EXHIBIT 10.1
VENDOR AGREEMENT
This Vendor Agreement (“
Agreement ”) is entered into as of October 14,
2009 (“ Contract Date ”) and effective as of the
Effective Date (as defined in the Recitals below) by and among GE
Commercial Distribution Finance Corporation (“ CDF
”), Arctic Cat Sales Inc. (“ACSI”) and Arctic Cat
Inc. (“AC”) (ACSI and AC shall be referred to herein,
unless otherwise noted, individually and collectively as “
Vendor ”).
RECITALS
(a)
Vendor is a manufacturer or
distributor that sells inventory to various dealers and/or
distributors (each, a “ Dealer ”) for subsequent
resale; and
(b)
Vendor currently has in place a
Dealer inventory financing program with Textron Financial
Corporation and/or Textron Inc. (collectively,
“Textron”) and on or about the Contract Date will give
notice or otherwise agree with Textron to terminate such agreement
on its renewal date (January 20, 2010) or earlier , and this
Agreement, together with all obligations, terms and conditions
herein, shall become effective (the “Effective Date”)
upon the later of (i) the effective date of the termination of
such agreement with Textron, and (ii) satisfaction of the
conditions in Section 17 hereof; and
(c)
Any and all inventory sold and/or
distributed by Vendor prior to, on or after the Effective Date of
this Agreement, including but not limited to inventory which is the
subject of the Purchased Accounts (as defined below) shall be
defined herein as “ Inventory ”; and
(d)
CDF provides or may provide
inventory financing services to Dealers of Vendor; and
(e)
Accounts receivable either purchased
by CDF from Textron or paid off by CDF to Textron, and representing
amounts which Dealers owe for financing which Textron extended to
such Dealers with respect to Inventory prior to the Effective Date,
shall be defined herein as “ Purchased Accounts
”; and
(f)
In order to promote Vendor’s
sale of Inventory to its Dealers, Vendor has requested that CDF
provide financing to its Dealers and has agreed to enter into this
Agreement to induce CDF to provide such financing.
NOW, THEREFORE,
to induce CDF to extend financing to
Vendor’s Dealers, Vendor and CDF agree as follows:
1.
Representations and
Warranties .
A.
Whenever a Dealer requests the
shipment of Inventory from ACSI and that CDF finance such
Inventory, ACSI may deliver to CDF one or more invoices describing
the Inventory. By delivery of an invoice relating to
Inventory (for the avoidance of doubt, including but not limited to
any Purchased Accounts and the inventory related to such accounts),
ACSI represents, warrants and covenants to CDF as
follows:
(a)
The invoice issued by ACSI
represents a valid obligation of Dealer, is legally enforceable
according to its terms, relates to a bona fide sale of Inventory by
ACSI to Dealer, as requested by Dealer, and is not subject to any
claim, setoff or defense to payment by Dealer; and that Dealer
requested that its acquisition of the Inventory be financed by
CDF.
(b)
ACSI will transfer to Dealer all of
its right, title and interest in and to the Inventory so described,
contingent only upon CDF’s approval to finance the
transaction.
(c)
ACSI’s title to the Inventory
will be free and clear of all liens and encumbrances when
transferred to Dealer.
(d)
The Inventory is in new (meaning
(i) not previously sold at retail or (ii) not registered
or titled in any state) and unused condition (excepting for normal
wear and tear incidental to demonstration as approved by CDF); it
is of the kind, quality and condition represented or warranted to
Dealer; it meets or exceeds all applicable federal, state and local
safety, construction and other standards; and, if it is a type of
Inventory customarily crated or boxed, such crate or box is factory
sealed; and the Inventory is in salable condition suitable for
ordinary retail sale.
If ACSI breaches any of the above
representations, warranties or covenants, ACSI will immediately
(i) pay to CDF an amount equal to the total unpaid principal
balance and any finance charges owed to CDF on all Inventory
related to the breach, and (ii) reimburse CDF for all costs
and expenses (including, but not limited to, reasonable
attorneys’ fees) incurred by CDF as a result of the
breach.
B.
Vendor also
represents, warrants and covenants to CDF as follows:
(a)
Due
Organization; Authority . Vendor is and will
continue to be duly organized, validly existing and in good
standing under the laws of the state of its formation, is and will
continue to be duly qualified and licensed to do business in every
jurisdiction where such qualification or licensing is necessary to
carry out its obligations under this Agreement and has and will
continue to have the power, authority and legal right to enter into
and perform its obligations under this Agreement.
(b)
Due
Authorization; Enforceability . This Agreement has
been duly authorized, executed and delivered by Vendor and,
assuming due authorization, execution and delivery by Vendor,
constitutes its valid and legally
binding obligation,
enforceable against it in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other similar laws affecting the rights
of creditors generally and by general principles of
equity.
(c)
No Violation
. The execution and delivery of this
Agreement does not, and the performance by Vendor of its
obligations hereunder will not (i) constitute or create a
breach of any agreement to which Vendor is a party,
(ii) violate or conflict with any provision of its charter or
by-laws or other organizational documents, or any law, governmental
rule or regulation, judgment or order applicable to it, or any
provision of any indenture, mortgage, contract or other instrument
to which it is a party or by which it or its property is bound,
(iii) constitute a default under any credit facility or
agreement to which it is a party or by which it or its property is
bound, or (iv) require the consent or approval of, the giving
of notice to, the registration with or the taking of any action in
respect of or by, any federal or state governmental authority or
agency (including any local governmental authority or agency) or
other third party, except as have been duly obtained, given or
accomplished and are in full force and effect.
2.
Inventory Financing
. CDF will only be bound to
finance Inventory with respect to which CDF has agreed to finance
in the exercise of its sole discretion and then only
if: (a) ACSI delivers to CDF an invoice, acceptable in
form and content to CDF, relating to CDF’s agreement/approval
within thirty (30) days after CDF issues its agreement/approval;
(b) ACSI ships the Inventory to the respective Dealer not more
than ten (10) days before or not more than three (3) days
after the date of the invoice/EDI transmission relating to such
Inventory; and (c) CDF has not revoked its
agreement/acceptance before the shipment of the Inventory to Dealer
(prior to funding an approval CDF shall have the right to cancel an
approval upon oral or written notice to ACSI at any time prior to
shipment). If ACSI fails to satisfy any of the foregoing
conditions, CDF shall not be obligated to finance the Inventory,
even though CDF may have previously agreed to finance such
Inventory. Without limiting the generality of the foregoing, if CDF
has not advanced funds with respect to any approval by the date
such approval expires, or by such date as CDF and ACSI may have
otherwise agreed to, then any invoice relating to such approval
shall be deemed not received by CDF and CDF shall have no
obligation to finance such invoice. With respect to invoices which
satisfy the above conditions CDF shall pay ACSI the amount of the
invoice, subject to the terms of the financing program then in
effect between ACSI and CDF. CDF may deduct, setoff, withhold and
or apply any sums or payments due from Vendor to CDF under this
Agreement, any guaranty or due from Vendor to CDF under any other
agreement, against any sums due from CDF to Vendor from any advance
to be made by CDF against any invoice.
3.
Purchase of Inventory
. Whenever CDF deems it
necessary in its sole discretion to repossess or if CDF otherwise
comes into possession, actual or constructive, of any Inventory in
which it has a security interest or other lien, including but not
limited to any Inventory acquired by a Dealer in replacement of
Inventory previously held by Dealer, ACSI will purchase such
Inventory from CDF at the time of CDF’s repossession or other
acquisition of possession thereof in accordance with the following
terms and conditions:
(a)
ACSI will purchase such Inventory,
regardless of its condition, at the point where CDF repossesses it
or where it otherwise comes into CDF’s possession;
(b)
The purchase price ACSI will pay to
CDF for such Inventory will be due and payable immediately in full,
and will be an amount equal to the total unpaid principal balance
owed to CDF with respect to such Inventory;
(c)
ACSI shall not assert or obtain any
interest in or to any Inventory acquired by ACSI until the purchase
price therefor is paid in full;
(d)
If an invoice delivered to CDF by
ACSI does not identify the Inventory covered thereby by serial
number, but only by model number, and ACSI cannot prove to
CDF’s reasonable satisfaction that an item of Inventory is
covered by a particular invoice, then for purposes of determining
the age or price of an item of Inventory under this Agreement, the
item of Inventory shall be deemed to be covered by the most recent
invoice which has an item with the same model number as the item of
Inventory tendered for purchase by ACSI;
(e)
ACSI hereby agrees that in the event
that CDF refinances Inventory for a Dealer by means of a buyout of
a Dealer’s debt from another financing source or otherwise,
such Inventory shall be subject to purchase by ACSI pursuant to the
terms of this Agreement notwithstanding the fact that CDF did not
finance the initial purchase of such Inventory by Dealer from
ACSI;
(f)
The aggregate repurchase obligations
for ACSI for Inventory pursuant to Sections 3 and 4 of this
Agreement shall not exceed the Repurchase Cap per any consecutive
twelve-month period with the first period beginning on the
Effective Date. “ Repurchase Cap ” as used
herein shall mean the greater of (i) Sixty Million Dollars
($60,000,000.00) or (ii) twenty percent (20%) of the ANR (as
defined below) of all Dealers for the prior consecutive
twelve-month period with the first period beginning on the
Effective Date. Notwithstanding anything contained herein to the
contrary, the repurchase terms agreed to by ACSI contained in this
Agreement are in addition to (and do not limit) the loss sharing
and recourse and other obligations of Vendor to CDF hereunder,
under any Guaranty referenced in Section 17 below or
under any other agreement with CDF. Therefore, any amount payable
by Vendor under the loss sharing and recourse terms set forth in
Section 5 below, any Guaranty referenced in
Section 17 below or under any other agreement with CDF
shall not be included or considered as payment(s) by Vendor
for purposes of the Repurchase Cap; and
(g)
“ ANR ” as used
in this Agreement shall be defined as follows: with respect to any
calendar year shall be determined as of December 31 of each
calendar year by aggregating the Monthly ADB (as defined below) for
each calendar month in such calendar year and dividing such
aggregate amount by 12 (the number of calendar months in a
year). ANR for any calendar year in which this financing
program for ACSI’s Dealers as described herein shall be
terminated or which is less than a full 365 day year (each such
calendar year is referred to herein as a “ short year
”) shall
be calculated by aggregating the Monthly ADB (as
defined below) for each calendar month in such short year and
dividing such aggregate amount by the number of calendar months in
such short year). The Repurchase Cap, Gross Margin Income (as
described in the Program Terms Letter referenced in
Section 17 ) and the “rebate” (as described
in Section 5.1 of this Agreement), if any, for any
short year shall be prorated accordingly. “ Monthly
ADB ” with respect to any calendar month shall be
determined by aggregating the total outstanding principal amount
owing to CDF from all Dealers with respect to the financing program
for ACSI’s Dealers as described herein (as determined on a
managed basis without regard for securitization) for each day
during such calendar month and dividing such aggregate amount by
the number of days in such calendar month.
4.
Additional Terms of
Purchase . In
addition to ACSI’s obligations set forth above, if CDF at any
time repossesses or otherwise comes into possession of any
Inventory from a Dealer who received the Inventory from a third
party and not directly from ACSI, ACSI shall purchase such
Inventory from CDF on demand, in accordance with the terms set
forth above in Section 3 ; provided, however ,
that with respect to any Inventory (excluding Purchased Accounts
and the inventory related to such accounts): (a) CDF
will first request such third party to purchase such Inventory from
CDF; and (b) if such third party fails to immediately purchase
such Inventory from CDF, ACSI shall immediately purchase such
Inventory and pay CDF a purchase price therefor in an amount equal
to the total unpaid principal balance owed to CDF with
respect to such Inventory and all costs and expenses (including,
without limitation, reasonable attorneys’ fees) paid or
incurred by CDF in connection with its repossession of such
Inventory.
5.
Loss Sharing and
Recourse.
5.1
ACSI unconditionally and absolutely
guaranties repayment to CDF of (i) fifty percent (50%) of all
losses incurred by CDF ( disregarding securitization) with
respect to all current and future Dealer Liabilities (as defined
below) which do not exceed one percent (1%) of Dealers’
combined average outstandings with CDF for each twelve (12) month
period with the first twelve month period beginning on the
Effective Date, and (ii) one hundred percent (100%) of all
losses incurred by CDF (disregarding securitization) with
respect to all current and future Dealer Liabilities which do
exceed one percent (1%) of Dealers’ combined average
outstandings with CDF for such twelve (12) month period; provided
that ACSI’s liability for any such losses pursuant to this
Section 5.1(ii) exceeding such one percent (1%)
shall not be greater than Ten Million Dollars ($10,000,000.00)
during any such twelve (12) month period. For purposes of clarity,
ACSI’s liability pursuant to this Section 5.1(i)
shall not be counted towards the cap described in this
Section 5.1(ii) . “ Dealer
Liabilities ” as used in this Section 5 shall
mean (a) all indebtedness of any nature of any Dealer
(excluding Tracker Marine Retail, LLC) owed to CDF (as determined
on a managed basis without regard for securitization) whether
existing or arising hereafter with respect to Inventory, whether
for principal, interest, fees, expenses, reimbursement obligations
or otherwise (as determined on a managed basis without regard for
securitization) and (b) all costs and expenses (including,
without limitation, reasonable attorneys’ fees) incurred by
CDF in attempting to collect such indebtedness from any Dealer.
ACSI will immediately pay to CDF the amount of the guarantied
Dealer Liabilities upon receipt of notice from CDF that such Dealer
Liabilities exist with respect to any Dealer. ACSI’s
guaranty under this Section 5 is a guaranty of payment
and not of collection. If for any calendar year
(beginning with calendar year 2010), CDF’s respective share
of the aggregate annual loss with respect to the financing program
for ACSI’s Dealers (excluding Tracker Marine Retail, LLC) as
described herein (as determined on a managed basis without regard
for securitization) is less than 0.50% of ANR (as defined
above), after giving effect to the loss sharing to be contributed
by ACSI for such calendar year, then the difference between
CDF’s respective share of such annual loss amount and 0.50%
of ANR for such calendar year will be shared evenly with the ACSI
within 60 days of such calendar year’s year-end. The
loss and the ANR for any year during which this Vendor Agreement
shall be in effect for only a part of such calendar year shall be
prorated. All determinations of applicable losses shall be
based upon CDF’s internally calculated profit and loss
report, with respect to the financing program for ACSI’s
Dealers as described herein, as determined by CDF in its sole
discretion in accordance with its then current internal cost
allocation and accounting policies and procedures, which policies
and procedures may change from time to time. Notwithstanding
anything contained herein to the contrary, Tracker Marine Retail,
LLC shall not be included in any of the calculations set forth in
this Section 5.1 .
5.2
ACSI’s
obligations hereunder shall be unconditional, irrespective of, at
any time, (i) the invalidity or unenforceability of the Dealer
Liabilities or any agreement or instrument relating to any of the
Dealer Liabilities (collectively, the “ Transaction
Documents ”), (ii) any law, regulation or order in
effect in any jurisdiction affecting any of the terms or the rights
of CDF with respect to the Dealer Liabilities or the Transaction
Documents, (iii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Dealer
Liabilities, or any other amendment or waiver of or any consent to
departure from any Transaction Document, (iv) the absence of
any attempt to collect the Dealer Liabilities from Dealer or from
any other person primarily or secondarily liable with respect to
the Dealer Liabilities or of any attempt to realize upon any
security interest securing the Dealer Liabilities, (v) any
exchange, release, non-perfection or other impairment of any
security interest securing the Dealer Liabilities or other
security, (vi) any release of or settlement with any Dealer or
other obligor with respect to the Dealer Liabilities or any release
or amendment or waiver of or consent to departure from any other
guaranty of the Dealer Liabilities, (vii) CDF’s
acceptance at any time of any additional collateral, guarantees or
other credit support relating to the Dealer Liabilities,
(viii) any dispute between CDF and any Dealer, or any
termination of credit to any Dealer or modification of the terms
thereof, (ix) the disallowance in bankruptcy or other
proceedings of all or any part of CDF’s claim against any
Dealer or any other person liable for any Dealer Liabilities, and
(x) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Dealer, a guarantor or
a surety.
5.3
This guaranty
will not be released, discharged or affected by the impairment,
sale or other disposition of any collateral that is security for
the Dealer Liabilities which any Dealer owes to CDF. ACSI
will pay CDF the amount of
such Dealer Liabilities even
if CDF has not (i) notified the applicable Dealer that it is
in default, or (ii) exercised any of CDF’s rights or
remedies against such Dealer, any other person or any current or
future collateral. If any Dealer hereafter undergoes any
change in its ownership, identity or organizational structure, this
guaranty will extend to all current and future obligations which
such new or changed legal entity owes to CDF. ACSI
irrevocably waives any right of notice of the number and amount of
advances made by CDF to any Dealer in reliance on this guaranty and
any claim or action against any Dealer; all rights of offset
against CDF or Dealer; and all defenses to the enforceability of
this guaranty (including, without limitation, fraudulent
inducement). ACSI further waives all defenses based on
suretyship or impairment of collateral and defenses which any
Dealer may assert on the underlying Dealer Liabilities, including,
but not limited to, breach of warranty, fraud, payment of disputed
amounts, statute of frauds, bankruptcy, statute of limitations,
lender liability and deceptive trade practices.
5.4
No delay on the
part of CDF in the exercise of any right or remedy shall operate as
a waiver thereof, and no single or partial exercise by CDF of any
right or remedy shall preclude any further exercise thereof.
No modification, waiver or amendment of any of the provisions of
this Section 5 shall be binding upon CDF except as
expressly set forth in a writing duly signed on CDF’s behalf
by any authorized officer or agent of CDF and delivered by CDF to
ACSI. CDF’s failure at any time to require strict
performance by ACSI of any of the provisions contained in this
Section 5 shall not waive, affect or diminish any right
of CDF at any time to demand strict performance
therewith.
5.5
To the extent that ACSI or any
Dealer makes any payment to CDF or CDF enforces any security
interests or exercises any rights of setoff with respect to the
Dealer Liabilities, and such payment or the proceeds of such
enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not
occurred. Notwithstanding anything in this
Section 5 to the contrary, the right of recovery
against ACSI under this Section 5 is limited to the
extent it is judicially determined with respect to ACSI that
entering into this guaranty would violate Section 548 of the
United States Bankruptcy Code or any comparable federal, state or
other laws relating to fraudulent transfers or the like, in which
case ACSI shall be liable under this Section 5 only for
amounts aggregating up to the largest amount that would not render
ACSI’s obligations under this Section 5 subject
to avoidance under Section 548 of the United States Bankruptcy
Code or any such comparable laws.
5.6
Notwithstanding anything contained
herein to the contrary, the loss sharing and recourse terms agreed
to by ACSI in this Agreement are in addition to (and do not limit)
the repurchase and other obligations of Vendor to CDF hereunder,
under any Guaranty referenced in Section 17 below or
under any other agreement with CDF. Therefore, any amount
payable by Vendor under the Repurchase Cap, any Guaranty referenced
in Section 17 below or under any other agreement with
CDF shall not be included or considered as payment(s) by
Vendor for purposes of the cap set forth in this
Section 5 .
6.
Exclusivity.
During the term of this
Agreement, which includes the initial term and any additional terms
thereafter, Vendor agrees to the following:
(a)
Vendor will not, directly or through
its affiliates, enter into, consummate, or otherwise arrange for
any Vendor supported (monetary or otherwise) special, preferred,
private label, joint venture, business combination, contractual
arrangement, partnership, strategic alliance or other legal or
business relationship with any person or entity other than CDF for
the purpose (whether exclusive, primary or otherwise) of operating
or promoting any type of wholesale financing program to its Dealers
in the United States;
(b)
Vendor will use its best effort to
encourage Dealers to use CDF as their financing source with respect
to any purchase of Inventory;
(c)
Vendor wil
