EXHIBIT 1.1
AMENDMENT NO. 1 TO THE
DISTRIBUTION AND MANAGEMENT AGREEMENT
This Amendment No. 1 to the Distribution and Management Agreement (this
"Amendment"), effective as of January __, 2004, is entered into by and among
Onyx Acceptance Corporation, a Delaware corporation (the "Company"), Xxxxxx
Xxxxxxxxxx Ltd., a Minnesota corporation (the "Agent"), and Xxxxxx Xxxxxxxxxx
Agency, Inc., a Minnesota corporation.
RECITALS
A. The Company and the Agent have entered into a Distribution and
Management Agreement, dated as of February 15, 2002 (the "Agreement"), pursuant
to which the Company appointed the Agent to act as the Company's exclusive
selling agent in connection with the offer, sale and renewal of up to an
aggregate principal amount of $50,000,000 of renewable, unsecured, subordinated
notes of the Company (the "Original Notes"), upon the terms and subject to the
conditions set forth therein.
B. As of the date of this Amendment, approximately $2,572,040.75 of the
Original Notes remain unsold and available for issuance (the "Unsold Notes").
C. The parties desire to amend the Agreement solely to reflect that the
Company is proposing to register and publicly offer and sell up to an additional
$50,000,000 of renewable, unsecured, subordinated notes of the Company (such
notes, together with the Unsold Notes, are referred to herein as the "Additional
Notes").
D. Xxxxxx Xxxxxxxxxx Agency, Inc. wishes to become a party to the
Agreement for the sole purposes of Sections 2.05 and 3.01 of the Agreement, as
amended herein, and by executing this Amendment, it agrees and consents to be
bound by the terms and conditions of Sections 2.05 and 3.01 of the Agreement, as
amended herein.
E. The parties agree and acknowledge that the Agreement is being amended
solely with regard to the Additional Notes and that this Amendment will not in
any way amend the Agreement as it relates to the Original Notes, other than the
Unsold Notes.
F. Section 9.10 of the Agreement permits the parties to modify the terms
of the Agreement provided such modification is made in writing and signed by the
parties.
G. Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Agreement.
Accordingly, and in consideration of the foregoing, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
1. Definitions. For the purposes of this Amendment, the following terms
shall have the following meanings:
a. Second Effective Date. The date and time on which the Company's
Registration Statement on Form S-3 (File No. 333-109545) is or was
declared effective by the Commission.
b. Second Closing Date. After the Second Effective Date, the first
date on which any Additional Notes are issued and sold by the Company to
any Investors.
2. Scope of this Amendment. Each of the parties hereby agrees and
acknowledges that this Amendment amends the Agreement solely with regard to the
Additional Notes and that this Agreement in no way amends the Agreement as it
relates to the Original Notes, other than the Unsold Notes.
3. Amendment to Section 1.01(m). Section 1.01(m) of the Agreement shall be
amended in its entirety to provide as follows:
"(m) Indenture. That certain Indenture dated February 11, 2002, by and
between the Company and the Trustee with respect to the Notes, as supplemented
by that certain Supplement No. 1 to Indenture dated or about January __, 2004,
by and between the Company and the Trustee."
4. Amendment to Section 1.01(u). The words "an aggregate principal amount
up to $50,000,000 and" in the definition of "Notes" in Section 1.01(u) of the
Agreement shall be deleted.
5. Amendment to Section 1.01(x). Section 1.01(x) of the Agreement shall be
amended in its entirety to provide as follows:
"(x) Paying Agent Agreement. That certain agreement by and between the
Company and Paying Agent relating to the Company's engagement of the
Paying Agent to act as the paying agent for the Notes, as amended by that
certain Amendment No. 1 to Paying Agent Agreement dated January __, 2004,
by and between the Company and Paying Agent."
6. Amendment to Section 1.01(ee). Section 1.01(ee) of the Agreement shall
be amended in its entirety to provide as follows:
"(ee) Registration Statement. The term "Registration Statement" shall be
deemed to refer to both the Registration Statements on Form S-3 (File Nos.
333-71238 and 333-109545) of the Company with respect to the Notes filed
with the Securities and Exchange Commission under the Securities Act of
1933, as amended and declared effective by the Commission, including the
respective copies thereof filed with the Commission."
7. Amendment to Section 2.03(a)(ii). The following sentence shall be added
as the final sentence of Section 2.03(a)(ii):
"Solely with regard to the Additional Notes, in no event will the Company
pay or cause to be paid an aggregate portfolio management fee greater than
1.25% of the aggregate
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principal amount of the Additional Notes pursuant to the provisions of
Section 2.03(a)(ii) of the Agreement."
8. Amendment to Section 2.03(b). The following sentence shall be added as
the final sentence of Section 2.03(b):
"Solely with regard to the Additional Notes, in no event will the Company
pay or cause to be paid an amount greater than .234% of the aggregate
principal amount of the Additional Notes pursuant to the provisions of
Section 2.03(b) of the Agreement."
9. Amendment to Section 2.05. Section 2.05 of the Agreement shall be
amended in its entirety to provide as follows:
"The Company agrees that Agent may sell other notes or securities in
offerings similar to the Offering for other issuers during the course of
the Offering; and Agent and Agency (as defined in Section 3.01 below) may
advertise such offerings without limitation using "below market" (referred
to as stand-by, preemptable, or remnant) media. However, without the prior
written consent of the Company, the Agent and Agency agree not to
advertise such offerings for such other notes or securities using "at
market" media within the same radio, newspaper or other print media
outlets or markets in which the Company is actively advertising its Notes.
The Company is considered actively advertising if $10,000 or more is spent
in a week to advertise the Offering using the specified media outlet(s).
Anything to the contrary notwithstanding, the Agent may advertise other
notes or securities of other issuers on its website or on the website of
such other issuers, subject to the confidentiality provisions of this
Agreement, and Agent shall have the right to advertise or otherwise
disclose to unrelated prospective issuers, at its own expense, its
relationship with the Company, the services it provides in connection with
the Notes and the amount of money that it raised through the Offering."
10. Amendment to Section 3.01(b). Section 3.01(b) of the Agreement shall
be amended in its entirety to provide as follows:
"(b) Marketing and Advertising. During the term of this Agreement, Agent
shall develop and execute a direct response marketing strategy for the
Notes designed to meet the Company's capital goals in a timely manner,
which shall be subject to the prior approval of the Company. Agent shall
also oversee designing and printing all marketing materials, in accordance
with the Securities Act, including the applicable Rules and Regulations
and any other requirements of the SEC and NASD or other Governmental
Rules.
(i) For purposes of Sections 2.05 and 3.01 only, Xxxxxx
Xxxxxxxxxx Agency, Inc., a wholly owned subsidiary of Agent
("Agency") is hereby made a party to this Agreement. During the term
of Agent's activities to market and sell the Notes hereunder, Agency
will provide Company with media planning, media buying, media
production, media placement and other marketing services related to
the Offering as described on Exhibit D hereto, and the terms of which
shall be binding upon Company and Agency.
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(ii) Notwithstanding the foregoing, the authority of Agent and
Agency with respect to all ad placements and use of all marketing
materials shall be subject to receiving the prior written approval of
the Company.
(iii) In order to minimize advertising costs, Agent and/or
Agency may recommend that the Company enter into long term contracts
(not to exceed one year) with various newspapers and radio stations,
and in such event, in addition to the direct cost of the
advertisements themselves, the Company shall be responsible for any
termination fees that result from the early cancellation of such
contracts if approved by Company.
(iv) During the term of this Agreement, Company shall allow
Agent and Agency to use the Company's logo, corporate colors,
trademarks, trade names, fonts, and other aspects of corporate
identity in advertisements and marketing materials related to the
Notes and on Agent's website, subject to the Company's prior written
approval of the specific use of these items in writing in each
instance (which shall not be unreasonably withheld). Neither the
Agent nor the Agency will make use of the Company's logo, corporate
colors, trademarks or trade names in any manner that would reasonably
be expected to disparage or damage such marks, the reputation of the
Company or diminish the Company's goodwill. It is expressly agreed
that neither the Agent nor the Agency is acquiring any right, title
or interest in the Company's logo, corporate colors, trademarks or
trade names."
11. Addition of Section 3.02(f). The following shall be added to the
Agreement as Section 3.02(f):
"(f) Security. The parties shall take appropriate security measures to
protect customer nonpublic personal information ("NPI"), as defined in the
Xxxxx-Xxxxx-Xxxxxx Act of 1999, Title V, and its implementing regulations,
against accidental or unlawful destruction and unauthorized access,
tampering, and copying during storage in either party's computing or paper
environment. Access to NPI must be restricted to only the personnel that
have a business need. NPI must be stored in a secured format within all
systems at both parties' location and any other locations where the data
may reside. Transmission of such NPI between the parties or vendors must
be done in a secure manner, in a method mutually agreed upon by both
parties. Both parties agree that each will engage appropriate and
industry-standard measures necessary to meet information security
guidelines as required by the Xxxxx-Xxxxx-Xxxxxx Act, Title V and its
implementing regulations as applicable to such party to effectuate this
Agreement."
12. Amendment to Article VI and Article VIII. Any and all rights and
obligations of the parties under Article VI and Article VIII of the Agreement
with respect to the Initial Closing Date shall be deemed to also apply to the
Second Closing Date.
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13. Amendment to Section 6.01(a). The first sentence of Section 6.01(a) of
the Agreement shall be amended in its entirety to provide as follows:
"The Registration Statement shall have become effective not later than
4:00 p.m. Minneapolis, Minnesota time on the date of this Amendment, and
no stop order suspending the effectiveness thereof shall have been issued
and no proceedings for that purpose shall have been initiated or, to the
knowledge of the Company or the Agent, threatened by the Commission or any
state securities commission or similar regulatory body."
14. Amendment to Sections 7.01 and 7.02. The references in Sections 7.01
and 7.02 of the Agreement to the "Effective Date" shall be amended to refer to
the Effective Date or Second Effective Date, as the case may be.
15. Amendment to Section 8.01. Section 8.01 of the Agreement shall be
amended in its entirety to provide as follows:
"This Agreement shall become effective as of the date first set forth
above, and shall continue in full force and effect until terminated as
provided below."
16. Amendment to Section 8.04(b)(i). Section 8.04(b)(i) of the Agreement
shall be amended in its entirety to provide as follows:
"(i) with respect to the termination of Agent's activities to market and
sell the Notes, Agent must provide at least thirty (30) days' prior written
notice to the Company, except as otherwise provided herein or in the event of
any material breach hereof by Company, in which case such termination may be
effective upon one (1) day's notice; and"
17. Amendment to Section 9.02. The reference to "Xxxxxxx, Street and
Deinard, Professional Association" in Section 9.02 of the Agreement shall be
deleted in its entirety and replaced with the following:
"Xxxxxxxxxxx Xxxxx & Xxxxxxxx XXX
Xxxxx XXX, Xxxxx 0000
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Tel. (000) 000-0000"
18. Addition of Exhibit D. The Exhibit D attached to this Amendment shall
be added to the Agreement as Exhibit D.
19. No Other Changes. Except as specifically amended by this Amendment,
all other provisions of the Agreement remain in full force and effect. This
Amendment shall not constitute or operate as a waiver of, or estoppel with
respect to, any provisions of the Agreement by any party hereto.
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20. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
ONYX ACCEPTANCE CORPORATION
By:________________________________
Its:________________________________
XXXXXX XXXXXXXXXX LTD.
By:________________________________
Its:________________________________
XXXXXX XXXXXXXXXX AGENCY, INC.
(for purposes of Sections 2.05 and
3.01 only)
By:________________________________
Its:________________________________
(Signature Page to Amendment No. 1 to Distribution and Management Agreement)
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EXHIBIT D
XXXXXX XXXXXXXXXX AGENCY, INC. SERVICES
The following describes the media planning, media buying and other
marketing services to be provided by Xxxxxx Xxxxxxxxxx Agency, Inc ("Agency") to
Onyx Acceptance Corporation ("Company") in connection with the offer and sale of
the Notes, as more specifically defined in, and pursuant to the terms of, the
Distribution and Management Agreement among Company, Xxxxxx Xxxxxxxxxx Ltd., the
parent company of Agency ("Agent"), and Agency, as amended, to which this
description is an exhibit.
1. Agency Services.
Agency will perform the following services for the Company:
- Employ on Company's behalf Agency's knowledge of the available media
and marketing approaches that can effectively be used to promote the
issuance of the Notes on a "direct to the consumer" basis.
- Acting on the study, analysis and knowledge of the product described
above, formulate and recommend a marketing and media plan (or
plans).
- In the execution of the plan (or plans), when approved by Company:
- Order space, time or other marketing services and materials to be
used for advertising, endeavoring to secure the most advantageous
rates available.
- Check and verify insertions, displays, broadcasts or other means
used.
- Audit invoices for space and time and other marketing services
performed on the Company's behalf.
2. General Provisions.
Approval of Expenditures: Agency agrees to secure Company's prior
written approval of all expenditures in connection with Company's plans.
Cancellation of Plans: Company reserves the right to modify, reject,
cancel or stop any and all plans, schedules or work in progress. In such event
Agency shall take reasonable steps to carry out Company's instructions as
promptly as practicable. To the extent such plans or work is approved by the
Company in advance, Company agrees to assume liability for all commitments made
by Agency on its behalf, and to reimburse Agency for any losses (including
cancellation penalties) that Agency may sustain derived therefrom and for all
expenses incurred in connection with Company approved plans on its
authorization, and to pay Agency any service charges relating thereto, in
accordance with the provisions hereof.
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Failure of Suppliers to Perform: Agency will endeavor to the best of its
knowledge and ability to guard against any loss to Company through failure of
media or suppliers to properly execute their commitments, but shall not be held
responsible for any failure on their part.
Confidentiality: Agency acknowledges its responsibility to use all
reasonable efforts to preserve the confidentiality of any proprietary or
confidential information or data developed by Agency on behalf of Company or
disclosed by Company to Agency. Agency, along with Agent, agrees to execute a
Non-Disclosure Agreement, substantially in the form attached hereto as
Supplement I.
Responsibility of and Indemnification by Agency: Agency agrees to
indemnify and hold Company, its officers, directors, agents and employees
harmless from and against any claims, liabilities, losses, costs, expenses, or
the like, including reasonable attorneys' fees, incurred in respect to any
breach by Agency of the Agreement or Agency's negligence and/or intentional
wrongdoing in connection with the services.
Responsibility of and Indemnification by Company: Company agrees to
indemnify and hold Agency, its officers, directors, agents and employees
harmless from and against any claims, liabilities, losses, costs, expenses, or
the like, including reasonable attorneys' fees, incurred in respect to any
breach by the Company of this Agreement or the Company's negligence and/or
intentional wrongdoing in connection therewith. Company shall be responsible for
the accuracy, completeness and propriety of information concerning its products
and services that it furnishes to Agency in connection with the performance of
the services.
3. Charges.
- Charges for Advertising Space and Time: Company agrees to pay the
media expense directly to Agency or the media source, as mutually
agreed to by the parties. Payment will be at current published gross
rates (or at lower gross rates when available) for advertising that
runs in all media.
- Rate Adjustments:
- Short Rates: If, in a medium having a schedule of graduated
rates, less space or time than contracted for is used, Company is
to pay the difference, if any, between the rate billed and the
rate actually earned.
- Other Refunds: Agency shall refund or credit Company any other
refunds received by it in connection with advertising space or
time.
- Other Marketing Expenses. Company agrees to pay Agency for all
marketing expenses related to the development and production of all
direct marketing and promotional materials. All work will be
outlined in a Project Fee Estimate and must be approved in writing
in advance by the Company.
- Maximum Charges. Notwithstanding anything to the contrary herein, in
no event will the amount paid to Agency for its aggregate xxxx-up of
advertising and
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media costs exceed 3.3% of the aggregate principal amount of the
Additional Notes sold in the Offering.
4. Terms of Payment
- Timing of Payment: To the extent that the xxxx-up owed to Agency
hereunder exceeds 3.3% of the Additional Notes sold in the Offering,
the amount of such xxxx-up will accrue until such time as the
Company has sold a sufficient amount of Additional Notes. To the
extent the Agent's xxxx-up is permitted to be paid pursuant to the
foregoing sentence, Agent will issue an invoice to the Company for
such amount.
- Terms of Payment: Payment of invoices will be due either by check or
wire transfer, as requested by Agency, within 30 days.
- Wire Instructions: Payment of invoices by wire transfer will
be made to:
The Business Bank
Minnetonka, MN
ABA# 000000000
FC: Xxxxxx Xxxxxxxxxx Agency, Inc.
Acct# 102657
- Company Agreement to Pay: Company agrees to pay Agency invoices on
payment dates stated thereon. So that Company may have sufficient
time to audit and pay Agency bills and that Agency may have
sufficient time to pay the media suppliers, by payment date, Agency
will mail media invoices at least 21 days before payment due date.
5. Termination.
- Period of Services: The services provided by Agency shall begin upon
execution and delivery of Amendment No. 1 to the Distribution and
Management Agreement and shall continue until termination of Agent's
activities to market and sell the Notes thereunder.
- Payment for Purchases and Work Done: Any materials, services, etc.
Agency has committed to purchase for Company's account with
Company's approval (or any uncompleted work previously approved by
Company either specifically or as part of a plan) prior to
termination of the Services shall be paid for by Company in
accordance with the provisions of this Agreement.
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