Exhibit 10.111
DISTRIBUTION AND MANAGEMENT AGREEMENT
DATED AS OF FEBRUARY 15, 2002
ONYX ACCEPTANCE CORPORATION
AND
XXXXXX XXXXXXXXXX LTD.
----------------------------
$50,000,000.00
RENEWABLE UNSECURED SUBORDINATED NOTES
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS.............................................................1
Section 1.01 Defined Terms.................................................1
Section 1.02 Accounting Terms..............................................4
ARTICLE II APPOINTMENT OF AGENT AND RELATED AGREEMENTS............................5
Section 2.01 Appointment; Exclusivity......................................5
Section 2.02 Scope of Agency...............................................5
Section 2.03 Compensation to Agent.........................................5
Section 2.04 Brokers and Dealers...........................................7
Section 2.05 Agent's Unrelated Activities..................................7
Section 2.06 Best Efforts; Independent Contractor..........................7
Section 2.07 Issuance and Payment..........................................8
ARTICLE III SERVICES; STANDARD OF CARE............................................8
Section 3.01 Services for Notes............................................8
Section 3.02 Maintenance of Files and Records.............................10
Section 3.03 Monthly Reports to the Company...............................11
ARTICLE IV REPRESENTATIONS AND COVENANTS OF THE COMPANY..........................11
Section 4.01 Representations, Warranties and Agreements of the Company....11
Section 4.02 Covenants of the Company.....................................17
ARTICLE V REPRESENTATIONS AND COVENANTS OF AGENT; CONDITIONS.....................19
Section 5.01 Representations and Warranties of Agent......................19
Section 5.02 Covenants of Agent...........................................22
ARTICLE VI CONDITIONS............................................................23
Section 6.01 Conditions of the Agent's Obligations........................23
Section 6.02 Conditions of the Company's Obligations......................28
Section 6.03 .............................................................28
ARTICLE VII......................................................................28
INDEMNIFICATION AND CONTRIBUTION.................................................28
Section 7.01 Company's Indemnification of Agent...........................28
Section 7.02 Agent's Indemnification of the Company.......................29
Section 7.03 Notice of Indemnification Claim..............................30
Section 7.04 Contribution.................................................31
Section 7.05 Notice of Contribution Claim.................................31
Section 7.06 Reimbursement................................................32
Section 7.07 Arbitration..................................................32
Section 7.08 Intellectual Property Infringement...........................32
Section 7.09 Confidentiality..............................................32
ARTICLE VIII TERM AND TERMINATION................................................33
Section 8.01 Effective Date of this Agreement.............................33
i
Section 8.02 Termination Prior to Initial Closing Date....................33
Section 8.03 Notice of Termination........................................34
Section 8.04 Termination After Initial Closing Date.......................34
Section 8.05 Termination Without Termination of Offering..................34
ARTICLE IX MISCELLANEOUS.........................................................35
Section 9.01 Survival.....................................................35
Section 9.02 Notices......................................................35
Section 9.03 Successors and Assigns; Transfer.............................36
Section 9.04 Cumulative Remedies..........................................36
Section 9.05 Attorneys' Fees..............................................36
Section 9.06 Entire Agreement.............................................36
Section 9.07 Choice of Law; Venue.........................................36
Section 9.08 Confidentiality..............................................36
Section 9.09 Rights to Investor Lists.....................................36
Section 9.10 Waiver; Subsequent Modification..............................37
Section 9.11 Severability.................................................37
Section 9.12 Joint Preparation............................................37
Section 9.13 Captions.....................................................37
Section 9.14 Counterparts.................................................37
Section 9.15 Third Party Contractors......................................37
Section 9.16 .............................................................37
ii
DISTRIBUTION AND MANAGEMENT AGREEMENT
THIS DISTRIBUTION AND MANAGEMENT AGREEMENT is entered into as of this
15th day of February, 2002 by and between Onyx Acceptance Corporation, a
Delaware Corporation (the "Company"), and Xxxxxx Xxxxxxxxxx Ltd., a Minnesota
corporation, as agent (the "Agent").
RECITALS
WHEREAS, the Company proposes to register and publicly offer and sell up
to $50,000,000 aggregate principal amount of renewable, unsecured, subordinated
notes of the Company;
WHEREAS, subject to the termination rights set forth herein, the Company
desires to appoint the Agent to act as the Company's exclusive selling agent in
connection with the offer, sale and renewal of such notes on a best effort basis
and act as the Company's servicing agent to provide certain administrative
services with respect to the Notes, and Agent desires to accept such duties, all
as provided for by the terms of this Agreement.
NOW, THEREFORE, in consideration of the above and for other good and
valuable consideration, receipt of which is acknowledged, and in consideration
of the mutual promises, covenants, representations and warranties hereinafter
set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINED TERMS. Whenever used in this Agreement, the
following terms have the respective meanings set forth below. The definitions of
such terms are applicable to the singular as well as to the plural forms of such
terms.
(a) Accepted Note Practices. As applicable to the context in
which this term is used, those procedures and practices with respect to
the offering, marketing, selling, servicing and administration of the
Notes that satisfy the following: (i) meet at least the same standards
that Agent would follow in exercising reasonable care in offering,
marketing, selling, servicing and administering similar programs for
publicly offered notes or securities; (ii) comply with all applicable
federal and state laws; (iii) comply with the provisions of this
Agreement; and (iv) give due consideration to the accepted standards of
practice of prudent investment banking firms that offer, market, sell,
service or administer comparable programs for publicly offered notes or
securities and the reliance of the Company on the Agent for the
offering, marketing, selling, servicing and administration of the
Renewable Note Program.
(b) Agent. Xxxxxx Xxxxxxxxxx Ltd., a Minnesota corporation, or
its successors in interest, if approved by the Company as provided
herein.
(c) Agreement. This Distribution and Management Agreement,
including any exhibits or attachments hereto, as originally executed,
and as amended or supplemented from time to time in accordance with the
terms hereof.
(d) Business Day. Any day other than (a) a Saturday or Sunday or
(b) another day on which banking institutions in the State of New York
or the State of Minnesota are authorized or obligated by law, executive
order, or governmental decree to be closed.
(e) Commission or SEC. The Securities and Exchange Commission.
(f) Company. Onyx Acceptance Corporation, or its successors in
interest.
(g) Due Date. The day on which each Scheduled Payment is due to
any Holder from the Company on any Note for a Due Period, exclusive of
any days of grace.
(h) Due Period. The monthly, quarterly, semi-annual, or annual
periods, or the full term of the Note if interest is due at maturity,
for which scheduled payments of interest will be paid on any Note.
(i) Effective Date. As defined in Section 6.01(a), the date and
time the Registration Statement is or was declared effective by the
Commission.
(j) Exchange Act. The Securities Exchange Act of 1934, as
amended.
(k) Governmental Rules. Any law, rule, regulation, ordinance,
order, code, interpretation, judgment, decree, policy, decision or
guideline of any governmental agency, court or authority.
(l) Holder. The registered owner of any Note, including any
purchaser or any subsequent transferee or other holder thereof.
(m) Indenture. That certain Indenture dated on or about February
11, 2002, by and between the Company and the Trustee with respect to the
Notes.
(n) Initial Closing Date. After the Effective Date, the first
date on which any Notes are issued and sold by the Company to any
Investors.
(o) Investor. Any person who purchases Notes or person who
contacts the Agent expressing an interest in purchasing the Notes or
requesting information concerning the Notes.
(p) Letter of Intent. That certain letter of intent dated August
15, 2001 by and between the Company and the Agent relating to the
Offering.
(q) Material Agreement. With respect to a person, any agreement,
contract, joint venture, lease, commitment, guaranty or other
contractual arrangement or any bond, debenture, indenture, mortgage,
deed of trust, loan or security agreement, note, instrument or other
evidence of indebtedness, which in the case of any of the foregoing is
Distribution and Management Agreement - Page 2
material to the business, assets, operations or condition, financial or
otherwise, of such person or which is material to the ability of such
person to perform its obligations under this Agreement.
(r) NASD. The National Association of Securities Dealers, Inc.
(s) Note Confirmation. With respect to the issuance and ownership
of the Notes in book-entry form, an appropriate written confirmation of
the issuance and ownership or transfer of ownership of a Note to a
Holder, the format of which shall comply with Accepted Note Practices.
(t) Note Portfolio. The aggregate of individual Notes, as it
exists from time to time, which, unless the context otherwise requires
or provides, will be determined or evaluated based upon the principal
balances of the Notes.
(u) Notes. The renewable, unsecured, subordinated notes of the
Company that are being offered and sold pursuant to the Registration
Statement and that have an aggregate principal amount up to $50,000,000
and such other terms as described in the Prospectus, and any additional
principal amount of the same or similar notes as may be registered from
time to time pursuant to the Registration Statement.
(v) Offering. The offer and sale of the Notes in accordance with
the terms and subject to the conditions set forth in the Registration
Statement.
(w) Paying Agent. Xxxxx Fargo Bank Minnesota, N.A. or its
successors or assigns, or such other paying agent with respect to the
Notes as may be subsequently appointed by the Company.
(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.
(y) Paying Agent Fees. All fees and expenses payable to the
Paying Agent in accordance with the Paying Agent Agreement.
(z) Portfolio Reports. The reports to the Company regarding the
Note Portfolio required to be prepared and delivered by the Agent under
this Agreement.
(aa) Preliminary Prospectus. Any preliminary prospectus included
in the Registration Statement prior to the time it becomes or became
effective under the Securities Act, including the respective copies
thereof filed with the Commission.
(bb) Prospectus. The prospectus included in the Registration
Statement at the time it is or was declared effective by the Commission,
except that if any prospectus provided to the Agent by the Company for
use in connection with the Offering differs from the prospectus as filed
with the Commission, the term "Prospectus" shall refer to such differing
prospectus from and after the time such prospectus is first provided to
the Agent by the Company for such use, including the respective copies
thereof filed with the
Distribution and Management Agreement - Page 3
Commission, and also shall include any prospectus supplements to and any
other supplements to such prospectus that are filed with the Commission
as part of the Registration Statement.
(cc) Prepayment. The payment of all or part of the interest due
in any Due Period prior to the Due Date.
(dd) Redemption Payment. The payment of principal plus any
accrued and unpaid interest, that is being made at the discretion of the
Issuer in accordance with the Indenture.
(ee) Registration Statement. That certain Registration Statement
on Form S-3 (File No. 333-71238) 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 on or about
the date hereof, including the respective copies thereof filed with the
Commission.
(ff) Renewable Note Program. The marketing, subscription and
sale, administration, customer service and investor relations,
registration of ownership, reporting, payment, repurchase, redemption,
renewal and related activities associated with the Notes.
(gg) Repurchase Payment. The payment of principal plus any
accrued and unpaid interest, less any penalties upon the repurchase of
any Note, that is being made at the request of the Holder in accordance
with the Indenture.
(hh) Rules and Regulations. The rules and regulations under the
Securities Act as now and hereafter amended.
(ii) Scheduled Payment. For any Due Period and any Note, the
amount of interest and/or principal indicated in such Note as required
to be paid by the Company under such Note for the Due Period and giving
effect to any rescheduling or reduction of payments in any insolvency or
similar proceeding and any portion thereof.
(jj) Securities Act. The Securities Act of 1933, as amended, and
as hereafter amended.
(kk) Trust Account. The trust account established by the Trustee
pursuant to the Indenture.
(ll) Trustee. U.S. Bank Trust, National Association, or its
successors or assigns.
(mm) Trustee's Fee. All fees and expenses payable to the Trustee
in accordance with the Indenture.
SECTION 1.02 ACCOUNTING TERMS. Unless otherwise specified in this
Agreement, all accounting terms used in this Agreement shall be interpreted, all
accounting determinations under this Agreement shall be made, and all financial
statements required to be delivered by any
Distribution and Management Agreement - Page 4
person pursuant to this Agreement shall be prepared, in accordance with
generally accepted accounting principles as in effect from time to time applied
on a consistent basis. To the extent generally accepted accounting practices do
not apply to certain reports or accounting practices of Agent, the parties will
mutually agree on the accounting practices and assumptions.
ARTICLE II
APPOINTMENT OF AGENT AND RELATED AGREEMENTS
SECTION 2.01 APPOINTMENT; EXCLUSIVITY. On the basis of the
representations, warranties and agreements herein contained, and subject to the
terms and conditions set forth herein and in the Prospectus during the term of
this Agreement, the Company appoints the Agent as its exclusive agent for
purposes of selling, including the offer and sale of the Notes, and servicing,
including the servicing and administration of the Notes, in each case, under the
Renewable Note Program upon the terms and conditions set forth herein, including
without limitation compliance and conformity with Accepted Note Practices and
Governmental Rules, and the Agent agrees to use its best efforts as such agent
to offer and sell the Notes to Investors until the later of the termination of
the Offering or the payment in full of all outstanding Notes, or until the
termination of this Agreement, if earlier. During the term of this Agreement,
the Company agrees to direct to the Agent all inquiries it receives with respect
to the Notes.
SECTION 2.02 SCOPE OF AGENCY. In the performance of its duties
hereunder, Agent shall have full power and authority to take any and all actions
for purposes of selling, including the offer and sale of Notes, and servicing,
including the servicing and administration of the Notes, in each case, under the
Renewable Note Program that Agent, in its discretion, deems necessary or
appropriate, subject in all respects to compliance and conformity with Accepted
Note Practices and Governmental Rules. Such discretion shall include, without
limitation, the right to accept or reject subscription agreements, waive or
reduce early repurchase penalties when appropriate, change interest payment
dates, enforce early repurchase penalties and allow prepayment of Notes, with or
without penalty (subject to the limitations in the Indenture). Notwithstanding
the foregoing, Agent's authority to take any action on the Company's behalf,
other than the rejection of subscription agreements, which has a financial
impact of $500 or more shall be subject to receiving the prior written consent
of the Company. In the performance of its duties hereunder, the Agent shall (i)
act exclusively as the agent and the bailee of the Company in connection with
the Renewable Note Program; (ii) hold, in trust and as custodian, all
subscription agreements, notices or other documents and all purchase proceeds or
other payments received by it in connection with the Renewable Note Program for
the sole and exclusive use and benefit of the Company; and (iii) make
dispositions of the items in clause (ii) only in accordance with this Agreement
or at the written direction of the Company. Except as set forth herein with
respect to the Renewable Note Program, the Agent shall have no authority,
express or implied, to act in any manner or by any means for or on behalf of the
Company.
SECTION 2.03 COMPENSATION TO AGENT.
(a) Agent's Fees and Commissions. In consideration of the
agreement of the Agent to provide its services as set forth in this
Agreement, the Company will pay the Agent the following amounts:
Distribution and Management Agreement - Page 5
(i) a commission of up to three percent (3%) of the gross
proceeds received on the sale and renewal of Notes in accordance
with the schedule set forth as Exhibit A hereto; and
(ii) an annual portfolio management fee equal to 0.25% of
the weighted average daily principal balance of the Note
Portfolio.
(b) Agent's Expenses. The Company agrees with the Agent that
whether or not the Effective Date occurs or the Agreement is terminated
or cancelled or the sale of the Notes hereunder is consummated, and
regardless of the reason for or cause of any such termination,
cancellation, or failure to consummate, the Company will pay or cause to
be paid to the applicable persons the following, whether incurred prior
or subsequent to the date of this Agreement:
(i) subject to the prior approval by the Company, all
reasonable out-of-pocket costs of the Agent incurred in
connection with the Offering, including, but not limited to,
designing, printing and mailing all offering and advertising
materials (including document fulfillment services),
advertisements in newspapers, on the radio, on the internet and
through direct mail, operating a toll-free telephone number, and
assisting the Company with creating a web site, including any
costs of a web developer or other third party consultants;
(ii) all reasonable fees and expenses of persons (other
than the Agent and its affiliates), including, without
limitation, fees and expenses of the Company's auditors and legal
counsel, in connection with the preparation, printing, filing,
and delivery of the Registration Statement (including the
financial statements therein and all amendments, schedules, and
exhibits thereto), each Preliminary Prospectus, the Prospectus,
and any amendment thereof or supplement thereto;
(iii) all reasonable fees and expenses incurred in
connection with the qualification of the Notes for offer and sale
under the securities or Blue Sky laws of the states and other
jurisdictions which the Agent may designate (with the prior
approval of the Company) in accordance with the terms herewith;
(iv) all reasonable out-of-pocket costs incurred by the
Agent or any other contractor in connection with the preparation,
printing, filing, and delivery of notices, quarterly statements,
newsletters and any other materials to be sent to Holders;
(v) all reasonable fees and expenses of the Agent's legal
counsel in connection with the Offering and the ongoing servicing
and administration of the Renewable Note Program as provided
herein;
(vi) all fees and expenses of the Trustee and Paying Agent
in connection with the Notes, and
Distribution and Management Agreement - Page 6
(vii) all reasonable out-of-pocket costs incident to the
performance of the Agent's obligations hereunder with respect to
the ongoing servicing and administration of the Renewable Note
Program that are not otherwise specifically described herein.
The provisions of this Section are intended to relieve the Agent from
the payment of reasonable fees, expenses and out-of-pocket costs which
the Company hereby agrees to pay and shall not impair or limit the
obligations of the Company hereunder to the Agent.
(c) Payment of Fees and Commissions. On the last Business Day of
each month, or as soon thereafter as practicable, Agent shall provide
the Company with a written invoice for the previous month's fees and
commissions that are payable with respect to Notes issued through the
last three Business Days of the previous month that are not rescinded.
Such commissions and fees will be due and payable by the later of the
fifteenth (15th) day of every month or fifteen (15) days after the date
such invoice is received. Notes issued in the last three Business Days
of each month, and the fees and commissions payable with respect
thereto, will be counted in the amount due to Agent for the subsequent
month.
SECTION 2.04 BROKERS AND DEALERS. The Agent may, in its sole discretion
and at no additional obligation or expense to the Company, use the services of
other brokers or dealers who are members of the NASD in connection with the
offer and sale of the Notes. The Agent may enter into agreements with any such
broker or dealers to act as its sub-agents for the sale of the Notes and shall
be solely responsible for the payment of any portion of the Agent's compensation
hereunder to such brokers or dealers.
SECTION 2.05 AGENT'S UNRELATED ACTIVITIES. 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; provided, however, without
the written consent of the Company, Agent agrees not to advertise such other
notes or securities by radio, newspaper or other media in such markets and at
such times as the Company's advertisements for Notes are being broadcast or
published. 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.
SECTION 2.06 BEST EFFORTS; INDEPENDENT CONTRACTOR. Anything to the
contrary notwithstanding, Agent shall have no obligation to sell any minimum
principal amount of Notes or to purchase Notes for its own account, for resale
or for any other purpose, but rather Agent shall use its best efforts as selling
agent in connection with the Offering of the Notes. During the term of this
Agreement, all actions taken by Agent pursuant to this Agreement shall be in the
capacity of an independent contractor, all sales of Notes conducted by Agent
shall be solely for the account and at the risk of the Company, and in no event
shall the Agent have any obligations under the Notes.
Distribution and Management Agreement - Page 7
SECTION 2.07 ISSUANCE AND PAYMENT. The Notes shall be issued pursuant
to the Indenture and all Scheduled Payments, Redemption Payments and Repurchase
Payments shall be made by electronic funds transfer or automated clearing house
(i.e., ACH) remittance from the Trust Account by the Paying Agent in accordance
with the Paying Agent Agreement. The Company shall pay funds into the Trust
Account as needed to cover Scheduled Payments, Redemption Payments, Repurchase
Payments, Trustee's Fees and Paying Agent Fees.
ARTICLE III
SERVICES; STANDARD OF CARE
SECTION 3.01 SERVICES FOR NOTES. The services to be provided to the
Company by the Agent pursuant to and during the term of this Agreement shall
include the following:
(a) Note Structure and Interest Rates. During the term of this
Agreement, Agent shall advise the Company regarding the structure of the
Notes and provide sample document forms. Throughout the Offering, Agent
shall assist the Company in determining appropriate Note interest rates
based on current market conditions and the Company's capital goals.
(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. Agent shall manage the process of creating, producing and
placing any newspaper, radio, internet and direct mail advertisements.
Agent shall also oversee designing and printing all marketing materials,
in accordance with the applicable Rules and Regulations and any other
requirements of the SEC and NASD or other Governmental Rules.
(i) Notwithstanding the foregoing, Agent's authority with
respect to all ad placements and use of all marketing materials
shall be subject to receiving the prior written approval of the
Company.
(ii) In order to minimize advertising costs, Agent 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.
(iii) During the term of this Agreement, Company shall allow
Agent to use the Company's logo, corporate colors, trademarks,
tradenames, fonts, and other aspects of corporate identity in
advertisements and marketing materials related to the Notes,
subject to the Company's prior written approval of the specific
use of these items in writing in each instance.
(c) Subscription, Sale and Ownership. During the term of this
Agreement, Agent shall review and process each subscription agreement
for the Notes received from an Investor with the objective of
determining whether (i) such agreement is complete and
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accurate in all material respects, including without limitation the
execution thereof by such Investor, (ii) such Investor timely remits the
subscribed amount in accordance with the subscription agreement and such
subscribed amount is the correct amount, and (iii) the principal amount,
interest rate and term to maturity and any other material terms of the
Notes are verified for accuracy and completeness. Upon delivery by each
Investor of a completed subscription agreement for Notes and full
payment of the principal amount of such Notes in accordance with the
Investor's subscription agreement, the Agent shall promptly (i) accept
or reject such subscription agreements on the Company's behalf, (ii)
verify that the payment of the principal amount of such Investor's
accepted subscription for the Notes is being remitted to the Company in
accordance with the subscription agreement in an account established by
the Company for such purpose or in such other manner as may be directed
by the Company from time to time, and (iii) remit to the Trustee
electronic or hard copies of all accepted subscription agreements and
related records as may be reasonably requested by the Trustee, including
without limitation, a record of each deposit relating to the payment of
the subscription amount of the Notes. Pursuant to the preceding
sentence, Notes shall be issued by Agent on the Company's behalf in
book-entry form only and Agent shall deliver a Note Confirmation to each
Holder (with a copy to the Trustee) with respect to such Holder's
respective accepted subscription agreement and the receipt of full
payment for such Holder's Notes. The Company hereby appoints the Agent
as its initial Registrar (as such term is defined in the Indenture) for
the Notes pursuant to Section 2.3 of the Indenture. For so long as Agent
shall serve as the Registrar for the Notes, Agent shall perform all of
the duties and obligations of the Registrar under the Indenture,
including without limitation the obligation to maintain a book-entry
registration and transfer system for the ownership of the Notes in
accordance with Section 2.14 and the other provisions of Article II of
the Indenture.
(d) Investor Relations and Reporting. During the term of this
Agreement, Agent, in conjunction with the Trustee, shall manage all
aspects of the customer service and investor relations functions,
including, but not limited to, handling all inquiries from Investors,
mailing investment kits, delivering to each Investor the Prospectus and
subscription agreement, meeting with Investors, processing subscription
agreements, responding to all written or telephonic questions by
Investors and Holders relating to the Notes, recording changes in
Holders' addresses or accounts, issuing quarterly statements and
newsletters to Holders, directing the Paying Agent to make Scheduled
Payments, Repurchase Payments and Redemption Payments to Holders in a
timely manner, and issuing (or directing the Paying Agent to issue) Form
1099's to Holders as required by law. In addition, Agent shall provide
the Trustee (and copy the Company) with management reports regarding the
Notes as required under Section 4.3 of the Indenture.
(e) Web Site Development. Subject to compliance and conformity
with Accepted Note Practices by Agent, Agent (or a third party service
provider working at Agent's direction) shall assist the Company in
developing a dedicated Internet web site separate from the Company's
corporate site to allow Investors to view online and download copies of
the Offering documents (including the Prospectus, Interest Rate
Supplement, and Subscription Agreement) and marketing materials that are
included in the investment kit or comparable information.
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(f) OID Calculation. During the term of this Agreement, Agent
shall promptly provide to the Company all such information that is
necessary to calculate original issue discount (OID) for federal income
tax purposes for each Note and otherwise cooperate with the Company in
making such calculations pursuant to Section 4.02(l). Upon receipt by
the Agent from the Company of the OID calculations pursuant to Section
4.02(l), the Agent shall, if required, provide appropriate OID
information and/or legends to the Holder upon issuance and during the
term of each such Note.
SECTION 3.02 MAINTENANCE OF FILES AND RECORDS. Agent shall establish
and maintain at all times during the term of this Agreement files and records
(including, without limitation, computerized records) regarding the Notes and
the Note Portfolio, with full and correct entries of all transactions or
modifications in a reasonably secure, up-to-date manner and in accordance with
the following:
(a) Location. All Note and Note Portfolio files and records shall
be stored and maintained at Agent's principal place of business, or
other location as designated by the Agent, with the Company's prior
written consent, which shall not be unreasonably withheld. Agent shall
keep in its files all correspondence received or sent regarding each
Note, each Investor, and each Holder, whether upon any purchase or
transfer of a Note.
(b) Return. If this Agreement is terminated, the Agent shall
promptly deliver to the Company or its designee, as the case may be, all
Note files and records (including, without limitation, copies of
computerized records and servicing and other software, except as may be
prohibited by any third party contract or license) related to the
selling and servicing of the Notes and all monies collected by it
relating to the Renewable Note Program (less any fees or expenses due to
the Agent). Agent shall be entitled to make and keep copies of such
records, at its cost and expense, but Agent must maintain such copies in
strict compliance with all applicable Governmental Rules. In addition to
delivering such data and monies, the Agent shall use its best efforts to
effect the orderly and efficient transfer of the selling and servicing
of the Notes to the Company or other party designated by the Company to
assume responsibility for such selling and servicing, including, without
limitation, directing Holders to remit all repurchase or other notices
to the address designated by the Company. All costs of conversion and
transfer of such records to the Company or another agent shall be paid
by the Company.
(c) Original Documents. Agent will scan and make an electronic
copy of all original documents, including subscription agreements, Note
Confirmations, correspondence from Investors and Holders and other
materials relating to the Renewable Note Program, and store the
originals of such documents in a reasonably secure manner and location
as may be agreed upon with the Company. Agent shall exercise due care in
handling and delivering the original documents and the other documents
in the Note files and records. Agent shall not grant or allow any person
an interest in original documents or rights thereunder, and all original
documents in the possession of Agent shall be deemed to be in the
possession of the Company.
(d) Examination. At any time during Agent's normal business
hours, the Company and its agents and representatives may physically
inspect any documents, files
Distribution and Management Agreement - Page 10
or other records relating to the Renewable Note Program and discuss the
same with Agent's officers and employees. Agent shall supply copies of
any such documents, files, or other records upon request of the Company,
as soon as is reasonably and commercially practicable, without notice,
at the Company's cost and expense.
(e) Retention. Unless otherwise requested by the Company, or
unless otherwise required by law, Agent shall retain, with respect to
each Note, for a period of 24 months from the date the Note is fully
paid, all records, files and documents related to each such Note. At the
end of such 24-month period, all such items shall be transferred to the
Company, or to a third party as designated by the Company, at the
Company's sole cost and expense. Agent shall be permitted to retain
copies of any such documents for its own files for its own account and
at its own expense. Agent shall maintain the privacy of the Investors
and Holders in accordance with all applicable Governmental Rules.
SECTION 3.03 MONTHLY REPORTS TO THE COMPANY. Agent shall provide the
Company with monthly reports and analysis regarding the status of the Note
Portfolio, the marketing efforts and the amount of Notes remaining under the
Registration Statement. Agent shall provide such reports on or before the tenth
(10th) day of each month with respect to activity during the immediately
preceding month. Agent shall also provide interim or custom reports at the
Company's request as is commercially reasonable, including, without limitation,
a weekly update via email identifying new Holders by name, address and principal
amount of Notes purchased.
ARTICLE IV
REPRESENTATIONS AND COVENANTS OF THE COMPANY
SECTION 4.01 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
The Company represents and warrants to and agrees with the Agent as follows,
which representations and warranties shall be deemed to be made continuously
from and as of the date hereof until this Offering is terminated and all
then-outstanding Notes have been paid in full or such earlier date that this
Agreement has been terminated.
(a) The Registration Statement, including the Prospectus subject
to completion, has been prepared by the Company in conformity with the
requirements of the Securities Act and the Rules and Regulations and has
been filed with the Commission under the Securities Act. Copies of the
Registration Statement and any amendments thereto, as filed with the
Commission, have been delivered by the Company to the Agent.
(b) As of the Effective Date, and at all times subsequent thereto
until the termination of the Offering, the Registration Statement and
Prospectus, including each document included therein by reference, and
all amendments thereof and supplements thereto, will comply with or have
complied with the provisions and requirements of the Securities Act and
the Rules and Regulations. Neither the Commission nor any state
securities authority has issued any order preventing or suspending the
use of any Preliminary Prospectus or requiring the recirculation of a
Preliminary Prospectus, or issued a stop order with respect to the
Offering (if the Registration Statement has been declared effective), or
instituted or, to the Company's knowledge, threatened the
Distribution and Management Agreement - Page 11
institution of, proceedings for any of such purposes. When the
Registration Statement shall become effective and when any
post-effective amendment thereto shall become effective, the
Registration Statement will not or did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading. When the
Registration Statement is or was declared effective by the Commission
and at all times subsequent thereto until the termination of the
Offering, the Prospectus (as amended or supplemented, if the Company
shall have filed with the Commission any amendment thereof or supplement
thereto) will not or did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. None of the
representations and warranties in this Section shall apply to any
statements in, or omissions from the Agent Disclosure Statements (as
defined in Section 5.01(f) below) in the Registration Statement or the
Prospectus, or any amendment thereof or supplement thereto.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with full power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement and Prospectus. The Company is duly qualified to do business
and is in good standing in each jurisdiction in which the ownership or
lease of its properties or the conduct of its business requires such
qualification and in which the failure to be qualified or in good
standing would have a material adverse effect on the condition
(financial or otherwise), earnings, operations or business of the
Company and, to the best of the Company' s knowledge, no proceeding has
been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.
(d) The Company has operated and is operating in material
compliance with all authorizations, licenses, certificates, consents,
permits, approvals and orders of and from all state, federal and other
governmental regulatory officials and bodies necessary to own its
properties and to conduct its business as described in the Registration
Statement and Prospectus, all of which are, to the best of the Company's
knowledge, valid and in full force and effect. The Company is conducting
its business in substantial compliance with all applicable laws, rules
and regulations of the jurisdictions in which it is conducting business,
and the Company is not in material violation of any applicable law,
order, rule, regulation, writ, injunction, judgment or decree of any
court, government or governmental agency or body, domestic or foreign,
having jurisdiction over the Company or over its properties.
(e) The Company is not in violation of its certificate of
incorporation or bylaws or in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
Material Agreement to which it is a party or by which it or its
properties are bound.
(f) The Company has full requisite power and authority to enter
into this Agreement and perform the transactions contemplated hereby.
This Agreement has been
Distribution and Management Agreement - Page 12
duly authorized, executed and delivered by the Company and is a valid
and binding agreement on the part of the Company, enforceable against
the Company in accordance with its terms. The performance of this
Agreement and the consummation of the transactions herein contemplated
will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under:
(i) any Material Agreement to which the Company is a party or
by which the Company or its properties may be bound;
(ii) the certificate of incorporation or bylaws of the
Company, or
(iii) any applicable law, order, rule, regulation, writ,
injunction, judgment or decree of any court, government or
governmental agency or body, domestic or foreign, having
jurisdiction over the Company or over its properties.
(g) No consent, approval, authorization or order of or
qualification with any court, governmental agency or body, domestic or
foreign, having jurisdiction over the Company or over its properties is
required for the execution and delivery of this Agreement and the
consummation by the Company of the transactions herein contemplated,
except such as may be required under the Securities Act, the Exchange
Act, or under state or other securities or blue sky laws, all of which
requirements have been satisfied.
(h) Except as is otherwise expressly described in or incorporated
by reference into the Registration Statement or Prospectus, there is
neither pending nor, to the best of the Company's knowledge, threatened,
any action, suit, claim or proceeding against the Company or any of its
officers or any of its properties, assets or rights before any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or over its officers or properties or
otherwise which if successful would be likely to (A) result in any
material adverse change in the condition (financial or otherwise),
earnings, operations or business of the Company or might materially and
adversely affect its properties, assets or rights, or (B) prevent
consummation of the transactions contemplated hereby.
(i) All outstanding shares of capital stock of the Company are
duly authorized and validly issued, fully paid and non-assessable, have
been issued in compliance with all federal and state securities laws,
were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities, and the authorized
and outstanding capital stock of the Company conforms in all material
respects with the statements relating thereto contained in the
Registration Statement and the Prospectus. The Notes to be sold
hereunder by the Company have been duly authorized for issuance and sale
pursuant to the Indenture and this Agreement and, when issued and
delivered against payment therefor in accordance with the terms of the
Indenture and this Agreement, will be duly and validly issued and fully
paid and non-assessable and will be sold free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest; and
no preemptive right, co-sale right, registration right, right of first
refusal or other similar right of stockholders exists with respect to
any of the Notes to be sold hereunder by the Company or the issuance and
sale
Distribution and Management Agreement - Page 13
thereof. The Notes will comply as to form with all applicable provisions
of the laws of the State of New York.
(j) PricewaterhouseCoopers LLP, which has expressed its opinion
with respect to certain of the financial statements filed as part of the
Registration Statement, is an independent accounting firm within the
meaning of the Securities Act and the Rules and Regulations. The
financial statements of the Company set forth or incorporated by
reference in the Registration Statement and Prospectus comply in all
material respects with the requirements of the Securities Act and fairly
present the financial position and the results of operations of the
Company at the respective dates and for the respective periods to which
they apply in accordance with generally accepted accounting principles
consistently applied throughout the periods involved; and the supporting
schedules included or incorporated by reference in the Registration
Statement present fairly the information required to be stated therein.
(k) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, except as is
otherwise disclosed in the Registration Statement or Prospectus or as is
otherwise incorporated into the Registration Statement pursuant to the
Securities Act and the Rules and Regulations, there has not been:
(i) any material change in the capital stock or long-term
debt (including any capitalized lease obligation) or material
increase in the short-term debt of the Company;
(ii) any material issuance of options (other than to
directors and employees of the Company), warrants, convertible
securities or other rights to purchase the capital stock of the
Company;
(iii) any material adverse change, or any development
involving a material adverse change, in or affecting the
condition (financial or otherwise), earnings, operations,
business or business prospects, management, financial position,
stockholders' equity, results of operations or general condition
of the Company;
(iv) any transaction entered into by the Company that is
material to the Company, except transactions entered into by the
Company in the ordinary course of business that are consistent
with past practices (including without limitation any
securitization transaction);
(v) any material obligation, direct or contingent, incurred
by the Company, except obligations incurred in the ordinary
course of business; or
(vi) any loss or damage (whether or not insured) sustained to
the property of the Company, which has a material adverse effect
on the condition (financial or otherwise), earnings, operations
or business of the Company.
Distribution and Management Agreement - Page 14
(l) Except as is otherwise expressly disclosed in the
Registration Statement or Prospectus or as is otherwise incorporated
into the Registration Statement pursuant to the Securities Act and the
Rules and Regulations:
(i) the Company has good and marketable title to all of
the property, real and personal, and assets described in the
Registration Statement or Prospectus as being owned by it, free
and clear of any and all pledges, liens, security interests,
encumbrances, equities, charges or claims, other than such as
would not have a material adverse effect on the condition
(financial or otherwise), earnings, operations or business of the
Company; and
(ii) the Material Agreements to which the Company is a
party described in the Registration Statement and Prospectus are
valid agreements, enforceable by the Company except as the
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by
judicial limitations on the right of specific performance. Except
as set forth in the Registration Statement and Prospectus, the
Company owns or leases all such properties as are necessary to
its operations as now conducted.
(m) The Company has timely filed (or has timely requested an
extension of time to file) all necessary federal and state income and
franchise tax returns. The Company has paid all taxes shown on such tax
returns as due and payable, and there is no tax deficiency that has been
or, to the best of the Company's knowledge, could be asserted against
the Company that might have a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or properties
of the Company, and all tax liabilities are adequately provided for in
the books of the Company; provided, however, that the Company has not
paid, and a deficiency may have been asserted for, taxes which are being
contested by the Company in good faith and by proper proceedings and for
which appropriate and reasonable reserves have been provided.
(n) The Company owns, or possesses adequate rights to use, all
patents, patent rights, inventions, trade secrets, know-how, technology,
service marks, trade names, copyrights, trademarks and proprietary
rights or information which are necessary for the conduct of its present
or intended business as described in the Registration Statement or
Prospectus. The expiration of any patents, patent rights, trade secrets,
trademarks, service marks, trade names or copyrights would not have a
material adverse effect on the condition (financial or otherwise),
earnings, operations or business of the Company and the Company has not
received any notice of, and has no knowledge of, any infringement of or
conflict with the asserted rights of others with respect to any patent,
patent rights, inventions, trade secrets, know-how, technology,
trademarks, service marks, trade names or copyrights that, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, might have a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company.
(o) The Company has not taken and will not take, directly or
indirectly, any action (and does not know of any action by its
directors, officers, employees, or other
Distribution and Management Agreement - Page 15
agents) which has constituted or is designed to, or which might
reasonably be expected to, cause or result in stabilization or
manipulation, as defined in the Exchange Act or otherwise, to facilitate
the sale or resale of the Notes. The Company has not distributed and
will not distribute prior to the completion of the distribution of the
Notes, any offering material in connection with the offering and sale of
the Notes other than any Preliminary Prospectus, the Prospectus, the
Registration Statement and other materials, if any, permitted by the
Securities Act and Rules and Regulations.
(p) The Company maintains insurance, which is in full force and
effect, with insurers of recognized financial responsibility of the
types and in the amounts generally deemed adequate for its business and,
to the best of the Company's knowledge, in line with the insurance
maintained by similar companies and businesses; and the Company has no
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company.
(q) The Company has not at any time during the last five years
made any unlawful contribution to any candidate for an office or failed
to disclose fully any contribution in violation of law, or made any
payment to any federal or state governmental officer or official,
domestic or foreign, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that transactions are executed in accordance with
management's general or specific authorizations and transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles. To maintain
accountability for assets, access to assets is permitted only in
accordance with management's general or specific authorization, and the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(r) Except as set forth in the Registration Statement and
Prospectus or as is otherwise incorporated into the Registration
Statement pursuant to the Securities Act and the Rules and Regulations:
(i) the Company is in material compliance with all material
rules, laws and regulations relating to the use, treatment,
storage and disposal of toxic substances and protection of health
or the environment (the "Environmental Laws") which are
applicable to its business;
(ii) the Company has received no notice from any governmental
authority or third party of an asserted claim under Environmental
Laws, which claim is required to be disclosed in the Registration
Statement and the Prospectus;
Distribution and Management Agreement - Page 16
(iii) to the best of the Company's knowledge, the Company
will not be required to make any future material capital
expenditures to comply with Environmental Laws: and
(iv) no property which is owned, leased or occupied by the
Company has been designated as a Superfund site pursuant to the
Comprehensive Response, Compensation and Liability Act of 1980,
as amended (42 U.S.C. Section 9601, et seq.), or otherwise
designated as a contaminated site under applicable state or local
law.
(s) The historical financial information, financial projections
and due diligence information of the Company presented to the Agent for
its review, were prepared in good faith and represent the Company's best
present estimate of the Company's financial condition prior to, and
immediately following, completion of the sale of the Notes.
(t) During the term of this Agreement, and except as set forth
herein and in the Registration Statement, no person or entity other than
the Agent is entitled to any compensation or other payments from either
the Company or the Agent, as a finder, underwriter or agent in
connection with the Offering or any other proposed transaction between
the Company and the Agent. The Company agrees to promptly notify the
Agent of any such relationships, including consulting or prior agency
agreements entitling other parties to compensation for the Offering and
agrees to provide the Agent with a copy of such agreements.
(u) Any certificate signed by any officer of the Company and
delivered to Agent or to Agent's counsel shall be deemed a
representation and warranty by the Company to the Agent as to the
matters covered thereby that have a material relationship to the
Offering, the Registration Statement or the Renewable Note Program.
SECTION 4.02 COVENANTS OF THE COMPANY. The Company hereby covenants and
agrees with the Agent as follows:
(a) If the Registration Statement has not already been declared
effective by the Commission, the Company will use its best efforts to
cause the Registration Statement and any post-effective amendments
thereto to become effective as promptly as possible. The Company will
notify the Agent promptly of the time when the Registration Statement or
any post-effective amendment to the Registration Statement has become
effective or any supplement to the Prospectus has been filed and of any
request by the Commission for any amendment or supplement to the
Registration Statement or Prospectus or additional information. The
Company will prepare and file with the Commission, promptly upon the
Agent's reasonable request, any amendments or supplements to the
Registration Statement or Prospectus that, in the Agent's opinion, may
be necessary or advisable in connection with the Offering of the Notes
by the Agent; and the Company will not file any amendment or supplement
to the Registration Statement or Prospectus to which the Agent shall
reasonably object by notice to the Company after having been furnished a
copy a reasonable time prior to the filing.
Distribution and Management Agreement - Page 17
(b) The Company will advise the Agent, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of the qualification of the
Notes for offering or sale in any jurisdiction, or of the initiation or
receipt of any specific threat of any proceeding for any such purpose.
The Company will promptly use its best efforts to prevent the issuance
of any stop order or to obtain its withdrawal if such a stop order
should be issued.
(c) Within the time during which a Prospectus relating to the
Notes is required to be delivered under the Securities Act, the Company
will comply as far as it is able with all requirements imposed upon it
by the Securities Act and the Rules and Regulations, so far as necessary
to permit the continuance of sales of or dealings in the Notes as
contemplated by the provisions hereof and the Prospectus. If, during the
longer of such period or the term of this Agreement, any event or change
occurs that could reasonably be considered material to the Offering or
that causes any of the representations and warranties of the Company
contained herein to be untrue in any material respect, or as a result of
which the Prospectus would include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances then existing, not
misleading, or if, during such period, it is necessary to amend the
Registration Statement or supplement the Prospectus to comply with the
Securities Act, then the Company will promptly notify the Agent, and, if
necessary, will amend the Registration Statement or supplement the
Prospectus (at the expense of the Company) so as to correct such
statement or omission or effect such compliance. Without limiting the
foregoing, if this Agreement is terminated for any reason, the Company
shall promptly amend the Prospectus and any related Offering materials
to delete references to the Agent.
(d) The Company will use its best efforts to arrange for the
qualification of the Notes for offering and sale under the securities
laws of such jurisdictions as the Agent may reasonably designate (with
the prior approval of the Company) and to continue such qualifications
in effect for so long as may be required for purposes of the Offering.
In each jurisdiction in which the Notes shall have been qualified as
herein provided, the Company will make and file such statements and
reports in each year as are or may be reasonably required by the laws of
such jurisdiction.
(e) The Company will furnish to the Agent copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and
all amendments and supplements to such documents, in each case as soon
as available and in such quantities as the Agent may from time to time
reasonably request.
(f) For such period as this Agreement may be in effect, the
Company shall make available to the Agent, as soon as the same shall be
sent to its stockholders generally, copies of all annual or interim
stockholder reports of the Company and will, for the same period, also
furnish the Agent one copy of any report, application or document (other
than exhibits, which, however, will be furnished on Agent's request)
filed by the Company with the Commission, Nasdaq, the NASD or any
securities exchange.
Distribution and Management Agreement - Page 18
(g) At all times during the term of this Agreement, the Company
shall provide all information reasonably requested by Agent that relates
to the Renewable Note Program in a timely manner and shall use its best
efforts to insure that such information is complete and accurate.
(h) The Company will, for a period of two (2) years from the
Effective Date or such longer period as this Agreement is in effect,
furnish directly to the Agent quarterly profit and loss statements,
reports of the Company's cash flow and statements of application of the
proceeds of the Offering in such reasonable detail as the Agent may
request.
(i) The Company will apply the net proceeds from the sale of the
Notes substantially in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(j) The Company will not take, and will use its best efforts to
cause each of its officers and directors not to take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in stabilization or manipulation as defined in the
Exchange Act of the price of any security of the Company to facilitate
the sale or resale of the Notes.
(k) The Company will authorize Agent to conduct due diligence
investigations (limited to one per calendar year following the date
hereof) to verify the Company's ability to offer and perform its
obligations under the Notes during the term of this Agreement and agrees
to provide Agent with access to its relevant books and records for the
purpose of performing quarterly cash flow analysis.
(l) Upon receipt of the information necessary to calculate OID
from the Agent pursuant to Section 3.01(f), the Company will calculate,
or cause a third party to calculate, OID for federal tax purposes for
each Note and deliver each such calculation to the Agent to be provided
to each Holder in accordance with Section 3.01(f).
ARTICLE V
REPRESENTATIONS AND COVENANTS OF AGENT; CONDITIONS
SECTION 5.01 REPRESENTATIONS AND WARRANTIES OF AGENT. The Agent hereby
represents and warrants to the Company as follows, which representations and
warranties shall be made as of the execution of this Agreement until this
Agreement has been terminated:
(a) The Agent (i) has been duly organized, is validly existing
and in good standing as a Minnesota corporation, (ii) has qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of its properties or the nature of its
activities (including without limitation activities of the Agent
hereunder) makes such qualification necessary, and (iii) has full power,
authority and legal right to own its property, to carry on its business
as presently conducted, and to enter into and perform its obligations
under this Agreement.
Distribution and Management Agreement - Page 19
(b) The execution and delivery by the Agent of this Agreement are
within the power of the Agent and have been duly authorized by all
necessary corporate action on the part of the Agent. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions herein contemplated, nor compliance with the provisions
hereof, will conflict with or result in a breach of, or constitute a
default under, any of the provisions of any Governmental Rule binding on
the Agent, the charter or bylaws of the Agent, or any of the provisions
of any Material Agreement to which the Agent is a party or by which it
is bound; nor will they result in the creation or imposition of any
lien, charge or encumbrance upon any of Agent's property pursuant to the
terms of any Material Agreement.
(c) The Agent has obtained all governmental consents, licenses,
approvals and authorizations, registrations and declarations which are
necessary for the execution, delivery, performance, validity and
enforceability of Agent's obligations under this Agreement.
(d) There are no actions, suits or proceedings pending or, to the
knowledge of the Agent, threatened against or affecting the Agent,
before or by any court, administrative agency, arbitrator or
governmental body with respect to any of the transactions contemplated
by this Agreement, or which will, if determined adversely to the Agent,
materially and adversely affect it or its business, assets, operations
or condition, financial or otherwise, or adversely affect the Agent's
ability to perform its obligations under this Agreement. The Agent is
not in default with respect to any order of any court, administrative
agency, arbitrator or governmental body so as to materially and
adversely affect the transactions contemplated by this Agreement.
(e) The Agent has obtained all necessary consents, approvals,
waivers and notifications of creditors, lessors and other
nongovernmental persons in connection with the execution and delivery of
this Agreement, and the consummation of all the transactions herein
contemplated.
(f) When the Registration Statement shall become effective and
when any post-effective amendment thereto shall become effective, the
Agent Disclosure Statements in the Registration Statement will not or
did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading. When the Registration Statement is or was declared
effective by the Commission and at all times subsequent thereto until
the termination of the Offering, the Agent Disclosure Statements in the
Prospectus (as amended or supplemented, if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) will
not or did not contain any untrue statement of a material fact or omit
to state a material fact required to the stated therein or necessary in
order to make the statements therein, in light of the circumstances in
which they were made, not misleading. "Agent Disclosure Statements"
shall mean any statements or disclosures included within or the subject
of the Registration Statement or the Prospectus, which are either (i)
included within the disclosure under the heading "Plan of Distribution"
in the Prospectus, or (ii) based upon and conform to written information
relating to the Agent furnished in writing
Distribution and Management Agreement - Page 20
to the Company by the Agent specifically for use in the preparation of
the Registration Statement or the Prospectus, or any such amendment or
supplement thereto; provided, however, the Agent makes no representation
with respect to any Agent Disclosure Statement made without the consent
of the Agent, or with respect to which the Agent has provided the
Company a written objection.
(g) The Agent has operated and is operating in material
compliance with all authorizations, licenses, certificates, consents,
permits, approvals and orders of and from all state, federal and other
governmental regulatory officials and bodies necessary to conduct its
business as contemplated by and described in this Agreement, all of
which are, to the Agent's knowledge, valid and in full force and effect.
The Agent is conducting its business in substantial compliance with all
applicable Governmental Rules, laws, rules and regulations of the
jurisdictions in which it is conducting business, and the Agent is not
in material violation of any applicable Governmental Rules, law, order,
rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Agent or over its properties.
(h) The Agent has full requisite power and authority to enter
into this Agreement and perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the
Agent and is a valid and binding agreement on the part of the Agent,
enforceable against the Agent in accordance with its terms. The
performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under: (i) any
Material Agreement to which the Agent is a party or by which the Agent
or its properties may be bound; (ii) the articles of incorporation or
bylaws of the Agent; or (iii) any applicable law, order, rule,
regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Agent or over its properties.
(i) The Agent has not distributed and will not distribute prior
to the completion of the Offering, any offering material in connection
with the Offering, other than any Preliminary Prospectus, the
Prospectus, the Registration Statement and other materials, if any,
permitted by and in compliance with the Securities Act and the Rules and
Regulations.
(j) The Agent maintains insurance, which is in full force and
effect, with insurers of recognized financial responsibility of the
types and in the amounts generally deemed adequate for its business and,
to the best of the Agent's knowledge, in line with the insurance
maintained by similar companies and businesses; and the Agent shall add
the Company as a beneficiary or additional insured against any covered
loss and shall provide the Company with a copy of the respective
insurance policies; and the Agent has no reason to believe that it will
not be able to renew its existing insurance coverage as and when such
coverage expires or obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not
materially and adversely affect the financial condition or business
operations of the Agent.
Distribution and Management Agreement - Page 21
(k) The Agent has been assigned, transferred and assumed all of
the rights, interests, duties and obligations that Xxxxxx & Xxxxxxxxx
Financial, Inc. ("Xxxxxx & Xxxxxxxxx") previously had or claimed with
respect to the Renewable Note Program and the Offering of the Notes. As
a result of such assignment, transfer and assumption, the Company does
not have any outstanding or existing agreement, contract or other
arrangement relating to the Renewable Note Program and the Offering of
the Notes to which Xxxxxx & Xxxxxxxxx is a party or which otherwise
involves Xxxxxx & Xxxxxxxxx, and the Company otherwise does not have any
obligations, duties, liabilities or payments owing or due to Xxxxxx &
Xxxxxxxxx in connection with the Renewable Note Program and the Offering
of the Notes. Xxxxxx & Xxxxxxxxx does not currently own 50% or more of
any class or all classes of equity in the Agent, nor does Xxxxxx &
Xxxxxxxxx have options, warrants, rights or any other arrangement which
would result in Xxxxxx and Xxxxxxxxx owning 50% or more of any class or
all classes of equity in the Agent. The Agent is not controlled directly
or indirectly by Xxxxxx & Xxxxxxxxx and Agent is not subject or party to
any arrangement that permits or allows or would permit or allow the
Agent to be controlled directly or indirectly by Xxxxxx & Xxxxxxxxx.
Agent is not subject or a party to, or otherwise materially involved in,
nor does Agent reasonably expect to be subject or a party to, or
otherwise become materially involved in, any litigation, proceeding,
claim or other action involving or relating to Xxxxxx & Xxxxxxxxx,
including any litigation, proceeding, claim or other action from prior
securities offerings that involved Xxxxxx & Xxxxxxxxx as an underwriter,
broker-dealer or selling agent.
SECTION 5.02..COVENANTS OF AGENT. The Agent hereby covenants to the
Company as follows, which covenants shall be deemed in force unless and until
this Agreement is terminated as provided herein:
(a) The Agent shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(b) Except as provided in this Agreement, the Agent shall not
take any action, or permit any action to be taken by others, which would
excuse any person from any of its covenants or obligations under any
Note, or under any other instrument related to a Note, or which would
result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any Note or
any such instrument or any right in favor of the Company in a Note or
such instrument, without the written consent of the Company.
(c) The Agent shall not assign this Agreement or any of its
rights, powers, duties or obligations hereunder without the express
prior written consent of the Company, which shall not be unreasonably
withheld.
(d) Within the shorter of the time during which a prospectus
relating to the Notes is required to be delivered under the Securities
Act and the Rules and Regulations or the term of this Agreement, the
Agent will comply as far as it is able with all requirements imposed
upon it by the Securities Act and the Rules and Regulations, so far as
necessary to permit the continuance of sales of or dealings in the Notes
as contemplated by the provisions hereof and the Prospectus. If, during
the shorter of such period or the term of
Distribution and Management Agreement - Page 22
this Agreement, to the Agent's best knowledge, any event or change
occurs that could reasonably be considered material to the Offering or
that causes any of the representations and warranties of the Agent
contained herein to be untrue in any material respect, or as a result of
which the Prospectus would include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances then existing, not
misleading, or if, during such period, to the Agent's best knowledge, it
is necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Securities Act and the Rules and
Regulations, then the Agent will promptly notify the Company, and, if
necessary, use reasonable efforts to assist the Company in amending the
Registration Statement or supplementing the Prospectus (at the expense
of the Company) so as to correct such statement or omission or effect
such compliance.
(e) The Agent will use reasonable efforts (i) to determine and
designate the states or jurisdictions, if any, where the qualification
or registration of the Notes is necessary or advisable in connection
with the Offering and (ii) to assist the Company in arranging for the
qualification or registration of the Notes for offering and sale under
the securities laws of such states or jurisdictions and to continue such
qualifications or registrations in effect for so long as may be required
for purposes of the distribution of the Notes. In each state or
jurisdiction in which the Notes shall have been qualified or registered
as herein provided, the Agent will assist with making and filing the
Company statements and reports in each year as are or may be reasonably
required by the laws of such states or jurisdiction.
(f) At all times during the term of this Agreement, the Agent
shall provide all information relating to the Offering, the Renewable
Note Program or the Note Portfolio reasonably requested by the Company
in a timely manner and shall use its best efforts to insure that such
information is complete and accurate in all material respects.
(g)The Agent shall take such additional action as is reasonably
requested by the Company in order to carry out the purposes of this
Agreement.
ARTICLE VI
CONDITIONS
SECTION 6.01 CONDITIONS OF THE AGENT'S OBLIGATIONS. The obligation of
the Agent to sell the Notes on a best efforts basis as provided herein shall be
subject to the accuracy of the representations and warranties of the Company, in
the case of the Notes, as of the date hereof, to the performance by the Company
of its obligations hereunder, and to the satisfaction of the following
additional conditions:
(a) The Registration Statement shall have become effective not
later than 4:00 p.m. Minneapolis, Minnesota time on the date of this
Agreement, or such later date or time as shall be consented to in
writing by Agent (the "Effective Date"), 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
Distribution and Management Agreement - Page 23
body. Any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the satisfaction of the Agent and
Agent's counsel.
(b) The Agent shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment thereof or
supplement thereto, contains any untrue statement of a fact which is
material or omits to state a fact which is material and is required to
be stated therein or is necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
(c) Subsequent to the Effective Date and prior to termination of
the Offering, there shall not have occurred any change, or any
development involving a prospective change, which materially and
adversely affects the Company's condition (financial or otherwise),
earnings, operations, properties, business or business prospects from
that set forth in the Registration Statement or Prospectus, and which is
material and adverse or that makes it impracticable or inadvisable to
proceed with the Offering of the Notes as contemplated by the Prospectus
and this Agreement.
(d) All corporate proceedings and other legal matters in
connection with this Agreement, the form of Registration Statement and
the Prospectus, and the registration, authorization, issue, sale and
delivery of the Notes shall have been reasonably satisfactory to Agent's
counsel, in all material respects, and Agent's counsel shall have been
furnished with such papers and information as it may reasonably have
requested to enable it to pass upon the matters referred to in this
Section.
(e) The Agent shall have received the opinion of Xxxxxxx & Xxxxx,
L.L.P., counsel for the Company, dated as of the Initial Closing Date,
satisfactory in form and substance to the Agent and Agent's counsel,
which includes the opinions as set forth in Exhibit B attached hereto.
Xxxxxxx & Xxxxx, L.L.P., in rendering the foregoing opinion, may rely as
to questions of law not involving the laws of the United States or the
State of New York upon opinions of local counsel, and, as to questions
of fact, upon representations or certificates of officers of the Company
and of government officials, in which case its opinion is to state such
reliance. Copies of any opinion, representation or certificate so relied
upon shall be delivered to the Agent and to Agent's counsel.
(f) Within five Business Days of the Initial Closing Date, the
Agent shall have received from PricewaterhouseCoopers LLP a letter dated
the date of such execution, in form and substance satisfactory to the
Agent, to the effect that they are independent accountants with respect
to the Company within the meaning of the Securities Act and the
applicable published instructions, and the Rules and Regulations
thereunder, and further stating in effect that, in their opinion, the
audited financial statements incorporated by reference in the
Registration Statement and Prospectus covered by their report included
therein comply as to form in all material respects with the applicable
requirements of the Securities Act, the published instructions and the
Rule and Regulations.
Distribution and Management Agreement - Page 24
(g) Within five Business Days of the Initial Closing Date, the
Agent shall have received from PricewaterhouseCoopers LLP a letter dated
the date of such execution, in form and substance satisfactory to the
Agent, that:
(i) On the basis of (1) a reading of the minutes of the
stockholders' and directors' meetings of the Company, (2)
inquiries of certain officials of the Company responsible for
financial and accounting matters, (3) a reading of the Company's
monthly operating statements for the months beginning on
___________, ____, and (4) other specified procedures and
inquiries (but not an audit in accordance with generally accepted
accounting principles), nothing came to their attention causing
them to believe that:
(A) the unaudited financial statements of the Company
incorporated by reference in the Prospectus and any amendment
thereof or supplement thereto do not comply as to form, in
all material respects, with the applicable accounting
requirements of the Securities Act and the published Rules
and Regulations or were not prepared in conformity with
generally accepted accounting principles and practices
applied on a basis consistent in all material respects with
those followed in the preparation of the audited financial
statements of the Company included therein;
(B) the unaudited amounts of revenues, income before
provision for income taxes, net income and ratio of earnings
to fixed charges of the Company incorporated by reference in
the Prospectus, or any amendment thereof or supplement
thereto, were not derived from financial statements prepared
in conformity with generally accepted accounting principles
and practices applied on a basis consistent in all material
respects with those followed in the preparation of the
audited financial statements of the Company included therein;
or
(C) with respect to the period subsequent to _________,
______, there were, at a specified date, not more than five
business days prior to the date of the letter, any changes or
any material increases or decreases in capital stock,
long-term or short-term debt or stockholders' equity,
decreases in net assets, net current assets, or net worth or
any material decrease, as compared with the corresponding
period of the prior year, in revenues or net income of the
Company as compared with the amounts shown in the balance
sheet included in the Registration Statement, except as
disclosed or referred to in the Prospectus and Registration
Statement.
(ii) Certain information and data regarding the Company and
its operations set forth in the Prospectus (excluding information
or data that is incorporated by reference thereto) that are
expressed in dollars (or percentages derived from dollar amounts)
or numbers have been compared to accounting records of the
Company which were subject to the internal accounting controls of
the Company and are in agreement with such records or
computations made therefrom, excluding any questions of legal
interpretation.
Distribution and Management Agreement - Page 25
(h) The Agent shall have received from the Company a certificate,
dated as of the Initial Closing Date, of the principal financial officer
of the Company, to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the date
of the certificate, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied under this Agreement.
(ii) No stop order or other order suspending the
effectiveness of the Registration Statement or any amendment
thereof or the qualification of the Notes for offering or sale
have been issued, and no proceedings for that purpose have been
instituted or, to the best of his knowledge, are contemplated by
the Commission or any state or regulatory body.
(iii) The signer of said certificate has carefully examined
the Registration Statement and the Prospectus and any amendments
thereof or supplements thereto.
(iv) Such documents contain all statements and information
required to be included therein; the Registration Statement, or
any amendment thereof, does not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; and the Prospectus, as amended or supplemented, does
not include any untrue statement of material fact or omit to
state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(v) There has occurred no event required to be set forth in
an amended or supplemented Prospectus which has not been so set
forth.
(vi) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, the Company has not incurred any material liabilities
or material obligations, direct or contingent, or entered into
any Material Agreements, not in the ordinary course of business
consistent with past practice, and except as disclosed in the
financial statements incorporated by reference in the
Registration Statement, there has not been any material change in
the capital stock, or any material increase in the short-term
debt or long-term debt (other than consistent with past
practices), or in the issuance of options (other than to
directors and employees of the Company), warrants, convertible
securities or other rights to purchase the capital stock, of the
Company, or any material adverse change or any development
involving a prospective material adverse change (whether or not
arising in the ordinary course of business) in the general
affairs, condition (financial or otherwise), business, key
personnel, property, prospects, net worth or results of
operations of the Company.
(vii) Except as stated in the Registration Statement and
Prospectus, there is not pending or, to their knowledge,
threatened or contemplated, any
Distribution and Management Agreement - Page 26
action, suit or proceeding to which the Company is a party before
or by any court or governmental agency, authority or body, or any
arbitrator, which might result in any material adverse change of
the condition, (financial or otherwise), business, prospects, or
results of operations of the Company.
(i)The Agent shall have received a certificate of Secretary of
the Company, dated as of such Initial Closing Date, with the documents
listed herein attached, and to the effect and certifying as follows:
(i) Attached thereto are true and correct copies of the
certificate of incorporation of the Company, as amended to the
date of the certificate, and stating that there have been no
changes or amendments to the attached certificate of
incorporation of the Company, and no resolutions have been
adopted by the Board of Directors or stockholders of the Company
relating to (A) the amendment of said certificate of
incorporation; (B) the merger, consolidation or dissolution of
the Company; or (C) the sale of all or substantially all of the
assets or business of the Company, and that the Company is in
good standing in the State of Delaware and has paid all of its
corporate franchise taxes due as of the date of such certificate.
(ii) Attached thereto is a true and correct copy of the
bylaws of the Company as in effect as of the date of such
certificate and no resolutions have been adopted by the Board of
Directors or stockholders of the Company relating to changes or
amendments to the attached bylaws.
(iii) Attached thereto are true and correct copies of the
resolutions of the Board of Directors of the Company relating to
the preparation and signing of the Registration Statement and
this Agreement, the issuance and sale of the Notes and other
related matters, and such resolutions have not been amended,
modified or rescinded and are in full force and effect as of the
date of such certificate and are the only resolutions adopted by
the Board of Directors of the Company with respect to the
offering contemplated by the Registration Statement.
(iv) The persons who have signed the Registration Statement
and all amendments thereto were duly elected at the respective
times of such signing and duly acting as officers and directors
of the Company or as an attorney-in-fact therefor, as set forth
in the Registration Statement.
(j)Xxxxxxx & Xxxxx, L.L.P., shall deliver to the Agent a Blue Sky
Memorandum reasonably satisfactory to the Agent confirming that all
requisite actions for the offer and sale of the Notes in all
jurisdictions requested by the Agent have been taken.
(k)The Company shall have furnished to the Agent and to Agent's
Counsel such additional certificates, documents and evidence as the
Agent shall reasonably request.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Agent and Agent's counsel. All statements contained in any certificate,
letter or other document delivered pursuant hereto by,
Distribution and Management Agreement - Page 27
or on behalf of, the Company shall be deemed to constitute representations and
warranties of the Company.
The Agent may waive in writing the performance of any one or more of the
conditions specified in this Section or extend the time for their performance.
If any of the conditions specified in this Section shall not have been
fulfilled when and as required by this Agreement to be fulfilled and if the
fulfillment of said condition has not been waived by the Agent, this Agreement
and all obligations of the Agent hereunder may be canceled at, or at any time
prior to, the Initial Closing Date by the Agent. Any such reasonable
cancellation shall be without liability of the Agent to the Company and shall
not relieve the Company of its obligations under Article VII hereof. Notice of
such cancellation shall be given to the Company as specified in Section 8.03.
SECTION 6.02 CONDITIONS OF THE COMPANY'S OBLIGATIONS.
The obligations of the Company as provided herein shall be subject to the
accuracy of the representations and warranties of the Agent, the performance by
the Agent of its obligations hereunder and to the satisfaction of the following
conditions:
(a) Within five Business Days of the Initial Closing Date, the Company
shall have received the opinion of counsel for the Agent, dated as of the
Initial Closing Date, satisfactory in form and substance to the Company and
Company's counsel, which includes the opinions as set forth in Exhibit C hereto.
Counsel for the Agent, in rendering the foregoing opinion, may rely as to
questions of law not involving the laws of the United States or the State of
Minnesota upon opinions of local counsel, and, as to questions of fact, upon
representations or certificates of officers of the Agent and of government
officials, in which case its opinion is to state such reliance. Copies of any
opinion, representation or certificate so relied upon shall be delivered to the
Company and to Company's counsel.
ARTICLE VII
INDEMNIFICATION AND CONTRIBUTION
SECTION 7.01 COMPANY'S INDEMNIFICATION OF AGENT. The Company hereby
agrees to indemnify and hold harmless the Agent, and each person, if any, who
controls the Agent within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages or liabilities that arise out of, or are
based upon, (i) any breach, in any material respect, of any representation,
warranty, agreement or covenant of the Company contained in this Agreement; (ii)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment thereof or supplement thereto, or
the omission or alleged omission to state in the Registration Statement or any
amendment thereof or supplement thereto a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (iii) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, if used prior to the
Effective Date of the Registration Statement, or in the Prospectus (as amended
or as supplemented), or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in
Distribution and Management Agreement - Page 28
light of the circumstances under which they were made, not misleading; or (iv)
any untrue statement or alleged untrue statement of a material fact contained in
any application or other statement executed by the Company or based upon written
information furnished by the Company filed in any jurisdiction in order to
qualify the Notes under, or exempt the Notes or the sale thereof from
qualification under, the securities laws of such jurisdiction, or the omission
or alleged omission to state in such application or statement a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company will reimburse the Agent and each such controlling person (subject to
the limitation set forth in Section 7.03 hereof) for any legal or other expenses
reasonably incurred by the Agent or controlling person in connection with
investigating or defending against any such loss, claim, damage, liability or
action. However, the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with the Agent Disclosure Statements or
any written information furnished to the Company by the Agent specifically for
use in any application or other statement executed by the Company or the Agent
filed in any jurisdiction in order to qualify the Notes under, or exempt the
Notes or the sale thereof from qualification under, the securities laws of such
jurisdiction (unless the Agent provided the Company with written notice of such
untrue statement or omission within a reasonable time prior to the use thereof
and the Company failed to undertake prompt action to correct such untrue
statement or omission before its use, in which case the Company's
indemnification shall nevertheless apply); and provided further that the Company
will not be liable to the Agent with respect to any Preliminary Prospectus to
the extent that any such loss, claim, damage or liability results from the fact
that the Agent sold Notes to a person who was not sent or given, at or prior to
written confirmation of such sale, a copy of the Prospectus in any case where
such delivery is required by the Securities Act and the Rules and Regulations
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Preliminary Prospectus was correct
in the Prospectus, provided that the Company has delivered the Prospectus to the
Agent in requisite quantity to permit such delivery or sending. This indemnity
agreement is in addition to any liability which the Company may otherwise have.
SECTION 7.02 AGENT'S INDEMNIFICATION OF THE COMPANY. The Agent agrees
to indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each person who controls
the Company within the meaning of Section 15 of the Securities Act against any
losses, claims, damages or liabilities that arise out of, or are based upon, (i)
any breach, in any material respect, of any representation, warranty, agreement,
obligation or covenant of the Agent contained in this Agreement, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof or supplement thereto, or the
omission or alleged omission to state in the Registration Statement or any
amendment thereof or supplement thereto, a material fact required to be stated
therein or necessary to make the statements therein not misleading; (iii) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, if used prior to the Effective Date of the Registration
Statement, or in the Prospectus (as amended or as supplemented), or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iv) any untrue
statement or alleged untrue statement of a material fact contained in any
application or
Distribution and Management Agreement - Page 29
other statement executed by the Company or by the Agent and filed in any
jurisdiction in order to qualify the Notes under, or exempt the Notes or the
sale thereof from qualification under, the securities laws of such jurisdiction,
or the omission or alleged omission to state in such application or statement a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that in each case such indemnification shall
extend only to the extent that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity with
the Agent Disclosure Statements or any written information furnished to the
Company by, or on behalf of, the Agent specifically for use in any application
or other statement executed by the Company or by the Agent and filed in any
jurisdiction (unless the Agent provided the Company with written notice of such
untrue statement or omission within a reasonable time prior to the use thereof
and the Company failed to undertake prompt action to correct such untrue
statement or omission before its use in which case the Agent's indemnification
shall not apply). The Agent will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, or controlling
person (subject to the limitation in Section 7.03 hereof) in connection with
investigating or defending against any such loss, claim, damage, liability or
action. This indemnity agreement is in addition to any liability which the Agent
may otherwise have.
SECTION 7.03 NOTICE OF INDEMNIFICATION CLAIM. Promptly after receipt by
an indemnified party under Section 7.01 or 7.02 of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against any indemnifying party under Section 7.01 or 7.02, notify in
writing the indemnifying party of the commencement thereof. Failure or delay to
so notify the indemnifying party will not relieve it from any liability under
Section 7.01 or 7.02 as to the particular item for which indemnification is then
being sought, except to the extent that the indemnifying party incurs or
sustains damages or losses as a result of such failure to notify or delay in
notification. In case any such action is brought against any indemnified party,
and the indemnified party notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, to assume the defense thereof, with counsel who
shall be reasonably satisfactory to such indemnified party. After notice from
the indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under Section 7.01 or 7.02 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party, and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select as separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties, in which event the fees and expenses of such separate counsel shall be
borne by the indemnifying party. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel for each indemnified party
separate from the indemnifying party's respective counsel(s) for all indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances. Any such indemnifying party shall
Distribution and Management Agreement - Page 30
not be liable to any such indemnified party on account of any settlement of any
claim or action effected without the consent of such indemnifying party.
SECTION 7.04 CONTRIBUTION. In order to provide for just and equitable
contribution in any action in which the Agent or the Company (or any person who
controls the Agent or the Company within the meaning of Section 15 of the
Securities Act) makes claim for indemnification pursuant to Section 7.01 or 7.02
hereof, but such indemnification is unavailable or insufficient to hold harmless
and indemnify a party under Section 7.01 or 7.02, as applicable, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in Section 7.01 or 7.02, as applicable, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Agent on the other from the offering of the Notes hereunder or (ii)
if the allocation provided by the foregoing clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in such clause (i) but also the relative fault of
the Company on the one hand and the Agent on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Agent on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Notes (before deducting expenses) received by the
Company bear to the total commissions received by the Agent. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Agent and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Company
and the Agent agree that it would not be just and equitable if contributions
pursuant to this Section 7.04 were to be determined by pro rata allocation or by
any other method of allocation which does not take into account the equitable
considerations referred to in this Section 7.04. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in this Section 7.04 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the subject of
this Section 7.04. Notwithstanding the provisions of this Section, the Agent
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Notes distributed to the public were offered to the
public exceeds the amount of any damages that the Agent has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
SECTION 7.05 NOTICE OF CONTRIBUTION CLAIM. Promptly after receipt by a
party to this Agreement of notice of the commencement of any action, suit or
proceeding, such person will, if a claim for contribution in respect thereof is
to be made against another party (the "Contributing Party"), notify the
Contributing Party of the commencement thereof, but the failure to so notify the
Contributing Party will not relieve the Contributing Party from any liability
which it may have to any party other than under Section 7.04. Any notice given
pursuant to Section 7.03 hereof shall be deemed to be like notice under this
Section 7.05. In case any such action, suit or proceeding is brought against any
party, and such person notifies a Contributing Party of the
Distribution and Management Agreement - Page 31
commencement thereof, the Contributing Party will be entitled to participate
therein with the notifying party and any other Contributing Party similarly
notified.
SECTION 7.06 REIMBURSEMENT. In addition to its other obligations under
Section 7.01 and 7.04 hereof, the indemnifying party, as applicable, agrees
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding described in Section 7.01, it will
reimburse the indemnified party on a monthly basis for all legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
indemnifying party's obligation to reimburse the indemnified party for such
expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the indemnified
party shall promptly return such payment to the indemnifying party.
SECTION 7.07 ARBITRATION. It is agreed that any controversy rising out
of the operation of the interim reimbursement arrangements set forth in Section
7.06 hereof, including the amounts of any requested reimbursement payments and
the method of determining such amounts, shall be settled by arbitration
conducted pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration or
a written notice of intention to arbitrate, therein electing the arbitration
tribunal. If the party demanding arbitration does not make such designation of
an arbitration tribunal in such demand or notice, then the party responding to
said demand or notice is authorized to do so. Any such arbitration will be
limited to the operation of the interim reimbursement provisions contained in
Section 7.06 hereof and will not resolve the ultimate propriety or
enforceability of the obligation to indemnify for expenses which is created by
the provisions of Section 7.01 and 7.02 hereof or the obligation to contribute
to expenses which is created by the provisions of Section 7.04 hereof.
SECTION 7.08 INTELLECTUAL PROPERTY INFRINGEMENT. Agent agrees that it
shall defend, indemnify and hold harmless, at its own expense, all suits and
claims against the Company and any officers, directors, employees and affiliates
of the Company (collectively, the "Company Indemnified Parties"), for
infringement or violation of any patent, trademark, copyright, trade secret or
other intellectual property rights of any third party that relates to this
Agreement or the Offering, sale or servicing of the Notes. Agent agrees that it
shall pay all sums, including without limitation, reasonable attorneys' fees and
other costs incurred by the Company, in defense of, by final judgment or decree,
or in settlement of any suit or claim asserted or assessed against, or incurred
by, any of the Company Indemnified Parties on account of such infringement or
violation, provided that the Company Indemnified Parties involved shall
cooperate in all reasonable respects with Agent and its attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the Company Indemnified Parties may,
at their own cost, participate in the investigation, trial and defense of such
lawsuit or action and any appeal arising therefrom. The parties shall cooperate
with each other in any notifications to insurers.
SECTION 7.09 CONFIDENTIALITY. The parties to this Agreement acknowledge
and agree that all information, whether oral or written, concerning a disclosing
party and its business
Distribution and Management Agreement - Page 32
operations, prospects and strategy, which is furnished by the disclosing party
to the other party is deemed to be confidential, restricted and proprietary to
the disclosing party (the "Proprietary Information"). Proprietary Information
supplied shall not be disclosed, used or reproduced in any form except as
required to accomplish the intent of, and in accordance with the terms of, this
Agreement and the Indenture. The receiving party shall provide the same care to
avoid disclosure or unauthorized use of Proprietary Information as it provides
to protect its own proprietary information, including without limitation
retaining Proprietary Information in a secure place with limited access, but in
no event shall the receiving party fail to use reasonable care under the
circumstances to avoid disclosure or unauthorized use of Proprietary
Information. Unless otherwise specified in writing, all Proprietary Information
shall (i) remain the property of the disclosing party, (ii) be used by the
receiving party only for the purpose for which it was intended under this
Agreement and the Indenture, and (iii) together with all copies of such
information, be returned to the disclosing party or destroyed upon request of
the disclosing party, and, in any event, upon termination of this Agreement,
except as otherwise provided or contemplated by this Agreement, including
Sections 3.02(b) and (e) and 8.05 hereof. Proprietary Information does not
include information which is: (a) published or included as disclosure within the
Registration Statement or otherwise available in the public domain through no
fault of the receiving party; (b) lawfully received from a third party having
rights in the information without restriction of the third party's right to
disseminate the information and without notice of any restriction against its
further disclosure; or (c) produced under order of a court of competent
jurisdiction or other similar requirement of a governmental agency or authority,
so long as the party required to disclose the information provides the other
party with prior notice of such order or requirement and its cooperation to the
extent reasonable in preserving its confidentiality. Because damages may be
difficult to ascertain, the parties agree, without limiting any other rights and
remedies specified herein, an injunction may be sought against the party who has
breached or threatened to breach this section.
ARTICLE VIII
TERM AND TERMINATION
SECTION 8.01 EFFECTIVE DATE OF THIS AGREEMENT. This Agreement shall
become effective on the Effective Date immediately after the time at which the
Registration Statement shall become effective under the Securities Act.
SECTION 8.02 TERMINATION PRIOR TO INITIAL CLOSING DATE. This Agreement
may be terminated by the Agent, at its option, by giving notice to the Company,
if (i) the Company shall have failed, refused, or been unable, at or prior to
the Initial Closing Date, to perform any agreement on its part to be performed
hereunder; (ii) any other condition of the Agent's obligations hereunder is not
fulfilled or waived by the Agent; (iii) a banking moratorium shall have been
declared by federal, New York or Minnesota authorities; (iv) there shall have
been such a serious, unusual and material change in general economic, monetary,
political or financial conditions, or the effect of international conditions on
the financial markets in the United States shall be such as, in the judgment of
the Agent, makes it inadvisable to proceed with the delivery of the Notes; (v)
the enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which, in the reasonable judgment of the Agent, materially and adversely affects
or will materially and
Distribution and Management Agreement - Page 33
adversely affect the business or operations of the Company; or (vi) there shall
be a material outbreak of hostilities or material escalation and deterioration
in the political and military situation between the United States and any
foreign power, or a formal declaration of war by the United States of America
shall have occurred. Any such termination shall be without liability of any
party to any other party, except as provided in Section 7.01, 7.02 and 7.04
hereof; provided, however, that the Company shall remain obligated to pay costs
and expenses to the extent provided in Section 2.03 hereof.
SECTION 8.03 NOTICE OF TERMINATION. If the Agent elects to terminate
this Agreement as provided in Section 8.02, it shall notify the Company and the
Company's counsel promptly by telephone or transmitted by any standard form of
telecommunication, confirmed by letter sent to the address specified in Section
9.02 hereof.
SECTION 8.04 TERMINATION AFTER INITIAL CLOSING DATE. The Company or
Agent may terminate this Agreement at any time subsequent to the Initial Closing
Date as provided below, and in such case, Agent will be paid fees and
commissions accrued up to the date of such termination plus its expenses accrued
as of such date within thirty (30) days of such termination:
(a) The Company will have the ability to terminate this Agreement
in the following manner:
(i) with respect to the Company's termination of Agent's
activities to market and sell the Notes, the Company must provide
at least seven (7) days prior written notice to Agent, and
(ii) with respect to the Company's termination of Agent's
other activities relating to the Notes, the Company will provide
at least thirty (30) days prior written notice to Agent.
(b) Agent will have the ability to terminate this Agreement in
the following manner:
(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, and
(ii) with respect to the termination of Agent's other
activities relating to the Notes, Agent must provide at least
sixty (60) days prior written notice to the Company; provided,
however, that in either case of clause (i) or (ii) of this
sentence, the Company may decrease the time periods for
terminating Agent's activities by providing Agent with notice for
termination consistent with the preceding paragraph (a).
SECTION 8.05 TERMINATION WITHOUT TERMINATION OF OFFERING. Anything to
the contrary notwithstanding, the termination of this Agreement shall not
prevent the Company from commencing or cause the Company to terminate the
Offering. In the event this Agreement is terminated without a termination of the
Offering, then the Company, or its agents, shall be
Distribution and Management Agreement - Page 34
entitled to use all materials developed by Agent related to the Notes as
provided elsewhere herein.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 SURVIVAL. The respective indemnity and contribution
agreements of the Company and the Agent set forth herein and the respective
representations, warranties, covenants and agreements of the Company and the
Agent set forth herein, shall remain operative and in full force and effect,
regardless of any investigation made by, or on behalf of, the Agent, the
Company, any of its officers and directors, or any controlling person referred
to in Article VII and shall survive the sale of the Notes. The aforesaid
indemnity and contribution agreements shall also survive any termination or
cancellation of this Agreement. Any successor of any party or of any such
controlling person, or any legal representative of such controlling person, as
the case may be, shall be entitled to the benefit of the respective indemnity
and contribution agreements.
SECTION 9.02 NOTICES. All notices or communications hereunder, except
as herein otherwise specifically provided, shall be in writing and shall be
mailed, delivered or transmitted by any standard form of telecommunication, as
follows:
If to the Agent, to: Xxxxxx Xxxxxxxxxx Ltd.
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: K. Xxxxxx Xxxxxxx
Tel. (000) 000-0000
with a copy to: Xxxxxxx, Street and Deinard, Professional Association
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Tel. (000) 000-0000
If to the Company, to: Onyx Acceptance Corporation
00000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Krahelski
Tel. (000) 000-0000
Distribution and Management Agreement - Page 35
with a copy to: Xxxxxxx & Xxxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Tel. (000) 000-0000
SECTION 9.03 SUCCESSORS AND ASSIGNS; TRANSFER. This Agreement shall
inure to the benefit of and be binding upon the Agent and the Company and their
respective successors and assigns, and the officers, directors and controlling
persons referred to in Article VII. Nothing expressed in this Agreement is
intended or shall be construed to give any person or corporation, other than the
parties hereto, their respective successors and assigns, and the controlling
persons, officers and directors referred to in Article VII, any legal or
equitable right, remedy or claim under, or in respect of, this Agreement or any
provision herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of the
parties hereto and their respective executors, administrators, successors,
assigns and such controlling persons, officers and directors, and for the
benefit of no other person or corporation. No purchaser of any Notes shall be
construed a successor or assign merely by reason of such purchase. Neither party
may assign its rights and obligations under this Agreement without the written
consent of the other party.
SECTION 9.04 CUMULATIVE REMEDIES. Unless otherwise expressly provided
herein, the remedies of the parties provided for herein shall be cumulative and
concurrent, and may be pursued singularly, successively or together, at the sole
discretion of the party for whose benefit such remedy is provided, and may be
exercised as often as occasion therefor shall arise.
SECTION 9.05 ATTORNEYS' FEES. In the event of any action to enforce or
interpret this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and costs, whether or not such action proceeds to
judgment.
SECTION 9.06 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement constitutes the entire agreement of the parties hereto
with respect to the matters addressed herein and supersedes all prior or
contemporaneous contracts, promises, representations, warranties and statements,
whether written or oral, with respect to such matters.
SECTION 9.07 CHOICE OF LAW; VENUE. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to conflict of law principles.
SECTION 9.08 CONFIDENTIALITY. The Company agrees to keep confidential
all non-public information concerning the marketing, selling and administration
of the Notes, except as disclosure may be required by law. The Agent agrees to
keep confidential all non-public information supplied to it by the Company,
including without limitation, all non-public information obtained during any due
diligence investigation of the Company.
SECTION 9.09 RIGHTS TO INVESTOR LISTS. The Offering will produce a list
of prospective, current and former Investors and Holders. The Company and Agent
each shall be able to use
Distribution and Management Agreement - Page 36
these lists for their own business purposes as long as doing so does not
interfere with the marketing, sale or administration of the Notes.
SECTION 9.10 WAIVER; SUBSEQUENT MODIFICATION. Except as expressly
provided herein, no delay or omission by any party in insisting upon the strict
observance or performance of any provision of this Agreement, or in exercising
any right or remedy, shall be construed as a waiver or relinquishment of such
provision, nor shall it impair such right or remedy, and no waiver by any party
or any failure or refusal of the other party to comply with its obligations
under this Agreement shall be deemed a waiver of any other or subsequent failure
or refusal to so comply by such other party. No waiver or modification of the
terms hereof shall be valid unless in writing and signed by the party to be
charged, and then only to the extent therein set forth.
SECTION 9.11 SEVERABILITY. If any term or provision of this Agreement
or application thereof to any person or circumstance shall, to any extent, be
found by a court of competent jurisdiction to be invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term or provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
SECTION 9.12 JOINT PREPARATION. The preparation of this Agreement has
been a joint effort of the parties and the resulting document shall not, solely
as a matter of judicial construction, be construed more severely against one of
the parties than the other.
SECTION 9.13 CAPTIONS. The title of this Agreement and the headings of
the various articles, section and subsections have been inserted only for the
purpose of convenience, are not part of this Agreement and shall not be deemed
in any manner to modify, explain, expand or restrict any of the provisions of
this Agreement.
SECTION 9.14 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
SECTION 9.15 THIRD PARTY CONTRACTORS.
In the event that the Company engages a third party to perform any of
the obligations of the Agent under this Agreement, including, without
limitation, coordinating the receipt and logging of incoming subscription
agreements to purchase Notes and accompanying funds and documents, the Company
shall provide written notice to the Agent of such engagement, the Agent shall
thereafter be relieved of any such obligations for which the third party was
engaged, and in no event shall the Agent be liable for, or be obligated to
indemnify the Company with regard to, any act (or failure to act) of such third
party. The Company agrees to indemnify the Agent against any loss, claim, damage
or liability arising from the Company's engagement of any such third party or
such third party's acts (or failures to act) in a manner consistent with the
provisions of Article VII hereof.
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Distribution and Management Agreement - Page 37
IN WITNESS WHEREOF, this Distribution and Management Agreement is hereby
entered into by the undersigned parties as of the date first set forth above.
THE COMPANY: ONYX ACCEPTANCE CORPORATION
By:_______________________________________
Name:
Title:
THE AGENT: XXXXXX XXXXXXXXXX LTD.
By:_______________________________________
K. Xxxxxx Xxxxxxx
President
DISTRIBUTION AND MANAGEMENT AGREEMENT SIGNATURE PAGE
