[***PORTIONS OF THIS EXHIBIT MARKED BY BRACKETS ("[***]") OR OTHERWISE
IDENTIFIED HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.***]
EXHIBIT 10.16
NON-EXCLUSIVE THIRD PARTY LESSOR AGREEMENT
THIS AGREEMENT is entered into this 26th day of July, 1996 by and between
GLOBAL IMAGING SYSTEMS, INC. ("XXXX"), a Delaware Corporation, and Tokai
Financial Services, Inc. ("Leasing Company"), a _______________ Corporation.
RECITALS
X. XXXX is in the business of providing financial services to the
subsidiaries of GLOBAL IMAGING SYSTEMS, INC. ("XXXX"), hereinafter referred to
as GLOBAL IMAGING SUBSIDIARIES ("GIS"), throughout the United States.
B. Leasing Company is in the business of providing financing and leasing
services throughout the United States.
C. Leasing Company's acceptance of this Agreement is a condition to
Leasing Company being asked to and permitted to lease equipment which is sold by
GIS.
X. XXXX and Leasing Company agree that all communications relating to GIS
and this Agreement shall only be made to XXXX except for the communication of
lease applications and the approval thereof.
E. It is the intent of the parties hereto that Leasing Company, on a
non-exclusive basis, shall solely provide lease financing to GIS's customers
pursuant to the directions of XXXX and shall not offer other services to the GIS
customers whose identity is a trade secret with the understanding that GIS
customers may already be lessees of Leasing Company or may in the future submit
lease financing applications directly to the Leasing Company or to the Leasing
Company through other equipment vendors or manufacturers ("Leasing Company
Lessees") and Leasing Company is not precluded from accepting lease applications
from Leasing Company Lessees.
F. Leasing Company shall use its best efforts to ensure that information
supplied by XXXX or GIS and which information is not available to the public
will not be supplied to anyone who competes with XXXX or GIS as a manufacturer
or dealer in the Copier/Facsimile Network Solution Market.
ACCORDINGLY, in consideration of the foregoing and the mutual covenants
herein below, XXXX and Leasing Company agree as follows:
AGREEMENT
1. Services provided by Leasing Company. Leasing Company shall only
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provide lease financing to GIS's customers in accordance with the terms and
conditions of this Agreement. It is contemplated by the parties that the number
of XXXX subsidiaries (GIS) will increase in the future. As each such subsidiary
is acquired by XXXX, said subsidiary shall receive the benefits of this
agreement upon notice of such acquisition from XXXX to Leasing Company.
All customers will be billed and collected by Leasing Company under the
XXXX name. Permission is hereby given by XXXX to use its name for billing and
other purposes
Page 1
as required under the Program. All customer phone inquiries to Leasing Company
and communication from Leasing Company will be in the name of XXXX. Exceptions
to this clause are allowed as required by law in the enforcement of the terms of
agreements under the Program.
GIS authorizes the Leasing Company to execute, in its name, all leases
including any and all related documentation. To facilitate the assignment of the
leases to the Leasing Company, this provision shall constitute a blanket
assignment of the leases and shall be effective for each lease at the time it is
accepted by the Leasing Company.
GIS customers that become ninety (90) days delinquent from the due date
will henceforce be billed and collected by Leasing Company under Leasing
Company's name. In addition, XXXX may, from time to time, direct Leasing Company
to communicate with GIS customers solely in the name of the Leasing Company.
2. Non-Recourse. Except as set forth in this Agreement, all leases and
------------
contracts are non-recourse to XXXX and/or GIS unless specifically agreed to in
writing by the Chief Financial Officer or Chief Operating Officer of XXXX.
3. Lease Rates. The lease rates shall be mutually agreed upon by the
-----------
parties from time to time as set forth herein. All lease rates used by the
parties, shall be set forth in writing upon mutual agreement by the parties.
4. Rate Changes. Any rate change must be reviewed and mutually approved
------------
by the parties at least 30 days prior to such rate change becoming effective.
Any rate increase will become effective on the first calendar business day of a
specified month which date shall be at least 30 days after the above-referenced
mutual agreement with respect to such rate change. Such rate changes shall only
be effective with respect to applications submitted to Leasing Company after the
effective date. Any rate decrease will become effective immediately.
5. Documentation and Forms. Any and all forms used by Leasing Company to
-----------------------
document leases made to GIS customers shall be in a form and content which is
approved by XXXX in its sole discretion.
6. Financing Programs. Leasing Company authorizes XXXX to offer any
------------------
financing programs offered by Leasing Company to GIS customers. Any financing
programs provided by or originated by Leasing Company may not be used by XXXX or
GIS except in connection with leases written by Leasing Company to GIS
customers, unless such financing programs are found in the public domain and
enter the public domain from a source other than XXXX or GIS. Any financing
programs originated or provided by XXXX to Leasing Company are the property of
XXXX as set forth below. Any financing programs provided by or originated by
XXXX may not be used by Leasing Company except in connection with leases written
by Leasing Company to GIS customers, unless such financing programs are found in
the public domain and enter the public domain from a source other than Leasing
Company. If Leasing Company is notified that a non-GIS dealer is believed to be
infringing on a XXXX trademark or copyright protected program and Leasing
Company agrees that such an infringement exists, Leasing Company shall not
accept offending programs or close replications from
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[*****Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.]
the offering dealer. Both XXXX and Leasing Company will endeavor to immediately
notify each other of potentially offending programs and mutually determine if a
trademark or copyright infringement exists.
7. Buyouts, Upgrades and Renewals. All buyouts, upgrades and renewals of
------------------------------
GIS customers shall be determined in accordance with mutually agreed upon
standards and terms which shall be in writing.
8. Application of Funds. Payments received by Leasing Company shall be
--------------------
applied in the following manner for the benefit of the identified party:
Priority Purpose Benefit of
-------- ------- ----------
1 Equipment Element Leasing Company
2 Rental Tax Leasing Company
3 Other Taxes Leasing Company
4 Lessor Late Charges Leasing Company
5 Base Assurance XXXX
In the event a Customer requests to upgrade a Lease with new equipment
to be supplied by XXXX or GIS, Leasing Company shall waive any unpaid Lessor
Late Charges and XXXX shall waive any unpaid Base Assurance charges. In the
event a Lessee elects to buyout its Lease, the Leasing Company will attempt to
include Lessor Late Charges and Base Assurance Charges in the buyout amount to
the Customer. Notwithstanding the preceding sentence, in the event Leasing
Company is unable to negotiate a buyout which includes all or part of the
outstanding Lessor Late Charges and Base Assurance Charges, the negotiated
buyout amount shall be applied to the Equipment Element and any agreed upon
residual amount, plus Rental Tax and Other Taxes. Any additional moneys received
as part of the buyout shall be applied to Lessor Late Charges and Base Assurance
Charges based on their delinquency level with the most delinquent charges paid
first.
In the event a Lease is delinquent and Leasing Company negotiates with
a Customer to bring the Lease current, Leasing Company will attempt to include
delinquent Lessor Late Charges and Base Assurance charges in addition to the
delinquent Equipment Element, Rental Tax and Other Taxes in the amount necessary
to bring the Lease current. In the event Leasing Company is unable to collect
all of the Lessor Late Charges and/or Base Assurance charges to cure a
delinquency, any moneys received from the Customer in excess of the amount
required to bring the Equipment Element, Rental Tax and Other Taxes current,
shall be applied to Lessor Late Charges and Base Assurance charges based on
their delinquency level with the most delinquent oldest fees paid first.
9. Lessee Charges. All charges to GIS customers other than lease
--------------
payments, contractual late payment charges and appropriate taxes must be
approved by XXXX. It is understood that this clause specifically includes
charges for equipment insurance, assurance or risk fees. With respect to
documentation fees, each Lease Agreement will include a provision requiring the
Lessee to pay a documentation fee of at least [**]
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[***Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions***]
and notwithstanding Leasing Company's ability to collect the documentation fee,
XXXX shall receive [**]
10. Credit Authorizations & Transmission of Business Data. Leasing
-----------------------------------------------------
Company shall at all times maintain a toll free 800 telephone number for the
transmission of leasing customers applications for both voice applications and
facsimile applications. Such toll free telephone number shall be provided
without charge to XXXX and/or GIS. In addition, Leasing Company shall provide
within 180 days of the execution of this agreement, at its expense, modem access
by XXXX and GIS to Leasing Company for purposes of transmitting applications and
meter reading data. XXXX & Leasing Company shall use their best efforts to
develop a expanded interface beyond that discussed above between GIS computer
systems and Leasing Company computer systems. Credit approval shall be made in
accordance with Leasing Company standard credit standards. Such credit standards
shall contain acceptable credit worthiness standards as well as appropriate
response time as required by XXXX.
11. Lease Funding. Leasing Company shall promptly fund any amount due
-------------
XXXX and/or GIS in accordance with mutually agreed upon standards and terms.
12. Warranty. XXXX will represent and warrant as follows:
--------
a. For each lease, the Leasing company shall have received the sole
original copy of the lease and neither GIS or the GIS subsidiary has pledged,
assigned, sold, granted a security interest in or otherwise placed a lien on
such lease.
b. To the best of its knowledge all transactions will be validly
made for consideration and represent binding obligations of the person specified
as the lessee, debtor, co-maker or guarantor and the signatures tendered are
genuine and valid.
c. There will be no set-off or counter claim at law or equity that
could be effective against the transaction.
d. None of the transactions or signatures will be obtained by fraud
or fraudulent misrepresentation on the part of XXXX, GIS or their employees.
e. No side documents related to contract or lease agreement which
would have a negative impact on the yield or enforceability of the agreement
have been issued by XXXX, GIS or their authorized representatives.
x. XXXX will be the sole and absolute owner of any document being
assigned and equipment will be free and clear of all liens and encumbrances.
x. XXXX or GIS is aware of no circumstances or actions which would
affect the validity of the transaction.
h. All equipment is new or remanufactured and subject to warranty
unless specified otherwise.
i. Any breach of the aforementioned warranties and representations
will obligate GIS to cure the breach within 30 days of discovery by XXXX or GIS
or notice
Page 4
by Leasing Company or if unable to cure the breach, purchase back the
transaction for the Net Book Value at the time the transaction is purchased
back.
13. Guaranty. In order to induce the Leasing Company to accept
--------
representations and warranties by XXXX on behalf of GIS, XXXX hereby
unconditionally guarantees to Leasing Company and its successors and assigns:
(a) the due and punctual payment to TFS when due of all payment obligations of
GIS under this Agreement, (b) the full prompt and unconditional performance of
every obligation to be performed by GIS under this Agreement and (c) all
expenses of obtaining or endeavoring to obtain payment or performance thereof or
of enforcing this Guaranty, including attorneys' fees and other legal expenses.
14. Trade Secrets. XXXX, as a part of XXXX and at the request of XXXX, is
-------------
consenting to allow Leasing Company to write leases for GIS customers for GIS
equipment sales. XXXX will allow Leasing Company to access some or all of the
following information which the parties agree are trade the secrets of XXXX,
XXXX and GIS: GIS subsidiary list; XXXX and GIS customer lists; XXXX financing
programs; XXXX and GIS pricing information; XXXX and GIS statistical and
information records derived from GIS customer records; XXXX and GIS customer
credit information including information derived therefrom; XXXX and GIS
prospective customer lists; XXXX and GIS employee lists; GIS office locations;
list of GIS suppliers; copies of XXXX and GIS leases and related agreements;
and, XXXX and GIS policies and procedures.
The parties acknowledge that the above items and the information
contained therein constitute a valuable asset of XXXX, XXXX and GIS. In order
for Leasing Company to supply its lease financing services to GIS and XXXX, XXXX
will disclose such information to Leasing Company. Since such information
constitutes trade secrets of XXXX, XXXX and GIS, Leasing Company agrees to
preserve in confidence any such information so disclosed, and to obtain from
each of its employees and agents designated to have access, a similar agreement
and further agrees not to use, disclose or reproduce any such information
without the specific written approval of XXXX.
Leasing Company agrees to use such information for no purpose other
than to currently service the GIS generated leases for the term of such leases.
The use of such information for anything other than the current collection of
lease payments would be a breach of the confidence entrusted to Leasing Company
and would constitute the unauthorized use of XXXX'x and GIS's trade secrets.
Upon termination of this Agreement, Leasing Company agrees to return
promptly all copies of any material received under this agreement except for the
documents required by it to continue collecting on its existing leases.
This Agreement shall not apply to information in the public domain at
the time of disclosure or to information lawfully obtained from third parties
who did not derive the information from Leasing Company. This Agreement shall
remain in full effect during the term of this Agreement and continue to be in
full effect for a period of five years after the termination of this Agreement.
Page 5
15. Books and Records. Leasing Company shall allow XXXX access to all
-----------------
Leasing Company records related to GIS customer leases and such GIS customers.
Leasing Company shall give responses and analytical reports to XXXX as mutually
agreed to by the parties.
16. Assignment. XXXX may assign some or all of its rights and benefits
----------
under this Agreement to benefit of XXXX, GIS and/or any financial institution
for the purpose of financing. XXXX shall notify Leasing Company in writing of
any such assignment and Leasing Company shall honor such assignment upon receipt
of notice thereof. Such assignment shall not relieve XXXX of its
responsibilities under this Agreement.
17. Independent Contractor. The parties specifically agree and intend
----------------------
that Leasing Company shall be an independent contractor and that Leasing Company
will not at any time represent orally or in writing to anyone that it has any
right, power or authority not expressly granted by this Agreement. Leasing
Company shall not use the XXXX name or any name related thereto without specific
written authorization from XXXX.
18. Termination. Either party may terminate this Agreement on 30 days
-----------
written notice. Upon termination, all rights and obligations incurred up to the
expiration of the termination notice shall remain in full force and effect until
such time as all transactions accepted by Leasing Company shall have been
completed.
The obligations incurred under Paragraphs 2, 6, 7, 9, 11 and 12 shall
remain in full force and effect for a period of five years form the date of the
termination.
19. Severability. If any provision of this Agreement is declared invalid
------------
by any tribunal, then such provision shall be deemed automatically adjusted to
the minimum extent necessary to conform to the requirements for validity as
declared at such time and, as so adjusted, shall be deemed a provision of this
Agreement as though originally included herein. In the event that the provision
invalidated is of such a nature that it cannot be so adjusted, the provision
shall be deemed deleted from this Agreement as though such provisions had never
been included herein. In either case, the remaining provisions of this Agreement
shall remain in effect.
20. Financial Statements. Beginning with the year ending December 31,
--------------------
1996, and for each fiscal year thereafter, XXXX as soon as available, but not
later than 90 days after the close of each fiscal year, shall provide Leasing
company with a complete copy of XXXX'x balance sheet as of the close of such
year and XXXX'x statement of income and retained earnings and changes in
financial position for such year, prepared on a consolidated basis and certified
by a public accounting firm of recognized standard.
21. Entire Agreement. This Agreement contains the entire agreement
----------------
between the parties hereto and supersedes all prior and contemporaneous
agreements. There are no other understandings, statements promises or
inducements, oral or otherwise, contrary to the terms of this Agreement. No
supplement, modification or amendment of any term, provision or condition of
this Agreement shall be binding or enforceable unless executed in writing by the
parties hereto. No waiver of any term, provision, or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or shall constitute, a waiver of any other provision hereof,
whether or
Page 6
not similar, nor shall such waiver constitute a continuing waiver, and no waiver
shall be binding unless executed in writing by the party making the waiver.
22. Arbitration. If any dispute or controversy between the parties hereto
-----------
arises out of or relating to this Agreement or any transaction contemplated
hereunder, such dispute or controversy shall be submitted to arbitration by a
panel of three (3) arbitrators under the Commerical Rules of Arbitration of the
American Arbitration Association in Tampa, Florida. The three (3) arbitrators
shall decide any such matter in accordance with then applicable rules of the
American Arbitration Association or any successor organization. The
determinations of the arbitrators shall be final and shall not be subject to
judicial review; provided, however, that any award or determination rendered by
the arbitrators may be entered in any court of competent jurisdiction in the
State of Florida for the Federal district court for the Middle District of
Florida and the parties hereto hereby consent to the jurisdiction of said courts
for the purpose set forth in this section.
23. Governing Law. This Agreement shall be subject to, governed by,
-------------
construed and enforced in accordance with the laws of the State of New York.
Leasing Company agrees that is any dispute arises that is not subject to the
arbitration provisions contained above, jurisdiction and venue of such action
shall be in Hillsborough County, State of Florida.
GLOBAL IMAGING SYSTEMS. INC.
BY: [SIGNATURE ILLEGIBLE]
------------------------------
LESSOR
BY: [SIGNATURE ILLEGIBLE]
------------------------------
Tokai Financial Services, Inc
Page 7
GLOBAL IMAGING SYSTEMS INC.
LEASE AGREEMENT MODIFICATION
As discussed our dealers are adamantly against the lease renewal verbiage, of
the Lease Agreement, that states that the agreement will renew for additional
terms of 12 months each.
Therefore, we suggest that the following modification be made to Section 5 of
the Lease Agreement, on an exception basis when needed:
- CROSS OUT THE VERBIAGE - "FOR ADDITIONAL TERMS OF TWELVE(12) MONTHS
EACH".
- INSERT THE VERBIAGE. "ON A MONTH TO MONTH BASIS"
The sales rep and the customer will each initial the modification on the
document.
The Xxxxxx dealer group will use this verbiage as a rule and not as an
exception.
We signify our acceptance of this modification by our signatures below:
/s/ Xxxx Xxxxxxx 9/24/96 /s/ Xxxx Friefelder 9/26/96
----------------------------- ---------------------------------------
Xxxx Xxxxxxx Date Xxxx Friefelder Date
Global Imaging Systems Inc. Tokai Financial Services
