benefit of Conduit, its Acquisition Amount. Unless a Financial Institution has notified the Agent that it does not intend to pay its Acquisition Amount, the Agent may assume that such payment has been made and may, but shall not be obligated to, make the amount of such payment available to Conduit in reliance upon such assumption. Conduit hereby sells and assigns to the Agent for the ratable benefit of the Financial Institutions, and the Agent hereby purchases and assumes from Conduit, effective upon the receipt by Conduit of the Conduit Transfer Price, the Purchaser Interests of Conduit which are the subject of any transfer pursuant to this Article XIII.

Section 13.2 Transfer Price Reduction Financial Institution Yield. If the Adjusted Funded Amount is included in the calculation of the Conduit Transfer Price for any Purchaser Interest, each Financial Institution agrees that the Agent shall pay to Conduit the Reduction Percentage of any Financial Institution Yield received by the Agent with respect to such Purchaser Interest.

Section 13.3 Payments to Conduit. In consideration for the reduction of the Conduit Transfer Prices by the Conduit Transfer Price Reductions, effective only at such time as the aggregate amount of the Capital of the Purchaser Interests of the Financial Institutions equals the Conduit Residual, each Financial Institution hereby agrees that the Agent shall not distribute to the Financial Institutions and shall immediately remit to Conduit any Financial Institution Yield, Collections or other payments received by it to be applied pursuant to the terms hereof or otherwise to reduce the Capital of the Purchaser Interests of the Financial Institutions.

Section 13.4 Limitation on Commitment to Purchase from Conduit. Notwithstanding anything to the contrary in this Agreement, no Financial Institution shall have any obligation to purchase any Purchaser Interest from Conduit, pursuant to Section 13.1 or otherwise, if:

(i) Conduit shall have voluntarily commenced any proceeding or filed any petition under any bankruptcy, insolvency or similar law seeking the dissolution, liquidation or reorganization of Conduit or taken any corporate action for the purpose of effectuating any of the foregoing; or

(ii) involuntary proceedings or an involuntary petition shall have been commenced or filed against Conduit by any Person under any bankruptcy, insolvency or similar law seeking the

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dissolution, liquidation or reorganization of Conduit and such proceeding or petition shall have not been dismissed.

Section 13.5 Defaulting Financial Institutions. If one or more Financial Institutions defaults in its obligation to pay its Acquisition Amount pursuant to Section 13.1 (each such Financial Institution shall be called a "Defaulting Financial Institution" and the aggregate amount of such defaulted obligations being herein called the "Conduit Transfer Price Deficit"), then upon notice from the Agent, each Financial Institution other than the Defaulting Financial Institutions (a "Non-Defaulting Financial Institution") shall promptly pay to the Agent, in immediately available funds, an amount equal to the lesser of (x) such Non-Defaulting Financial Institution's proportionate share (based upon the relative Commitments of the Non-Defaulting Financial Institutions, after excluding the Commitment of any Approved Unconditional Liquidity Providers) of the Conduit Transfer Price Deficit and (y) the unused portion of such Non-Defaulting Financial Institution's Commitment; provided, however, that if an Approved Unconditional Liquidity Provider is the Defaulting Financial Institution, the Non-Defaulting Financial Institutions shall have no obligation to pay any amount to the Agent pursuant to this Section 13.5 as a result of a default by such Approved Unconditional Liquidity Provider; provided, further, that in no event shall any Approved Unconditional Liquidity Provider be required to make any payment as a Non-Defaulting Financial Institution pursuant to this
Section 13.5. A Defaulting Financial Institution shall forthwith upon demand pay to the Agent for the account of the Non-Defaulting Financial Institutions all amounts paid by each Non-Defaulting Financial Institution on behalf of such Defaulting Financial Institution, together with interest thereon, for each day from the date a payment was made by a Non-Defaulting Financial Institution until the date such Non-Defaulting Financial Institution has been paid such amounts in full, at a rate per annum equal to the Federal Funds Effective Rate plus two percent (2%). In addition, without prejudice to any other rights that Conduit may have under applicable law, each Defaulting Financial Institution shall pay to Conduit forthwith upon demand, the difference between such Defaulting Financial Institution's unpaid Acquisition Amount and the amount paid with respect thereto by the Non-Defaulting Financial Institutions, together with interest thereon, for each day from the date of the Agent's request for such Defaulting Financial Institution's Acquisition Amount pursuant to Section 13.1 until the date the requisite amount is paid to Conduit in full, at a rate per annum equal to the Federal Funds Effective Rate plus two percent (2%).

Section 13.6 Terminating Financial Institutions.

(a) Each Financial Institution hereby agrees to deliver written notice to the Agent not more than 30 Business Days and not less than 5 Business Days prior to the Liquidity Termination Date indicating whether such Financial Institution, in its sole and absolute discretion, intends to renew its Commitment hereunder. If any Financial

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Institution fails to deliver such notice on or prior to the date that is 5 Business Days prior to the Liquidity Termination Date, such Financial Institution will be deemed to have declined to renew its Commitment (each Financial Institution which has declined or has been deemed to have declined to renew its Commitment hereunder, a "Non-Renewing Financial Institution"). The Agent shall promptly notify Conduit of each Non-Renewing Financial Institution and Conduit, in its sole and absolute discretion, may (A) to the extent of Commitment Availability, declare that such Non-Renewing Financial Institution's Commitment shall, to such extent, automatically terminate on a date specified by Conduit on or before the Liquidity Termination Date or (B) upon one (1) Business Days' notice to such Non-Renewing Financial Institution assign to such Non-Renewing Financial Institution on a date specified by Conduit its Pro Rata Share of the aggregate Purchaser Interests then held by Conduit, subject to, and in accordance with, Section 13.1. In addition, Conduit may, in its sole and absolute discretion, at any time (x) to the extent of Commitment Availability, declare that any Affected Financial Institution's Commitment shall automatically terminate on a date specified by Conduit or (y) assign to any Affected Financial Institution on a date specified by Conduit its Pro Rata Share of the aggregate Purchaser Interests then held by Conduit, subject to, and in accordance with,
Section 13.1 (each Affected Financial Institution or each Non-Renewing Financial Institution is hereinafter referred to as a "Terminating Financial Institution"). The parties hereto expressly acknowledge that any declaration of the termination of any Commitment, any assignment pursuant to this Section 13.6 and the order of priority of any such termination or assignment among Terminating Financial Institutions shall be made by Conduit in its sole and absolute discretion.

(b) Upon any assignment to a Terminating Financial Institution as provided in this Section 13.6, any remaining Commitment of such Terminating Financial Institution shall automatically terminate. Upon reduction to zero of the Capital of all of the Purchaser Interests of a Terminating Financial Institution (after application of Collections thereto pursuant to Sections 2.2 and 2.3) all rights and obligations of such Terminating Financial Institution hereunder shall be terminated and such Terminating Financial Institution shall no longer be a "Financial Institution" hereunder; provided, however, that the provisions of Article X shall continue in effect for its benefit with respect to Purchaser Interests held by such Terminating Financial Institution prior to its termination as a Financial Institution.

ARTICLE XIV
MISCELLANEOUS

Section 14.1 Waivers and Amendments. (a) No failure or delay on the part of the Agent or any Purchaser 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

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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 in accordance with the provisions of this
Section 14.1(b). Conduit, Seller and the Agent, at the direction of the Required Financial Institutions, may enter into written modifications or waivers of any provisions of this Agreement, provided, however, that no such modification or waiver shall:

(i) without the consent of each affected Purchaser, (A) extend the Liquidity Termination Date or the date of any payment or deposit of Collections by Seller or the Servicer, (B) reduce the rate or extend the time of payment of Financial Institution Yield or any CP Costs (or any component of Financial Institution Yield or CP Costs), (C) reduce any fee payable to the Agent for the benefit of the Purchasers, (D) except pursuant to Article XII hereof, change the amount of the Capital of any Purchaser, any Financial Institution's Pro Rata Share (except pursuant to Sections 13.1 or 13.5) or any Financial Institution's Commitment, (E) amend, modify or waive any provision of the definition of Required Financial Institutions or this Section 14.1(b), (F) consent to or permit the assignment or transfer by Seller of any of its rights and obligations under this Agreement, (G) change the definition of "Eligible Receivable," "Credit Enhancement," "Hedging Agreement" or "Hedge Provider" or (H) amend or modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (G) above in a manner that would circumvent the intention of the restrictions set forth in such clauses; or

(ii) without the written consent of the then Agent, amend, modify or waive any provision of this Agreement if the effect thereof is to affect the rights or duties of such Agent.

Notwithstanding the foregoing, (i) without the consent of the Financial Institutions, but with the consent of Seller, the Agent may amend this Agreement solely to add additional Persons as Financial Institutions hereunder and (ii) the Agent, the Required Financial Institutions and Conduit may enter into amendments to modify any of the terms or provisions of Article XI, Article XII,
Section 14.13 or any other provision of this Agreement without the consent of any Seller Party, provided that such amendment has no negative impact upon such Seller

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Party. Any modification or waiver made in accordance with this Section 14.1 shall apply to each of the Purchasers equally and shall be binding upon each Seller Party, the Purchasers and the Agent.

Section 14.2 Notices. Except as provided in this Section 14.2, 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, three (3) 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 in this
Section 14.2. Seller hereby authorizes the Agent to effect purchases and Tranche Period and Discount Rate selections based on telephonic notices made by any Person whom the Agent in good faith believes to be acting on behalf of Seller. Seller agrees to deliver promptly to the Agent a written confirmation of each telephonic notice signed by an authorized officer of Seller; provided, however, the absence of such confirmation shall not affect the validity of such notice. If the written confirmation differs from the action taken by the Agent, the records of the Agent shall govern absent manifest error.

Section 14.3 Ratable Payments. If any Purchaser, whether by setoff or otherwise, has payment made to it with respect to any portion of the Aggregate Unpaids owing to such Purchaser (other than payments received pursuant to
Section 10.2 or 10.3) in a greater proportion than that received by any other Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such Purchaser agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Aggregate Unpaids held by the other Purchasers so that after such purchase each Purchaser will hold its ratable proportion of such Aggregate Unpaids; provided that if all or any portion of such excess amount is thereafter recovered from such Purchaser, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

Section 14.4 Protection of Ownership Interests of the Purchasers. (a) Seller 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 the Agent may request, to perfect, protect or more fully evidence the Purchaser Interests, or to enable the Agent or the Purchasers to exercise and enforce their rights and remedies hereunder. Without limiting the foregoing, Seller will, upon the request of the Agent, 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

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desirable, or that the Agent may reasonably request, to perfect, protect or evidence such Purchaser Interests. At any time following the occurrence of an Amortization Event, the Agent may, or the Agent may direct Seller or the Servicer to, notify the Obligors of Receivables, at Seller's expense, of the ownership or security interests of the Purchasers under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to the Agent or its designee. Seller or the Servicer (as applicable) shall, at any Purchaser's request, withhold the identity of such Purchaser in any such notification.

(b) If any Seller Party fails to perform any of its obligations hereunder, the Agent or any Purchaser may (but shall not be required to) perform, or cause performance of, such obligations, and the Agent's or such Purchaser's costs and expenses incurred in connection therewith shall be payable by Seller as provided in Section 10.3. Each Seller Party irrevocably authorizes the Agent at any time and from time to time in the sole and absolute discretion of the Agent, and appoints the Agent as its attorney-in-fact, to act on behalf of such Seller Party (i) to authorize and/or execute on behalf of such Seller Party as debtor and to file financing or continuation statements (and amendments thereto and assignments thereof) necessary or desirable in the Agent's sole and absolute discretion to perfect and to maintain the perfection and priority of the interest of the Purchasers in the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as the Agent in its sole and absolute discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the interests of the Purchasers in the Receivables. This appointment is coupled with an interest and is irrevocable. The authorization by each Seller Party set forth in the second sentence of this Section 14.4(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 14.5 Confidentiality. (a) Each Seller Party and each Purchaser 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 Conduit 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 Seller Party and such Purchaser and its officers and employees may disclose such information to such Seller Party's and such Purchaser's external accountants and attorneys and as required by any applicable law or order of any judicial or administrative proceeding.

(b) Anything herein to the contrary notwithstanding, each Seller Party hereby consents to the disclosure of any nonpublic information with respect to it (i) to the Agent, the Financial Institutions or Conduit by each other, (ii) by the Agent or

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the Purchasers to any prospective or actual assignee or participant of any of them and (iii) by the Agent to any rating agency, Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to Conduit or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which Bank One acts as the administrative agent 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 Purchasers 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 14.6 Bankruptcy Petition. Seller, the Servicer, the Agent and each Financial Institution hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of Conduit or any Unconditional Liquidity Provider, it will not institute against, or join any other Person in instituting against, Conduit or any such entity 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 14.7 Limitation of Liability. Except with respect to any claim arising out of the willful misconduct or gross negligence of Conduit, the Agent or any Financial Institution, no claim may be made by any Seller Party or any other Person against Conduit, the Agent or any Financial Institution 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 Seller Party 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 14.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

Section 14.9 CONSENT TO JURISDICTION. EACH SELLER PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT AND EACH SELLER PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR

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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 SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST ANY SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY SELLER PARTY AGAINST THE AGENT OR ANY PURCHASER OR ANY AFFILIATE OF THE AGENT OR ANY PURCHASER 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 SELLER PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.

Section 14.10 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 SELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.

Section 14.11 Integration; Binding Effect; Survival of Terms.

(a) This Agreement and each other Transaction Document contain 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 the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy) and shall inure to the benefit of the Hedge Provider (if any) and its successors and permitted assigns (including any trustee in bankruptcy). 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 any Seller Party pursuant to Article V, (ii) the indemnification and payment provisions of Article X, and Sections 14.5 and 14.6 shall be continuing and shall survive any termination of this Agreement.

PATTERSON RECEIVABLES PURCHASE AGREEMENT

Section 14.12 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 14.13 Bank One Roles. Each of the Financial Institutions acknowledges that Bank One acts, or may in the future act, (i) as administrative agent for Conduit or any Financial Institution, (ii) as issuing and paying agent for the Commercial Paper, (iii) to provide credit or liquidity enhancement for the timely payment for the Commercial Paper and (iv) to provide other services from time to time for Conduit or any Financial Institution (collectively, the "Bank One Roles"). Without limiting the generality of this Section 14.13, each Financial Institution hereby acknowledges and consents to any and all Bank One Roles and agrees that in connection with any Bank One Role, Bank One may take, or refrain from taking, any action that it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for Conduit, and the giving of notice to the Agent of a mandatory purchase pursuant to Section 13.1.

Section 14.14 Characterization. (a) It is the intention of the parties hereto that each purchase hereunder shall constitute and be treated as an absolute and irrevocable sale, which purchase shall provide the applicable Purchaser with the full benefits of ownership of the applicable Purchaser Interest. Except as specifically provided in this Agreement, each sale of a Purchaser Interest hereunder is made without recourse to Seller; provided, however, that (i) Seller shall be liable to each Purchaser and the Agent for all representations, warranties, covenants and indemnities made by Seller pursuant to the terms of this Agreement, and (ii) such sale does not constitute and is not intended to result in an assumption by any Purchaser or the Agent or any assignee thereof of any obligation of Seller or any Originator or any other person arising in connection with the Receivables, the Related Security, or the related Contracts, or any other obligations of Seller or any Originator.

(b) In addition to any ownership interest which the Agent may from time to time acquire pursuant hereto, Seller hereby grants to the Agent for the ratable benefit of the Purchasers a valid and perfected security interest in all of Seller's right, title and interest in, to and under all Receivables now existing or hereafter arising, the

PATTERSON RECEIVABLES PURCHASE AGREEMENT

Collections, each Lock-Box, each P.O. Box, each Collection Account, all Related Security, all other rights and payments relating to such Receivables, and all proceeds of any thereof prior to all other liens on and security interests therein to secure the prompt and complete payment of the Aggregate Unpaids. The Agent and the Purchasers shall have, in addition to the rights and remedies that 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.

Section 14.15 Excess Funds. Each of Seller, the Servicer, each Purchaser and the Agent agrees that Conduit shall be liable for any claims that such party may have against Conduit only to the extent that Conduit has funds in excess of those funds necessary to pay matured and maturing Commercial Paper and to the extent such excess funds are insufficient to satisfy the obligations of Conduit hereunder, Conduit shall have no liability with respect to any amount of such obligations remaining unpaid and such unpaid amount shall not constitute a claim against Conduit. Any and all claims against Conduit shall be subordinate to the claims against Conduit of the holders of Commercial Paper and any Person providing liquidity support to Conduit.

(Signature Pages Follow)

PATTERSON RECEIVABLES PURCHASE AGREEMENT

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

PDC FUNDING COMPANY, LLC

By:    /s/ Jeffrey J. Stang
Name:  Jeffrey J. Stang
Title: Vice President and Treasurer

Address:      1031 Mendota Heights Road
              St. Paul, MN 55120

              Attn: Chief Financial Officer
              Facsimile: (651) 686-8984

PATTERSON DENTAL COMPANY,
as Servicer

By:    /s/ R. Stephen Armstrong
Name:  R. Stephen Armstrong
Title: Executive Vice President, Treasurer
       and Chief Financial Officer

Address:      1031 Mendota Heights Road
              St. Paul, MN 55120

              Attn: Chief Financial Officer
              Facsimile: (651) 686-8984

PATTERSON RECEIVABLES PURCHASE AGREEMENT

PREFERRED RECEIVABLES FUNDING
CORPORATION

By:      /s/ Patrick J. Power
Authorized Signatory

Address:       c/o Bank One, NA (Main Office Chicago),
                as Agent
               Asset Backed Finance
               Suite IL1-0079, 1-19
               1 Bank One Plaza
               Chicago, Illinois 60670-0079
               Facsimile: (312) 732-1844

BANK ONE, NA (MAIN OFFICE CHICAGO),
as a Financial Institution and as Agent

By:      /s/ Patrick J. Power
Name:    Patrick J. Power
Title:   Authorized Signatory

Address:       Bank One, NA (Main Office Chicago)
               Asset Backed Finance
               Suite IL1-0612, 1-19
               1 Bank One Plaza
               Chicago, Illinois  60670-0612
               Facsimile: (312) 732-4487

                 PATTERSON RECEIVABLES PURCHASE AGREEMENT

EXHIBIT I

DEFINITIONS

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

"Accrual Period" means each Fiscal Month, provided that the initial Accrual Period hereunder means the period from (and including) the date of the initial purchase hereunder to (and including) the last day of the Fiscal Month thereafter.

"ACH Receipts" means funds received in respect of Automatic Debit Collections.

"Acquisition" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which PDCo or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company or other business entity.

"Acquisition Amount" means, on the date of any purchase from Conduit of one or more Purchaser Interests pursuant to Section 13.1, (a) with respect to each Financial Institution (other than any Unconditional Liquidity Provider), the lesser of (i) such Financial Institution's Pro Rata Share of the sum of (A) the lesser of (1) the Adjusted Liquidity Price of each such Purchaser Interest and (2) the Capital of each such Purchaser Interest and (B) all accrued and unpaid CP Costs for each such Purchaser Interest and (ii) such Financial Institution's unused Commitment and (b) with respect to each Unconditional Liquidity Provider, the lesser of (x) such Unconditional Liquidity Provider's Pro Rata Share of the sum of (1) the Capital of each such Purchaser Interest and
(2) all accrued and unpaid CP Costs for each such Purchaser Interest and (y) such Unconditional Liquidity Provider's unused Commitment.

"Adjusted Funded Amount" means, in determining the Conduit Transfer Price for any Purchaser Interest, an amount equal to the sum of (a) the Adjusted Liquidity Price of each such Purchaser Interest and (b) an amount equal to each Unconditional Liquidity

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Provider's Pro Rata Share of the difference between (i) the Adjusted Liquidity Price of each such Purchaser Interest and (ii) the Capital of each such Purchaser Interest.

"Adjusted Liquidity Price" means an amount equal to:

                                1 + (.50 x .10)

where:

         RI     =       the undivided percentage interest evidenced by
                        such Purchaser Interest.

         DC     =       the Deemed Collections.

         NDR    =       the Outstanding Balance of all Receivables that
                        are not Defaulted Receivables.

Each of the foregoing shall be determined from the most recent Monthly Report received from the Servicer.

"Adverse Claim" means a lien, security interest, charge or encumbrance, or other right or claim in, of or on any Person's assets or properties in favor of any other Person.

"Affected Financial Institution" has the meaning specified in Section 12.1(c).

"Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities of the controlled Person or possesses, directly or indirectly, the power to direct or cause the

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PATTERSON RECEIVABLES PURCHASE AGREEMENT

direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.

"Agent" has the meaning set forth in the preamble to this Agreement.

"Agent's Account" has the meaning set forth in Section 2.2(a).

"Aggregate Capital" means, on any date of determination, the aggregate amount of Capital of all Purchaser Interests outstanding on such date.

"Aggregate Unpaids" means, at any time, an amount equal to the sum of all accrued and unpaid fees under the Fee Letter, CP Costs, Financial Institution Yield, Aggregate Capital, Hedging Obligations and all other unpaid Obligations (whether due or accrued) at such time.

"Agreement" means this Receivables Purchase Agreement, as it may be amended, restated, supplemented or otherwise modified and in effect from time to time.

"Amortization Date" means the earliest to occur of (i) the day on which any of the conditions precedent set forth in Section 6.2 are not satisfied, (ii) the Business Day immediately prior to the occurrence of an Amortization Event set forth in Section 9.1(d)(ii), (iii) the Business Day specified in a written notice from the Agent following the occurrence of any other Amortization Event and, (iv) the date which is 5 Business Days after the Agent's receipt of written notice from Seller that it wishes to terminate the facility evidenced by this Agreement.

"Amortization Event" has the meaning specified in Article IX.

"Approved Unconditional Liquidity Provider" means an Unconditional Liquidity Provider which has received approval from Standard & Poor's Ratings Services and Moody's Investors Service, Inc. to be relieved from any obligation to pay amounts as a Non-Defaulting Financial Institution pursuant to Section 13.5 hereof.

"Assignment Agreement" has the meaning set forth in Section 12.1(b).

"Authorized Officer" means, with respect to any Person, its president, corporate controller, treasurer or chief financial officer.

"Automatic Debit Collection" means the payment of Collections by an Obligor by means of automatic electronic funds transfer from the Obligor's bank account.

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"Balloon Payment Receivable" means a Receivable that arises under a Contract that requires the final payment to be in an amount equal to 35% of the initial balance of such Receivable.

"Bank One" means Bank One, NA (Main Office Chicago) in its individual capacity and its successors.

"Broken Funding Costs" means for any Purchaser Interest which: (i) has its Capital reduced without compliance by Seller with the notice requirements hereunder or (ii) is assigned under Article XIII or terminated prior to the date on which it was originally scheduled to end; an amount equal to the excess, if any, of (A) the CP Costs or Financial Institution Yield (as applicable) that would have accrued during the remainder of the Tranche Periods or the tranche periods for Commercial Paper determined by the Agent to relate to such Purchaser Interest (as applicable) subsequent to the date of such reduction, assignment or termination of the Capital of such Purchaser Interest if such reduction, assignment or termination had not occurred or such Reduction Notice had not been delivered, over (B) the sum of (x) to the extent all or a portion of such Capital is allocated to another Purchaser Interest, the amount of CP Costs or Financial Institution Yield actually accrued during the remainder of such period on such Capital for the new Purchaser Interest, and (y) to the extent such Capital is not allocated to another Purchaser Interest, the income, if any, actually received during the remainder of such period by the holder of such Purchaser Interest from investing the portion of such Capital not so allocated. In the event that the amount referred to in clause (B) exceeds the amount referred to in clause (A), the relevant Purchaser or Purchasers agree to pay to Seller the amount of such excess. All Broken Funding Costs shall be due and payable hereunder upon demand.

"Business Day" means any day on which banks are not authorized or required to close in New York, New York or Chicago, Illinois and The Depository Trust Company of New York is open for business, and, if the applicable Business Day relates to any computation or payment to be made with respect to the LIBO Rate, any day on which dealings in dollar deposits are carried on in the London interbank market.

"Capital" of any Purchaser Interest means, at any time, (A) the Purchase Price of such Purchaser Interest, minus (B) the sum of the aggregate amount of Collections and other payments received by the Agent which in each case are applied to reduce such Capital in accordance with the terms and conditions of this Agreement; provided that such Capital shall be restored (in accordance with Section 2.5) in the amount of any Collections or other payments so received and applied if at any time the distribution of such Collections or payments are rescinded, returned or refunded for any reason.

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"Change of Control" means (i) the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of Servicer or (ii) PDCo ceases to own, directly or indirectly, 100% of the outstanding membership units of Seller or 100% of the outstanding capital stock of any Originator.

"Charged-Off Receivable" means a Receivable: (i) as to which the Obligor thereof has taken any action, or suffered any event to occur, of the type described in Section 9.1(d) (as if references to Seller Party therein refer to such Obligor); (ii) as to which the Obligor thereof, if a natural person, is deceased, (iii) which, consistent with the Credit and Collection Policy, would be written off Seller's books as uncollectible, (iv) which has been identified by Seller as uncollectible or (v) as to which any payment, or part thereof, remains unpaid for 180 days or more from the original due date for such payment.

"Collection Account" means, collectively, each First-Tier Account and the Second-Tier Account.

"Collection Account Agreement" means (i) with respect to each Lock-Box or Collection Account, an agreement, substantially in the form of Exhibit VI, among an Originator (if applicable), Seller, the Agent and a Collection Bank, or any similar or analogous agreement among an Originator, Seller, the Agent and a Collection Bank and (ii) with respect to each P.O. Box, a Postal Notice.

"Collection Bank" means, at any time, any of the banks holding one or more Collection Accounts.

"Collection Notice" means a notice, in substantially the form of Annex A to Exhibit VI, from the Agent to a Collection Bank, or any similar or analogous notice from the Agent to a Collection Bank.

"Collections" means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including, without limitation, all scheduled payments, prepayments, yield, Finance Charges or other related amounts accruing in respect thereof, all cash proceeds of Related Security with respect to such Receivable and all payments received pursuant to the Hedging Agreement.

"Commercial Paper" means promissory notes of Conduit issued by Conduit in the commercial paper market.

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PATTERSON RECEIVABLES PURCHASE AGREEMENT

"Commitment" means, for each Financial Institution, the commitment of such Financial Institution to purchase Purchaser Interests from (i) Seller and
(ii) Conduit, in an amount not to exceed (i) in the aggregate, the amount set forth opposite such Financial Institution's name on Schedule A to this Agreement, as such amount may be modified in accordance with the terms hereof (including, without limitation, any termination of Commitments pursuant to
Section 13.6 hereof) and (ii) with respect to any individual purchase hereunder, its Pro Rata Share of the Purchase Price therefor.

"Commitment Availability" means at any time the positive difference (if any) between (a) an amount equal to the aggregate amount of the Commitments minus an amount equal to 2% of such aggregate Commitments at such time minus (b) the Aggregate Capital at such time.

"Concentration Limit" means, at any time, for any Obligor, 2% of the aggregate Outstanding Balance of all Eligible Receivables, or such other amount (a "Special Concentration Limit") for such Obligor designated by the Agent; provided, that in the case of an Obligor and any Affiliate of such Obligor, the Concentration Limit shall be calculated as if such Obligor and such Affiliate are one Obligor; and provided, further, that Conduit or the Required Financial Institutions may, upon not less than three Business Days' notice to Seller, cancel any Special Concentration Limit.

"Conduit" has the meaning set forth in the preamble to this Agreement.

"Conduit Residual" means the sum of the Conduit Transfer Price Reductions.

"Conduit Transfer Price" means, with respect to the assignment by Conduit of one or more Purchaser Interests to the Agent for the benefit of one or more of the Financial Institutions pursuant to Section 13.1, the sum of (i) the lesser of (a) the Capital of each such Purchaser Interest and (b) the Adjusted Funded Amount of each such Purchaser Interest and (ii) all accrued and unpaid CP Costs for each such Purchaser Interest.

"Conduit Transfer Price Deficit" has the meaning set forth in Section 13.5.

"Conduit Transfer Price Reduction" means in connection with the assignment of a Purchaser Interest by Conduit to the Agent for the benefit of the Financial Institutions, the positive difference (if any) between (i) the Capital of such Purchaser Interest and (ii) the Adjusted Funded Amount for such Purchaser Interest.

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PATTERSON RECEIVABLES PURCHASE AGREEMENT

"Consolidated Adjusted EBITDA" means, as to any Person for any period, the sum of Consolidated EBIT for such period (i) plus consolidated depreciation and amortization for such period, (ii) plus extraordinary losses incurred other than in the ordinary course of business, (iii) minus extraordinary gains realized other than in the ordinary course of business. For Persons acquired by PDCo during the relevant measurement period, their EBITDA results will be included in the calculation of Consolidated Adjusted EBITDA as if those Persons were owned by PDCo for the entire reporting period. Consolidated Adjusted EBITDA will be calculated on a rolling four-quarter basis.

"Consolidated EBIT" means, as to any Person and with reference to any period, Consolidated Net Income plus, to the extent deducted from revenues in determining Consolidated Net Income, (i) Consolidated Interest Expense, (ii) expense for federal, state, local and foreign income and franchise taxes paid or accrued and (iii) extraordinary losses incurred other than in the ordinary course of business, minus, to the extent included in Consolidated Net Income, extraordinary gains realized other than in the ordinary course of business, all calculated for such Person and its Subsidiaries on a consolidated basis.

"Consolidated Interest Expense" means, as to any Person and with reference to any period, the interest expense of such Person and its Subsidiaries calculated on a consolidated basis for such period including, without limitation, such interest expense as may be attributable to capitalized leases, receivables transaction financing costs, the discount or implied interest component of off-balance sheet liabilities, all commissions, discounts and other fees and charges owed with respect to letters of credit and net mark-to-market exposure.

"Consolidated Net Income" means as to any Person and with reference to any period, the net income (or loss) of such Person and its Subsidiaries calculated on a consolidated basis for such period, excluding any non-cash charges or gains which are unusual, non-recurring or extraordinary.

"Consolidated Tangible Net Worth" means, as of any date of determination, the consolidated total stockholders' equity (including capital stock, additional paid-in capital and retained earnings) of PDCo and its Subsidiaries determined in accordance with GAAP, less goodwill and other intangible assets.

"Consolidated Total Debt" means (a) all Indebtedness of PDCo and its Subsidiaries, on a consolidated basis, reflected on a balance sheet prepared in accordance with GAAP, plus, without duplication (b) the face amount of all outstanding letters of credit in respect of which PDCo or any Subsidiary has any reimbursement obligation and the principal amount of all contingent obligations of PDCo and its Subsidiaries, plus obligations associated with capitalized leases, plus obligations arising from the sale of accounts

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PATTERSON RECEIVABLES PURCHASE AGREEMENT

receivable and other forms of off-balance sheet financing, including receivables transaction attributed indebtedness.

"Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or application for a letter of credit.

"Contract" means, with respect to any Receivable, any and all instruments, agreements, invoices or other writings pursuant to which such Receivable arises or which evidences such Receivable.

"CP Costs" means for any day during which a Purchaser Interest is held by the Conduit, an amount equal to the Capital of such Purchaser Interest multiplied by a per annum rate equivalent to the "weighted average cost" (as defined below) related to the issuance of indexed Commercial Paper of the Conduit that is allocated, in whole or in part, to fund such Capital (and which may also be allocated in part to the funding of other assets of the Conduit); provided, however, that if any component of such rate is a discount rate, in calculating such rate for such Capital for such date, the rate used to calculate such component of such rate shall be a rate resulting from converting such discount rate to an interest bearing equivalent rate per annum. As used in this definition, the "weighted average cost" shall consist of (x) the actual interest rate paid to purchasers of indexed Commercial Paper issued by the Conduit, (y) the costs associated with the issuance of such Commercial Paper (including dealer fees and commissions to placement agents), and (z) interest on other borrowing or funding sources by the Conduit, including to fund small or odd dollar amounts that are not easily accommodated in the commercial paper market.

"Credit and Collection Policy" means Seller's and/or the applicable Originator's credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in Exhibit VIII hereto, as modified from time to time in accordance with this Agreement.

"Credit Enhancement" means, on any date, an amount equal to (i) the Net Receivables Balance as of the close of business of the Servicer on such date, multiplied by the greater of (x) 10% and (y) 3 times the Default Ratio.

"Deemed Collections" means the aggregate of all amounts Seller shall have been deemed to have received as a Collection of a Receivable. If at any time, (i) the Outstanding

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Balance of any Receivable is either (x) reduced as a result of any defective or rejected goods or services, any discount or any adjustment or otherwise by Seller or any Originator (other than cash Collections on account of the Receivables) or (y) 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), (ii) any of the representations or warranties in Article V are no longer true with respect to any Receivable or
(iii) the Related Equipment for any Receivable is Repossessed and sold for less than the fair market value of such Related Equipment, Seller shall be deemed to have received a Collection of such Receivable in the amount of (A) such reduction or cancellation in the case of clause (i) above, (B) the entire Outstanding Balance in the case of clause (ii) above and (C) the difference between the fair market value of the Repossessed Related Equipment and the gross proceeds received upon the sale of such Repossessed Related Equipment in the case of clause (c) above.

"Default Fee" means with respect to any amount due and payable by Seller in respect of any Aggregate Unpaids, an amount equal to the greater of
(i) $1000 and (ii) interest on any such unpaid Aggregate Unpaids at a rate per annum equal to 2% above the Prime Rate.

"Default Ratio" means, as of the last day of each Fiscal Month, a percentage equal to: (i) the aggregate Outstanding Balance of all Defaulted Receivables on such day, divided by (ii) the aggregate Outstanding Balance of all Receivables on such day.

"Defaulted Receivable" means a Receivable as to which any payment, or part thereof, remains unpaid for 121 days or more from the original due date for such payment.

"Defaulting Financial Institution" has the meaning set forth in Section 13.5.

"Delinquency Ratio" means, at any time, a percentage equal to (i) the aggregate Outstanding Balance of all Receivables that were Delinquent Receivables at such time divided by (ii) the aggregate Outstanding Balance of all Receivables at such time.

"Delinquent Receivable" means a Receivable as to which any payment, or part thereof, remains unpaid for 61 days or more from the original due date for such payment.

"Designated Obligor" means an Obligor indicated by the Agent to Seller in writing.

"Dilutions" means, at any time, the aggregate amount of reductions or cancellations described in clause (i) of the definition of "Deemed Collections".

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"Discount Rate" means, the LIBO Rate or the Prime Rate, as applicable, with respect to each Purchaser Interest of the Financial Institutions.

"Discounted Receivable" means a Receivable that arises under a Contract that does not contain a stated rate of interest applicable to the Outstanding Balance of such Receivable.

"Discounted Receivable Discounted Balance" means, at any time, with respect to any Discounted Receivable, the discounted Outstanding Balance of such Receivable, which Outstanding Balance shall be discounted using a discount rate of 10%.

"EagleSoft Computer Receivable" means a Receivable originated by PDSI that arises from the sale or financing of computer hardware equipment by PDSI.

"EagleSoft Software Receivable" means a Receivable originated by PDSI that arises from the sale, licensing or financing of computer software by PDSI.

"Eligible Receivable" means, at any time, a Receivable:

(i) the Obligor of which (a) if a natural person, is a resident of the United States or, if a corporation or other business organization, is organized under the laws of the United States or any political subdivision thereof and has its chief executive office in the United States; (b) is not an Affiliate of any of the parties hereto;
(c) is not a Designated Obligor; and (d) is not a government or a governmental subdivision or agency,

(ii) the Obligor of which is not, and has not been, the Obligor of any Charged-Off Receivable or any Defaulted Receivable,

(iii) that is not a Charged-Off Receivable or a Defaulted Receivable,

(iv) that is not a Delinquent Receivable at the time a Purchaser Interest in such Receivable is purchased hereunder,

(v) that arises under a Contract that has not had any payment or other terms of such Contract extended, modified or waived, unless such Receivable is a Modified Receivable,

(vi) that is an "account" or "chattel paper" within the meaning of Article 9 of the UCC of all applicable jurisdictions,

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(vii) that is denominated and payable only in United States dollars in the United States,

(viii) that arises under a Contract in substantially the form of one of the form contracts set forth on Exhibit IX hereto or otherwise approved by the Agent in writing, which, together with such Receivable, is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms subject to no offset, counterclaim or other defense,

(ix) that arises under a Contract that (A) does not require the Obligor under such Contract to consent to the transfer, sale or assignment of the rights and duties of the applicable Originator or any of its assignees under such Contract and (B) does not contain a confidentiality provision that purports to restrict the ability of any Purchaser to exercise its rights under this Agreement, including, without limitation, its right to review the Contract,

(x) that arises under a Contract that contains an obligation to pay a specified sum of money, contingent only upon the sale of goods or the provision of services by the applicable Originator,

(xi) that, together with the Contract related thereto, does not contravene any law, rule or regulation applicable thereto (including, without limitation, any law, rule and regulation 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 no part of the Contract related thereto is in violation of any such law, rule or regulation,

(xii) that satisfies all applicable requirements of the Credit and Collection Policy,

(xiii) that was generated in the ordinary course of the applicable Originator's business,

(xiv) that arises solely from the sale, licensing or financing of goods or the provision of services to the related Obligor by the applicable Originator, and not by any other Person (in whole or in part),

(xv) as to which the Agent has not notified Seller that the Agent has determined that such Receivable or class of Receivables is not acceptable as an

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Eligible Receivable, including, without limitation, because such Receivable arises under a Contract that is not acceptable to the Agent,

(xvi) that is not subject to any right of rescission, set-off, counterclaim, any other defense (including defenses arising out of violations of usury laws) of the applicable Obligor against the applicable Originator or any other Adverse Claim, and the Obligor thereon holds no right as against such Originator to cause such Originator to repurchase the goods or merchandise the sale of which shall have given rise to such Receivable (except with respect to sale discounts effected pursuant to the Contract, or defective goods returned in accordance with the terms of the Contract),

(xvii) that, (a) if such Receivable is a Discounted Receivable, the related Contract requires that payment in full of the Outstanding Balance of such Receivable be made not later than 63 months after the date such Receivable was originated; (b) if such Receivable is an EagleSoft Computer Receivable or EagleSoft Software Receivable, the related Contract requires that payment in full of the Outstanding Balance of such Receivable to be made not later than 39 months after the date such Receivable was originated; and (c) otherwise, the related Contract requires that payment in full of the Outstanding Balance of such Receivable to be made not later than 60 months after the date such Receivable was originated,

(xviii) as to which the applicable Originator has satisfied and fully performed all obligations on its part with respect to such Receivable required to be fulfilled by it, and no further action is required to be performed by any Person with respect thereto other than payment thereon by the applicable Obligor,

(xix) all right, title and interest to and in which has been validly transferred by the applicable Originator directly to Seller under and in accordance with the Receivables Sale Agreement, and Seller has good and marketable title thereto free and clear of any Adverse Claim,

(xx) that arises under a Contract that requires the Outstanding Balance of such Receivable to be paid in equal consecutive monthly installments, unless such Receivable is a Balloon Payment Receivable,

(xxi) that, if such Receivable is a Veterinary Receivable, the Outstanding Balance thereof, when added to the Outstanding Balance of all other Veterinary Receivables, does not exceed 5% of the aggregate Outstanding Balance of all Receivables,

Exh. I-12

PATTERSON RECEIVABLES PURCHASE AGREEMENT

(xxii) that, if such Receivable is a Balloon Payment Receivable, the Outstanding Balance thereof, when added to the Outstanding Balance of all other Balloon Payment Receivables, does not exceed 5% of the aggregate Outstanding Balance of all Receivables,

(xxiii) that, if such Receivable is an EagleSoft Software Receivable, the Outstanding Balance thereof, when added to the Outstanding Balance of all other EagleSoft Software Receivables, does not exceed 15% of the aggregate Outstanding Balance of all Receivables,

(xxiv) that, if such Receivable is an EagleSoft Computer Receivable, the Outstanding Balance thereof, when added to the Outstanding Balance of all other EagleSoft Computer Receivables, does not exceed 10% of the aggregate Outstanding Balance of all Receivables,

(xxv) that, if such Receivable is a Modified Receivable, the Outstanding Balance thereof, when added to the Outstanding Balance of all other Modified Receivables, does not exceed 5% of the aggregate Outstanding Balance of all Receivables,

(xxvi) that, if such Receivable is a Discounted Receivable, the Outstanding Balance thereof, when added to the Outstanding Balance of all other Discounted Receivables, does not exceed 5% of the aggregate Outstanding Balance of all Receivables,

(xxvii) that, together with the related Contract, has not been sold, assigned or pledged by the applicable Originator or Seller, except pursuant to the terms of the Receivables Sale Agreement and this Agreement,

(xxviii) that (a) if such Receivable is an EagleSoft Software Receivable, the Obligor thereof has made at least three payments on such Receivable and (b) otherwise, the Obligor thereof has made at least one payment on such Receivable,

(xxix) that arises under a Contract that provides for aggregate payments thereunder in an amount less than $250,000,

(xxx) the Obligor of which is not the Obligor of other Receivables with an aggregate Outstanding Balance in excess of $250,000,

(xxxi) with respect to which there is only one original executed copy of the related Contract, which will, together with the related records be held by the Servicer as

Exh. I-13

PATTERSON RECEIVABLES PURCHASE AGREEMENT

bailee of the Agent and the Purchasers, and no other custodial agreements are in effect with respect thereto, and

(xxxii) that excludes residual value and any maintenance component.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

"Excess Spread" means, as of the last day of any Fiscal Month, the sum of (i) the weighted average annual percentage rate accruing on the Receivables, minus (ii) 1%, minus (iii) if the Hedging Agreement shall have been entered into in accordance with Section 7.3, the Hedge Fixed Rate otherwise, a per annum percentage that is the percentage equivalent of the CP Costs accrued during such Fiscal Month or the Financial Institution Yield accrued during such month (as applicable), minus (iv) the Program Fee Rate (as defined in the Fee Letter), minus (v) the Facility Fee Rate (as defined in the Fee Letter).

"Facility Account" means the account numbered 1109495 maintained by Seller in the name of "PDC Funding Company, LLC" at Bank One, together with any successor account or sub-account.

"Facility Termination Date" means the earliest of (i) the Liquidity Termination Date and (ii) the Amortization Date.

"Federal Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy," as amended and any successor statute thereto.

"Federal Funds Effective Rate" means, for any period, a fluctuating interest rate per annum for each day during such period equal to (a) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York in the Composite Closing Quotations for U.S. Government Securities; or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:30 a.m. (Chicago time) for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by it.

"Fee Letter" means that certain letter agreement dated as of the date hereof among Seller, Conduit and the Agent, as it may be amended, restated, supplemented or otherwise modified and in effect from time to time.

"Finance Charge Collections" means Collections consisting of Finance Charges.

Exh. I-14

PATTERSON RECEIVABLES PURCHASE AGREEMENT

"Finance Charges" means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract.

"Financial Institution Yield" means for each respective Tranche Period relating to Purchaser Interests of the Financial Institutions, an amount equal to the product of the applicable Discount Rate for each Purchaser Interest multiplied by the Capital of such Purchaser Interest for each day elapsed during such Tranche Period, annualized on a 360 day basis.

"Financial Institutions" has the meaning set forth in the preamble in this Agreement.

"First Tier Account" means each concentration account, depositary account, lock-box account or similar account in which any Collections are collected or deposited, including, without limitation, by means of automatic funds transfer (other than the Second-Tier Account) and which is listed on Exhibit IV.

"Fiscal Month" means any of the thirteen consecutive four week or five week accounting periods used by PDCo for accounting purposes which begin on the Sunday after the last Saturday in April of each year and ending on the last Saturday in April of the next year.

"Funding Agreement" means this Agreement and any agreement or instrument executed by any Funding Source with or for the benefit of Conduit.

"Funding Source" means (i) any Financial Institution or (ii) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to Conduit.

"GAAP" means generally accepted accounting principles in effect in the United States of America as of the date of this Agreement, provided, that if there occurs after the date of this Agreement any change in GAAP that affects in any material respect the calculation of any amount described in Section 9.2(f),
(m) or (n), the Agent and Seller shall negotiate in good faith amendments to the provisions of this Agreement that relate to the calculation of such amounts with the intent of having the respective positions of the Agent and the Purchasers and Seller after such change in GAAP conform as nearly as possible to their respective positions as of the date of this Agreement and, until any such amendments have been agreed upon, the amounts described in Sections 9.1(f), (m) and (n) shall be calculated as if no such change in GAAP has occurred.

Exh. I-15

PATTERSON RECEIVABLES PURCHASE AGREEMENT

"Hedge Fixed Amount" means, with respect to each Settlement Period, an amount equal to the product of (i) the average Aggregate Capital outstanding during such Settlement Period, times (ii) the Hedge Fixed Rate, times (iii) a fraction, the numerator of which is the number of days in such Settlement Period and the denominator of which is 360.

"Hedge Fixed Rate" means, for any day during a Settlement Period, the fixed rate payable under the Hedging Agreement (without taking into account any netting provisions thereunder), as such rate may be, reset from time to time.

"Hedge Floating Amount" means, with respect to each Settlement Period, an amount equal to the product of (i) the average Aggregate Capital outstanding during such Settlement Period, times (ii) the one-month LIBO Rate applicable to the outstanding Aggregate Capital during such Settlement Period, times (iii) a fraction, the numerator of which is the number of days in such Settlement Period and the denominator of which is 360.

"Hedge Provider" means Bank One and any replacement therefor selected by the Agent and Seller in accordance with Section 7.3.

"Hedge Provider Downgrade" means the unsecured, unguaranteed, long-term debt rating of the Hedge Provider under the then current Hedging Agreement, if any, is reduced below A- or withdrawn by Standard & Poor's Ratings Service or below A3 or withdrawn by Moody's Investors Service.

"Hedging Agreement" has the meaning set forth in Section 7.3.

"Hedging Obligations" means all amounts payable to the Hedge Provider under the Hedging Agreement, including, without limitation, the accrued fixed amount under the Hedging Agreement and all breakage costs associated with the termination of the Hedging Agreement.

"Incremental Purchase" means a purchase of one or more Purchaser Interests which increases the total outstanding Aggregate Capital hereunder.

"Indebtedness" of a Person means such Person's (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by liens or payable out of the proceeds or production from property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments, (v) capitalized lease obligations, (vi) net liabilities under interest rate

Exh. I-16

PATTERSON RECEIVABLES PURCHASE AGREEMENT

swap, exchange or cap agreements, (vii) Contingent Obligations and (viii) liabilities in respect of unfunded vested benefits under plans covered by Title IV of ERISA.

"Independent Governor" shall mean a governor of Seller who is not at such time, and has not been at any time during the preceding five (5) years, (A) a director, officer, governor, manager, member, employee or affiliate of Seller, any Patterson Entity, or any of their respective Subsidiaries or Affiliates, or (B) the beneficial owner (at the time of such individual's appointment as an Independent Governor or at any time thereafter while serving as an Independent Governor) of any of the outstanding common membership units or capital stock, as applicable, of Seller, any Patterson Entity, or any of their respective Subsidiaries or Affiliates, having general voting rights.

"Intercreditor Agreement" means an intercreditor agreement by and among the Agent, US Bank, as agent under the US Bank Contract Purchase Agreement, PDCo, PDSI, Webster and Seller, as the same may be amended, restated supplemented or otherwise modified from time to time.

"LIBO Rate" means the rate per annum equal to the sum of (i) (a) the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen LIBOR01 as of 11:00 a.m. (London time) two Business Days prior to the first day of the relevant Tranche Period, and having a maturity equal to such Tranche Period, provided that, (i) if Reuters Screen LIBOR01 is not available to the Agent for any reason, the applicable LIBO Rate for the relevant Tranche Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Tranche Period, and having a maturity equal to such Tranche Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available to the Agent, the applicable LIBO Rate for the relevant Tranche Period shall instead be the rate determined by the Agent to be the rate at which Bank One offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Tranche Period, in the approximate amount to be funded at the LIBO Rate and having a maturity equal to such Tranche Period, divided by (b) one minus the maximum aggregate reserve requirement (including all basic, supplemental, marginal or other reserves) which is imposed against the Agent in respect of Eurocurrency liabilities, as defined in Regulation D of the Board of Governors of the Federal Reserve System as in effect from time to time (expressed as a decimal), applicable to such Tranche Period plus (ii) 1.00% per annum. The LIBO Rate shall be rounded, if necessary, to the next higher 1/16 of 1%.

Exh. I-17

PATTERSON RECEIVABLES PURCHASE AGREEMENT

"Liquidity Termination Date" means May 9, 2003, as extended by mutual agreement of Seller, the Agent and the Purchasers.

"Lock-Box" means each locked postal box with respect to which a bank who has executed a Collection Account Agreement has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables and which is listed on Exhibit IV.

"Material Adverse Effect" means a material adverse effect on (i) the financial condition or operations of any Seller Party and its Subsidiaries, (ii) the ability of any Seller Party to perform its obligations under this Agreement or the Performance Provider to perform its obligations under the Performance Undertaking, (iii) the legality, validity or enforceability of this Agreement or any other Transaction Document, (iv) any Purchaser's interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or the Collections with respect thereto, or (v) the collectibility of the Receivables generally or of any material portion of the Receivables.

"Modified Receivable" means a Receivable as to which the payment terms of the related Contract have been extended or modified for credit reasons since the origination of such Receivable.

"Monthly Report" means a report, in substantially the form of Exhibit X hereto (appropriately completed), furnished by the Servicer to the Agent pursuant to Section 8.5.

"Net Receivables Balance" means, at any time, the aggregate Outstanding Balance of all Eligible Receivables at such time reduced by (i) the aggregate amount by which the Outstanding Balance of all Eligible Receivables of each Obligor and its Affiliates exceeds the Concentration Limit for such Obligor and
(ii) the excess of the aggregate Outstanding Balance of all Eligible Receivables that are Discounted Receivables over the aggregate Discounted Receivable Discounted Balance of all such Receivables.

"Non-Defaulting Financial Institution" has the meaning set forth in
Section 13.5.

"Non-Renewing Financial Institution" has the meaning set forth in
Section 13.6(a).

"Obligations" shall have the meaning set forth in Section 2.1.

"Obligor" means a Person obligated to make payments pursuant to a Contract.

Exh. I-18

PATTERSON RECEIVABLES PURCHASE AGREEMENT

"Originated Receivable" means all indebtedness and other obligations owed to Seller or an Originator (at the time it arises, and before giving effect to any transfer or conveyance under the Receivables Sale Agreement or hereunder) or in which Seller or an Originator has a security interest or other interest, including, without limitation, any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale, licensing or financing of goods or the rendering of services by an Originator, and further includes, without limitation, the obligation to pay any Finance Charges with respect thereto. Indebtedness and other rights and obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate from an Originated Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided further, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be an Originated Receivable regardless of whether the account debtor, any Originator or Seller treats such indebtedness, rights or obligations as a separate payment obligation.

"Originator" means each of PDSI and Webster, in their respective capacities as seller under the Receivables Sale Agreement.

"Outstanding Balance" of any Receivable at any time means the then outstanding principal balance thereof.

"Participant" has the meaning set forth in Section 12.2.

"Patterson Entity" means each of PDCo and each Originator and their respective successors.

"PDCo" has the meaning set forth in the preamble to this Agreement.

"PDSI" means Patterson Dental Supply, Inc., a Minnesota corporation, together with its successors and assigns.

"Performance Provider" means PDCo in its capacity as Provider under the Performance Undertaking.

"Performance Undertaking" means that certain Performance Undertaking, dated as of May 10, 2002, by Performance Provider in favor of Seller, substantially in the form of Exhibit XI, as the same may be amended, restated, supplemented or otherwise modified from time to time.

Exh. I-19

PATTERSON RECEIVABLES PURCHASE AGREEMENT

"Permitted Investments" means (a) evidences of indebtedness maturing within thirty days after the date of loan thereof, issued by, or guaranteed by the full faith and credit of, the federal government of the United States, (b) repurchase agreements with banking institutions or broker-dealers registered under the Securities Exchange Act of 1934 which are fully secured by obligations of the kind specified in clause (a), (c) money market funds (i) rated not lower than the highest rating category from Moody's Investors Service and "AAA m" or "AAAm-g," from Standard & Poor's Rating Service or (ii) which are otherwise acceptable to the Agent or (d) commercial paper issued by any corporation incorporated under the laws of the United States and rated at least "A-1+" (or the equivalent) by Standard & Poor's Ratings Service and at least "P-1" (or the equivalent) by Moody's Investors Service.

"Person" means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

"P.O. Box" means a locked postal box located in a United States post office to which Obligors remit payments of Receivables.

"Postal Notice" means a notice from an Originator directing the United States post office where any P.O. Box is located to transfer control of such P.O. Box to the Agent, which notice shall be substantially in the form of Exhibit XII.

"Potential Amortization Event" means an event which, with the passage of time or the giving of notice, or both, would constitute an Amortization Event.

"Prime Rate" means a rate per annum equal to the prime rate of interest announced from time to time by Bank One or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes.

"Principal Collections" means Collections other than Finance Charge Collections.

"Pro Rata Share" means, for each Financial Institution, a percentage equal to (i) the Commitment of such Financial Institution, divided by (ii) the aggregate amount of all Commitments of all Financial Institutions hereunder, adjusted as necessary to give effect to the application of the terms of Sections 13.5 or 13.6.

"Purchase Limit" means $200,000,000.

"Purchase Notice" has the meaning set forth in Section 1.2.

Exh. I-20

PATTERSON RECEIVABLES PURCHASE AGREEMENT

"Purchase Price" means, with respect to any Incremental Purchase of a Purchaser Interest, the amount paid to Seller for such Purchaser Interest which shall not exceed the least of (i) the amount requested by Seller in the applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the applicable purchase date and (iii) the excess, if any, of the Net Receivables Balance (less the Credit Enhancement) on the applicable purchase date over the aggregate outstanding amount of Aggregate Capital determined as of the date of the most recent Monthly Report, taking into account such proposed Incremental Purchase.

"Purchaser Interest" means, at any time, an undivided percentage ownership interest (computed as set forth below) associated with a designated amount of Capital, selected pursuant to the terms and conditions hereof in (i) each Receivable arising prior to the time of the most recent computation or recomputation of such undivided interest, (ii) all Related Security with respect to each such Receivable, and (iii) all Collections with respect to, and other proceeds of, each such Receivable. Each such undivided percentage interest shall equal:

where:

C        =        the Capital of such Purchaser Interest.

CE       =        the Credit Enhancement.

NRB      =        the Net Receivables Balance.

Such undivided percentage ownership interest shall be initially computed on its date of purchase. Thereafter, until the Amortization Date, each Purchaser Interest shall be automatically recomputed (or deemed to be recomputed) on each day prior to the Amortization Date. The variable percentage represented by any Purchaser Interest as computed (or deemed recomputed) as of the close of the Business Day immediately preceding the Amortization Date shall remain constant at all times thereafter.

Exh. I-21

PATTERSON RECEIVABLES PURCHASE AGREEMENT

"Purchasers" means Conduit and each Financial Institution.

"Purchasing Financial Institution" has the meaning set forth in Section 12.1(b).

"Receivable" means at any time, each and every Originated Receivable that has been identified for sale to Seller in any Sale Assignment (as defined in the Receivables Sale Agreement), including all schedules thereto, delivered pursuant to Section 1.1(a)(ii) of the Receivables Sale Agreement.

"Receivables Sale Agreement" means that certain Receivables Sale Agreement, dated as of May 10, 2002, by and among the Originators and Seller, as the same may be amended, restated, supplemented or otherwise modified from time to time.

"Records" means, with respect to any Receivable, all Contracts and other 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 Receivable, any Related Security therefor and the related Obligor.

"Reduction Notice" has the meaning set forth in Section 1.3.

"Reduction Percentage" means, for any Purchaser Interest acquired by the Financial Institutions from Conduit for less than the Capital of such Purchaser Interest, a percentage equal to a fraction the numerator of which is the Conduit Transfer Price Reduction for such Purchaser Interest and the denominator of which is the Capital of such Purchaser Interest.

"Related Equipment" means with respect to any Receivable, the goods sold or licensed to or financed for the Obligor which sale, licensing or financing gave rise to such Receivable and all financing statements or other filings with respect thereto.

"Related Security" means, with respect to any Receivable:

(i) all of Seller's interest in the Related Equipment or other inventory and goods (including returned or repossessed inventory or goods), if any, the sale, licensing or financing of which by the applicable Originator gave rise to such Receivable, and all insurance contracts with respect thereto,

(ii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all

Exh. I-22

PATTERSON RECEIVABLES PURCHASE AGREEMENT

financing statements and security agreements describing any collateral securing such Receivable,

(iii) all guaranties, letters of credit, insurance, "supporting obligations" (within the meaning of Section 9-102(a) of the UCC of all applicable jurisdictions) and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise,

(iv) all service contracts and other contracts and agreements associated with such Receivable,

(v) all Records related to such Receivable,

(vi) all of Seller's right, title and interest in, to and under the Receivables Sale Agreement and the Performance Undertaking,

(vii) all of Seller's right, title and interest in and to each Lock-Box, P.O. Box and Collection Account, and any and all agreements related thereto,

(viii) all of Seller's right, title and interest in, to and under the Hedging Agreement, and

(ix) all proceeds of any of the foregoing.

"Repossessed" means that, with respect to any Related Equipment, the applicable Originator or its agent has obtained possession, control and dominion of such Related Equipment from the related Obligor.

"Required Financial Institutions" means, at any time, Financial Institutions with Commitments in excess of 66-2/3% of the Purchase Limit.

"Restricted Junior Payment" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of membership units of Seller now or hereafter outstanding, except a dividend payable solely in shares of that class of membership units or in any junior class of membership units of Seller, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of membership units of Seller now or hereafter outstanding, (iii) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to the Subordinated Loans

Exh. I-23

PATTERSON RECEIVABLES PURCHASE AGREEMENT

(as defined in the Receivables Sale Agreement), (iv) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of membership units of Seller now or hereafter outstanding, and (v) any payment of management fees by Seller (except for reasonable management fees to the Originators or their Affiliates in reimbursement of actual management services performed).

"Second Tier Account" means the account numbered 1109735 maintained by Seller in the name of "PDC Funding Company, LLC" at Bank One, together with any successor account or sub-account.

"Seller" has the meaning set forth in the preamble to this Agreement.

"Seller Parties" has the meaning set forth in the preamble to this Agreement.

"Servicer" means at any time the Person (which may be the Agent) then authorized pursuant to Article VIII to service, administer and collect Receivables.

"Servicing Fee" has the meaning set forth in Section 8.6.

"Settlement Date" means (A) the 19th day of each calendar month, and (B) the last day of the relevant Tranche Period in respect of each Purchaser Interest of the Financial Institutions; or, in each case, if such day is not a Business Day, then the first Business Day thereafter.

"Settlement Period" means (A) in respect of each Purchaser Interest of Conduit, (i) at any time when the Hedge Agreement is not in full force and effect, the immediately preceding Accrual Period and (ii) at any time when the Hedge Agreement is in full force and effect, each period commencing on (and including) a Settlement Date and ending on (but excluding) the next Settlement Date, and (B) in respect of each Purchaser Interest of the Financial Institutions, the entire Tranche Period of such Purchaser Interest. As used herein, the "related" Settlement Period with respect to a Settlement Date means the Settlement Period which precedes such Settlement Date in the case of Purchaser Interests of the Conduit or which ends on such Settlement Date in the case of Purchaser Interests of the Financial Institutions.

"Subsidiary" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, limited liability company, joint venture or similar business organization more than 50% of the

Exh. I-24

PATTERSON RECEIVABLES PURCHASE AGREEMENT

ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of Seller.

"Termination Date" has the meaning set forth in Section 2.2(d).

"Termination Percentage" has the meaning set forth in Section 2.2(d).

"Terminating Financial Institution" has the meaning set forth in
Section 13.6(a).

"Terminating Tranche" has the meaning set forth in Section 4.3(b).

"Tranche Period" means, with respect to any Purchaser Interest held by a Financial Institution:

(a) if Financial Institution Yield for such Purchaser Interest is calculated on the basis of the LIBO Rate, a period of one month, or such other period as may be mutually agreeable to the Agent and Seller, commencing on a Business Day selected by Seller or the Agent pursuant to this Agreement. Such Tranche Period shall end on the day in the applicable succeeding calendar month which corresponds numerically to the beginning day of such Tranche Period, provided, however, that if there is no such numerically corresponding day in such succeeding month, such Tranche Period shall end on the last Business Day of such succeeding month; or

(b) if Financial Institution Yield for such Purchaser Interest is calculated on the basis of the Prime Rate, a period commencing on a Business Day selected by Seller and agreed to by the Agent, provided no such period shall exceed one month.

If any Tranche Period would end on a day which is not a Business Day, such Tranche Period shall end on the next succeeding Business Day, provided, however, that in the case of Tranche Periods corresponding to the LIBO Rate, if such next succeeding Business Day falls in a new month, such Tranche Period shall end on the immediately preceding Business Day. In the case of any Tranche Period for any Purchaser Interest which commences before the Amortization Date and would otherwise end on a date occurring after the Amortization Date, such Tranche Period shall end on the Amortization Date. The duration of each Tranche Period which commences after the Amortization Date shall be of such duration as selected by the Agent.

"Transaction Documents" means, collectively, this Agreement, each Purchase Notice, the Receivables Sale Agreement, the Performance Undertaking, the Intercreditor Agreement, each Collection Account Agreement, the Hedging Agreement, the Fee Letter,

Exh. I-25

PATTERSON RECEIVABLES PURCHASE AGREEMENT

the Subordinated Note (as defined in the Receivables Sale Agreement) and all other instruments, documents and agreements executed and delivered in connection herewith.

"UCC" means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.

"Unconditional Liquidity Provider" means a Financial Institution that is identified by the Agent or by Bank One as an entity which will not under any circumstance receive any Conduit Transfer Price Reduction hereunder.

"US Bank" means U.S. Bank National Association, a national banking association, together with its successors.

"US Bank Contract Purchase Agreement" means that certain Second Amended and Restated Contract Purchase Agreement, dated as of April 28, 2000, by and among PDCo, PDSI, certain financial institutions party thereto and US Bank, as agent, as amended by the First Amendment to Second Amended and Restated Contract Purchase Agreement, dated as of April 30, 2001 and as further amended, restated, supplemented or otherwise modified from time to time.

"US Bank Receivable" means each receivable identified on a schedule to the US Bank Contract Purchase Agreement (or in any other writing delivered pursuant thereto) as a receivable to be sold thereunder and identified at least by the obligor thereof and the outstanding principal amount thereof.

"Veterinary Receivable" means a Receivable arising from the sale or financing by Webster of veterinary equipment.

"Webster" means Webster Veterinary Supply, Inc., a Minnesota corporation, together with its successors and assigns.

All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of Illinois, and not specifically defined herein, are used herein as defined in such Article 9.

Exh. I-26

Exhibit 10.15

RECEIVABLES SALE AGREEMENT

dated as of May 10, 2002,

AMONG

THE ORIGINATORS
NAMED HEREIN

AND

PDC FUNDING COMPANY, LLC,
as Buyer

RECEIVABLES SALE AGREEMENT

THIS RECEIVABLES SALE AGREEMENT, dated as May 10, 2002, 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, LLC, a Minnesota limited liability company ("Buyer"). Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I hereto (or, if not defined in Exhibit I hereto, the meaning assigned to such term in Exhibit I to the Purchase Agreement).

PRELIMINARY STATEMENTS

Each Originator now owns, and from time to time hereafter will own, Originated Receivables. Each Originator wishes to sell and assign to Buyer, and Buyer wishes to purchase from such Originator, all of such Originator's right, title and interest in and to certain of such Originated Receivables, together with the Related Security and Collections with respect thereto.

Each Originator and Buyer intend the transactions contemplated hereby to be true sales of the Receivables from such Originator to Buyer, providing Buyer with the full benefits of ownership of the Receivables, and neither of the Originators nor Buyer intends these transactions to be, or for any purpose to be characterized as, loans from Buyer to any Originator.

Following each purchase of Receivables from the Originators, Buyer will sell undivided interests therein and in the associated Related Security and Collections pursuant to that certain Receivables Purchase Agreement dated as of May 10, 2002 (as the same may from time to time hereafter be amended, supplemented, restated or otherwise modified, the "Purchase Agreement") among Buyer, the Servicer (as defined therein), the Conduit (as defined therein), the financial institutions from time to time party thereto as "Financial Institutions" and Bank One, NA (Main Office Chicago), as agent for the Conduit and Financial Institutions or any successor agent appointed pursuant to the terms of the Purchase Agreement (in such capacity, the "Agent").

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

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ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASE

Section 1.1 Purchases of Receivables.

(a) Agreement to Sell and Purchase. (i) 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 Buyer, without recourse (except to the extent expressly provided herein), and Buyer may, at its option, purchase from such Originator, all of Originator's right, title and interest in, to and under certain Originated Receivables owned by such Originator, together, in each case, with all Related Security and Collections with respect thereto. In connection with the payment of the Purchase Price for any Receivables, Buyer may request that Originator selling such Receivables deliver, and such Originator shall deliver, such approvals, opinions, information, reports or documents as Buyer may reasonably request.

(ii) Not less than two Business Days prior to each date on which any Originator proposes to sell Originated Receivables to Buyer, such Originator shall deliver to Buyer (i) a notice that such Originator proposes to sell to Buyer, on the specified Purchase Date, Originated Receivables, and (ii) an executed Sale Assignment, to which shall be attached a schedule of the Originated Receivables to be sold on such Purchase Date, identified at least by contract number, Obligor and principal amount outstanding as of such Purchase Date or any other date identified in such Sale Assignment. Effective upon Buyer's acceptance of such Sale Assignment, such Originator does hereby sell to Buyer without recourse (except to the extent expressly provided herein), and Buyer does hereby purchase or acquire, from such Originator, all of Originator's right, title and interest in and to the Originated Receivables identified in such Sale Assignment. The schedule attached to the first Sale Assignment delivered pursuant to this Section 1.1(a)(ii) shall be deemed to be Schedule B to this Agreement (and this Agreement shall be deemed, automatically and without further action by any Person, supplemented and modified thereby) and each schedule attached to any Sale Assignment thereafter delivered pursuant to this Section 1.1(a)(ii) shall be deemed to amend and supplement Schedule B hereto. Buyer shall be obligated to pay the Purchase Price for the Receivables purchased hereunder in accordance with Section 1.2.

(b) It is the intention of the parties hereto that each Purchase of Receivables made hereunder shall constitute a sale, which sale is absolute and irrevocable and provides Buyer with the full benefits of ownership of the Receivables. Except for the Purchase Price Credits owed pursuant to Section 1.3, each sale of Receivables hereunder is made without recourse to any Originator; provided, however, that (i) each Originator shall be liable to Buyer for all representations, warranties, covenants and indemnities made by such Originator pursuant to the terms of the Transaction Documents to which such Origina-

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tor is a party, and (ii) such sale does not constitute and is not intended to result in an assumption by Buyer or any assignee thereof of any obligation of any Originator or any other Person arising in connection with the Receivables, the related Contracts 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 Receivables made hereunder shall constitute sales of such Receivables rather than loans secured thereby, each Originator agrees that it will, on or prior to the date hereof and in accordance with Section 4.1(e)(ii), mark its master data processing records relating to the Receivables with a legend acceptable to Buyer and to the Agent (as Buyer's assignee), evidencing that Buyer has purchased such Receivables as provided in this Agreement and to note in its financial statements that its Receivables have been sold to Buyer. Upon the request of Buyer or the Agent (as Buyer'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 Buyer's ownership interest in the Receivables and the Related Security and Collections with respect thereto, or as Buyer or the Agent (as Buyer's assignee) may reasonably request.

Section 1.2 Payment for the Purchase.

(a) The Purchase Price for any Purchase of Receivables hereunder shall be payable in full by Buyer to the Originator of such Receivables in accordance with Section 1.2(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 Buyer in connection with its subsequent sale of an interest in such Receivables to the Purchasers under the Purchase Agreement or other cash on hand; and

(ii) the balance, by delivery of the proceeds of a subordinated revolving loan from such Originator to Buyer (a "Subordinated Loan") 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 Buyer'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 Buyer 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 Buyer thereunder.

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Subject to the limitations set forth in Section 1.2(a)(ii), each Originator irrevocably agrees to advance each Subordinated Loan requested by Buyer on or prior to the 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 Buyer is not required under the Purchase Agreement to set aside for the benefit of, or otherwise pay over to, the Purchasers.

(b) The Purchase Price for each Receivable purchased hereunder shall be due and payable in full by Buyer to the Originator of such Receivable on the Purchase Date for such Receivable, provided that settlement of the Purchase Price between Buyer and each Originator shall be effected on the next occurring Settlement Date (or, if the Purchase Date is a Settlement Date, on such Settlement Date). In addition, increases or decreases in the amount owing under the Subordinated Notes made pursuant to Section 1.2(a) shall be deemed to have occurred and shall be effective as of the next Settlement Date to occur after such increase or decrease.

Section 1.3 Purchase Price Credit Adjustments. If on any day:

(a) the Outstanding Balance of a Receivable 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 Receivable (other than cash Collections on account of the Receivables),

(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 II are not true when made or deemed made with respect to any Receivable, or

(c) the Related Equipment for any Receivable is Repossessed and sold for less than the fair market value of such Related Equipment,

then, in such event, Buyer shall be entitled to a credit (each, a "Purchase Price Credit") against the Purchase Price otherwise payable hereunder to the Originator of such Receivable 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 Balance of such Receivable and in the case of clause (c) above, the difference between the fair market value of the Repossessed Related Equipment and the gross proceeds received upon the sale of such Repossessed Related

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Equipment. 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 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.

Section 1.4 Payments and Computations, Etc. All amounts to be paid or deposited by Buyer 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 1.5 Transfer of Records.

(a) In connection with each Purchase of Receivables hereunder, each Originator hereby sells, transfers, assigns and otherwise conveys to Buyer all of such Originator's right and title to and interest in the Records relating to all Receivables 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 Buyer, 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 Receivables, to the extent necessary to administer such Receivables, 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 Buyer (or Buyer'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 Aggregate Unpaids, and shall terminate on the date this Agreement terminates in accordance with its terms.

(b) Each Originator (i) shall take such action requested by Buyer and/or the Agent (as Buyer's assignee), from time to time hereafter, that may be necessary or appropriate to ensure that Buyer and its assigns under the Purchase Agreement have an enforceable ownership interest in the Records relating to the Receivables purchased from such Originator hereunder, and (ii) shall use its reasonable efforts to ensure that Buyer, the

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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 Receivables and/or to recreate such Records.

Section 1.6 Characterization. If, notwithstanding the intention of the parties expressed in Section 1.1(b), any sale by any Originator to Buyer of Receivables 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 Receivables hereunder shall constitute a true sale thereof, each Originator hereby grants to Buyer a duly perfected security interest in all of such Originator's right, title and interest in, to and under all Receivables now existing and hereafter arising, all Collections and Related Security with respect thereto, each Lock-Box, P.O. Box and Collection Account, all other rights and payments relating to such Originator's Receivables 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 Receivables together with all other obligations of such Originator hereunder, which security interest shall be prior to all other Adverse Claims thereto. Buyer 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 II
REPRESENTATIONS AND WARRANTIES

Section 2.1 Representations and Warranties of Originator. Each Originator hereby represents and warrants to Buyer on the date hereof and on the date of each Purchase that:

(a) Corporate Existence and Power. Such Originator is a corporation, duly organized and validly existing and in good standing under the laws of its state of incorporation. Each such Originator is duly qualified to do business and is in good standing as a foreign corporation, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted, except where the failure to be so qualified or to have and hold such governmental licenses, authorizations, consents and approvals could not reasonably be expected to have a Material Adverse Effect.

(b) Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations

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hereunder and thereunder and such Originator's use of the proceeds of each Purchase from such Originator made hereunder, are within its corporate powers and authority, and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which such Originator is a party has been duly executed and delivered by such Originator.

(c) No Conflict. The execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws (or equivalent organizational documents) or any shareholder agreements, voting trusts or similar arrangements applicable to any of its authorized shares, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Originator or its Subsidiaries (except as created hereunder). No transaction contemplated hereby requires compliance with any bulk sales act or similar law.

(d) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.

(e) Actions, Suits. There are no actions, suits or proceedings pending, or to the best of such Originator's knowledge, threatened, against or affecting such Originator, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a Material Adverse Effect. Such Originator is not in default with respect to any order of any court, arbitrator or governmental body.

(f) Binding Effect. This Agreement and each other Transaction Document to which such Originator is a party constitute the legal, valid and binding obligations of such Originator enforceable against such Originator in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(g) Accuracy of Information. All information heretofore furnished by such Originator or any of its Affiliates to Buyer (or its assigns) for purposes of or in connection with this Agreement, any of the other Transaction Documents or any

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transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Originator or any of its Affiliates to Buyer (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.

(h) Use of Proceeds. No proceeds of any Purchase hereunder will be used (i) for a purpose that violates, or would be inconsistent with, any law, rule or regulation applicable to such Originator or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.

(i) Good Title. Immediately prior to each Purchase hereunder, such Originator (i) is the legal and beneficial owner of the Receivables to be sold by such Originator hereunder, and (ii) is the legal and beneficial owner of the Related Security with respect thereto or possesses a valid and perfected security interest therein, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect such Originator's ownership interest in each Receivable, its Collections and the Related Security.

(j) Perfection. This Agreement, together with the filing of the financing statements contemplated hereby and the executed Sale Assignments, is effective to transfer to Buyer (and Buyer shall acquire from such Originator)
(i) legal and equitable title to, with the right to sell and encumber, each Receivable existing or hereafter arising, together with the Collections with respect thereto, and (ii) all of such Originator's right, title and interest in the Related Security associated with each Receivable, in each case, free and clear of any Adverse Claim, except as created by the Transactions Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer's ownership interest in the Receivables, the Related Security and the Collections.

(k) Jurisdiction of Organization; Places of Business; etc. Exhibit II correctly sets forth such Originator's legal name, jurisdiction of organization, Federal Employer's Identification Number and State Organizational Identification Number. Such Originator's principal places of business and chief executive office and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit II or such other locations of which Buyer has been notified in accordance with Section 4.2(a) in jurisdictions where all action required by Section 4.1(g) or Section 7.3(a) has been taken and completed. Such Originator has not, within the period of one year prior to the date hereof, (i) changed the location of its principal place of business or chief executive office or,

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except as set forth on Exhibit II, its organizational structure, (ii) changed its legal name, (iii) except as set forth on Exhibit II, become a "new debtor" (within the meaning of Section 9-102(a)(56) of the UCC in effect in the State of Minnesota) or (iv) changed its jurisdiction of organization. Such Originator is a "registered organization" (within the meaning of Section 9-102 of the UCC as in effect in the State of Minnesota).

(l) Collections. The conditions and requirements set forth in
Section 4.1(i) have at all times been satisfied and duly performed. The names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts at each Collection Bank and the post office box number of each Lock-Box or P.O. Box, are listed on Exhibit III. Such Originator has not granted any Person, other than Buyer (and its assigns) dominion and control or "control" (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of any Lock-Box, P.O. Box or Collection Account, or the right to take dominion and control or "control" (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of any such Lock-Box, P.O. Box or Collection Account at a future time or upon the occurrence of a future event. Such Originator has taken all steps necessary to ensure that Buyer (or its assigns) has "control" (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) over all Collection Accounts. Such Originator has the ability to identify, within one Business Day of deposit, all amounts that are deposited to any First-Tier Account as constituting Collections or non-Collections.

(m) Material Adverse Effect. Since January 26, 2002, no event has occurred that would have a Material Adverse Effect.

(n) Names. In the past five (5) years, such Originator has not used any corporate or other names, trade names or assumed names other than as listed on Exhibit II.

(o) Ownership of Buyer. PDCo owns 100% of the issued and outstanding membership units of Buyer, free and clear of any Adverse Claim. Such membership units are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Buyer.

(p) Not a Holding Company or an Investment Company. Such Originator is not a "holding company" or a "subsidiary holding company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or any successor statute. Such Originator is not and, after giving effect to the transactions contemplated hereby, will not be required to be registered as, an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or any successor statute.

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(q) Compliance with Law. Such Originator has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Receivable, together with any Contract related thereto, does not contravene 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 no part of such Contract is in violation of any such law, rule or regulation.

(r) Compliance with Credit and Collection Policies. Such Originator has complied in all material respects with such Originator's Credit and Collection Policy with regard to each Receivable and any related Contract, and has not made any material change to such Credit and Collection Policy, except such material change as to which Buyer (or its assigns) has been notified in accordance with Section 4.1(a)(vii).

(s) Payments to Originator. With respect to each Receivable transferred to Buyer by such Originator hereunder, the Purchase Price received by such Originator 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 Receivable hereunder is or may be voidable under any section of the Federal Bankruptcy Code.

(t) Enforceability of Contracts. Each Contract with respect to each Receivable sold by such Originator hereunder is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(u) Eligible Receivables. Each Receivable sold by such Originator hereunder and included at any time in the Net Receivables Balance as an Eligible Receivable was, on its Purchase Date, an Eligible Receivable.

(v) Accounting. The manner in which such Originator accounts for the transactions contemplated by this Agreement does not jeopardize the characterization of the transactions contemplated herein as being true sales.

(w) No Adverse Selection. To the extent that such Originator has retained Originated Receivables that would be Eligible Receivables but which have not been

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transferred to Buyer hereunder, such Originator has not selected those Originated receivables to be transferred hereunder in any manner that materially adversely affects Buyer.

ARTICLE III
CONDITIONS OF PURCHASE

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

Section 3.2 Conditions Precedent to Subsequent Payments. Buyer's obligation to pay for Receivables on any Purchase Date shall be subject to the further conditions precedent that (a) the Facility Termination Date shall not have occurred; (b) Buyer (or its assigns) shall have received the notice required pursuant to Section 1.1(a)(ii), an executed Sale Assignment and such other approvals, opinions or documents as it may reasonably request and (c) on the Purchase Date for such Receivables, the following statements shall be true (and acceptance of the proceeds by any Originator of any payment for such Receivable shall be deemed a representation and warranty by such Originator that such statements are then true):

(i) the representations and warranties of such Originator set forth in Article II 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

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

Notwithstanding the foregoing conditions precedent, upon payment of the Purchase Price for any Receivable (whether by payment of cash, through an increase in the amounts outstanding under the Subordinated Notes and/or by offset of amounts owed to Buyer), title to such Receivable and the Related Security and Collections with respect thereto shall vest in Buyer, whether or not the conditions precedent to Buyer's obligation to pay for such Receivable 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 Buyer to rescind the related purchase and direct such Originator to pay to Buyer an amount equal to the Purchase Price that shall have been paid with respect to any Receivables related thereto.

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ARTICLE IV
COVENANTS

Section 4.1 Affirmative Covenants of the Originators. Until the date on which this Agreement terminates in accordance with its terms, each Originator hereby covenants as set forth below:

(a) Financial 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 Buyer (and its assigns):

(i) Annual Reporting. Within 90 days after the close of each of its fiscal years, audited, unqualified consolidated financial statements (which shall include balance sheets, statements of income and retained earnings and a statement of cash flows) for PDCo and its consolidated Subsidiaries for such fiscal year certified in a manner acceptable to Buyer (or its assigns) by independent public accountants acceptable to Buyer (or its assigns). Delivery within the time period specified above of PDCo's annual report on Form 10-K for such fiscal year (together with PDCo's annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Securities Exchange Act of 1934, as amended) prepared in accordance with the requirements therefor and filed with the Securities and Exchange Commission, shall be deemed to satisfy the requirements of this Section 4.1(a)(i), provided, that the report of the independent public accounts contained therein is acceptable to the Agent.

(ii) Quarterly Reporting. Within 45 days after the close of the first three (3) quarterly periods of each of its fiscal years, balance sheets of PDCo as at the close of each such period and statements of income and retained earnings and a statement of cash flows for PDCo for the period from the beginning of such fiscal year to the end of such quarter, all certified by its chief financial officer. Delivery within the time period specified above of PDCo's quarterly report on Form 10-Q for such fiscal quarter prepared in accordance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this Section 4.1(a)(ii).

(iii) Compliance Certificate. Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit IV signed by such Originator's Authorized Officer and dated the date of such annual financial statement or such quarterly financial statement, as the case may be.

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(iv) Shareholder Statements and Reports. Promptly upon the furnishing thereof to the shareholders of PDCo or such Originator, copies of all financial statements, reports and proxy statements so furnished.

(v) S.E.C. Filings. Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which PDCo or such Originator or any of their respective Subsidiaries files with the Securities and Exchange Commission.

(vi) Copies of Notices. Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than Buyer, the Agent or the Conduit, copies of the same.

(vii) Change in Credit and Collection Policies. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to such Originator's Credit and Collection Policy, a copy of such Originator's Credit and Collection Policy then in effect and a notice (A) indicating such change or amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of the Receivables of such Originator or decrease the credit quality of any newly created Receivables of such Originator, requesting Buyer's consent thereto.

(viii) Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Originator as Buyer (or its assigns) may from time to time reasonably request in order to protect the interests of Buyer (and its assigns) under or as contemplated by this Agreement.

(b) Notices. Such Originator will notify the Buyer (or its assigns) in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:

(i) Termination Events or Potential Termination Events. The occurrence of each Termination Event and each Potential Termination Event, by a statement of an Authorized Officer of such Originator.

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(ii) Judgment and Proceedings. (1) The entry of any judgment or decree against such Originator or any of its Subsidiaries if the aggregate amount of all judgments and decrees then outstanding exceeds $1,000,000, and (2) the institution of any litigation, arbitration proceeding or governmental proceeding against such Originator that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(iii) Material Adverse Effect. The occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect.

(iv) Defaults Under Other Agreements. The occurrence of a default or an event of default under any other financing arrangement pursuant to which such Originator is a debtor or an obligor.

(v) Downgrade of PDCo or an Originator. Any downgrade in the rating of any Indebtedness of PDCo or any Originator by Standard & Poor's Ratings Services or by Moody's Investors Service, Inc., setting forth the Indebtedness affected and the nature of such change.

(c) Compliance with Laws and Preservation of Corporate Existence. Such Originator will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Such Originator will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted, except where the failure to so preserve and maintain any such rights, franchises or privileges or to so qualify could not reasonably be expected to have a Material Adverse Effect.

(d) Audits. Such Originator will furnish to Buyer (or its assigns) from time to time such information with respect to it and the Receivables as Buyer (or its assigns) may reasonably request. Such Originator will, from time to time during regular business hours as requested by Buyer (or its assigns), upon reasonable notice and at the sole cost of such Originator, permit Buyer (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 Receivables of such Originator and the Related Security, including, without limitation, the related Contracts, and

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(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 Receivables of such Originator and the Related Security or such Originator's performance under any of the Transaction Documents 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.

(e) Keeping and Marking of Records and Books.

(i) Such Originator will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable). Such Originator will give Buyer (or its assigns) notice of any material change in the administrative and operating procedures referred to in the previous sentence.

(ii) Such Originator will (A) on or prior to the date hereof, mark its master data processing records and other books and records relating to the Receivables of such Originator with a legend, acceptable to Buyer (or its assigns), describing Buyer's ownership interests in the Receivables and further describing the Purchaser Interests of the Agent (on behalf of the Purchasers) under the Purchase Agreement and (B) upon the request of Buyer (or its assigns), (x) mark each Contract with a legend describing Buyer's ownership interests in the Receivables of such Originator and further describing the Purchaser Interests of the Agent (on behalf of the Purchasers) and (y) deliver to Buyer (or its assigns) all Contracts (including, without limitation, all multiple originals of any such Contract) relating to the Receivables.

(f) Compliance with Contracts and Credit and Collection Policies. Such Originator will timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables of such Originator and (ii) comply in all respects with the Credit and Collection Policy in regard to each Receivable and the related Contract.

(g) Ownership. Such Originator will take all necessary action to establish and maintain, irrevocably in Buyer, (A) legal and equitable title to the Receivables

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of such Originator and the Collections and (B) all of such Originator's right, title and interest in the Related Security associated with the Receivables of such Originator, in each case, free and clear of any Adverse Claims other than Adverse Claims in favor of Buyer (and its assigns) (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer's interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Buyer as Buyer (or its assigns) may reasonably request).

(h) Purchasers' Reliance. Each Originator acknowledges that the Agent and the Purchasers are entering into the transactions contemplated by the Purchase Agreement in reliance upon Buyer's identity as a legal entity that is separate from such Originator and any Affiliates thereof. Therefore, from and after the date of execution and delivery of this Agreement, such Originator will take all reasonable steps including, without limitation, all steps that Buyer or any assignee of Buyer may from time to time reasonably request to maintain Buyer's identity as a separate legal entity and to make it manifest to third parties that Buyer is an entity with assets and liabilities distinct from those of such Originator and any Affiliates thereof and not just a division of such Originator or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, such Originator (i) will not hold itself out to third parties as liable for the debts of Buyer nor purport to own the Receivables and other assets acquired by Buyer,
(ii) will take all other actions necessary on its part to ensure that Buyer is at all times in compliance with the covenants set forth in Section 7.1(i) of the Purchase Agreement and (iii) will cause all tax liabilities arising in connection with the transactions contemplated herein or otherwise to be allocated between such Originator and Buyer on an arm's-length basis and in a manner consistent with the procedures set forth in U.S. Treasury Regulations "1.1502-33(d) and 1.1552-1.

(i) Collections. Such Originator will cause (1) all items from all P.O. Boxes to be processed and deposited into a Collection Account within 1 Business Day after receipt in a P.O. Box, all ACH Receipts to be deposited immediately to a Collection Account and all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account, (2) all Collections deposited to any First-Tier Account to be electronically swept or otherwise transferred to the Second-Tier Account within 1 Business Day after deposit to such First-Tier Account, and (3) each Lock-Box, P.O. Box and Collection Account to be subject at all times to a Collection Account Agreement that is in full force and effect. In the event any payments relating to Receivables are remitted directly to such Originator or any Affiliate of such Originator, such Originator will remit such payments (or will cause all such payments to be remitted) directly to a Collection Bank for deposit into a 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

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and its assigns. Such Originator will transfer exclusive ownership, dominion and control (including "control" within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of each Lock-Box, P.O. Box and Collection Account to Buyer and will not grant the right to take dominion and control or grant "control" (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of any Lock-Box, P.O. Box or Collection Account at a future time or upon the occurrence of a future event to any Person, except to Buyer (or its assigns) as contemplated by this Agreement and the Purchase Agreement.

(j) Taxes. Such Originator will file all tax returns and reports required by law to be filed by it and promptly pay all taxes and governmental charges at any time owing. Such Originator will pay when due any taxes payable in connection with the Receivables of such Originator, exclusive of taxes on or measured by income or gross receipts of Buyer and its assigns.

(k) Insurance. Such Originator will maintain in effect, or cause to be maintained in effect, at such Originator's own expense, such casualty and liability insurance as such Originator deems appropriate in its good faith business judgment. Buyer and the Agent, for the benefit of the Purchasers, shall be named as additional insureds with respect to all such liability insurance maintained by such Originator. Such Originator will pay, or cause to be paid, the premiums therefor and deliver to Buyer and the Agent evidence satisfactory to Buyer and the Agent of such insurance coverage. Copies of each policy shall be furnished to Buyer, the Agent and any Purchaser in certificated form upon Buyer's, the Agent's or such Purchaser's request.

Section 4.2 Negative Covenants of the Originators. Until the date on which this Agreement terminates in accordance with its terms, each Originator hereby covenants that:

(a) Name Change, Jurisdiction of Organization, Offices and Books of Account. Such Originator will not change its name, jurisdiction of organization, identity, corporate or other organizational structure (within the meaning of Sections 9-503 and/or 9-507 of the UCC of all applicable jurisdictions) or relocate its chief executive office, principal place of business or any office where Records are kept unless it shall have: (i) given Buyer (or its assigns) at least forty-five(45) days' prior written notice thereof and (ii) delivered to Buyer (or its assigns) all financing statements, instruments and other documents requested by Buyer (or its assigns) in connection with such change or relocation acceptable to the Agent.

(b) Change in Payment Instructions to Obligors. Such Originator will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock Box, P.O. Box or

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Collection Account, unless Buyer (or its assigns) shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account, P.O. Box or Lock-Box, an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box or P.O. Box; provided, however, that such Originator may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account.

(c) Modifications to Contracts and Credit and Collection Policy. Such Originator will not make any change to its Credit and Collection Policy that could adversely affect the collectibility of the Receivables of such Originator, or decrease the credit quality of any newly created Receivables of such Originator. Except as otherwise permitted in its capacity as sub-Servicer pursuant to Article VIII of the Purchase Agreement, such Originator will not extend, amend or otherwise modify the terms of any Receivable or the Contract related thereto other than in accordance with such Originator's Credit and Collection Policy.

(d) Sales, Liens. Such Originator will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Receivable of such Originator or any Related Security or Collections, or upon or with respect to the Contract under which any Receivable of such Originator arises, or any Lock-Box, P.O. Box or Collection Account, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in favor of Buyer provided for herein), and such Originator will defend the right, title and interest of Buyer in, to and under any of the foregoing property, against all claims of third parties claiming through or under such Originator. Such Originator shall not create or suffer to exist any mortgage, pledge, security interest, encumbrance, lien, charge or other similar arrangement on any of its inventory the financing or lease of which gives rise to any Receivable of such Originator.

(e) No Adverse Selection. To the extent that such Originator has retained Originated Receivables that would be Eligible Receivables but which have not been transferred to Buyer hereunder, such Originator will not select those Originated Receivables to be transferred hereunder in any manner that materially adversely affects Buyer.

(f) 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 Receivables of such Originator and the Related Security by such Originator to Buyer or in any other respect account for or treat the transactions contemplated hereby in any manner other than as a sale of the Receivables of such Originator and the Related Security by such

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Originator to Buyer except to the extent that such transactions are not recognized on account of consolidated financial reporting in accordance with GAAP.

(g) Collections. Such Originator will not deposit or otherwise credit, or cause or permit to be so deposited or credited, to the Second-Tier Account, cash or cash proceeds other than Collections. Such Originator will not deposit or otherwise credit, or cause or permit to be so deposited or credited, any Collections or proceeds thereof to any lock-box account or to any other account not covered by a Collection Account Agreement.

ARTICLE V
TERMINATION EVENTS

Section 5.1 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)) or any other Transaction Document to which it is a party 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, any other Transaction Document to which it is a party 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) Failure of any Originator to pay any Indebtedness when due in excess of $1,000,000; or the default by such Originator in the performance of any term, provision or condition contained in any agreement under which any such Indebtedness was created or is governed, the effect of which is to cause, or to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of such Originator shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof.

(d) (i) Any Originator or any of its Subsidiaries shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against any Originator or any of its Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry

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of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property and, solely in the case of a proceeding instituted against (and not by) such Originator, such proceeding is not dismissed within 60 days; or (iii) any Originator or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth in the foregoing clauses (i) or (ii) of this subsection (d).

(e) A Change of Control shall occur.

(f) One or more final judgments for the payment of money in an amount in excess of $1,000,000, individually or in the aggregate, shall be entered against any Originator on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and such judgment shall continue unsatisfied and in effect for fifteen (15) consecutive days without a stay of execution.

Section 5.2 Remedies. Upon the occurrence and during the continuation of a Termination Event, Buyer may take any of the following actions: (i) declare the Termination Date to have occurred, whereupon the Termination Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Originator; provided, however, that upon the occurrence of a Termination Event described in Section 5.1(d), or of an actual or deemed entry of an order for relief with respect to any Originator under the Federal Bankruptcy Code or under any other applicable bankruptcy, insolvency, arrangement, moratorium or similar laws of any other jurisdiction (foreign or domestic), the Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Originator and (ii) to the fullest extent permitted by applicable law, declare that the Default Fee shall accrue with respect to any amounts then due and owing by each Originator to Buyer. The aforementioned rights and remedies shall be without limitation and shall be in addition to all other rights and remedies of Buyer and its assigns otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative.

ARTICLE VI
INDEMNIFICATION

Section 6.1 Indemnities by the Originators. Without limiting any other rights that Buyer may have hereunder or under applicable law, each Originator hereby agrees to indemnify (and pay upon demand to) Buyer 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 Buyer or any such assign) and disbursements (all of the foregoing being

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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 Buyer of an interest in the Receivables of such Originator, excluding, however:

(x) 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;

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

(z) 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 Purchasers of Purchaser Interests under the Purchase Agreement as a loan or loans by the Purchasers to Buyer secured by, among other things, the Receivables, 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 Buyer 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 Buyer 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, any other Transaction Document 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;

(ii) the failure by such Originator, to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract 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;

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(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 or any Receivable;

(v) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable of such Originator (including, without limitation, a defense based on such Receivable or the related Contract 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 Receivable or the furnishing or failure to furnish such merchandise or services;

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

(vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of any Purchase, the ownership of the Receivables 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 Receivable 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 Termination Event described in
Section 5.1(d);

(x) any failure to vest and maintain vested in Buyer, or to transfer to Buyer, legal and equitable title to, and ownership of, the Receivables of such Originator and the Collections, and all of such

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Originator's right, title and interest in the Related Security associated with the Receivables of such Originator, in each case, free and clear of any Adverse Claim;

(xi) 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 Receivable 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;

(xii) any action or omission by such Originator which reduces or impairs the rights of Buyer with respect to any Receivable of such Originator or the value of any such Receivable;

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

(xiv) the failure of any Receivable of such Originator included in the calculation of the Net Receivables Balance as an Eligible Receivable to be an Eligible Receivable at the time so included; and

(xv) the Hedging Obligations.

Section 6.2 Other Costs and Expenses. Each Originator shall be jointly and severally liable for, and shall reimburse Buyer 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 Buyer on demand for any and all costs and expenses of Buyer, 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.

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ARTICLE VII
MISCELLANEOUS

Section 7.1 Waivers and Amendments.

(a) No failure or delay on the part of Buyer (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 Buyer and, to the extent required under the Purchase Agreement, the Agent and the Financial Institutions or the Required Financial Institutions.

Section 7.2 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, three (3) 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 in this Section 7.2.

Section 7.3 Protection of Ownership Interests of Buyer.

(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 Buyer (or its assigns) may request, to perfect, protect or more fully evidence the interest of Buyer hereunder and the Purchaser Interests, or to enable Buyer (or its assigns) to exercise and enforce their rights and remedies hereunder. Without limiting the foregoing, each Originator will, upon the request of Buyer (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 Buyer (or its assigns) may reasonably request, to perfect, protect or evidence such interest of Buyer (or such Purchaser Interests). At any time, Buyer may, at the applicable Originator's sole cost and expense, direct such Originator to notify the

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Obligors of Receivables of such Originator of the ownership interests of Buyer under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to Buyer or its designee.

(b) If any Originator fails to perform any of its obligations hereunder, Buyer (or its assigns) may (but shall not be required to) perform, or cause performance of, such obligations, and Buyer's (or such assigns') costs and expenses incurred in connection therewith shall be payable by the Originators as provided in Section 6.2. Each Originator irrevocably authorizes Buyer (and its assigns) at any time and from time to time in the sole and absolute discretion of Buyer (or its assigns), and appoints Buyer (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 Buyer's (or its assigns') sole and absolute discretion to perfect and to maintain the perfection and priority of the interest of Buyer in the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as Buyer (or its assigns) in their sole and absolute discretion deem necessary or desirable to perfect and to maintain the perfection and priority of Buyer's interests in the Receivables. This appointment is coupled with an interest and is irrevocable. The authorization by each Originator set forth in the second sentence of this
Section 7.3(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 7.4 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.

(b) Anything herein to the contrary notwithstanding, each Originator hereby consents to the disclosure of any nonpublic information with respect to it (i) to Buyer, the Agent, the Financial Institutions or the Conduit by each other, (ii) by Buyer, the Agent or the Purchasers to any prospective or actual assignee or participant of any of them and (iii) by the Agent or any Purchaser to any rating agency, Funding Source, Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to any Company or any entity organized for the purpose of purchasing, or

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making loans secured by, financial assets for which Bank One acts as the administrative agent 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 Purchasers 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).

(c) Buyer 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 each Originator, the Obligors and their respective businesses obtained by it in connection with the due diligence evaluations, structuring, negotiating and execution of the Transaction Documents, and the consummation of the transactions contemplated herein and any other activities of Buyer arising from or related to the transactions contemplated herein provided, however, that each of Buyer and its employees and officers shall be permitted to disclose such confidential or proprietary information: (i) to the Agent and the other Purchasers, (ii) to any prospective or actual assignee or participant of the Agent or the other Purchasers, (iii) to any rating agency, Funding Source, provider of a surety, guaranty or credit or liquidity enhancement to Conduit, (iv) to any officers, directors, employees, outside accountants and attorneys of any of the foregoing, and (v) to the extent required pursuant to any applicable law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings with competent jurisdiction (whether or not having the force or effect of law) so long as such required disclosure is made under seal to the extent permitted by applicable law or by rule of court or other applicable body.

Section 7.5 Bankruptcy Petition. (a) Each Originator and Buyer each hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any Funding Source that is a special purpose bankruptcy remote entity or of the Conduit, it will not institute against, or join any other Person in instituting against, any such entity or the Conduit 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.

(b) Each Originator covenants and agrees that, prior to the date that is one year ad one day after the payment in full of all outstanding obligations of Buyer under the Purchase Agreement, it will not institute against, or join any other Person in instituting against, Buyer 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.

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Section 7.6 Limitation of Liability. Except with respect to any claim arising out of the willful misconduct or gross negligence of the Conduit, the Agent or any Financial Institution, no claim may be made by any Originator or any other Person against the Conduit, the Agent or any Financial Institution 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 7.7 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

Section 7.8 CONSENT TO JURISDICTION. EACH ORIGINATOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS 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 SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST ANY ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY ORIGINATOR AGAINST BUYER (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 CHICAGO, ILLINOIS.

Section 7.9 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

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ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.

Section 7.10 Integration; Binding Effect; Survival of Terms.

(a) This Agreement and each other Transaction Document contain 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 Buyer, 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 Buyer. Buyer 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 Buyer, pursuant to the Purchase Agreement, may assign to the Agent, for the benefit of the Purchasers, 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 Buyer, shall, subject to the terms of the Purchase Agreement, have the right to enforce this Agreement and to exercise directly all of Buyer's rights and remedies under this Agreement (including, without limitation, the right to give or withhold any consents or approvals of Buyer 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 II; (ii) the indemnification and payment provisions of Article VI; and (iii)
Section 7.5 shall be continuing and shall survive any termination of this Agreement.

Section 7.11 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

RECEIVABLES SALE AGREEMENT

indicated, all references herein to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and sections of, and schedules and exhibits to, this Agreement.

Section 7.12 Subordination. Each Originator shall have the right to receive, and Buyer 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 Buyer or any assets or properties of Buyer, whether arising hereunder or otherwise existing, provided that, after giving effect to any such payment, the aggregate Outstanding Balance of Receivables owned by Buyer at such time exceeds the sum of (a) the Aggregate Unpaids 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 Buyer owing to the Agent or any Purchaser under the Purchase Agreement.

(Signature Page Follows)

RECEIVABLES SALE AGREEMENT

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: Chief Financial Officer
             Facsimile: (651) 686-8984

WEBSTER VETERINARY SUPPLY, INC.

By:    /s/ R. Stephen Armstrong
Name:  R. Stephen Armstrong
Title: Vice President, Treasurer and Chief Financial
       Officer

Address:     1031 Mendota Heights Road
             St. Paul, MN 55120

             Attn: Chief Financial Officer
             Facsimile: (651) 686-8984

PDC FUNDING COMPANY, LLC

By:    /s/ Jeffrey J. Stang
Name:  Jeffrey J. Stang
Title: Vice President and Treasurer

Address:     1031 Mendota Heights Road
             St. Paul, MN 55120

             Attn: Chief Financial Officer
             Facsimile: (651) 686-8984

               30

                             RECEIVABLES SALES AGREEMENT

Exhibit I

Definitions

As used in this Agreement and the Exhibits, Schedules and Annexes thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof). If a capitalized term is used in this Agreement, or any Exhibit, Schedule or Annex thereto, and not otherwise defined therein or in this Exhibit I, such term shall have the meaning assigned thereto in Exhibit I to the Purchase Agreement.

"Agent" has the meaning set forth in the Preliminary Statements to this Agreement.

"Agreement" means this Receivables Sale Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.

"Buyer" has the meaning set forth in the preamble to this Agreement.

"Calculation Period" means each Fiscal Month or portion thereof which elapses during the term of this Agreement; provided, that the first Calculation Period shall commence on the date of the initial Purchase hereunder and end on the last day of the Fiscal Month ending thereafter and the final Calculation Period shall terminate on the Termination Date.

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

"Credit and Collection Policy" means each Originator's credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in Exhibit V, as modified from time to time in accordance with the Agreement.

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

"Dilutions" means, at any time, the aggregate amount of reductions or cancellations described in Section 1.3(a) of this Agreement.

"Discount Factor" means a percentage calculated to provide Buyer with a reasonable return on its investment in the Receivables of any Originator after taking account of (i) the time value of money based upon the anticipated dates of collection of the

RECEIVABLES SALES AGREEMENT

Receivables of such Originator and the cost to Buyer of financing its investment in such Receivables during such period and (ii) the risk of nonpayment by the Obligors. The Originator of such Receivables and Buyer 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 take effect as of the commencement of a Calculation Period, shall apply only prospectively and shall not affect the Purchase Price payment made prior to the Calculation Period during which such Originator and Buyer agree to make such change.

"Initial Cutoff Date" has the meaning set forth in Section 1.2(a).

"Material Adverse Effect" means a material adverse effect on
(i) the financial condition or operations of any Originator and its Subsidiaries, (ii) the ability of any Originator to perform its obligations under the Agreement or any other Transaction Document, (iii) the legality, validity or enforceability of the Agreement or any other Transaction Document,
(iv) any Originator's, Buyer's, the Agent's or any Purchaser's interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, or (v) the collectibility of the Receivables generally or of any material portion of the Receivables.

"Net Value" means, as of any date of determination, an amount equal to the sum of (i) the aggregate Outstanding Balance of the Receivables at such time, minus (ii) the sum of (A) the Aggregate Capital outstanding at such time, plus (B) the Credit Enhancement.

"Net Worth" means, as of the last Business Day of each Calculation Period preceding any date of determination, the excess, if any, of
(a) the aggregate Outstanding Balance of the Receivables at such time, over (b) the sum of (i) the Aggregate Capital 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).

"Originated Receivable" means all indebtedness and other obligations owed to an Originator (at the time it arises, and before giving effect to any transfer or conveyance under this Agreement) or Buyer (after giving effect to the transfers under this Agreement) or in which an Originator or Buyer has a security interest or other interest, including, without limitation, any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale, licensing or financing of goods or the rendering of services by an Originator and further includes, without limitation, the obligation to pay any Finance Charges with respect thereto. Indebtedness and other rights and obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute an Originated Receivable separate from an Originated

Exh. I-2

RECEIVABLES SALES AGREEMENT

Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided, further, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be an Originated Receivable regardless or whether the account debtor or the Originator of such Originated Receivable treats such indebtedness, rights or obligations as a separate payment obligation.

"Originator" has the meaning set forth in the preamble to this Agreement.

"Potential Termination Event" means an event which, with the passage of time or the giving of notice, or both, would constitute a Termination Event.

"Purchase" means a purchase of Originated Receivables pursuant to Section 1.1(a) of this Agreement by Buyer from any Originator of such Originated Receivables and the Related Security and Collections related thereto, together with all related rights in connection therewith.

"Purchase Agreement" has the meaning set forth in the Preliminary Statements to this Agreement.

"Purchase Date" means any Business Day selected by an Originator and notified to Buyer in accordance with Section 1.1(a) of this Agreement on which a Purchase is to occur.

"Purchase Price" means, with respect to any Purchase from any Originator hereunder, the aggregate price to be paid by Buyer to such Originator for such Purchase in accordance with Section 1.2 for the Receivables of such Originator, Collections and Related Security being sold to Buyer, which price shall equal on any date (i) the product of (x) the Outstanding Balance of such Receivables 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 1.3.

"Purchase Price Credit" has the meaning set forth in Section 1.3.

"Receivable" means, at any time, each and every Originated Receivable that has been identified for sale to the Buyer in any Sale Assignment (including all schedules thereto) delivered pursuant to Section 1.1(a)(ii) of this Agreement.

"Related Security" means, with respect to any Receivable of any Originator:

(i) all of such Originator's interest in the Related Equipment or other inventory and goods (including returned or

Exh. I-3

RECEIVABLES SALES AGREEMENT

repossessed inventory or goods), if any, the sale, licensing or financing of which by such Originator gave rise to such Receivable, and all insurance contracts with respect thereto,

(ii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and security agreements describing any collateral securing such Receivable,

(iii) all guaranties, letters of credit, insurance, "supporting obligations" (within the meaning of Section 9-102(a) of the UCC of all applicable jurisdictions) and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise,

(iv) all service contracts and other contracts and agreements associated with such Receivable,

(v) all Records related to such Receivable,

(vi) all of such Originator's right, title and interest in each Lock-Box, P.O. Box and each Collection Account, and any and all agreements related thereto, and

(vii) all proceeds of any of the foregoing.

"Required Capital Amount" means, as of any date of determination, an amount equal to the sum of (i) the twenty-four month rolling average of Dilutions, plus (ii) the result obtained in the foregoing clause (i) of this definition, multiplied by 10%.

"Sale Assignment" means a sale assignment substantially in the form of Exhibit VII.

"Settlement Date" means, with respect to each Calculation Period, the date that is the 19/th/ calendar day (or, if such day is not a Business Day, then the first Business Day thereafter) of the month following such Calculation Period.

"Subordinated Loan" has the meaning set forth in Section 1.2(a).

Exh. I-4

RECEIVABLES SALES AGREEMENT

"Subordinated Note" means a promissory note in substantially the form of Exhibit VI hereto as more fully described in Section 1.2, as the same may be amended, restated, supplemented or otherwise modified from time to time.

"Termination Date" means the earliest to occur of (i) the Facility Termination Date, (ii) the Business Day immediately prior to the occurrence of a Termination Event set forth in Section 5.1(d), (iii) the Business Day specified in a written notice from Buyer to Originator following the occurrence of any other Termination Event, and (iv) the date which is 5 Business Days after Buyer's receipt of written notice from Originator that it wishes to terminate the facility evidenced by this Agreement.

"Termination Event" has the meaning set forth in Section 5.1 of the Agreement.

"Transaction Documents" means, collectively, this Agreement, each Collection Account Agreement, each Sale Assignment, the Subordinated Notes and all other instruments, documents and agreements executed and delivered in connection herewith.

All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of Illinois, and not specifically defined herein, are used herein as defined in such Article 9.

Exh. I-5

Exhibit 10.16

PATTERSON DENTAL COMPANY

2001 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

1. Purpose

The purpose of the Patterson Dental Company 2001 Non-Employee Directors' Stock Option Plan ("the Plan") is to secure for Patterson Dental Company ("the Company") and its shareholders the benefits of the incentive inherent in increased Common Stock ownership by the members of the Board of Directors ("the Board") of the Company who are Eligible Directors as defined in the Plan.

2. Administration

The Plan shall be administered by the Board. The Board shall have all the powers vested in it by the terms of the Plan, such powers to include authority (within the limitations described herein) to prescribe the form of the agreement embodying awards of stock options made under the Plan ("Options"). The Board shall, subject to the provisions of the Plan, grant Options under the Plan and shall have the power to construe the Plan, to determine all questions arising thereunder and to adopt and amend such rules and regulations for the administration of the Plan as it may deem desirable. Any decision of the Board in the administration of the Plan, as described herein, shall be final and conclusive. The Board may act only by a majority of its members in office, except that the members thereof may authorize any one or more of their number or the Secretary or any other officer of the Company to execute and deliver documents on behalf of the Board. No member of the Board shall be liable for anything done or omitted to be done by such member or by any other member of the Board in connection with the Plan, except for such member's own willful misconduct or as expressly provided by statute.

3. Amount of Stock

The stock which may be issued and sold under the Plan will be the Common Stock (par value $.01 per share) of the Company, of a total number not exceeding 400,000 shares, subject to adjustment as provided in Paragraph 6 below. In the event that Options granted under the Plan shall terminate or expire without being exercised in whole or in part, new Options may be granted covering the shares not purchased under such lapsed Options.

4. Eligible Directors

The members of the Board who are eligible to participate in the Plan are persons who serve as directors of the Company on or after the effective date of the Plan and who are not current employees of the Company or any affiliate or subsidiary of the Company.

5. Terms and Conditions of Options

Each Option granted under the Plan shall be evidenced by an agreement in such form as the Board shall prescribe from time to time in accordance with the Plan and shall comply with the following terms and conditions:

(a) The Option exercise price shall be the fair market value of the Common Stock shares subject to such Option on the date the Option is granted. The fair market value of the Common Stock shall be determined as follows:

(i) if the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange, the fair market value on any

given day shall be the average of the high and the low sales price of a Common Stock share on such day or, if such exchange is closed on that date, on the last preceding date on which such exchange was open for trading;

(ii) if the Common Stock is not listed on a national securities exchange, the fair market value on any given day shall be the average of the high and the low sales prices of a Common Stock share on the Nasdaq National Market on such day or, if the Nasdaq National Market is closed on that date, on the last preceding date on which the Nasdaq National Market was open for trading;

(iii) if the Common Stock is not listed on a national securities exchange, is not admitted to unlisted trading privileges on any such exchange, and is not eligible for inclusion on the Nasdaq National Market, the fair market value on any given day shall be the average of the closing representative bid and asked prices on such day, as reported on the Nasdaq National Market, and if not reported on such Market, then as reported by the National Quotation Bureau, Inc. or such other publicly available compilation of the bid and asked prices of the Common Stock in any over-the-counter market on which the Common Stock is traded; or

(iv) if there exists no public trading market for the Common Stock, the fair market value on any given day shall be an amount determined by the Board in such manner as it may reasonably determine in its discretion, provided that such amount shall not be less than the book value per share as reasonably determined by the Board as of the date of determination nor less than the par value of the Stock.

(b) Each year, as of the date of the annual meeting of shareholders of the Company, commencing with the 2002 annual meeting of the shareholders of the Company, each Eligible Director who has been elected or reelected or who is continuing as a member of the Board as of the adjournment of the annual meeting, shall automatically receive an Option award. The number of shares to be covered by an Option award to an Eligible Director who is elected to the Board for the first time, either by the shareholders of the Company or by the Board to fill a vacancy thereon, shall be 12,000 shares (an "Initial Grant"). The date of an Option award to a person first elected to the Board to fill a vacancy thereon shall be the date of such election. The number of shares to be covered by an Option award to an Eligible Director who is reelected to the Board or whose Board Membership is continuing following such annual meeting shall be 6,000 shares (an "Annual Grant"). The number of shares of any Option award shall be subject to adjustment as provided in Section 6. An Initial Grant shall also be awarded to an Eligible Director who is first elected to the Board prior to the Company's 2002 annual meeting, and who has not received the grant of a stock option under any other plan of the Company; provided, however, that if an Initial Grant is made within six months of an Annual Grant to which an Eligible Director would be entitled to receive, such Initial Grant shall be in lieu of the next succeeding Annual Grant.

(c) In addition to any Options received pursuant to Section 5(b), each Eligible Director shall automatically be granted the right to elect to receive additional Options in lieu of the amount of the director's annual fee such Eligible Director is entitled to receive ("Annual Retainer"), or a portion thereof, for the year following election or reelection to, or continuation on, the Board. Such election to receive additional Options shall be irrevocable and must be made in writing prior to the commencement of the period

prior to which the Annual Retainer is to be earned. Options granted subject to such election shall be granted on the first day of the Company's fiscal year in which such Annual Retainer is earned. The number of additional Options such Eligible Director can obtain pursuant to this Section shall be determined pursuant to the following formula:

Amount of Annual
Retainer to be Converted          =   Options Granted in Lieu of
Stock Price per share on Date of      Cash
Grant x Valuation Discount

The Valuation Discount shall be based upon the Black-Scholes formula or upon such other discount as the Board determines to be appropriate.

(d) No Option granted under the Plan shall be transferable by the optionee other than by will or by the laws of descent and distribution, and such Option shall be exercisable, during the optionee's lifetime, only by the optionee. Notwithstanding the foregoing, the Board may set forth in a stock option agreement, at the time of grant or thereafter, that Options may be transferred to trusts solely for the benefit of such immediate family members and to partnerships in which such family members and/or trusts are the only partners. For this purpose, immediate family means the optionee's spouse, parents, children, stepchildren, grandchildren and legal dependants. Any transfer of Options made under this provision will not be effective until notice of such transfer is delivered to the Company.

(e) No Option or any part of an Option shall be exercisable:

(i) except as provided in Section 5(h) and Section 6(b), before the Eligible Director has served one term-year as a member of the Board since the date the Option was granted (as used herein, the term "term-year" means that period from one Annual Meeting to the subsequent Annual Meeting),

(ii) after the expiration of ten years from the date the Option was granted, or after the expiration of one year following the date on which the Eligible Director to whom the Option was granted ceased to be an Eligible Director for any reason.

(iii) unless written notice of the exercise is delivered to the Company specifying the number of shares to be purchased and payment in full is made for the shares of Common Stock being acquired thereunder at the time of exercise, such payment shall be made:

(A) in United States dollars by certified check, or bank draft, or

(B) by tendering to the Company Common Stock shares owned by the person exercising the Option and having a fair market value equal to the cash exercise price applicable to such Option, such fair market value to be the average of the high and low sales prices of a Common Stock share on the date of exercise as reported on the Nasdaq National Market or, if the Nasdaq National Market is closed on that date, on the last preceding date on which the Nasdaq National Market was open for trading, or

(C) by a combination of United States dollars and Common Stock shares as aforesaid, and

(iv) unless the person exercising the Option has been, at all times during the period beginning with the date of grant of the Option and ending on the date of such exercise, an Eligible Director of the Company, except that if such person shall cease to be such an Eligible Director, for any reason, while holding an Option that has not expired and has not been fully exercised, such person, or in the case of death, the executors, administrators, legatees or distributes, as the case may be, at any time within one year after the date such person ceases to be such an Eligible Director (but in no event after the Option has expired under the provisions of subparagraph 5(e)(ii) above), may exercise the Option with respect to any Common Stock shares as to which such person has not exercised the Option on the date the person ceased to be such an Eligible Director.

In the event any Option is exercised by the executors, administrators, legatees or distributees of the estate of a deceased optionee, the Company shall be under no obligation to issue stock thereunder unless and until the Company is satisfied that the person or persons exercising the Option are the duly appointed legal representatives of the deceased optionee's estate or the proper legatees or distributees thereof.

(f) Subject to subparagraph 5(e) above, an Option shall become exercisable in full beginning on the earlier of (a) the first anniversary date of the grant of the Option or (b) the completion of one term-year following the grant of the Option.

(g) Notwithstanding anything to the contrary herein, if an Option has been transferred in accordance with Section 5(d), the Option shall be exercisable solely by the transferee. The Option shall remain subject to the provisions of the Plan, including that it will be exercisable only to the extent that the optionee or optionee's estate would have been entitled to exercise it if the optionee had not transferred the Option. In the event of the death of the transferee prior to the expiration of the right to exercise the Option, the Option shall be exercisable by the executors, administrators, legatees and distributees of the transferee's estate, as the case may be, for a period of one year following the date of the transferee's death but in no event be exercisable after the expiration of the Option period set forth in the Stock Option Agreement. The Option shall be subject to such other rules or terms as the Board shall determine.

(h) In the case of an Initial Grant, one-third of such Option shall become exercisable on the first, second and third anniversaries of the date of grant, respectively.

6. Adjustment Upon Certain Events

(a) In the event of changes in the outstanding Common Stock of the Company by reason of any stock dividend, recapitalization, merger, consolidation, split-up, combination, exchange of shares, rights offering to purchase stock at a price substantially below market value, or the like, the aggregate number and kind of shares available under the Plan, and the number, kind and price of shares subject to outstanding Options, shall be appropriately adjusted by the Board, whose determination shall be conclusive.

(b) Upon the occurrence of a Change of Control, (i) all outstanding Options granted pursuant to the Plan, to the extent not theretofore exercised or canceled, shall become exercisable in full for the remainder of the applicable term of such Options, and (ii) all restrictions applicable to all outstanding Options granted pursuant to the Plan shall be deemed to have been satisfied and such Options shall immediately vest in full.

(c) Except as otherwise provided in an Option agreement, upon the occurrence of a Change of Control (as defined in Section 6(d)), the Board may, in its sole discretion, provide for (i) the payment of a cash amount in exchange for the cancellation of an Option which may equal the excess, if any, of the fair market value of the shares subject to such Option, as defined in Section 5(a), over the aggregate exercise price of such Options or (ii) the issuance of substitute Option awards that will substantially preserve the value, rights and benefits of any affected Options previously granted hereunder.

(d) "Change of Control" means any one of the following:

(i) Individuals who, as of September 10, 2001, constitute the Board of Directors of the Company (the "Incumbent Board"), cease for any reason to constitute at least a majority of such Board; provided, however, that any individual becoming a director subsequent to the date hereof, whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of the office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a "person" (as such term is defined in Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended from time to time) other than the Incumbent Board; or

(ii) Consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the then outstanding Shares of the Company (or its successor by merger, consolidation or purchase of all or substantially all of its assets) (the "Outstanding Common Stock") and the combined voting power of the then outstanding voting securities of the Company (or its successor by merger, consolidation or purchase of all or substantially all of its assets) entitled to vote generally in the election of directors (the "Outstanding Voting Securities") immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then Outstanding Common Stock and the combined voting power of the then Outstanding Voting Securities, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, and (B) at least a majority of the members of the board of directors of the

corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of such Incumbent Board providing for such Business Combination; or

(iii) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

7. Miscellaneous Provisions

(a) Except as expressly provided for in the Plan, no Eligible Director or other person shall have any claim or right to be granted an Option under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving any Eligible Director any right to be retained in the service of the Company.

(b) Except as provided for under Section 5(d), an optionee's rights and interest under the Plan may not be assigned or transferred in whole or in part either directly or by operation of law or otherwise (except in the event of an optionee's death, by will or the laws of descent and distribution), including, but not by way of limitations, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no such right or interest of any participant in the Plan shall be subject to any obligation or liability of such participant. Any Options held by such assignee or transferee shall be subject to the terms of this Plan and the agreement pursuant to which such Options were granted.

(c) No Common Stock shares shall be issued hereunder unless counsel for the Company shall be satisfied that such issuance will be in compliance with applicable federal, state and other securities laws and regulations.

(d) It shall be a condition to the obligation of the Company to issue Common Stock shares upon exercise of an Option, that the optionee (or any beneficiary or person entitled to act under subparagraph 5(e)(iv) above) pay to the Company, upon its demand, such amount as may be requested by the Company for the purpose of satisfying any liability or obligation of the Company to withhold federal, state, local or foreign income or other taxes. If the amount requested is not paid, the Company may refuse to issue Common Stock shares.

(e) The expenses of the Plan shall be borne by the Company.

(f) The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the issuance of shares upon exercise of any Option under the Plan and issuance of shares upon exercise of Options shall be subordinate to the claims of the Company's general creditors.

(g) By accepting any Option or other benefit under the Plan, each optionee and each person claiming under or through such person shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, any action taken under the Plan by the Company or the Board.

8. Amendment

The Plan may be amended at any time and from time to time by the Board as the Board shall deem advisable, including, but not limited to amendments necessary to qualify for any exemption or to comply with applicable law or regulations provided, however, that except as provided in Paragraph 6 above, the Board may not, without further approval by the shareholders of the Company in accordance with Paragraph 10 below, increase the maximum number of shares of Common Stock as to which Options may be granted under the Plan, increase the number of shares subject to an Option, reduce the minimum Option exercise price described in subparagraph 5(a) above, extend the period during which Options may be granted or exercised under the Plan or change the class of persons eligible to receive Options under the Plan. No amendment of the Plan shall materially and adversely affect any right of any optionee with respect to any Option theretofore granted without such optionee's written consent.

9. Termination

This Plan shall terminate upon the earlier of the following dates or events to occur:

(a) upon the adoption of a resolution of the Board terminating the Plan; or

(b) at earlier of (i) 11:59 pm, St. Paul, Minnesota time, on the date of the tenth annual meeting of Shareholders of the Company held after 2001, or (ii) on December 31, 2011.

10. Effective Date of Plan

The Plan shall become effective as of September 10, 2001, or such later date as the Board may determine, provided that the Company's shareholders shall have adopted the Plan at the Company's 2001 Annual Meeting of Shareholders.

Exhibit 10.17

AMENDMENT TO THE
PATTERSON DENTAL COMPANY
RESTATED EMPLOYEE STOCK PURCHASE PLAN

Pursuant to the authority to amend the Restated Employee Stock Purchase Plan of Patterson Dental Company (the "Plan") retained by the Board of Directors of Patterson Dental Company (the "Company") as set forth in paragraph 20 of the Plan, the Plan is hereby amended in the following respect:

Paragraph 3(a) of the Plan is amended by amending and restating the first sentence to read as follows:

"Any person who is an Employee as of the Offering Date of a given offering period and who had Continuous Status as an Employee of six consecutive months shall be eligible to participate in such offering period under the Plan, subject to the requirements of paragraph 5(a) and the limitations imposed by Section 423(b) of the Code."

AMENDMENT NO. 2
TO
RESTATED EMPLOYEE STOCK PURCHASE PLAN
OF
PATTERSON DENTAL COMPANY

Pursuant to the authority to amend the Restated Employee Stock Purchase Plan of Patterson Dental Company (the "Plan") retained by the Board of Directors of Patterson Dental Company (the "Company") as set forth in paragraph 20 of the Plan, the Plan is hereby amended in the following respect:'

Paragraph 24, Term of Plan shall be amended by deleting the current paragraph and replacing it with the following:

Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board of Directors or its approval by the Shareholders of the Company as described in paragraph 21. It shall continue in effect for an indefinite duration unless sooner terminated under paragraph 20. Except as amended herein, the Plan shall remain in full force and effect in its current form.

EXHIBIT 10.18

PATTERSON DENTAL COMPANY

EMPLOYEE STOCK OWNERSHIP PLAN

Amended and restated effective

May 1, 2001

PATTERSON DENTAL COMPANY

EMPLOYEE STOCK OWNERSHIP PLAN

The undersigned hereby adopt the amendment and restatement of the Patterson Dental Company Employee Stock Ownership Plan as reflected in the written instrument entitled "Patterson Dental Company Employee Stock Ownership Plan," which instrument is attached hereto and made a part hereof.

This amended and restated plan document shall be effective as of May 1, 2001.

IN WITNESS WHEREOF, the undersigned has caused this Declaration of Amendment to be executed by its duly authorized officers this 4th day of December, 2001.

PATTERSON DENTAL COMPANY

By:      /s/ Stephen Armstrong
   -------------------------------------
Name:  R. Stephen Armstrong

Title: Executive Vice President & CFO

                               Table of Contents
                               -----------------

ARTICLE I -    INTRODUCTION                                                   1
-----------    ------------                                                   -
Section 1.1    Name of Plan and Trust                                         1
Section 1.2    Purpose                                                        1
Section 1.3    Plan Maintained by More Than One Employer                      1
Section 1.4    Background                                                     1
Section 1.5    Effective Date of Plan Amendments                              1

ARTICLE II -   DEFINITIONS                                                    2
------------   -----------                                                    -
Section 2.1    Account                                                        2
Section 2.2    Acquisition Loan                                               2
Section 2.3    Beneficiary                                                    2
Section 2.4    Board of Directors                                             2
Section 2.5    Break In Service                                               2
Section 2.6    Code                                                           2
Section 2.7    Compensation                                                   2
Section 2.8    Controlled Group                                               3
Section 2.9    Effective Date                                                 3
Section 2.10   Employee                                                       4
Section 2.11   Employer                                                       4
Section 2.12   Employer Stock                                                 4
Section 2.13   Employment Year                                                4
Section 2.14   ERISA                                                          4
Section 2.15   Fair Market Value Per Share                                    4
Section 2.16   Fiduciary                                                      4
Section 2.17   Financed Shares                                                4
Section 2.18   Forfeitures                                                    5
Section 2.19   Highly Compensated Employee:                                   5
Section 2.20   Hour of Service shall mean                                     5
Section 2.21   Limitation Year                                                7
Section 2.22   Non-Highly Compensated Employee                                7
Section 2.23   Normal Retirement Age                                          7
Section 2.24   Parental Absence                                               7
Section 2.25   Participant                                                    7
Section 2.26   Plan                                                           7
Section 2.27   Plan Administrator                                             7
Section 2.28   Plan Year                                                      7
Section 2.29   Section 415 Compensation                                       7
Section 2.30   Sponsor                                                        8
Section 2.31   Trust                                                          8
Section 2.32   Trust Fund                                                     8
Section 2.33   Trustee                                                        8
Section 2.34   Valuation Date                                                 8
Section 2.35   Year of Service                                                8


                                       i

Section 2.36   Year of Service for Participation                              8
Section 2.37   Year of Service for Vesting                                    8

ARTICLE III -  ELIGIBILITY AND PARTICIPATION                                  9
-------------  -----------------------------                                  -
Section 3.1    Eligibility for Participation                                  9
Section 3.2    Eligibility Computation Periods                                9
Section 3.3    Participation Upon Reemployment                                9
Section 3.4    Participation After Normal Retirement Age                      9
Section 3.5    Collective Bargaining Agreement                                9
Section 3.6    Participation Upon Return To Eligible Class                   10
Section 3.7    Employee Leasing                                              10
Section 3.8    Classification                                                10

ARTICLE IV -   CONTRIBUTIONS                                                 11
------------   -------------                                                 --
Section 4.1    Employer Contributions                                        11
Section 4.2    Time of Payment and Form of Contribution                      11
Section 4.3    Allocation of Employer Contribution                           11
Section 4.4    Allocation of Forfeitures                                     13
Section 4.5    Advance Employer Contributions                                13
Section 4.6    Limitations on Allocations                                    13
Section 4.7    No Contributions by Participants                              15
Section 4.8    Make-Up Contributions for Omitted Participants                15
Section 4.9    Exclusive Benefit; Refund of Employer Contribution            15
Section 4.10   Dividends                                                     16

ARTICLE V -    DETERMINATION OF VALUE OF PARTICIPANT'S ACCOUNTS              18
-----------    ------------------------------------------------              --
Section 5.1    Trust Fund and Allocation of Earnings                         18
Section 5.2    Determination of Market Value                                 18
Section 5.3    Diversification of Investments                                18

ARTICLE VI -   RETIREMENT AND OTHER TERMINATION OF PARTICIPATION VESTING     20
------------   ---------------------------------------------------------     --
Section 6.1    Full Vesting: Retirement, Death or Disability                 20
Section 6.2    Other Termination of Employment: Participant's Vested
               Percentage                                                    20
Section 6.3    Vesting Upon Termination of the Plan                          20
Section 6.4    Forfeiture of Nonvested Benefit                               20
Section 6.5    Vesting Computation Period                                    21
Section 6.6    Years of Service                                              21
Section 6.7    Forfeiture Due to Discharge of Employment for Cause           21

ARTICLE VII -  DISTRIBUTIONS                                                 23
-------------  -------------                                                 --
Section 7.1    Time of Distribution                                          23
Section 7.2    Manner of Distribution                                        25
Section 7.3    Form of Distribution                                          25
Section 7.4    Required Distribution After Death                             26
Section 7.5    Put Option                                                    27
Section 7.6    Right of First Refusal                                        27
Section 7.7    Distribution Prior to a Five Consecutive Breaks in Service;
               Restoration of Forfeited Account                              29

                                       ii

Section 7.8    Reemployment After Distribution Has Been Made or Commenced    30
Section 7.9    Designation of Beneficiaries                                  30
Section 7.10   Minors and Persons Under Legal Disability                     31
Section 7.11   Interest of Persons Who Cannot Be Located                     31
Section 7.12   Non-alienation of Benefits                                    31
Section 7.13   Direct Rollovers                                              31

ARTICLE VIII - PLAN LOANS                                                    33
-------------------------                                                    --
Section 8.1    Plan Loans                                                    33

ARTICLE IX -   TOP-HEAVY PLAN PROVISIONS                                     34
------------   -------------------------                                     --
Section 9.1    Definitions                                                   34
Section 9.2    Determination of Top-Heavy                                    36
Section 9.3    Minimum Contribution                                          36
Section 9.4    Vesting for Top-Heavy Plan                                    36

ARTICLE X -    PLAN ADMINISTRATION                                           38
-----------    -------------------                                           --
Section 10.1   Employer Responsibility                                       38
Section 10.2   Powers and Duties of the Plan Administrator                   38
Section 10.3   Records and Reports of the Plan Administrator                 39
Section 10.4   Plan Administrative Committee.                                39
Section 10.5   Organization and Operation of the Plan Administrative
               Committee                                                     39
Section 10.6   Compensation and Responsibility for Payment of Expenses
               of the Plan Administrator                                     39
Section 10.7   Indemnity of Plan Administrator or Plan Administrative
               Committee Members                                             40
Section 10.8   Claims Procedurer                                             40
Section 10.9   Voting Rights                                                 40
Section 10.10  Bonding                                                       41

ARTICLE XI -   QUALIFIED DOMESTIC RELATIONS ORDERS                           42
------------   -----------------------------------                           --
Section 11.1   Permissible Assignment                                        42
Section 11.2   Definitions                                                   42
Section 11.3   Notification                                                  43
Section 11.4   Disposition of Disputed Funds                                 43
Section 11.5   Payment of Benefits                                           44
Section 11.6   Form of Payment                                               44

ARTICLE XII -  AMENDMENTS AND ACTION BY SPONSOR/EMPLOYER                     45
-------------  -----------------------------------------                     --
Section 12.1   Amendments                                                    45
Section 12.2   Action by Sponsor/Employer                                    45
Section 12.3   Plan Ceases to Constitute an ESOP                             45

ARTICLE XIII - SUCCESSOR SPONSOR AND MERGER OR CONSOLIDATION OF PLANS        46
-------------- ------------------------------------------------------        --
Section 13.1   Successor Sponsor                                             46
Section 13.2   Plan Assets                                                   46

                                      iii

ARTICLE XIV -  PLAN TERMINATION                                              47
-------------  ----------------                                              --
Section 14.1   Termination of Plan and Trust                                 47
Section 14.2   Full Vesting                                                  47
Section 14.3   Distribution of Trust Fund                                    47

ARTICLE XV -   MISCELLANEOUS                                                 48
------------   -------------                                                 --
Section 15.1   Nonguaranty of Employment                                     48
Section 15.2   Rights to Trust Assets                                        48
Section 15.3   Word Usage                                                    48
Section 15.4   Governing Law                                                 48
Section 15.5   Uniformed Services Employment and Reemployment Act of 1994    48

EXHIBIT A -    SPECIAL PROVISIONS APPLICABLE TO CERTAIN EMPLOYEES      Exh. A-1
EXHIBIT B -    SPECIAL EFFECTIVE DATES                                 Exh. B-1
SUPPLEMENT A - EGTRRA AMENDMENT                                       Supp. A-1
SUPPLEMENT B - THOMPSON DENTAL COMPANY PROVISIONS                     Supp. B-1

ARTICLE I - INTRODUCTION

Section 1.1 Name of Plan and Trust.

(a) The name of this Plan is the Patterson Dental Company Employee Stock Ownership Plan ("ESOP").

(b) The name of the Trust for the Plan is the Patterson Dental Company Employee Stock Ownership Trust.

Section 1.2 Purpose. This Plan is intended to be a qualified stock bonus plan and qualified employee stock ownership plan. This Plan is designed to invest primarily in qualifying employer securities. The terms and provisions of this Plan and Trust are intended to conform to the requirements of sections 401(a) of the Internal Revenue Code of 1986, as amended, and the Employee Retirement Income Security Act of 1974 (ERISA), as amended.

Section 1.3 Plan Maintained by More Than One Employer. Upon written consent by the Board of Directors more than one Employer may adopt this Plan.

Section 1.4 Background.

(a) This Plan was first adopted April 27, 1990, effective May 1, 1989. The Plan was amended and restated on December 6, 1994.

(b) The Plan was amended and restated as this Plan document effective as of the Restatement Date to incorporate prior Plan amendments and to conform the Plan to the requirements of the Uruguay Round Agreements Act of 1994, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the Internal Revenue Restructuring and Reform Act of 1998 and the Community Renewal Tax Relief Act of 2000 (collectively the "GUST" amendments) and to make certain other miscellaneous changes.

Section 1.5 Effective Date of Plan Amendments. The provisions of the Plan, as modified by any amendment that does not specifically provide otherwise, shall apply only to those participants who terminate employment on or after the effective date of such amendment and to Beneficiaries who die after such effective date.

ARTICLE II - DEFINITIONS

Section 2.1 Account shall mean the entire interest of each Participant in the Trust consisting of Employer contributions, and all earnings and gains allocable thereto.

Section 2.2 Acquisition Loan shall mean a loan (or other extension of credit) used by the Trust to finance the acquisition of Employer Stock (see "Financed Shares"), which loan may constitute an extension of credit to the Trust from a "party in interest" (as defined in ERISA Section 3(14)).

Section 2.3 Beneficiary shall mean the person, persons or entity designated in accordance with the Plan to receive payments in the event of a Participant's death.

Section 2.4 Board of Directors shall mean the Board of Directors of the Sponsor unless provided otherwise.

Section 2.5 Break In Service shall mean a Plan Year in which an Employee or a Participant is credited with not more than 500 Hours of Service with the Employer or a member of the Employer's Controlled Group.

Section 2.6 Code shall mean the Internal Revenue Code of 1986, as amended. Any reference to a specific provision of the Code includes a reference to such provision, any valid ruling, regulation or authoritative pronouncement promulgated thereunder and any provision of future law that amends, supplements or supersedes the provision.

Section 2.7 Compensation shall mean a Participant's total earnings from the Employer actually paid during a Plan Year for services rendered, including bonuses and overtime. Compensation shall include, but is not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, fringe benefits and reimbursements or other expense allowances under a nonaccountable plan.

Compensation shall not include the following:

(a) Employer contributions to a deferred compensation plan to the extent that, before the application of the limitation under Code Section 415 to that plan, the contributions are not includable in the Employee's gross income for the taxable year in which contributed; Employer contributions under a SEP to the extent such contributions are deductible by the Employee are not includable in the Employee's gross income for the taxable year in which contributed; or any distribution from a deferred compensation plan, regardless of whether such amounts are includable in the gross income of the Employee when distributed;

(b) Amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by an Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;

(c) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and

(d) Other amounts which receive special tax benefits or contributions made by the Employer towards the purchase of an annuity contract described in Code Section 403(b), whether or not such contributions are excludable from the Employee's gross income

Compensation shall include only that compensation which is actually paid or made available to the Participant during the Plan Year. The Compensation of any Employee who becomes a Participant during a Plan Year shall be limited to Compensation paid after commencement of participation. Notwithstanding the above, Compensation shall include any amount that is deferred by a Participant pursuant to a salary reduction agreement with respect to which the Employer makes a contribution on behalf of the Participant and which is not includable in the gross income of the Participant under Code Sections 125, 402(a)(8) (or effective January 1, 1993, 402(e)(3)), 402(h) or 403(b). Compensation shall include any elective amounts that are not includible in the gross income of the Participant by reason of Code Section 132(f)(4).

In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, for Plan Years beginning on or after January 1, 1994, the annual compensation of each Employee taken into account under the Plan shall not exceed the OBRA `93 annual compensation limit. The OBRA `93 annual compensation limit is $150,000, as adjusted by the Commissioner for increases in the cost of living in accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA `93 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12. For Plan Years beginning on or after January 1, 1994, any reference in this Plan to the limitation under Code Section 401(a)(17) shall mean the OBRA `93 annual compensation limit set forth in this provision. If Compensation for any prior determination period is taken into account in determining an Employee's benefits accruing in the current Plan Year, the Compensation for that prior determination period is subject to the OBRA `93 annual compensation limit in effect for that prior determination period. For this purpose, for determination periods beginning before the first day of the first Plan Year beginning on or after January 1, 1994, the OBRA `93 annual compensation limit is $150,000.

Section 2.8 Controlled Group shall mean those entities which constitute a controlled group of corporations as defined in Code Section 414(b), trades or business under common control as defined in Code Section 414(c), or an affiliated service group as defined in Code Section 414(m), and any other entity required to be aggregated with the Employer pursuant to Regulations under Code
Section 414(o).

Section 2.9 Effective Date shall mean May 1, 2001, the date on which the provisions of this amended and restated Plan document became effective, except as otherwise provided

herein or in Exhibit B.

Section 2.10 Employee shall mean any person employed by the Employer other than independent contractors. Employee shall include any leased employees within the meaning of Code Section 414(n)(2), unless leased employees constitute less than 20 percent of the Employer's non-highly compensated workforce (as defined in Code Section 414(n)(5)(C)) and such leased employees are covered by a plan described in section 414(n)(5)(B) of the Code.

The term "leased employee" is defined as any person, other than an employee of the recipient, who pursuant to an agreement between the recipient and any other person (the "leasing organization") has performed services for the recipient (or for the recipient and related persons as determined pursuant to Code Section 414(n)(6)) on a substantially full-time basis for a period of at least one year, and such services are performed under the primary direction or control of the recipient.

Section 2.11 Employer shall mean Patterson Dental Company and any successor entity thereto which adopts this Plan. Employer shall also include any other employer who, with the written consent of the Board of Directors, adopts this Plan.

Section 2.12 Employer Stock shall mean shares of common stock of Patterson Dental Company (or of a Controlled Group member) having a combination of voting power and dividend rights equal to or in excess of any other class of common stock of Patterson Dental Company (or of a Controlled Group member). Employer Stock shall also include noncallable preferred stock if such stock is convertible at any time into common stock meeting the foregoing requirements.

Section 2.13 Employment Year shall mean a consecutive twelve month period measured from an Employee's initial date of hire (or latest date of rehire if the Employee has terminated employment) or from any anniversary thereof. An Employee's initial date of hire shall be the date on which the Employee first is credited with an Hour of Service.

Section 2.14 ERISA shall mean the Employee Retirement Income Security Act of 1974 as enacted in P.L 93-406, including any amendments thereto.

Section 2.15 Fair Market Value Per Share shall mean that value per share as determined by the Board of Directors, provided that in determining Fair Market Value Per Share the Board of Directors shall obtain and rely upon a valuation made by an independent appraiser, provided such appraiser satisfies requirements similar to those contained in the Regulations prescribed under Section 170(a)(1) of the Code.

Section 2.16 Fiduciary shall mean the Employer, the Plan Administrator and the Trustee, or any other person who exercises any discretionary authority or discretionary control respecting the Plan or Trust, but only with respect to the specific responsibilities of each for the administration of the Plan and Trust. For the purposes of ERISA, the Sponsor shall be a Named Fiduciary and the Sponsor may from time to time appoint one or more additional named Fiduciaries.

Section 2.17 Financed Shares shall mean shares of Employer Stock acquired by the Trust with the proceeds of an Acquisition Loan.

Section 2.18 Forfeitures shall mean the nonvested portion of a Participant's Account which may be reallocated to other Participants in accordance with Sections 4.4 and 6.4 hereof.

Section 2.19 Highly Compensated Employee shall mean:

(a) Any Employee

(1) who at any time during such Plan Year or the preceding Plan Year, was a five percent (5%) owner of the Employer (as defined in Code Section 416(i)(1)); or

(2) who at any time during the preceding Plan Year performed services for the Employer or a member of the Controlled Group and received annual compensation (as defined in Code
Section 414(q)(7)) in excess of $80,000 (as adjusted for cost of living increases).

(b) A former Employee shall be treated as a Highly Compensated Employee if such Employee was a Highly Compensated Employee when he separated from service, or such Employee was a Highly Compensated Employee at any time after attaining age 55.

(c) For purposes of determining the Employees who are Highly Compensated Employees, the Employer shall include all members of the Employer's Controlled Group.

Section 2.20 Hour of Service shall mean:

(a) Each hour for which an Employee is paid, or entitled to payment, by the Employer for the performance of duties;

(b) Each hour for which an Employee is paid, or entitled to payment, by the Employer for a period of time during which no duties are performed (whether or not the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence (but not in excess of 501 hours in any continuous period during which no duties are performed). A payment shall be deemed to be made by or due from the Employer regardless of whether such payment is made by or due from the Employer directly, or indirectly, through a trust fund, insurer or other entity to which the Employer contributes or pays premiums; provided, however, that no such Hours of Service shall be credited to the Employee if such direct or indirect payment is made or due under a plan maintained solely for the purpose of complying with applicable worker's compensation, unemployment compensation or disability insurance laws, or only reimburses the Employee for medical or medically related expenses incurred by the Employee;

(c) Each hour for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by the Employer;

(d) Hours of Service, for purposes of determining whether a Break in Service has occurred, shall include each hour credited for a Parental Absence in accordance with the following:

(1) The Plan Administrator shall credit to the Employee on Parental Leave, the Hours of Service which otherwise would normally have been credited to such individual but for such absence; or if the Plan Administrator is unable to so determine the Hours of Service pursuant to paragraph (a), eight Hours of Service per normal work day.

(2) The total number of Hours of Service credited by reason of any Parental Absence shall not exceed 501.

(3) The Hours of Service credited under this paragraph (d) shall be treated as Hours of Service in only the Plan Year in which the Parental Absence begins, if a Participant would be prevented from incurring a Break in Service in such year solely because of the Hours of Service credited under this paragraph (d); or, in any other case, in the Plan Year immediately following the Plan Year in which the Parental Absence begins.

(4) No Hours of Service credit shall be given under this paragraph (d) unless the Employee furnishes to the Plan Administrator such timely information as the Plan Administrator may reasonably require in order to establish that the absence from work was a Parental Absence and the number of days for which there was such an absence.

(e) Each hour for which an Employee could have worked during a period of time in which he performs no duties and for which he is neither paid nor entitled to payment while absent on an approved leave of absence. For the foregoing purposes:

(1) No more than 501 Hours of Service shall be credited with respect to a single computation period during which the Employee performs no duties, and crediting for Hours of Service during an approved Leave of Absence shall not be permitted to cause an Employee's total Hours of Service for any Plan Year to equal or exceed 1,000 or more Hours, unless such Employee was entitled to 1,000 or more Hours for actual service or performance of duties as an Employee.

(2) Approved leave of absence shall mean any absence authorized by the Employer under the Employer's standard personnel practices, provided that all persons in similar circumstances must be treated alike in the granting of such approved leaves of absence, and provided further that the Participant returns at the end of the authorized absence. An absence due to service in the Armed Forces of the United States shall be considered an approved leave of absence, provided that the absence is caused by war or other emergency, or provided that the Employee is required to serve under the laws of conscription in time of peace, and further provided that the Employee returns to employment with the Employer within the

period provided by law.

(f) An individual will be credited with the number of Hours of Service he completes while a leased Employee and with any other organization to the extent Hours of Service are required to be taken into account pursuant to Code section 414(o).

Hours of Service shall be determined and applied to the appropriate computation periods in accordance with Department of Labor Regulations, Section 2530.200b-2(b) and (c) from the Employer's records of hours worked and hours for which payment is made or due. Hours of Service equivalencies shall be in accordance with Department of Labor Regulations Section 2530-200b-3 and for each pay period in which a salaried Employee is paid, such Employee shall be credited with the number of Hours which correspond to his pay period under the following equivalencies:

 Pay Period          Hours of Service
 ----------          ----------------

Weekly                      45
Biweekly                    90
Semimonthly                 95
Monthly                    190

Section 2.21 Limitation Year means the twelve consecutive month period which begins on May 1 and ends the following April 30, or such other twelve consecutive month period designated by the Board of Directors, provided such change is reflected in an amendment to the Plan.

Section 2.22 Non-Highly Compensated Employee shall mean any Employee who is neither a Highly Compensated Employee nor a family member of a Highly Compensated Employee.

Section 2.23 Normal Retirement Age shall mean age 65.

Section 2.24 Parental Absence shall mean an absence from work for any period by reason of the Participant's pregnancy, birth of the Participant's child, placement of a child with the Participant in connection with the adoption of such child, or any absence for the purpose of caring for such child for a period immediately following such birth or placement.

Section 2.25 Participant shall mean an Employee or former Employee of the Employer participating in this Plan pursuant to the provisions of Article III hereof.

Section 2.26 Plan shall mean the Patterson Dental Company Employee Stock Ownership Plan established and continued by this instrument.

Section 2.27 Plan Administrator shall mean the Sponsor or such other person or committee as the Sponsor may designate pursuant to the provisions of this Plan to act on behalf of the Employer.

Section 2.28 Plan Year shall mean a consecutive twelve month period beginning on May 1 and ending on the subsequent April 30.

Section 2.29 Section 415 Compensation shall mean for an individual for any period, his or her "compensation" within the meaning of Code Section 414(c)(3) for the period from the Controlled Group. The Plan Administrator may, for any period, determine the items of remuneration that, in accordance with Treasury Regulations, will be included in Section 415 Wages for such period; provided that for each purpose under this Plan, the Plan Administrator's determination will be uniform throughout any period.

Section 2.30 Sponsor shall mean Patterson Dental Company.

Section 2.31 Trust shall mean the Trust created under the Agreement and Declaration of Trust entered into by the Employer and Trustee pursuant to this Plan.

Section 2.32 Trust Fund shall mean all of the assets of the Plan held by the Trustee at any time under the Trust.

Section 2.33 Trustee shall mean the person, persons or entity appointed by the Board of Directors to administer the Trust or any duly appointed and qualified successor Trustee.

Section 2.34 Valuation Date shall mean the 31st day of March of each calendar year, and each interim date, if any, as selected by the Plan Administrator, upon which the Trust Fund is valued.

Section 2.35 Year of Service shall mean a consecutive twelve month computation period during which an Employee has completed at least one thousand (1,000) Hours of Service with the Employer. An Employee shall be credited with all Hours of Service completed with any Employer, as defined in Section 2.11, or any other member of the Employer's Controlled Group. Service with an entity (all or a portion of which is acquired by, merges with or becomes an Employer or a member of its Controlled Group) for any period prior to the date of the acquisition, merger or affiliation will be taken into account under this Plan as Hours of Service with the Employer only if, to the extent and for the purposes, specified on an exhibit to the Plan.

Section 2.36 Year of Service for Participation shall mean a Year of Service determined on the basis of an eligibility computation period as defined in
Section 3.2 and shall include all Years of Service prior to the original effective date of this Plan.

Section 2.37 Year of Service for Vesting shall mean a Year of Service determined on the basis of the vesting computation period as defined in Section 6.5, and shall include all Years of Service prior to the original effective date of this Plan.

ARTICLE III - ELIGIBILITY AND PARTICIPATION

Section 3.1 Eligibility for Participation

(a) Except for any leased Employee or any Employee who is covered by a collective bargaining agreement which does not provide for inclusion in this Plan, an Employee shall become a Participant in this Plan as of the first day of May or November next following the date on which the Employee has completed a Year of Service for Participation.

(b) An Employee shall become a Participant only if he is an Employee on the date on which he would otherwise be entitled to commence participation.

(c) Notwithstanding the foregoing, it is the intention of the Employer that this Plan in operation shall satisfy the nondiscrimination coverage requirements of Code Section 4 10(b).

Section 3.2 Eligibility Computation Periods. The initial eligibility computation period shall coincide with an Employee's first Employment Year. If an Employee does not complete a Year of Service during such period, then subsequent eligibility computation periods shall be Plan Years beginning with the Plan Year which includes the last day of the Employee's first Employment Year.

Section 3.3 Participation Upon Reemployment

(a) A Participant or former Participant who returns to the employment of the Employer after a termination of employment may resume participation on the Participant's reemployment commencement date (the date on which the Employee is first credited with an Hour of Service upon reemployment).

(b) An Employee whose employment terminates prior to becoming a Participant, who is subsequently reemployed by an Employer, and who on the reemployment commencement date has satisfied the eligibility requirements of Section 3.1, shall begin participation on the reemployment commencement date.

(c) Any other Employee whose employment terminates prior to becoming a Participant, shall enter the Plan in accordance with the provisions of
Section 3.1 hereof.

(d) For purposes of this Section 3.3, the Plan shall take into account all of an Employee's Years of Service for Participation.

Section 3.4 Participation After Normal Retirement Age. Any Participant who remains in the employ of the Employer after Normal Retirement Age shall continue as a Participant and shall be entitled to share in the Employer contributions, if any, pursuant to Article IV until such time as such Participant terminates employment with the Employer.

Section 3.5 Collective Bargaining Agreement. An Employee who is excluded from

participation in the Plan under Section 3.1 solely by reason of being covered by a collective bargaining agreement which does not provide for inclusion in this Plan shall be eligible to commence participation in the Plan as of the date such Employee is no longer covered by such a collective bargaining agreement. A Participant who becomes covered by a collective bargaining agreement which does not provide for inclusion in this Plan will not be eligible to share in and will not receive Employer contributions or allocations of Forfeitures for the Plan Years during which he is covered for the entire Plan Year by such a collective bargaining agreement. A Participant who is covered by such a collective bargaining agreement for part of a Plan Year and is otherwise eligible to share in Employer contributions under Section 4.3 will be eligible to share in Employer contributions or allocations of Forfeitures for such Plan Year, but only with respect to Compensation received while the Participant was not covered by such a collective bargaining agreement.

Section 3.6 Participation Upon Return To Eligible Class

(a) In the event a Participant becomes ineligible to participate in the Plan solely by reason of moving from an eligible class of Employees to an ineligible class of Employees as prescribed under Section 3.1, such Employee shall resume participation immediately upon returning to an eligible class of Employees.

(b) However, if such Employee, as described in (a) above, incurs a Break in Service, participation shall resume pursuant to the Break in Service rules under Section 3.3.

(c) In the event an Employee who would previously have become a Participant had he been a member of an eligible class of Employees becomes a member of an eligible class, such Employee will begin participation in the Plan immediately upon becoming a member of an eligible class.

Section 3.7 Employee Leasing. Except as provided in Section 2.10 and
Section 3.1 of the Plan, a leased employee, within the meaning of Code Section 414(n) or 414(o), shall be treated as an Employee of the Employer for purposes of this Plan. Furthermore, any contributions or benefits provided to a leased employee by the leasing organization which are attributable to services provided by such leased employee to the Employer or member of the Employer's Controlled Group shall be treated as contributions and benefits provided by the Employer.

Section 3.8 Classification. The classification of an individual as an Employee (or a leased Employee) for all purposes under the Plan, including the designation of an Employee as eligible to participate, is determined solely by the Employer and will not be modified by any subsequent classification or reclassification made by a judicial or administrative determination.

ARTICLE IV - CONTRIBUTIONS

Section 4.1 Employer Contributions. With respect to each Plan Year, the Employer shall contribute an amount or amounts, if any, as the Board of Directors of the Employer shall determine in its absolute discretion.

The amount contributed by the Employer shall not exceed the maximum amount deductible by it for federal income tax purposes under section 404(a) of the Code.

Section 4.2 Time of Payment and Form of Contribution. The Employer contributions, if any, shall be paid to the Trustee either in cash or Employer Stock as the Board of Directors may from time to time determine. In determining the amount of the Employer contributions, shares of Employer Stock will be valued at their then Fair Market Value Per Share. The Employer contributions shall be paid to the Trustee on or before the due date for filing its federal income tax return including extensions, for the fiscal year of the Employer with respect to which the contributions were made.

Section 4.3 Allocation of Employer Contribution

(a) If at the time of such Employer contribution, principal and interest is unpaid on any Acquisition Loan and is then due, so much of the Employer contribution as is required shall be applied to the payment of interest or principal on the Acquisition Loan which is then due and Financed Shares shall be released in accordance with Section 4.3(c).

(b) The Employer contributions with respect to a Plan Year along with all Forfeitures for such Plan Year or Financed Shares released from the Loan Suspense Account under Section 4.3(c) shall be allocated by the Plan Administrator to the Accounts of eligible Participants as of the last day of the Plan Year in the same proportion that the Compensation of each Participant for the Plan Year bears to the Compensation of all Participants for such Plan Year.

(1) No allocation of the Employer's contribution for a Plan Year shall be made to a Participant unless such Participant is credited with 1,000 Hours of Service during the Plan Year and is in the employ of the Employer on the last day of the Plan Year.

(2) Notwithstanding clause (1), any Participant who is not in the employ of the Employer on the last day of the Plan Year due to retirement on or after his Normal Retirement Age, death or Disability, shall nonetheless receive an allocation of the Employer's contribution for such Plan Year. Such allocation shall be made on the basis of actual Compensation received during such Plan Year.

(c) Financed Shares acquired with the proceeds of an Acquisition Loan under Section 4.3 of the Trust shall be added to and maintained in a Loan Suspense Account. As the Employer makes contributions to the Plan for a Plan Year and the Trustee makes payments of principal and interest on the Acquisition Loan, such Financed Shares shall

be released from the Loan Suspense Account and allocated as of the last day of the Plan Year for which the contribution was made to the Accounts of the Participants in the manner provided in paragraph (b) above. The number of Financed Shares to be released from the Loan Suspense Account for each Plan Year shall be equal to the number of Financed Shares held in the Loan Suspense Account immediately before the release for the current Plan Year multiplied by a fraction, the numerator of which is the amount of principal and interest paid for the Plan Year and the denominator of which is the sum of the numerator plus the principal and interest to be paid in all future years of the Acquisition Loan repayment period.

(1) If the interest rate under the Acquisition Loan is variable, then the interest to be paid in future years shall be determined by using the interest rate in effect as of the end of the Plan Year.

(2) At the direction of the Plan Administrator, the Trustee can agree to provide for the release of Financed Shares from the Loan Suspense Account based solely on the principal (rather than principal and interest) to be paid on the Acquisition Loan provided, however, that such Acquisition Loan (including any renewal, extension or refinancing) must provide for principal payments at a cumulative rate that is not less rapid at any time than level annual payments of such amounts for ten (10) years.

(3) If payments on the Acquisition Loan are made more frequently than annually, Financed Shares shall be released from the Loan Suspense Account as payments are made, however, such shares shall be treated as an Advance Employer Contribution and shall only be allocated to Participant Accounts as of the end of the Plan Year.

(d) If Financed Shares acquired with the proceeds of an Acquisition Loan are sold before being released from the Loan Suspense Account, the proceeds from such sale shall be applied to the payment of principal and interest on the Acquisition Loan or may be deposited and retained in the Loan Suspense Account. Any sale proceeds remaining after payment of all principal and interest on the Acquisition Loan shall be treated as a general investment gain and allocated to the Accounts of Participants under
Section 5.1.

(e) If the Plan has acquired Employer Stock and the seller has properly elected to qualify for nonrecognition of gain on the sale of such securities under Code Section 1042, then, for the ten (10) year period beginning on the later of the date of the sale of such securities or the date of the Plan allocation attributable to the final payment of the Acquisition Loan incurred in connection with such sale, no portion of the assets of the Trust Fund attributable to (or allocable in lieu of) Employer Stock acquired from sellers electing to qualify for nonrecognition of gain on the sale of such securities under Code Section 1042 shall be allocated for the benefit of such seller, any person related to any such seller under Code Section 267(b) (except as excluded by Code Section 409(n)(3)(A)) or any other person who owns (after application of Code Section 318(a), but without regard to the employee trust exception in paragraph (2)(B)(i)), more than

25% (by value) of the Employer or members of the Controlled Group (all within the meaning of Code Section 409(n)).

(f) With respect to certain dividends used to make payments on an Acquisition Loan, the special allocation rules of Section 4.10 of this Plan shall apply.

(g) If the Financed Shares acquired with the proceeds of an Acquisition Loan are sold or redeemed prior to being released from the Loan Suspense Account and the Acquisition Loan is not prepaid, then the sale or redemption proceeds, or investments acquired with such proceeds, shall continue to be held in the Loan Suspense Account as collateral for the Acquisition Loan and shall continue to be subject to the release requirements of Section 4.3(c). Any proceeds remaining after repayment of the Acquisition Loan shall be treated as a general investment gain and allocated to the Accounts of Participants under Section 5.1.

Section 4.4 Allocation of Forfeitures. Forfeitures shall, as of the last day of each Plan Year, be allocated among the Accounts of all Participants as a part of and on the same basis as the Employer contribution is allocated among such Participants pursuant to Section 4.3. No portion of Employer Stock shall be forfeited until any other assets allocated to a Participant's Account are first forfeited.

Section 4.5 Advance Employer Contributions. In the event that a part or all of an Employer's contribution for a Plan Year is paid before the last day of a Plan Year, such advance contribution shall be held by the Trustee as a separate fund, and along with the net income and any change in value of such separate fund, allocated among the Accounts of the Participants as of the last day of the Plan Year pursuant to Section 4.3. In the event that the Plan is terminated before the last day of the Plan Year, any advance contributions determined to be nondeductible within the meaning of Code Section 4972, including any amount treated as an advance contribution under Section 4.6, shall be returned to the Employer.

Section 4.6 Limitations on Allocations

(a) No Annual Addition shall be allocated to the Account of any Participant with respect to any Limitation Year which exceeds the lesser of:

(1) Twenty-five percent (25%) of the Participant's Section 415 Compensation for such Limitation Year, or

(2) Thirty Thousand Dollars ($30,000.00), (or such larger amount as announced by the Secretary of the Treasury with respect to such Limitation Year to reflect cost-of-living adjustments).

(b) For purposes of this Section, Annual Addition means the sum of:

(1) All Employer contributions allocable to the Participant for a Limitation Year under this Plan and under all other defined contribution plans maintained by the

Employer or any member of the Controlled Group;

(2) All Employee contributions to such plans allocable to the Participant for a Limitation Year;

(3) Forfeitures (based upon the Fair Market Value Per Share of Employer Stock as of the end of the Plan Year) allocable to the Participant under such plans;

(4) Amounts allocated to an individual medical account, as defined in Code Section 415(1)(1), which is part of a defined benefit or annuity plan maintained by the Employer or a Controlled Group member; and

(5) Amounts allocated, after December 31, 1985, to a separate account of a "key employee" attributable to post-retirement medical benefits to the extent required under Code Section 419A(d)(1).

(c) For any Plan Year in which any Employer contributions are applied by the Trustee (not later than the due date, including extensions, for filing the Employer's federal income tax return for that Plan Year) to pay principal or interest on an Acquisition Loan and not more than one-third (1/3) of the Employer contributions are allocated to Highly Compensated Employees, Annual Additions shall not include any Financed Shares which are allocated as Forfeitures or Employer contributions used to pay interest on an Acquisition Loan. The Trustee may reallocate such Employer contributions in order to satisfy this special limitation.

(d) The limitation contained in Section 4.6(a) shall be determined by aggregating the contributions made by the Employer to all defined contribution plans maintained by it or any members of the Controlled Group for such Limitation Year.

(e) In the event that the Annual Addition with respect to any Participant under all defined contribution plans and welfare benefit funds of the Employer for any Limitation Year exceeds the limitation contained in this Section, the excess Annual Addition shall be attributable first to the Employer's Retirement Savings Plan and the Employer shall take such steps with respect to this Plan as may be required so that no excess Annual Addition is made.

(f) To the extent the Annual Addition with respect to any Participant exceeds the limitation contained in Section 4.6(a) after application of the preceding paragraphs and on account of a reasonable error in estimating a Participant's annual compensation, as the result of the allocation of Forfeitures, or under other circumstances to which Treas. Reg. Sec. 1.415-6(b)(6) is applicable, then, to the extent necessary to prevent such excess, the Plan Administrator shall, in the following order:

(1) reallocate pursuant to Section 4.4, a portion of any Forfeitures in an amount equal to any remaining excess, after first subtracting from both the numerator and the denominator of the reallocation formula an amount equal to the Compensation

with respect to any such Participant, and

(2) reallocate pursuant to Section 4.3, a portion of the Employer contribution in an amount equal to any remaining excess, after first subtracting from both the numerator and the denominator of the reallocation formula an amount equal to the Compensation with respect to any such Participant, and

(3) deposit any remaining excess amount in a suspense account and treat such amount as an Advance Employer Contribution for the succeeding Plan Year in accordance with Section 4.5 hereof.

Section 4.7 No Contributions by Participants. Employee contributions are neither required nor permitted under this Plan.

Section 4.8 Make-Up Contributions for Omitted Participants. If, after the Employer's annual contribution for a Plan Year has been made and allocated it should appear that, through oversight or a mistake of fact or law, a Participant (or an Employee who should have been considered a Participant) who should have been entitled to share in such contribution received no allocation or received an allocation which was less than he should have received, the Employer may, at its election, and in lieu of reallocating such contribution, make a special make-up contribution for the Account of such Participant in an amount adequate to provide for him the same percentage of his Compensation for such Plan Year as was allocated to the Accounts of other Participants for such omitted Plan Year and earnings attributable thereto.

Section 4.9 Exclusive Benefit; Refund of Employer Contribution

(a) Exclusive Benefit. All contributions made by the Employer are made for the exclusive benefit of the Participants and their Beneficiaries, and such contributions shall not be used or diverted to purposes other than for the exclusive benefit of the Participants and their Beneficiaries.

(b) Refund. Notwithstanding the foregoing, amounts contributed to the Trust by the Employer may be refunded to the Employer only under the following circumstances:

(1) Disallowance of Deduction. To the extent that an income tax deduction is disallowed for the contribution made by the Employer, the Trustee shall immediately refund to the Employer the amount so disallowed upon presentation, within one (1) year of the date of such disallowance, of evidence thereof and a demand by the Employer for such refund.

(2) Denial of Qualified Status. If it is determined that the Plan does not initially constitute a qualified plan, there shall be returned to the Employer, upon demand, any contribution made by the Employer with respect to any Plan year in which qualified status is denied, provided that demand is made by the Employer and refund is made by the Trustee within one (1) year of the date of denial of

qualification of the Plan.

(3) Mistake of Fact. In the case of a contribution which is made in whole or in part by reason of a mistake of fact, so much of such contribution as is attributable to the mistake of fact shall be returned to the Employer on demand. The Employer shall present evidence of the mistake of fact to the Trustee as well as calculations as to the impact of such mistake. Demand and repayment must be effectuated within one
(1) year after the payment of the contribution to which the mistake applies.

(c) Accounting. In the event that any refund is paid to the Employer hereunder, such refund shall be made without interest and shall be apportioned among the Accounts of the Participants as an investment loss except to the extent that the amount of the refund can be attributed to one or more specific Participants (such as in the case of mistakes of fact, disallowances of compensation resulting in reduction of deductible contribution) in which case the amount of the refund attributable to each Participant's Account shall be debited directly against such Account.

(d) Limitations on Refund. Notwithstanding any other provision of this Section, no refund shall be made to the Employer which is specifically chargeable to the Account of any Participant in excess of 100% of the amount of such Account which is derived from the Employer's contributions, nor shall a refund be made by the Trustee of any funds, otherwise subject to refund hereunder, which have been distributed to Participants and/or Beneficiaries. In the case that such distributions become refundable, the Employer shall have a claim directly against the distributees to the extent of the refund to which it is entitled. All refunds pursuant to this Section shall be limited in amount, circumstances and timing to the provisions of
Section 403(c) of ERISA.

Section 4.10 Dividends

(a) Any cash dividends received by the Trustee on Employer Stock allocated to the Accounts of Participants (or former Participants or Beneficiaries) may be:

(1) retained in the Participants' applicable Accounts;

(2) used to make payments on an Acquisition Loan the proceeds of which were used to acquire the Employer Stock with respect to which the dividend is paid; or

(3) paid to such Participants, former Participants or Beneficiaries; (in a nondiscriminatory manner) at the sole discretion of the Employer. Any current payment in cash to the Participants, former Participants or Beneficiaries must be made within 90 days of the end of the Plan Year in which the dividends are received by the Trustee. The Employer may elect to pay any cash dividend directly to the Participants or Beneficiaries. Any such payment of cash dividend on shares of Employer Stock shall be accounted for as if the Participant or Beneficiary receiving such dividends was the direct owner of such shares of Employer Stock and such payment shall not be treated as a distribution under the Plan.

(b) In the event a dividend is used to make payments on an Acquisition Loan, the proceeds of which were used to acquire the Employer Stock with respect to which the dividend was paid, then Employer Stock with a Fair Market Value of not less than the amount of such dividend shall be allocated to the Account of a Participant to which such dividend would have been allocated. Allocation of such Employer Stock shall be made in accordance with the following:

(i) A portion (or all) of the Employer Stock released from the Loan Suspense Account pursuant to Section 4.3(c) as a result of the use of the cash dividend on Employer Stock (whether allocated or unallocated) to pay principal on the Acquisition Loan shall first be allocated in accordance with this Section 4.10(b)(i). That portion of the released Financed Shares having a Fair Market Value per Share equal to the dividends paid on shares of Employer Stock which have been allocated to Participants' Accounts on or before the date such dividends are paid, shall be allocated to each Account pro rata based on the amount of the dividends attributable to Employer Stock held in such Account. If the dividends paid on allocated Employer Stock exceeds the fair market value of the Financed Shares released in accordance with Section 4.3(c), then the Sponsor shall contribute to the Plan such additional amounts of Employer Stock to the Trust necessary to cause the Fair Market Value of the total amount of Employer Stock allocated under this Section 4.10(b)(i) to equal the value of the cash dividends attributable to the Employer Stock held in Participant Accounts.

(ii) If there remains any released and unallocated Financed Shares after the allocation under Section 4.10(b)(i), above, then such Employer Stock shall be allocated in the same manner as an Employer Contribution under Section 4.3(b).

ARTICLE V - DETERMINATION OF VALUE OF PARTICIPANT'S ACCOUNTS

Section 5.1 Trust Fund and Allocation of Earnings. The Trustee shall maintain or cause to be maintained Accounts which shall accurately reflect, from time to time, the value of the interest of each Participant in the Trust Fund resulting from the contributions of the Employer allocated to each Participant. In this condition the Accounts shall reflect each Participant's share of interest, dividends, realized and unrealized losses and expenses (other than those to be borne by the Employer in accordance with this Plan), except that income from Employer Stock acquired with the proceeds of an Acquisition Loan and held in the Loan Suspense Account shall be used to repay such Loan. Such sum shall be determined as of the last day of each Plan Year and, after allocating the Employer contribution for such Plan Year, allocated as a credit or charge to the Account of each Participant in the same proportion that the balance of the Account of each Participant at the beginning of the Plan Year bears to the total of the balances of the Accounts of all Participants at the beginning of such Plan Year; provided, however, that distribution payments made during, but prior to the last day of, such Plan Year shall first be deducted from such balances.

Section 5.2 Determination of Market Value. The Trustee shall, as provided in the Agreement and Declaration of Trust, ascertain and certify the fair market value of the Trust Fund as of the Valuation Date. Such valuation shall include the Employer's contribution with respect to such Plan Year. Similar valuations shall be made at such other times as necessary for the purpose of determining the value of a Participant's Account. In determining the fair market value of the Fund, the Trustee shall use the Fair Market Value Per Share of the Employer Stock as determined by the Board of Directors.

Section 5.3 Diversification of Investments

(a) Each Participant who has attained age 55 and completed ten
(10) full years of participation under the Plan shall be permitted to direct the Plan Administrator as to the investment of 25 percent of the value of the Participant's Account balance but only to the extent such portion exceeds the amount to which a prior election under this
Section 5.3 applied. Such direction shall be permitted within 90 days after the last day of each Plan Year during the Participant's Qualified Election Period. Within 90 days after the close of the last Plan Year in the Participant's Qualified Election Period, a Participant may direct the Plan Administrator as to the investment of 50 percent of the value of his Account balance. Such direction as to the investment of the Participant's Account balance shall constitute a request to distribute that portion of the Participant's Account covered by the election.

(b) A Participant's Qualified Election Period shall be the sixth Plan Year period beginning on the later of (i) the Plan Year in which the Participant attains age 55; or (ii) the Plan Year in which the Participant first becomes qualified under subparagraph (a) above.

(c) The Participant's direction shall be provided to the Plan Administrator in writing and shall be effective no later than 180 days after the close of the Plan Year to

which the direction applies to the Participant.

(d) This Section 5.3 shall apply to all Employer Stock, whenever acquired under the Trust.

ARTICLE VI - RETIREMENT AND OTHER TERMINATION OF PARTICIPATION VESTING

Section 6.1 Full Vesting: Retirement, Death or Disability

A Participant shall be one hundred percent (100%) vested in the portion of his Account attributable to Employer Contributions upon the earliest occurrence of any of the following events occurring while an Employee:

(a) Attaining Normal Retirement Age;

(b) Death; or

(c) Total and Permanent Disability. For this purpose, Total and Permanent Disability shall mean a physical or mental condition which totally and permanently prevents a Participant from rendering further service in a job classification that is satisfactory to the Employer. Total and Permanent Disability shall be established by a medical opinion rendered by a doctor approved by the Plan Administrator.

    Years of Service           Vested Percentage
    ----------------           -----------------

Fewer than three years                 None
3 years but fewer than 4                20%
4 years but fewer than 5                40%
5 years but fewer than 6                60%
6 years but fewer than 7                80%
7 years or more                        100%

No amendment shall be made to modify this vesting schedule unless any participant with at least three years of Vesting Service may elect to have his nonforfeitable percentage computed under the Plan without regard to such amendment.

Section 6.3 Vesting Upon Termination of the Plan. A Participant shall become 100 percent vested in that portion of his Account attributable to Employer contributions upon termination of the Plan pursuant to Article XIV.

Section 6.4 Forfeiture of Nonvested Benefit.

(a) A Forfeiture of a Participant's nonvested benefit shall occur under the Plan as of the last day of the Plan Year in which occurs the fifth consecutive Break in

Service for the Participant due to the termination of employment.

(b) The nonvested portion of the Participant's Account will continue to be held in a subaccount until such amount is forfeited in accordance with Section 6.4(a). If the Participant resumes employment with the Employer or a member of the Employer's Controlled Group prior to incurring five consecutive Breaks in Service, the subaccount will be disregarded and its balance will be included in the Participant's Account balance. In the event a Participant received a distribution of the vested portion of his Account balance, then the Participant's vested interest in his Account balance following a resumption of employment in accordance with this
Section 6.4(b) at any given time will not be less than the amount "X" determined by the formula: X = P(AB + (R x D)) - (R x D), where P is the Participant's vested percentage at the time of determination; AB is the Account balance at the time of determination; D is the amount of the distribution; and R is the ratio of the Account balance at the time of determination, to the balance immediately following the distribution.

(c) A Participant who has incurred a Break in Service and who resumes participation as described in Section 3.3 hereof shall forfeit the amount of any contribution made on his behalf for the Plan Year which includes his date of reemployment if he terminates employment prior to the first anniversary of such date of reemployment.

Section 6.5 Vesting Computation Period. For purposes of determining vesting under this Article VI, the computation period shall be the Plan Year.

Section 6.6 Years of Service. A Participant shall be credited with all Years of Service except the following:

(a) Years of Service prior to the Participant incurring five consecutive Breaks in Service unless:

(1) at the time of the Breaks in Service the Participant was vested under Section 6.2; or

(2) for nonvested Participants, the aggregate number of Years of Service prior to the consecutive Breaks in Service exceeds the number of consecutive Breaks in Service; and

(b) Years of Service after five consecutive Breaks in Service shall not be taken into account for purposes of determining a Participant's vested percentage in his Account prior to the consecutive Breaks in Service. Any years prior to the five consecutive Breaks in Service shall not be counted until the Participant completes a Year of Service after his date of reemployment.

Section 6.7 Forfeiture Due to Discharge of Employment for Cause

(a) Notwithstanding anything herein to the contrary, in the event a Participant

terminates employment with the Employer prior to his completion of seven
(7) Years of Service for Employee misconduct, such Participant shall have his vested interest in his Account, determined in accordance with the following schedule:

 Years of Service         Vested Percentage
 ----------------         -----------------

Fewer than 5 years                 0%
5 years or more                   100%

(b) For purposes of this Section, Employee misconduct is any misdemeanor, felony or any other act evidencing fraud or dishonesty on the part of the Employee. Any portion of a Participant's Account forfeited for cause shall be available for reallocation to the Accounts of the remaining Participants pursuant to Section 4.4 as of the close of the Plan Year in which such Forfeiture occurs.

(c) This Section 6.7 shall not apply to a Participant if (i) such Participant has attained Normal Retirement Age; (ii) the Top-Heavy Plan vesting provisions of Section 9.5 of this Plan apply to such Participant;
(iii) the Plan has been totally or partially terminated; or (iv) there has been a complete discontinuance of contributions under the Plan.

ARTICLE VII - DISTRIBUTIONS

Section 7.1 Time of Distribution

(a) Normal Time for Distribution. Upon a Participant's termination of employment and upon the direction of the Plan Administrator, the Trustee shall, after the value of the Participant's Account has been determined in accordance with Article V, make or commence distribution of such Account. Upon the request of a Participant, or if applicable, his Beneficiary, distribution of a Participant's Account shall be commenced as soon as practicable following the end of the Plan Year as follows:

(1) If the Participant separates from service by reason of the attainment of Normal Retirement Age, death, or disability, the distribution of the Participant's Account balance will begin not later than one year after the end of the Plan Year in which such event occurs.

(2) If the Participant separates from service for any reason other than those enumerated in subparagraph (1) above, and is not reemployed by the Employer at the end of the fifth Plan Year following the Plan Year of such separation from service, distribution of the Participant's Account balance will begin not later than one year after the end of the fifth Plan Year following the Plan Year in which the Participant separated from service.

(3) If any portion of a Participant's Account balance includes Employer Stock which was acquired with the proceeds of an Acquisition Loan that has not been repaid in full, then distribution of such Employer Stock under subparagraph (2) shall commence no later than the close of the Plan Year in which the Acquisition Loan is fully repaid, provided, however, that if such Employer Stock was originally acquired with the proceeds of that original Acquisition Loan dated June 25, 1990, with a final maturity date of June 15, 2000, then such Acquisition Loan, or any loan to refinance such Acquisition Loan shall for purposes of this subparagraph (3) be treated as repaid in full no later than June 15, 2000.

(b) Consent to Distribution Prior to Normal Retirement Age.

(1) If the value of the Participant's vested Account balance is greater than $5,000, and the Account balance is immediately distributable, the Plan Administrator shall authorize the distribution of such vested portion of the Participant's Account balance only with the written consent of the Participant. (In the event of the Participant's death, the Participant's surviving spouse, if a Beneficiary, must consent in writing to such distribution.) Such consent shall be obtained in writing within ninety (90) days prior to the distribution starting date. For purposes of this section, an Account balance is "immediately distributable" if any part of the Account balance may be distributed to the Participant (or surviving spouse) before the Participant attains or would have attained the later of Normal Retirement Age or age 62; and a Participant's `distribution starting date" is the first day of the first period for which an amount is paid as an annuity or any other

form.

(2) If a Participant terminates his employment with the Employer and the value of his vested Account balance is not greater than $5,000, the Plan Administrator shall direct the distribution of such vested Account balance in a lump sum without the Participant's consent.

(c) Required Distributions at Age 70 1/2. Distribution of Account balances must be made or commenced to the Participant not later than the Participant's required commencement date as described below:

(1) If a Participant is a five-percent (5%) owner of the Employer (as defined in Code Section 416(i)), at any time during the five (5) Plan Years ending in the Plan Year in which the Employee attains age 70 1/2, distribution of benefits must commence not later than the April 1 following the later of the close of the calendar year in which such Participant attained age 70 1/2regardless of whether such Participant has terminated employment at such time, or the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a five percent (5%) owner, or the calendar year in which the Participant retires.

(2) Distributions to Participants who were not five percent (5%) owners (as defined in Code Section 416(i)) must be commenced by the later of April 1 of the calendar year following the calendar year in which the Participant attains age 70 1/2, or the calendar year in which the Participant terminates employment.

(3) Once distributions have begun to a 5-percent owner, they must continue to be distributed even if the Participant ceases to be a five percent (5%) owner in a subsequent year.

(4) If distributions are required to be commenced under this
Section 7.1(c) and the Participant has not elected otherwise, the Plan Administrator shall direct the distribution of the Participant's entire Account balance in the form of installments in substantially equal amounts on a monthly, quarterly, semi-annual or annual basis, for a period not extending beyond either the Participant's life expectancy or the life expectancy of the Participant and his or her Beneficiary, and, if the Beneficiary is not the Participant's spouse, the period over which such payments will be made will be determined by reference to the applicable table of joint life expectancies set forth in Treas. Reg. Sec. 1.401(a)(9)-2. Prior to commencement of the installments, the Participant may elect whether the life expectancies for the Participant and his or her spouse are to be recalculated on an annual basis for purposes of determining the amount of each installment payment hereunder. If no such election is made, the life expectancies of the Participant and his or her spouse will not be recalculated.

(d) Requested Distribution Upon Retirement. Except as limited by
Section 7.1(a) and in the absence of a request for distribution or written direction to defer distribution, the Plan Administrator shall direct the Trustee to make or commence

distribution on or before the 60th day following the end of the Plan Year in which occurs the latest of the following events:

(1) the date on which the Participant attains Normal Retirement Age; or

(2) the date on which the Participant terminates his employment with the Employer.

Section 7.2 Manner of Distribution

(a) The Plan Administrator, pursuant to any election made by a Participant (or Beneficiary), shall direct the Trustee to make distribution of the Participant's Account to him or to his Beneficiary or Beneficiaries, as the case may be, in one or more of the following methods:

(1) In one (1) lump sum; or

(2) In periodic payments of substantially equal amounts, payable not less frequently than annually for a period not extending beyond the life expectancy of the Participant or the joint life expectancies of the Participant and a Designated Beneficiary. (Designated Beneficiary shall mean any individual designated as a Beneficiary by a Participant.)

(b) With respect to installment distributions and unless a longer period is requested by the Participant or his Beneficiary, the Plan Administrator shall direct the Trustee to distribute to a Participant or his Beneficiary, Employer Stock in substantially equal monthly, quarterly, semiannual, or annual installments over a period of not longer than five
(5) years. In the case of a Participant with an Account balance in the Plan in excess of $500,000, the five (5) year period shall be extended one (1) additional year (but not more than five (5) additional years) for each $100,000 or fraction thereof by which such balance exceeds $500,000. The foregoing dollar limits shall be adjusted to reflect cost of living increases as announced by the Secretary of Treasury.

(c) In no event shall the amount paid to the Participant and his Designated Beneficiary exceed the amount of his Account.

(d) Periodic distributions to a Participant who has attained age 70 1/2, must equal or exceed an amount determined in accordance with the rules provided in Prop. Treas. Reg.ss.1.401(a)(9)-1, whether in proposed or final form.

Section 7.3 Form of Distribution

(a) Distribution of a Participant's Account shall be made in whole shares of Employer Stock valued at their Fair Market Value Per Share as of the date set forth in Section 5.2, cash, or a combination of both. Balances representing fractional shares will be distributed in cash. In the event Employer Stock is not available for distribution on the date a distribution is due hereunder, the Trustee shall hold such amount until Employer Stock is acquired. Notwithstanding the preceding, the Plan Administrator may

distribute the amount of the Participant's Account in cash, provided that, in such case, the Participant shall have the right to demand in writing that such distribution be in the form of Employer Stock.

(b) If the articles or bylaws of the Employer restrict ownership of substantially all shares of Employer Stock to Employees and the Trust, the distribution of a Participant's Account may be made entirely in cash without granting the Participant the right to demand distribution in shares of Employer Stock.

Section 7.4 Required Distribution After Death. If a Participant dies prior to distribution of his entire vested Account balance, then distribution thereof after the death of the Participant must be made no later than and in accordance with the following:

(a) If, prior to the death of the Participant, the distribution has commenced, the remaining portion of the Account balance shall be distributed at least as rapidly as under the method of distribution being used as of the date of death.

(b) If, prior to the death of the Participant, the distribution has not commenced, the entire Account balance of the Participant must be distributed by December 31 of the fifth calendar year after the death of the Participant, except as provided in subparagraph (c), below.

(c) Restrictions of subparagraph (b) shall not apply to any portion of a Participant's Account balance which is payable to or for the benefit of a designated Beneficiary if:

(1) Such a portion will be distributed over the life of such designated Beneficiary or over a period certain not extending beyond the Beneficiary's life expectancy, and the distribution commences on or before December 31 of the calendar year immediately following the calendar year of the date of the Participant's death; or

(2) If the Beneficiary is the spouse of the Participant, distributions are not required to begin earlier than the later of (i) December 31 of the calendar year immediately following the calendar year in which the Participant died, or (ii) December 31 of the calendar year in which the Participant would have attained age 70 1/2.

(d) If the surviving spouse dies before the distributions to such spouse begin, then the 5-year distribution requirement of subparagraph (b) shall apply as if the spouse were the Participant.

Section 7.5 Put Option

(a) Subject to Section 7.5(f), Employer Stock distributed pursuant to
Section 8.3 hereof, shall be subject to a Put Option for two separate periods of time permitting the

Participant, his donees or beneficiaries to sell such stock to the Employer. The first option period shall be a period of sixty days commencing on the date the stock subject to the option is distributed. The second option period shall be a period of sixty days beginning on the date a Participant is notified of the Fair Market Value Per Share in the next Plan Year. The Participant shall be given written notice of the new Fair Market Value Per Share and of his option to have the Employer repurchase his stock at the new Fair Market Value Per Share.

(b) The selling price of Employer Stock sold pursuant to such Put Option shall be the Fair Market Value as of the last valuation under
Section 5.2.

(c) If the Employer Stock was distributed to the Participant as part of a lump sum distribution, then payment of the purchase price under the Put Option may be deferred if the following conditions are satisfied:

(1) The amount deferred is adequately secured;

(2) A reasonable rate of interest is charged on the unpaid principal balance; and

(3) Periodic payments are made at least annually in substantially equal installments over a period not to exceed 5 years from the date the Put Option is exercised, provided, the first such installment is paid within 30 days of said exercise date.

In all other events the Employer Stock shall be repurchased no later than 30 days after the Participant exercises the Put Option.

(d) In the event that the Employer Stock subject to the Put Option was purchased by the Trustee with the proceeds of an Acquisition Loan, the period specified in subparagraph (c)(3) above may be extended to a date no later than the earlier of 10 years from the date the Put Option is exercised or the date the Acquisition Loan used by the Trust to acquire the stock subject to the Put Option is entirely repaid.

(e) Notwithstanding the preceding, the Trustee may, but shall not be required to, assume the rights and obligations of the Employer under the Put Option.

(f) Section 7.5(a) shall not apply to Employer Stock that is or becomes readily tradeable on an established securities market within the meaning of Code Section 409(h).

Section 7.6 Right of First Refusal

(a) Subject to Section 7.6(f), if any Participant, his Beneficiary or any other person to whom shares of Employer Stock are distributed from the Plan (the "Selling Participant") shall, at any time, desire to sell some or all of such shares (the "Offered Shares") to a third party (the `Third Party"), the Selling Participant shall give written notice of such desire to the Employer and the Administrator, which notice shall contain the number of shares offered for sale, the proposed terms of the sale and the names and

addresses of both the Selling Participant and Third Party. Both the Trust Fund and the Employer shall each have the right of first refusal for a period of fourteen (14) days from the date the Selling Participant gives such written notice to the Employer and the Administrator (such fourteen
(14) day period to run concurrently against the Trust Fund and the Employer) to acquire the Offered Shares. As between the Trust Fund and the Employer, the Trust Fund shall have priority to acquire the shares pursuant to the right of first refusal. The selling price and terms shall be the same as offered by the Third Party.

(b) If the Trust Fund and the Employer do not exercise their right of first refusal within the required fourteen (14) day period provided above, the Selling Participant shall have the right, at any time following the expiration of such fourteen (14) day period, to dispose of the Offered Shares to the Third Party; provided, however, that (i) no disposition shall be made to the Third Party on terms more favorable to the Third Party than those set forth in the written notice delivered by the Selling Participant above, and (ii) if such disposition shall not be made within thirty (30) days following the expiration of such fourteen (14) day period to a third party on the terms offered to the Employer and the Trust Fund, the offered Shares shall again be subject to the right of first refusal set forth above.

(c) The closing pursuant to the exercise of the right of first refusal under Section 8.6(a) above shall take place at such place agreed upon between the Administrator and the Selling Participant, but not later than ten (10) days after the Employer or the Trust Fund shall have notified the Selling Participant of the exercise of the right of first refusal. At such closing, the Selling Participant shall deliver certificates representing the Offered Shares duly endorsed in blank for transfer, or with stock powers attached duly executed in blank with all required transfer tax stamps attached or provided for, and the Employer or the Trust Fund shall deliver the purchase price, or an appropriate portion thereof, to the Selling Participant.

(d) Except as provided in this paragraph (d), no Employer Stock acquired with the proceeds of an Acquisition Loan shall be subject to a right of first refusal. Employer Stock, which is acquired with the proceeds of any Acquisition Loan which is distributed to a Participant or Beneficiary shall be subject to the right of first refusal, provided for in paragraph (a) of this Section only so long as the Employer Stock is not publicly traded. In addition, in the case of Employer Stock which was acquired with the proceeds of an Acquisition Loan, the selling price and other terms under the right must not be less favorable to the seller than the greater of the value of the security determined under Regulationss. 54.4975-11(d)(5), or the purchase price and other terms offered by a buyer (other than the Employer or the Trust Fund), making a good faith offer to purchase the security. The right of first refusal must lapse no later than fourteen (14) days after the security holder gives notice to the holder of the right that an offer by a third party to purchase the security has been made. The right of first refusal shall comply with the provisions of paragraphs (a), (b) and (c) of this Section, except to the extent those provisions may conflict with the provisions of this paragraph.

(e) Certificates for shares distributed pursuant to the Plan which are subject to

Section 7.6(a) shall contain the following legend:

"The shares represented by this certificate are transferable only upon compliance with the terms of the PATTERSON DENTAL COMPANY EMPLOYEE STOCK OWNERSHIP PLAN (the "Plan") effective as of May 1, 1989, which grants to Patterson Dental Company and the Plan a right of first refusal, a copy of said Plan being on file in the office of Patterson Dental Company."

(f) Section 7.6(a) shall not apply to Employer Stock that is or becomes readily tradeable on an established securities market within the meaning of Code Section 409(h).

Section 7.7 Distribution Prior to a Five Consecutive Breaks in Service; Restoration of Forfeited Account

(a) Conditions for Restoration. If a terminated Participant who incurred a Forfeiture under Section 6.4(b) is reemployed by the Employer prior to incurring five (5) consecutive one-year Breaks in Service and the reemployed Participant repays within five (5) years of his date of reemployment the amount of the distribution, if any, he received at his previous termination of employment, then the Plan Administrator shall restore the Participant's Account with the amount of the Forfeiture and the repaid amount.

(b) Time and Method of Restoration. If the Participant has the right to make a repayment of his lump sum distribution under Section 7.7(a), then the Plan Administrator shall restore the Participant's Account as of the last day of the Plan Year in which the repayment is made. To restore the Participant's Account, the Plan Administrator, to the extent necessary, shall allocate to the Participant's Account first, the amount, if any of Participant Forfeitures for the Plan Year; second, the amount of any special Employer contribution made for the purpose of restoring a Participant's Account; and third, the amount, if any of the Trust Fund net income or gain for the Plan Year. To the extent the amounts available for restoration under the immediately preceding sentence are insufficient to make the required restoration, the Employer shall contribute, without regard to any requirement or condition of Sections 4.1 or 4.7, such additional amount as is necessary to enable the Plan Administrator to make the required restoration.

(c) Segregated Account for Repaid Amount. Until the Plan Administrator restores the Participant's Account balance under Section 7.7(b), the Trustee shall invest the amount the Participant has repaid in a segregated account maintained solely for that Participant. Until commingled with the balance of the Trust Fund on the date the Plan Administrator restores the Participant's Account, the Participant's segregated account shall remain a part of the Trust, but it alone shall share in any income it earns and it alone shall bear any expense or loss it incurs. Unless the repayment qualifies as a Rollover contribution, the Plan Administrator shall direct the Trustee to repay to the Participant as soon as is administratively practicable, the full amount of the Participant's segregated account if the Plan Administrator determines that one or more of the conditions

preventing repayment and restoration under Section 7.7(a) is applicable.

Section 7.8 Reemployment After Distribution Has Been Made or Commenced. In the event that a former Participant is reemployed by the Employer after distribution to him has been made or commenced, the following rules shall apply:

(a) Further distribution of his Account shall be suspended and the undistributed remainder shall continue to be held in the Trust Fund, it being the intent hereof that no distribution shall be made while a Participant is employed with the Employer.

(b) Such former Participant shall again become a Participant in the Plan upon satisfaction of the requirements set forth in Section 3.3.

Section 7.9 Designation of Beneficiaries

(a) Each Participant may designate on forms to be furnished by the Plan Administrator, a Beneficiary or Beneficiaries to receive his Account in the event of his death and may change or revoke any such designation from time to time. No such designation, change or revocation shall be effective unless executed by the Participant and delivered to the Plan Administrator during the Participant's lifetime. In the event that a Participant shall have failed to designate a Beneficiary or Beneficiaries, or the Beneficiary or Beneficiaries, as the case may be, shall have failed to survive the Participant, the Participant's Account shall be payable to the first class of the following classes of Beneficiaries then surviving and, except in the case of his surviving issue, in equal shares if there are then more than one in each class:

(1) Participant's surviving spouse,

(2) Participant's surviving issue per stirpes and not per capita,

(3) Participant's surviving parents,

(4) Participant's surviving brothers and sisters,

(5) Representatives of the Participant's estate.

For this purpose, "per stirpes" means in equal shares among living children and the issue of deceased children, the latter taking by right of representation, and "issue" means all persons who are descended from the person referred to, either by legitimate birth or legal adoption.

(b) If a Participant designates a Beneficiary other than such Participant's spouse to receive his Account in the event of his death, such designation shall not take effect unless:

(1) The Participant's spouse consents in writing to the election, and such consent

acknowledges the effect of such election and is witnessed by a Plan representative or a Notary Public; or

(2) It is established by the Participant in writing to the satisfaction of the Plan Administrator that the consent required under subparagraph (1) may not be obtained because there is no spouse; because the spouse cannot be located; or because of such other circumstances provided by regulations issued under the Code.

Any consent by a spouse (or establishment that the consent of a spouse may not be obtained) under subparagraph (2) above shall be effective only with respect to such spouse.

Section 7.10 Minors and Persons Under Legal Disability. If any person to whom a benefit is payable hereunder is a minor, or if the Plan Administrator determines that any person to whom such benefit is payable is incompetent by reason of physical or mental disability, the Trustee shall have power to cause the payment becoming due to such person to be made to another for his benefit. Any payment made pursuant to such power shall, as to such payment, operate as a complete discharge of the Trustee, provided that due care is exercised in selecting the recipient.

Section 7.11 Interest of Persons Who Cannot Be Located. In the event that a Participant or Beneficiary who has been determined to be entitled to a distribution hereunder cannot be located by the Trustee after reasonable, good faith effort, said funds shall be reallocated among the Participants as a Forfeiture. Thereafter if the Participant or Beneficiary entitled to the vested Account balance is located or claims the vested Account balance, such vested Account balance shall be reinstated from Forfeitures for such Plan Year or from any special Employer contributions made for the purpose of restoring a Participant's Account. Such Account balance shall then be distributed to the Participant or Beneficiary in accordance with this Article VII.

Section 7.12 Non-alienation of Benefits. Except in the case of Qualified Domestic Relations Orders, pursuant to Article XI hereof, benefits payable under the provisions of this Plan shall not be subject, in any manner, to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind either voluntary or involuntary, prior to actually being received by the person entitled to the benefit under the terms of the Plan and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. The Trust shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to benefits hereunder.

Section 7.13 Direct Rollovers

(a) Election. This Section 7.13 applies to distributions made on or after January 1, 1993. Notwithstanding any provision of this Plan to the contrary that would otherwise limit a "distributee's" election under this Section, a "distributee" may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of

an "eligible rollover distribution" paid directly to an "eligible retirement plan" specified by the "distributee" in a "direct rollover."

(b) Administration. The election in Section 7.13(a) shall be subject to such reasonable procedures and requirements as may be prescribed by the Plan Administrator.

(c) Definitions. For purposes of this Section 7.13, the following terms are defined as follows:

(1) Eligible rollover distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code Section
401(a)(9); and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); any hardship distribution described in Code Section 401(k)(2)(B)(i)(IV); and any other amount excepted from the definition of "eligible rollover distribution" by Code Section 402(c)(4).

(2) Eligible retirement plan: An eligible retirement plan is an individual retirement account described in Code Section
408(a); an individual retirement annuity described in Code
Section 408(b); an annuity plan described in Section 403(a) of the Code; or a qualified trust described in Section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity.

(3) Distributee: A distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code
Section 414(p), are distributees with regard to the interest of the spouse or former spouse.

(4) Direct rollover: A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.

ARTICLE VIII - PLAN LOANS

Section 8.1 Plan Loans. Loans to Participants are not permitted under this Plan.

ARTICLE IX - TOP-HEAVY PLAN PROVISIONS

Section 9.1 Definitions. As used in this Article IX the following terms shall mean:

(a) "Top-heavy" Plan. The Plan will be Top-Heavy if, as of the Determination Date for such Plan Year:

(1) The aggregate of the Account(s) of Key Employees under the Plan exceeds sixty percent (60%) of the aggregate of the Accounts of all Participants under the Plan, unless the Plan is part of an Aggregation Group which is not Top-Heavy; or

(2) The Plan is part of an Aggregation Group which is Top-Heavy.

For purposes of determining whether on each Determination Date the Plan is a Top-Heavy Plan, the Accounts of Non-Key Employees who during any prior Plan Year were Key Employees shall be disregarded. If an Employee has not performed any services for the Employer at any time during the five year period ending on the Determination Date, the Account balance of such Employee shall be disregarded.

(b) "Aggregation Group".

(1) A required Aggregation Group consists of the following plans:

(i) Each plan of an Employer in which a Key Employee is a participant in the plan year containing the Determination Date, or any of the four preceding plan years; and

(ii) Each plan of an Employer which enables a plan described in clause (i) to meet the requirements of Code Sections 401(a)(4) or 410.

(2) A permissive Aggregation Group consists of the following plans:

(i) Any plan included in (b)(1), and

(ii) Any other plan designated by an Employer provided that by including such plan, the Aggregation Group would continue to meet the requirements of Sections 401(a)(4) and 410 of the Code.

(c) Top-heavy Aggregation Group. An Aggregation Group is Top-Heavy if the sum of:

(1) the present value of the cumulative accrued benefits for Key Employees under all defined benefit plans included in such group, and

(2) the aggregate of the accounts of Key Employees under all defined contribution plans included in such group,

exceeds sixty percent (60%) of a similar sum determined for all Employees.

(d) A "Key Employee" is any Employee or former Employee (including a Beneficiary of such Employee) who at any time during the Plan Year or any of the four preceding Plan Years is:

(1) an officer of the Employer with annual Section 415 Compensation greater than fifty percent (50%) of the dollar limit in effect under Section 415(b)(1)(A) of the Code for such Plan year (as adjusted for cost of living increases), provided that no more than fifty employees, (or if less, the greater of three Employees) or ten percent of all Employees shall be treated as officers;

(2) one of the ten Employees who have annual Section 415 Compensation from the Employer greater than the limitation in effect under Section 415(c)(1)(A) of the Code for such Plan Year (as adjusted for cost of living increases) and who owns one of the largest interests (which interest is more than a one-half percent (.05%) interest) in the Employer;

(3) a five percent (5%) owner of the Employer; or

(4) a one percent (1%) owner of the Employer who has an annual compensation of more than $150,000.00;

The constructive ownership rules of Section 318 of the Code (substituting "5 percent" for "50 percent" in subparagraph (C) of Section 318(a)(2)), shall be applicable to (2), (3) and (4) above. For purposes of subparagraph
(2), if two Employees have the same interest in the Employer, the Employee having greater annual Section 415 Compensation from the Employer shall be treated as having a larger interest. The Plan Administrator will make the determination of who is a Key Employee in accordance with Section 416(i)(1) of the Code and the regulations issued thereunder, which this Plan hereby incorporates by reference.

(e) A "Non-Key Employee" is an Employee who is not a Key Employee. and includes the Beneficiary of such Employee.

(f) The "Determination Date" means the last day of the preceding Plan Year.

(g) The "Valuation Date" is the Determination Date as of which account balances are valued for purposes of calculating the top-heavy ratio.

(h) "Account" of a Participant, with respect to the Plan, or (if applicable) the Aggregation Group of which the Plan is a part, means as of any Determination Date:

(1) the Account balance(s) of such Participant; plus

(2) the contributions due as of the Determination Date; plus

(3) the aggregate distributions made from the plan(s) to such Participant within five (5)years thereof; less

(4) any rollover amount contributed to this Plan by a Participant after December 31, 1983, but only to the extent permitted by regulations issued under Section 416(i)(4)(A) of the Code.

Section 9.2 Determination of Top-Heavy. The Plan Administrator shall determine on each Determination Date whether the Plan is Top-Heavy. In making its determination, the Plan Administrator shall include all plans of a required Aggregation Group and any plans of the permissive Aggregation Group it determines to be appropriate for inclusion. The Determination of Account balances and the present value of accrued benefits is made separately for each plan and then the results of these determinations are aggregated by adding together the results for each plan as of the Determination Date for such plans that fall within the same calendar years. For purposes of determining whether the Plan is Top Heavy, if the Employer is a member of a Controlled Group, then all employees of the Controlled Group shall be treated as Employees of the Employer and all qualified plans maintained by the Controlled Group shall be treated as maintained by the Employer.

Section 9.3 Minimum Contribution. For Plan Years during which the Plan is determined to be Top-Heavy, allocation of the Employer contributions, if any, shall be subject to the following rules:

(a) Each Participant employed on the last day of the Plan Year shall receive a minimum allocation of the Employer contributions to his Account of not less than three percent (3%) of the Participant's compensation (within the meaning of Section 415 of the Code and regulations issued thereunder), whether or not such Participant had sufficient Hours of Service to entitle such Participant to any allocation provided, however, that such minimum allocation shall not exceed the highest percentage of Employer contributions allocated to any Key Employee for such Plan Year.

(b) Any allocation made hereunder shall be offset by any Employer contribution allocation made to the Participant's account in another qualified plan maintained by the Employer which is in an Aggregation Group with this Plan.

(c) After the satisfaction of the minimum allocation rule of subsection (a), any remaining Employer contributions shall be allocated to Participants' Accounts in accordance with Section 4.3.

Section 9.4 Vesting for Top-Heavy Plan

(a) Commencing on the first day of any Plan Year for which the Plan is determined to be Top-Heavy, the following vesting schedule shall be substituted for the vesting schedule of Section 6.2 and Section 6.7 of this Plan:

Years of Service                   Vested
With the Employer                Percentage
-----------------                ----------

Fewer than 2 years                  None
2 years but fewer than 3             20%
3 years but fewer than               40%
4 years but fewer than 5             60%
5 years but fewer than               60%
6 years or more                     100%

(b) All Years of Service shall be calculated without regard to whether the Plan was Top-Heavy during the applicable Plan Year.

(c) If the Plan becomes Top-Heavy and thereafter ceases to be Top-Heavy, the foregoing vesting schedule shall continue to apply in determining the nonforfeitable interest of any Participant who had at least three (3) Years of Service of the last day of the Plan Year in which the Plan was Top-Heavy. For other Participants, the above schedule shall apply only to their Account as of the last day of the last Plan Year in which the Plan was Top-Heavy.

ARTICLE X - PLAN ADMINISTRATION

Section 10.1 Employer Responsibility. The Employer, or if there is more than one Employer, the Sponsor shall be the Plan Administrator.

Section 10.2 Powers and Duties of the Plan Administrator.

(a) The Plan Administrator shall be responsible for and shall control and manage the operation and administration of the Plan.

(b) The Plan Administrator shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan.

(c) The Plan Administrator shall direct the Trustee concerning all payments which shall be made out of the Trust pursuant to the Plan.

(d) At the end of each Plan Year the Employer shall submit to the Plan Administrator the names of all Participants and the amount of contribution to be made by the Employer. The Plan Administrator shall then allocate the Employer contribution to all eligible Participants and shall transmit this information to the Trustee.

(e) The Plan Administrator shall interpret the Plan and shall determine all questions arising in the administration, interpretation, and application of the Plan, including but not limited to questions of eligibility and the status and rights of Participants, Beneficiaries and other persons. Any such determination by the Plan Administrator shall be made in its sole discretion and shall be presumptively conclusive and binding on all persons. The regularly kept records of the Employer shall be conclusive and binding upon all persons with respect to an Employee's Hours of Service, date and length of employment, time and amount of Compensation and the manner of payment thereof, type and length of any absence from work and all other matters contained therein relating to Employees.

(f) The Plan Administrator may require each Participant and each Beneficiary of a deceased Participant to furnish evidence, data or information as the Plan Administrator considers necessary or desirable for purposes of administering the Plan, including his post office address and any change in post office address.

(g) All rules and determinations of the Plan Administrator shall be uniformly and consistently applied to all persons in similar circumstances.

(h) The Plan Administrator may appoint accountants, counsel, specialists, and other persons as it deems necessary or desirable in connection with the administration of this Plan. The Plan Administrator shall be entitled to rely conclusively upon, and shall be fully protected in any action taken by it in good faith in relying upon, any opinions or reports which shall be furnished to it by any such accountant, counsel, specialist or other person.

Section 10.3 Records and Reports of the Plan Administrator. The Plan Administrator shall keep a record of all its proceedings and acts and shall keep all such books of account, records, and other data as may be necessary for proper administration of the Plan. The Plan Administrator shall notify the Trustee and the Employer of any action taken by it and, when required, shall notify any other interested person or persons. The Plan Administrator shall have a copy of this Plan and a copy of the Trust Agreement available at the principal office of the Employer during business hours. Such of its records as may pertain solely to a particular Participant shall be made available to such Participant, either by periodic reports or presentation for examination by such Participant during business hours.

Section 10.4 Plan Administrative Committee. The Board of Directors of the Sponsor may, in its discretion, appoint a committee of one or more persons, to be known as the Plan Administrative Committee (Committee) to act as the agent of the Sponsor in performing the duties of the Sponsor. The members of the Committee shall serve at the pleasure of the Board of Directors; they may be officers, directors, or Employees of the Employer or any other individuals. Any member may resign by delivering his written resignation to the Board of Directors and to the Committee. Vacancies in the Committee arising by resignation, death, removal or otherwise, shall be filled by the Board of Directors. The Sponsor shall advise the Trustee in writing of the names of the members of the Committee and of changes in membership from time to time.

Section 10.5 Organization and Operation of the Plan Administrative Committee.

(a) If the Board of Directors of the Sponsor appoints a Committee, the Committee shall act by majority vote of its members at the time in office, and such action may be taken either by a vote at a meeting or in writing without a meeting. The signatures of a majority of the members will be sufficient to authorize Committee action. A Committee member shall not participate in discussions of or vote upon matters pertaining to his own participation in the Plan.

(b) The Committee may authorize any of its members or any other person to execute any document or documents on behalf of it, in which event the Committee shall notify the Trustee in writing of such action and the name or names of such member or person. The Trustee thereafter shall accept and rely upon any document executed by such members or persons as representing action by the Plan Administrator, until the Committee shall file with the Trustee a written revocation of such designation.

(c) The Committee may adopt such bylaws and regulations as it deems desirable for the conduct of its affairs. These rules may be made available to the Employer and the Participants as determined by the Committee.

Section 10.6 Compensation and Responsibility for Payment of Expenses of the Plan Administrator. The Plan Administrator or members of the Committee who are Employees of the Employer shall serve without compensation for services as such, but all proper expenses incurred by the Plan Administrator incident to the functioning of the Plan may be paid in whole or in part by the Employer and any expenses not paid by the Employer shall be paid by the

Trustee out of the principal or income of the Trust Fund; provided, however, that unusual costs and expenses of litigation involving the Plan and losses, if any, of the Plan of any kind or character, shall be deemed expenses of the Plan and shall be borne by, and paid out of the Plan assets, except to the extent the Board of Directors elects to have such expenses paid directly by the Employer.

Section 10.7 Indemnity of Plan Administrator or Plan Administrative Committee Members. The Sponsor shall indemnify and defend the Plan Administrator or, if the Board of Directors of the Sponsor has appointed a Committee each member of the Committee and each of its other Employees against any and all claims, loss, damages, expenses (including reasonable attorneys fees), and liability arising in connection with the administration of the Plan, except when the same is judicially determined to be due to the gross negligence or willful misconduct of such member or other Employee. The Employer may purchase liability insurance to cover the Plan Administrator or members of the Committee against loss, claims, damages or expense.

Section 10.8 Claims Procedure. Claims for benefits under the Plan shall be made in writing to the Plan Administrator. Within ninety (90) days after the filing of such a claim, the Plan Administrator shall, notify the claimant in writing whether his claim is upheld or denied. A notice of denial shall be written in a manner calculated to be understood by the claimant, and shall contain (i) the specific reason or reasons for denial of the claim, (ii) a specific reference to the pertinent Plan provisions upon which the denial is based, (iii) a description of any additional material or information necessary for the claimant to perfect the claim, together with an explanation of why such material or information is necessary, and (iv) an explanation of the Plan's review procedure. Within sixty (60) days of the receipt by the claimant of the written notice of denial of the claim, the claimant or his duly authorized agent may file a written request with the Plan Administrator that it conduct a full and fair review hearing of the denial of the claimant's claim for benefits. In connection with the claimant's appeal of the denial of his benefit, the claimant or his duly authorized representative may review pertinent documents and may submit issues and comments in writing within 30 days of filing such request for review. The Plan Administrator shall render a decision on the claim appeal promptly, but not later than sixty (60) days after the receipt of the claimant's request for review, unless special circumstances (such as the need to hold a hearing, if necessary) require an extension of time for processing, in which case the sixty (60) day period may be extended to one hundred and twenty (120) days. The Plan Administrator shall notify the claimant in writing of any such extension. The decision upon review shall be communicated to the claimant within thirty days of the hearing and shall (i) include specific reasons for the decision, (ii) be written in a manner calculated to be understood by the claimant and (iii) contain specific references to the pertinent Plan provisions upon which the decision is based.

Section 10.9 Voting Rights.

(a) A Participant shall be entitled to direct the Trustee as to the manner in which voting rights of Employer Stock which is acquired by the Trust and allocated to his Account as of the record date are to be exercised with respect to any corporate matters which involves the voting of such shares with respect to the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation,

dissolution, sale of substantially all assets of a trade or business, or such similar transaction as may be prescribed by regulations.

(b) A Participant shall be entitled to direct the Trustee as to the manner in which voting rights of the Employer Stock which was acquired with the proceeds of an Acquisition Loan entitled to the interest exclusion under Section 133 of the Code and allocated to his Account are to be exercised with respect to all corporate matters subject to shareholder vote.

(c) If the Employer Stock is a "registration-type class of securities, then each Participant or Beneficiary under the Plan shall be entitled to direct the Trustee as to the manner in which all voting rights of the Employer Stock allocated to his Account are to be exercised. A "registration-type class of securities" means: (i) a class of securities required to be registered under Section 12 of the Securities Exchange Act of 1934, and (ii) a class of securities which would be required to be so registered except for the exemption from registration provided in subsection (g)(2)(H) of such Section 12.

(d) The Trustee shall vote (i) Employer Stock in the Account of a Participant to which no such instructions have been received, (ii) Employer Stock in the Loan Suspense Account, (iii) Employer Stock held as an advance Employer Contribution, and (iv) Employee Stock held pending reallocation as a Forfeiture. For purposes of this Section 10.9(d) the Board of Directors of the Sponsor shall have the exclusive power, authority and responsibility for directing the Trustee in determining how Employer Stock shall be voted.

(e) Before each meeting of shareholders at which Participants have the right to direct the Trustee as to the manner of voting allocated shares, the Trustee, at the request of the Plan Administrator, shall furnish to each Participant, or Beneficiary, within a reasonable time before the meeting, a copy of the proxy solicitation material together with a form requesting directions on how such shares of Employer Stock allocated to such Participant's Account shall be voted on each such matter subject to direction. Upon timely receipt of such directions, the Trustee shall, on each such matter, vote as directed by the Participant the number of shares of Employer Stock allocated to such Participant's Account."

Section 10.10 Bonding. Every Fiduciary, except a bank or an insurance company, unless exempted by ERISA, shall be bonded in an amount not less than 10% of the amount of the Trust funds such Fiduciary handles with a minimum bond of $1,000 and a maximum bond of $500,000. The cost of such bond(s), shall be an expense of and may, at the election of the Employer, be paid from the Trust Fund or by the Employer.

ARTICLE XI - QUALIFIED DOMESTIC RELATIONS ORDERS

Section 11.1 Permissible Assignment. Notwithstanding any provision to the contrary herein, the Plan Administrator may assign the interest of a Participant in the Plan (or in a succeeding plan of the Employer or in the plan of a successor Employer) to an Alternate Payee pursuant to a Qualified Domestic Relations Order.

Section 11.2 Application of Provisions. The provisions of this Article shall control in the event the Plan receives a Qualified Domestic Relations Order with respect to a Participant's interest in the Trust Fund.

Section 11.3 Definitions.

(a) Alternate Payee shall mean a

(1) spouse,

(2) former spouse,

(3) child, or

(4) other dependent

of a Participant who is recognized by a Qualified Domestic Relations Order as having a right to receive all, or a portion of, a Participant's benefits under the Plan. An Alternate Payee is treated as a Beneficiary for all purposes under the Plan.

(b) Earliest Retirement Date under this Plan shall mean the earlier of:

(1) the date on which the Participant is entitled to a distribution under the Plan; or

(2) the later of (A) the day a Participant is entitled to a distribution under the Plan; or (B) the earliest date on which the Participant could begin receiving benefits under the Plan if the Participant had terminated employment with the Employer and all members of the Controlled Group. However, if the value of the amount payable to the Alternate Payee is $3,500 or less on the date payment would begin under the Qualified Domestic Relations Order, that date shall be the Earliest Retirement Date.

(c) Qualification Procedures shall mean written procedures adopted by the Plan Administrator to determine whether domestic relations orders meet the requirements set out in paragraph (d), below, and to administer distributions under such orders. The procedures shall be implemented within a reasonable time after receipt of a domestic relations order by the Plan Administrator. Qualification Procedures must permit an Alternate Payee to designate a representative for receipt of copies of notices sent to the Alternate Payee with respect to a Qualified Domestic Relations Order.

(d) Qualified Domestic Relations Order shall mean a judgment, decree or

order, including approval of a property settlement agreement, that relates to provision of child support, alimony payments, or marital property rights to an Alternate Payee, is made pursuant to state domestic relations law, including a state community property law, and creates an Alternate Payee's right to all or a portion of the benefits payable to a Participant under the Plan.

(1) A Qualified Domestic Relations Order must specify:

(i) the name and last known mailing address of each Alternate Payee,

(ii) the amount or percentage of the Participant's benefits to be paid to the Alternate Payee or the manner in which the amount is to be determined,

(iii) the number of payments or period for which payments are required, and

(iv) each plan to which the order relates.

(2) An order does not qualify under this definition if it:

(i) requires the Plan Administrator to provide a benefit or option not available under the Plan,

(ii) requires the Plan to provide increased benefits or

(iii) requires payment of benefits to an Alternate Payee that are required to be paid to another Alternate Payee under a previously existing Qualified Domestic Relations Order.

Section 11.4 Notification. The Plan Administrator shall promptly give written notification to the Participant and to the Alternate Payee of receipt of a domestic relations order and of Plan Qualification Procedures. The Plan Administrator shall then proceed with Qualification Procedures to determine whether the order is a Qualified Domestic Relations Order and shall notify the Participant and Alternate (or the Alternate Payee's designated representative) of its determination.

Section 11.5 Disposition of Disputed Funds.

(a) During the period in which the Plan Administrator is making its determination of the qualified status of the Domestic Relations Order, a separate accounting shall be maintained for any amounts which would be payable to the Participant.

(b) If the order is determined to be a Qualified Domestic Relations Order within the 18-month period beginning on the date on which the first payment would be required to be made under the order, the Plan Administrator shall direct the Trustee to distribute the amounts in accordance with the order.

(c) If the Plan Administrator determines that the order is not a Qualified

Domestic Relations Order, or has not made a determination within the 18-month period described in (b) the Plan Administrator shall direct the Trustee to pay such amounts to the persons who would have received the amounts if the order had not been issued.

(d) If an order is qualified after expiration of the 18-month period described in (b), payment of benefits to an Alternate Payee shall proceed prospectively and the Plan shall not be liable to an Alternate Payee for benefits attributable to the period prior to qualification.

Section 11.6 Payment of Benefits. The Plan Administrator shall comply with any Qualified Domestic Relations Order requiring that benefits be paid to an Alternate Payee beginning on a date on or after the Participant's Earliest Retirement Date. If an Alternate Payee under a Qualified Domestic Relations Order cannot be located, the Plan Administrator may either maintain a separate accounting of the amount which would have been paid to such Alternate Payee, or reallocate such amount among the accounts of Participants as a reduction of the Employer contribution, if the Alternate Payee is thereafter located, the reallocated amount shall be reinstated for the benefit of the Alternate Payee.

Section 11.7 Form of Payment. Payment of benefits pursuant to a Qualified Domestic Relations Order shall be made only as permitted under the Plan.

ARTICLE XII - AMENDMENTS AND ACTION BY SPONSOR/EMPLOYER

Section 12.1 Amendments. The Sponsor reserves the right to make from time to time any amendment or amendments to this Plan in any manner it deems necessary or advisable in order to comply with ERISA. However, no amendment shall be made which authorizes or permits any of the Trust Fund, other than the part which is required to pay taxes and administration expenses, to be used for or diverted to purposes other than for the exclusive benefit of the Participants or Beneficiaries. No amendment shall cause or permit any portion of the Trust Fund to revert to or become a property of the Employer, and no amendment which affects the rights, duties or responsibilities of the Trustee, Plan Administrator, or an Employer may be made without the written consent of the affected party.

Section 12.2 Action by Sponsor/Employer. Any action by the Sponsor or an Employer under this Plan may be by resolution of its Board of Directors or by any person or persons duly authorized by resolution of the Board of Directors to take action. However, neither the Trustee nor the Plan Administrator (if other than the Sponsor) shall have any obligation or responsibility with respect to any action required by the Plan to be taken by the Sponsor or the Employer, any Participant or eligible Employee, nor for the failure of any of those person to act or make any payment or contribution, or to otherwise provide any benefit contemplated under this Plan. The Trustee or the Plan Administrator (if other than the Sponsor or the Employer) shall not be required to collect any contribution required under the Plan, or determine the correctness of the amount of the Employer contribution.

Section 12.3 Plan Ceases to Constitute an ESOP. In the event that the Plan is terminated pursuant to Section 14.1 hereof, or is amended in a manner which causes the Plan to cease being an ESOP, any Employer Stock distributed to the Participants in liquidation of the Trust Fund, or held by the Trustee if the Trust Fund is not liquidated, which was acquired with Acquisition Loan proceeds shall continue to be subject to the provisions of Section 7.5, relating to the Put Option requirement, and the Trust Agreement.

ARTICLE XIII - SUCCESSOR SPONSOR AND MERGER OR CONSOLIDATION OF PLANS

Section 13.1 Successor Sponsor. In the event of the dissolution, merger, consolidation or reorganization of the Sponsor, provisions may be made by which the Plan and Trust will be continued by the successor. In that event, such successor shall be substituted for the Sponsor under the Plan. The substitution of the successor shall constitute an assumption of the Plan liabilities by the successor and the successor shall have all the powers, duties and responsibilities of the Employer under the Plan.

Section 13.2 Plan Assets. In the event of the merger or consolidation of this Plan with, or transfer of assets and liabilities of this Plan to, any other Plan, each Participant shall be entitled (if such other plan had then terminated) to receive a benefit immediately after the merger, consolidation or transfer which is not less than the benefit he would have been entitled to receive immediately before the merger, consolidation or transfer (if this Plan had then terminated).

ARTICLE XIV - PLAN TERMINATION

Section 14.1 Termination of Plan and Trust. The Employer shall have the right, at any time, to suspend or discontinue its contributions under the Plan, and to terminate, at any time, this Plan and the Trust created thereunder. The Plan shall terminate (as to any Employer) upon the first to occur of the following:

(a) The date terminated by action of the Board of Directors, provided the Board gives the Trustee thirty (30) days' prior written notice of the termination;

(b) The date the Employer shall be judicially declared bankrupt or insolvent;

(c) The dissolution, merger, consolidation or reorganization of the Employer, or the sale by such Employer of all or substantially all of its assets, unless the successor or purchaser makes provision to continue the Plan, in which event the successor or purchaser shall substitute itself as such Employer.

Section 14.2 Full Vesting. Notwithstanding any other provision in this Plan to the contrary, upon a full or partial termination of the Plan, or upon complete discontinuance of contributions, an affected Participant's right to his Account shall be one hundred percent (100%) nonforfeitable.

Section 14.3 Distribution of Trust Fund. Upon a termination of the Plan, the Employer at its option may direct and require the Trustee to liquidate the Trust Fund or the applicable portion thereof, and distribute the same to interested Participants. If the Employer does not direct the Trustee to liquidate the Trust Fund upon a termination of the Plan, then the provisions of Article VII shall remain operative, and the Trust shall continue until the Trustee has distributed all of the benefits under the Plan. On each Valuation Date, the Plan Administrator shall credit any part of a Participant's Account retained in the Trust Fund with its proportionate share of the Trust Fund's income, expenses, gains and losses, both realized and unrealized, until such Account has been fully distributed.

ARTICLE XV - MISCELLANEOUS

Section 15.1 Nonguaranty of Employment. Nothing contained in this Plan shall be construed as a contract of employment between the Employer and any Employee or as a right of any Employee to be continued in the employment of the Employer or as a limitation of the right of the Employer to discharge any of its Employees with or without cause.

Section 15.2 Rights to Trust Assets. No Employee shall have any right to or interest in any assets of the Trust Fund upon termination of his employment or otherwise, except as provided from time to time under this Plan and then only to the extent of the benefits payable under the Plan to such Employee out of the assets of the Trust Fund. Except as otherwise may be provided under Title IV of ERISA, all payments of benefits as provided for in this Plan shall be made solely out of the assets of the Trust Fund and none of the Fiduciaries shall be liable therefor in any manner.

Section 15.3 Word Usage. Words used in the masculine shall apply to the feminine where applicable; and wherever the context of the Plan dictates, the plural shall be read as the singular and the singular as the plural.

Section 15.4 Governing Law. To the extent that state law is not preempted by provisions of ERISA or any other laws of the United States, this Plan will be administered, construed and enforced according to the internal, substantive laws of the State of Minnesota, without regard to its conflict of laws rules.

Section 15.5 Uniformed Services Employment and Reemployment Act of 1994. Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service with respect to qualified military service will be provided in accordance with Code Section 414(u).

Exhibit A Special Provisions Applicable to Certain Employees

In connection with the acquisition of Barber Dental Supply, Inc. by merger into Patterson Dental Company effective December 18, 1995, all Employees acquired from Barber Dental Supply, Inc. are provided credit for service with Barber Dental Supply, Inc. for purposes of determining such Employee's Years of Service for Participation and Years of Service for Vesting.

In connection with the acquisition of EagleSoft Incorporated effective July 18, 1997, all Employees hired in connection with such acquisition are provided credit for service with EagleSoft Incorporated solely for purposes of determining such Employee's Years of Service for Participation.

In connection with the acquisition of Hill Dental Company, Inc. effective February 2, 1998, all Employees hired in connection with such acquisition are provided credit for service with Hill Dental Company, Inc. solely for purposes of determining such Employee's Years of Service for Participation.

In connection with the acquisition of Professional Business Systems, Inc. effective February 24, 1999, all Employees hired in connection with such acquisition are provided credit for service with Professional Business Systems, Inc. solely for purposes of determining such Employee's Years of Service for Participation.

In connection with the acquisition of Barr Dental Supply, Inc. effective June 28, 1999, all Employees hired in connection with such acquisition are provided credit for service with Barr Dental Supply, Inc. solely for purposes of determining such Employee's Years of Service for Participation.

In connection with the acquisition of Guggenheim Bros. Dental Supply Co. effective March 27, 2000, all Employees hired in connection with such acquisition are provided credit for service with Guggenheim Bros. Dental Supply Co. solely for purposes of determining such Employee's Years of Service for Participation.

Exh. A-1

In connection with the acquisition of Micheli Dental Supply effective August 2, 2000, all Employees hired in connection with such acquisition are provided credit for service with Micheli Dental Supply solely for purposes of determining such Employee's Years of Service for Participation.

In connection with the acquisition of substantially all of the assets of J. A. Webster, Inc. by a wholly-owned subsidiary of Patterson Dental Company effective July 9, 2001, all Employees hired in connection with such acquisition are provided credit for service with J. A. Webster, Inc. solely for purposes of determining such Employee's Years of Service for Participation.

Exh. A-2

Exhibit B Special Effective Dates

The definition of "Highly Compensated Employee" at Section 2.19 is effective for Plan Years beginning on or after May 1, 1997.

The definition of Section 415 Compensation at Section 2.29 is effective for Plan Years beginning on or after May 1, 1997.

The required commencement of distributions under Section 7.1(c) relating to Participants who are not 5% owners is effective May 1, 1997.

The definition of eligible rollover distribution under Section 7.13(b) excludes hardship distributions effective May 1, 2000.

The Super-Top Heavy and related Code Section 415(e) rules are deleted effective May 1, 2000.

The provisions of Section 15.5 relating to the Uniformed Services Employment and Reemployment Act of 1994 are effective December 12, 1994.

Exh. B-1

SUPPLEMENT A
TO THE
PATTERSON DENTAL COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
EGTRRA AMENDMENT

A-1. Purpose and Application.

(a) The purposes of this Supplement A to the Patterson Dental Company Employee Stock Ownership Plan (the "Plan") is to modify, supersede and supplement the terms of the Plan as it relates to certain amendments required or permitted under certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This Supplement is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and regulations or other pronouncements issued in connection therewith.

(b) Unless this Supplement provides otherwise, the provisions of this Supplement A will be effective as of May 1, 2002.

(c) This Supplement A will supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this Supplement A.

A-2. Annual Additions Limitation. Effective for Limitation Years beginning after December 31, 2001, the Annual Additions limitation under Section 4.6 regarding the amount that may be contributed or allocated to a Participant's accounts under the Plan for any Limitation Year shall not exceed the lesser of:

(a) $40,000, as adjusted for increases in the cost-of-living under Code
Section 415(d), or

(b) 100 percent of the Participant's Section 415 Compensation for the Limitation Year. The compensation limit referred to in this clause (b) will not apply to any contribution for medical benefits after separation from service (within the meaning of Code Section 401(h) or 419A(f)(2)) that is otherwise treated as an Annual Addition.

A-3. Increase in Compensation Limit. For purposes of Section 2.7, the annual Compensation for each Participant taken into account in determining allocations for any Plan Year beginning after December 31, 2001, shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to annual Compensation for the determination period that begins with or within such calendar year.

A-4. Modification of Top-Heavy Rules. This section shall apply for purposes of determining whether the Plan is a Top-Heavy Plan under Code Section 416(g) and the provisions of Article IX of the Plan for Plan Years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of Code Section 416(c) for such years.

(a) Key Employee. For purposes of Section 9.1(d), Key Employee means any Employee or former Employee (including any deceased employee) who, at any time during the Plan Year that includes the determination date, was an officer of the Company having annual Section 415 Compensation greater than $130,000 (as adjusted under Code Section

Supp. A-1

416(i)(1) for Plan Years beginning after December 31, 2002), a 5-percent owner of the Company, or a 1-percent owner of the Company having annual Section 415 Compensation of more than $150,000. The determination of a Key Employee will be made in accordance with Code
Section 416(i)(1) and the applicable regulations and other guidance of general applicability issued thereunder.

(b) Determination of Present Values and Amounts. For purposes of Sections 9.1(h) and 9.2, in determining if the Plan is a Top-Heavy Plan, the present values of accrued benefits and the amounts of account balances of an Employee as of the determination date will be increased by the distributions made with respect to the employee under the Plan and any plan aggregated with the Plan under Code Section 416(g)(2) during the 1-year period ending on the determination date. The preceding sentence will also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Code Section 416(g)(2)(A)(i). If a distribution is made for a reason other than separation from service, death, or disability, this provision will be applied by substituting "5-year period" for "1-year period." The accrued benefits and accounts of any individual who has not performed services for the Company during the 1-year period ending on the determination date will not be taken into account.

(c) Minimum Benefits. For purposes of Section 9.3, if the Plan is a Top-Heavy Plan, Company matching contributions will be taken into account for purposes of satisfying the minimum contribution requirements of Code Section 416(c)(2) and the Plan. The preceding sentence will apply with respect to Company matching contributions under the Plan or, if the Plan provides that the minimum contribution requirement will be met in another plan, such other plan. Company matching contributions that are used to satisfy the minimum contribution requirements will be treated as matching contributions for purposes of the Actual Contribution Percentage test and other requirements of Code Section 401(m).

A-5. Direct Rollovers of Plan Distributions. Effective for distributions made after December 31, 2001, for purposes of the direct rollover provisions in
Section 7.13 of the Plan, an Eligible Retirement Plan will also mean an annuity contract described in Code Section 403(b) and an eligible plan under Code
Section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and that agrees to separately account for amounts transferred into such plan from this Plan. The definition of Eligible Retirement Plan will also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relation order, as defined in Code Section 414(p). No amount that is distributed on account of hardship will be an Eligible Rollover Distribution, and the Distributee may not elect to have any portion of such a distribution paid directly to an Eligible Retirement Plan.

Supp. A-2

SUPPLEMENT B
TO THE
PATTERSON DENTAL COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN

Thompson Dental Company Provisions

B-1. Purpose and Application. The purpose of this Supplement B is to set forth the application of specific provisions of the Plan or exceptions to the Plan as they relate to the employees of Thompson Dental Company ("Thompson"), the acquisition of Thompson by Patterson Dental Company (effective April 3, 2002), and the merger of the Thompson Dental Company Employee Stock Ownership Plan and Trust ("Thompson ESOP") with and into the Plan.

B-2. Adoption; Merger. Thompson hereby adopts the Plan as a participating Employer effective April 3, 2002, and as an amendment and restatement of and merger with the Thompson ESOP effective as of May 1, 2002.

B-3. Service.

(a) For purposes of determining Years of Service for eligibility and vesting, each employee of Thomson will, as of April 3, 2002, be credited with Years of Service and Hours of Service determined by including all service with either Thompson, Patterson Dental Company, or any member of the Controlled Group of either Thompson or Patterson Dental Company.

(b) For purposes of determining Years of Service for vesting, a Plan Year for Participants who were Thompson employees during 2002 will include both the calendar year beginning January 1, 2002 and the Plan Year beginning May 1, 2002.

B-4. Eligibility and Participation.

(a) An employee of Thompson, including a Thompson employee who has become an employee of an Employer, who has satisfied the eligibility requirements on April 3, 2002 will become a Participant in the Plan on April 3, 2002.

(b) On and after May 1, 2002, eligible employees will begin participating in the Plan as of the November 1 or May 1 coincident with or next following the date he or she has satisfied the eligibility requirements of Section 3.1 of the Plan.

(c) Each Participant in the Thompson ESOP as of May 1, 2002 will continue as a Participant in this Plan effective as of May 1, 2002.

(d) Notwithstanding the provisions of Section 3.1 of the Plan, the following employees are not eligible to participate in the Plan:

Supp. B-1

(i) nonresident aliens;

(ii) members of the DesPortes family owning stock in Thompson on January 1, 1995, and persons related to such family members as described in Code Section 409(n)(1)(A) and (B) of the Code.

B-5. Vesting Schedule. Participants, including any employee who was a participant in the Thompson ESOP at the time of its merger with the Patterson ESOP, will be subject to the seven-year graded vesting schedule at Section 6.2 of the Plan in lieu of the five-year cliff vesting schedule under the Thompson ESOP, provided, however, that:

(a) each Participant who was 100% vested in his or her account balances under the Thompson ESOP as of April 30, 2002, will at all times be 100% vested in his or her accounts under the Patterson ESOP; and

(b) each Participant who is not 100% vested in his or her accounts transferred from the Thompson ESOP and has at least three Years of Vesting Service before the end of the election period provided under this paragraph
(b) may elect to have his or her vested percentage under the Patterson ESOP determined on the basis of the five-year cliff vesting schedule under the Thompson ESOP, namely:

Years of Service            Vested Percentage
----------------            -----------------
 Less than 5                          0%
 5 or more                          100%

A Participant eligible to elect under this paragraph (b) may file his or her election with the Plan Administrator within 60 days of the issuance of the notice of the amendment of the vesting schedule to such Participant.

B-6. Beneficiary Designations. [Will the Thompson Beneficiary Designations transfer or will new designations be required?]

B-7. Thompson ESOP Accounts. The Plan Administrator shall maintain a subaccount within each Account for a Participant whose account under the Thompson ESOP was transferred to the Plan.

B-8. Distributions. If a distribution is to be made in the form of shares of Employer Stock, then, to the extent necessary to avoid triggering an excise tax under Code section 4978, such distribution will commence not earlier than the end of the Plan Year in which the Participant has incurred a Break in Service.

Supp. B-2

Exhibit 10.19

ARTICLES OF AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
PATTERSON DENTAL COMPANY

The undersigned, Peter L. Frechette, President and Chief Executive Officer of Patterson Dental Company, (the "Corporation") with the purpose of amending the Corporation's Restated Articles of Incorporation under the provisions of Minnesota Statutes Chapter 302A, states that:

1. The name of the Corporation is Patterson Dental Company.

2. The first paragraph of Article 4 of the Corporation's Restated Articles of Incorporation shall be amended to read as follows:

ARTICLE 4

Authorized Shares: The total authorized shares of all classes which the corporation shall have authority to issue is 630,000,000, consisting of 30,000,000 shares of preferred stock of the par value of one cent ($0.01) per share (hereinafter the "preferred stock"); and 600,000,000 shares of common stock of the par value of one cent ($0.01) per share (hereinafter the "common stock").

3. This amendment to the Restated Articles of Incorporation of the Corporation was approved by the shareholders of the Corporation pursuant to Minnesota Statutes Chapter 302A and the undersigned is authorized to execute same.

IN WITNESS WHEREOF, the undersigned has executed this Amendment to the Restated Articles of Incorporation on this 19th day of November, 2001.