EXHIBIT 1.3
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 29, 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 29, 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
29, 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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