EXHIBIT
10.78
VENDOR PROGRAM AGREEMENT
THIS VENDOR PROGRAM AGREEMENT ("Agreement") is made and entered into as of June
30, 1995, by and between DVI Financial Services Inc. ("DVI") and ADAC
Laboratories ("ADAC").
RECITALS
ADAC, in the regular course of its business, has entered into or
acquired or may hereafter enter into or acquire "Contracts" and may desire from
time to time to sell to DVI and DVI may desire to purchase from ADAC the
"Obligations" on the terms and conditions set forth below.
AGREEMENT
1. DEFINITIONS
For the purpose of this Agreement the following terms shall have the
following meanings:
1.1. "▇▇▇▇ of Lading". Any document(s) which evidence(s) that the
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Equipment has been shipped to a Customer.
1.2. "Contracts". Any lease, conditional sales contract, installment
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sale contract, chattel mortgage, security agreement, promissory note, any other
title retention or lien instrument, or any other agreement providing for
deferred installment payments to ADAC, arising out of the sale or lease of
Equipment or the extension of credit.
1.3. "Contract Term". The noncancellable term of any Contract as set
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forth in the Contract or any other documents evidencing such term.
1.4. "Customers". Customers of ADAC who enter into a Contract with
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ADAC for the purpose of financing the acquisition of ADAC's Equipment.
1.5. "End User". Purchasers and/or users of ADAC equipment world-wide.
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1.6. "Equipment". The personal property, software or fixtures which
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are the subject of a Financed Contract.
1.7. "Event of Default". Event of Default shall have the meaning given
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to such term in Section 17 hereof.
1.8. "Financed Contract". Any Contract the Obligations of which have
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been purchased by DVI.
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1.9. "First Loss Recourse Pool". First Loss Recourse Pool shall have
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the meaning given to such term in Section 12 hereof.
1.10. "Installment Payments". The Customer's periodic installment
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payments on Obligations due under a Financed Contract net of taxes, tariffs and
imposts. Installment Payments may be due monthly, quarterly, or semi-annually.
1.11. "Installment Payment Start Date". The date on which the Customer's
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payment obligation starts.
1.12. "Net Investment Value". DVI's net book value of an Obligation as
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determined by calculating the present value of all Installment Payments
remaining on a Financed Contract using the discount rate used in calculating the
original Purchase Price.
1.13. "Obligations". The deferred payment and other obligations due or
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to become due under Financed Contracts.
1.14. "Portfolio". The entire group of Contracts purchased by DVI.
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1.15. "Purchase Price". The present value of all Installment Payments
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remaining on an Obligation as of the date of its purchase by DVI hereunder
calculated using a discount rate equal to the yield of thirty-one (31) month
United States Treasury Notes as quoted in the Wall Street Journal on the date
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of purchase of the Obligation plus Four Hundred Fifteen (415) basis points.
The Purchase Price will be calculated based upon the assumption that each
Installment Payment will be due on the last calendar day of each respective
month in which an Installment Payment is due.
1.16. "Remarketing Loss". Remarketing Loss shall have the meaning given
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to such term in Section 13.4 hereof.
1.17. "Remarketing Proceeds". Remarketing Proceeds shall have the
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meaning given to such term in Section 13.3 hereof.
2. FINANCING TRANSACTIONS.
2.1. DVI's Determination to Finance Contracts and Purchase Obligations.
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Subject to the terms and conditions hereof, ADAC shall submit to DVI certain
Contracts with Customers, and DVI, in its sole discretion, shall determine
whether to finance any Contract and purchase the Obligations under said
Contract.
2.2. No Liability For Non-Funding; Release of Rejected Contracts. DVI is
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not obligated under this Agreement to finance any Contract with any of ADAC's
Customers, the decision to finance any such Contract being at the sole
discretion of DVI. In the event DVI elects not to finance any proposed Contract
submitted by ADAC, DVI will return the package containing all financial and
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related information on the proposed Contract to ADAC and ADAC can place the
rejected Contract with any other funding source.
2.3. Submittal of Proposed Contracts. With respect to each Contract,
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prior to presenting such Contract to DVI, in accordance with DVI's formats,
systems, methods, procedures and standards, ADAC will prepare for, and submit
to, DVI a credit package for each Customer. ADAC shall also furnish such other
credit information as DVI, from time to time, may reasonably require.
3. PURCHASE OF CONTRACTS
3.1. Terms of Purchase. If DVI decides, pursuant to Section 2 above,
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to finance a Contract and purchase the Obligations, DVI shall purchase, from
ADAC, the Obligations for the Purchase Price.
3.2. Purchase of Obligations. Upon payment of the Purchase Price ADAC
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shall sell, assign and transfer the Obligations under Financed Contracts to
DVI and grant DVI a security interest in the Financed Contract and in any
interest that ADAC has in the Equipment. Should ADAC fail to do so, DVI is
authorized to execute on behalf of ADAC any necessary assignment or endorsement
of Obligations which have been omitted in any financing statements necessary to
perfect its security interest in the Financed Contract or Equipment.
3.3. ADAC's Warranties. ADAC agrees that all of ADAC's usual warranties,
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express and implied as to the Equipment, and any service or maintenance agreed
to between ADAC and its Customer, are hereby made to, and the agreements are
with, the Customer as well as to and with DVI.
3.4. Representations and Warranties with Respect to Financed Contracts.
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ADAC represents and warrants with respect to each Financed Contract, any related
Equipment or related Acknowledgment and Consent to Assignment that:
3.4.1. The Contracts have been created or acquired by ADAC in the
regular course of its business and represent existing and valid legally
enforceable obligations in accordance with the terms thereof based on an actual
and bona fide sale and delivery or lease of equipment or extension of credit to
the named Customer which has been finally accepted by the Customer and for which
the Customer is unconditionally liable to make payment in the amount stated in
the Contract without right of rejection, return, offset, defense, counterclaim,
discount or deduction;
3.4.2. All statements made in the contracts, including names,
addresses, locations, descriptions of Equipment, down payments and unpaid
balances, are true and accurate and are in all respects what they purport to be;
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3.4.3. All signatures and endorsements that appear on the Contracts
or any agreement or instruments relating thereto are genuine and all signatories
and endorsers, if any, have full capacity to contract;
3.4.4. Absolute title to the Contract, free and clear of any liens,
encumbrances or claims of others is vested absolutely in ADAC and no other
assignment of, or security interest in, or other interest or benefit in the
Contracts and in favor anyone other than DVI is in effect;
3.4.5. The transactions underlying or giving rise to the Contracts
and the sale, delivery or assignment thereof by ADAC to DVI are in conformity
with and do not violate any applicable U.S. state or federal laws or regulations
and all documents constituting, securing or relating to the Contracts are
legally sufficient and enforceable under such laws and regulations of the
countries of the Customers under the Financed Contracts.
3.4.6. ADAC will use its best efforts to make all necessary filings,
recordings, or give notice and obtain all necessary waivers and consents so as
to enable DVI to obtain judgment against the Customer for the unpaid balance of
the Contract and for ADAC to exercise the rights of a seller retaining title or
a secured party as to the Equipment;
3.4.7. ADAC will not, without the prior written consent of DVI,
accept any collections, repossess or consent to the return of any Equipment or
modify the terms of any Contract;
3.4.8. Any down payment set forth in the Contracts was made in cash
and no part of it was advanced to the Customer by ADAC or any assignor; and
3.4.9. Any related amendment, addendum, schedule, rider, supplement,
agreement or instrument entered into with the Customer and any other documents
relating to the Contract or Equipment has been delivered to DVI including,
without limitation, Bills of Lading.
3.4.10. The Contracts require that the Equipment is and will continue
to be insured by the Customer against risk of loss by fire and other insurable
hazards and ADAC shall be named as loss payee under such policy as ADAC's
interests may appear and ADAC hereby assigns its right, title and interest in
and to said insurance policies and any proceeds therefrom to DVI.
4. TERM OF AGREEMENT AND AMOUNT OF COMMITMENT; RENEWAL
4.1. Term. The Term of this Agreement is for a period of one (1) year
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from the effective date hereof, and thereafter will be automatically renewed for
successive one (1) year terms unless
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either party elects to terminate this Agreement by giving notice in writing to
the other party of its intention to terminate thirty (30) days prior to the end
of the then current Term; PROVIDED HOWEVER, that DVI shall have the right to
immediately terminate this Agreement by giving notice to ADAC upon the
occurrence of an Event of Default as defined in Section 17 below.
4.2. Commitment Amount. Subject to the terms and conditions of this
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Agreement, and during the Initial Term of this Agreement, DVI agrees to purchase
Obligations from ADAC up to the aggregate principal sum of Five Million Dollars
($5,000,000). At such time as DVI has completed the purchase of the initial
Five Million Dollars ($5,000,000) of Obligations, DVI in its sole discretion may
increase the Commitment Amount.
5. ADMINISTRATION OF CONTRACTS
Until the happening of an Event of Default hereunder DVI authorizes ADAC or
its agent, and ADAC agrees, as agent for DVI, to ▇▇▇▇ for and collect all monies
due and to become due under the Financed Contracts and to make all appropriate
efforts, by suit or otherwise, at ADAC's own cost and expense, subject at all
times to DVI's right to direct and control the same. In connection therewith,
ADAC agrees that ADAC may (a) obtain and enter judgments against Customers and
undertake all proceedings supplementary thereto for the purpose of enforcing
such judgments and (b) subject to Section 13 of this Agreement, repossess,
resell, re-lease or otherwise dispose of the Equipment. ADAC agrees to exercise
due care and diligence in so acting as DVI's agent and to indemnify and hold DVI
harmless from and against all loss, liability (including negligence, tort and
strict liability), damage, costs and expenses (including reasonable attorney's
fees) caused by any of ADAC's actions and will not, without DVI's prior written
consent, grant any extension of time of payment, compromise or settle for less
than the full amount owing, or release in any manner Customers or any other
persons liable for payment under any Financed Contract. ADAC agrees to direct
any Customer under any Financed Contract to remit all Installment Payments
directly to a demand deposit account designated by DVI entitled "ADAC Latin
American Finance" which account shall be owned and controlled solely by DVI.
ADAC agrees that it will not direct any Customer under any Financed
Contract to make payment to any other place or address without DVI's prior
written consent. Any payments received by ADAC under any Financed Contract will
be held by ADAC in trust for DVI even though the same may have been commingled
with ADAC's assets as a convenience to ADAC and ADAC agrees to remit all such
funds received by it to DVI immediately upon receipt by ADAC.
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6. SERVICE BY ADAC
ADAC agrees promptly to fulfill all of its obligations to the Customers
with respect to the Equipment. The purchase of the Contract and Obligations by
DVI shall not be deemed an assumption by DVI of, or impose on DVI, any
obligation with respect to the Customer or the Equipment. ADAC shall provide
customer service and Equipment maintenance equivalent to that provided to ADAC's
other customers whether purchasers or Customers. Such service shall be provided
at ADAC's billing rates then in effect and include, but not be limited to,
hardware and software maintenance, required engineering changes to the
Equipment, customer training and program support.
7. RELATIONSHIP OF THE PARTIES
7.1. No Warranties by DVI; No Agency Created. It is understood and
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agreed to by the parties hereto that this Agreement does not create a fiduciary
relationship between them, that DVI and ADAC are and shall continue to be
independent contractors and that nothing in this Agreement is intended to make
either party a general or special agent, legal representative, subsidiary, joint
venturer, partner, employer or servant of the other for any purpose.
It is further understood and agreed by the parties hereto that DVI is
not the manufacturer, supplier, vendor, distributor, dealer, integrator or
merchant in the Equipment which shall be the subject matter of any proposed
Contract financed pursuant to this Agreement. The Customer, in every instance
without exception, will have selected the Equipment. DVI DOES NOT AND WILL NOT
MAKE ANY WARRANTY OR REPRESENTATION WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO
THE FITNESS, CONDITION, MERCHANTABILITY, DESIGN OR OPERATION OF THE EQUIPMENT,
ITS FITNESS FOR ANY PARTICULAR PURPOSE, THE QUALITY OR CAPACITY OF MATERIALS IN
THE EQUIPMENT OR WORKMANSHIP IN THE EQUIPMENT, OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER.
7.2. Insurance Maintained by ADAC. At all times while this Agreement
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is in effect, and in any event, for as long as the term of any Financed
Contract, ADAC shall maintain a general liability policy in form and amount
satisfactory to DVI, insuring DVI and ADAC against any loss or damage resulting
from the design, manufacture, purchase, financing, leasing, ownership, delivery,
possession, transportation, storage, maintenance, repair, return, use, and
operation of any item of Equipment. The aforementioned policy of insurance
shall not be cancelled without the insurer first giving thirty (30) days written
notice of said proposed cancellation to DVI. ADAC shall furnish to DVI a
certificate of insurance evidencing the coverage herein required, or copy of
said policy.
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8. ENHANCEMENTS AND UPGRADES
Any software developments or enhancements and hardware changes required by
such developments or enhancements shall be made immediately available to
Customers on the same basis as to other End Users of ADAC's Equipment.
9. REPAIRING AND REFURBISHING
At DVI's request, ADAC agrees, at its own expense, to repair and refurbish
any Equipment that is repossessed pursuant to Section 13 of this Agreement. ADAC
will provide such services with respect to each Financed Contract until the
earlier of one (1) year following the expiration date of such Financed Contract
or when DVI has received all of its Net Investment Value with respect to such
Financed Contract.
10. WARRANTIES
ADAC hereby represents and warrants to DVI and its assignees as follows:
10.1. Patent/Trademark. All Equipment delivered to Customers under
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any Contract financed under this Agreement shall be subject to (i) warranties
and patent/trademark indemnities given by the Equipment's manufacturer and (ii)
any further warranties or assurances of performance actually made to a Customer
in writing by ADAC.
10.2. Design Changes. Engineering design changes and configuration
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changes, including software, which improve performance or extend product life
will be made available to Customers on the same basis as other End Users and at
a price not to exceed the standard End User price in effect at the time.
10.3. Spare Parts. ADAC will maintain or require its suppliers to
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maintain an inventory of spare parts for the Equipment for a period up to the
latest expiration date of any outstanding Financed contract, including any
extensions or renewals thereof.
11. GENERAL INDEMNITY
ADAC agrees to indemnify and hold DVI, its subsidiaries, affiliates,
stockholders, directors, officers, employees, agents, successors and assigns
harmless from and to defend against all claims, losses, liabilities (including
negligence, tort and strict liability), damages, judgments, suits, and all legal
proceedings, and any and all costs and expenses in connection therewith and
attorneys' fees, arising out of or in any manner connected with the design,
manufacture, purchase, financing, ownership, delivery, rejection, non-delivery,
possession, use, transportation, storage, operation, maintenance, repair, return
or other disposition of the
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Equipment, or with this Agreement, or with any Financed Contract, including,
without limitation, claims for injury to or death or persons and for damage to
property, and to give DVI prompt notice of any such claim or liability excluding
any of the same arising from the negligence or willful misconduct of DVI, and
provided that ADAC shall be given prompt notice of such claims and ADAC shall
have the right to defend any such claims, at ADAC's expense.
12. ADAC FIRST LOSS RECOURSE POOL
12.1. Calculation of First Loss Recourse Pool, Limited Recourse. The
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First Loss Recourse Pool ("Pool") will be established at the time DVI first
purchases a contract from ADAC. No actual fund shall be established with
respect to the Pool. ADAC shall, upon written request of DVI, pay to DVI the
amount of Remarketing Loss arising as a consequence of any events set forth in
Section 12.2, provided that ADAC shall not at any time be required to pay an
amount exceeding the then amount of the Pool. All claims due DVI shall be
payable to DVI by ADAC in U.S. dollars via check or wire transfer within five
(5) days of the request for payment. The amount of the Pool will increase or
decrease as follows:
Ten percent (10%) of the Purchase Price of each new Financed Contract
shall be added to the Pool. However, the Pool shall at no time become greater
than fifteen percent (15%) (the "Ceiling Percentage") of the Net Investment
Value of the then outstanding Financed Contracts. (If reductions in Net
Investment Value of the outstanding Financed Contracts cause the Pool to exceed
the Ceiling Percentage, the Pool will be reduced accordingly.) Any Remarketing
Loss shall reduce the Pool by the amount of the Remarketing Loss. The foregoing
calculation is subject to the further adjustment that at such time as the Pool
becomes $150,000 or less, the Pool shall not be further reduced by amortization
of the outstanding Financed Contracts.
DVI and ADAC shall jointly prepare each month during the term of this
Agreement a calculation of First Loss Recourse Pool in the form attached as
Exhibit A to this Agreement.
Except for breaches by ADAC of warranties, representations and covenants
given and agreed to by ADAC in this Agreement, and for indemnities provided by
ADAC hereunder to which this limited recourse provision does not apply, DVI will
not at any time have recourse to ADAC, personally or to its assets, for an
amount exceeding the then amount of the Pool, but rather DVI shall have recourse
only to the Financed Contracts and its security interest in the Equipment for
repayment of the Obligations.
12.1.1. Adjustments to Recourse Pool. ADAC and DVI agree to annually
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analyze the performance of the Portfolio beginning eighteen (18) months from the
date the first Contract is
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purchased by DVI. If at such time the Default Rate is less than one percent
(1%) the Ceiling Percentage will be decreased to ten percent (10%); if the
Default Rate is between one percent (1%) and three percent (3%) inclusive the
Ceiling Percentage will remain at fifteen percent (15%); and if the Default Rate
is greater than three percent (3%) the Ceiling Percentage will increase to
twenty percent (20%). The Default Rate at any time will be determined by
dividing (x) the then Net Investment Value of those outstanding Financed
Contracts having delinquencies of more than thirty (30) days by (y) the
aggregate Net Investment Value of the Portfolio.
12.2. Amounts Payable from and Credits to Recourse Pool. The Recourse
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Pool shall be charged by DVI for the amount of any Remarketing Loss and said
amount shall be payable by ADAC immediately upon the occurrence of any of the
following events: (i) a Remarketing Loss under a Financed Contracts exists
following the resale of repossessed Equipment related to such Financed Contract;
(ii) an item of Equipment that has been repossessed from a Customer is
determined to be non-saleable by agreement ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇, (▇▇▇) ▇▇▇ and
ADAC are unable to resell repossessed Equipment within one hundred and twenty
(120) days after date of repossession, or (iv) ADAC is unable to take possession
of the Equipment within one hundred and twenty (120) days from the date of DVI's
written request for repossession. In the event that either event (iii) or event
(iv) above occurs and ADAC or DVI is able to remarket the repossessed Equipment
after the initial one hundred and twenty (120) day period, any proceeds from the
remarketing payable to ADAC, up to an amount equal to the amount charged to the
Recourse Pool, shall be credited to the Recourse Pool. Any amount in excess of
the Recourse Pool amount shall be allocated as set forth in Section 13.3.
13. REPOSSESSION AND REMARKETING
ADAC shall have the following obligations:
13.1. ADAC's Obligation to Repossess and Remarket. ADAC at its cost
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agrees to use reasonable efforts to repossess the Equipment under any defaulted
Financed Contract and said obligations shall continue for the entire term of
said Contract respecting such Equipment, notwithstanding the termination or
expiration of this Agreement and without regard to any extension or non-
extension of this Agreement; provided however, that ADAC shall not be required
to take legal action to effect collection or repossession of any Equipment. If
DVI reasonably believes that any Financed Contract is unenforceable, upon the
request of DVI, ADAC shall proceed, at its sole expense, to take legal action to
enforce the terms of the Financed Contract. If a court of competent
jurisdiction determines that the Financed Contract is not enforceable against
the Customer in accordance with its terms, upon the request of DVI, ADAC shall
repurchase the Financed Contract from DVI for the Purchase Price set forth in
Section 18.2 of this
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Agreement. In situations where circumstances make immediate recovery of the
Equipment necessary and DVI has requested same, ADAC shall use all reasonable
efforts necessary to obtain the Equipment on an expedited basis. If the
Equipment cannot be repossessed, DVI may charge the Recourse Pool in accordance
with Section 12 above.
13.2. Obligation to Remarket. In the event that a Customer should
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default in the payment or performance of any of the terms or conditions of any
Financed Contract, ADAC shall, subject to DVI's instructions to the contrary, at
ADAC's expense, attempt to peaceably take possession of, transport, store,
repair or refurbish, if necessary and maintain the Equipment on behalf of DVI.
ADAC agrees to use its best efforts to locate a purchaser or substitute Customer
for the Equipment on terms satisfactory to DVI.
13.2.1. Upon resale, the equipment shall carry ADAC's regular
warranty for a period equal to the greater of: (i) the warranty remaining for
the benefit of the defaulting Customer as of the date of recovery by ADAC, or
(ii) six (6) months.
13.3. Remarketing Proceeds. Remarketing Proceeds shall mean the
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gross proceeds of resale or re-lease of any Equipment. The gross proceeds of
any re-lease of Equipment shall be calculated on a present value basis using the
formula set forth in the definition of Purchase Price. Any Remarketing Proceeds
in excess of the Net Investment Value realized upon any sale or releasing of any
Equipment shall be divided between DVI and ADAC as follows: ten percent (10%)
to DVI, ninety percent (90%) to ADAC.
13.4. Remarketing Loss. Losses as a result of repurchase, repossession
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and remarketing shall be determined as the excess of (i) the then Net Investment
Value of the Financed Contract over (ii) Remarketing Proceeds with respect to
such Financed Contract.
13.5. Remarketing Expenses All costs, fees and expenses of remarketing
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or refurbishing the Equipment shall be borne solely by ADAC.
14. GENERAL ADMINISTRATIVE PROVISIONS
14.1. Site of Equipment and Inspection. Unless otherwise approved by
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DVI in writing, all Equipment shall be installed at the Customer's location
designated in the Financed Contract. ADAC shall promptly notify DVI when ADAC
becomes aware of any change in the location of the Equipment after its
installation.
14.2. Financial Statements. During the term of this Agreement, ADAC
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will furnish to DVI, promptly upon their becoming available, or in any event
within one hundred and twenty (120) days after the end of each fiscal year,
copies of certified financial statements for the years covered therein.
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14.3. Notices. All notices hereunder shall be in writing, shall be
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dispatched by prepaid certified first class mail or responsible courier
addressed to ADAC or DVI at the addresses set forth in Section 18.10 or to such
other addresses as ADAC and DVI shall have furnished to the other in writing.
14.4. Non-Solicitation of Funding Sources. During the term of this
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Agreement and for one (1) year thereafter, ADAC agrees that it will not solicit,
divert, take away or interfere with any of DVI's funding sources of which ADAC
has actual knowledge.
15. ADAC REPRESENTATIONS, WARRANTIES, AND COVENANTS
ADAC represents, warrants and covenants as follows:
15.1. Organization and Standing. ADAC is a corporation duly organized,
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validly existing and in good standing under the laws of the State of California
and has all requisite power and authority to own and operate its properties, to
carry on its business as now conducted and proposed to be conducted under this
Agreement, to enter into this Agreement and the Contracts referred to herein to
which ADAC is to be a party and to carry out the transactions contemplated
hereby and thereby.
15.2. Compliance with Other Instruments. ADAC is not in violation of
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any term of its articles of incorporation or bylaws, any material judgment,
decree or other imposed by any state or federal court or government or agency
thereof, or any agreement, instrument, statute, rule or government regulation,
which violation would have a material adverse effect on ADAC. The execution,
delivery and performance of this Agreement and any other instrument referred to
herein to which ADAC is a party will not result in such violation, or be in
conflict, or constitute a default under any such term, or result in the creation
of any mortgage, lien, charge or encumbrance upon any of the properties or
assets of ADAC pursuant to any such term except pursuant to this Agreement.
15.3. This Agreement. This Agreement has been duly authorized,
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executed and delivered by ADAC and constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms.
15.4. Agreements. ADAC hereby agrees (i) without prior written
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consent of DVI or any subsequent assignee, not to extend, amend, supplement or
terminate any Financed Contract, or agree to, or permit, any modifications,
waiver or other alteration of the terms thereof, and (ii) to deliver to DVI all
notices or other communications received by ADAC in connection with any Financed
Contract or any aspect thereof. ADAC constitutes and appoints DVI, its
successors and assigns, or any designee of DVI, as ADAC's agent and attorney-in-
fact, which appointment is irrevocable and coupled with an interest, and with
full power (in the name of ADAC or
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otherwise) to endorse without recourse ADAC's name upon any and all notes,
checks or drafts or other instruments for payment of any obligation, ask,
require, demand, receive, compound and give acquittance for any and all monies
and claims for money due and to become due under, or arising out of any Financed
Contract, and upon the occurrence and continuation of an Event of Default to
give all or any of the notices, consents, instructions or other communications
reserved to ADAC in any Financed Contract, and to file any claims or take any
action or institute any proceedings which DVI with respect to the Financed
Contracts or any subsequent assignee deem to be necessary or advisable, hereby
ratifying and confirming whatsoever said attorney shall and may do by virtue
thereof. Any repossessed Equipment will be held by ADAC in trust for ADAC and
DVI and kept apart and distinguishable from ADAC's property.
15.5. Taxes. ADAC warrants and represents that all sales, use, property,
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or other taxes, licenses, tolls, inspection and/or other fees, bonds, permits or
certificates, including any penalties and interest with respect thereto, which
were or may be required to be paid or obtained in connection with any Financed
Contract of the Equipment by ADAC, subsequent sale of Equipment and assignment
of any Financed Contract to DVI (excluding any tax on the net income of DVI and
any tax arising from any financing by DVI of any Financed Contract or Equipment)
have been, or when due will promptly be, paid in full by ADAC or the provision
for the payment thereof by the Customers are provided for in any Financed
Contract.
16. DVI REPRESENTS AND WARRANTS AS FOLLOWS:
16.1. Organization and Standing. DVI is a corporation duly organized,
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validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own and operate its properties, to
carry on its business as now conducted and proposed to be conducted under this
agreement, to enter into this agreement and other instruments referred to herein
to which DVI is to be a party and to carry out the transactions contemplated
hereby and thereby.
16.2. Compliance with Other Instruments. DVI is not in violation of
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any term of its articles of incorporation or bylaws, any material judgment,
decree or order imposed by any state or federal court or government or
governmental regulation, which violation would have a material adverse effect
upon ADAC. The execution, delivery and performance of this Agreement and any
other instrument referred to herein to which DVI is a party will not result in
such violation, or be in conflict with or constitute a default under such term,
or result in the creation of any mortgage, lien, charge or encumbrance upon any
of the properties or assets of DVI pursuant to any such term, except that a lien
in favor of DVI's lenders may exist with respect to Financed Contracts, the
financing of which by DVI obtained through such lenders.
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17. EVENTS OF DEFAULT
17.1. Events of Default. Any one of the following occurrences or acts
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shall constitute an "Event of Default" (or "Events of Default") under this
Agreement:
17.1.1. Default by ADAC in the payment of any amounts due and payable
from ADAC to DVI including, but not limited to, Recourse Pool payments,
indemnities, or any Repurchase Price, and such Default shall not have been
remedied within five (5) days after the written notice thereof to ADAC from DVI.
17.1.2. Default by ADAC in the performance or compliance of any
material term or covenant not relating to payments due DVI from ADAC, contained
in this Agreement that materially adversely affects ADAC's ability to perform
under this Agreement as a whole and such Default shall not have been remedied
within thirty (30) days after the written notice thereof to ADAC from DVI.
17.1.3. If any proceedings shall be commenced by or against ADAC, for
dissolution or under any bankruptcy, insolvency, reorganization, arrangement,
composition or similar laws at that time in effect and if involuntary, are not
dismissed within sixty (60) days.
17.1.4. If ADAC fails to provide or cause to be provided, service,
maintenance, replacement or repair of Equipment in accordance with the
provisions of this Agreement.
17.1.5. Any representation or warranty set forth in Section 3.4 above
(including Subsections 3.4.1 through 3.4.10) relating to any Financed Contract
or any representation or warranty of ADAC made in any Financed Contract, or in
any certificate or other writing delivered pursuant to any Financed Contract
shall prove to be incorrect in any material respect.
17.1.6. Any representation or warranty of ADAC made in Sections 15.1,
15.2 and 15.3 of this Agreement, or in any certificate or other writing with
respect to such Sections delivered pursuant hereto shall prove to be incorrect
in any material respect.
17.1.7. There shall be levied any attachment, execution or like process
in an amount which gives rise to an adverse change in ADAC's financial condition
unless such attachment, execution or process is released within sixty (60) days
thereafter.
17.1.8. ADAC shall voluntarily suspend its business.
13
18. REPURCHASE OBLIGATION OF ADAC
18.1. Repurchase Obligation. Upon the occurrence and continuance of
---------------------
any Event of Default set forth in Sections 17.1.1, 17.1.4 and/or 17.1.5 above,
ADAC, promptly upon receipt of DVI's demand, agrees to repurchase any Obligation
directly affected by such default and accept assignment of any such Obligations
("Repurchase Obligation"). Upon the occurrence and continuance of any Event of
Default set forth in Sections 17.1.2, 17.1.3, 17.1.6, 17.1.7 and/or 17.1.8 above
or in the event ADAC fails to repurchase any Obligation or accept reassignment
of any Obligations DVI shall have the right to require ADAC to immediately
repurchase any or all Obligations purchased by DVI pursuant to this Agreement,
and accept reassignment of any or all Financed Contracts.
18.2. Repurchase Price. ADAC shall repurchase the Obligations from
----------------
DVI pursuant to Section 18.1 above, by paying to DVI the Net Investment Value of
the Contract. ADAC agrees to repurchase any or all Obligations hereunder
without first requiring DVI to resort to any Customer or to any other guaranty,
security or collateral which DVI may have or hold. ADAC's repurchase Obligation
is unconditional.
18.3. Waivers. Upon the occurrence and continuance of an Event of
-------
Default, ADAC further agrees that DVI may at any time and from time to time
without notice to, or the consent of, ADAC, and without affecting or impairing
this Repurchase obligation, do any of the following: (i) renew or extend any
Obligations of any Customer or any of its guarantors or of any other party at
any time directly or contingently liable for the payment of any Obligations;
(ii) accept partial payments of any Obligation; (iii) settle, refinance (by
operation of law or otherwise) compound, compromise, collect or liquidate any
Obligations and the security therefor in any manner; (iv) consent to the
transfer or sale of any Obligation or any security therefor; or (v) bid and
purchase at any sale of any other Equipment or security.
18.4. Waiver of Impairment of Collateral. ADAC shall not be released
----------------------------------
or discharged, either in whole or in part, by DVI's failure or delay to perfect
or continue the perfection or enforcement of any security interest in any
Equipment or other security which secures the Obligation.
19. MISCELLANEOUS
19.1. Enforcement. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND
-----------
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. This Agreement
may be executed in one or more counterparts each of which shall have the full
force and effect of an original.
14
19.2. Assignment or Agreement. Except as set forth below, each
-----------------------
party shall not sell, transfer, assign, pledge or encumber this agreement or any
right or duty granted hereunder without the prior written consent of the other
party hereto, which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, DVI shall have the right, without obtaining written consent of
ADAC, to transfer or assign its interest hereunder as follows:
19.2.1. Secured Party. ADAC agrees that DVI shall have the right to
-------------
assign or grant a security interest to a bank or financial institution ("Secured
Party") with respect to any or all of DVI's interests under this Agreement and
in the Obligations purchased hereunder and in the Financed Contracts, and that
the Secured Party shall, in entering into such transaction with DVI, be acting
in reliance upon and be entitled to the benefits of this Section 19.2.1. ADAC
agrees that it will not assert against any Secured Party any defense,
counterclaim or offset that ADAC may have against DVI. Accordingly, ADAC agrees
with DVI and the Secured Party (for whom this covenant is expressly made) that
DVI may assign, pledge, transfer or otherwise dispose of or grant a security
interest to Secured Party in any or all of DVI's interest under this Agreement,
the Financed Contracts, or any portion thereof, or Equipment without notice to
ADAC or consent of ADAC thereto.
19.2.2. Entities. DVI may assign all or any part of its interest
--------
under this Agreement and in the Financed Contracts and Equipment to any entity
with which DVI or the officers of DVI are affiliated, which entities shall
thereupon be deemed to be bound by all the terms and conditions of this
Agreement provided that such entities agree to permit DVI to act as their agent.
In the event of any such assignment, such entities shall acquire the right to
enforce rights and interests assigned to them hereunder individually and
severally with respect to the Obligations purchased hereunder and Obligations
(or part thereof) owned by or assigned to such entities, provided that ADAC
shall nonetheless be required to honor notices from, report and be accountable
to, only DVI (and not such entities) with respect to such Equipment and
Obligations or part thereof, the services to be provided by ADAC hereunder and
all other rights, duties and obligations of ADAC under this Agreement.
19.3. Inurement. This Agreement is for the benefit for the parties
---------
hereto and shall be binding upon their successors, assignees, and surviving
entities of any merger, sale, consolidation or reorganization.
19.4. Severability. In the event that any of the terms of this
------------
Agreement are or become or are declared to be illegal by any court or tribunal
of competent jurisdiction, such term or terms shall be null and void and shall
be deemed deleted from this
15
Agreement, and all remaining terms of this Agreement shall remain in full force
and effect.
19.5. Waiver of Breach. No waiver of any breach of any provision of
----------------
this Agreement shall constitute a waiver of any prior, concurrent or subsequent
breach of the same or any other provisions hereof and no waiver shall be
effective unless made in writing.
19.6. Headings. The descriptive headings of the several sections of
--------
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
19.7. Confidential Treatment and Disclosure by DVI and ADAC. Each
-----------------------------------------------------
party will treat this Agreement and all documents contemplated to be delivered
hereunder and all terms and conditions hereof and thereof as confidential and
will not disclose or use the same without the prior written consent of the other
unless such disclosure or use is required by law.
19.8. Attorney's Fees. In the event of litigation hereunder the
---------------
prevailing party shall be entitled to reimbursement of all expenses incurred
therewith including reasonable attorneys' fees and costs.
19.9. Entire Agreement. This Agreement constitutes the entire
----------------
understanding of the parties hereto, and no representations, except as contained
in this Agreement have been made by either party to the other and none has been
relied upon by the other party. Any term of this Agreement may be amended and
the observance of any term hereof may be waived (either generally or in
particular instance and either retroactively or prospectively) only upon written
agreement of DVI and ADAC.
19.10. Notices. Notices will be deemed effective: (i) 3 days after
-------
deposit in the U.S. Mail, (ii) the same day if personally delivered, or (iii)
the following business day if sent by reliable overnight courier. All notices
shall be in writing addressed as follows:
If to ADAC: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------- Attention: Chief Financial Officer
cc: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to DVI: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------- Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President
16
cc: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, White & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
20. SURVIVAL AND EFFECT OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES
All obligations, representations, warranties, covenants and indemnities
made by ADAC herein, and in other documents or instruments delivered in
connection with this Agreement shall survive the expiration or termination of
any Financed Contract, and shall continue in effect so long as any Financed
Contract is outstanding and shall survive the date of the expiration or any
termination of this Agreement, if necessary. All such covenants, agreements,
representations, warranties and indemnities shall bind the party making the same
and its successors and assigns and shall inure to the benefit of and be
enforceable by each party for whom made and its successors and assigns.
21. COUNTERPARTS
This Agreement may be executed in counterparts which taken together shall
constitute one Agreement.
IN WITNESS WHEREOF, DVI and ADAC have caused this agreement to be executed
by their respective officers thereunder duly authorized as of day and year first
above written.
DVI Financial Services Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
ADAC Laboratories
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President Finance and
Chief Financial Officer
17
EXHIBIT A TO VENDOR PROGRAM AGREEMENT
BETWEEN DVI FINANCIAL SERVICES INC. AND ADAC LABORATORIES
FIRST LOSS RECOURSE POOL CALCULATION FORM
Total Net Balance of First Loss Recourse
Pool from next previous Calculation Form $____________
Additions due to Purchases:
Purchase Price Additions to Pool
ABC Corp. $____________ X 10% $____________
DEF Corp. $____________ X 10% $____________
GHI Corp. $____________ X 10% $____________
Total Additions: $____________
Deductions due to Remarketing Losses:
JKL Corp. $____________
MNO Corp. $____________
Total Deductions: $____________
Gross Balance of First Loss Recourse Pool $____________
Net Investment Value of the Portfolio $____________
Adjustments to First Loss Recourse Pool:
In the event the Gross Balance of the First Loss Recourse Pool exceeds 15%
of the Net Investment Value of the Portfolio, reduce the amount of the
First Loss Recourse Pool to 15% of the Net Investment Value of the
Portfolio.
Total Net Balance of First Loss Recourse Pool $____________
18